B-159337, JUL. 7, 1966

B-159337: Jul 7, 1966

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ARCHITECT OF THE CAPITOL: REFERENCE IS MADE TO YOUR LETTER DATED JUNE 1. FOR WHICH SERVICES ARE FURNISHED.'. IT IS REPORTED THAT CONSULTANT SERVICES WERE RENDERED UNDER THE SUBJECT CONTRACT IN CONNECTION WITH 30 SEPARATE PROCUREMENT CONTRACTS. DRAWINGS AND SPECIFICATIONS FOR THE MAIL BASKETS WERE DEVELOPED BY THE CONSULTANTS AND. A CONTRACT WAS AWARDED TO THE LOW BIDDER IN THE AMOUNT OF $10. IT WAS LEARNED THAT THE CONGRESSMEN GENERALLY DID NOT WANT THE MAIL BASKETS INSTALLED IN THEIR SUITES. THE MANUFACTURER WAS ADVISED THAT HIS CONTRACT WAS CANCELLED. THE MANUFACTURER WAS REIMBURSED FOR THE EXPENSES HE HAD INCURRED PRIOR TO CANCELLATION IN THE AMOUNT OF $1. IT IS REPORTED THAT THE CONSULTANTS WERE REQUESTED TO EVALUATE AND GIVE THEIR RECOMMENDATIONS ON THE MANUFACTURER'S CLAIM.

B-159337, JUL. 7, 1966

TO THE HONORABLE J. GEORGE STEWART, ARCHITECT OF THE CAPITOL:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 1, 1966, WITH ENCLOSURES, REQUESTING OUR DECISION AS TO THE AMOUNT OF A PAYMENT WHICH MAY PROPERLY BE MADE TO JOHN HARBESON, WM. J. H. HOUGH, WM. H. LIVINGSTON AND ROY F. LARSON, ARCHITECTS AND FURNITURE CONSULTANTS, UNDER CONTRACT NO. ACHO-245, DATED MAY 27, 1963, TO FURNISH ALL NECESSARY PROFESSIONAL SERVICES FOR THE DESIGN AND PROCUREMENT OF FURNITURE AND FURNISHINGS FOR THE RAYBURN HOUSE OFFICE BUILDING, PURSUANT TO THE AUTHORITY CONFERRED BY PUBLIC LAW 24, 84TH CONGRESS, 69 STAT. 40, 41 AND BY PUBLIC LAW 88-25, 77 STAT. 32.

THE SUBJECT CONTRACT INCLUDES THE FOLLOWING PROVISIONS WITH RESPECT TO THE PAYMENT OF COMPENSATION FOR SERVICES RENDERED THEREUNDER:

"ARTICLE 3. IN CONSIDERATION OF THE FURNISHING BY THE PARTIES OF THE SECOND PART OF THE SERVICES DESCRIBED IN ARTICLES 1 AND 2 HEREOF, THE PARTY OF THE FIRST PART SHALL PAY THE PARTIES OF THE SECOND PART AS COMPENSATION AN AMOUNT EQUAL TO FIVE AND ONE-HALF PERCENT (5 1/2 PERCENT) OF THE TOTAL COST OF ALL FURNITURE AND FURNISHINGS PROCURED FOR THE RAYBURN HOUSE OFFICE BUILDING, FOR WHICH SERVICES ARE FURNISHED.'

"ARTICLE 4. FOR THE PURPOSE OF MAKING PARTIAL PAYMENTS AND FOR PAYMENT IN THE EVENT OF TERMINATION OF THE CONTRACT AS HEREINAFTER PROVIDED, THE PERCENTAGE TO BE PAID SHALL BE BASED UPON AN ESTIMATED COST OF THREE MILLION DOLLARS ($3,000,000) FOR THE FURNITURE AND FURNISHINGS, UNTIL SUCH TIME AS THE ACTUAL COST CAN BE DETERMINED, AT WHICH TIME THE AMOUNTS DUE SHALL BE ADJUSTED TO CONFORM TO THE ACTUAL COST. ALL SERVICES PERFORMED PRIOR TO THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS FOR THE FURNITURE AND FURNISHINGS SHALL BE EVALUATED AT SEVENTY-FIVE PERCENT (75 PERCENT) OF THE CONSIDERATION, AND ALL SERVICES PERFORMED AFTER THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS SHALL BE EVALUATED AT TWENTY-FIVE PERCENT (25 PERCENT) OF THE SIDERATION.'

IT IS REPORTED THAT CONSULTANT SERVICES WERE RENDERED UNDER THE SUBJECT CONTRACT IN CONNECTION WITH 30 SEPARATE PROCUREMENT CONTRACTS, INCLUDING ONE CONTRACT FOR THE MANUFACTURE AND DELIVERY OF BRONZE WIRE MAIL BASKETS FOR THE REPRESENTATIVES' OFFICE SUITES. DRAWINGS AND SPECIFICATIONS FOR THE MAIL BASKETS WERE DEVELOPED BY THE CONSULTANTS AND, IN ACCORDANCE WITH THEIR RECOMMENDATIONS, A CONTRACT WAS AWARDED TO THE LOW BIDDER IN THE AMOUNT OF $10,140. SUBSEQUENTLY, BUT BEFORE THE WORK UNDER THE MANUFACTURER'S CONTRACT HAD PROGRESSED VERY FAR, IT WAS LEARNED THAT THE CONGRESSMEN GENERALLY DID NOT WANT THE MAIL BASKETS INSTALLED IN THEIR SUITES. AS A RESULT, THE MANUFACTURER WAS ADVISED THAT HIS CONTRACT WAS CANCELLED. THE MANUFACTURER WAS REIMBURSED FOR THE EXPENSES HE HAD INCURRED PRIOR TO CANCELLATION IN THE AMOUNT OF $1,727.80. IN CONNECTION WITH THAT SETTLEMENT, IT IS REPORTED THAT THE CONSULTANTS WERE REQUESTED TO EVALUATE AND GIVE THEIR RECOMMENDATIONS ON THE MANUFACTURER'S CLAIM, HOWEVER, YOU DO NOT INDICATE THAT SUCH ACTIONS ARE REGARDED AS BEING OUTSIDE THE SCOPE OF THEIR DUTIES (ARTICLE 1 (I) ). THE CONSULTANTS HAVE SUBMITTED AN INVOICE IN AN AMOUNT EQUAL TO 75 PERCENT OF 5 1/2 PERCENT OF $10,140 AS THEIR FEE FOR SERVICES RENDERED UP TO THE TIME OF AWARD OF THE CONTRACT FOR THE MAIL BASKETS.

IT IS YOUR RECOMMENDATION THAT THE CONSULTANTS BE COMPENSATED FOR THE SERVICES RENDERED IN CONNECTION WITH THE MAIL BASKET CONTRACT AND THAT THEIR COMPENSATION BE COMPUTED ON THE BASIS OF 75 PERCENT OF 5 1/2 PERCENT OF $10,140 PLUS 25 PERCENT OF 5 1/2 PERCENT OF $1,727.80.

UNDER THE TERMS OF ARTICLE 3 OF THE CONSULTANTS' CONTRACT IT WAS AGREED THAT THEIR COMPENSATION FOR THE DESCRIBED SERVICES SHOULD BE AN AMOUNT EQUAL TO 5 1/2 PERCENT OF THE TOTAL COST OF ALL FURNITURE AND FURNISHINGS PROCURED FOR THE RAYBURN BUILDING FOR WHICH SUCH SERVICES WERE FURNISHED. WITH THE POSSIBLE EXCEPTION OF THE WORD "PROCURED," WHICH WILL BE DISCUSSED HEREAFTER, THE MEANING OF THIS PROVISION IS CLEAR. ARTICLE 4 RELATES ONLY TO PARTIAL OR PROGRESS PAYMENTS AND PAYMENT IN THE EVENT OF TERMINATION OF THE CONSULTANTS' CONTRACT, FOR THE PURPOSES OF WHICH AN ESTIMATED COST FIGURE OF $3,000,000 IS TO APPLY UNTIL SUCH TIME AS THE ACTUAL COST CAN BE DETERMINED, AT WHICH TIME THE AMOUNTS DUE SHALL BE ADJUSTED TO CONFORM TO THE ACTUAL COST. THE PERCENTAGE FORMULA STATED IN ARTICLE 4 APPEARS INTENDED TO APPLY WHERE PROGRESS PAYMENTS ARE MADE AND IS NOT INTENDED TO APPLY FOR FINAL FEE COMPUTATION PURPOSES. READING SUCH PROVISIONS TOGETHER, AND PARTICULARLY THE PHRASES "TOTAL COST" AND "ACTUAL COST," IT IS REASONABLY CLEAR THAT IT WAS INTENDED THE CONSULTANTS' FEE SHOULD BE GEARED TO THE TOTAL AMOUNT ACTUALLY PAID FOR ALL THE FURNITURE AND FURNISHINGS PROCURED, FOR WHICH SERVICES ARE FURNISHED. ALTHOUGH THE WORD PROCURED" IS GENERALLY DEFINED TO MEAN "ACQUIRED" OR "OBTAINED," AND IT DOES NOT APPEAR THAT ANY OF THE MAIL BASKETS WERE ACQUIRED BY THE GOVERNMENT, WE DO NOT THINK IT SHOULD BE SO STRICTLY CONSTRUED WITH RESPECT TO THE CONTRACT FOR THE PROCUREMENT OF THE MAIL BASKETS AS TO REQUIRE THE EXCLUSION OF THE $1,727.80, ACTUALLY PAID IN CONNECTION THEREWITH, AS A COMPONENT OF THE TOTAL COST FOR THE FURNITURE AND FURNISHINGS PROCURED UNDER THE 30 INDIVIDUAL CONTRACTS UPON WHICH THE CONSULTANTS' COMPLETE FEE PRESUMABLY WILL BE COMPUTED.

WHILE IT IS NOTED THAT YOUR RECOMMENDATION THAT PAYMENT BE COMPUTED ACCORDING TO THE PRICE STATED IN THE CONTRACT FOR THE BASKETS (RATHER THAN THE ACTUAL AMOUNT PAID IN CONNECTION THEREWITH) IS MADE ON THE BASIS OF CONSIDERATIONS WHICH YOU FEEL ARE EQUITABLE UNDER THE CIRCUMSTANCES, IT IS WELL SETTLED THAT ACCOUNTING OFFICERS OF THE GOVERNMENT MAY NOT SETTLE QUESTIONS ON AN EQUITABLE--- AS DISTINGUISHED FROM A LEGAL---BASIS. COMP. GEN. 124, 142. FURTHER, IT IS ALSO WELL SETTLED THAT WHEN A VALID AND BINDING CONTRACT HAS VESTED IN THE UNITED STATES THE RIGHT TO HAVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO DIVEST THE GOVERNMENT OF SUCH VESTED RIGHT OR TO ALLOW COMPENSATION FOR PERFORMANCE IN AN AMOUNT GREATER THAN THAT AGREED UPON IN THE CONTRACT (20 COMP. GEN. 652, 658), EVEN THOUGH UNFORESEEN CAUSES MAY RENDER THE CONTRACT PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE THAN ANTICIPATED (26 COMP. GEN. 365, 367).

ACCORDINGLY, IT IS OUR OPINION THAT PAYMENT TO THE CONSULTANTS FOR SERVICE PERFORMED IN CONNECTION WITH THE MAIL BASKETS IN QUESTION SHOULD BE LIMITED TO AN AMOUNT EQUAL TO 5 1/2 PERCENT OF $1,727.80.