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INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 4. YOU REQUESTED THE PROCURING ACTIVITY TO COLLECT THIS FEE ON YOUR BEHALF OR IF THIS WAS NOT POSSIBLE. WE HAVE BEEN INFORMED BY THE CONTRACTING AGENCY THAT THEY HAVE BEEN NOTIFIED BY VAN NORMAN MACHINE COMPANY THAT VAN NORMAN'S CONTINGENT FEE CONTRACT WITH YOUR FIRM EXPIRED AS OF APRIL 1. YOU ARE ENTITLED TO NO CONTINGENT FEES ON CONTRACTS AWARDED ON OR AFTER THAT DATE. SINCE THE CONTRACT UNDER CONSIDERATION WAS AWARDED ON APRIL 8. VAN NORMAN'S POSITION IS THAT THEY HAVE NO OBLIGATION TO PAY YOU A CONTINGENT FEE. IT IS ALSO REPORTED THAT THE PRICE BREAKDOWN SUBMITTED BY VAN NORMAN MACHINE COMPANY ON MARCH 20. ALTHOUGH SUCH FEE COULD POSSIBLY HAVE BEEN INCLUDED IN THE CONTRACT.

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B-166094, MAY 29, 1969

TO J. E. HELSEL AND ASSOCIATES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 4, 1969, WHEREIN YOU REQUESTED THAT THIS OFFICE RECOUP A CONTINGENT FEE ALLEGEDLY OWED YOUR COMPANY BY VAN NORMAN MACHINE COMPANY, ON ACCOUNT OF THEIR RECEIVING A CONTRACT PURSUANT TO INVITATION FOR BIDS N00600-68-B-0329, DATED JANUARY 16, 1968, ISSUED BY THE U.S. NAVY PURCHASING OFFICE, WASHINGTON NAVY YARD, WASHINGTON, D.C. 20390. ON JANUARY 8, 1969, YOU REQUESTED THE PROCURING ACTIVITY TO COLLECT THIS FEE ON YOUR BEHALF OR IF THIS WAS NOT POSSIBLE, ON THE GOVERNMENT'S BEHALF. IN YOUR LETTER TO THIS OFFICE YOU STATE THAT SINCE IT APPEARS THAT THE NAVY CAN DO NOTHING IN THE MATTER, YOU ASK THAT WE RECOUP THE AMOUNT OF THE CONTINGENT FEE FOR THE GOVERNMENT.

WE HAVE BEEN INFORMED BY THE CONTRACTING AGENCY THAT THEY HAVE BEEN NOTIFIED BY VAN NORMAN MACHINE COMPANY THAT VAN NORMAN'S CONTINGENT FEE CONTRACT WITH YOUR FIRM EXPIRED AS OF APRIL 1, 1968, AND THAT UNDER THE TERMS OF THE CONTRACT, ACCORDING TO THE COMPANY, YOU ARE ENTITLED TO NO CONTINGENT FEES ON CONTRACTS AWARDED ON OR AFTER THAT DATE. SINCE THE CONTRACT UNDER CONSIDERATION WAS AWARDED ON APRIL 8, 1968, VAN NORMAN'S POSITION IS THAT THEY HAVE NO OBLIGATION TO PAY YOU A CONTINGENT FEE.

IT IS ALSO REPORTED THAT THE PRICE BREAKDOWN SUBMITTED BY VAN NORMAN MACHINE COMPANY ON MARCH 20, 1968, TO THE CONTRACTING AGENCY DID NOT INCLUDE A CONTINGENT FEE, ALTHOUGH SUCH FEE COULD POSSIBLY HAVE BEEN INCLUDED IN THE CONTRACT, UNDER OVERHEAD, OR SOME OTHER ITEM.

IN ANY EVENT, IN THE ABSENCE OF ANY PRIVITY OF CONTRACT BETWEEN THE GOVERNMENT AND YOUR FIRM THERE WOULD BE NO LEGAL BASIS FOR THIS OFFICE TO COLLECT A CONTINGENT FEE ON YOUR BEHALF FROM ANY AMOUNT DUE TO THE CONTRACTOR. SEE B-119695, MAY 21, 1954 AND B-105859,DECEMBER 13, 1951. THE UNITED STATES GOVERNMENT WAS NOT IN ANY WAY A PARTY TO THE CONTRACT BETWEEN YOUR FIRM AND VAN NORMAN MACHINE COMPANY, NOR WERE YOU A PARTY TO THE CONTRACT BETWEEN THAT FIRM AND THE GOVERNMENT, WHICH FIXED THE RESPECTIVE RIGHTS AND LIABILITIES OF THE GOVERNMENT AND VAN NORMAN.

WE COULD NOT ENFORCE SUCH AN OBLIGATION OF VAN NORMAN TO YOUR FIRM EVEN IF THE AMOUNT OF THE FEE HAD BEEN ASSIGNED BY VAN NORMAN TO YOUR FIRM, SINCE SUCH ASSIGNMENT WOULD BE VOID UNDER THE ASSIGNMENT OF CLAIMS ACT, AS AMENDED (SEE 31 U.S.C. 203, 41 U.S.C. 15, AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 7-103.8). NEITHER WOULD SUCH FEE BE ENFORCEABLE BY GARNISHMENT OR ATTACHMENT AGAINST THE UNITED STATES, EVEN IF YOU HAD OBTAINED A JUDGMENT AGAINST THE COMPANY FOR THE AMOUNT OF THE FEE (SEE ALLEN V. ALLEN, 291 F. SUPP. 312 (S.D. IOWA, 1968) ).

IN THE CIRCUMSTANCES, THE APPARENT DISPUTE BETWEEN YOUR FIRM AND VAN NORMAN AS TO WHETHER YOU ARE OR NOT ENTITLED TO THE CONTINGENT FEE CANNOT BE RESOLVED BY THE CONTRACTING AGENCY OR THIS OFFICE.

AS TO RECOUPMENT BY THIS OFFICE OF THE ALLEGED CONTINGENT FEE ON BEHALF OF THE GOVERNMENT, YOUR ATTENTION IS INVITED TO THE TERMS OF THE PROVISION INCLUDED IN THE CONTRACT PURSUANT TO ASPR 7-103.20, AS FOLLOWS:

"COVENANT AGAINST CONTINGENT FEES (1958 JAN)

"THE CONTRACTOR WARRANTS THAT NO PERSON OR SELLING AGENCY HAS BEEN EMPLOYED OR RETAINED TO SOLICIT OR SECURE THIS CONTRACT UPON AN AGREEMENT OR UNDERSTANDING FOR A COMMISSION, PERCENTAGE, BROKERAGE, OR CONTINGENT FEE, EXCEPTING BONA FIDE EMPLOYEES OR BONA FIDE ESTABLISHED COMMERCIAL OR SELLING AGENCIES MAINTAINED BY THE CONTRACTOR FOR THE PURPOSE OF SECURING BUSINESS. FOR BREACH OR VIOLATION OF THIS WARRANTY THE GOVERNMENT SHALL HAVE THE RIGHT TO ANNUL THIS CONTRACT WITHOUT LIABILITY OR IN ITS DISCRETION, TO DEDUCT FROM THE CONTRACT PRICE OR CONSIDERATION, OR OTHERWISE RECOVER, THE FULL AMOUNT OF SUCH COMMISSION, PERCENTAGE, BROKERAGE OR CONTINGENT FEE.'

IN ITS BID VAN NORMAN SPECIFICALLY INDICATED THAT IT HAD AN EMPLOYMENT AGREEMENT WITH YOUR FIRM, WHICH APPARENTLY FALLS WITHIN THE EXCEPTIONS SET FORTH WITHIN THE "COVENANT AGAINST CONTINGENT FEES" CLAUSE QUOTED ABOVE. WHILE THE GOVERNMENT, UNDER THIS FIXED PRICE CONTRACT, COULD HAVE PROCEEDED AGAINST VAN NORMAN MACHINE COMPANY IF THE COMPANY HAD MADE ANY MATERIAL MISREPRESENTATION RELATIVE TO THE TERMS OF ITS AGREEMENT WITH YOUR COMPANY, THE GOVERNMENT DOES NOT APPEAR TO HAVE ANY RIGHT TO WITHHOLD ANY AMOUNT FROM PAYMENT TO VAN NORMAN MACHINE COMPANY TO COVER AMOUNTS POSSIBLY OWED TO YOUR COMPANY UNDER THE EMPLOYMENT AGREEMENT.

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