B-172054, JUN 11, 1971

B-172054, JUN 11, 1971

CONTRACTS - FULL PERFORMANCE - PAYMENTS DECISION THAT A VOUCHER SUBMITTED BY ROYAL TYPEWRITER COMPANY FOR $14 COVERING MAINTENANCE SERVICE BASED ON A GSA CONTRACT MAY NOT BE CERTIFIED FOR PAYMENT UNTIL JUNE 30, 1971. UNDER 31 U.S.C. 529 AGENTS OF THE GOVERNMENT ARE PROHIBITED FROM COMPENSATING CONTRACTORS FOR ANY SERVICE WHICH THE GOVERNMENT HAS NOT YET RECEIVED. BECAUSE ROYAL TYPEWRITER COMPANY IS OBLIGATED TO MAKE SERVICE CALLS AS NEEDED UNTIL JUNE 30, 1971, PAYMENT IS PROHIBITED UNTIL THAT DATE.

TO MR. E. J. ELSBERRY, JR.:

BY LETTER OF FEBRUARY 25, 1971, REFERENCE FIS-5-FIN-1, YOU REQUESTED AN ADVANCE DECISION AS TO WHETHER CERTIFICATION SHOULD BE MADE ON A VOUCHER FOR PAYMENT OF ROYAL TYPEWRITER COMPANY (ROYAL) INVOICE NO. 6 513194, IN THE AMOUNT OF $14. THE INVOICE IS DATED JANUARY 19, 1971, AND COVERS MAINTENANCE SERVICE ON AN IBM TYPEWRITER FOR THE PERIOD JANUARY 1 THROUGH JUNE 30, 1971.

THE SUBJECT BILLING IS BASED UPON GENERAL SERVICES ADMINISTRATION CONTRACT 04S-17833, WHICH PROVIDES FOR TYPEWRITER MAINTENANCE SERVICE DURING THE PERIOD JULY 1, 1970, THROUGH JUNE 30, 1971. UNDER ITEM NO. 2 OF THE CONTRACT'S SPECIFICATIONS, ENTITLED "ANNUAL MAINTENANCE SERVICE," REGULAR MAINTENANCE INSPECTIONS ARE TO BE PERFORMED TWICE ANNUALLY AT INTERVALS NOT EXCEEDING 6 MONTHS. ADDITIONALLY, THIS SERVICE IS TO INCLUDE "ALL INTERVENING SERVICE CALLS NECESSARY BETWEEN REGULAR INSPECTIONS" THROUGHOUT THE ENTIRE CONTRACT PERIOD.

THE TOTAL PRICE OF THE "ANNUAL MAINTENANCE SERVICE" IS $28 PER YEAR. THE SUBJECT INVOICE FOR $14 COVERS THE SECOND 6-MONTH PERIOD OF THE CONTRACT. THE REQUIRED REGULAR MAINTENANCE INSPECTION FOR THIS PERIOD WAS PERFORMED ON JANUARY 14, 1971. YOU QUESTION THE PROPRIETY OF CERTIFYING PAYMENT TO ROYAL AT THIS TIME, IN LIGHT OF THE PROHIBITIONS SET FORTH IN TITLE 31 OF THE U.S.C. SECTION 529. THAT SECTION PROVIDES, IN PERTINENT PART, THAT:

" *** IN ALL CASES OF CONTRACTS FOR THE PERFORMANCE OF ANY SERVICE, OR THE DELIVERY OF ARTICLES OF ANY DESCRIPTION, FOR THE USE OF THE UNITED STATES, PAYMENT SHALL NOT EXCEED THE VALUE OF THE SERVICE RENDERED, OR OF THE ARTICLES DELIVERED PREVIOUSLY TO SUCH PAYMENT. *** "

UNDER THIS STATUTE, AGENTS OF THE GOVERNMENT ARE STRICTLY PROHIBITED FROM COMPENSATING CONTRACTORS FOR ANY SERVICES WHICH THE GOVERNMENT HAS NOT YET RECEIVED. AS STATED IN B-140857, OCTOBER 12, 1959:

" *** THE PRIMARY PURPOSE OF SUCH PROHIBITION IS TO PRECLUDE THE POSSIBILITY OF LOSS IN THE EVENT A CONTRACTOR, AFTER RECEIPT OF PAYMENT, SHOULD FAIL TO PERFORM HIS CONTRACT *** ."

BY THE TERMS OF THE SUBJECT CONTRACT, ROYAL HAS NOT FULFILLED ITS OBLIGATIONS TO THE GOVERNMENT MERELY BY COMPLETING PERFORMANCE OF THE REGULAR SEMIANNUAL INSPECTIONS. IT IS FURTHER OBLIGATED TO MAKE ALL SERVICE CALLS NEEDED UNTIL JUNE 30, 1971. AS THE LATTER OBLIGATION CONSTITUTES A DISTINCT AND REAL PORTION OF THE BARGAIN, IT IS CLEAR THAT THE GOVERNMENT WILL NOT HAVE RECEIVED THE FULL AMOUNT OF SERVICES CONTRACTED FOR UNTIL JUNE 30, WHEN THE CONTRACT EXPIRES. IT IS ENTIRELY FEASIBLE THAT ROYAL, UPON RECEIVING ADVANCE PAYMENT IN FULL FOR SERVICES TO BE RENDERED THROUGH THAT DATE, MIGHT FAIL TO PERFORM ITS DUTIES DURING THE REMAINDER OF THE CONTRACT PERIOD. THE SITUATION PRESENTED, THEREFORE, IS CLEARLY ONE TO WHICH THE PROHIBITIONS OF 31 U.S.C. 529 WERE INTENDED TO APPLY.

ACCORDINGLY, THE INVOICE WHICH IS RETURNED HEREWITH MAY NOT BE CERTIFIED PRIOR TO THE END OF THE CONTRACT PERIOD.