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B-140049, OCT. 27, 1959

B-140049 Oct 27, 1959
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S. MAURICE LIVINGSTON: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 1. IN WHICH IT WAS HELD THAT NO LEGAL BASIS EXISTED FOR ADJUSTING THE CONTRACT PRICE OF CERTAIN LOTS OF SURPLUS PROPERTY PURCHASED BY YOUR FROM THE UNITED STATES ARMY PROPERTY DISPOSAL SALES AGENCY. RECEIPT IS ALSO ACKNOWLEDGED OF YOUR LETTER OF AUGUST 10. YOU ARE ADVISED THAT OUR OFFICE DOES NOT HAVE AUTHORITY TO SUBPOENA WITNESSES OR TO EXAMINE THEM ORALLY BUT MUST DISPOSE OF QUESTIONS PRESENTED ON THE BASIS OF THE WRITTEN RECORD. IT IS THE INVARIABLE RULE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO ACCEPT THE STATEMENT OF FACTS AS REPORTED BY THE ADMINISTRATIVE OFFICERS. 37 COMP. THERE IS NOTHING IN THE PRESENT RECORD TO JUSTIFY THE APPLICATION OF A DIFFERENT RULE TO THIS CASE.

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B-140049, OCT. 27, 1959

TO MR. S. MAURICE LIVINGSTON:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 1, 1959, FORWARDING FOR OUR ATTENTION A COPY OF A LETTER OF THE SAME DATE, WHICH YOU WROTE TO HONORABLE JACOB K. JAVITS, UNITED STATES SENATE, IN REGARD TO OUR DECISION OF JULY 14, 1959, B-140049, TO YOU, IN WHICH IT WAS HELD THAT NO LEGAL BASIS EXISTED FOR ADJUSTING THE CONTRACT PRICE OF CERTAIN LOTS OF SURPLUS PROPERTY PURCHASED BY YOUR FROM THE UNITED STATES ARMY PROPERTY DISPOSAL SALES AGENCY, YOKOHAMA, JAPAN, UNDER CONTRACTS NOS. DA/S/92-557-FEC- N26946, DA/S/92-557-FEC-N26961, AND DA/S/92-557-FEC N26962. RECEIPT IS ALSO ACKNOWLEDGED OF YOUR LETTER OF AUGUST 10, 1959.

YOU REQUEST THAT THE FACTS AS ADMINISTRATIVELY REPORTED BE DISREGARDED AND THAT AN INVESTIGATION UNDER OATH BE CONDUCTED BY OUR OFFICE. YOU ARE ADVISED THAT OUR OFFICE DOES NOT HAVE AUTHORITY TO SUBPOENA WITNESSES OR TO EXAMINE THEM ORALLY BUT MUST DISPOSE OF QUESTIONS PRESENTED ON THE BASIS OF THE WRITTEN RECORD. OUR OFFICE, HAVING NO FIRSTHAND KNOWLEDGE OF THE FACTS, MUST NECESSARILY RELY ON THE REPORT OF THE ADMINISTRATIVE OFFICE. IN THE ABSENCE OF EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF, IT IS THE INVARIABLE RULE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO ACCEPT THE STATEMENT OF FACTS AS REPORTED BY THE ADMINISTRATIVE OFFICERS. 37 COMP. GEN. 658, 570; AND 16 ID. 1105, 1106. THERE IS NOTHING IN THE PRESENT RECORD TO JUSTIFY THE APPLICATION OF A DIFFERENT RULE TO THIS CASE.

THE ACTION OF THE CONTRACTING OFFICER IN FURNISHING YOU FROM THE INVENTORY SHEETS THE WEIGHT OF THE MATERIAL PURCHASED BY YOU WAS A MERE ACCOMMODATION AND SUCH ACTION MAY NOT BE REGARDED AS A MODIFICATION OF THE TERMS AND CONDITIONS OF THE INVITATION, ONE OF WHICH WAS THAT THE AWARD WOULD BE MADE ON A "PRICE FOR THE LOT" BASIS. IN THIS REGARD YOUR ATTENTION IS INVITED TO PARAGRAPH 12, GENERAL SALE TERMS AND CONDITIONS, CONCERNING VERBAL MODIFICATIONS OF SUCH TERMS AND CONDITIONS.

YOUR ATTENTION IS SPECIFICALLY INVITED TO THE CASE OF LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, WHEREIN THE PLAINTIFF CONTENDED THAT THE UNITED STATES WAS LIABLE IN DAMAGES FOR A SHORTAGE IN DELIVERY OF SPECIFIED LOTS OF SCRAP IRON AND STEEL WHICH HAD BEEN OFFERED FOR SALE IN A SCHEDULE SHOWING THE VARIOUS PLACES WHERE THE SCRAP IRON WAS ACCUMULATED AND THE APPROXIMATE WEIGHTS AT EACH LOCATION, AND WHICH HAD BEEN PURCHASED "AS IS" FOR A STIPULATED LUMP SUM PRICE. IN REJECTING SUCH CONTENTION THE COURT STATES (PAGE 92):

"* * * THE NAMING OF QUANTITIES CANNOT BE REGARDED AS IN THE NATURE OF A WARRANTY, BUT MERELY AS AN ESTIMATE OF THE PROBABLE AMOUNTS IN REFERENCE TO WHICH GOOD FAITH ONLY COULD BE REQUIRED OF THE PARTY MAKING IT.'

IN VIEW OF THE FOREGOING, THERE EXISTS NO LEGAL BASIS FOR MAKING AN ADJUSTMENT OF THE CONTRACT PRICE BASED UPON A SHORTAGE OF THE ITEMS INVOLVED UNLESS IT CAN BE SHOWN THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH. FROM THE EVIDENCE PRESENTED THERE IS NO REASONABLE BASIS FOR CONCLUDING THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH.

IN YOUR LETTER OF AUGUST 10, 1959, YOU STATE THAT YOU ARE NOT ASKING FOR AN ADJUSTMENT OF THE CONTRACT PRICE ON LEGAL GROUNDS BUT ON MORAL AND ETHICAL GROUNDS. IN THAT CONNECTION, IT MAY BE STATED THAT THE AUTHORITY OF OUR OFFICE UNDER SECTION 236, REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF 1921, 42 STAT. 20, DOES NOT EXTEND TO CLAIMS BASED SOLELY ON EQUITABLE OR MORAL OBLIGATIONS.

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