B-161159, JUN. 12, 1967

B-161159: Jun 12, 1967

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TO OPERATIONS RESEARCH INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 27. THE WORK WAS TO BE PERFORMED UNDER INDIVIDUAL TASK ORDERS. WHOSE POSITION IS DEFINED IN ARTICLE V. THE WORK TO BE PERFORMED UNDER THIS CONTRACT WILL BE ACCOMPLISHED ON A TASK ORDER BASIS. THE CONTRACTOR WILL BE FURNISHED AN ORIGINAL AND THREE COPIES OF AN UNSIGNED TASK ORDER PROVIDING FULL INFORMATION AS TO THE NATURE OF THE TASK TO BE PERFORMED. THE CONTRACTOR WILL. IN THE EVENT A BID IS PROPOSED. THE CONTRACTOR WILL BE NOTIFIED BY TELEPHONE TO COMMENCE WORK. AN EXECUTED COPY OF THE TASK ORDER SIGNED BY THE CONTRACTING OFFICER WILL THEN BE FORWARDED TO THE CONTRACTOR. THE FIXED HOURLY RATES AND MATERIAL PRICES SPECIFIED IN ARTICLE IV WILL APPLY TO ALL TASK ORDERS ISSUED UNDER THIS CONTRACT.'.

B-161159, JUN. 12, 1967

TO OPERATIONS RESEARCH INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 27, 1967, WITH ENCLOSURES, PRESENTING FOR OUR CONSIDERATION A CLAIM IN CONNECTION WITH TASK ORDER NO. 41, DATED MAY 26, 1966, UNDER DEPARTMENT OF HEALTH,EDUCATION, AND WELFARE (HEW) CONTRACT NO. PH43-66-13 WITH COMPUTERS FOR INDUSTRY AND BUSINESS, INC. (CIB).

THE ABOVE-CITED BASIC AGREEMENT WITH CIB DATED SEPTEMBER 1, 1965, PROVIDED FOR THE FURNISHING OF ELECTRONIC DATA PROCESSING SERVICES TO THE NATIONAL INSTITUTE OF NEUROLOGICAL DISEASES AND BLINDNESS (NINDB), NATIONAL INSTITUTES OF HEALTH, PUBLIC HEALTH SERVICE, FOR THE SUPPORT OF THE PERINATAL RESEARCH PROJECT. THE WORK WAS TO BE PERFORMED UNDER INDIVIDUAL TASK ORDERS, AND ARTICLES I AND II OF THE BASIC AGREEMENT PROVIDED AS FOLLOWS:

"ARTICLE I

DESCRIPTION OF WORK

"A. INDEPENDENTLY AND NOT AS AN AGENT OF THE GOVERNMENT, THE CONTRACTOR SHALL, ON THE TERMS AND CONDITIONS SET FORTH HEREIN, FURNISH ALL NECESSARY LABOR, MATERIAL AND FACILITIES TO PROVIDE ELECTRONIC DATA PROCESSING (EDP) SERVICES IN SUPPORT OF THE PERINATAL RESEARCH PROJECT OF THE NATIONAL INSTITUTE OF NEUROLOGICAL DISEASES AND BLINDNESS.

"B. ALL WORK UNDER EACH TASK ORDER OF THIS CONTRACT SHALL BE PERFORMED UNDER THE GENERAL GUIDANCE AND DIRECTION OF THE PROJECT OFFICER, WHOSE POSITION IS DEFINED IN ARTICLE V. SUCH GUIDANCE AND DIRECTION BY THE PROJECT OFFICER SHALL NOT, HOWEVER, INCREASE THE PRICE, OR EXTEND THE DELIVERY DATE IN THE INDIVIDUAL TASK ORDERS. SUCH CHANGES SHALL BE MADE ONLY BY ACTION OF THE CONTRACTING OFFICER.

"ARTICLE II

TASK ORDER PROCEDURE

"A. THE WORK TO BE PERFORMED UNDER THIS CONTRACT WILL BE ACCOMPLISHED ON A TASK ORDER BASIS. TASK ORDERS UNDER THIS CONTRACT SHALL BE ISSUED TO THE CONTRACTOR IN WRITING BY THE CONTRACTING OFFICER AND SHALL INCLUDE APPLICABLE SPECIFICATION REQUIREMENTS, THE NEGOTIATED FIXED PRICE, AND THE DELIVERY DATE FOR THE REQUIRED WORK, AND ANY OTHER TERMS AND CONDITIONS. THE GOVERNMENT RESERVES THE RIGHT TO MAKE NO GUARANTEE AS TO THE NUMBER OF TASK ORDERS TO BE ISSUED UNDER THIS CONTRACT.

"B. PRIOR TO ISSUANCE OF THE FORMAL TASK ORDER, THE CONTRACTOR WILL BE FURNISHED AN ORIGINAL AND THREE COPIES OF AN UNSIGNED TASK ORDER PROVIDING FULL INFORMATION AS TO THE NATURE OF THE TASK TO BE PERFORMED. THE CONTRACTOR WILL, PRIOR TO COMMENCING ANY WORK, COMPLETE THE APPLICABLE PORTIONS OF THE TASK ORDER PROVIDING INFORMATION AS TO THE FIXED PRICE AND DELIVERY DATE/S). IF THE CONTRACTOR DECLINES TO BID ON A PARTICULAR TASK ORDER, THE CONTRACTOR SHOULD SO NOTE ON THE TASK ORDER AND RETURN SAME TO THE CONTRACTING OFFICER. IN THE EVENT A BID IS PROPOSED, A SEPARATE BACKUP SHEET SHALL ALSO BE PROVIDED SHOWING THE NUMBER OF HOURS REQUIRED AND/OR MATERIALS BY CATEGORY, THE EARLIEST STARTING DATE AND THE COMPLETION DATE. THREE COPIES OF THE TASK ORDER INCLUDING THE ORIGINAL SHALL BE SIGNED BY THE CONTRACTOR AND RETURNED AS PROMPTLY AS POSSIBLE TO THE CONTRACTING OFFICER. UPON RECEIPT AND ACCEPTANCE OF THE CONTRACTOR'S PROPOSAL, THE CONTRACTOR WILL BE NOTIFIED BY TELEPHONE TO COMMENCE WORK. AN EXECUTED COPY OF THE TASK ORDER SIGNED BY THE CONTRACTING OFFICER WILL THEN BE FORWARDED TO THE CONTRACTOR.

"C. UNLESS OTHERWISE PROVIDED FOR BY AMENDMENT TO THE CONTRACT, THE FIXED HOURLY RATES AND MATERIAL PRICES SPECIFIED IN ARTICLE IV WILL APPLY TO ALL TASK ORDERS ISSUED UNDER THIS CONTRACT.'

ARTICLE 6 OF THE GENERAL PROVISIONS PROVIDED, IN PERTINENT PART, AS FOLLOWS:

"6. RESPONSIBILITY FOR SUPPLIES

"EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, (I) THE CONTRACTOR SHALL BE RESPONSIBLE FOR THE SUPPLIES COVERED BY THIS CONTRACT UNTIL THEY ARE DELIVERED AT THE DESIGNATED DELIVERY POINT, REGARDLESS OF THE POINT OF INSPECTION; * * *.'

YOU ADVISE THAT AT THE REQUEST OF NINDB, YOU PERFORMED WORK ON THE PERINATAL PROJECT UNDER WHICH CIB WAS THE CONTRACTOR AND THAT AFTER PERFORMING THE WORK YOU COULD NOT COLLECT THE $15,000 DUE YOU BECAUSE CIB IN THE INTERIM HAD BECOME BANKRUPT. YOU ALLEGE THAT THE SUBCONTRACT WAS ENTERED INTO BETWEEN YOUR COMPANY AND NINDB AND THAT CIB HAD NO PART IN THE SUBCONTRACT. YOU CLAIM THAT YOU WERE A PRIME CONTRACTOR IN THE CIRCUMSTANCES AND WERE, THEREFORE, ENTITLED TO DIRECT PAYMENT BY THE GOVERNMENT.

TASK ORDER NO. 41 WAS AWARDED TO CIB FOR $23,000 ON A FIXED-PRICE BASIS. THE PURPOSE OF THE CONTRACT WAS TO COMPLETE A REPORT ON "DRUGS AND EPILEPTIC SEIZURES" FOR THE DEVELOPMENT OF SLEEP DATA. INITIAL GENERALIZED SPECIFICATIONS AMPLIFIED BY VERBAL DESCRIPTION WERE PREPARED AND PRESENTED TO THE CONTRACTOR (CIB) WHICH, WHILE IT HAD WELL-QUALIFIED MATHEMATICAL PROGRAMMERS AND AVAILABLE STATISTICAL ASSISTANCE WITHIN ITS STAFF, DID NOT FEEL QUALIFIED TO HANDLE THE ENTIRE JOB REQUIREMENT SINCE THE TYPE OF MODEL BUILDING REQUIRED WAS FELT TO REPRESENT A RESEARCH AND DEVELOPMENT TYPE OF ASSIGNMENT RATHER THAN DATA PROCESSING AND ANALYSIS. IT WAS AGREED THAT THIS PART OF THE ASSIGNMENT SHOULD BEST BE SUBCONTRACTED TO SPECIALISTS IN THIS TYPE OF ANALYSIS. CIB PREPARED TO HANDLE THE SCREENING AND CLEANUP OF THE DATA AND TO PERFORM ALL THE WORK REQUIRED TO PREPARE THE COMPUTER TYPE FILES NECESSARY TO BE USED IN THE MODEL BUILDING. CIB ALSO DETERMINED THAT YOUR COMPANY WAS BOTH SUITABLE AND ACCEPTABLE FOR THE TASK INVOLVING THE MODEL BUILDING PHASE. IT IS REPORTED THAT ALL OF THE DATA USED BY YOUR COMPANY IN THIS TASK WAS PREPARED BY CIB AND WERE BASED ON SPECIFICATIONS PRESENTED TO CIB BY YOUR COMPANY AS REPRESENTING THE NEEDS FOR THE MODEL BUILDING PART OF THE JOB. IT IS FURTHER REPORTED THAT YOUR PROPOSAL TO PERFORM THIS PART OF THE WORK WAS SUBMITTED TO CIB FOR ITS APPROVAL AS TO ADEQUACY AND SUITABILITY PRIOR TO YOUR ACCEPTANCE AS A SUBCONTRACTOR.

FURTHER, THE RECORD BEFORE THIS OFFICE REVEALS CORRESPONDENCE BETWEEN YOUR FIRM AND CIB WHICH ESTABLISHES THAT THERE WAS IN FACT AN AGREEMENT BETWEEN YOUR COMPANY AND CIB. IN THIS PARTICULAR, A LETTER DATED JUNE 13, 1966, FROM CIB TO YOUR COMPANY STATES AS FOLLOWS:

"PLEASE CONSIDER THIS LETTER AS OUR AUTHORIZATION FOR YOU TO PROCEED ON THE ECG PROJECT FOR DR. CAVENESS OF N.I.H. AS A SUBCONTRACTOR ON OUR TASK ORDER 41 WHICH WAS APPROVED ON MAY 26, 1966. IT IS OUR UNDERSTANDING THAT THE FIXED PRICE CEILING FOR THIS SECTION OF THE PROJECT WILL BE $15,000 AND THAT YOU WILL BE REIMBURSED WHEN WE HAVE BEEN REIMBURSED AT THE CONCLUSION OF THE JOB.' PRIOR TO THIS, YOUR LETTER OF MAY 3, 1966, TO CIB, OUTLINED YOUR PROPOSAL AND TERMS UNDER WHICH YOU WOULD PERFORM THE WORK FOR CIB.

WHILE YOU STATE THAT YOU PERFORMED DIRECTLY FOR NINDB AND THAT THERE IS NO RECORD OF TECHNICAL COMMUNICATION EXISTING BETWEEN YOUR COMPANY (ORI) AND CIB DURING THE PERFORMANCE OF THE CONTRACT, THE RECORD REVEALS THAT BECAUSE OF COMPLICATED INSTRUCTIONS AND TECHNICAL INFORMATION THERE WAS FULL EXCHANGE OF INFORMATION AND CONTACT BETWEEN THE TECHNICAL PERSONNEL OF THE GOVERNMENT AND ORI DURING THE COURSE OF YOUR PERFORMANCE AS A SUBCONTRACTOR AND THAT THIS DIRECT CONTACT WAS DESIRABLE IN ORDER TO AVOID CONFUSION OR MISINTERPRETATION OF INSTRUCTIONS. FURTHER, DELIVERY OF THE MODEL DIRECTLY TO NINDB WAS MADE FOR YOUR CONVENIENCE SINCE ORI IS IN SILVER SPRING, MARYLAND, AND CIB WAS IN NEW YORK, NEW YORK. REPORT OF COMPLETION AND ACCEPTANCE OF THE MODEL WAS MADE TO CIB AND UPON COMPLETION OF THE PART OF THE TASK PERFORMED BY CIB WITH ITS OWN STAFF, THE GOVERNMENT MADE PAYMENT TO CIB OF THE ENTIRE CONTRACT PRICE PURSUANT TO ARTICLE IV OF THE BASIC AGREEMENT.

UPON REVIEW OF THE RECORD BEFORE US WE FIND THAT NO PRIVITY OF CONTRACT EXISTED BETWEEN YOUR COMPANY AND THE GOVERNMENT, NOR IS THERE ANY RECORD OF A CONTRACT BETWEEN ORI AND THE GOVERNMENT. IN REGARD TO PRIVITY, IT IS WELL-SETTLED THAT CONTRACTS OR AGREEMENTS TO FURNISH SUPPLIES TO PRIME CONTRACTORS ENGAGED IN THE PERFORMANCE OF CONTRACTS WITH THE GOVERNMENT ORDINARILY DO NOT RESULT IN PRIVITY OF CONTRACT BETWEEN THE SUBCONTRACTORS AND THE UNITED STATES. H. HERFURTH, JR., INC., V. UNITED STATES, 89 CT.CL. 122; JOSEPH PETRIN, ET AL V. UNITED STATES, 90 CT.CL. 670; UNITED STATES V. DRISCOLL, 96 U.S. 421; AND MERRITT V. UNITED STATES, 267 ID. 338. IT IS ESTABLISHED THAT, UNLESS PRIVITY EXISTS BETWEEN A SUBCONTRACTOR AND THE GOVERNMENT TO SUPPORT AN INDEPENDENT CAUSE OF ACTION BY THE FORMER AGAINST THE LATTER, ANY LEGAL RIGHTS OF THE SUBCONTRACTOR MUST BE ASSERTED ON ITS BEHALF BY THE PRIME CONTRACTOR. D. A. SULLIVAN AND SONS, INC., V. UNITED STATES, 129 CT.CL. 63; H. HERFURTH, JR., INC. V. UNITED STATES, SUPRA; 23 COMP. GEN. 655; 32 ID. 174.