B-160399, FEB. 3, 1967

B-160399: Feb 3, 1967

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LA PAZ AND LIMA THAT ISC WAS DEVELOPING HOME STUDY MATERIALS UNDER CONTRACT AND SUGGESTED THAT THE REPRESENTATIVES EXPLORE POSSIBLE WAYS OF INCORPORATING SUCH MATERIALS INTO THEIR RESPECTIVE PEACE CORPS PROGRAMS. DURING APRIL 1966 THE REPRESENTATIVES WERE REQUESTED BY THE PEACE CORPS TO ASCERTAIN WHETHER SUFFICIENT VOLUNTEER INTEREST EXISTED IN OFFERING A HOME STUDY COURSE ON A PILOT BASIS. THE PEACE CORPS ADVISED ITS REPRESENTATIVES THAT ENROLLMENT FORMS IN THE HOME STUDY COURSE WERE ACCEPTABLE IF RECEIVED BEFORE JUNE 15. IT WAS ASCERTAINED THAT THE REQUIRED NUMBER OF ENROLLMENTS WOULD BE RECEIVED AND A FAVORABLY RECOMMENDED ISC BUDGET FOR THE COURSE WAS CIRCULATED ON THAT DATE AMONG PEACE CORPS OFFICIALS FOR CONSIDERATION AND APPROVAL.

B-160399, FEB. 3, 1967

TO DIRECTOR, PEACE CORPS:

WE REFER TO A LETTER DATED OCTOBER 4, 1966, FROM THE DIRECTOR OF CONTRACTS, PEACE CORPS, SUBMITTING FOR ADJUDICATION BY THIS OFFICE THE TERMINATION CLAIM OF INTERNATIONAL STUDY CENTER, INC. (ISC), WASHINGTON, D.C., RELATING TO CONTRACT NO. PC-72-757, BECAUSE OF DOUBTFUL QUESTIONS OF LAW RAISED THEREIN. THE CLAIM OF ISC INCLUDES PRECONTRACT COSTS INCURRED IN PURSUANCE OF THE ADMINISTRATION OF A HOME STUDY COURSE FOR 90 PEACE CORPS VOLUNTEERS IN LATIN AMERICA AND OTHER COSTS PRIOR TO YOUR DECISION TO ABANDON THE HOME STUDY PROGRAM. IT APPEARS THAT THE HOME STUDY COURSE SUPPLEMENTED A PRIOR CONTRACT WHICH ISC HAD WITH THE PEACE CORPS FOR THE DEVELOPMENT OF THE COURSE.

THE RECORD SHOWS THAT IN JANUARY 1966 THE PEACE CORPS INFORMED ITS REPRESENTATIVES IN BOGOTA, LA PAZ AND LIMA THAT ISC WAS DEVELOPING HOME STUDY MATERIALS UNDER CONTRACT AND SUGGESTED THAT THE REPRESENTATIVES EXPLORE POSSIBLE WAYS OF INCORPORATING SUCH MATERIALS INTO THEIR RESPECTIVE PEACE CORPS PROGRAMS. DURING APRIL 1966 THE REPRESENTATIVES WERE REQUESTED BY THE PEACE CORPS TO ASCERTAIN WHETHER SUFFICIENT VOLUNTEER INTEREST EXISTED IN OFFERING A HOME STUDY COURSE ON A PILOT BASIS, AND RECOMMENDED THAT SUCH PEACE CORPS STAFFS ENCOURAGE VOLUNTEER PARTICIPATION. ON JUNE 8, 1966, THE PEACE CORPS ADVISED ITS REPRESENTATIVES THAT ENROLLMENT FORMS IN THE HOME STUDY COURSE WERE ACCEPTABLE IF RECEIVED BEFORE JUNE 15, AND THAT ENROLLEE REGISTRATION FORMS WOULD BE FORWARDED FOR APPROVAL ABOUT JUNE 20, 1966. WITH 81 ENROLLMENTS IN HAND BY JUNE 10, 1966, IT WAS ASCERTAINED THAT THE REQUIRED NUMBER OF ENROLLMENTS WOULD BE RECEIVED AND A FAVORABLY RECOMMENDED ISC BUDGET FOR THE COURSE WAS CIRCULATED ON THAT DATE AMONG PEACE CORPS OFFICIALS FOR CONSIDERATION AND APPROVAL. BY TELEGRAM DATED JUNE 29, 1966, THE PEACE CORPS REPRESENTATIVES WERE ADVISED THAT ENROLLMENTS WERE SUFFICIENT FOR THE PROGRAM, AND THAT THE ISC REPRESENTATIVE DIRECTING THE PROJECT WOULD ARRIVE IN LIMA, LA PAZ AND BOGOTA ON JULY 14, 16 AND 21, 1966, RESPECTIVELY, FOR CONSULTATIONS IN CONNECTION THEREWITH.

IT IS REPORTED BY ISC THAT DURING THE PERIOD JUNE 20 THROUGH JUNE 30, 1966, ITS PRINCIPAL WORK TASKS WERE DEVOTED TO PROCESSING ENROLLMENTS IN THE COURSE, VERIFYING THE GRADUATE STATUS OF APPLICANTS, MAILING REGISTRATION FORMS FOR UNIVERSITY USE, AND MAILING THE FIRST OF EIGHT STUDY GUIDE UNITS TO ENROLLEES, WHICH SERVICES, THE SCHOOL REPORTS, IT PERFORMED IMMEDIATELY UPON RECEIPT OF ENROLLMENTS IN KEEPING WITH THE CONCEPT OF THE PROGRAM.

AT THE REQUEST OF PEACE CORPS OFFICIALS, THE PEACE CORPS CONTRACT ADMINISTRATOR MET WITH THE PRESIDENT OF ISC ON JULY 5, AND AN AGREEMENT WAS REACHED AS TO THE TERMS OF THE CONTRACT FOR ADMINISTRATION OF THE HOME STUDY PROGRAM. MOST OF SUCH TERMS WERE THEREAFTER SET FORTH IN A TYPED COPY OF CONTRACT NO. PC-72-757. AT THE CONCLUSION OF THAT MEETING THE CONTRACT ADMINISTRATOR SIGNED THE FOLLOWING LETTER WHICH WAS ADDRESSED TO ISC UNDER THAT DATE:

"PEACE CORPS CONTRACT NO. 72-757, IN THE AMOUNT OF $30,884, WILL HAVE EFFECTIVE DATE OF JULY 1, 1966, WHEN THE CONTRACT IS SIGNED BY YOU WITHOUT SUBSTANTIVE CHANGE AND EXECUTED BY THE PEACE CORPS. PRECONTRACT COSTS INCURRED SUBSEQUENT TO JUNE 20, 1966, WILL BE ALLOWED TO THE SAME EXTENT HAD THEY BEEN INCURRED AFTER THE EFFECTIVE DATE OF THE CONTRACT.'

IT APPEARS THAT THE TERMS AGREED UPON, INSOFAR AS THEY RELATED TO THE PRINCIPAL ELEMENTS OF THE WORK TO BE PERFORMED, MERELY REFLECTED PREVIOUS UNDERSTANDINGS BETWEEN THE PEACE CORPS AND ISC AS TO THE SCOPE AND GENERAL REQUIREMENTS OF THE PROGRAM, AND THAT THE MAIN PURPOSE OF THE MEETING WAS THE FINALIZATION OF THE CONTRACT PRICE AND THE PERIOD FOR WHICH PRECONTRACT COSTS WOULD BE ALLOWED.

LIKEWISE UNDER DATE OF JULY 5, 1966, ISC SUBMITTED THE FOLLOWING LETTER TO THE CONTRACT ADMINISTRATOR, WHICH WAS SIGNED BY HIM ON THE "APPROVED" LINE ON JULY 7, 1966:

"REFERENCE YOUR LETTER OF JULY 5, 1966 REGARDING PRE CONTRACT COSTS INCURRED UNDER CONTRACT NO. 72-757, JULY 1, 1966, SUBSEQUENT TO JUNE 20, 1966, I SHOULD LIKE TO REQUEST YOUR CONCURRENCE TO THE INCLUSION OF THE SUM OF $3,864.60 FOR SUCH COSTS IN OUR FIRST VOUCHER UNDER THIS NEW CONTRACT. THESE COSTS REPRESENT STAFF SALARY PAYMENTS, DIRECT ADMINISTRATIVE COSTS (CHIEFLY TRANSPORTATION AND A TRAVEL ADVANCE), COST OF TEXTS AND OVERHEAD FOR A PORTION OF THE PREPARATORY PHASE OF THIS HOME STUDY PROGRAM. THE BREAKDOWN IS AS FOLLOWS:

CHART

"SALARIES $ 1,361.60

DIRECT ADMINISTRATIVE 1,780.00

TRAVEL $ 699.00

TEXTBOOKS 900.00

OTHER 181.00

OVERHEAD 723.00

TOTAL $ 3,864.60

"YOUR KIND ATTENTION TO THIS MATTER IS MOST APPRECIATED.'

ON JULY 19, 1966, YOU DECIDED TO ABANDON THE HOME STUDY PROGRAM, AND THE TYPED COPY OF CONTRACT NO. PC-72-757 WAS NOT FORMALLY EXECUTED. ON JULY 20, 1966, YOUR DECISION WAS COMMUNICATED TO THE PRESIDENT OF ISC WHO WAS THEN IN SOUTH AMERICA CONSULTING WITH PEACE CORPS REPRESENTATIVES IN ACCORDANCE WITH THE PEACE CORPS TELEGRAM OF JUNE 29.

SINCE THE PEACE CORPS CONTRACT ADMINISTRATOR HAD NOT BEEN OFFICIALLY DELEGATED CONTRACTUAL AUTHORITY, HIS ACTIONS OF JULY 5 AND 7 WERE RATIFIED BY YOU ON SEPTEMBER 19, 1966, AND TWO DAYS LATER ISC SUBMITTED ITS TERMINATION CLAIM FOR REIMBURSABLE COSTS UNDER THE TERMS OF THE CONTRACT FOR THE PERIOD JUNE 20 TO JULY 22, 1966.

THE RECOMMENDATION OF THE PEACE CORPS THAT THE CLAIM BE PAID, APPEARS TO BE BASED ON A MEMORANDUM OF SEPTEMBER 30, 1966, FROM THE OFFICE OF YOUR GENERAL COUNSEL TO THE DIRECTOR OF CONTRACTS. IN THAT MEMORANDUM IT IS POINTED OUT THAT WHETHER PARTIES TO CONTRACTUAL NEGOTIATIONS ARE CONTRACTUALLY BOUND BY PRELIMINARY WRITINGS, OR ARE NOT BOUND UNTIL A FORMAL CONTRACT IS SIGNED, IS A MATTER OF INTENTION OF THE PARTIES. IT IS FURTHER NOTED THEREIN THAT SINCE NEITHER THE CONTRACT ADMINISTRATOR, NOR ANY OTHER PEACE CORPS OFFICIAL WITH WHOM ISC DEALT, WAS DESIGNATED UNDER APPROPRIATE PROCEDURES OF THE PEACE CORPS AS AN OFFICER WITH AUTHORITY TO ENTER CONTRACTS ON BEHALF OF THE PEACE CORPS, NEITHER THE ACTIONS OF THE CONTRACT ADMINISTRATOR ON JULY 5 AND 7 NOR THE PREVIOUS NEGOTIATIONS COULD, IN THE ABSENCE OF RATIFICATION BY COMPETENT AUTHORITY, BE CONSIDERED BINDING UPON THE GOVERNMENT EVEN IF THEY WERE SO INTENDED BY THE PEACE CORPS OFFICIALS. IT IS ALSO APTLY STATED IN THE MEMORANDUM (CITING 22 COMP. GEN 1080) THAT A PARTICULAR ACT OR CONTRACT MAY BE RATIFIED BY A GOVERNMENT OFFICIAL ON WHOSE BEHALF SUCH ACT OR CONTRACT HAS BEEN DONE OR MADE, IF THAT PERSON COULD HAVE GIVEN AUTHORITY TO DO THE ACT OR ENTER INTO THE CONTRACT IN THE FIRST INSTANCE, AND IF THAT PERSON STILL HAS THE POWER TO DO SO AT THE TIME OF THE RATIFICATION. THE RATIFICATION CAN BE AFTER THE WORK IS PERFORMED AS WELL AS BEFORE, AND SUCH A RATIFICATION IS THE EQUIVALENT TO THE POSSESSION BY THE AGENT OF A PREVIOUS AUTHORITY TO DO THE ACT OR ENTER INTO THE CONTRACT.

THE AUTHORITY OF THE PEACE CORPS TO ENTER INTO CONTRACTS IS DESCRIBED IN THE MEMORANDUM AS FOLLOWS:

"IN THE INSTANT CASE, THE AUTHORITY GIVEN THE PRESIDENT BY SECTION 10 (A) (1) OF THE PEACE CORPS ACT TO ENTER INTO CONTRACTS HAS BEEN DELEGATED BY THE PRESIDENT TO THE SECRETARY OF STATE AND BY THE SECRETARY OF STATE TO THE PEACE CORPS DIRECTOR. THE DIRECTOR HAS, IN TURN, DELEGATED TO THE DIRECTOR OF CONTRACTS OF THE PEACE CORPS, IN CONNECTION WITH PROGRAM ACTIVITIES, THE POWER TO SIGN OR APPROVE CONTRACTS, BUT WITHOUT POWER TO REDELEGATE THAT FUNCTION.'

IN LINE WITH THE FOREGOING REASONING, IT IS SUGGESTED BY THE OFFICE OF YOUR GENERAL COUNSEL THAT YOUR RATIFICATION ON SEPTEMBER 19, 1966, OF THE CONTRACT ADMINISTRATOR'S ACTIONS WOULD APPEAR TO CURE THE CONTRACT ADMINISTRATOR'S LACK OF AUTHORITY TO ENTER INTO THE CONTRACT IN QUESTION, AND THUS IT WOULD SUPPORT A FINDING OF AN EXPRESS CONTRACT WITH ISC.

WE AGREE, AS IS CONCLUDED IN THE MEMORANDUM OF SEPTEMBER 30, 1966, THAT ISC INCURRED THE COSTS IN QUESTION IN COMPLETE GOOD FAITH. WE ALSO FEEL THAT THE RECORD INDICATES THAT THE SUBJECT ACTIONS OF ISC WERE PERFORMED PURSUANT TO A MUTUAL UNDERSTANDING BETWEEN THAT SCHOOL AND RESPONSIBLE (ALTHOUGH TECHNICALLY NON-CONTRACTUAL) PEACE CORPS OFFICIALS, AND WITH THE FULL KNOWLEDGE AND COOPERATION OF SUCH OFFICIALS. IT LIKEWISE APPEARS THAT PREVIOUS UNDERSTANDINGS AND ALL THERETOFORE UNDECIDED MATERIAL FACTORS WERE ENCOMPASSED IN THE TERMS OF THE AGREEMENT REACHED ON JULY 5, AND THAT RESPONSIBLE OFFICIALS OF THE PEACE CORPS AND ISC THEREAFTER PROCEEDED WITH THE EXECUTION OF THE HOME STUDY PROGRAM IN ACCORDANCE WITH SUCH AGREEMENT AS THOUGH IT CONSTITUTED A FIRM COMMITMENT. IT FURTHER APPEARS THAT THE TERMS OF THAT AGREEMENT ARE SET FORTH IN THE TYPED COPY OF CONTRACT NO. PC-72 757 (EXCEPT AS TO THE ALLOWANCE OF COSTS INCURRED PRIOR TO THE EFFECTIVE DATE THEREOF) AND THAT THE AGREEMENT AS REDUCED TO ITS WRITTEN FORM WOULD HAVE BEEN FORMALLY SIGNED WITHOUT SUBSTANTIVE CHANGE BY THE PARTIES CONCERNED IF THE DECISION HAD NOT BEEN MADE TO ABANDON THE HOME STUDY PROGRAM.

IN THE VIEW OF THE FOREGOING, AND WHILE WE RECOGNIZE THAT STRONG ARGUMENTS CAN BE ADVANCED TO THE CONTRARY, WE BELIEVE, AS SUGGESTED IN THE MEMORANDUM BY THE OFFICE OF YOUR GENERAL COUNSEL, THAT THE AGREEMENT REACHED WITH ISC BY THE CONTRACT ADMINISTRATOR ON JULY 5 AND SUPPLEMENTED ON JULY 7, AND WHICH YOU RATIFIED ON SEPTEMBER 19, MAY REASONABLY BE REGARDED AS CONSTITUTING AN EXPRESS CONTRACT AND AS AFFORDING AN ADEQUATE LEGAL BASIS FOR THE ALLOWANCE OF APPROPRIATE AMOUNTS FOR THE PERIOD JUNE 20 THROUGH JULY 22, 1966, UNDER ISC'S TERMINATION CLAIM.

SINCE THE SUBJECT CLAIM IS NOT SUPPORTED BY RECEIPTS, PERTINENT RECORDS, OR OTHER EVIDENCE ESTABLISHING THE ACTUAL EXPENDITURE OF THE AMOUNTS CLAIMED, THE CLAIM IS RETURNED FOR PAYMENT BY YOUR AGENCY OF SUCH AMOUNTS AS MAY BE PROPERLY SUBSTANTIATED AND OTHERWISE FOUND FOR ALLOWANCE IN ACCORDANCE WITH THE TERMS OF THE CONTRACT AND THE PEACE CORPS COST PRINCIPLES INCORPORATED UNDER CLAUSE 4 OF THE CONTRACT'S GENERAL PROVISIONS.

SHOULD ADDITIONAL QUESTIONS ARISE CONCERNING THE SUBJECT CLAIM THEY MAY BE SUBMITTED FOR OUR FURTHER CONSIDERATION.