B-168619, JAN. 14, 1970

B-168619, JAN. 14, 1970

CONTRACTS--PAYMENTS--OVERCHARGES--SET-OFF DECISION TO JARRETT PRESS, INC; CONCERNING PROPRIETY OF GPO WITHHOLDING FROM CURRENT CONTRACTS OVERCHARGES UNDER PRIOR CONTRACT. A REVIEW OF THE RECORD SUBSTANTIATES GPO'S CONCLUSION THAT CONTRACTOR OVERCHARGED GOVERNMENT IN AMOUNT OF $18,500. NOTWITHSTANDING THAT AMOUNT WITHHELD FROM CURRENT CONTRACTS DOES NOT COVER OVERCHARGE, UNTIL FULLY RECOVERED UNDER GOVERNMENT'S INHERENT RIGHT OF SET-OFF, IT CANNOT BE CONCLUDED THAT GOVERNMENT IS ESTOPPED TO RECOVER OVERPAYMENTS FROM CURRENT CONTRACTS.

TO JARRETT PRESS, INC.:

WE HAVE RECEIVED YOUR LETTERS OF DECEMBER 12 AND 19, 1969, REQUESTING THAT WE ISSUE A LETTER TO THE UNITED STATES GOVERNMENT PRINTING OFFICE (GPO) STATING THAT PROCEEDS OF CURRENT CONTRACTS MAY NOT BE WITHHELD BY THE GPO IN SATISFACTION OF AN ASSERTED INDEBTEDNESS RESULTING FROM CERTAIN OVERCHARGES BY YOUR COMPANY UNDER A PRIOR PRINTING CONTRACT.

THE FACTS OF RECORD REVEAL THAT ON NOVEMBER 29, 1968, THE GPO ACCEPTED YOUR BID ON PROGRAM 902'S FOR MISCELLANEOUS PUBLICATIONS FOR THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE IN THE NEW YORK CITY AREA FOR THE PERIOD DECEMBER 1, 1968, THROUGH NOVEMBER 30, 1969. IN THE FALL OF 1969, AFTER YOUR FIRST 17 INVOICES HAD BEEN SUBMITTED, APPROVED, AND PAID, THE GPO NOTED A TOTAL OVERCHARGE ON THESE INVOICES OF $18,500. WE ARE INFORMED THAT THE GPO IS WITHHOLDING PAYMENT ON PRINT ORDERS NOS. 18, 21, 23, 24, AND 25 (NOS. 19, 20, AND 22 HAVING BEEN CANCELED PRIOR TO PERFORMANCE). THE AMOUNT WITHHELD DOES NOT COVER THE AMOUNT OF THE OVERCHARGE. CONSEQUENTLY, YOUR COMPANY HAS BEEN ADVISED BY THE GPO THAT PAYMENTS ON ALL WORK WOULD BE WITHHELD UNTIL FULL RECOVERY HAD BEEN MADE.

YOU DISPUTE THE GPO'S RIGHT TO RECOVER THE EXCESS AMOUNT BILLED UNDER INVOICES 1 THROUGH 17. YOU HAVE ASKED US FOR AN IMMEDIATE DECISION ON THIS MATTER AUTHORIZING YOU TO PROCEED WITH THE WORK ON TWO CURRENT CONTRACTS AND ASSURING YOU PAYMENT FOR ALL NEW WORK SUBSEQUENT TO DECEMBER 1, 1969. FOR THE REASONS STATED BELOW, WE CANNOT COMPLY WITH YOUR REQUEST.

THE RIGHT OF SETOFF HAS BEEN HELD TO BE INHERENT IN THE UNITED STATES AND TO BE GROUNDED IN THE COMMON LAW RIGHT OF EVERY CREDITOR TO APPLY THE MONEYS OF HIS DEBTOR IN HIS HANDS TO THE EXTINGUISHMENT OF THE AMOUNTS DUE HIM FROM THE DEBTOR. GRATIOT V. UNITED STATES, 40 U.S. 336 (1841); MCKNIGHT V. UNITED STATES, 98 U.S. 176 (1878); BARRY V. UNITED STATES, 229 U.S. 47 (1913). THUS, WHERE A PERSON IS BOTH A DEBTOR AND CREDITOR TO THE GOVERNMENT IN ANY FORM, THE ACCOUNTING OFFICERS ARE REQUIRED BY LAW TO CONSIDER BOTH THE DEBITS AND CREDITS AND TO SET OFF ONE INDEBTEDNESS AGAINST THE OTHER, AND CERTIFY ONLY THE BALANCE. TAGGART V. UNITED STATES, 17 CT. CL. 322 (1881). FURTHERMORE, THE GOVERNMENT'S RIGHT TO SET OFF A CONTRACTOR'S DEBTS AGAINST CONTRACT PROCEEDS EXTENDS TO DEBTS OWED BY THE CONTRACTOR AS A RESULT OF SEPARATE AND INDEPENDENT TRANSACTIONS. UNITED STATES V. MUNSEY TRUST CO; 332 U.S. 234 (1947), AS EXPLAINED IN PEARLMAN V. RELIANCE INS. CO; 371 U.S. 132 AT 140 (1962).

IT APPEARS THAT THERE IS A DIFFERENCE OF OPINION BETWEEN YOU AND THE GPO AS TO THE PROPER METHOD FOR CHARGING FOR WORK PERFORMED UNDER THE 1968 CONTRACT. WE HAVE BEEN PROVIDED WITH COPIES OF THE FIRST 17 BILLINGS SUBMITTED BY YOU AND PAID BY THE GPO; IN ADDITION, WE HAVE BEEN FURNISHED A COPY OF THE CONTRACT AND COPIES OF THE GPO WORKSHEETS SHOWING THE METHOD USED BY THE GPO IN CALCULATING THE AMOUNT IN WHICH EACH INVOICE SHOULD PROPERLY HAVE BEEN STATED. OUR REVIEW OF THESE DOCUMENTS PERSUADES US THAT THE GPO WAS CORRECT IN CONCLUDING THAT YOU OVERCHARGED THE GOVERNMENT IN THE TOTAL AMOUNT OF $18,500. IT IS CLEAR THAT EACH OF YOUR FIRST 17 INVOICES WAS INCORRECT IN ONE OR BOTH OF TWO SPECIFIC WAYS: CHARGING FOR PRESS WASHUP WHEN SUCH WAS NOT PERMITTED, AND FAILING TO COMPUTE CHARGES ON THE BASIS MOST ECONOMICAL AT THE PRICES QUOTED.

CONCERNING THE FIRST MATTER, A NOTE INCLUDED IN THE SCHEDULE OF PRICES CLEARLY STATES: "A SINGLE WASHUP CHARGE AT THE APPLICABLE RATE WILL BE ALLOWED FOR EACH PRESS FORM SIZE USED IN PRINTING PAMPHLETS OR BOOKS WITH A COLORED INK." IT IS APPARENT FROM ANOTHER PORTION OF THE SCHEDULE OF PRICES THAT "COLORED INK" WAS INTENDED TO MEAN ANY COLOR OF INK, OTHER THAN BLACK. HOWEVER, THERE WERE SEVERAL INSTANCES WHERE YOU BILLED FOR PRESS WASHUP WHERE THE PRINTING HAD BEEN DONE IN BLACK INK. INASMUCH AS THE CONTRACT DID NOT AUTHORIZE YOU TO CHARGE FOR PRESS WASHUP IN SUCH CIRCUMSTANCES, THE GOVERNMENT IS ENTITLED TO RECOVER THE AMOUNT ERRONEOUSLY PAID TO YOU FOR WASHUP.

WITH REFERENCE TO THE SECOND POINT, THE CONTRACT PROVIDED:

"WHEN A PAMPHLET CONSISTS OF MORE THAN ONE SIGNATURE, CHARGES WILL BE ALLOWED ONLY ON THE BASIS OF THAT COMBINATION OF ONE BASIC SIGNATURE PLUS SUCH ADDITIONAL SIMILAR OR SMALLER SIGNATURES (OR ONE BASIC SECTION PLUS SUCH ADDITIONAL SIGNATURES) AS MAY BE REQUIRED, WHICH PROVES TO BE THE MOST ECONOMICAL AT THE PRICES QUOTED." YOUR BILLINGS WERE NOT IN CONFORMANCE WITH THIS TERM OF THE CONTRACT. A COMPARISON OF THE GPO WORKSHEETS AND YOUR INVOICES READILY DEMONSTRATES THAT YOU REPEATEDLY FAILED TO COMPUTE CHARGES ON THE BASIS OF THE MOST ECONOMICAL COMBINATION OF ONE BASIC SIGNATURE OR SECTION PLUS ADDITIONAL SIMILAR OR SMALLER SIGNATURES. HENCE, THE GOVERNMENT PAID MORE THAN IT WAS REQUIRED TO PAY AND MORE THAN YOU WERE ENTITLED TO.

SINCE YOU ERRONEOUSLY OVERCHARGED THE GOVERNMENT, THE GOVERNMENT IS ENTITLED TO A REFUND OF THE AMOUNT OF THE OVERPAYMENT. THE FACT THAT THE VOUCHERS WERE VERIFIED CORRECT BY GPO ACCOUNTING OFFICIALS AND REGULARLY PAID DOES NOT PREVENT RECOVERY AT A LATER DATE. AS A GENERAL MATTER, THE GOVERNMENT IS NOT ESTOPPED BY THE ACTS OF ITS AGENTS. SEE UTAH POWER & LIGHT CO. V. UNITED STATES, 243 U.S. 389 (1917). IT IS ALSO TRUE THAT THE DOCTRINE OF ESTOPPEL HAS BEEN APPLIED AGAINST THE UNITED STATES IN CERTAIN LIMITED INSTANCES. SEE THE DISCUSSIONS IN UNITED STATES V. CERTAIN PARCELS OF LAND, 131 F. SUPP. 65 (S.D. CAL; 1955) AND UNITED STATES V. STANDARD OIL COMPANY OF CALIFORNIA, 20 F. SUPP. 427 (D.C. CAL; 1937). THE BASIS OF THE RECORD BEFORE US, WE CANNOT CONCLUDE THAT THE PRESENT CIRCUMSTANCES JUSTIFY A FINDING THAT THE GOVERNMENT IS ESTOPPED TO RECOVER THE OVERPAYMENTS. ACCORDINGLY, THE GPO WOULD BE ACTING PROPERLY IN RETAINING PROCEEDS OF EXISTING OR FUTURE CONTRACTS TO SATISFY THE REMAINDER OF YOUR INDEBTEDNESS.