B-95708, JULY 24, 1950, 30 COMP. GEN. 23

B-95708: Jul 24, 1950

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CONTRACTS - PURCHASES ON THE OPEN MARKET AT EXCESS COST - GOVERNMENT LIABILITY WHERE FUEL OIL WAS PURCHASED ON THE OPEN MARKET FROM A FORMER CONTRACTOR AT A PRICE IN EXCESS OF THAT STIPULATED IN AN EXISTING CONTRACT WITH ANOTHER CONTRACTOR. SUCH OPEN-MARKET PURCHASES WAS BEYOND THE SCOPE OF SAID OFFICER'S AUTHORITY. THE GOVERNMENT IS NOT OBLIGATED TO PAY ANY AMOUNT IN EXCESS OF THE EXISTING CONTRACT PRICE FOR THE OIL. 1950: REFERENCE IS MADE TO YOUR LETTER OF MAY 9. WAS ALLOWED IN THE AMOUNT OF $1. WAS DISALLOWED AS BEING THE AMOUNT CHARGED IN EXCESS OF THE EXISTING CONTRACT PRICE. THE RECORD BEFORE THIS OFFICE DISCLOSED THAT THE OIL WAS DELIVERED BY YOU PURSUANT TO PURCHASE ORDER ISSUED UNDER DATE OF JANUARY 19 AND FEBRUARY 18.

B-95708, JULY 24, 1950, 30 COMP. GEN. 23

CONTRACTS - PURCHASES ON THE OPEN MARKET AT EXCESS COST - GOVERNMENT LIABILITY WHERE FUEL OIL WAS PURCHASED ON THE OPEN MARKET FROM A FORMER CONTRACTOR AT A PRICE IN EXCESS OF THAT STIPULATED IN AN EXISTING CONTRACT WITH ANOTHER CONTRACTOR, DUE TO AN ERROR ON THE PART OF THE PURCHASING OFFICER IN ASSUMING THAT A NEW CONTRACT HAD BEEN OR WOULD BE AWARDED TO THE FORMER CONTRACTOR, SUCH OPEN-MARKET PURCHASES WAS BEYOND THE SCOPE OF SAID OFFICER'S AUTHORITY, AND, THEREFORE, THE GOVERNMENT IS NOT OBLIGATED TO PAY ANY AMOUNT IN EXCESS OF THE EXISTING CONTRACT PRICE FOR THE OIL.

ACTING COMPTROLLER GENERAL YATES TO THE OHIO OIL COMPANY, JULY 24, 1950:

REFERENCE IS MADE TO YOUR LETTER OF MAY 9, 1950, PROTESTING THE ACTION TAKEN IN GENERAL ACCOUNTING OFFICE SETTLEMENT OF APRIL 19, 1950, CERTIFICATE NO. 1838689, WHEREIN YOUR CLAIM IN THE SUM OF $2,401.59, FOR A QUANTITY OF FUEL OIL FURNISHED IN THE SIOUX ORDNANCE DEPOT, PANHANDLE, NEBRASKA, WAS ALLOWED IN THE AMOUNT OF $1,825.21, AND THE BALANCE, OR $576.38, WAS DISALLOWED AS BEING THE AMOUNT CHARGED IN EXCESS OF THE EXISTING CONTRACT PRICE.

THE RECORD BEFORE THIS OFFICE DISCLOSED THAT THE OIL WAS DELIVERED BY YOU PURSUANT TO PURCHASE ORDER ISSUED UNDER DATE OF JANUARY 19 AND FEBRUARY 18, 1949, BY THE POST ENGINEER, ON THE ASSUMPTION THAT A NEW CONTRACT HAD BEEN OR WOULD BE AWARDED TO YOUR COMPANY, THE CONTRACT UNDER WHICH PREVIOUS SHIPMENTS WERE MADE HAVING EXPIRED. HOWEVER, CONTRACT NO. ASP- 404 DATED SEPTEMBER 29, 1948, WAS EXECUTED WITH THE SAUNDERS PETROLEUM COMPANY, FOR THE FURNISHING OF FUEL OIL TO THE SAID DEPOT FROM OCTOBER 1, 1948, THROUGH MAY 31, 1949, THE PERIOD DURING WHICH THE SUBJECT PURCHASE ORDERS WERE ISSUED, BUT THROUGH INADVERTENCE THE OIL WAS NOT PROCURED UNDER THAT CONTRACT.

THE FACTS IN THE PRESENT CASE ARE SOMEWHAT SIMILAR TO THOSE INVOLVED IN THE DECISION OF THIS OFFICE DATED MAY 13, 1947, 26 COMP. GEN. 866, WHEREIN IT WAS STATED AS FOLLOWS:

* * * IT APPEARS THAT THE PROCUREMENT OF THE GASOLINE HERE INVOLVED ON THE OPEN MARKET RATHER THAN FROM THE SCHEDULED CONTRACTOR, THE PHILLIPS PETROLEUM CO., WAS NOT DUE TO A PUBLIC EXIGENCY BUT TO AN ERROR ON THE PART OF THE ADMINISTRATIVE OFFICERS OR EMPLOYEES CONCERNED IN DETERMINING THAT NO GENERAL SCHEDULE OF SUPPLIES CONTRACT FOR THE GASOLINE EXISTED. HOWEVER, SUCH ERROR DOES NOT ESTABLISH THE LEGALITY OF THE TRANSACTION. IT WAS THE DUTY OF THE PURCHASING OFFICER, ACTING FOR AND IN BEHALF OF THE UNITED STATES, TO PURCHASE THE GASOLINE REQUIRED AT THE PROJECT SITE UNDER THE GENERAL SCHEDULE OF SUPPLIES. HENCE, THE OPEN-MARKET PURCHASE OF GASOLINE AT A PRICE IN EXCESS OF THAT STIPULATED THEREIN WAS BEYOND THE SCOPE OF THE SAID OFFICERS' AUTHORITY.

IT FOLLOWS THAT, SINCE THE PURCHASING OFFICER IN THIS CASE WAS AUTHORIZED TO OBLIGATE THE GOVERNMENT ONLY TO THE EXTENT OF THE PRICE STIPULATED IN THE APPLICABLE GENERAL SCHEDULE OF SUPPLIES CONTRACT * * * THERE IS NO AUTHORITY FOR CHARGING APPROPRIATED MONEYS WITH ANY AMOUNT IN EXCESS OF THAT PRICE. * * *

SUCH CONCLUSION IS PREDICATED UPON THE BASIS THAT WHERE AN AGENT OF THE GOVERNMENT ACTS IN EXCESS OF THE AUTHORITY VESTED IN HIM, HIS ACT, FROM A LEGAL STANDPOINT, IS NO LONGER AN ACT OF THE GOVERNMENT. THE UNDERWRITER, 6 F.2D 937. LIKEWISE, THE UNAUTHORIZED ACTS OF ITS AGENTS CANNOT OBLIGATE THE GOVERNMENT. FILOR V. UNITED STATES, 9 WALL. 45; WHITESIDE, ET AL. V. UNITED STATES, 93 U.S. 247, 257. AND, UNDER THOSE CIRCUMSTANCES, THE COURTS HAVE HELD CONSISTENTLY THAT ONE ENTERING INTO A CONTRACT WITH AN OFFICER OR EMPLOYEE OF THE GOVERNMENT IS CHARGED WITH NOTICE OF THE LIMITATIONS PLACED UPON THE AUTHORITY OF THE OFFICER OR EMPLOYEE TO OBLIGATE THE UNITED STATES. SEE HUME V. UNITED STATES, 132 U.S. 406; JACOB REED'S SONS V. UNITED STATES, 273 ID. 200; DAVIS V. UNITED STATES, 59 C.CLS. 197.

ACCORDINGLY, SINCE THE PURCHASING AGENT IN THIS CASE WAS NOT AUTHORIZED TO OBLIGATE THE GOVERNMENT TO PAY ANY AMOUNT IN EXCESS OF THE EXISTING CONTRACT FOR FUEL OIL, THE ACTION TAKEN IN THE SETTLEMENT OF APRIL 19, 1950, WAS CORRECT AND IS SUSTAINED.