B-172991, FEB 23, 1972

B-172991: Feb 23, 1972

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THE PROJECT WAS FINANCED BY A LOAN TO THE UNITED ARAB REPUBLIC (UAR). THAT COPIES OF THE FINAL REPORT MAY HAVE BEEN OF BENEFIT TO AID CONSTITUTING A FURTHER BASIS FOR PAYMENT. IS LIMITED BY THE PROVISIONS OF 31 U.S.C. 71 TO THOSE CLAIMS TO WHICH THE UNITED STATES IS A PARTY. IT IS APPARENT THAT THE SUBJECT LOAN AGREEMENT WAS A BILATERAL ONE BETWEEN ONLY TWO PARTIES. WHILE LDP MAY HAVE RELIED ON AID'S REQUEST OR ON THE COMMITMENTS OF THE UNITED STATES UNDER THE AGREEMENT. ALTHOUGH AID MAY HAVE DERIVED SOME BENEFIT FROM THE LDP FINAL REPORT. SUCH BENEFIT WAS ONLY INCIDENTAL TO ITS CREDITOR RESPONSIBILITIES AND IN NO WAY EXTENDS THE AGENCY'S CONTRACTUAL LIABILITY. IT IS THE OPINION OF THE COMP.

B-172991, FEB 23, 1972

MERITORIOUS CLAIMS ACT - EQUITABLE RELIEF - SETTLEMENT JURISDICTION OF THE COMP. GEN. CONCERNING A CLAIM OF LARAMORE, DOUGLASS, AND POPHAM OF NEW YORK (LDP) UNDER THE MERITORIOUS CLAIMS ACT FOR FINAL PAYMENT DUE UNDER THE TERM OF A CONSULTING ENGINEERING CONTRACT WITH THE CAIRO ELECTRICITY AND GAS ADMINISTRATION (CEGA) - FINALLY CHANGED TO THE EGYPTIAN ELECTRICITY CORPORATION (EEC) - FOR THE CAIRO WEST POWER PROJECT. THE PROJECT WAS FINANCED BY A LOAN TO THE UNITED ARAB REPUBLIC (UAR), FROM THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID). CLAIMANT CONTENDS THAT ITS EXTENSION OF SERVICES BEYOND THE ORIGINAL TERM, AT THE REQUEST AND URGING OF AID, ENTITLES IT TO EQUITABLE RELIEF FROM THE UNITED STATES, AND THAT COPIES OF THE FINAL REPORT MAY HAVE BEEN OF BENEFIT TO AID CONSTITUTING A FURTHER BASIS FOR PAYMENT. THE SETTLEMENT JURISDICTION OF THE COMP. GEN. UNDER THE MERITORIOUS CLAIMS ACT, 31 U.S.C. 236, IS LIMITED BY THE PROVISIONS OF 31 U.S.C. 71 TO THOSE CLAIMS TO WHICH THE UNITED STATES IS A PARTY. IT IS APPARENT THAT THE SUBJECT LOAN AGREEMENT WAS A BILATERAL ONE BETWEEN ONLY TWO PARTIES, THE UNITED STATES (AID) AND THE UAR (EEC). WHILE LDP MAY HAVE RELIED ON AID'S REQUEST OR ON THE COMMITMENTS OF THE UNITED STATES UNDER THE AGREEMENT, SUCH RELIANCE DOES NOT MAKE THE UNITED STATES LIABLE TO LDP AS A PARTY TO THE CLAIM. FURTHER, ALTHOUGH AID MAY HAVE DERIVED SOME BENEFIT FROM THE LDP FINAL REPORT, SUCH BENEFIT WAS ONLY INCIDENTAL TO ITS CREDITOR RESPONSIBILITIES AND IN NO WAY EXTENDS THE AGENCY'S CONTRACTUAL LIABILITY. IT IS THE OPINION OF THE COMP. GEN. THAT EXTENSION OF THE TERM PERIOD WAS NOT THE PROXIMATE CAUSE OF LDP'S LOSS. FURTHER, THE CLAIM IS ESSENTIALLY THAT OF A PRIVATE CITIZEN AGAINST A FOREIGN GOVERNMENT TO WHICH THE UNITED STATES IS NOT A PARTY AND, THEREFORE, OUTSIDE THE SETTLEMENT JURISDICTION OF GAO. ACCORDINGLY, THE COMP. GEN. MUST DECLINE TO REPORT THE MATTER TO CONGRESS AS A MERITORIOUS CLAIM.

TO MR. WALLACE L. DUNCAN:

BY LETTER OF MAY 14, 1971, YOU FILED IN BEHALF OF LARAMORE, DOUGLASS AND POPHAM OF NEW YORK (LDP) A CLAIM WITH THE COMPTROLLER GENERAL UNDER THE MERITORIOUS CLAIMS ACT, 31 U.S.C. 236 ET SEQ.

THE CLAIM IN THE AMOUNT OF $4,500 REPRESENTS FINAL PAYMENT DUE UNDER THE TERM OF A CONSULTING ENGINEERING CONTRACT ENTERED INTO BETWEEN LDP AND THE CAIRO ELECTRICITY AND GAS ADMINISTRATION (CEGA) - FINALLY CHANGED TO THE EGYPTIAN ELECTRICITY CORPORATION (EEC) - IN FEBRUARY 1963 FOR THE CAIRO WEST POWER PROJECT. THE PROJECT WAS FINANCED BY A LOAN TO THE UNITED ARAB REPUBLIC (UAR) FROM THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) (AID LOAN NO. 263-H-020-CAIRO WEST POWER PROJECT, DATED FEBRUARY 20, 1963). THE LOAN AND CONTRACT WERE ADMINISTERED BY EEC AN INSTRUMENTALITY OF UAR. LDP APPARENTLY WOULD HAVE BEEN PAID THE $4,500 FROM AID FUNDS PROVIDED UNDER THE UAR-AID AGREEMENT. HOWEVER, IN JUNE 1967 UAR SEVERED DIPLOMATIC RELATIONS WITH THE UNITED STATES AND IN RESPONSE AID EVIDENTLY ON JULY 1, 1967, PLACED A HOLD ON ITS LETTER OF COMMITMENT SO THAT NO FURTHER LOAN FUNDS COULD BE PAID UAR THROUGH THE BANK OF AMERICA.

LDP HAD COMPLETED PERFORMANCE OF ITS CONTRACT WITH UAR (EEC) BY SUBMITTING TO EEC ON FEBRUARY 3, 1967, A FINAL REPORT ON THE PROJECT. EEC APPROVED THE FINAL REPORT AND BY ITS TRANSMITTAL LETTER OF MAY 27, 1967, DELIVERED TO LDP SIGNED COPIES OF LDP'S INVOICE AND EEC'S CERTIFICATE OF PERFORMANCE TO THE BANK OF AMERICA SO THAT LDP COULD BE PAID THE $4,500. LDP SUBMITTED THESE PAYMENT DOCUMENTS TO THE BANK OF AMERICA ON JUNE 2, 1967, BUT IT COULD NOT IMMEDIATELY MAKE PAYMENT TO LDP BECAUSE UAR'S (EEC'S) LETTER OF CREDIT WITH THE BANK OF AMERICA HAD EXPIRED. EVIDENTLY BEFORE THE LETTER OF CREDIT WAS RENEWED THROUGH APRIL 30, 1968, AND LDP AGAIN REQUESTED PAYMENT FROM THE BANK OF AMERICA, AID'S HOLD OF JULY 1, 1967, ON ITS LETTER OF COMMITMENT BECAME EFFECTIVE. AID REFUSED LDP'S REQUEST TO WITHDRAW THE HOLD, AND THE LETTER OF COMMITMENT EXPIRED ON APRIL 1, 1968, WITHOUT LDP HAVING BEEN PAID THE $4,500 FROM THE LOAN FUNDS. EFFECTIVE NOVEMBER 14, 1967, SEVERAL MONTHS AFTER LDP'S COMPLETION OF THE CONTRACT AND DELIVERY OF THE FINAL REPORT, SECTION 301(F)(4) OF PUBLIC LAW 90-137 (BY ADDING SECTION 620(T) TO THE FOREIGN ASSISTANCE ACT OF 1961) TERMINATED FOREIGN ASSISTANCE IN OR TO ANY COUNTRY SEVERING DIPLOMATIC RELATIONS WITH THE UNITED STATES. CONSEQUENTLY AID LOAN FUNDS UNDER ITS AGREEMENT WITH UAR COULD NOT BE MADE AVAILABLE TO UAR TO PAY LDP AFTER THAT DATE. LDP SUBMITTED A CLAIM FOR FINAL PAYMENT OF $4,500 DIRECTLY TO AID AND UAR (EEC) BUT A REPLY SATISFACTORY TO LDP HAS NOT BEEN RECEIVED.

IT IS YOUR CONTENTION THAT AID HAD A LEGAL OBLIGATION TO APPROVE OR RELEASE PAYMENT UNDER ITS LETTER OF COMMITMENT AND LOAN AGREEMENT, AND AID HAVING UNREASONABLY WITHHELD SUCH APPROVAL OR RELEASE, THE UNITED STATES AS WELL AS UAR IS LIABLE FOR THE FINAL PAYMENT OF $4,500. YOU ALSO STATE THAT LDP IS EQUITABLY ENTITLED TO RELIEF FROM THE UNITED STATES BECAUSE LDP SHOWED GOOD FAITH AND INTERNATIONAL COOPERATION IN EXTENDING THE RESIDENT ENGINEERING SERVICES ABOVE THE ORIGINAL TERM OF 24 MONTHS AT THE REQUEST AND URGING OF AID, DESPITE THE INCONVENIENCE AND HARDSHIP TO LDP. FOR THESE REASONS YOU BELIEVE THAT WE SHOULD SUBMIT THE CLAIM TO THE CONGRESS UNDER THE MERITORIOUS CLAIMS ACT. ALSO IN CONNECTION WITH THE CLAIM, IS YOUR LETTER OF SEPTEMBER 13, 1971, YOU TRANSMITTED CORRESPONDENCE DATED IN NOVEMBER 1965 TENDING TO SHOW THAT AID MAY HAVE INDUCED LDP TO EXTEND ITS RESIDENT ENGINEERING SERVICES FOR THE CORPORATION BEYOND THE INITIAL 2-YEAR CONTRACT PERIOD ENDING JULY 18, 1965. YOUR LETTER OF OCTOBER 4, 1971, INDICATES THAT THE "FINAL REPORT" (MENTIONED ABOVE) THAT LDP WAS REQUIRED TO FURNISH UAR (EEC) AND COPIES OF WHICH WERE MADE AVAILABLE TO AID MAY HAVE BEEN OF SOME BENEFIT TO AID, AND HENCE, CONSTITUTES A FURTHER BASIS FOR PAYMENT OF THE INSTANT CLAIM BY THE UNITED STATES.

ON JUNE 29, 1971, WE SUBMITTED YOUR CLAIM LETTER OF MAY 14, 1971, EXPRESSING YOUR CONTENTIONS TO THE ADMINISTRATOR OF AID, AND BY LETTER OF AUGUST 3, 1971, THE GENERAL COUNSEL OF AID SUBMITTED A RESPONSE. WITH RESPECT TO THE LEGAL LIABILITY OF THE UNITED STATES, HE STATES, IN PART, THAT:

"THE LOAN AGREEMENT BETWEEN THE UAR (EEC) AND THE UNITED STATES (A.I.D.) IS A BILATERAL AGREEMENT BETWEEN THE TWO PARTIES ONLY, SEPARATE AND DISTINCT FROM THE CONTRACT BETWEEN THE UAR (EEC) AND LARAMORE (LDP). THERE IS NOTHING IN THE LOAN AGREEMENT TO INDICATE THAT A CONTRACTUAL RELATIONSHIP HAD ARISEN BETWEEN A.I.D. AND LARAMORE OR THAT LARAMORE WAS TO RECEIVE ANY FUNDS ADVANCED TO THE UAR THEREUNDER.

"LARAMORE ENTERED INTO THE CONTRACT WITH THE UAR (EEC) ON AN ARM'S LENGTH BASIS. A.I.D. WAS NOT A PARTY TO THAT CONTRACT AS SURETY OR OTHERWISE. NOR COULD LARAMORE CLAIM THAT IT WAS INDUCED BY A.I.D. TO ENTER INTO THE CONTRACT WITH THE UAR (EEC). MOREOVER, A.I.D.'S LETTER OF COMMITMENT DID NOT CONSTITUTE A LEGAL FOUNDATION FOR THE FORMATION OF A CONTRACTUAL STATUS BETWEEN A.I.D. AND LARAMORE. AND, IN ANY EVENT, A.I.D. RETAINED THE RIGHT TO PLACE A HOLD ON ITS LETTER OF COMMITMENT WITHOUT INCURRING ANY CONTRACTUAL LIABILITY."

THE MERITORIOUS CLAIMS ACT OF APRIL 10, 1928, 31 U.S.C. 236, PROVIDES:

"WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM OR DEMAND IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS, HE SHALL SUBMIT THE SAME TO THE CONGRESS BY A SPECIAL REPORT CONTAINING THE MATERIAL FACTS AND HIS RECOMMENDATION THEREON."

OUR CLAIMS JURISDICTION IS LIMITED TO THOSE CLAIMS TO WHICH THE UNITED STATES IS A PARTY. 31 U.S.C. 71. HENCE, UNLESS THE INSTANT CLAIMS MAY BE CONSIDERED A CLAIM AGAINST THE UNITED STATES AND WITHIN THE SETTLEMENT JURISDICTION OF THIS OFFICE WE MAY NOT REPORT IT TO THE CONGRESS AS A MERITORIOUS CLAIM.

ON THE BASIS OF THE FACTS REPORTED BY AID, AS WELL AS ON THE RECORD BEFORE US, WE CANNOT AGREE THAT THE UNITED STATES IS "PARTY" TO THE CLAIM BECAUSE OF ITS COMMITMENTS UNDER THE LOAN AGREEMENT DOCUMENTS, OR BECAUSE OF THE ACTION TAKEN BY AID IN FREEZING PAYMENTS THEREUNDER. THE COMMITMENTS OF THE UNITED STATES UNDER THE LOAN AGREEMENT WERE TO THE UAR AND NOT TO LDP, SINCE LDP WAS NOT A PARTY TO SUCH AGREEMENT. WHILE LDP WAS FREE - AT ITS OWN RISK - TO RELY ON THE COMMITMENTS OF THE UNITED STATES UNDER THE LOAN AGREEMENT, SUCH RELIANCE DOES NOT PLACE ANY LIABILITY ON THE UNITED STATES. IN OTHER WORDS, WHILE IT MAY BE THAT LDP, IN ENTERING INTO ITS CONTRACT WITH THE UAR (EEC), RELIED ON THE COMMITMENTS OF THE UNITED STATES UNDER ITS (THE UNITED STATES') LOAN AGREEMENT WITH THE UAR, SUCH RELIANCE DOES NOT MAKE THE UNITED STATES LIABLE TO LDP AS "A 'PARTY' TO THE CLAIM." FURTHER AS STATED BY AID'S GENERAL COUNSEL, THE AID-UAR LOAN AGREEMENT SPECIFICALLY PROVIDED THAT THE UNITED STATES COULD PLACE A HOLD ON, OR TERMINATE, ITS LETTER OF COMMITMENT, WITHOUT INCURRING ANY CONTRACTUAL LIABILITY TO THE UAR.

FURTHER, EVEN IF IT BE ASSUMED THAT THE EXTENSION OF THE LDP-UAR (EEC) CONTRACT RESULTED FROM THE INFORMAL REQUEST OR ENCOURAGEMENT OF AID PERSONNEL, IT IS OUR VIEW THAT SUCH EXTENSION WAS NOT THE PROXIMATE CAUSE OF - OR AT LEAST NOT THE ONLY REASON FOR - LDP NOT BEING PAID THE FINAL $4,500 DUE UNDER ITS CONTRACT WITH THE UAR (EEC). LDP'S CONTRACT WITH EEC APPARENTLY EXPIRED ON JULY 18, 1965. LDP WENT FROM JULY 18, 1965, TO NOVEMBER 22, 1965, WITHOUT A CONTRACT AND DURING THAT PERIOD NEGOTIATED WITH THE UAR (EEC) CONCERNING A CONTRACT EXTENSION. IT APPEARS THAT LDP WANTED $4,000 PER MONTH FOR A 12-MONTH EXTENSION BUT FINALLY AGREED TO ACCEPT $3,000 PER MONTH AND EXECUTED THE EXTENSION ON NOVEMBER 22, 1965, RETROACTIVE TO JULY 18, 1965. THE CONTRACT AS EXTENDED EXPIRED PURSUANT TO ITS TERMS ON JULY 18, 1966. APPARENTLY THE UAR'S (EEC'S) LETTER OF CREDIT WITH THE BANK OF AMERICA WAS IN EFFECT ON JULY 18, 1966, BUT IT WOULD EXPIRE ON NOVEMBER 1, 1966, UNLESS EXTENDED BY THE UAR. UNDER ITS CONTRACT WITH THE UAR, LDP HAD FROM JULY 18, 1966, TO 30 DAYS PRIOR TO NOVEMBER 1, 1966, TO FURNISH ITS FINAL REPORT TO THE UAR AND BE PAID UNDER THE UAR'S ORIGINAL LETTER OF CREDIT. FURTHER, WE ASSUME FROM THE RECORD BEFORE US THAT THE UAR COULD HAVE EXTENDED (BUT DID NOT) ITS LETTER OF CREDIT FROM NOVEMBER 1, 1966, TO JUNE 30, 1967, AND PRESUMABLY HAVE RECEIVED FUNDS FROM AID UNDER AID'S LETTER OF COMMITMENT, SINCE AID APPARENTLY DID NOT PLACE A HOLD ON ITS (THEN EXISTING) LETTER OF COMMITMENT UNTIL JULY 1, 1967. ANY RISK OF THE UAR NOT EXTENDING ITS LETTER OF CREDIT WAS A RISK ASSUMED BY LDP WHEN IT AGREED TO THE CONTRACT EXTENSION. SINCE AN AID LETTER OF COMMITMENT APPARENTLY WAS IN EFFECT FROM JULY 18, 1966, THE DATE THE LDP-UAR (EEC) CONTRACT EXPIRED, TO JULY 1, 1967 (OR AT LEAST JUNE 30, 1967), IT DOES NOT APPEAR THAT EITHER THE EXTENSION OF THE CONTRACT - EVEN IF IT WERE AT THE URGING OF AID PERSONNEL - OR THE HOLD PLACED BY AID ON ITS LETTER OF COMMITMENT - IN ACCORDANCE WITH THE PROVISIONS OF SECTION 103.2 OF THE AID-UAR AGREEMENT - WAS THE PROXIMATE CAUSE OF LDP NOT BEING PAID THE FINAL $4,500 DUE IT UNDER ITS CONTRACT WITH THE UAR. HAD EITHER OF THESE EVENTS OCCURRED LDP COULD HAVE BEEN PAID, I.E., HAD LDP SUBMITTED ITS FINAL REPORT 30 DAYS PRIOR TO NOVEMBER 1, 1966, OR HAD THE UAR EXTENDED ITS LETTER OF CREDIT (IN FAVOR OF LDP) FROM NOVEMBER 1, 1966, TO JUNE 30, 1967, LDP APPARENTLY COULD AND WOULD HAVE BEEN PAID THE $4,500 DUE IT UNDER ITS CONTRACT WITH THE UAR. THE FACT THAT NEITHER OF THESE THINGS OCCURRED WAS NOT THE FAULT OF THE UNITED STATES.

AS TO ANY BENEFIT DERIVED BY AID FROM THE "FINAL REPORT" PREPARED BY LDP FOR THE UAR (EEC), COPIES OF WHICH LDP REQUESTED THE UAR TO FURNISH AID, THE RECORD DISCLOSES THAT AID'S LOAN AGREEMENT WITH THE UAR REQUIRED THE UAR TO FURNISH AID "WITH SUCH INFORMATION AND REPORTS RELATING TO THE PROJECT, ELIGIBLE ITEMS AND THE LOAN AS A.I.D. REASONABLY MAY REQUEST." THE UAR'S (EEC'S) AGREEMENT WITH LDP REQUIRED LDP TO PREPARE AND SUBMIT "TO CEGA (EEC) A FINAL REPORT ON THE PROJECT WITH A NARRATIVE SUMMARY OF THE JOB ACCEPTANCE TESTS AND CURVES AS MAY BE APPROPRIATE." THE FACT THAT THE UAR (EEC) MAY HAVE REQUIRED ITS CONSULTING ENGINEERS (LDP) TO FURNISH AID A COPY OF ALL THE REPORTS THE CONSULTING ENGINEER WAS REQUIRED (UNDER ITS CONTRACT WITH THE UAR (EEC)) TO FURNISH THE UAR (EEC) DOES NOT IN OUR OPINION MAKE AID LIABLE (ON AN IMPLIED CONTRACT BASIS) TO LDP FOR PAYMENT OF THE FINAL $4,500 DUE LDP UNDER THE LDP-UAR CONTRACT, REGARDLESS OF ANY BENEFIT AID MAY HAVE DERIVED FROM SUCH FINAL REPORT.

FURTHER, AS INDICATED IN YOUR LETTER OF MAY 14, IN A CASE (B-163051, MAY 2, 1968) INVOLVING A SOMEWHAT SIMILAR CLAIM WE DECLINED TO REPORT THE CLAIM TO CONGRESS AS A MERITORIOUS CLAIM, ON THE GROUND THAT THE CLAIM INVOLVED WAS NOT ONE OTHERWISE WITHIN THE SETTLEMENT JURISDICTION OF THE GENERAL ACCOUNTING OFFICE. INSOFAR AS THE MERITORIOUS CLAIMS ACT IS CONCERNED, WE SEE NO SIGNIFICANT DIFFERENCE BETWEEN THE CLAIM IN THE INSTANT CASE AND THE CLAIM INVOLVED IN OUR ABOVE-CITED DECISION.

FROM THE ABOVE, IT IS EVIDENT THAT YOUR CLIENT'S CLAIM IS ESSENTIALLY A CLAIM BY A PRIVATE CITIZEN AGAINST A FOREIGN GOVERNMENT TO WHICH THE UNITED STATES WAS NOT A PARTY, AND IS, THEREFORE, NOT WITHIN THE JURISDICTION OF THIS OFFICE TO SETTLE, OR CLAIMS JURISDICTION BEING LIMITED TO THOSE CLAIMS TO WHICH THE UNITED STATES IS A PARTY. ALSO, AS INDICATED ABOVE, EVEN IF AID PERSONNEL URGED LDP TO EXTEND ITS CONTRACT WITH UAR, IT IS OUR VIEW THAT SUCH EXTENSION WAS NOT THE PROXIMATE CAUSE OF ANY LOSS SUFFERED BY LDP. RATHER, SUCH LOSS APPARENTLY RESULTED FROM EITHER LDP NOT SUBMITTING ITS FINAL REPORT TO UAR WHILE UAR'S LETTER OF CREDIT IN FAVOR OF LDP WAS STILL IN EXISTENCE OR BECAUSE UAR FAILED TO EXTEND ITS LETTER OF CREDIT IN FAVOR OF LDP DURING THE PERIOD AID'S LETTER OF COMMITMENT IN FAVOR OF UAR WAS STILL IN EXISTENCE, I.E., BETWEEN NOVEMBER 1, 1966, AND JUNE 30, 1967.

IN LIGHT OF THE FOREGOING, AND MORE PARTICULARLY SINCE YOUR CLIENT'S CLAIM IS NOT WITHIN THE SETTLEMENT JURISDICTION OF THE GENERAL ACCOUNTING OFFICE, WE MUST DECLINE TO REPORT THE MATTER TO THE CONGRESS AS A MERITORIOUS CLAIM.