B-195588 OM, NOV 20, 1979

B-195588 OM: Nov 20, 1979

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PRECIS-UNAVAILABLE COMPTROLLER GENERAL: WE ARE FORWARDING THE FILES PERTAINING TO THE CLAIMS OF J & P INDUSTRIAL PRODUCTS AND PREMIER INDUSTRIAL CORPORATION. IT WAS DISCOVERED AT FORT BLISS THAT AN UNAUTHORIZED CONTRACTOR OPERATED SUPPLY SYSTEM HAD BEEN ESTABLISHED TO FURNISH PARTS TO THE MATERIEL READINESS DIVISION BY MISUSE OF AUTHORITY TO PLACE ORDERS AGAINST BLANKET PURCHASE AGREEMENTS. ORDERS WERE ISSUED THAT NO MORE DELIVERIES WERE TO BE ACCEPTED FROM THE CLAIMANTS. A NUMBER OF INVESTIGATIONS APPEAR TO BE UNDERWAY AT THE PRESENT TIME BECAUSE OF THE LARGE NUMBER OF IRREGULARITIES THAT WERE COMMITTED IN FURNISHING THESE UNAUTHORIZED SUPPLIES. THE CLAIMANTS ARE CLAIMING PAYMENT OF A TOTAL OF $145.

B-195588 OM, NOV 20, 1979

PRECIS-UNAVAILABLE

COMPTROLLER GENERAL:

WE ARE FORWARDING THE FILES PERTAINING TO THE CLAIMS OF J & P INDUSTRIAL PRODUCTS AND PREMIER INDUSTRIAL CORPORATION, IN THE AMOUNTS OF $43,686.55 AND $102,175.46, FOR PARTS SUPPLIED THE MATERIEL READINESS DIVISION, DIO, FORT BLISS, TEXAS, IN AUGUST AND SEPTEMBER, 1978 UNDER AN UNAUTHORIZED CONTRACTOR OPERATED SUPPLY SYSTEM.

IN SEPTEMBER 1978, IT WAS DISCOVERED AT FORT BLISS THAT AN UNAUTHORIZED CONTRACTOR OPERATED SUPPLY SYSTEM HAD BEEN ESTABLISHED TO FURNISH PARTS TO THE MATERIEL READINESS DIVISION BY MISUSE OF AUTHORITY TO PLACE ORDERS AGAINST BLANKET PURCHASE AGREEMENTS. ON SEPTEMBER 11, 1978, ORDERS WERE ISSUED THAT NO MORE DELIVERIES WERE TO BE ACCEPTED FROM THE CLAIMANTS.

A NUMBER OF INVESTIGATIONS APPEAR TO BE UNDERWAY AT THE PRESENT TIME BECAUSE OF THE LARGE NUMBER OF IRREGULARITIES THAT WERE COMMITTED IN FURNISHING THESE UNAUTHORIZED SUPPLIES.

THE CLAIMANTS ARE CLAIMING PAYMENT OF A TOTAL OF $145,862.01 FOR THE SUPPLIES AND SERVICES THEY FURNISHED. THE CONTRACTING OFFICER, IN ADDITION TO PROTESTING THE IRREGULARITIES INVOLVED, REPORTS THAT THE PRICES CLAIMED ARE EXCESSIVE AND ARE NOT CONSIDERED FAIR AND REASONABLE. THE ADMINISTRATIVE REPORT FROM THE ARMY FINANCE & ACCOUNTING CENTER IN INDIANAPOLIS RECOMMENDS THAT 58% OF THE J & P INDUSTRIAL PRODUCTS CLAIM AND 49.58% OF THE PREMIER INDUSTRIAL CORPORATION CLAIM BE PAID.

IN VIEW OF THE AMOUNT CLAIMED, AND BECAUSE OF THE VIOLATIONS OF PROCEDURES AND PRICES BEING CLAIMED, THE MATTER IS SUBMITTED FOR YOUR CONSIDERATION.

CONGRESSMAN RICHARD C. WHITE HAS EXPRESSED AN INTEREST IN THE MATTER.

INDORSEMENT

DIRECTOR, CLAIMS DIVISION

RETURNED. THESE CLAIMS SHOULD BE CERTIFIED FOR PAYMENT IN THE AMOUNTS RECOMMENDED BY THE CONTRACTING OFFICER.

ALTHOUGH THE PROCEDURE WHICH THE CLAIMANTS FOLLOWED AT THE SUGGESTION AND APPROVAL OF A GOVERNMENT OFFICIAL WAS IMPROPER, THE CLAIMANTS DID DELIVER COMMODITIES AND MATERIALS WHICH WERE RETAINED BY THE GOVERNMENT AND THE RECORD PROVIDES NO EVIDENCE OF BAD FAITH. WE MAY INFER RATIFICATION FROM THE RETENTION OF THE MATERIALS AND THE RECOMMENDATION THAT THE CLAIMS BE PAID. MOLITOR & GRAYSON, B-188454, JANUARY 15, 1979, 79-1 CPD 18; PLANNED COMMUNICATIONS SERVICES, INC., B-191476, MAY 31, 1978, 78-1 CPD 408.

PAYMENT FOR GOODS AND/OR SERVICES ON A QUANTUM MERUIT OR QUANTUM VALEBAT BASIS, AS HERE, IS AUTHORIZED ON THE BASIS OF THE VALUE RECEIVED BY THE GOVERNMENT. 40 COMP.GEN. 447, 451 (1961). THE CONTRACTING OFFICER HAS DETERMINED THE REASONABLE VALUE OF THE GOODS PROVIDED BY J & P INDUSTRIAL PRODUCTS AND PREMIER INDUSTRIAL CORPORATION TO BE 58 PERCENT AND 49.58 PERCENT, RESPECTIVELY, OF THE AMOUNTS CLAIMED. THE CLAIMS SHOULD BE CERTIFIED FOR PAYMENT IN THESE AMOUNTS.

THE BALANCE OF BOTH CLAIMS REPRESENTS, WE BELIEVE, THE "VALUE" OF THE SERVICES ALLEGEDLY PROVIDED BY THE CLAIMANTS IN HELPING TO OPERATE THE SUPPLY SYSTEM. SINCE THE CONTRACTING OFFICER HAS DECLINED TO RATIFY THE SERVICES AND, IN ANY EVENT, SECTION 852 OF PUBLIC LAW 95-111 PROHIBITS THE USE OF FY 1978 FUNDS FOR THE CONVERSION OF SUCH SUPPORT FUNCTIONS TO CONTRACTOR OPERATIONS, THE BALANCE OF THESE CLAIMS SHOULD BE DISALLOWED. SEE MOORE'S AUTO BODY & PAINT, INC., B-189304, AUGUST 2, 1977, 77-2 CPD 72; ALLEN BUSINESS MACHINES COMPANY, 55 COMP.GEN. 356 (1975).

SETTLEMENT SHOULD BE ISSUED "IN FULL SETTLEMENT" OF THESE CLAIMS.

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