B-27200, JULY 9, 1942, 22 COMP. GEN. 13

B-27200, JULY 9, 1942, 22 COMP. GEN. 13

CONTRACTS - PRICE ADJUSTMENT - "CEILING" PRICE CHANGES PRICES FIXED IN EXISTING GASOLINE CONTRACTS OF THE POST OFFICE DEPARTMENT MAY NOT BE INCREASED BECAUSE OF THE RAISING BY THE OFFICE OF PRICE ADMINISTRATION OF THE ESTABLISHED MAXIMUM PRICES FOR GASOLINE, IN THE ABSENCE OF PROVISIONS IN THE CONTRACTS, OR OF STATUTORY PROVISIONS, CONTEMPLATING SUCH ADJUSTMENT.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, JULY 9, 1942:

I HAVE YOUR LETTER OF JULY 4, 1942, AS FOLLOWS:

THIS DEPARTMENT ENTERED INTO NUMEROUS CONTRACTS FOR GASOLINE FOR THE POSTAL SERVICE FOR DELIVERY DURING THE PERIOD BEGINNING JULY 1, 1942, AND ENDING SEPTEMBER 30, 1942.

SINCE THE AWARDING OF THE CONTRACTS THE OFFICE OF PRICE ADMINISTRATION HAS INCREASED THE CEILING PRICE ON GASOLINE BY 2 1/2 CENTS PER GALLON AND INQUIRIES ARE BEING RECEIVED FROM CONTRACTORS AS TO THE EFFECT OF SUCH A PRICE CEILING ON THEIR CONTRACTS.

ADVICE IS REQUESTED, AT YOUR EARLIEST CONVENIENCE, AS TO THE ACTION TO BE TAKEN BY THIS DEPARTMENT.

THE ACT OF JANUARY 30, 1942, PUBLIC LAW 421, 56 STAT. 23, CREATING AN OFFICE OF PRICE ADMINISTRATION, PROVIDES IN SECTION 2 (A), 56 STAT. 24, THAT THE PRICE ADMINISTRATOR "MAY BY REGULATION OR ORDER ESTABLISH SUCH MAXIMUM PRICE OR MAXIMUM PRICES AS IN HIS JUDGMENT WILL BE GENERALLY FAIR AND EQUITABLE AND WILL EFFECTUATE THE PURPOSES OF THIS ACT.' THE PURPOSES OF THE ACT, AS STATED IN THE TITLE, ARE TO FURTHER THE NATIONAL DEFENSE AND SECURITY BY CHECKING SPECULATIVE AND EXCESSIVE PRICE RISES, PRICE DISLOCATIONS, AND INFLATIONARY TENDENCIES. THE ADMINISTRATOR IS AUTHORIZED TO ESTABLISH MAXIMUM OR "CEILING" PRICES, AND THERE IS NOTHING IN THE LEGISLATION CONTEMPLATING THAT SUCH MAXIMUM PRICES SHALL BE REGARDED, ALSO, AS MINIMUM PRICES, OR AS PROHIBITING THE SALE OF COMMODITIES, OR THE MAKING OF CONTRACTS TO SELL COMMODITIES, OR THE PERFORMANCE OF EXISTING CONTRACTS TO SELL COMMODITIES, AT ANY PRICES BELOW SUCH MAXIMUM OR CEILING PRICES. THE BASIC PURPOSE IS TO PREVENT, NOT TO AUTHORIZE, PRICE INCREASES, AND RAISING THE ESTABLISHED MAXIMUM PRICES PERMITTED ON CERTAIN COMMODITIES DOES NOT PREVENT THE CONTINUED SALE OF SUCH COMMODITIES AT LOWER PRICES OR REQUIRE OR AUTHORIZE ANY UPWARD ADJUSTMENT OF PRICES FIXED BY EXISTING CONTRACTS.

ANSWERING YOUR INQUIRY IN THE GENERAL TERMS IN WHICH IT IS PROPOUNDED, YOU ARE ADVISED THAT IN THE ABSENCE OF EXPRESS PROVISIONS IN THE EXISTING POST OFFICE DEPARTMENT CONTRACTS FOR AN ADJUSTMENT OF THE PRICE BECAUSE OF INCREASES IN THE ESTABLISHED MAXIMUM PRICE, OR OF OTHER STATUTORY PROVISIONS CONTEMPLATING SUCH ADJUSTMENTS, THERE APPEARS NO AUTHORITY OF LAW TO CHARGE APPROPRIATIONS WITH ANY SUMS REPRESENTING AN INCREASE OVER THE PRICES FIXED IN SUCH CONTRACTS. SEE 18 COMP. GEN. 240; 19 ID. 48, AND CASES CITED. CF. 20 COMP. GEN. 418; ID. 448.