B-138745, DEC. 11, 1959

B-138745: Dec 11, 1959

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GENERAL SERVICES ADMINISTRATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 6. IN OUR LETTER WE CITED CERTAIN INSTANCES IN WHICH PURCHASE ORDERS WERE DATED ON OR NEAR THE LAST DAY OF THE CONTRACT PERIOD BUT WERE NOT RECEIVED BY THE CONTRACTOR UNTIL AFTER THE EXPIRATION OF THE CONTRACT TERM. SOME ORDERS WERE SUBSEQUENTLY "AMENDED" TO INCREASE SUBSTANTIALLY THE QUANTITY BEING PROCURED. WE QUESTIONED WHETHER THE "AMENDMENTS" COULD PROPERLY BE REGARDED AS COVERING REQUIREMENTS FOR THE CONTRACT PERIOD AND WHETHER AMENDMENT OF PURCHASE ORDERS AFTER EXPIRATION OF THE CONTRACT PERIOD TO SIGNIFICANTLY INCREASE THE QUANTITIES UNDER PROCUREMENT WAS NOT IN CONTRAVENTION OF COMPETITIVE BID PROCEDURES.

B-138745, DEC. 11, 1959

TO HONORABLE FRANKLIN FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 6, 1959, IN RESPONSE TO OUR LETTER OF APRIL 7, 1959, WITH RESPECT TO THE VALIDITY OF CERTAIN PURCHASE ORDERS ISSUED UNDER TERM REQUIREMENTS CONTRACTS FOR OFFICE FURNITURE.

IN OUR LETTER WE CITED CERTAIN INSTANCES IN WHICH PURCHASE ORDERS WERE DATED ON OR NEAR THE LAST DAY OF THE CONTRACT PERIOD BUT WERE NOT RECEIVED BY THE CONTRACTOR UNTIL AFTER THE EXPIRATION OF THE CONTRACT TERM. FURTHER, SOME ORDERS WERE SUBSEQUENTLY "AMENDED" TO INCREASE SUBSTANTIALLY THE QUANTITY BEING PROCURED. WE QUESTIONED WHETHER THE "AMENDMENTS" COULD PROPERLY BE REGARDED AS COVERING REQUIREMENTS FOR THE CONTRACT PERIOD AND WHETHER AMENDMENT OF PURCHASE ORDERS AFTER EXPIRATION OF THE CONTRACT PERIOD TO SIGNIFICANTLY INCREASE THE QUANTITIES UNDER PROCUREMENT WAS NOT IN CONTRAVENTION OF COMPETITIVE BID PROCEDURES. WE ALSO QUESTIONED WHETHER PURCHASE ORDERS DATED AND, PRESUMABLY, MAILED ON THE LAST DAY OF THE CONTRACT TERM BUT RECEIVED AFTER EXPIRATION OF THE CONTRACT PERIOD COULD BE REGARDED AS HAVING BEEN ISSUED PURSUANT TO THE CONTRACT.

IN YOUR LETTER OF MAY 6, 1959, IT IS STATED THAT THE AMENDMENTS TO THE PURCHASE ORDERS WERE NEGOTIATED PURSUANT TO SECTION 302 (C) (2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 252 (C) (2), WHICH AUTHORIZES THE USE OF NEGOTIATION WHEN THE PUBLIC EXIGENCY WILL NOT ADMIT OF THE DELAY INCIDENT TO ADVERTISING. YOU STATE FURTHER WITH RESPECT TO THE EXISTENCE OF AN EXIGENCY:

"BY THE MIDDLE OF APRIL IT WAS READILY APPARENT THAT THE REGION 3 INVENTORY POSITION FOR THESE ITEMS WAS CRITICAL--- STOCKS WERE FAST BECOMING EXHAUSTED AND EMERGENCY PROCUREMENT ACTION WAS IMPERATIVE, INASMUCH AS TERM CONTRACTS FOR THESE ITEMS FOR THE PERIOD BEGINNING APRIL 1, 1958 WERE NOT AVAILABLE AND KNOWN DATES AS TO AVAILABILITY OF SUCH CONTRACTS COULD NOT BE FIRMLY ESTABLISHED. FOR EXAMPLE, AT THE END OF MARCH 1958 THE INVENTORY OF OFFICE FURNITURE WAS APPROXIMATELY $600,000 WITH A CORRESPONDING BACKORDER VALUE OF ONLY $23,000, WHEREAS THE INVENTORY AT THE END OF APRIL WAS REDUCED BY APPROXIMATELY 33 PERCENT AND THE BACKORDER RATIO HAD INCREASED APPROXIMATELY 500 PERCENT.

"WE APPRECIATE AMENDING OF A CONTRACT OR PURCHASE ORDER TO A QUANTITY SUBSTANTIALLY LARGER THAN THAT ORIGINALLY CALLED FOR, AFTER THE CONTRACT EXPIRED, IS NOT USUALLY A JUSTIFIABLE PROCESS. HOWEVER, IN VIEW OF THE EMERGENCY SET FORTH ABOVE, AMENDMENTS TO THE EXISTING PURCHASE ORDERS WERE NEGOTIATED UNDER SECTION 302 (C) (2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED.

"THESE AMENDMENTS WERE NEGOTIATED WITH THE EXPIRED CONTRACT SUPPLIERS WHO WERE THEN IN PRODUCTION AND IN A POSITION TO MAKE PROMPT DELIVERY ON THESE ITEMS. IN ORDER TO EXPEDITE DELIVERY, IT WAS DETERMINED TO SIMPLIFY EXISTING ADMINISTRATIVE PROCEDURES BY AMENDING THE THEN EXISTING PURCHASE ORDERS AND THEREBY ELIMINATE NEEDLESS DOCUMENTATION WHICH WOULD HAVE UNNECESSARILY DELAYED DELIVERY OF THESE CRITICAL ITEMS. THE FACT THAT BIDS FOR THESE ITEMS HAD BEEN OPENED AND WERE UNDER CONSIDERATION FOR AWARD IS NOT CONSIDERED CONTROLLING IN LIGHT OF THE EMERGENCY, SINCE THE NEW CONTRACTS TO BE AWARDED WOULD NOT PRODUCE DELIVERY WITHIN THE SAME PERIOD BECAUSE OF THE NECESSITY FOR APPROVAL OF PRE-PRODUCTION SAMPLES PRIOR TO MAKING DELIVERIES.'

YOU ALSO CITE IN SUPPORT OF THE ACTION TAKEN OUR DECISION PUBLISHED AT 38 COMP. GEN. 171, WHERE IT WAS STATED AT PAGE 174 THAT WE:

"* * * WOULD NOT OBJECT TO NEGOTIATED PURCHASES FOR STOCK REPLENISHMENT IN INSTANCES IN WHICH EXCEPTIONALLY HEAVY AND SUDDEN DEMANDS MAKE IT OBVIOUS THAT A STOCK ITEM FOR WHICH THERE IS A NORMALLY STEAD REQUIREMENT WILL BE DEPLETED TO SUCH AN EXTENT THAT,UNLESS REPLACEMENTS ARE OBTAINED WITHIN LESS TIME THAN EVEN THE MINIMUM REQUIRED FOR PROCUREMENT BY ADVERTISING, A SUBSTANTIAL VOLUME OF NORMALLY ANTICIPATED ORDERS MIGHT NOT BE CAPABLE OF BEING FILLED. EVEN IN CASES OF THIS KIND, WE BELIEVE THAT CONSIDERATION SHOULD BE GIVEN TO NEGOTIATING FOR ONLY SUCH QUANTITIES AS WOULD BE EXPECTED TO BE REQUIRED BEFORE ADDITIONAL DELIVERIES COULD BE OBTAINED BY ADVERTISING.'

YOUR POSITION, THAT BIDS WHICH HAD BEEN OPENED COULD NOT BE CONSIDERED TO SATISFY THE EMERGENCY PROCUREMENT BECAUSE OF THE NECESSITY FOR APPROVAL OF PRE-PRODUCTION SAMPLES PRIOR TO MAKING DELIVERIES, IS SUBJECT TO CONSIDERABLE QUESTION. IN A NUMBER OF INSTANCES THE NEW CONTRACT WAS AWARDED TO THE SAME FIRM WHICH HAD HELD THE OLD CONTRACT, AND ORDERS UNDER SUCH NEW CONTRACT WERE ACTUALLY DELIVERED BEFORE COMPLETION OF DELIVERIES UNDER SOME OF THE ORDERS WHICH YOU NOW CHARACTERIZE AS NEGOTIATED EMERGENCY PROCUREMENTS. WE RECOGNIZE THAT, IN MANY INSTANCES, FACTORS OTHER THAN THE PRE PRODUCTION SAMPLE REQUIREMENT MIGHT DELAY THE AWARD OF A CONTRACT PURSUANT TO FORMAL ADVERTISING EVEN AFTER THE BIDS HAVE BEEN OPENED. THE OPENED BIDS, HOWEVER, COULD CERTAINLY HAVE BEEN USED AS A BASIS FOR NEGOTIATION. IN EVERY INSTANCE, THE INCUMBENT CONTRACTOR HAD SUBMITTED LOWER PRICES ON HIS BID FOR THE NEW TERM. FAILURE TO CONSIDER SUCH LOWER BIDS APPEARS TO HAVE BEEN A BREACH OF THE CONTRACTING OFFICER'S DUTY TO CONDUCT THE NEGOTIATIONS TO THE BEST ADVANTAGE OF THE GOVERNMENT. SEE 38 COMP. GEN. 861.

FURTHER, OUR DECISION FROM WHICH YOU QUOTED SPECIFICALLY LIMITS PROCUREMENTS UNDER THE EXIGENCY EXCEPTION TO QUANTITIES WHICH WOULD BE REQUIRED BEFORE ADDITIONAL DELIVERIES COULD BE OBTAINED THROUGH FORMAL ADVERTISING. IN AT LEAST ONE OF THE INSTANCES MENTIONED ABOVE, THE FIRST DELIVERY UNDER THE NEW CONTRACT WAS MADE ALMOST TWO MONTHS BEFORE THE LAST DELIVERY UNDER THE EMERGENCY PROCUREMENT, DESPITE CONSIDERABLE DELAY IN THE AWARD OF THE NEW CONTRACT. IN EXAMINING THE RECORDS IN RESPECT TO TWO CONTRACTORS WHO SUPPLIED DESKS UNDER BOTH THE AMENDED PURCHASE ORDERS AND THE REGULAR CONTRACTS FOR THE NEW PERIOD WE FOUND THAT THOSE TWO CONTRACTORS TOGETHER HAD DELIVERED 800 DESKS UNDER THE EMERGENCY PROCUREMENT AFTER THEY BEGAN SUBSTANTIAL DELIVERIES UNDER SUCCESSOR CONTRACTS, AND THAT THESE TWO CONTRACTORS DELIVERED MORE THAN 4,000 DESKS UNDER THE LATER CONTRACTS BEFORE DELIVERIES OF THE EMERGENCY PROCUREMENTS WERE COMPLETED. IT SHOULD BE NOTED THAT DELIVERIES WERE MADE SUBSTANTIALLY ON SCHEDULE.

WE RECOGNIZE THAT SOME DEGREE OF OVERLAPPING MUST OCCUR IN SITUATIONS OF THIS KIND. WE QUESTION, HOWEVER, WHETHER THERE HAS BEEN COMPLIANCE WITH THE QUOTED PROVISION OF 38 COMP. GEN. 171, IN VIEW OF THE DEGREE OF THE OVERLAPPING.

AT THE TIME THE "AMENDMENTS" WERE ISSUED, GSA HAD ALREADY OPENED ADVERTISED BIDS FROM THESE SUPPLIERS AND WITHOUT EXCEPTION THE SAME SUPPLIERS HAD ALL OFFERED PRICES MATERIALLY LOWER THAN PREVAILED ON THE AMENDED PURCHASE ORDERS. THE BIDS IN QUESTION WERE OPENED APRIL 4, 1958, WHEREAS THE AMENDED PURCHASE ORDERS WERE NOT ISSUED UNTIL DATES RANGING FROM APRIL 23 THROUGH APRIL 29, 1958. IF THESE TRANSACTIONS HAD BEEN CONSUMMATED AT THE NEW BID PRICES FROM THESE SAME SUPPLIERS THE FACE AMOUNTS OF THE ORDERS WOULD HAVE BEEN OVER $25,000 LESS.

WE NOTED THAT THIRTEEN AMENDED PURCHASE ORDERS TOTALING ABOUT $315,000 WERE ISSUED TO EIGHT DIFFERENT SUPPLIERS. INTERVIEWS WITH REPRESENTATIVES OF THREE OF THESE SUPPLIERS, LOCATED IN WASHINGTON, D.C., REVEALED THAT THE UNDERSTANDING BETWEEN GSA REPRESENTATIVES AND THE SUPPLIERS RELATED TO THE WILLINGNESS OF THE SUPPLIERS TO ACCEPT THIS ADDITIONAL BUSINESS UNDER THE OLD CONTRACTS AND THAT THERE WAS NO THOUGHT GIVEN TO THE POSSIBILITY OF ENTERING INTO NEW NEGOTIATED PURCHASES. PRICE APPARENTLY WAS NOT DISCUSSED AND ONE OF THESE REPRESENTATIVES STATED THAT HIS COMPANY WAS IN NEED OF ORDERS AND WELCOMED THE BUSINESS.

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

NATIONAL BUYING DIVISION OFFICIALS, WITH WHOM THE MATTER WAS DISCUSSED, STATED THAT, PRIOR TO ANY ACTION BEING TAKEN TO AMEND THE ORDERS IN QUESTION, THE PROPOSED ACTIONS WERE REVIEWED BY THE CHIEF, OFFICE FURNITURE SECTION, NBD. SINCE THE SUPPLIERS UNDER THE EXPIRED CONTRACTS WERE THEN IN PRODUCTION AND IN A POSITION TO MAKE PROMPT DELIVERY, AND NO OTHER SUPPLIERS WERE KNOWN TO HAVE BEEN ABLE TO SUPPLY SPECIFICATION ITEMS WITHIN THE TIME REQUIRED, IT WAS FELT THAT THESE CONTACTS REPRESENTED ADEQUATE NEGOTIATIONS UNDER THE EMERGENCY CONDITIONS WHICH EXISTED, EVEN THOUGH THE BUYERS DID NOT REALIZE THAT THEY WERE NEGOTIATING FOR EMERGENCY PURCHASES OF ADDITIONAL QUANTITIES OF OFFICE FURNITURE. THEY STATED THAT AT THE TIME THEY WERE PRIMARILY CONCERNED WITH DELIVERIES AND IT WAS FELT THAT IF THEY WERE ABLE TO OBTAIN STEPPED-UP EXIGENCY DELIVERIES AT THE FORMER CONTRACT PRICES FROM THE ONLY KNOWN SOURCES OF SUPPLY AVAILABLE TO MEET THE DELIVERIES REQUIRED, THE GOVERNMENT WOULD BE MAKING AN ADVANTAGEOUS PURCHASE. IT WAS DETERMINED TO SIMPLIFY EXISTING ADMINISTRATIVE PROCEDURES BY AMENDING THE THEN EXISTING PURCHASE ORDERS AND THEREBY ELIMINATE NEEDLESS DOCUMENTATION WHICH WOULD HAVE UNNECESSARILY DELAYED DELIVERIES.

WE DO NOT AGREE THAT DOCUMENTATION OF THIS TRANSACTION, AS REQUIRED BY GSA MANUAL GS 5-1, WOULD HAVE DELAYED DELIVERY. FURTHERMORE, IT IS EVEN MORE UNLIKELY, IF THESE DETERMINATIONS HAD IN FACT BEEN MADE, THAT GSA WOULD HAVE FOLLOWED UP WITH A FORM OF DOCUMENTATION TO SUGGEST A PURCHASING PROCEDURE WHICH IS NOT USUALLY A JUSTIFIABLE PROCESS. AS A MATTER OF FACT, OUR REVIEW OF THIS MATTER DISCLOSED THAT THE ACCELERATED BUYING BY CUSTOMER AGENCIES AND A CRITICAL STOCK POSITION CONTINUED TO PREVAIL FOR OFFICE FURNITURE FOR SEVERAL MONTHS. SUCCESSOR TERM CONTRACTS FOR SEVERAL CHAIR ITEMS WERE NOT AWARDED UNTIL AUGUST 1, 1958, AND IT WAS SUBSEQUENTLY NECESSARY TO NEGOTIATE TWO SUCCESSIVE INTERIM PROCUREMENTS FOR THESE CHAIRS UNDER SECTION 302 (C) (2). WE NOTED THAT BOTH OF THESE PROCUREMENTS INCLUDED SUITABLE COMPETITION UNDER THE CIRCUMSTANCES AND THEY WERE FULLY DOCUMENTED AS REQUIRED BY EXISTING ADMINISTRATIVE PROCEDURES.

THE FACTS THAT THE PROCEDURES FOLLOWED VARIED SO SIGNIFICANTLY FROM THE REGULAR PROCEDURES USED IN CONTEMPORANEOUS EMERGENCY PROCUREMENTS, AND THAT NEITHER THE BUYERS NOR THE SELLERS CONSIDERED THEY WERE ENTERING INTO NEW CONTRACT, STRONGLY SUGGEST THE POSSIBILITY THAT THE PUBLIC EXIGENCY JUSTIFICATION MAY HAVE BEEN DEVELOPED SUBSEQUENT TO THE ISSUANCE OF THE AMENDMENTS RATHER THAN BEFORE. IN ANY CASE, WE HAVE NOT FOUND OR BEEN FURNISHED WITH ANY SHOWING THAT THE PERSONS ISSUING THE AMENDMENTS HAD AUTHORITY TO CONTRACT FOR OFFICE FURNITURE. UNDER THE PROVISIONS OF FEDERAL SUPPLY SERVICE ORDER NO. 93, REVISED, DATED FEBRUARY 4, 1958, THE NATIONAL BUYING DIVISION IS MADE RESPONSIBLE FOR CONTRACTING FOR THE TYPES OF ITEMS IN QUESTION. SINCE THE PERSONS WHO SIGNED THE "AMENDMENTS" WERE OFFICERS OR EMPLOYEES OF REGIONAL OFFICES, THEIR ACTIONS, IF IN FACT THEY WERE NEGOTIATING EMERGENCY PURCHASES, APPEAR TO HAVE BEEN IN CONFLICT WITH THAT ORDER. UNDER THE PROVISIONS OF GSA MANUAL GS 1-2, CHAPTER I, PART 1, AUTHORITY DELEGATED TO THE HEAD OF A SERVICE OR STAFF OFFICE IN THE CENTRAL OFFICE MAY NOT BE REDELEGATED BY HIM TO ANY OFFICER OR EMPLOYEE OF A REGIONAL OFFICE. ACCORDINGLY, THE AUTHORITY DELEGATED UNDER ORDER NO. 93 COULD NOT HAVE BEEN REDELEGATED BY THE NATIONAL BUYING DIVISION TO ANY OFFICERS OR EMPLOYEES OF THE REGIONAL OFFICE.

IT IS WELL RECOGNIZED THAT A CONTRACT PURPORTEDLY ENTERED INTO ON BEHALF OF THE GOVERNMENT BY ONE WITHOUT AUTHORITY SO TO CONTRACT DOES NOT BIND THE UNITED STATES. UNITED STATES V. WILLIS, 164 F.2D 453. ACCORDINGLY, WE FEEL THAT, IN THE ABSENCE OF FURTHER INFORMATION, THERE IS A SERIOUS QUESTION AS TO THE VALIDITY OF THE ORDERS IN QUESTION AND AS TO WHETHER THE CONTRACTORS WERE ENTITLED TO PAYMENT EXCEPT ON A QUANTUM MERUIT BASIS. CF. 37 COMP. GEN. 330, 332. WITH RESPECT TO WHETHER PURCHASE ORDERS DATED ON THE LAST DAY OF THE CONTRACT TERM BUT RECEIVED AFTER EXPIRATION OF THE CONTRACT COULD BE REGARDED AS HAVING BEEN ISSUED PURSUANT TO THE CONTRACT, YOU STATE IN THE LETTER OF MAY 6, 1959:

"* * * IT HAS LONG BEEN AN ESTABLISHED PRACTICE IN ALL OUR TERM CONTRACTS, INCLUDING FEDERAL SUPPLY SCHEDULE CONTRACTS, THAT ORDERS ISSUED ON THE LAST DAY OF A CONTRACT PERIOD, REGARDLESS OF WHEN RECEIVED BY THE CONTRACTOR, ARE VALID OBLIGATIONS UPON BOTH THE CONTRACTOR AND THE GOVERNMENT. THIS PRACTICE IS SUPPORTED BY THE DOCTRINE STATED IN 35 COMPTROLLER GENERAL 272.'

THE "DOCTRINE" STATED AT 35 COMP. GEN. 272 STANDS FOR THE PROPOSITION THAT WHERE AN ACCEPTANCE OF AN OFFER BY MAIL IS AUTHORIZED THE ACCEPTANCE IS EFFECTIVE FROM THE TIME OF MAILING. WHETHER A PURCHASE ORDER UNDER AN EXISTING TERM REQUIREMENTS CONTRACT IS AN ACCEPTANCE OF AN OFFER DEPENDS UPON THE SPECIFIC PROVISIONS OF THE CONTRACT FIXING THE CONTRACTOR'S OBLIGATION AND THE TERMS OF THE PURCHASE ORDER.

THERE ARE HERE PRESENTED TWO ASPECTS OF THIS QUESTION. THE FIRST IS WHETHER PURCHASE ORDERS ISSUED PRIOR TO THE END OF THE CONTRACT PERIOD BUT RECEIVED BY THE CONTRACTOR AFTER THE CONTRACT TERMINATION DATE CONSTITUTE REQUIREMENTS FOR THE TERM. IN 21 COMP. GEN. 961 WE CONSIDERED CONTRACTS OF THIS GENERAL TYPE WHICH PROVIDED FOR DELIVERY FOUR DAYS AFTER RECEIPT OF AN ORDER. WE HELD THAT SUPPLIES ORDERED FOR DELIVERY AT A TIME LONGER THAN THE CONTRACT DELIVERY PERIOD BEYOND THE CONTRACT EXPIRATION DATE COULD NOT BE REGARDED AS COVERING REQUIREMENTS WITHIN THE CONTRACT PERIOD AND THEREFORE COULD NOT BE REGARDED AS COMING UNDER THE CONTRACT.

IN THE TERM CONTRACTS PRESENTLY UNDER CONSIDERATION, FINAL DELIVERY WAS REQUIRED WITHIN 45 DAYS AFTER RECEIPT OF AN ORDER. A REVIEW HAS DISCLOSED THAT IN A NUMBER OF INSTANCES PURCHASE ORDERS ISSUED AS OF THE LAST DAY OF THE CONTRACT PERIOD OR EARLIER SPECIFIED DELIVERY SUBSEQUENT TO THE END OF THE 45-DAY DELIVERY PERIOD BEYOND THE CONTRACT TERMINATION DATE. EXAMPLES OF THIS SITUATION ARE:

1. WASHINGTON ISSUED P.O.NO. WA-S-45461-1, DATED MARCH 31, 1958, IN THE AMOUNT OF $8,412 TO THE GENERAL FIREPROOFING CO., REQUESTING DELIVERY OF 75 CHAIRS AT DESTINATION ON JUNE 16, 1958, AND 100 CHAIRS AT DESTINATION ON JUNE 30. ON APRIL 25, 1958, THIS ORDER WAS AMENDED TO INCREASE THE QUANTITY OF THE FIRST CHAIR ITEM FROM 75 TO 425 AND REQUEST DELIVERY OF 350 ON MAY 15, 1958, AND 75 ON JUNE 16 AND TO INCREASE THE SECOND ITEM FROM 100 TO 475 AND REQUEST DELIVERY OF 375 ON MAY 15, 1958 AND 100 ON JUNE 30, 1958. SHIPMENT OF THE CHAIRS WAS AS FOLLOWS: 425 ON MAY 12, 300 ON MAY 14, AND 175 ON JUNE 26.

2. BOSTON ISSUED P.O.NO. BO-W-58-3098-9 DATED MARCH 28, 1958, IN THE AMOUNT OF $2,402.40 TO CRAMER POSTURE CHAIR CO., REQUESTING JUNE DELIVERY OF 130 CHAIRS. SHIPMENT WAS MADE JUNE 5, 1958.

3. ATLANTA ISSUED P.O.NO. AT-51054-1/CS1 DATED MARCH 31, 1958, IN THE AMOUNT OF $1,755.84 TO CRAMER POSTURE CHAIR CO., REQUESTING DELIVERY OF 96 CHAIRS ON JUNE 30, 1958. SHIPMENT WAS MADE JUNE 10, 1958.

4. SAN FRANCISCO ISSUED P.O.NO. SF8GH-2677-4 DATED MARCH 28, 1958, TO GENERAL FIREPROOFING O., FOR 425 DESKS REQUESTING DELIVERY AT THE RATE OF 85 EACH BY MAY 15, MAY 26, JUNE 5, JUNE 16, AND JUNE 26. UNDER REVISED DELIVERY INSTRUCTIONS 170 OF THESE UNITS WERE SHIPPED MAY 26, 1958, AND THE REMAINING 255 UNITS WERE RECEIVED BY THE SAN FRANCISCO REGION AS FOLLOWS: 85 ON JUNE 6, 85 ON JUNE 18, AND 85 ON JULY 8.

WHILE THE TOTAL NUMBER OR VALUE OF REGIONAL PURCHASE ORDERS WHICH SPECIFIED DELIVERY SUBSEQUENT TO THE 45-DAY PERIOD INCLUDED IN THE CONTRACTS WAS NOT DETERMINED, WE DID NOTE, FROM CONTRACTOR REPORTS ON FILE, THAT FURNITURE VALUED IN EXCESS OF $350,000 WAS SHIPPED BY VARIOUS CONTRACTORS AFTER MAY 15 AGAINST PURCHASE ORDERS WHICH WERE DATED OR ISSUED ON OR BEFORE MARCH 31, 1958. THIS AMOUNT EXCLUDES DELIVERIES UNDER THE PURCHASE ORDER AMENDMENTS DATED AFTER MARCH 31, 1958.

IN ACCORDANCE WITH THE FOREGOING WE CONCLUDE THAT PURCHASE ORDERS STIPULATING DELIVERY (OF WHATEVER TYPE CALLED FOR BY THE CONTRACT TERMS) AT A DATE FOLLOWING THE CONTRACT TERMINATION DATE BY MORE THAN THE DELIVERY PERIOD CALLED FOR UNDER THE TERMS OF THE CONTRACT MAY NOT BE REGARDED AS COVERING REQUIREMENTS FOR THE CONTRACT PERIOD. THEREFORE, SUCH PURCHASE ORDERS CANNOT BE REGARDED AS COMING UNDER THE CONTRACT AND ARE PROPERLY FOR PAYMENT ON A QUANTUM MERUIT BASIS ONLY.

THE SECOND ASPECT OF THE QUESTION IS WHETHER A PURCHASE ORDER RECEIVED BY THE CONTRACTOR AFTER THE CONTRACT TERMINATION DATE IS A VALID ORDER AGAINST THE CONTRACT REGARDLESS OF WHEN MAILED AND WITHOUT REFERENCE TO THE REQUIRED DELIVERY DATE. IN THE CONTRACT CONSIDERED AT 21 COMP. GEN. 961 THE CONTRACTOR WAS REQUIRED TO DELIVER ALL SUPPLIES CONTRACTED FOR "THAT MAY BE ORDERED DURING THE CONTRACT TERM.' IN THE CASES UNDER CONSIDERATION THE CONTRACTS PROVIDED THAT THE CONTRACTOR AGREES TO DELIVER ANY QUANTITY (WITHIN CERTAIN LIMITS NOT HERE UNDER CONSIDERATION) WHICH MAY BE COVERED "BY THE ISSUANCE AT ANY TIME DURING SAID QUARTERLY PERIOD OF PURCHASE ORDERS.' AS WE NOTED IN OUR EARLIER LETTER TO YOU ON THE MATTER, WHILE WE RECOGNIZE THAT THE MEANING OF LANGUAGE USED IN A CONTRACT SHOULD BE BASED ON THE INTENTION OF THE PARTIES, AMPLE LEGAL AUTHORITY EXISTS FOR CONSTRUING THE TERM "ISSUANCE" TO INCLUDE THE ACT OF DELIVERY.

IN THE PAST WE HAVE CONSIDERED SITUATIONS IN WHICH PURCHASE ORDERS, UNDER CONTRACTS USING THE SAME LANGUAGE AS THAT CONSIDERED IN 21 COMP. GEN. 961, WERE MAILED PRIOR TO THE CONTRACT TERMINATION DATE BUT WERE RECEIVED BY THE CONTRACTORS SUBSEQUENT TO THAT DATE. WHERE PRICES STIPULATED IN SUCH PURCHASE ORDERS WERE LOWER THAN THOSE CALLED FOR BY CONTRACTS COVERING THE SUBSEQUENT PERIOD, THE CONTRACTORS SUBMITTED CLAIMS TO OUR OFFICE FOR THE DIFFERENCE BETWEEN THE OLD CONTRACT PRICE AND THE NEW CONTRACT PRICE. EACH INSTANCE THOSE CLAIMS WERE ALLOWED ON THE BASIS THAT THE TIME AT WHICH THE ORDER WAS RECEIVED WAS SIGNIFICANT IN DETERMINING WHETHER IT WAS PLACED WITHIN THE CONTRACT PERIOD. WE BELIEVE THAT THE SAME RULE SHOULD BE APPLICABLE IN FAVOR OF THE GOVERNMENT WHEN THE NEW CONTRACT PRICE IS LOWER.

IT DOES NOT APPEAR THAT THE MERE DIFFERENCES IN LANGUAGE NOTED ABOVE SHOULD SIGNIFICANTLY AFFECT OUR CONSIDERATION OF THE MATTER, UNLESS THERE IS AVAILABLE ADDITIONAL EVIDENCE AS TO THE INTENT OF THE PARTIES WITH RESPECT TO THE MEANING OF THE LANGUAGE USED. CERTAINLY IT WOULD BE INAPPROPRIATE TO APPLY TO THIS TYPE OF SITUATION TWO CONTRADICTORY RULES, CONSISTENT ONLY TO THE EXTENT THAT THE UNITED STATES IS REQUIRED TO PAY THE HIGHER OF THE ALTERNATIVE PRICES. THEREFORE, UNLESS AFFIRMATIVE EVIDENCE IS PROVIDED ESTABLISHING AN INTENTION OF THE PARTIES UNDER THE CONTRACTS IN QUESTION TO CONSIDER ANY PURCHASE ORDERS AS UNDER THE CONTRACT WHICH WERE MAILED PRIOR TO THE CONTRACT TERMINATION DATE, WE ARE INCLINED TO REGARD ANY PURCHASE OF THE CONTRACT PERIOD AS NOT HAVING BEEN ISSUED PURSUANT TO THE CONTRACT. IN SUCH CASE, OF COURSE, PAYMENT ON A QUANTUM MERUIT BASIS ONLY WOULD BE AUTHORIZED.

WE SHOULD APPRECIATE YOUR FURTHER CONSIDERATION OF THESE MATTERS, AND AN EXPRESSION OF YOUR VIEWS AS TO THE PROPRIETY AND NATURE OF ACTION WHICH MIGHT BE UNDERTAKEN TO ATTEMPT TO SECURE REFUNDS OF SOME REASONABLE PART OF THE AMOUNTS PAID UNDER THE ORDERS HERE UNDER CONSIDERATION.