B-46925, JANUARY 25, 1945, 24 COMP. GEN. 555

B-46925: Jan 25, 1945

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APPROPRIATIONS - FISCAL YEAR - AVAILABILITY BEYOND - CONTRACT CANCELLATION AND REWARD DURING SUBSEQUENT FISCAL YEAR WHERE A CONTRACT OBLIGATING THE FISCAL YEAR APPROPRIATION THEN CURRENT FOR THE PURCHASE OF EQUIPMENT WAS CANCELLED BY MUTUAL AGREEMENT SUBSEQUENT TO THE EXPIRATION OF SUCH FISCAL YEAR DUE TO THE INABILITY OF THE GOVERNMENT TO FURNISH THE NECESSARY PRIORITY RATING. 1945: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 10. WAS AWARDED TO THE REIGER MANUFACTURING COMPANY. WERE ISSUED FOR THE PURCHASE OF THE EQUIPMENT. THE SOIL CONSERVATION SERVICE WAS. UNABLE TO SECURE THE REQUIRED PRIORITY RATING AND AS A RESULT THE CONTRACT WAS CANCELLED BY MUTUAL AGREEMENT AND THE CONTRACTOR NOT DECLARED IN DEFAULT.

B-46925, JANUARY 25, 1945, 24 COMP. GEN. 555

APPROPRIATIONS - FISCAL YEAR - AVAILABILITY BEYOND - CONTRACT CANCELLATION AND REWARD DURING SUBSEQUENT FISCAL YEAR WHERE A CONTRACT OBLIGATING THE FISCAL YEAR APPROPRIATION THEN CURRENT FOR THE PURCHASE OF EQUIPMENT WAS CANCELLED BY MUTUAL AGREEMENT SUBSEQUENT TO THE EXPIRATION OF SUCH FISCAL YEAR DUE TO THE INABILITY OF THE GOVERNMENT TO FURNISH THE NECESSARY PRIORITY RATING, A REPLACEMENT CONTRACT THEREAFTER ENTERED INTO ON THE BASIS OF A NEW SOLICITATION OF BIDS CANNOT BE REGARDED AS AN OBLIGATION LEGALLY INCURRED DURING THE PRIOR FISCAL YEAR--- AS IN THE CASE OF A PURCHASE AGAINST THE ACCOUNT OF A DEFAULTING CONTRACTOR--- SO AS TO AUTHORIZE PAYMENT OF THE CONTRACT PRICE FROM THE PRIOR FISCAL YEAR APPROPRIATION. 2 COMP. GEN. 130, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO R. L. GEIGER, JR., DEPARTMENT OF AGRICULTURE, JANUARY 25, 1945:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 10, 1945, AS FOLLOWS:

THE ATTACHED BUREAU VOUCHER NO. 2804, IN FAVOR OF THE GRAVELY MOTOR PLOW AND CULTIVATOR COMPANY, DUNBAR, WEST VIRGINIA, COVERING THE PURCHASE OF TWO TRACTORS WITH SICKLE MOWERS HAS BEEN PRESENTED TO ME FOR CERTIFICATION AS AN AUTHORIZED CERTIFYING OFFICER OF THE SOIL CONSERVATION SERVICE.

CONTRACT A-SC-/PA-0/-924, WAS AWARDED TO THE REIGER MANUFACTURING COMPANY, MIAMISBURG, OHIO, ON JUNE 16, 1944, ON ITEM NO. 1, FOR TWO TRACTORS WITH MOWERS. PURCHASE ORDERS NOS. 971-44-PA-0 AND 972-44-PA-0 DATED JUNE 16, 1944, (COPIES ATTACHED), WERE ISSUED FOR THE PURCHASE OF THE EQUIPMENT, PAYMENT TO BE MADE FROM FUNDS AVAILABLE IN THE ANNUAL APPROPRIATION FOR THE SOIL CONSERVATION SERVICE FOR THE FISCAL YEAR 1944 ( PUBLIC LAW 129, 78TH CONGRESS). THE BID FORM REQUIRED AMONG OTHER THINGS THAT WHERE DELIVERY WOULD BE IMPOSSIBLE OR UNREASONABLY DELAYED WITHOUT PRIORITY ASSISTANCE BY THE CONTRACTING GOVERNMENTAL AGENCY THE BIDDER WOULD INDICATE THE LOWEST PRIORITY RATING NECESSARY TO FURNISH THE EQUIPMENT WITHIN THE TIME SPECIFIED BY HIM. ACCORDINGLY, THE BIDDER INDICATED THE NEED FOR A PRIORITY RATING. THE SOIL CONSERVATION SERVICE WAS, HOWEVER, UNABLE TO SECURE THE REQUIRED PRIORITY RATING AND AS A RESULT THE CONTRACT WAS CANCELLED BY MUTUAL AGREEMENT AND THE CONTRACTOR NOT DECLARED IN DEFAULT. PURCHASE ORDERS NOS. 971-44-PA-0 AND 972-44-PA-0 WERE, THEREFORE, ALSO CANCELLED ON AUGUST 26, 1944.

SINCE THE EQUIPMENT WAS STILL NEEDED, BIDS WERE AGAIN SOLICITED ON AUGUST 23, 1944, AND THE BID OF THE GRAVELY MOTOR PLOW AND CULTIVATOR COMPANY ACCEPTED AND AWARD MADE UNDER CONTRACT A-SC-/PA-0) 1164 DATED SEPTEMBER 27, 1944. PURCHASE ORDER NO. 1307-45-PA-0 DATED SEPTEMBER 29, 1944 (COPY ATTACHED) WAS ISSUED FOR THE TWO TRACTORS, AND IT WAS DESIRED THAT IT BE CHARGED TO FUNDS AVAILABLE FROM THE 1944 APPROPRIATION. THE TRACTORS WERE DELIVERED ON NOVEMBER 24, 1944.

WHILE THE EQUIPMENT WAS FURNISHED UNDER THE TERMS OF A CONTRACT AWARDED DURING THE FISCAL YEAR 1945 AND THE PURCHASE CONSUMMATED FROM A CONTRACTOR OTHER THAN THE ONE FROM WHOM THE PURCHASE WAS ORIGINALLY CONTEMPLATED, IT WAS THE ORIGINAL INTENT TO PURCHASE THE TRACTORS DURING THE 1944 FISCAL YEAR, AND FUNDS WERE RESERVED FOR PAYMENT FROM THE APPROPRIATION AVAILABLE FOR THAT FISCAL YEAR. AS PREVIOUSLY INDICATED, THE FIRST CONTRACTOR WAS NOT DECLARED IN DEFAULT, AND NO CHARGE FOR EXCESS COST RAISED, SINCE THE SOIL CONSERVATION SERVICE WAS UNABLE TO SECURE THE PRIORITY RATING IN ACCORDANCE WITH THE PRINCIPLE STATED IN 2 COMP. GEN. 130, THE FISCAL YEAR 1944 APPROPRIATION MAY PROPERLY BE CHARGED WITH THE COST OF THE EQUIPMENT PURCHASED.

IN VIEW OF THE FOREGOING, YOUR DECISION IS REQUESTED AS TO WHETHER I MAY PROPERLY CERTIFY THE VOUCHER CHARGING THE 1944 APPROPRIATION WITH ALL OF THE COST OF THE REPLACING PURCHASE OR IF NOT, MAY IT BE PROPERLY CERTIFIED IF THE ORIGINALLY RESERVED AMOUNT OF $410.90 IS CHARGED TO THE 1944 APPROPRIATION AND THE BALANCE OF $335.10 IS CHARGED TO FUNDS AVAILABLE FOR THE FISCAL YEAR 1945 ( PUBLIC LAW 367, 78TH CONGRESS).

IN 2 COMP. GEN. 130, THE DECISION REFERRED TO IN YOUR LETTER, IT WAS HELD (QUOTING FROM THE SYLLABUS):

AN ORDER PLACED BY ONE DEPARTMENT OR ESTABLISHMENT OF THE GOVERNMENT WITH ANOTHER, FOR A BONA FIDE NEED OF THE FISCAL YEAR THEN CURRENT, OBLIGATES THE APPROPRIATION CURRENT FOR SUCH FISCAL YEAR ON THE SAME BASIS AS AN ORDER PLACED FOR SUCH A NEED PURSUANT TO A VALID CONTRACT WITH OTHER THAN SUCH DEPARTMENT OR ESTABLISHMENT OF THE GOVERNMENT, AND, IF THERE BE A DEFAULT IN DELIVERY BY SUCH DEPARTMENT OR ESTABLISHMENT, THE ARTICLES OR SUPPLIES MAY BE PROCURED OTHERWISE AND CHARGED UNDER THE APPROPRIATION THUS OBLIGATED.

THE SAID DECISION WAS BASED UPON THE PROPOSITION THAT AN ORDER FOR SUPPLIES PLACED BY ONE GOVERNMENT DEPARTMENT WITH ANOTHER HAS THE SAME EFFECT UPON THE APPROPRIATION SOUGHT TO BE CHARGED AS AN ORDER PLACED PURSUANT TO A VALID CONTRACT; SO THAT, WHERE THERE IS A DEFAULT IN DELIVERY BY THE REQUISITIONED DEPARTMENT, THE MATTER OF THE AVAILABILITY DURING THE SUCCEEDING FISCAL YEAR, OF THE APPROPRIATION FOR THE FISCAL YEAR IN WHICH THE ORDER WAS PLACED IS GOVERNED BY THE SAME PRINCIPLES AS APPLY TO THE PURCHASE OF GOODS AGAINST THE ACCOUNT OF A DEFAULTING CONTRACTOR.

HOWEVER, IN THE INSTANT CASE, THE ORIGINAL CONTRACT, TOGETHER WITH THE PURCHASE ORDERS ISSUED PURSUANT THERETO, WAS CANCELLED BY MUTUAL AGREEMENT BECAUSE OF THE INABILITY OF THE SOIL CONSERVATION SERVICE TO FURNISH THE NECESSARY PRIORITY RATING. SUCH CANCELLATION NOT ONLY DISSOLVED THE CONTRACTOR BUT EFFECTED A COMPLETE AND ABSOLUTE TERMINATION OF ALL RIGHTS AND OBLIGATIONS INCIDENT TO SUCH ORIGINAL CONTRACT. THE NEW PURCHASE WAS NOT MADE AGAINST THE ACCOUNT OF SUCH ORIGINAL CONTRACTOR; IT WAS MADE AGAINST THE ACCOUNT OF THE UNITED STATES. IN OTHER WORDS, WITH THE EXCEPTION OF THE FACT THAT THE SAME SPECIFICATIONS WERE USED, THE NEW SOLICITATION OF BIDS AND NEW CONTRACT HAD NO CONNECTION WHATEVER WITH THE ORIGINAL TRANSACTION. UNDER SUCH CIRCUMSTANCES, SUCH NEW CONTRACT CANNOT BE REGARDED AS AN OBLIGATION LEGALLY INCURRED DURING THE FISCAL YEAR 1944; AND, ACCORDINGLY, NO PART OF PAYMENTS TO BE MADE UNDER SUCH CONTRACT ARE CHARGEABLE TO APPROPRIATIONS FOR THE FISCAL YEAR 1944. 19 COMP. GEN. 702; B-1750, MARCH 13, 1939; B-22678, JANUARY 10, 1942. CF. B-29238, OCTOBER 20, 1942.