A-63653, DECEMBER 18, 1935, 15 COMP. GEN. 529

A-63653, DECEMBER 18, 1935, 15 COMP. GEN. 529

CONTRACTORS - RELIEF ACT - CODE AND PRESIDENTIAL REEMPLOYMENT AGREEMENT COMPLIANCE ONLY SUCH INCREASED COSTS AS ARE DEFINITELY SHOWN TO HAVE RESULTED DIRECTLY FROM CODE AND PRESIDENTIAL REEMPLOYMENT AGREEMENT COMPLIANCE ARE REIMBURSABLE UNDER THE ACT OF JUNE 16, 1934, 48 STAT. 974, AND WHERE THE CLAIMANT ACTED AS A DEALER ONLY IN THE PERFORMANCE OF A CONTRACT AND NOT AS MANUFACTURER OR PROCESSOR OF THE MATERIAL AND HAD NOT CONTRACTED FOR THE PURCHASE OF THE MATERIAL FROM THE MANUFACTURER OR PROCESSOR PRIOR TO JUNE 16, 1933, HE IS NOT ENTITLED TO REIMBURSEMENT IN AN AMOUNT ALLEGED TO REPRESENT THE INCREASE IN PRICE OF SAID MATERIAL BECAUSE OF THE NATIONAL INDUSTRIAL RECOVERY ACT.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 18, 1935:

THERE IS FOR CONSIDERATION BY THIS OFFICE THE CLAIM OF L. A. CLARKE AND SON, INC., FILED UNDER AUTHORITY OF THE ACT OF JUNE 16, 1934, 48 STAT. 974, IN THE AMOUNT OF $5,319.36, REPRESENTING ALLEGED INCREASED COSTS OF PERFORMANCE OF CONTRACT NO. NOS-32107, JULY 8, 1933, FOR FURNISHING APPROXIMATELY 194,000 FEET BOARD MEASURE OF LUMBER AT VARYING PRICES TO THE NORFOLK NAVY YARD AND THE NAVAL OPERATING BASE, SEWALL'S POINT, VA.

THE INVITATION FOR BIDS STATED THAT BIDS WOULD BE OPENED ON JUNE 6, 1933. THE CONTRACT BEARS THE NOTATION THAT THE BIDS WERE OPENED JUNE 13, 1933. IT APPEARS THAT AFTER DELIVERY OF APPROXIMATELY 40,000 FEET OF THE LUMBER THE CONTRACTOR WROTE THE BUREAU OF SUPPLIES AND ACCOUNTS OF THE NAVY DEPARTMENT UNDER DATE OF OCTOBER 2, 1933, SEEKING TO BE RELIEVED OF FILLING THE REMAINING PORTION OF ITS CONTRACT, ASSIGNING AS REASON FOR ITS REQUEST THE EXTREME DIFFICULTY IT WAS EXPERIENCING IN OBTAINING THE REQUIRED LUMBER AND THE GREATLY ADVANCED COST OF THE MATERIAL. IN THAT LETTER THE CONTRACTOR LAID SOME STRESS ON THE FACT THAT THE LENGTH OF TIME ELAPSING BETWEEN THE DATE OF OPENING OF BIDS AND THE AWARD OF CONTRACT WAS IN SOME MEASURE RESPONSIBLE FOR THE DIFFICULTY IT HAD EXPERIENCED. IT MAY BE SAID IN THIS CONNECTION THAT NEITHER THE INVITATION FOR BIDS NOR THE BID OF THE CONTRACTOR MADE ANY RESTRICTIVE PROVISIONS AS TO THE TIME WITHIN WHICH THE BID SHOULD BE ACCEPTED. WHETHER THE BIDS WERE OPENED ON JUNE 6 OR JUNE 13, 1933, THE TIME OCCUPIED IN EVALUATING THE BIDS FOR AWARD OF CONTRACT WOULD NOT BE EXCESSIVE.

THE PERTINENT PORTION OF THE LETTER OF OCTOBER 2, 1933, IS AS FOLLOWS:

BEFORE THE N.R.A. DRIVE AND AT THE TIME THAT THE BIDS WERE BEING SOUGHT FOR THIS CONTRACT, MANUFACTURERS WERE SUBMITTING QUOTATIONS ON THE MATERIALS IN ITEMS 3 AND 5, UNDER BID X, AT $19.00 AND $26.00 PER THOUSAND, RESPECTIVELY. EVER SINCE THE CONTRACT WAS AWARDED, WE HAVE MADE DILIGENT EFFORT TO OBTAIN THE LUMBER AND WE HAVE BEEN ABLE, BECAUSE OF THE SIGNING OF THE SOUTHERN PINE CODE, TO RECEIVE AN OFFER FROM ONLY ONE MANUFACTURER, AND THEY ARE ONLY WILLING TO FURNISH A PART OF THE LUMBER CONTRACTED FOR. THEY QUOTED US THE FOLLOWING PRICES:

MATERIAL IN ITEMS 3 AND 5, UNDER BID X, $65.00 AND $73.00 PER THOUSAND, RESPECTIVELY.

FRANKLY, WE DO NOT SEE ANY NECESSITY FOR THE TREMENDOUS INCREASE IN PRICES BY THE SOUTHERN MANUFACTURERS. HOURS HAVE BEEN REDUCED AND WAGES HAVE BEEN INCREASED, YET RAILROAD RATES HAVE REMAINED STATIONARY. BELIEVE THAT THE SOUTHERN MANUFACTURERS FEEL THAT THEY ARE STRONGLY ENTRENCHED BY VIRTUE OF THE CODE. A GREAT MANY OF THE SMALLER MILLS, WHO USED TO FURNISH US CONSIDERABLE MATERIAL, WERE UNABLE TO MEET THE TERMS OF THE CODE AND HAVE CLOSED THEIR PLANTS. THIS ALSO SERIOUSLY AFFECTED US IN OBTAINING MATERIAL.

THE CONTRACTOR WAS INFORMED THAT IT WOULD NOT BE RELIEVED FROM PERFORMANCE AND PROCEEDED TO COMPLETION WITH THE CONTRACT. IT APPEARS THAT HIGH PRICES CHARGED BY THOSE FROM WHOM IT PURCHASED THE LUMBER TO FILL THE CONTRACT RESULTED IN A LOSS TO THE CONTRACTOR OF $5,091.97, REPRESENTING THE DIFFERENCE BETWEEN THE NET COST AND THE NET CONTRACT PRICE, TO WHICH THERE IS ADDED AN ITEM OF $227.39 FOR "INSPECTION FEE CALLED FOR ON 151,592 FEET AT $1.50 M," MAKING THE TOTAL OF $5,319.36 HERE CLAIMED.

THE ADMINISTRATIVE FINDINGS OF FACT CORROBORATE THE CLAIM OF THE CONTRACTOR AS TO THE ACTUAL FIGURES INVOLVED. HOWEVER, THE REPORT IS TO THE EFFECT, WHICH IS BORNE OUT BY THE RECORDS, THAT THE CLAIMANT ACTED AS A DEALER ONLY IN PERFORMANCE OF THE CONTRACT AND DID NOT MANUFACTURE OR PERFORM ANY PROCESSING OF THE MATERIAL.

THE FACTS DO NOT ESTABLISH A CASE PROPER FOR RELIEF UNDER THE PROVISIONS OF THE ACT OF JUNE 16, 1934 (48 STAT. 974). IT MAY BE AND DOUBTLESS IS TRUE THAT THE CONTRACTOR COMPLIED WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND THE CODE OF FAIR COMPETITION FOR LUMBER AND TIMBER PRODUCTS INDUSTRIES. IT MAY BE POINTED OUT THAT THE FACT OF SUCH COMPLIANCE RESTS ENTIRELY UPON THE ASSERTION OF THE CONTRACTOR, AND THE ADMINISTRATIVE REPORT INCLUDES NO FINDINGS OF FACT ON THAT POINT, AND IT IS NOT MATERIAL IN THIS INSTANCE. IN VIEW OF THE CONCLUSION HEREIN REACHED, THERE WILL NOT BE CONSIDERED AT THIS TIME THE AMOUNT OF LOSS INVOLVED OR THE FAILURE OF THE CLAIMANT TO FURNISH THE CERTIFICATE OF A PUBLIC ACCOUNTANT.

THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE INCREASED COST OF THE LUMBER WAS DUE IN ANY DEGREE TO THE CONTRACTOR'S COMPLIANCE WITH THE REEMPLOYMENT AGREEMENT OR A CODE OF FAIR COMPETITION, AS CONTEMPLATED IN SECTION 2 OF THE ACT OF JUNE 16, 1934, WHICH PROVIDES THAT NO ALLOWANCE SHALL EXCEED THE AMOUNT BY WHICH THE PERFORMANCE OF THE CONTRACT WAS DIRECTLY INCREASED BY REASON OF CODE COMPLIANCE, ETC. THE ACT DOES NOT UNDERTAKE OR AUTHORIZE REIMBURSEMENT OF A CONTRACTOR FOR ALL LOSSES INCURRED IN THE PERFORMANCE OF GOVERNMENT CONTRACTS ENTERED INTO BEFORE AND PERFORMED AFTER AUGUST 10, 1933. IT IS ONLY SUCH INCREASED COSTS AS ARE DEFINITELY SHOWN TO HAVE RESULTED DIRECTLY FROM CODE COMPLIANCE. UNQUESTIONABLY THE ENACTMENT OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, RESULTED IN AN UPWARD TREND OF PRICES OF PRACTICALLY ALL COMMODITIES. HOWEVER, THE RELIEF ACT AFFORDS NO SANCTION FOR RELIEVING A CONTRACTOR ON ACCOUNT OF THAT GENERAL INCREASE IN BUSINESS COSTS. THE CONTRACTOR'S LETTER OF OCTOBER 2, 1933, SUPRA, WOULD INDICATE THAT AFTER THE AWARD OF THE CONTRACT THE CLAIMANT UNDERTOOK TO SHOP AROUND "TO SEE WHAT IT COULD DO.' IT EXPERIENCED DIFFICULTY IN GETTING ANY QUOTATION, BUT FINALLY SUCCEEDED IN OBTAINING SUFFICIENT MATERIAL TO FILL THE CONTRACT AT PRICES SUBSTANTIALLY IN EXCESS OF THOSE PREVALENT AT THE TIME THE BIDS WERE OPENED. IF IT MIGHT BE ASSUMED THAT SOME PART OF THE INCREASED PRICE WAS ATTRIBUTABLE TO COMPLIANCE WITH CODES OF FAIR COMPETITION BY THOSE FROM WHOM THE CONTRACTOR PURCHASED, THAT FACT COULD NOT BE MADE A BASIS FOR RELIEF IN THIS INSTANCE, BUT EVEN EVIDENCE OF THAT FACT IS LACKING. THE PRESIDENT'S REEMPLOYMENT AGREEMENT PROVIDED THAT WHERE A SIGNER HAD CONTRACTED PRIOR TO JUNE 16, 1933, TO PURCHASE GOODS AT A FIXED PRICE FROM ANOTHER SIGNER, THE PURCHASER WOULD MAKE AN APPROPRIATE ADJUSTMENT TO MEET ANY INCREASE IN COST TO THE SELLER BY HAVING SIGNED THE REEMPLOYMENT AGREEMENT OR CODE OF FAIR COMPETITION. SUCH A SITUATION DOES NOT EXIST HERE, AND IT IS PLAIN FROM THE CONTRACTOR'S LETTER THAT THE CLAIMANT HAD NOT CONTRACTED FOR THE PURCHASE OF LUMBER TO FILL ITS CONTRACT PRIOR TO JUNE 16, 1933. IT APPARENTLY HAD TAKEN NO STEPS FOR ITS OWN PROTECTION WITH RESPECT TO POSSIBLE INCREASED COSTS AND HAD MADE NO TENTATIVE COMMITMENTS AT PREVAILING PRICES FOR LUMBER TO FILL THE CONTRACT IN EVENT THAT IT RECEIVED THE AWARD. AT BEST, THE RECORD APPEARS TO PROVE ONLY THAT THE CLAIMANT PAID MORE FOR THE MATERIAL THAN IT RECEIVED THEREFOR, AND FAILS UTTERLY TO ESTABLISH THAT ANY PART OF THE INCREASED COST OF PERFORMANCE WAS THE RESULT OF COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT OR A CODE OF FAIR COMPETITION, EITHER BY THE CONTRACTOR OR THOSE FROM WHOM IT PURCHASED.

THERE APPEARS NO LEGAL BASIS FOR ANY FORM OF ADJUSTMENT OR ALLOWANCE UNDER THE ACT OF JUNE 16, 1934, AND THE CLAIM IS FOR DISALLOWANCE.