APRIL 2, 1924, 3 COMP. GEN. 711

APRIL 2, 1924, 3 COMP. GEN. 711

CONTRACTS - DENT ACT AWARDS - RELIEF OF DISBURSING OFFICER WHERE A FORMAL CONTRACT FOR SUPPLIES WAS COMPLETELY PERFORMED AND A SUPPLEMENTAL AGREEMENT WAS ENTERED INTO AFTER NOVEMBER 11, 1918, ATTEMPTING TO OBLIGATE THE UNITED STATES TO PAY FOR THE COST OF TOOLS OR FACILITIES REQUIRED BY THE CONTRACTOR TO PRODUCE THE SUPPLIES, THERE WAS NO AUTHORITY CONFERRED BY THE DENT ACT, OF MARCH 2, 1919, 40 STAT., 1272, TO MAKE AN AWARD IN SETTLEMENT OF EITHER THE CONTRACT OR THE SUPPLEMENTAL AGREEMENT. A DISBURSING OFFICER IS NOT ENTITLED TO RELIEF UNDER THE ACT OF APRIL 21, 1922, 42 STAT., 497, FOR PAYMENTS MADE ON A SUPPLEMENTAL AWARD TO "CORRECT ERRORS" IN THE ORIGINAL AWARD.

DECISION BY COMPTROLLER GENERAL MCCARL, APRIL 2, 1924:

THE SECRETARY OF WAR REQUESTED JANUARY 17, 1924, ALLOWANCE OF CREDIT UNDER THE ACT OF APRIL 21, 1922, 42 STAT., 497, FOR $3,636.96 AS A PAYMENT MADE FEBRUARY 17, 1920, BY FRANK W. DURYEA, MAJOR, ORDNANCE DEPARTMENT, TO ROOT AND VAN DERVOORT ENGINEERING CO. AS THE AMOUNT OF A SUPPLEMENTARY AWARD UNDER THE DENT ACT OF MARCH 2, 1919, 40 STAT., 1272, IN SETTLEMENT OF A CONTRACT DATED AUGUST 25, 1917, FOR 40,000 COMPLETE 8-INCH SHELLS. CREDIT FOR THE PAYMENT WAS DISALLOWED IN SETTLEMENT NO. W-74124, DATED DECEMBER 11, 1922, OF MAJOR DURYEA'S ACCOUNTS ON THE GROUND THAT SINCE THE CONTRACTOR HAD RELEASED THE UNITED STATES FROM ALL CLAIMS ARISING OUT OF THE CONTRACT BY THE ACCEPTANCE OF AN AWARD APPROVED AUGUST 15, 1919, THERE WAS NO CONSIDERATION TO THE UNITED STATES FOR THE SUPPLEMENTARY PAYMENT.

THE CONTRACT OF AUGUST 25, 1917, REQUIRED DELIVERY ON OR BEFORE MARCH 31, 1918, OF 40,000 8-INCH SHELLS, MANUFACTURED IN ACCORDANCE WITH CERTAIN DRAWINGS AND SPECIFICATIONS ATTACHED TO AND FORMING A PART OF THE CONTRACT. THE UNITED STATES AGREED TO FURNISH THE STEEL, COPPER BANDS, COVERS, AND CALKING WIRE NECESSARY AND TO PAY $22.84 EACH FOR THE SHELLS. IN SUPPLEMENTARY AGREEMENT THERETO, DATED APRIL, 1918, WHEREIN--- AFTER A RECITAL THAT ON ACCOUNT OF A REQUIREMENT THE COPPER BANDS BE MADE THINNER RESULTING IN "DECREASED EXPENSE OCCASIONED BY THE COPPER SCRAP; , THAT ON ACCOUNT OF "INCREASED EXPENSE MADE NECESSARY BY THE CHANGE IN THE LENGTH OF THE SHELL; " AND THAT "THE CHIEF OF ORDNANCE HAS DIRECTED THAT CERTAIN OF THE SHELLS BE HEAT TREATED"--- IT WAS AGREED THAT THE PRICE FOR EACH COMPLETED SHELL SHOULD BE DECREASED TO $22.6152 AND THAT THE ,UNITED STATES WILL PAY TO THE CONTRACTOR THE SUM OF $0.75 FOR EACH SHELL FORGING USED IN THE MANUFACTURE HEREUNDER, HEAT TREATED BY CURTIS AND CO., MANUFACTURING COMPANY, FOR THE CONTRACTOR, AND IN PURSUANCE OF THE DIRECTIONS AND INSTRUCTIONS OF THE CHIEF OF ORDNANCE.' DELIVERIES WERE NOT COMPLETED ON OR BEFORE MARCH 31, 1918, BUT THE CONTRACTOR IS SHOWN TO HAVE DELIVERED 40,000 SHELLS ON OR BEFORE JUNE 17, 1918, AND PAYMENT FOR ALL WAS MADE PRIOR TO JULY 31, 1918, EXCEPT FOR 1,500, FOR WHICH PAYMENT WAS MADE IN DECEMBER, 1918. THE CONTRACTOR DELIVERED 300 ADDITIONAL ON NOVEMBER 1, 1918, AND WAS PAID THEREFOR IN FEBRUARY, 1919, AND IN MARCH THERE WAS ALSO A PAYMENT OF $1.53 EACH FOR HEAT TREATING 3,087 SHELLS.

LONG AFTER THE CONTRACT HAD BEEN EXECUTED BY DELIVERY AND PAYMENT FOR THE 40,000 SHELLS, A PROXY-SIGNED SUPPLEMENTARY AGREEMENT WAS ENTERED INTO BEARING DATE OF DECEMBER 17, 1918, BUT TO WHICH IS ATTACHED A CERTIFICATION DATED FEBRUARY 15, 1919, OF THE MINUTES OF THE BOARD OF DIRECTORS OF THE CONTRACTOR AUTHORIZING CERTAIN OFFICIALS TO SIGN CONTRACTS IN ITS BEHALF, WHICH, SO FAR AS IS MATERIAL, PROVIDES THAT:

ARTICLE I. THE CONTRACTOR SHALL HEAT TREAT 3,087 OF THE SAID SHELLS CONTRACTED FOR 100 PERCENT AS DIRECTED BY THE INSPECTING OFFICER.

ARTICLE II. THE UNITED STATES SHALL PAY TO THE CONTRACTOR, IN ADDITION TO THE CONTRACT PRICE PROVIDED FOR IN THE SAID ORIGINAL CONTRACT, AS AMENDED BY THE SAID SUPPLEMENTAL CONTRACT, THE SUM OF $1.55 FOR HEAT TREATING EACH OF THE SAID 3,087 SHELLS.

ARTICLE III. THE CONTRACTOR SHALL AT ONCE (IF NOT ALREADY DONE IN ANTICIPATION OF THIS SUPPLEMENTAL CONTRACT) MAKE SUCH CHANGES IN ITS PLANT AT EAST MOLINE, ILLINOIS, AND INSTALL THEREIN SUCH HEAT-TREATING EQUIPMENT AND OTHER FACILITIES (HEREINAFTER COLLECTIVELY CALLED ,INCREASED FACILITIES") AS WILL INSURE THE PERFORMANCE OF THE AFORESAID CONTRACT, AS AMENDED, SAID INCREASED FACILITIES BEING AS FOLLOWS: TWO ADDITIONAL FURNACES WITH NECESSARY BUILDING CHANGES -- $22,000.00 CONCRETE FUEL-OIL TANK (CAPACITY 60,000 GALS.) ----------- 8,000.00 BUILDING AND FOUNDATION FOR FURNACES, FIXTURES, ETC. ----- 8,000.00 FURNACES--- HEAT TREATING:

FIRST HEAT ------------------------ $5,250.00

SECOND HEAT ----------------------- 4,500.00

ANNEALING ------------------------- 9,000.00

--------- TANKS ------------------------------------------------ -- 18,750.00

---------- TANKS ------------------------------- -------------------- 56,750.00

---------- OIL STORAGE (42,000 GALS.) ----------- $2,800.00 COOLING EQUIPMENT -------------- ----- 2,000.00 PIPE LINES ----------------------- ---- 2,250.00

--------- 7,050.00 GENERAL EQUIPMENT, AIR COMPRESSOR, AIR HOISTS, CONVEYING

EQUIPMENT, TESTING EQUIPMENT, SHOT BLAST, ETC. -------- 6,000.00 QUENCHING OIL (INITIAL SUPPLY) --------------------------- 7,500.00 MISCELLANEOUS COSTS, COVERING INSTALLATIONS, FREIGHT,

ETC., NOT INCLUDED IN THE ABOVE ---------------------- 2,700.00

TOTAL ------------------------------------------ 80,000.00

ARTICLE IV. IT IS ESTIMATED THAT THE COST OF SUCH INCREASED FACILITIES WILL BE $80,000.00, BUT SUCH ESTIMATED COST SHALL NOT BE EXCEEDED UNLESS ADDITIONAL COST IS AUTHORIZED BY THE CONTRACTING OFFICERS. THE UNITED STATES WILL PAY THE COST OF THE PROCUREMENT AND INSTALLATION OF SUCH INCREASED FACILITIES, WHETHER INCURRED SUBSEQUENT TO THE DATE HEREOF OR PRIOR THERETO IN ANTICIPATION HEREOF, BUT APPROVAL BY THE CHIEF OF ORDNANCE OF SUCH INCREASED FACILITIES AND OF THE SOURCE OF SUPPLY OF THE SAME AND THE PRICE THEREOF SHALL BE A PREREQUISITE TO ANY OBLIGATION ON THE PART OF THE UNITED STATES TO REIMBURSE THE CONTRACTOR THEREFOR. UPON THE CERTIFICATE OF THE CHIEF OF ORDNANCE SHOWING APPROVAL OF PROPERTY DELIVERED, OR SERVICES OR LABOR PERFORMED, OR EXPENSES INCURRED IN CONNECTION WITH SUCH INCREASED FACILITIES, THE UNITED STATES WILL PROMPTLY REIMBURSE THE CONTRACTOR FOR ALL PROPER ITEMS OF COST THEREOF. THE DETERMINATION OF THE COST FOR WHICH THE UNITED STATES SHALL REIMBURSE THE CONTRACTOR SHALL BE MADE IN ACCORDANCE WITH THE ,DEFINITION OF "COST" PERTAINING TO CONTRACTS," ISSUED BY THE WAR DEPARTMENT, OFFICE OF THE CHIEF OF ORDNANCE, DATED JUNE 27, 1917, AND HEREBY MADE A PART HEREOF BY REFERENCE. TO FACILITATE PROMPT PAYMENT FOR SAID INCREASED FACILITIES, THE UNITED STATES MAY ATTACH A DISBURSING OFFICER TO THE PRINCIPAL OFFICE OF THE CONTRACTOR. NO PAYMENT BY THE UNITED STATES SHALL ACT TO PREVENT THE UNITED STATES FROM LATER DISPUTING THE VALIDITY THEREOF UNDER THIS SUPPLEMENTAL CONTRACT.

ARTICLE V. ALL OF THE EQUIPMENT AND OTHER FACILITIES PAID FOR BY THE UNITED STATES SHALL IMMEDIATELY, UPON SUCH PAYMENT, BECOME THE PROPERTY OF THE UNITED STATES AND SHALL, IN SO FAR AS PRACTICABLE, BE KEPT SEPARATE AND APART FROM PROPERTY BELONGING TO THE CONTRACTOR AND SHALL BE MARKED AS THE CONTRACTING OFFICER MAY DIRECT. IN OPERATING, CARING FOR, AND STORING THE SAID PROPERTY OF THE UNITED STATES THE CONTRACTOR SHALL USE ITS BEST EFFORTS TO PROTECT THE SAME, BUT IT SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE THERETO, EXCEPT AS MAY BE CAUSED BY ITS OWN FAULT OR NEGLIGENCE. THE CONTRACTOR SHALL HAVE FREE AND UNRESTRICTED USE OF SUCH EQUIPMENT AND OTHER FACILITIES FOR THE PERFORMANCE OF SAID CONTRACT, AS AMENDED.

NOTHING FURTHER APPEARS TO HAVE BEEN DONE UNTIL AFTER THE DENT ACT OF MARCH 2, 1919, 40 STAT., 1272, AUTHORIZING THE SECRETARY OF WAR TO ADJUST, PAY, OR DISCHARGE ANY AGREEMENT, EXPRESS OR IMPLIED, UPON A FAIR AND EQUITABLE BASIS THAT HAD BEEN ENTERED INTO DURING THE EMERGENCY AND PRIOR TO NOVEMBER 12, 1918, AND WHICH HAD NOT BEEN EXECUTED IN THE MANNER PRESCRIBED BY LAW. THEN IT WAS THAT THE CONTRACTOR SUBMITTED A CLAIM ON ACCOUNT OF THE HEAT-TREATMENT FACILITIES, AND UNDER DATE OF AUGUST 15, 1919, THERE WAS APPROVED ON BEHALF OF THE SECRETARY OF WAR AN AWARD OF $15,642.07, WHICH THE CONTRACTOR AGREED TO ACCEPT IN DISCHARGE OF THE AGREEMENTS UPON A "FAIR AND EQUITABLE BASIS," AND THE UNITED STATES AGREED TO ACCEPT TITLE TO CERTAIN BUILDINGS AND MACHINERY. WHAT DISPOSITION WAS MADE OF THE BUILDINGS AND MACHINERY DOES NOT APPEAR. SUBSEQUENTLY AND ON DECEMBER 30, 1919, THERE WAS APPROVED ON BEHALF OF THE SECRETARY OF WAR A SUPPLEMENTARY AWARD OF $3,636.96 TO THE CONTRACTOR TO "ADJUST CERTAIN ERRORS SURROUNDING THE ISSUANCE OF SAID AWARD DUE TO MUTUAL MISTAKE OF FACT AND CONTRARY TO THE INTENTION OF THE RTIES.'

THE CONTRACT OF AUGUST 25, 1917, WAS REDUCED TO WRITING AND SIGNED BY THE PARTIES WITH THEIR NAMES AT THE END AS REQUIRED BY SECTION 3744, REVISED STATUTES. FURTHERMORE THE TOTAL QUANTITY OF 40,000 SHELLS HAD BEEN DELIVERED AND PAID FOR PRIOR TO THE DATE OF THE SUPPLEMENTARY AGREEMENT OF DECEMBER 17, 1918, ATTEMPTING TO OBLIGATE THE UNITED STATES TO PAY THE COST OF HEAT-TREATMENT EQUIPMENT THERETOFORE INSTALLED AND USED IN THE HEAT TREATMENT OF 3,087 SHELLS WHICH THERETOFORE HAD BEEN DELIVERED TO THE GOVERNMENT. OBVIOUSLY THERE WAS NO JURISDICTION UNDER THE DENT ACT OF MARCH 2, 1919, 40 STAT., 1272, TO MAKE AN AWARD AS TO THE CONTRACT OF AUGUST 25, 1917, FOR NOT ONLY WAS IT EXECUTED IN ACCORDANCE WITH LAW BUT IT HAD BEEN COMPLETELY PERFORMED. THERE WAS NO JURISDICTION UNDER SAID ACT TO MAKE AN AWARD IN SETTLEMENT OF THE SUPPLEMENTARY AGREEMENT OF DECEMBER 17, 1918, FOR IT WAS NOT EXECUTED DURING THE EMERGENCY AND PRIOR TO NOVEMBER 12, 1918. WHILE THE AGREEMENT OF DECEMBER 17, 1918, WAS TERMED A SUPPLEMENTARY AGREEMENT TO THE CONTRACT OF AUGUST 25, 1917, IT WAS IN LAW AND IN FACT A SEPARATE AND DISTINCT AGREEMENT IN SO FAR AS IT RELATED TO ANY WORK THEREAFTER TO BE PERFORMED, FOR THE REASON, AS HEREINBEFORE STATED, THE CONTRACT OF AUGUST 25, 1917, HAD BEEN COMPLETELY PERFORMED BY BOTH PARTIES. FURTHERMORE, AS THE SUPREME COURT HELD IN B. AND O. RAILROAD CO. V. UNITED STATES, 261 U.S., 592, THE DENT ACT MERELY VALIDATED INFORMAL CONTRACTS ENTERED INTO PRIOR TO NOVEMBER 12, 1918, AND SUBSEQUENT TO APRIL 5, 1917, AND GAVE THE CONTRACTOR NO GREATER RIGHTS THAN HE WOULD HAVE POSSESSED HAD HIS CONTRACT BEEN PROPERLY INSTEAD OF IMPROPERLY EXECUTED.

THERE WAS NO AUTHORITY FOR ANY EXECUTIVE OFFICIAL OF THE UNITED STATES TO OBLIGATE THE GOVERNMENT ON OR AFTER DECEMBER 17, 1918, TO PAY FOR ANY PART OF THE TOOLS OR FACILITIES THE CONTRACTOR WAS REQUIRED TO USE IN THE PERFORMANCE OF ITS CONTRACT WHICH HAD THERETOFORE BEEN COMPLETED. THE GOVERNMENT HAD AGREED TO AND DID FURNISH CERTAIN RAW MATERIAL, PAY A FIXED PRICE, AND PAY A CERTAIN SUM FOR THE HEAT TREATMENT OF THE SHELLS. THE ATTEMPT OF A CONTRACTING OFFICER THEREAFTER TO BIND THE GOVERNMENT TO PAY AN ADDITIONAL SUM TO THE CONTRACTOR THROUGH PAYING FOR THE INCREASED FACILITIES REQUIRED TO CARRY OUT THE CONTRACT WAS BEYOND HIS AUTHORITY AND INEFFECTUAL TO IMPOSE AN OBLIGATION ON THE GOVERNMENT.

IT IS SHOWN FROM THE PAPERS IN THE CASE THAT MAJOR DURYEA WAS FULLY COGNIZANT OF THE FACT THAT ,IT WOULD NOT BE PROPER TO VOUCHER" THE AMOUNT OF $3,636.96 CLAIMED BY THE CONTRACTOR BUT HE CHOSE TO PAY IT IN THE FORM OF AN AWARD WITHOUT TAKING THE PROPER STEP TO SAFEGUARD THE PUBLIC INTERESTS BY OBTAINING A DECISION UNDER THE ACT OF JULY 31, 1894, 28 STAT., 207, PRIOR TO PAYMENT. THIS IS NOT A PROPER CASE FOR RELIEF UNDER THE ACT OF APRIL 21, 1922, 42 STAT., 497.

A CHARGE FOR THE TOTAL AMOUNT PAID UNDER BOTH THE ORIGINAL AND THE SUPPLEMENTAL AWARDS IS HEREBY CERTIFIED AGAINST THE CONTRACTOR AND COLLECTION WILL BE PROCEEDED WITH AS IN OTHER CASES.