B-65416, MAY 13, 1947, 26 COMP. GEN. 866

B-65416, MAY 13, 1947, 26 COMP. GEN. 866

CONTRACTS - GENERAL SUPPLY SCHEDULES - PURCHASES ELSEWHERE AT EXCESS COST - GOVERNMENT AND EMPLOYEE LIABILITY WHERE THE PROCUREMENT OF GASOLINE ON THE OPEN MARKET AT A PRICE IN EXCESS OF THAT STIPULATED IN THE APPLICABLE GENERAL SCHEDULE OF SUPPLIES CONTRACT WAS DUE, NOT TO A PUBLIC EXIGENCY, BUT TO AN ERROR ON THE PART OF THE PURCHASING OFFICER IN DETERMINING THAT NO GENERAL SCHEDULE OF SUPPLIES CONTRACT FOR GASOLINE EXISTED, SUCH OPEN-MARKET PURCHASE IS TO BE REGARDED AS BEYOND THE SCOPE OF SAID OFFICER'S AUTHORITY, AND, THEREFORE, THERE IS NO AUTHORITY FOR CHARGING APPROPRIATED MONEYS WITH ANY AMOUNT IN EXCESS OF THE PRICE SET FORTH IN THE GENERAL SCHEDULE OF SUPPLIES CONTRACT. THE LOSS SUSTAINED BY A VENDOR FROM WHICH AN OPEN-MARKET PURCHASE OF GASOLINE WAS MADE AT A PRICE IN EXCESS OF THAT UNDER A GENERAL SCHEDULE OF SUPPLIES CONTRACT, THE GOVERNMENT NOT BEING LIABLE FOR THE EXCESS, MAY NOT BE ASSESSED BY THE GOVERNMENT FOR THE BENEFIT OF THE VENDOR AGAINST THE EMPLOYEES RESPONSIBLE FOR SUCH UNAUTHORIZED PURCHASE, THE MATTER BEING SOLELY FOR ADJUSTMENT BETWEEN THE EMPLOYEES AND THE VENDOR.

COMPTROLLER GENERAL WARREN TO BECKHAM SWIFT, DEPARTMENT OF COMMERCE, MAY 13, 1947:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 26, 1947, REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF THE TEXAS CO., DENVER, COLO., IN THE AMOUNT OF $55.35, REPRESENTING COMPENSATION ALLEGED TO BE DUE FOR GASOLINE DELIVERED TO THE CIVIL AERONAUTICS ADMINISTRATION'S VHF RADIO RANGE FACILITY, TOPEKA, KANS., PURSUANT TO PURCHASE ORDER NO. 5-2324, DATED JULY 15, 1946.

IN YOUR LETTER YOU STATE THAT THE SAID PURCHASE ORDER WAS ISSUED BY ASSISTANT AIRWAYS ENGINEER ARCH W. WADE, AND THAT IT COVERED AN OPEN MARKET PURCHASE OF 450 GALLONS OF " TEXACO FIRE CHIEF" GASOLINE FROM THE SAID COMPANY AT $0.123 PER GALLON, FEDERAL TAX INCLUDED, WHEREAS, SUBSEQUENT TO THE DATE OF THE DELIVERY OF SUCH GASOLINE AT THE PROJECT SITE, IT WAS DETERMINED THAT THE SAME GRADE OR TYPE OF GASOLINE COULD HAVE BEEN PROCURED UNDER GENERAL SCHEDULE OF SUPPLIES CONTRACT NO. TPS 75015 WITH THE PHILLIPS PETROLEUM CO., AT A COST OF $0.0985 PER GALLON FEDERAL TAX. IT APPEARS THAT THE ACTING CHIEF, CONSTRUCTION DIVISION, CIVIL AERONAUTICS ADMINISTRATION, 5TH REGION, KANSAS CITY, MO.--- WHO, REPORTEDLY, IS MR. WADE'S SUPERVISOR--- AUTHORIZED MR. WADE TO PURCHASE THE GASOLINE ON THE OPEN MARKET, BASED ON VERBAL INFORMATION FURNISHED BY THE CHIEF, CONTRACT AND PROCUREMENT DIVISION, CIVIL AERONAUTICS ADMINISTRATION, KANSAS CITY, MO., TO THE EFFECT THAT, APPARENTLY, NO CONTRACT EXISTED COVERING GASOLINE AT THAT PARTICULAR SITE. IT APPEARS FURTHER THAT THE IMPROPRIETY OF PURCHASING THIS GASOLINE ON THE OPEN MARKET WAS BROUGHT TO THE ATTENTION OF THE TEXAS CO. AND, AT THAT TIME, A SPECIFIC REQUEST WAS MADE THAT THE COMPANY REDUCE ITS ORIGINAL BILLING OF $0.123 PER GALLON TO $0.0985 PER GALLON, THE PRICE PROVIDED FOR IN THE AFOREMENTIONED CONTRACT. IN CONCLUSION, IT IS STATED IN YOUR LETTER THAT-

* * * THE TEXAS COMPANY, HOWEVER, REFUSED TO REDUCE THEIR ORIGINAL BILLING TO THE CONTRACT PRICE; AND THIS OFFICE MADE AN ADMINISTRATIVE DEDUCTION OF $11.03, AND PAYMENT WAS MADE ON NOVEMBER 6, 1946, BY E. J. BRENNAN, CHIEF DISBURSING OFFICER, SYMBOL NO. 2010-1055, D.C. VOUCHER NO. 10-160973.

THE TEXAS COMPANY REFUSED TO ACCEPT THIS CHECK AND RETURNED IT FOR EITHER A NEW CHECK IN THE AMOUNT OF $55.35, OR AN ADDITIONAL CHECK IN THE AMOUNT OF $11.03 TOGETHER WITH THE RETURN OF THE ORIGINAL CHECK. THE CHECK WAS THEN CANCELLED AND SCHEDULED ON SCHEDULE OF CANCELLED CHECKS NO. 10 DATED FEBRUARY 6, 1947; AND THE ENCLOSED VOUCHER WAS PREPARED FOR THE SIGNATURE OF THE TEXAS COMPANY TO BE RETURNED TO HIS OFFICE TO BE USED IN OBTAINING A DECISION AS TO THE LEGALITY OF PAYMENT IN EXCESS OF THE PRICE STIPULATED UNDER GENERAL SCHEDULE OF SUPPLIES CONTRACT, REGION 4, CLASS 7, TPS-75015, WITH THE PHILLIPS PETROLEUM COMPANY.

IN THE PAST THIS OFFICE HAS FOLLOWED THE PROCEDURE OF COLLECTING THE DIFFERENCE BETWEEN OPEN MARKET PURCHASES AND THE CONTRACT PRICE FROM THE EMPLOYEE RESPONSIBLE FOR THE PURCHASE UNLESS IT CAN BE SHOWN THAT AN EMERGENCY EXISTED. HOWEVER, IN VIEW OF YOUR DECISION NO. B-50592, DATED SEPTEMBER 27, 1945, TO THE NATIONAL HOUSING ADMINISTRATOR, IT APPEARS THAT THIS OFFICE IS WITHOUT AUTHORITY TO COLLECT FROM EMPLOYEES AS NONE OF THE CONTRACTS OF EMPLOYMENT WITH EMPLOYEES IN THIS OFFICE PROVIDES FOR THEIR MAKING GOOD ANY PECUNIARY LOSS SUSTAINED BY THE GOVERNMENT AS A RESULT OF ERROR IN JUDGMENT OR NEGLECT OF DUTY ON THEIR PART.

IT WOULD ALSO APPEAR THAT THE TEXAS COMPANY IS ENTITLED TO THE AMOUNT CLAIMED ON THE ENCLOSED VOUCHER AS IT IS STRICTLY IN ACCORDANCE WITH THE PURCHASE ORDER ISSUED BY MR. WADE UNLESS IT IS DETERMINED THAT MR. WADE WAS EXCEEDING HIS APPARENT AUTHORITY IN ISSUING THE PURCHASE ORDER. MIGHT BE MENTIONED THAT A NUMBER OF FIELD EMPLOYEES OF THIS OFFICE ISSUE PURCHASE ORDERS FOR SIMILAR PURCHASES FROM DAY TO DAY AND SELDOM ARE ANY SUCH ERRORS MADE IN CONNECTION WITH THE PURCHASES.

YOUR OPINION IS REQUESTED AS TO WHETHER OR NOT THE ENCLOSED VOUCHER MAY BE CERTIFIED FOR PAYMENT IN THE FULL AMOUNT FROM THE APPROPRIATION CITED THEREON, AND, IF NOT, WHETHER OR NOT ANY OF THE ABOVE-MENTIONED EMPLOYEES CAN BE FORCED TO PAY THE DIFFERENCE BETWEEN THE CONTRACT AND THE OPEN MARKET PRICE TO THE TEXAS COMPANY. IF SO, WHICH EMPLOYEE SHOULD PAY AND HOW CAN WE ENFORCE PAYMENT?

IT LONG HAS BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT ARTICLES OR SUPPLIES CONTRACTED FOR UNDER THE GENERAL SCHEDULE OF SUPPLIES MUST BE PROCURED UNDER SUCH CONTRACTS EXCEPT IN CASE OF AN EXIGENCY OR EMERGENCY REQUIRING SUCH IMMEDIATE DELIVERY AS COULD NOT BE EFFECTED BY ORDERING FROM THE GENERAL SUPPLY CONTRACTOR. SEE 16 COMP. GEN. 225, 227, AND THE CASES THERE CITED. IT APPEARS THAT THE PROCUREMENT OF THE GASOLINE HERE INVOLVED ON THE OPEN MARKET RATHER THAN FROM THE SCHEDULED CONTRACTOR, THE PHILLIPS PETROLEUM CO., WAS NOT DUE TO A PUBLIC EXIGENCY BUT TO AN ERROR ON THE PART OF THE ADMINISTRATIVE OFFICERS OR EMPLOYEES CONCERNED IN DETERMINING THAT NO GENERAL SCHEDULE OF SUPPLIES CONTRACT FOR THE GASOLINE EXISTED. HOWEVER, SUCH ERROR DOES NOT ESTABLISH THE LEGALITY OF THE TRANSACTION. IT WAS THE DUTY OF THE PURCHASING OFFICER, ACTING FOR AND IN BEHALF OF THE UNITED STATES, TO PURCHASE THE GASOLINE REQUIRED AT THE PROJECT SITE UNDER THE GENERAL SCHEDULE OF SUPPLIES. HENCE,THE OPEN- MARKET PURCHASE OF GASOLINE AT A PRICE IN EXCESS OF THAT STIPULATED THEREIN WAS BEYOND THE SCOPE OF THE SAID OFFICER'S AUTHORITY.

IT IS FUNDAMENTAL, OF COURSE, THAT, WHERE AN AGENT OF THE GOVERNMENT ACTS IN EXCESS OF THE AUTHORITY VESTED IN HIM, HIS ACT, FROM A LEGAL STANDPOINT, IS NO LONGER AN ACT OF THE GOVERNMENT. THE UNDERWRITER, 6 F.2D 937. MOREOVER, THE COURTS HAVE HELD CONSISTENTLY THAT ONE ENTERING INTO A CONTRACT WITH AN OFFICER OR EMPLOYEE OF THE GOVERNMENT IS CHARGED WITH NOTICE OF THE LIMITATIONS PLACED UPON THE AUTHORITY OF THE OFFICER OR EMPLOYEE TO OBLIGATE THE UNITED STATES. SEE HUME V. UNITED STATES, 132 U.S. 406; JACOB REED'S SONS V. UNITED STATES, 273 ID. 200; AND DAVIS V. UNITED STATES, 59 C.1CLS. 197. THE UNAUTHORIZED ACTS OF ITS AGENTS CANNOT OBLIGATE THE GOVERNMENT. FILOR V. UNITED STATES, 9 WALL. 45; AND WHITESIDE, ET AL. V. UNITED STATES, 93 U.S. 247, 257.

IT FOLLOWS THAT, SINCE THE PURCHASING OFFICER IN THIS CASE WAS AUTHORIZED TO OBLIGATE THE GOVERNMENT ONLY TO THE EXTENT OF THE PRICE STIPULATED IN THE APPLICABLE GENERAL SCHEDULE OF SUPPLIES CONTRACT FOR THE SAME GRADE OR TYPE OF GASOLINE, TO WIT, $0.0985 PER GALLON, THERE IS NO AUTHORITY FOR CHARGING APPROPRIATED MONEYS WITH ANY AMOUNT IN EXCESS OF THAT PRICE. ALSO, IT APPEARS FROM THE REPORTED FACTS AND APPLICABLE PRINCIPLES OF LAW SET FORTH ABOVE THAT THE LIABILITY, IF ANY, OF THE GOVERNMENT EMPLOYEES INVOLVED FOR THE LOSS SUSTAINED BY THE TEXAS COMPANY AS A RESULT OF THE TRANSACTION, IS A MATTER SOLELY FOR ADJUSTMENT BETWEEN THE EMPLOYEES AND THE COMPANY AND THAT THERE IS NO LEGAL BASIS ON WHICH THE GOVERNMENT WOULD BE JUSTIFIED IN TAKING ANY ACTION WITH REGARD TO SUCH MATTER. IN THE LATTER CONNECTION, IT SEEMS OBVIOUS THAT SINCE, AS WAS STATED IN THE DECISION OF SEPTEMBER 27, 1945, B-50592, 25 COMP. GEN. 299, THERE IS NO GENERAL AUTHORITY FOR THE ASSESSMENT OF CHARGES AGAINST EMPLOYEES OF THE GOVERNMENT AS A RESULT OF ERROR IN JUDGMENT OR NEGLECT OF DUTY, A FORTIORI THERE EXISTS NO PROPER BASIS FOR THE ASSESSMENT OF SUCH CHARGES TO COVER LOSSES SUSTAINED BY THIRD PARTIES.

ACCORDINGLY, YOU ARE ADVISED THAT THE INSTANT VOUCHER, WHICH IS RETURNED HEREWITH, PROPERLY MAY BE CERTIFIED FOR PAYMENT IN THE NET AMOUNT OF $44.33, IF OTHERWISE CORRECT.