B-15585, APRIL 17, 1941, 20 COMP. GEN. 659

B-15585: Apr 17, 1941

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PROVIDING FOR CHARGING TO THE GOVERNMENT ANY TAX OR OTHER CHARGE ON THE CONTRACT MATERIAL IMPOSED BY THE CONGRESS AFTER BIDS ARE OPENED. A CLAIM FOR SUCH REIMBURSEMENT DOES NOT HAVE SUCH ELEMENTS OF EQUITY AS TO WARRANT ITS BEING REPORTED TO THE CONGRESS FOR CONSIDERATION UNDER THE ACT OF APRIL 10. A CONTRACTOR MAY NOT BE REIMBURSED THE AMOUNT OF WAR RISK INSURANCE IT WAS REQUIRED TO PAY ON THE CONTRACT MATERIAL AS A RESULT OF WAR CONDITIONS ARISING AFTER ITS BID WAS SUBMITTED. A CLAIM FOR SUCH REIMBURSEMENT DOES NOT HAVE SUCH ELEMENTS OF EQUITY AS TO WARRANT ITS BEING REPORTED TO THE CONGRESS FOR CONSIDERATION UNDER THE ACT OF APRIL 10. THE TABLECLOTHS AND NAPKINS WERE TO BE MANUFACTURED AT BELFAST.

B-15585, APRIL 17, 1941, 20 COMP. GEN. 659

CONTRACTS - INCREASED COSTS - CUSTOMS DUTIES AND WAR RISK INSURANCE PARAGRAPH 5 OF "CONDITIONS," U.S. STANDARD FORM NO. 33 ( REVISED), PROVIDING FOR CHARGING TO THE GOVERNMENT ANY TAX OR OTHER CHARGE ON THE CONTRACT MATERIAL IMPOSED BY THE CONGRESS AFTER BIDS ARE OPENED, AFFORDS NO BASIS FOR REIMBURSEMENT TO A CONTRACTOR OF INCREASED CUSTOMS DUTIES RESULTING FROM A CHANGE IN MARKET VALUE OF THE CONTRACT MATERIAL DUE TO WAR CONDITIONS RATHER THAN FROM A CHANGE IN EXISTING LAW BY THE CONGRESS, AND A CLAIM FOR SUCH REIMBURSEMENT DOES NOT HAVE SUCH ELEMENTS OF EQUITY AS TO WARRANT ITS BEING REPORTED TO THE CONGRESS FOR CONSIDERATION UNDER THE ACT OF APRIL 10, 1928. IN THE ABSENCE OF A CONTRACT PROVISION THEREFOR, A CONTRACTOR MAY NOT BE REIMBURSED THE AMOUNT OF WAR RISK INSURANCE IT WAS REQUIRED TO PAY ON THE CONTRACT MATERIAL AS A RESULT OF WAR CONDITIONS ARISING AFTER ITS BID WAS SUBMITTED, AND A CLAIM FOR SUCH REIMBURSEMENT DOES NOT HAVE SUCH ELEMENTS OF EQUITY AS TO WARRANT ITS BEING REPORTED TO THE CONGRESS FOR CONSIDERATION UNDER THE ACT OF APRIL 10, 1928.

COMPTROLLER GENERAL WARREN TO JAMES G. HARDY AND CO., INC., APRIL 17, 1941:

YOUR LETTER OF MARCH 13, 1941, REQUESTS REVIEW OF SETTLEMENT DATED FEBRUARY 15, 1941, WHICH DISALLOWED YOUR CLAIM FOR $2,578.47, REPRESENTING EXCESS DUTIES AND WAR-RISK INSURANCE COSTS INCURRED BY YOU ON MERCHANDISE FURNISHED TO THE UNITED STATES MARITIME COMMISSION UNDER CONTRACT NO. MCC- 386, DATED AUGUST 22, 1939.

UNDER THE TERMS OF THE CONTRACT YOU AGREED TO FURNISH VARIOUS ITEMS OF LINEN TABLECLOTHS AND NAPKINS AT CERTAIN STIPULATED UNIT PRICES, DELIVERY TO BE MADE F.O.B. NEWPORT NEWS SHIPBUILDING AND DRY DOCKS CO., NEWPORT NEWS., VA. THE TABLECLOTHS AND NAPKINS WERE TO BE MANUFACTURED AT BELFAST, IRELAND, AND COURT RIGHT, BELGIUM, AND PURCHASE ORDER NO. AM MC-40-3, DATED AUGUST 23, 1939, ISSUED UNDER THE CONTRACT, DIRECTED THAT THE MERCHANDISE BE SHIPPED TO THE UNITED STATES LINES, UNITED STATES LINES PIER 60, NEW YORK, N.Y., SINCE SAID CHANGE IN DESTINATION POINT INVOLVED NO ADDITIONAL TRANSPORTATION CHARGES.

YOUR CLAIM IS BASED ON THE FACT THAT UPON RECEIPT OF THE MERCHANDISE IN THIS COUNTRY THE UNITED STATES CUSTOMS APPRAISERS PLACED A VALUATION ON THE MATERIAL FOR THE PURPOSE OF ASSESSING CUSTOMS DUTIES, WHICH VALUATION REPRESENTED A 32 PERCENT INCREASE OVER THE INVOICE PRICES. IT IS STATED THAT SAID INCREASE RESULTED FROM WAR CONDITIONS WHICH INTERVENED DURING THE PERIOD THAT ELAPSED FROM THE TIME THE CONTRACT WAS EXECUTED UNTIL THE DATES THE MERCHANDISE WAS SHIPPED. ALSO, YOU STATE THAT YOU WERE REQUIRED TO PAY WAR-RISK INSURANCE ON THE SHIPMENTS OF THE MATERIAL, WHICH EXPENSE WAS NOT CONTEMPLATED AT THE TIME YOUR BID WAS SUBMITTED. ACCORDINGLY, YOU URGE THAT THE GOVERNMENT SHOULD REIMBURSE YOU FOR THE ADDITIONAL COSTS THUS INCURRED.

THE CLAIM WAS DISALLOWED IN SETTLEMENT OF FEBRUARY 15, 1941, FOR THE REASON THAT SINCE YOU HAD BEEN PAID THE STIPULATED CONTRACT PRICES FOR THE MERCHANDISE, AND AS THE CONTRACT TERMS DID NOT PROVIDE FOR THE PAYMENT OF THE ADDITIONAL ITEMS OF EXPENSES CLAIMED BY YOU, THERE WAS NO LEGAL BASIS ON WHICH THE GOVERNMENT WAS REQUIRED TO REIMBURSE YOU FOR SAID EXPENSES. THERE WERE CITED IN THE SETTLEMENT THE CASES OF BRAWLEY V. UNITED STATES, 96 U.S. 168, AND SIMPSON V. UNITED STATES, 172 U.S. 372.

IT NOW IS CONTENDED IN YOUR LETTER OF MARCH 13, 1941, THAT THE CASES CITED IN THE SETTLEMENT OF FEBRUARY 15, 1941, ARE NOT APPLICABLE TO YOUR CLAIM, SINCE UNDER THE PROVISIONS OF PARAGRAPH 5 OF ,CONDITIONS," U.S. STANDARD FORM NO. 33 ( REVISED), THE GOVERNMENT EXPRESSLY, OR AT LEAST IMPLIEDLY, ENDEAVORED TO PROTECT CONTRACTORS FROM THE INJUSTICE OF HAVING ADDITIONAL COSTS IMPOSED IN THE FORM OF TAXES OF DUTIES AFTER BIDS WERE OPENED. IT IS URGED, THEREFORE, THAT UNDER THE PROVISIONS OF SAID PARAGRAPH 5 YOU ARE ENTITLED TO BE REIMBURSED FOR THE EXCESS DUTIES PAID ON THE MERCHANDISE. ALSO, YOU STATE THAT WHILE THERE MAY BE NO BASIS IN LAW FOR REIMBURSEMENT TO YOU OF THE WAR RISK INSURANCE COSTS, YOU BELIEVE THAT YOUR CLAIM THEREFOR HAS AN EQUITABLE BASIS. CONSEQUENTLY, YOU REQUEST THAT IF AUTHORITY IS NOT FOUND UNDER EXISTING LAW FOR THE PAYMENT OF YOUR CLAIM, THAT RELIEF BE GRANTED UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413.

PARAGRAPH 5 OF "CONDITIONS" PROVIDES AS FOLLOWS:

PRICES BID HEREIN INCLUDE ANY FEDERAL TAX HERETOFORE IMPOSED BY THE CONGRESS WHICH IS APPLICABLE TO THE MATERIAL ON THIS BID. IF ANY SALES TAX, PROCESSING TAX, ADJUSTMENT CHARGE, OR OTHER TAXES OR CHARGES ARE IMPOSED OR CHANGED BY THE CONGRESS AFTER THE DATE SET FOR THE OPENING OF THIS BID, AND MADE APPLICABLE DIRECTLY UPON THE PRODUCTION, MANUFACTURE, OR SALE OF THE SUPPLIES COVERED BY THIS BID, AND ARE PAID BY THE CONTRACTOR ON THE ARTICLES OR SUPPLIES HEREIN CONTRACTED FOR, THEN THE PRICES NAMED IN THIS BID WILL BE INCREASED OR DECREASED ACCORDINGLY, AND ANY AMOUNT DUE THE CONTRACTOR AS A RESULT OF SUCH CHANGE WILL BE CHARGED TO THE GOVERNMENT AND ENTERED ON VOUCHERS (OR INVOICES) AS SEPARATE ITEMS.

IT IS CLEAR THEREFROM THAT SAID PARAGRAPH CONTEMPLATED THAT A CHANGE WOULD BE MADE IN THE CONTRACT PRICES ONLY IF SOME CHANGE WAS MADE BY THE CONGRESS IN AN APPLICABLE TAX OR OTHER CHARGE AFTER THE DATE OF THE OPENING OF THE BIDS. THE INCREASED DUTIES FOR WHICH REIMBURSEMENT IS CLAIMED WERE NOT CHARGED TO YOU PURSUANT TO A CHANGE IN EXISTING LAW BY THE CONGRESS BUT MERELY RESULTED FROM A CHANGE IN THE MARKET VALUE OF THE MATERIAL COVERED BY THE CONTRACT AS THE RESULT OF EXTRANEOUS CONDITIONS. THEREFORE, SAID PARAGRAPH OF THE CONTRACT AFFORDS NO LEGAL BASIS FOR REIMBURSEMENT TO YOU OF THE AMOUNT PAID AS DUTY CHARGES IN EXCESS OF THOSE CONTEMPLATED AT THE TIME YOUR BID WAS SUBMITTED.

FURTHERMORE, THERE IS NO LEGAL BASIS APART FROM THE CONTRACT PROVISIONS ON WHICH THE GOVERNMENT IS OBLIGATED TO REIMBURSE YOU EITHER FOR THE EXCESS DUTIES PAID OR FOR THE WAR RISK INSURANCE. IT HAS BEEN HELD MANY TIMES BY COURTS THAT " WHERE ONE AGREES TO DO, FOR A FIXED SUM, A THING POSSIBLE TO BE PERFORMED, HE WILL NOT BE EXCUSED OR BECOME ENTITLED TO ADDITIONAL COMPENSATION, BECAUSE UNFORESEEN DIFFICULTIES ARE ENCOUNTERED.' UNITED STATES V. SPEARIN, 248 U.S. 132, 136; COLUMBUS RAILWAY AND POWER COMPANY V. COLUMBUS, 249 U.S. 399, 412; DAY V. UNITED STATES, 245 U.S. 159, 161. " AN ABNORMAL RISE IN THE PRICE OF GOODS, OR IN TRANSPORTATION CHARGES DUE TO THE EXISTENCE OF WAR, OR UNUSUAL TRADE CONDITIONS, SUCH THAT DEFENDANT COULD NOT PERFORM ITS CONTRACT WITHOUT GREATER EXPENSE THAN ANTICIPATED, IS NOT SUCH AN IMPOSSIBILITY AS WILL EXCUSE PERFORMANCE.' FARMERS' FERTILIZER COMPANY V. LILLIE ( C.C.A. 6TH) 18 F./2D) 197, 199.

MOREOVER, I DO NOT FIND THAT YOUR CLAIM HAS SUCH ELEMENTS OF EQUITY AS TO WARRANT ITS BEING REPORTED TO THE CONGRESS FOR CONSIDERATION UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413.