B-174452, JAN 19, 1972

B-174452, JAN 19, 1972

CONTRACTS - PRIVITY DECISION DENYING A CLAIM BY METROPOLITAN REPORTING SERVICES, INC., FOR PAYMENT OF STENOGRAPHIC AND TRANSCRIBING SERVICES FURNISHED TO NORRIS E. SMITH AND ASSOCIATES UNDER A CONTRACT WITH THE DEPARTMENT OF COMMERCE, AND ADMINISTERED BY THE NATIONAL ADVISORY COUNCIL ON MINORITY BUSINESS ENTERPRISES. CLAIMANT CONTENDS THAT SINCE IT ACTED AS AN AGENT OF THE COUNCIL IT SHOULD BE PAID DIRECTLY RATHER THAN THROUGH SMITH. ARTICLE 1 OF THE CONTRACT EXPLICITLY STATES THAT SMITH IS AN INDEPENDENT CONTRACTOR AND, THEREFORE, HIS AGENTS ACQUIRE A SUBCONTRACTOR STATUS. SINCE NO PRIVITY OF CONTRACT EXISTS BETWEEN A SUBCONTRACTOR AND THE UNITED STATES, THE GOVERNMENT ASSUMES NO OBLIGATIONS AND, ACCORDINGLY, THE CLAIM MUST BE DENIED.

TO METROPOLITAN REPORTING SERVICE, INC.:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 2, 1971, FROM REPRESENTATIVE LAWRENCE J. HOGAN FORWARDING YOUR CLAIM IN THE AMOUNT OF $4,320 FOR STENOGRAPHIC AND TRANSCRIBING SERVICES FURNISHED TO NORRIS E. SMITH & ASSOCIATES (SMITH), UNDER CONTRACT NO. 0-35483 ENTERED INTO WITH SMITH BY THE DEPARTMENT OF COMMERCE (COMMERCE), WASHINGTON, D.C., AND ADMINISTERED BY THE NATIONAL ADVISORY COUNCIL ON MINORITY BUSINESS ENTERPRISES (COUNCIL).

THE CONTRACT CALLED FOR A SURVEY OF LOCAL ATTITUDES CONCERNING THE IMPACT OF FEDERAL MINORITY ENTERPRISE PROGRAMS. THE TOTAL AMOUNT OF THE CONTRACT WAS $45,000. ON NOVEMBER 23, 1970, COMMERCE ISSUED A MODIFICATION TO THE CONTRACT WHICH INCREASED THE CONTRACT AMOUNT BY AN ADDITIONAL $22,817.62 TO $67,817.62. THE MODIFICATION PROVIDED FOR ADDITIONAL SERVICES AND SUPPLIES INCLUDING LOGISTICAL AND CLERICAL SERVICES. SMITH HAS BEEN PAID THE $67,817.62 PROVIDED FOR IN THE CONTRACT AS MODIFIED.

YOU CONTEND THAT SMITH IN HIS DEALINGS WITH YOU ACTED AS AGENT OF THE COUNCIL RATHER THAN A CONTRACTOR AND THAT AS THE PRODUCT PRODUCED BY YOU WAS USED DIRECTLY BY THE COUNCIL, PAYMENT FOR IT SHOULD BE MADE TO YOU BY THE COUNCIL. YOU STATE THAT IN YOUR EXPERIENCE WITH OTHER COMMISSIONS OR COUNCILS PAYMENT FOR REPORTING SERVICES RENDERED HAS ALWAYS BEEN MADE DIRECTLY TO YOU BY THE ACTIVITY UTILIZING THE SERVICES.

ARTICLE I, SCOPE OF WORK, OF THE GOVERNMENT CONTRACT WITH SMITH IS SPECIFIC THAT:

"THE CONTRACTOR, AS AN INDEPENDENT CONTRACTOR, AND NOT AS AN AGENT OF THE GOVERNMENT, SHALL PROVIDE ALL NECESSARY QUALIFIED PERSONNEL, MATERIALS AND FACILITIES TO CONDUCT A SURVEY *** ."

THEREFORE, SMITH WAS NOT ACTING AS AN AGENT OF THE GOVERNMENT IN ITS DEALING WITH YOU. IN THE CIRCUMSTANCES, YOUR RELATIONSHIP WITH SMITH MUST BE VIEWED AS THAT OF A SUBCONTRACTOR-CONTRACTOR.

SUBCONTRACTS WITH CONTRACTORS ENGAGED BY THE GOVERNMENT DO NOT RESULT IN PRIVITY OF CONTRACT BETWEEN THE SUBCONTRACTORS AND THE UNITED STATES. SEE KELLOGG V UNITED STATES, 7 WALL. 361 (1868); UNITED STATES V DRISCOLL, 96 U.S. 421 (1877); MERRETT V UNITED STATES, 267 U.S. 338 (1925); ARMSTRONG V UNITED STATES, 169 F. SUPP. 259 (1959). A CONTRACT OR AGREEMENT TO FURNISH SUPPLIES OR SERVICES TO A PRIME CONTRACTOR ENGAGED IN THE PERFORMANCE OF A CONTRACT WITH THE GOVERNMENT CREATES OBLIGATIONS ONLY BETWEEN THE PARTIES TO THE SUBCONTRACT. B 168132, DECEMBER 12, 1969. THERE IS NO PRIVITY OF CONTRACT BETWEEN YOU AND THE GOVERNMENT, THE SETTLEMENT OF THE OBLIGATION BETWEEN YOU AND SMITH IS A MATTER OUTSIDE THE JURISDICTION OF THE GOVERNMENT.

ACCORDINGLY, YOUR CLAIM MUST BE DENIED.