B-148464, APR. 19, 1965

B-148464, APR. 19, 1965

TO CONSOLIDATED DIESEL ELECTRIC CORPORATION:

BY LETTER DATED FEBRUARY 18, 1965, THE DEPARTMENT OF THE NAVY, OFFICE OF THE COMPTROLLER, FORWARDED FOR OUR COLLECTION ACTION, THE FILE RELATING TO YOUR INDEBTEDNESS OF $21,420, REPRESENTING EXCESS FREIGHT COSTS INCURRED BY THE GOVERNMENT IN CONNECTION WITH THE SHIPMENT OF 21 OF 32 AIR TRANSPORTABLE MOTOR VANS PURCHASED FROM YOU UNDER CONTRACT NO. N600/17/52069. THE DEPARTMENT OF THE NAVY ALSO FORWARDED YOUR LETTER OF MAY 29, 1962, ADDRESSED TO THE NAVY PURCHASING OFFICE, IN WHICH YOU PROTESTED YOUR INDEBTEDNESS AND REQUESTED FURTHER REVIEW OF THE MATTER BY THE DEPARTMENT OF THE NAVY.

THE QUESTION OF WHETHER THE INCREASED FREIGHT COSTS INVOLVED UNDER THE SUBJECT CONTRACT SHOULD BE RECOVERED FROM YOU WAS PRESENTED TO OUR OFFICE FOR CONSIDERATION BY THE DEPARTMENT OF THE NAVY, AND IN OUR DECISION OF MAY 7, 1962, B-148464, COPY ENCLOSED, TO THE SECRETARY OF THE NAVY, WE AGREED WITH THE ADMINISTRATIVE FINDING THAT THE AMOUNT OF THE INCREASED FREIGHT COSTS SHOULD BE RECOVERED FROM YOU.

IN YOUR LETTER OF MAY 29, 1962, TO THE NAVY PURCHASING OFFICE, YOU REQUESTED THE NAVY TO FURTHER REVIEW THE MATTER OF YOUR INDEBTEDNESS AND YOU CONTENDED AS FOLLOWS:

"THE RESULT OF THE COMPTROLLER GENERAL'S DECISION AND THE POSITION OF YOUR OFFICE, IF IN FACT THE CONTRACTING OFFICER HAD MADE AN ERROR, IS TO SOLELY IN RETROSPECT, PLACE THE BURDEN OF INCREASED COST ON THE CONTRACTOR. AS SET FORTH IN OUR LETTER TO YOUR OFFICE OF JANUARY 2, 1962, THIS ENTIRE INCREASED COST COULD HAVE BEEN AVOIDED BUT FOR THE CONTRACTING OFFICER'S ACTION. CONSOLIDATED DIESEL ELECTRIC CORPORATION WOULD HAVE MADE OTHER ARRANGEMENTS TO MINIMIZE THESE COSTS. THE RESULT OF THESE ARRANGEMENTS IS CERTAINLY EVIDENT IN OUR ORIGINAL BID IN COMPARING F.O.B. PLANT AND DESTINATION PRICES OF WEST COAST SHIPMENTS. IN ADDITION THERETO, THIS COMPANY FEELS THAT THE CHANGE ENTERED INTO IN F.O.B. ORIGIN POINTS WAS FULLY CONSIDERED BY THE CONTRACTING OFFICER IN THE TENOR OF OUR LETTER OF JULY 6, 1959, WHICH EXPLAINED THE MISUNDERSTANDING AND CONFUSION REGARDING THE CONTRACT AS AWARDED.'

YOUR CONTENTION WAS FULLY CONSIDERED IN OUR DECISION OF MAY 7, 1962, WHEREIN IT WAS STATED THAT OUR OFFICE HAS CONSISTENTLY FOLLOWED THE RULE THAT THE NAMING OF AN F.O.B. POINT IN A CONTRACT FIXES THE MAXIMUM LIABILITY OF THE GOVERNMENT FOR FREIGHT. IN AN ANALOGOUS SITUATION PRESENTED IN 28 COMP. GEN. 653, IT WAS HELD THAT THE ISSUANCE OF A CHANGE ORDER AT THE REQUEST AND FOR THE CONVENIENCE OF THE CONTRACTOR, AUTHORIZING THE SHIPMENT OF CERTAIN MATERIALS ON GOVERNMENT BILLS OF LADING FROM A PLACE OTHER THAN THE F.O.B. SHIPPING POINT DESIGNATED IN THE CONTRACT, WITH THE STIPULATION THAT ALL THE OTHER TERMS AND CONDITIONS OF THE CONTRACT REMAIN UNCHANGED, IS NOT TO BE REGARDED AS IMPOSING 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. IT WAS STATED IN THE DECISION THAT:

"* * * 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 ORP., 27 F.2D 389.'

SUCH REASONING APPLIES TO THE CIRCUMSTANCES GIVING RISE TO YOUR INDEBTEDNESS. THE GOVERNMENT, INDEPENDENTLY OF STATUTE, HAS THE RIGHT TO RECOVER FUNDS WHICH ITS AGENTS HAVE WRONGFULLY, ERRONEOUSLY, OR ILLEGALLY PAID. THIS RIGHT EXISTS WHETHER SUCH PAYMENTS WERE MADE UNDER MISTAKE OF LAW OR FACT; WHETHER BECAUSE IN EXCESS OF AUTHORITY OR BASED UPON AN ERRONEOUS INTERPRETATION OF A CONTRACT LATER FOUND TO BE INCORRECT, OR BECAUSE OF THE RELIANCE UPON FACTS FOUND SUBSEQUENTLY NOT TO EXIST. MOREOVER, LACHES ON THE PART OF THE GOVERNMENT AGENTS DOES NOT STOP THE GOVERNMENT FROM SECURING RECOVERY OF THE RESULTING OVERPAYMENTS. SEE 39 COMP. GEN. 726, 728.

ACCORDINGLY, YOU ARE REQUESTED TO REMIT THE SUM OF $21,420, WHICH SHOULD BE MADE PAYABLE TO THE UNITED STATES GENERAL ACCOUNTING OFFICE AND SHOULD BE MAILED TO THE UNITED STATES GENERAL ACCOUNTING OFFICE, CLAIMS DIVISION, WASHINGTON, D.C. 20548, REFERRING TO CLAIM Z-586800 (5).