B-161501, JUN. 14, 1967

B-161501, JUN. 14, 1967

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

BY LETTER DATED MARCH 27, 1967, THE CHIEF, FINANCE DIVISION REGION 3 (REFERENCE 3BCPA), TRANSMITTED TO OUR OFFICE GSA BILL NO. 857511 DATED FEBRUARY 11, 1967, IN THE AMOUNT OF $15,427.10, REPRESENTING DECEMBER 1966 BILLINGS UNDER CONTRACT GS-03-U/P/-0001 WITH KLINE PAPER STOCK COMPANY. IT WAS REQUESTED THAT WE DETERMINE WHETHER THE AMOUNT IS CORRECTLY COMPUTED UNDER THE CONTRACT COVERING THE SALES OF VARIOUS GRADES OF WASTE PAPERS ACCUMULATED AT GOVERNMENT-OWNED OR OPERATED PREMISES.

THE ISSUE PRESENTED IS WHETHER GSA SHOULD BILL KLINE FOR ITEMS NO. 1, 9, 10 OF THE CONTRACT THE PRICE OF $10 PER BALE FOR "NO. 1 MIXED PAPER" AS PUBLISHED BY A TRADE PUBLICATION,"OFFICIAL BOARD MARKETS" (OBM) OR WHETHER SUCH PAPER SHOULD BE PRICED AT ZERO AS INDICATED IN OBM. PAGE 9 OF THE SALES CONTRACT, ENTITLED METHOD OF ESTABLISHING MONTHLY BILLING PRICES, READS:

"USING THE AVERAGE OF THE HIGHEST PRICE QUOTED FOR "NO. 1 MIXED PAPER" IN BALES WEIGHING NOT LESS THAN 500 LBS. FOR THE NEW YORK MARKET UNDER "CURRENT WASTEPAPER PRICES" IN THOSE ISSUES OF THE "OFFICIAL BOARD MARKETS" DATED WITHIN THE MONTH IN WHICH THE PAPER IS REMOVED, THE SUCCESSFUL BIDDER WILL PAY THE GOVERNMENT FOR ITEMS NO. 1, NO. 9, AND NO. 10 IN THE VARIOUS TYPES OF PACKING, THE PRICE DETERMINED BY APPLYING THE PRICE DIFFERENTIAL PER TON ENTERED IN THE APPROPRIATE COLUMN OPPOSITE THERETO. IN NO EVENT SHALL THE MINIMUM PRICE TO BE PAID TO THE GOVERNMENT FOR WASTEPAPER DISPOSED OF UNDER ITEMS NO. 1, NO. 9, AND NO. 10 BE LESS THAN $1.00 PER TON.'

THE ISSUES OF OBM FOR DECEMBER 3 AND DECEMBER 10 SHOW A SYMBOL INSTEAD OF A PRICE FOR NO. 1 MIXED PAPER. A NOTE AT THE BOTTOM OF THE APPLICABLE PAGE ADVISES THAT AN "OFFICIAL" PRICE OF $10 IS A TOKEN PRICE ONLY. EDITORIAL NOTES IN THE DECEMBER 3 AND DECEMBER 10 ISSUES OF OBM EXPLAIN THAT THERE IS VIRTUALLY NO MARKET FOR NO. 1 MIXED PAPER AND THAT ONLY A SMALL PORTION IS MOVING FAR BELOW THE $10 FIGURE. OBM FURTHER EDITORIALIZED THAT IT WOULD BE IN THE BEST INTERESTS OF THE MARKET TO SET AN ARBITRARY PRICE IN ORDER TO AVOID CONFUSION. ON THESE FACTS, KLINE REQUESTED THAT THE BILLING REFLECT THE ACTUAL MARKET PRICE, NOT THE $10 ARBITRARY FIGURE. THEY ARGUE THAT THE PRICE SHOULD BE CHANGED FROM $10 PER BALE TO $1 PER BALE FOR THE WEEKS OF DECEMBER 3 AND DECEMBER 10. HOWEVER, REGION 3 MAINTAINS THAT THE $10 "OFFICIAL" PRICE MUST GOVERN.

THE FUNCTION OF OBM IS TO SERVE THE SCRAP-PAPER INDUSTRY BY REPORTING THE CURRENT BID AND ASKED PRICES. DURING THE TWO WEEKS IN QUESTION, A PRICE FOR NO. 1 MIXED PAPER WAS NOT QUOTED AS SUCH, BUT IT DOES NOT NECESSARILY FOLLOW THAT THE SELLING PRICE FOR NO. 1 MIXED PAPER WAS ZERO. RATHER, IT MAY BE INDICATIVE OF THE FACT THAT THERE WERE NOT ENOUGH SALES TO ENABLE OBM TO REPORT AN ACCURATE PRICE. OBVIOUSLY, SOME NO. 1 MIXED PAPER WAS HANDLED AND SOLD DURING DECEMBER 1966. BY THE SAME TOKEN, IT MAY BE THAT $10 PER BALE WAS A PURELY ARBITRARY FIGURE WHICH SHOULD NOT BE USED IN COMPUTING THE SALES PRICE UNDER THE CONTRACT. THEREFORE, WE THINK THAT A VALID QUESTION OF FACT HAS BEEN RAISED BY THE CONTRACTOR AS TO THE PROPER OBM PRICE TO BE USED FOR THE WEEKS OF DECEMBER 3 AND DECEMBER 10. CF. DEPARTMENT OF WANDP V. OKONITE CALLENDER C.CO. 181 F.2D 375 (C.C.A. 9TH 1950); SHELL PETROLEUM CORPORATION V. VICTOR GASOLINE CO. 84 F.2D 676 (C.C.A. 1936).

THEREFORE THE MATTER IS SOLELY ONE OF A DISPUTED QUESTION OF FACT PROPERLY FOR SETTLEMENT AS A DISPUTE UNDER CLAUSE NO. 15 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE SALES CONTRACT, PURSUANT TO WHICH THE CONTRACTING OFFICER IS REQUIRED TO DECIDE THE QUESTION AND TO FURNISH A COPY OF HIS WRITTEN DECISION TO THE CONTRACTOR WHO MAY THEN EXERCISE THE RIGHT OF APPEAL. 41 U.S.C. 321. THE RECORD BEFORE US CONTAINS NO INDICATION THAT THE CONTRACTING OFFICER REDUCED HIS DECISION TO WRITING AND FURNISHED A COPY TO THE CONTRACTOR.

WHERE, AS IN THIS INSTANCE, A CONTRACT PROVIDES FOR A DECISION WITH RESPECT TO SPECIFIED MATTERS BY A DESIGNATED OFFICIAL, THE CONTRACTOR IS ENTITLED TO HAVE SUCH DECISION MADE BY THE DESIGNATED OFFICIAL. SEE UNITED STATES V. NORTH AMERICAN COMMERCIAL CO., 74 FED. 145; PHOENIX BRIDGE CO. V. UNITED STATES, 85 CT.CL. 603, 629; SAMUEL PLATO V. UNITED STATES, 86 CT.CL. 665, 667. FURTHER, WHERE AS HERE THE CONTRACT SETS OUT A PROCEDURE UNDER WHICH DISPUTES AS TO FACT ARE TO BE DECIDED ADMINISTRATIVELY, THE ADMINISTRATIVE REMEDY THEREBY PROVIDED MUST BE EXHAUSTED BY THE CONTRACTOR BEFORE A CLAIM MATERIALLY RELEVANT TO A FACTUAL QUESTION FOR DETERMINATION PURSUANT TO THE PROCEDURE IS COGNIZABLE EITHER BY THE COURTS OR BY OUR OFFICE. UNITED STATES V. JOSEPH A. HOLPUCH CO., 328 U.S. 234; UNITED STATES V. BLAIR, 321 U.S. 730; UNITED STATES V. CALLAHAN WALKER CONST. CO., 317 U.S. 56; B-98784, NOVEMBER 28, 1950; B- 122849, MARCH 21, 1955.

ACCORDINGLY, THE PERTINENT DOCUMENTS ARE BEING RETURNED SO THAT THE ADMINISTRATIVE PROCEDURE PRESCRIBED BY THE "DISPUTES" CLAUSE OF THE CONTRACT MAY BE CARRIED OUT. A COPY OF OUR LETTER OF TODAY TO THE CONTRACTOR IS ALSO ENCLOSED.