B-141090, DEC. 29, 1959

B-141090, DEC. 29, 1959

TO SERVIONICS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 15, 1959, REQUESTING REVIEW OF GENERAL ACCOUNTING OFFICE SETTLEMENT DATED OCTOBER 2, 1959, WHICH DISALLOWED YOUR CLAIM IN THE AMOUNT OF $3,836 AS ADDITIONAL PAYMENT FOR FURNISHING CERTAIN MATERIALS AND PERFORMING CERTAIN SERVICES NOT SPECIFIED IN NEGOTIATED CONTRACT NO. AF 40/604/-8233 DATED FEBRUARY 3, 1958. THERE HAS BEEN RECEIVED, ALSO, YOUR LETTER OF DECEMBER 9, 1959.

BY THE TERMS OF THE CONTRACT NEGOTIATED WITH HEADQUARTERS, MEMPHIS AIR FORCE DEPOT, MALLERY AIR FORCE STATION, MEMPHIS, TENNESSEE, YOU AGREED TO FURNISH CERTAIN NON-PERSONAL PLANT LAYOUT SERVICES AND MATERIALS PURSUANT TO DELIVERY ORDERS TO BE ISSUED UNDER THE CONTRACT DURING A PERIOD OF ONE YEAR COMMENCING WITH THE DATE OF AWARD, THE ESTIMATED AGGREGATE AMOUNT OF SUCH ORDERS BEING $64,740. THE CONTRACT PROVIDED FOR FURNISHING GRID SHEETS OF ACETATE AND TEMPLATE WITHOUT ADHESIVE BACKING. IT APPEARS THAT YOU FURNISHED TO OLMSTED AIR FORCE BASE, PENNSYLVANIA, GRID SHEETS OF NYLAR AND TEMPLATES WITH ADHESIVE BACKING UNDER CALL NO. 36/600/-58-10575 ISSUED UNDER THE CONTRACT. YOUR CLAIM COVERS THE DIFFERENCE IN PRICE BETWEEN THE MATERIALS FURNISHED AND THOSE SPECIFIED IN THE CONTRACT. YOU CONTEND THAT THE SUBSTITUTION OF MATERIALS WAS MADE WITH THE CONSENT OF GOVERNMENT PERSONNEL AT OLMSTED AIR FORCE BASE WHO ADVISED YOU "THAT EVERY EFFORT WOULD BE MADE BY THEM TO OBTAIN AN AMENDMENT OF THE CONTRACT SO THAT CONTRACTOR COULD BE COMPENSATED THEREFOR.' YOU REFER TO THE SUBSTITUTED MATERIALS AND SERVICES AS THOSE "WHICH OLMSTED AIR FORCE BASE PROJECT MONITORING PERSONNEL REQUESTED, PROMISED TO PAY FOR, RECEIVED AND USED.'

PARAGRAPH 5 OF PART I OF THE SCHEDULE INCLUDED IN THE CONTRACT IS AS FOLLOWS:

"THE CONTRACTOR WILL NOT PERFORM ADDITIONAL SERVICES NOT CONTEMPLATED BY THIS CONTRACT UNTIL AUTHORIZED TO DO SO BY THE CONTRACTING OFFICER IN THE FORM OF A SUPPLEMENTAL AGREEMENT TO THIS CONTRACT.'

SEE, ALSO, PARAGRAPH 2 OF THE GENERAL PROVISIONS PROVIDING IN PART AS FOLLOWS:

THE CONTRACTING OFFICER MAY AT ANY TIME, BY A WRITTEN ORDER, AND WITHOUT NOTICE TO THE SURETIES, MAKE CHANGES, WITHIN THE GENERAL SCOPE OF THIS CONTRACT, IN ANY ONE OR MORE OF THE FOLLOWING: (I) DRAWINGS, DESIGNS, OR SPECIFICATIONS, WHERE THE SUPPLIES TO BE FURNISHED ARE TO BE SPECIALLY MANUFACTURED FOR THE GOVERNMENT IN ACCORDANCE THEREWITH; (II) METHOD OF SHIPMENT OR PACKING; AND (III) PLACE OF DELIVERY. IF ANY SUCH CHANGE CAUSES AN INCREASE OR DECREASE IN THE COST OF, OR THE TIME REQUIRED FOR, PERFORMANCE OF THIS CONTRACT, AN EQUITABLE ADJUSTMENT SHALL BE MADE IN THE CONTRACT PRICE OR DELIVERY SCHEDULE, OR BOTH, AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY.'

IN HIS LETTER TO YOU DATED JANUARY 13, 1959, THE CONTRACTING OFFICER STATES, IN SUBSTANCE, THAT ALTHOUGH YOU HAD DISCUSSED WITH PERSONNEL OF OLMSTED AIR FORCE BASE THE ADVANTAGES OF MAKING THE REFERRED-TO SUBSTITUTIONS NO SUCH DISCUSSION WAS HAD WITH ANY PERSONNEL CONNECTED WITH OR AUTHORIZED BY THE CONTRACTING OFFICE. IT WAS STATED FURTHER THAT ON JULY 3, 1958, AMENDMENT OF THE CONTRACT WAS REQUESTED OF THE CONTRACTING OFFICE AND THAT THE REQUEST WAS FORWARDED TO AIR MATERIAL COMMAND AND A NEGATIVE REPLY RECEIVED. THE CONTRACTING OFFICER STATED ALSO THAT IT WAS NOT UNTIL JULY 25, 1958, WHEN MR. WEISS, THE CONTRACT ADMINISTRATOR, VISITED THE WORK SITE, THAT THE CONTRACTING OFFICE BECAME AWARE THAT YOU WERE DELIVERING THE SUBSTITUTED MATERIALS; AND THAT MR. WEISS THEN ADVISED YOU THAT SUCH DELIVERIES WERE UNAUTHORIZED AND THAT ADDITIONAL PAYMENT WOULD NOT BE MADE BUT THAT YOU CONTINUED TO DELIVER THE SUBSTITUTED MATERIALS. THE FILE INCLUDES A MEMORANDUM BY MR. WEISS STATING THAT HE HAD STRONGLY ADVISED YOU TO DISCONTINUE FURNISHING THE HIGHER QUALITY MATERIAL SO LONG AS THE CONTRACT REMAINED UNMODIFIED. IN A STATEMENT DATED JUNE 25, 1959, THE CHIEF, MANAGEMENT SECTION, OLMSTED AIR FORCE BASE, STATES THAT ON OR ABOUT MAY 18, 1958, YOUR REPRESENTATIVE VISITED THE BASE AND SUGGESTED THE DESIRABILITY OF MAKING THE REFERRED-TO SUBSTITUTIONS OF MATERIALS; AND THAT HE WAS ADVISED THAT ALTHOUGH THE BASE PERSONNEL WOULD PREFER THE PROPOSED SUBSTITUTIONS, AMENDMENT OF THE CONTRACT COULD BE ACCOMPLISHED ONLY BY HIGHER AUTHORITY. HE STATES ALSO THAT AT NO TIME WERE YOU ADVISED TO DELIVER THE SUBSTITUTED MATERIAL PRIOR TO AMENDMENT OF THE CONTRACT.

NO REPRESENTATIVE OF THE GOVERNMENT OTHER THAN THE CONTRACTING OFFICER WAS AUTHORIZED TO ENLARGE, VARY, OR ALTER ANY OF THE REQUIREMENTS OR CONDITIONS OF THE CONTRACT, ESPECIALLY SO AS TO OBLIGATE THE GOVERNMENT FOR ADDITIONAL COSTS, AS THAT WRITTEN AGREEMENT PROVIDES SPECIFICALLY THAT NO DEPARTURE OR CHANGES COULD BE MADE WITHOUT THE WRITTEN CONSENT OF THE CONTRACTING OFFICER AND AMENDMENT OF THE CONTRACT ACCORDINGLY.

INDIVIDUALS DEALING WITH OFFICERS OF THE GOVERNMENT ACT AT THEIR OWN PERIL AND MUST SEE THAT THE PERSON ACTING IN AN OFFICIAL CAPACITY HAS AUTHORITY TO BIND THE GOVERNMENT. THE FLOYD ACCEPTANCES, 74 U.S. 666, 676; WHITESIDE V. UNITED STATES, 93 U.S. 247, 257; HAWKINS V. UNITED STATES, 96 U.S. 689, 691; UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, 392, AFFIRMED 32 F.2D 141, CERTIORARI DENIED, 280 U.S. 574; J. AND J. W. STOLTS ASSOCIATIONS V. UNITED STATES, 66 C.CLS. 1, 7-8. AN OFFICER'S "UNAUTHORIZED ACTS CANNOT ESTOP THE GOVERNMENT FROM INSISTING UPON THEIR INVALIDITY, HOWEVER BENEFICIAL THEY MAY HAVE PROVED TO THE UNITED STATES.' FILOR V. UNITED STATES, 76 U.S. 45, 49. SEE ALSO YUHMAX V. UNITED STATES, 109 F.2D 467, 460. AND THIS IS SO EVEN THOUGH THE CONDUCT OF THE SUBORDINATE OFFICER MAY HAVE BEEN SO GROSSLY ERRONEOUS OR SO FLAGRANTLY UNREASONABLE AS TO IMPLY BAD FAITH. UNITED STATES V. BLAIR, 321 U.S. 730.

IN HAWKINS V. UNITED STATES, 96 U.S. 689, THE CONTRACTOR ALLEGED AND PROVED THAT HE WAS REQUIRED BY AN ASSISTANT SUPERINTENDENT TO FURNISH BETTER STONE FOR A WALL THAN THAT SPECIFIED IN THE CONTRACT. THE COURT STATED THAT THE CLAIMANT READILY SUBMITTED TO THE DIRECTIONS GIVEN BY THE UNAUTHORIZED AGENT, WITHOUT GIVING ANY NOTICE AT THE TIME THAT HE WOULD CLAIM ANY GREATER COMPENSATION, AND THE COURT CONCLUDED:

"EXPRESS STIPULATIONS CANNOT IN GENERAL BE SET ASIDE OR VARIED BY IMPLIED PROMISES; OR, IN OTHER WORDS, A PROMISE IS NOT IMPLIED WHERE THERE IS AN EXPRESS WRITTEN CONTRACT, UNLESS THE EXPRESS CONTRACT HAS BEEN RESCINDED OR ABANDONED, OR HAS BEEN VARIED BY THE CONSENT OF THE PARTIES. HENCE, THE RULE IS, THAT, IF THERE BE AN EXPRESS WRITTEN CONTRACT BETWEEN THE PARTIES, THE PLAINTIFF IN AN ACTION TO RECOVER FOR WORK AND LABOR DONE, OR FOR MONEY PAID, MUST DECLARE UPON THE WRITTEN AGREEMENT SO LONG AS THE SPECIAL AGREEMENT REMAINS IN FORCE AND UNRESCINDED, AS HE CANNOT RECOVER UNDER SUCH CIRCUMSTANCES UPON A QUANTUM MERUIT. * * *"

"IMPLIED PROMISES OR PROMISES IN LAW EXIST ONLY WHEN THERE IS NO EXPRESS PROMISE BETWEEN THE PARTIES,--- (WORD ILLEGIBLE) FACIT (WORD ILLEGIBLE) (WORD ILLEGIBLE). * * *" ID. AT 697-698.

THE LAW IS CLEAR THAT IN CONTRACTS CONTAINING PROVISIONS SIMILAR IN CHARACTER TO THOSE CONTAINED IN THE SUBJECT CONTRACT THE GOVERNMENT IS NOT LIABLE EITHER ON QUANTUM MERUIT OR UPON THE CONTRACT FOR THE EXTRA WORK WHICH WAS NOT ORDERED BY THE PROPER OFFICIAL NOR IN THE APPROVED MANNER PROVIDED BY THE CONTRACT. PLUMLEY V. UNITED STATES, 226 U.S. 545, 547; UNITED STATES V. BLAIR, 321 U.S. 730, 734-736; YUHASZ V. UNITED STATES, 109 F.2D 467, 468; BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 C.CLS. 584; LOUISE HARDWICK, ADMINISTRATRIX V. UNITED STATES, 95 C.CLS. 336, 343; STANDARD ACCIDENT INSURANCE CO. V. UNITED STATES, 102 C.CLS. 770, 787, CERTIORARI DENIED, 325 U.S. 870.

FAILURE TO COMPLY WITH THE "CHANGES CLAUSE" IS SUFFICIENT WITHOUT ANYTHING ELSE TO PREVENT RECOVERY. LOUISE HARDWICK, ADMINISTRATRIX V. UNITED STATES, 95 C.CLS. 336, 343. THE GOVERNMENT CANNOT BE DEPRIVED OF THE BENEFITS OF THE ADMINISTRATIVE MACHINERY IT HAS PROVIDED TO MODIFY CONTRACTS, TO ADJUDICATE DISPUTES AND TO AVOID LARGE DAMAGE CLAIMS. UNITED STATES V. BLAIR, SUPRA.; UNITED STATES V. HOLPUCH CO., 328 U.S. 234, 239-240; YUHASZ V. UNITED STATES, 109 F.2D 467, 468; J. AND J. W. STOLTS ASSOCIATION V. UNITED STATES, 66 C.CLS. 1, 8-9.

FOR THE REASONS ABOVE SET FORTH, THE SETTLEMENT OF OCTOBER 2, 1959, DISALLOWING YOUR CLAIM, APPEARS CORRECT AND HEREBY IS SUSTAINED.