B-139405, MAY 6, 1959

B-139405, MAY 6, 1959

PRECIS-UNAVAILABLE

WINDSOR LOCKE PAPER CORPORATION:

REFERENCE IS MADE TO A LETTER DATED APRIL 14, 1959, FROM YOUR ATTORNEYS, CUTLER & CUTLER, ESQUIRES, REQUESTING RECONSIDERATION OF THE ACTION TAKEN BY OUR CLAIMS DIVISION ON SETTLEMENT VOUCHER DATED MARCH 3, 1958, WHEREBY YOUR CLAIM IN THE AMOUNT OF $3,860.94 WAS ALLOWED IN THE AMOUNT OF $2,095.52 AND DISALLOWED AS TO THE BALANCE AMOUNTING TO $1,765.42.

IN THE LETTER OF APRIL 14, 1959, YOUR ATTORNEYS INSISTED THAT THERE IS NO VALID JUSTIFICATION FOR THE DISALLOWANCE IN THIS CASE, REFERENCE BEING MADE TO SUPPLEMENTAL AGREEMENT (MODIFICATION NO. 1) DATED OCTOBER 18, 1955, UNDER WHICH IT WAS AGREED THAT THERE SHOULD BE REFUNDED TO THE CONTRACTOR THE SUM OF $3,860.94 REPRESENTING DISCOUNTS TAKEN - BUT NOT EARNED - ON PARTIAL SHIPMENTS NOS. 1 TO 5, INCLUSIVE, AND NOS. 110 TO 125, INCLUSIVE, AND THAT AS CONSIDERATION THEREFOR THE CONTRACTOR WAIVED AND RELEASED ANY CLAIM IT MIGHT HAVE AGAINST THE GOVERNMENT ARISING FROM THE DEDUCTION OF DISCOUNTS ON ALL OTHER PARTIAL SHIPMENTS INVOLVED UNDER THE CONTRACT. YOUR ATTORNEYS TAKE THE POSITION THAT THIS AGREEMENT CLEARLY EVIDENCES A RELEASE BY THE CONTRACTOR OF ALL CLAIMS RELATING TO DISCOUNT ON ALL SHIPMENTS INVOLVED UNDER THE CONTRACT, AND A RECIPROCAL COMMITMENT ON THE PART OF THE GOVERNMENT TO PAY TO YOU THE SUM OF $3,860.94.

THE CONTRACT IN THIS CASE PROVIDED FOR A TEN PERCENT DISCOUNT FOR PAYMENT WITHIN TEN DAYS, THE ADDITIONAL GENERAL PROVISION RESPECTING DISCOUNT BEING AS FOLLOWS:

"21.OFFERS OF DISCOUNT. WHERE PROCUREMENT IS MADE FOB ORIGIN, DISCOUNT TIME UNDER 10 DAYS WILL NOT BE CONSIDERED IN DETERMINING LOW BIDS. WHEN PROCUREMENT IS MADE FOB DESTINATION, DISCOUNT TIME UNDER 20 DAYS WILL NOT BE CONSIDERED IN DETERMINING LOW BIDS. *** TIME WILL BE COMPUTED TO DATE PAYMENTS ARE MAILED TO CONTRACTOR FROM DATE OF DELIVERY OF SUPPLIES TO CARRIER WHEN DELIVERY AND ACCEPTANCE ARE AT POINT OF ORIGIN, OR FROM DATE OF DELIVERY AT DESTINATION OR PORT OF EMBARKATION WHEN DELIVERY AND ACCEPTANCE ARE AT EITHER OF THESE POINTS, OR FROM DATE CORRECT INVOICE OR VOUCHER (PROPERLY CERTIFIED BY THE CONTRACTOR) IS RECEIVED IN THE OFFICE SPECIFIED BY THE GOVERNMENT IF THE LATTER DATE IS LATER THAN THE DATE OF DELIVERY, OR FROM THE DATE OF ACCEPTANCE OF SUPPLIES WHERE SAME HAVE BEEN SHIPPED AT CONTRACTOR'S OWN RISK AND ARE ACCEPTED SUBSEQUENT TO DELIVERY."

THE RECORD INDICATES THAT SUBSEQUENT TO THE EXECUTION OF THE SUPPLEMENTAL AGREEMENT IN THIS CASE, THE CONTRACTING OFFICER WAS APPRISED OF THE FACT THAT THE CONTRACTOR HAD DELAYED FURNISHING DOCUMENTS NECESSARY TO PLACE PARTIAL SHIPMENTS 1 THROUGH 5 IN LINE FOR PAYMENT, AND THAT PAYMENT HAD BEEN MADE ON THESE SHIPMENTS WITHIN THE DISCOUNT PERIOD AS COMPUTED FROM THE DATE OF RECEIPT OF THE NECESSARY DOCUMENTS, IN ACCORDANCE WITH ADDITIONAL GENERAL PROVISION 21, QUOTED ABOVE. IT THUS FOLLOWS THAT THE FINDING OF THE CONTRACTING OFFICER, AS SET FORTH IN THE SUPPLEMENTAL AGREEMENT, THAT AN UNREASONABLE LENGTH OF TIME ELAPSED BETWEEN SHIPMENT AND FORMAL ACCEPTANCE OF PARTIAL SHIPMENTS 1 THROUGH 5 WAS IN ERROR.

THE QUESTION HERE FOR CONSIDERATION APPEARS TO BE WHETHER THE SUPPLEMENTAL AGREEMENT, WHEREIN THE GOVERNMENT ERRONEOUSLY AGREED TO REFUND THE SUM OF $1,765.42, REPRESENTING THE DISCOUNT APPLICABLE TO PARTIAL SHIPMENTS 1 THROUGH 5, CONSTITUTES A CONTRACT BINDING ON THE UNITED STATES. SINCE PAYMENT FOR THESE PARTIAL SHIPMENTS WAS REPORTEDLY MADE WITHIN THE DISCOUNT PERIOD, AS COMPUTED FROM THE DATE OF RECEIPT OF CORRECT INVOICE OR VOUCHER, IN ACCORDANCE WITH ADDITIONAL GENERAL PROVISION NO. 21, IT IS OUR VIEW THAT THE RIGHT OF THE GOVERNMENT TO DISCOUNTS ON THESE SHIPMENTS VESTED IMMEDIATELY UPON PAYMENT AND HAVING BECOME VESTED, NO OFFICER OR EMPLOYEE OF THE GOVERNMENT HAD AUTHORITY TO MODIFY THE CONTRACT TERMS EXCEPT IN THE INTEREST OF THE GOVERNMENT. CHRISTIE V. UNITED STATES, 237 U. S. 234; SHIPMAN V. DISTRICT OF COLUMBIA, 18 C. CLS. 291, AND BAUSCH & LORA OPTICAL COMPANY V. UNITED STATES, 78 C. CLS. 584, 607. IT MAY BE POINTED OUT THAT THE SUPPLEMENTAL AGREEMENT WAS ENTERED INTO BY THE CONTRACTING OFFICER UNDER A MISAPPREHENSION AS TO THE TRUE FACTS. ALSO, IT HAS BEEN REPEATEDLY HELD THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN THE GOVERNMENT UNDER A CONTRACT. SEE BRAWLEY V. UNITED STATES, 96 U. S. 168; SIMPSON V. UNITED STATES, 172 U. S. 372, AND UNITED STATES V. AMERICAN SALES CORPORATION, 27 F. 2D 389.

WHILE AS BETWEEN PRIVATE PARTIES SUCH AN AGREEMENT AS THAT RECITED IN THE SUPPLEMENTAL AGREEMENT MIGHT BE BINDING AS A COMPROMISE SETTLEMENT, AN ADMINISTRATIVE CONTRACTING OFFICER OF THE UNITED STATES HAS NO AUTHORITY TO COMPROMISE CLAIMS BY OR AGAINST THE GOVERNMENT. IN OUR VIEW, THE AGREEMENT IS INEFFECTIVE TO BIND EITHER PARTY, AND NEITHER IT NOR OUR SETTLEMENT IS PREJUDICIAL TO YOUR RIGHT TO PURSUE ANY JUDICIAL REMEDY WHICH MAY BE AVAILABLE FOR RECOVERY OF ANY ADDITIONAL AMOUNTS TO WHICH YOU MAY BELIEVE YOU ARE ENTITLED.

UNDER THE FACTS AND CIRCUMSTANCES APPEARING FROM THE RECORD BEFORE US IN THIS CASE, THE ACTION TAKEN BY OUR CLAIMS DIVISION APPEARS TO HAVE BEEN CORRECT AND THE SAME IS SUSTAINED.