B-85522, MAY 19, 1949, 28 COMP. GEN. 653

B-85522, MAY 19, 1949, 28 COMP. GEN. 653

CONTRACTS - CHANGE ORDERS - INCREASED FREIGHT CHARGE LIABILITY THE ISSUANCE OF A CHANGE ORDER AT THE REQUEST, AND FOR THE CONVENIENCE, OF THE CONTRACTOR, AUTHORIZING THE SHIPMENT OF CERTAIN MATERIALS ON GOVERNMENT BILL OF LADING FROM A PLACE OTHER THAN THE F.O.B. SHIPPING POINT DESIGNATED IN THE CONTRACT WITH THE STIPULATION THAT ALL OTHER TERMS AND CONDITIONS OF THE CONTRACT REMAIN UNCHANGED, IS NOT TO BE REGARDED AS IMPOSING A LIABILITY ON THE GOVERNMENT FOR THE ADDITIONAL FREIGHT COSTS RESULTING THEREFROM, NOTWITHSTANDING THE FACT THAT THE DESTINATION POINT WAS UNDETERMINED AT THE TIME OF THE ISSUANCE OF THE CHANGE ORDER.

COMPTROLLER GENERAL WARREN TO LT. COL. D. F. BOICHOT, DEPARTMENT OF THE ARMY, MAY 19, 1949:

THERE HAS BEEN RECEIVED BY REFERENCE FROM THE OFFICE OF THE CHIEF OF FINANCE YOUR LETTER OF OCTOBER 15, 1948, WITH ENCLOSURES, REQUESTING DECISION WHETHER PAYMENT IS AUTHORIZED ON VOUCHER TRANSMITTED THEREWITH IN FAVOR OF INSUL-MASTIC CORPORATION OF AMERICA, IN THE SUM OF $167.64, COVERING REFUND OF THAT AMOUNT DEDUCTED ON D.O. VOUCHER NO. 2015 OF YOUR OCTOBER 1948 ACCOUNT.

THE ENCLOSURES SUBMITTED WITH YOUR LETTER DISCLOSE THAT BY THE TERMS OF CONTRACT NO. W28-024 ORD 3520, EXECUTED MAY 3, 1948, THE CONTRACTOR AGREED TO FURNISH CERTAIN MATERIALS IN THE QUANTITIES AND AT THE PRICES LISTED THEREIN, AND STIPULATED THAT SHIPMENT THEREOF WOULD BE MADE F.O.B. CHICAGO, ILLINOIS, ON GOVERNMENT BILL OF LADING. SUBSEQUENT THERETO BUT PRIOR TO DELIVERY THE CONTRACTOR REQUESTED, FOR ITS CONVENIENCE, THAT THE PROVISIONS OF THE CONTRACT BE ALTERED TO PERMIT SHIPMENT OF ITEM 2 FROM NEW KENSINGTON, PENNSYLVANIA, INSTEAD OF FROM CHICAGO, ILLINOIS. PURSUANT TO THAT REQUEST THE CONTRACTING OFFICER ISSUED CHANGE ORDER NO. 1, DATED JULY 8, 1948, AUTHORIZING THE CHANGE IN SHIPPING POINT WITH THE STIPULATION THAT " ALL OTHER TERMS AND CONDITIONS OF THE CONTRACT REMAIN UNCHANGED.'

THEREAFTER, THE MATERIAL IN QUESTION WAS SHIPPED F.O.B. NEW KENSINGTON, PENNSYLVANIA, INSTEAD OF CHICAGO, CONSIGNED TO ROCK ISLAND, ILLINOIS, AND IN MAKING PAYMENT THEREFOR, THE SUM OF $167.64 WAS DEDUCTED TO COVER THE FREIGHT CHARGES PAID BY THE GOVERNMENT IN EXCESS OF THE AMOUNT THAT WOULD HAVE BEEN PAID HAD THE SHIPMENT MOVED FROM CHICAGO, ILLINOIS. THE QUESTION PRESENTED IS WHETHER, UNDER THE FOREGOING CIRCUMSTANCES, THE ADDITIONAL FREIGHT COSTS ARE CHARGEABLE TO THE CONTRACTOR OR SHOULD BE BORNE BY THE GOVERNMENT SINCE, AT THE TIME THE CHANGE ORDER WAS ISSUED, THE ULTIMATE DESTINATION OF THE MATERIAL HAD NOT BEEN DETERMINED BY THE CONTRACTING OFFICER.

IN DECISION OF NOVEMBER 26, 1918, 25 COMP. DEC. 411, IT WAS HELD, QUOTING FROM THE SYLLABUS, THAT---

THE NAMING OF AN F.O.B. POINT FOR DELIVERY UNDER A CONTRACT FIXES THE MAXIMUM LIABILITY FOR FREIGHT AND THAT LIABILITY CANNOT BE MADE GREATER THAN THE FREIGHT ACTUALLY INCURRED * * *

ALSO, SEE 3 COMP. GEN. 56; 10 ID. 462; 18 ID. 953, WHEREIN THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE FOLLOWED THE PRINCIPLE THAT THE GOVERNMENT'S MAXIMUM LIABILITY FOR FREIGHT CHARGES, UNDER THE CIRCUMSTANCES OUTLINED, IS THAT FIXED BY THE CONTRACT TERMS OR THE ACTUAL CHARGES INCURRED, WHICHEVER IS THE LESSER AMOUNT. WHEN THAT RULE IS APPLIED TO THE FACTS IN THE PRESENT CASE IT BECOMES CLEAR THAT THE GOVERNMENT'S MAXIMUM LIABILITY FOR THE FREIGHT CHARGES INVOLVED IS THE APPLICABLE SHIPPING RATE FOR THE MATERIAL FROM CHICAGO TO ROCK ISLAND, ILLINOIS, AS ESTABLISHED BY THE ORIGINAL CONTRACT TERMS AND ANY FREIGHT COSTS IN EXCESS OF THOSE CHARGES ARE REQUIRED TO BE BORNE BY THE CONTRACTOR, NOTWITHSTANDING THE DESTINATION POINT WAS UNDETERMINED AT THE TIME OF ISSUANCE OF THE CHANGE ORDER.

ALSO, IT IS APPARENT THAT THE ISSUANCE OF CHANGE ORDER NO. 1, AUTHORIZING SHIPMENT FROM NEW KENSINGTON, PENNSYLVANIA, RATHER THAN FROM CHICAGO, MAY NOT BE REGARDED AS AN ASSUMPTION BY THE GOVERNMENT OF LIABILITY FOR ANY EXCESS FREIGHT COSTS INVOLVED, SINCE THE RECORD SHOWS THAT SUCH CHANGE WAS ISSUED AT THE REQUEST, AND FOR THE CONVENIENCE, OF THE CONTRACTOR WITH THE STIPULATION THAT ALL OTHER CONTRACT TERMS WERE TO REMAIN UNCHANGED. SINCE NO CONSIDERATION ACCRUED TO THE GOVERNMENT THROUGH THE ISSUANCE OF THE SAID CHANGE ORDER, THE GOVERNMENT WAS ENTITLED TO HAVE THE CONTRACT PERFORMED IN ACCORDANCE WITH THE INITIAL AGREEMENT. IT HAS BEEN HELD REPEATEDLY THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN THE GOVERNMENT UNDER A CONTRACT. SEE BRAWLEY V. UNITED STATES, 96 U.S. 168; SIMPSON V. UNITED STATES, 172 U.S. 372; UNITED STATES V. AMERICAN SALES CORP., 27 F.2D 389.

IN VIEW OF THE FOREGOING, THE CONCLUSION IS REQUIRED THAT THE CONTRACTOR IS NOT ENTITLED TO REFUND OF THE AMOUNT INVOLVED. ACCORDINGLY, PAYMENT O THE VOUCHER, WHICH IS RETURNED HEREWITH, IS NOT AUTHORIZED.