B-137471, JUL. 8, 1959

B-137471, JUL. 8, 1959

TO WHEELER AND WHEELER:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 19, 1959, SUBMITTING A CLAIM IN BEHALF OF COASTAL CARGO CO., INC., FOR $158,530.89 ALLEGED TO BE DUE THE CLAIMANT AS A RESULT OF TERMINATION OF CONTRACT AF 11/626/75.

THE CONTRACT IN QUESTION WAS AWARDED TO THE CLAIMANT ON SEPTEMBER 16, 1958, AND COVERED THE TRANSPORTATION OF 500 AIR PASSENGERS PER MONTH, AT A PRICE OF $222.90 PER PASSENGER, FROM CHARLESTON AIR FORCE BASE TO NOURASSEUR, AND RETURN, DURING THE PERIOD OCTOBER 1, 1958, THROUGH SEPTEMBER 30, 1959. PURSUANT TO ADVICE FROM THIS OFFICE DATED DECEMBER 9, 1958, B-137471, THE CONTRACT AWARD TO THE CLAIMANT WAS CANCELLED BY THE DEPARTMENT OF THE AIR FORCE ON DECEMBER 18, 1958, AND AN AWARD FOR THE REMAINING PORTION OF THE SERVICES COVERED BY CONTRACT AF 11/626/75 WAS MADE TO LOS ANGELES AIR SERVICE, INC., THE LOWEST RESPONSIBLE BIDDER, AT A PRICE OF $215.08 PER PASSENGER.

AS SET OUT IN A STATEMENT BY THE CLAIMANT'S CERTIFIED PUBLIC ACCOUNTANT THE CLAIM SUBMITTED CONSISTS OF LOSSES IN THE AMOUNT OF $55,994.61 WHICH THE CLAIMANT INCURRED IN PERFORMING 19 FLIGHTS BETWEEN THE DATE OF AWARD AND THE DATE OF CANCELLATION, PLUS LOSSES OF $74,122.97 WHICH OCCURRED DURING JANUARY, FEBRUARY, AND MARCH, 1959, BECAUSE THE CLAIMANT'S OBLIGATIONS UNDER CONTRACT AF 11/626/75 PRECLUDED THE ADVANCE SOLICITATION OF OTHER CONTRACTS TO BE PERFORMED DURING THIS PERIOD. ADDITIONALLY, THE CLAIM INCLUDES AN AMOUNT OF $28,413.31 REPRESENTING AN UNREALIZED PROFIT OF 8 PERCENT ON $355,166.41, THE REPORTED COST TO THE CLAIMANT OF PERFORMING THE 19 FLIGHTS PRIOR TO DECEMBER 18, 1958, WHICH ARE MENTIONED ABOVE.

SINCE YOUR LETTER FAILS TO SET OUT A SPECIFIC LEGAL BASIS UPON WHICH THE CLAIM IS BASED IT WOULD APPEAR APPROPRIATE, BEFORE CONSIDERING THE MERITS OF THE CLAIM, TO ADVISE YOU THAT THIS OFFICE IS WITHOUT JURISDICTION TO AUTHORIZE THE PAYMENT OF CLAIMS WHICH ARE BASED UPON EQUITABLE GROUNDS, AND WHERE THE VALIDITY OF A CLAIM, AS A MATTER OF LAW, IS DOUBTFUL, OR WHERE SUBSTANTIAL DEFENSES IN LAW WOULD APPEAR TO EXIST, WE ARE REQUIRED TO DISALLOW PAYMENT OF SUCH CLAIMS. LONGWILL V. UNITED STATES, 17 C.CLS. 288, 291.

AS INDICATED IN OUR LETTER OF DECEMBER 8, 1958, DIRECTING THE SECRETARY OF THE AIR FORCE TO CANCEL THE AWARD MADE TO THE CLAIMANT, SUCH CANCELLATION WAS BASED UPON A DETERMINATION THAT THE CONTRACTING OFFICER WAS REQUIRED TO MAKE THE AWARD TO THE LOWEST RESPONSIBLE BIDDER AND THAT HE WAS WITHOUT AUTHORITY, UNDER APPLICABLE LAW AND REGULATIONS, TO MAKE THE AWARD TO THE CLAIMANT. THE LAW IS SETTLED THAT FEDERAL CONTRACTING OFFICERS, IN EXERCISING POWERS CONFERRED UPON THEM BY STATUTE OR REGULATION, ARE BOUND TO FOLLOW PRESCRIBED PROCEDURES, AND ACTS OF SUCH OFFICERS IN EXCESS OF THEIR AUTHORITY ARE VOID AND DO NOT BIND OR ESTOP THE GOVERNMENT. 43 AM.JUR., PUBLIC OFFICERS, 249, 256; 54 AM.JUR., UNITED STATES, 92; THE FLOYD ACCEPTANCES, 74 U.S. 666; WISCONSIN CENTRAL RAILROAD CO. V. UNITED STATES, 164 U.S. 190; UTAH POWER AND LIGHT CO. V. UNITED STATES, 243 U.S. 389; UNITED STATES V. CITY AND COUNTY OF SAN FRANCISCO, 310 U.S. 16; UNITED STATES V. AMERICAN SALES CORP., 27 F.2D 389; THE GOVERNMENT OF THE VIRGIN ISLANDS V. GORDON AND OTHERS, 244 F.2D 818; LENDERS CASE, 7 C.CLS. 530; SCHNEIDER V. UNITED STATES, 19 C.CLS. 547; BARNES ET AL. V. DISTRICT OF COLUMBIA, 22 C.CLS. 366; CONSOLIDATED SUPPLY CO. V. UNITED STATES, 59 C.CLS. 197.

IN VIEW OF THE ABOVE CITED AUTHORITIES IT IS OUR OPINION THAT THE AGREEMENT SET OUT IN CONTRACT AF 11/626/75 WAS INVALID AND UNENFORCEABLE FROM ITS INCEPTION. SINCE NO VALID OR ENFORCEABLE AGREEMENT EXISTED, IT FOLLOWS THAT THERE CAN BE NO VALID OR ENFORCEABLE CLAIM FOR DAMAGES BASED UPON BREACH OR TERMINATION OF THE CONTRACT IN QUESTION. CORBIN ON CONTRACTS, SECTION 993.

UNDER THE CIRCUMSTANCES THE ONLY REMAINING QUESTION FOR CONSIDERATION WOULD APPEAR TO BE THE EXTENT OF THE GOVERNMENT'S LIABILITY, IF ANY, UNDER THE DOCTRINE OF QUANTUM MERUIT FOR THE SERVICES RENDERED BY THE CLAIMANT. WILLISTON ON CONTRACTS, SECTIONS 1770 AND 1786A.

THE AMOUNT OF RECOVERY PERMITTED ON THE BASIS OF QUANTUM MERUIT FOR SERVICES FURNISHED UNDER AN INVALID OR UNENFORCEABLE CONTRACT IS THE REASONABLE VALUE OF THE SERVICES. 98 C.J.S. 825; 58 AM.JUR., WORK AND LABOR, 35. AND THE LIMIT OF RECOVERY UNDER SUCH AGREEMENT HAS BEEN VARIOUSLY SAID TO BE THE CONTRACT PRICE, THE VALUE OF THE SERVICES REGARDLESS OF THE CONTRACT PRICE, AND THE BENEFIT RECEIVED BY THE RECIPIENT OF THE SERVICE. 58 AM.JUR., WORK AND LABOR, 35. WHILE THE CONTRACT PRICE IS THEREFORE NOT CONTROLLING IN DETERMINING THE REASONABLE VALUE OF SERVICES FURNISHED, IT HAS BEEN HELD THAT WHERE THE SUBJECT MATTER IS A PROPER SUBJECT OF CONTRACT AND THE SERVICE WAS PERFORMED IN GOOD FAITH, THE RIGHT OF RECOVERY IN QUANTUM MERUIT EXISTS UP TO THE LIMIT, BUT NOT BEYOND, THE AMOUNT WHICH WOULD HAVE BEEN RECOVERABLE UNDER A VALID CONTRACT COVERING THE SAME SUBJECT MATTER. 99 C.J.S. 825. AND WHERE THE CONTRACT HAS BEEN PARTIALLY PERFORMED THE ONE FURNISHING THE SERVICES IS NOT ENTITLED TO RECOVER AT THE CONTRACT RATE WHEN SUCH RATE IS GREATER THAN THE REASONABLE VALUE OF THE SERVICES RENDERED, NOR MAY HE RECOVER MORE WHERE THE REASONABLE VALUE OF THE SERVICES HAS ALREADY BEEN PAID. 71 C.J. 165-166. THE REASONABLE VALUE OF SERVICES FURNISHED UNDER AN INVALID OR UNENFORCEABLE CONTRACT IS NOT THE LOST FRUITS OF THE CONTRACT OR THE DAMAGES SUSTAINED BY THE CONTRACTOR, 98 C.J.S. 825, AND WHERE THE SUM CALLED FOR IN AN INVALID OR UNENFORCEABLE CONTRACT HAS BEEN PAID AND RECEIVED, NO MORE CAN BE RECOVERED IN AN ACTION BASED UPON QUANTUM MERUIT. 58 AM.JUR., WORK AND LABOR, 35; 76 ALR 1412-1413.

UNDER THE PRINCIPLES SET OUT ABOVE THERE WOULD APPEAR TO BE CONSIDERABLE AUTHORITY TO THE EFFECT THAT BOTH THE REASONABLE VALUE OF THE SERVICES PERFORMED BY THE CLAIMANT AND THE VALUE OF THE BENEFITS RECEIVED BY THE GOVERNMENT FROM SUCH SERVICES SHOULD BE COMPUTED AT THE RATE OF $215.08 PER PASSENGER, AS SET OUT IN THE LOW BID SUBMITTED BY LOS ANGELES AIR SERVICE, INC., AND AT WHICH RATE THE GOVERNMENT HAS BEEN RECEIVING SIMILAR SERVICES FROM THAT COMPANY SINCE THE AWARD TO THE CLAIMANT WAS CANCELLED. BE THAT AS IT MAY, WE UNDERSTAND THAT THE SUM OF $299,171.80 RECEIVED BY THE CLAIMANT REPRESENTS FULL PAYMENT AT THE CONTRACT PRICE OF $222.90 PER PASSENGER FOR THE NINETEEN FLIGHTS PERFORMED, AND IT IS OUR OPINION THAT THE AUTHORITIES CITED ABOVE CLEARLY INDICATE THERE IS NO LEGAL LIABILITY ON THE PART OF THE GOVERNMENT TO PAY THE CLAIMANT ANY AMOUNT IN ADDITION THERETO.

IN THE ABSENCE OF SUCH LIABILITY THE GENERAL ACCOUNTING OFFICE IS WITHOUT JURISDICTION TO AUTHORIZE ADDITIONAL PAYMENT, AND PAYMENT OF THE CLAIM MUST THEREFORE BE DENIED.