B-175674, MAY 30, 1972

B-175674, MAY 30, 1972

PROCUREMENT LAW - ACT OF GOVERNMENT - PROPOSED INCREASE IN CONTRACT PRICE CONCERNING WHETHER THE VETERANS ADMINISTRATION MAY INCREASE THE PRICE ON A CONTRACT AWARD TO ROBBINS SALES COMPANY, UNDER AN RFP FOR THE PROCUREMENT OF A QUANTITY OF STUFFED GREEN OLIVES. THE PRESIDENT'S TERMINATION OF THE 10 PERCENT IMPORT SURCHARGE WAS AN AUTHORIZED ACT OF THE SOVEREIGN FOR WHICH THE GOVERNMENT, AS A CONTRACTOR, CANNOT BE HELD RESPONSIBLE. HOROWITZ V U.S., 267 U.S. 458 (1925). FURTHER, ABSENT AN EXPRESS CONTRACT PROVISION CONCERNING ADJUSTMENTS FOR INCREASED COSTS OF PERFORMANCE, THE CONTRACTOR HAS NO RIGHT TO ADDITIONAL COMPENSATION. COLUMBUS RY., POWER & LIGHT CO. V. COLUMBUS, 249 U.S. 399 (1919). ACCORDINGLY, THERE EXISTS NO LEGAL BASIS FOR THE PROPOSED INCREASE IN PRICE.

TO MR. DONALD E. JOHNSON:

REFERENCE IS MADE TO A LETTER DATED APRIL 7, 1972 (134C), WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, REQUESTING A DECISION AS TO WHETHER THE VETERANS ADMINISTRATION MAY GRANT AN INCREASE IN PRICE OF $275 TO MODIFY CONTRACT NO. V797P-4989B, AWARDED DECEMBER 27, 1971, TO ROBBINS SALES COMPANY (ROBBINS).

THE MARKETING DIVISION FOR SUBSISTENCE, HINES, ILLINOIS, ISSUED REQUEST FOR PROPOSALS (RFP) NO. M4-Q100-72, DATED DECEMBER 6, 1971, FOR 250 CASES OF STUFFED GREEN OLIVES (ITEM 1) TO BE DELIVERED TO HINES, ILLINOIS, AND 300 CASES OF STUFFED GREEN OLIVES (ITEM 2) TO BE DELIVERED TO SOMERVILLE, NEW JERSEY. ONLY TWO OFFERS WERE RECEIVED BY THE SCHEDULED CLOSING DATE FOR SUBMISSION OF OFFERS, DECEMBER 22, 1971, AS FOLLOWS:

ITEM 1 ITEM 2

ROBBINS SALES COMPANY $17.97 $17.47

L AND S PACKING 17.80

ROBBINS INDICATED THAT PARADISE PRODUCTS CORPORATION (PARADISE), BROOKLYN, NEW YORK, WAS ITS SUBCONTRACTOR. AWARD WAS MADE TO ROBBINS ON DECEMBER 27, 1971, FOR BOTH ITEMS.

DURING THE FIRST PART OF JANUARY AN OFFICER OF ROBBINS IN A TELEPHONE CONVERSATION WITH A REPRESENTATIVE OF THE MARKETING DIVISION FOR SUBSISTENCE STATED THAT DUE TO AN ANNOUNCEMENT ON DECEMBER 20, 1971, BY THE PRESIDENT OF THE UNITED STATES, WHICH DEVALUED THE DOLLAR, PARADISE HAD REQUESTED AN INCREASE IN THE PRICE OF THE OLIVES TO BE DELIVERED UNDER SALES CONTRACT NO. V797P-4989B. IN A LETTER, DATED FEBRUARY 2, 1972, ROBBINS REQUESTED THAT THE SUBJECT CONTRACT BE MODIFIED SO THAT $.50 PER CASE WOULD BE ADDED TO THE PRICE. IN THIS REGARD, ROBBINS CLAIMS THAT IT CANNOT OBTAIN OLIVES TO FILL THE ORDER OR TO MEET THE SPECIFICATIONS FROM ANY OTHER SOURCE. ROBBINS NOTES THAT THE $.50 PER CASE MODIFICATION WOULD MERELY COMPENSATE PARADISE FOR THE HIGHER COSTS THAT FIRM HAS TO PAY INTERNATIONAL ENVASADORA, S.A. OF SEVILLE, SPAIN (THE GROWER'S AGENT AND SUPPLIER OF SPANISH OLIVES) FOR IMPORTING THE OLIVES, AND THAT SUCH HIGHER COSTS ARE DUE SOLELY TO THE ACTIONS OF THE UNITED STATES GOVERNMENT.

IT APPEARS THAT ROBBINS HAS MISSTATED THE PRESIDENT'S ANNOUNCEMENT (PROCLAMATION) OF DECEMBER 20, 1971, AS A DEVALUATION OF THE DOLLAR. INSTEAD, THE PROCLAMATION OF DECEMBER 20, 1971, TERMINATED THE 10 PERCENT IMPORT SURCHARGE (IMPOSED BY PROCLAMATION 4074, AUGUST 15, 1971) IN ACCORDANCE WITH A MULTILATERAL AGREEMENT REACHED AMONG A GROUP OF TEN MAJOR INDUSTRIAL NATIONS (THE SMITHSONIAN AGREEMENT OF THE GROUP OF TEN, DECEMBER 18, 1971). THE REMOVAL OF THE IMPORT SURCHARGE, AND RELATED PROVISIONS OF THE JOB DEVELOPMENT CREDIT (RESTRICTING THE CREDIT TO UNITED STATES GOODS), BY THE UNITED STATES WAS IN CONSIDERATION FOR AN IMMEDIATE REALIGNMENT OF EXCHANGE RATES BY THE OTHER PARTIES TO THE AGREEMENT (EXCEPT CANADA). MANY OTHER NATIONS THEREAFTER ALTERED THEIR EXCHANGE RATES IN TERMS OF THE DOLLAR (SEE HOUSE OF REPRESENTATIVES REPORT NO. 92- 912, MARCH 13, 1972, 92D CONGRESS, 2D SESSION). THUS, IT WOULD SEEM THAT THE JANUARY 1971 INCREASE IN THE PRICES OF IMPORTED OLIVES WAS DIRECTLY RELATED TO THE IMMEDIATE REALIGNMENT OF EXCHANGE RATES FOR WHICH ACTION THE 10 PERCENT IMPORT SURCHARGE WAS TERMINATED BY PRESIDENTIAL PROCLAMATION.

PRESIDENTIAL PROCLAMATION 4074 (36 FED. REG. 15724), WAS AUTHORIZED UNDER STATUTES INCLUDING THE TARIFF ACT OF 1930, AS AMENDED (SEE 19 U.S.C. 1351) AND THE TRADE EXPANSION ACT OF 1962, AS AMENDED (SEE 19 U.S.C. 1821), AND ASSESSED A SURCHARGE IN THE FORM OF A SUPPLEMENTAL DUTY AMOUNTING TO TEN PERCENT AD VALOREM TO CONTINUE IN EFFECT UNTIL MODIFIED OR TERMINATED BY THE PRESIDENT OR BY THE SECRETARY OF THE TREASURY. ACCORDINGLY, THE TERMINATION OF THE TEN PERCENT SURCHARGE BY THE PRESIDENTIAL PROCLAMATION OF DECEMBER 20, 1971, IN EXCHANGE FOR AN IMMEDIATE REALIGNMENT OF THE EXCHANGE RATES, IS CONSIDERED TO HAVE BEEN A VALID ACT OF THE SOVEREIGN. HAMPTON & CO. V UNITED STATES, 276 U.S. 394 (1928); FIELD V CLARK, 143 U.S. 649 (1892).

IT IS WELL SETTLED THAT THE GOVERNMENT, AS A CONTRACTOR, IS NOT RESPONSIBLE FOR THE CONSEQUENCES OR EFFECTS OF ACTS OF THE SOVEREIGN. SEE HOROWITZ V UNITED STATES, 267 U.S. 458 (1925); THE SUNSWICK CORP. V UNITED STATES, 75 F. SUPP. 221, 109 CT. CL. 772 (1948). ALSO, WHERE A GOVERNMENT CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION TO BE PAID, AND NO PROVISION IS MADE FOR ANY INCREASE IN THE EVENT PERFORMANCE BECOMES MORE EXPENSIVE OR DIFFICULT, THE FACT THAT THE COST OF PERFORMANCE IS INCREASED BY FACTORS WHICH DO NOT CONSTITUTE UNDUE INTERFERENCE BY THE GOVERNMENT DOES NOT ENTITLE THE CONTRACTOR TO ADDITIONAL COMPENSATION. SEE COLUMBUS RY., POWER & LIGHT CO. V COLUMBUS, 249 U.S. 399 (1919); 47 COMP. GEN. 313 (1967); 19 ID. 903 (1940); B- 175356, APRIL 13, 1972.

IN VIEW OF THE CASES CITED ABOVE, THERE WOULD APPEAR TO BE NO LEGAL AUTHORITY FOR GRANTING ROBBINS AN INCREASE IN THE CONTRACT PRICE BY REASON OF THE EXTRA COST OF CONTRACT PERFORMANCE DUE TO THE REALIGNMENT OF THE EXCHANGE RATES IN THE NATION CONCERNED.