B-209729 L/M, JAN 24, 1983

B-209729 L/M, JAN 24, 1983

PRECIS-UNAVAILABLE

HAMILTON FISH, JR., HOUSE OF REPRESENTATIVES:

THIS IS IN RESPONSE TO YOUR LETTER OF OCTOBER 15, 1982, REQUESTING THAT WE REVIEW CORRESPONDENCE SUBMITTED TO YOU BY MR. ROSEN, PRESIDENT OF DOREL HAT COMPANY (DOREL). MR. ROSEN CONTENDS THAT HE WAS ENTITLED TO A MONETARY AWARD UNDER THE VALUE ENGINEERING PROGRAM (VE PROGRAM) FOR HIS ASSISTANCE WHICH RESULTED IN A CHANGE IN CONTRACT SPECIFICATIONS TO PERMIT THE USE OF WOOL INSTEAD OF FUR FOR THE MANUFACTURE OF BERETS. THE DEFENSE LOGISTICS AGENCY (DLA) ACKNOWLEDGES THIS CHANGE PROBABLY WILL RESULT IN DLA SAVING MONEY UNDER FUTURE CONTRACTS FOR BERETS.

WE HAVE EXAMINED DOREL'S SUBMISSION AND REVIEWED RELEVANT LEGAL PRECEDENT CONCERNING THE QUESTION OF WHETHER OR NOT DOREL HAS ANY LEGAL RIGHT TO COMPENSATION FOR ITS ASSISTANCE TO DLA. BASED ON OUR REVIEW, WE DO NOT THINK DOREL HAS ESTABLISHED A RIGHT TO COMPENSATION.

IN EARLY JANUARY 1980, DLA APPARENTLY SENT A LETTER TO DOREL, AS A CONTRACTOR THAT HAD NOT PARTICIPATED IN DLA'S VE PROGRAM DURING 1979, INVITING THAT FIRM TO PARTICIPATE IN THE VE PROGRAM. DOREL WAS ADVISED IN THE LETTER THAT DLA WOULD REIMBURSE GOVERNMENT CONTRACTORS FOR "GOOD IDEAS" BY "SHARING EQUALLY WITH THE CONTRACTOR FORMALLY SUBMITTING THE IDEA ON BOTH THE INSTANT CONTRACT AND FUTURE CONTRACTS AWARDED DURING THE NEXT THREE YEARS WHETHER OR NOT HE IS THE SUCCESSFUL BIDDER."

DLA DENIES THAT THE LETTER OF JANUARY 1980 WAS INTENDED TO INVITE UNSOLICITED PROPOSALS AND CONTENDS THAT DOREL MISREAD THE LETTER. DLA POINTS OUT THAT THE LETTER SPECIFICALLY STATED THAT DLA WOULD SHARE SAVINGS WITH A CONTRACTOR WHICH SUBMITTED A COST REDUCTION PROPOSAL UNDER AN EXISTING CONTRACT.

DOREL HAD NO EXPRESS CONTRACT WITH DLA AND THUS THE PROPOSAL WAS "UNSOLICITED," THAT IS, NOT OFFERED UNDER AN EXISTING CONTRACT. OUR OFFICE AND THE COURT OF CLAIMS HAVE CONSIDERED CLAIMS FOR COMPENSATION FOR AN UNSOLICITED PROPOSAL USED BY THE GOVERNMENT WHICH ARE SIMILAR TO THE ONE PRESENTED BY DOREL. THE CLAIM IS ONE RECOGNIZING A CONTRACT IMPLIED- IN-FACT WHICH ALLOWS RECOVERY ON A QUANTUM MERUIT BASIS BECAUSE THE CLAIMANT PROVIDED A BENEFIT TO THE GOVERNMENT AND THE GOVERNMENT IMPLICITLY RATIFIED THE TRANSACTION. SEE GRISMAC CORPORATION V. UNITED STATES (GRISMAC), 556 F.2D 494 (CT.CL. 1977); CLAIM OF A BETTER WAY, INC. (ABW), 58 COMP.GEN. 35 (1978), 78-2 CPD 298; GKS, INC. (GKS), B-187593, JUNE 26, 1978, 78-1 CPD 461. HOWEVER, IN THESE CASES, THE CLAIMS WERE DENIED.

IN GRISMAC, SUPRA, AND TWO COMPTROLLER GENERAL DECISIONS, GKS, SUPRA, AND ABW, SUPRA, THE PROPOSALS SUBMITTED BY THE COMPANIES WERE HELD TO BE OUTSIDE THE SCOPE OF 10 U.S.C. SEC. 2386 (1976), WHICH PERMITS THE DEPARTMENT OF DEFENSE TO PURCHASE SPECIFIC TYPES OF INTELLECTUAL PROPERTY, BECAUSE THEY WERE ACTUALLY SUGGESTIONS AND NOT CLASSIFIABLE AS COPYRIGHTS, PATENTS, DESIGNS, PROCESSES, OR MANUFACTURING DATA UNDER THIS STATUTE. THE GRISMAC CORPORATION, FOR EXAMPLE, HAD RECOMMENDED VARIOUS CHANGES IN THE SIZE AND GRADE OF PLYWOOD USED IN WOODEN PALLETS AND A BETTER WAY, INC.'S PROPOSAL RECOMMENDED THE SUBSTITUTION OF ZINC ALLOY FOR BRASS FOR THE MANUFACTURE OF FAUCET HANDLES. DOREL'S PROPOSAL WOULD APPEAR TO BE SIMILAR TO THESE PROPOSALS AND WOULD APPEAR TO BE A "MERE SUGGESTION" WHICH IS NOT COVERED UNDER 10 U.S.C. SEC. 2386 (1976), AND FOR WHICH PAYMENT CANNOT BE AUTHORIZED.

ALTHOUGH DLA ACKNOWLEDGES THAT DOREL'S SUGGESTION CONSTITUTED A BENEFIT TO THE GOVERNMENT, DOREL'S CLAIM FAILS IN LIGHT OF THE DECISION IN GRISMAC, SUPRA, THAT DEPARTMENT OF DEFENSE OFFICIALS ARE NOT AUTHORIZED BY STATUTE 10 U.S.C. SEC. 2386 (1976), TO MAKE EXPRESS CONTRACTS OBLIGATING APPROPRIATED FUNDS FOR THE PURCHASE OF SUGGESTIONS. SINCE UNDER THE GRISMAC DECISION, AN EXPRESS CONTRACT WOULD NOT BE AUTHORIZED, AN IMPLIED- IN-FACT CONTRACT TO ACCOMPLISH THIS PURPOSE WOULD ALSO NOT BE AUTHORIZED, THUS PRECLUDING QUANTUM MERUIT RECOVERY, WHICH IS PREMISED ON AN IMPLIED CONTRACT THEORY.

UNDER THESE CIRCUMSTANCES, DLA'S DENIAL OF THIS CLAIM APPEARS TO BE SUPPORTED BY THE PREVAILING CASE LAW.

WE TRUST THIS INFORMATION IS HELPFUL IN RESPONDING TO YOUR CONSTITUENT.