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DANIEL BAKER CO.

FEBRUARY 9, 1945.—Committed to the Committee of the Whole House and

ordered to be printed

Mr. Ramey, from the Committee on Claims, submitted the following

REPORT

(To accompany H. R. 1676)

The Committee on Claims, to whom was referred the bill (H. R. 1676) for the relief of Daniel Baker Co., having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

A similar bill was favorably reported by this committee and passed the House in the Seventy-eighth Congress, but no action taken by the Senate before final adjournment of Congress.

The facts will be found fully set forth in House Report No. 1135, Seventy-eighth Congress, which is appended hereto and made a part of this report.

(H. Rept. No. 1135, 78th Cong., 1st sess.) The purpose of the proposed legislation is to appropriate the sum of $525.10 to the Daniel Baker Co., of Manchester, Clay County, Kv., in full settlement of all claims against the United States, which amount being withheld by the Government as part of the excess cost alleged to have been incurred by the United States by reason of the failure of the Daniel Baker Co. to perform under contract No. , T'ps-40640 entered into on May 28, 1941, with the Procurement Division of the Treasury Department to furnish gasoline to certain governmental agencies during the period between July 1 through September 30, 1941.

STATEMENT OF FACTS It appears that T. L. Britton, president of the Daniel Baker Co., handles petroleum products in a certain territory which comprises Clay, Leslie, Perry, a portion of Owsley, and a portion of Jackson Counties. Mr. Britton states that he is owner and president of the corporation; that he did ignorantly sign a contract to deliver gasoline to a Government agency in Clay County, a veterans' camp, and that by bidding he used only check marks and that the period for which he did bid was the quarter beginning July 1, 1941, and ending September 30, 1941. He states further that he did not know he was held for any other agencies until July 8, when he received a message from Pineville Civilian Conservation Corps

camp, almost 100 miles away, that he was to make deliveries to that camp. He immediately made a trip to the camp at Pineville, explaining that it was an error and he did not know about the delivery, there until the message came.

Mr. Britton states that he went directly to the city of Washington and appeared before the Treasury Department, in the Procurement Division. After the head of this Department heard his appeal and saw his franchise, they asked him to go to the Accounting Department of the Comptroller and they would recommend relief without penalty. This they did, but relief was not granted. He further states that he did furnish the governmental agencies within Clay County and that the Government did not release him from the contract and that money was deducted from his checks to pay the deficit charged by other companies.

He is an independent dealer, having no connection with Shell Oil Co., other than buying and paying cash for the products he gets. He was in nowise financially able to buy more than one tank car of gasoline at a time. He further staces that according to his record he has furnished the governmental agencies in Clay County invoices to the amount of $1,627.45, and that the Government has paid him $1,144.72, leaving a balance of $483.73. He states there is also a deduction of $32.79 and one for $8.58, which are not included in the above, making a total of $525.10.

It is the opinion of your committee that this company should be paid for this extra expense in delivering the product to a camp that was not thought to be in the territory covered by his contract. The committee recommend favorable consideration to the proposed legislation.

Appended hereto is the report of the Treasury Department, together with other pertinent evidence.

TREASURY DEPARTMENT,

Washington, June 30, 1943. Hon. Dan R. McGEHEE, Chairman, Committee on Claims,

House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Further reference is made to your letter dated April 15, 1943, enclosing copy of H. R. 2497, a bill for the relief of the Daniel Baker Co., of 'Manchester, Ky., and requesting this Department to forward to your committee a report of the facts in the case as disclosed by its files, together with an expression of opinion as to the merits of the bill, and copies of papers material to the facts relating thereto.

The proposed legislation, if enacted, would authorize and direct the Secretary of the Îreasury, to pay to the Daniel Baker Co. the sum of $525.10, which sum represents the balance being withheld by the Government as part of the excess costs alleged to have been incurred by reason of the failure of the contractor to perform under contract No. Tps-40640. The bill further authorizes and directs that the Daniel Baker Co. shall not be held liable or responsible on the claim of the United States against such company amounting to $101.21, such claim presumably representing the balance of the excess cost incurred by the United States by reason of the failure of the contractor to perform under its contract.

It appears from the record and the documents in the files of this office that the Procurement Division of this Department issued its invitation to bid under date of April 22, 1941, such invitation covering the furnishing of gasoline in region 2, comprising among others the State of Kentucky. Accompanying such invitation was schedule No. 3 listing the zones within the States referred therein for which bids were sought. There was also transmitted to the contractor with the invitation a copy of Special Instructions to Bidders proposing to furnish class 7 gasoline, dated March 4, 1941.

By reference to such special instructions it is to be noted that paragraph 13 thereof provides that “Bids will not be considered that

restrict deliy. eries to individual activities at specific locations in a zone." Such special instructions further provide in paragraph 14 that “A bidder who stipulates special conditions with respect to his bid, shall submit same in the form of a letter properly signed and attached to the front of U. S. Standard Form 33 (Revised) of each copy of his bid and not insert on or attach same to the price bidding sheets or any other page or part of the bid."

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Under date of April 24, 1941, the contractor submitted its bid, indicating an offer to supply the requirements of the Government in zone 15 of the State of Kentucky, such zone comprising the counties of Bell, Clay, Knox, and Whitley. No letter accompanied the bid indicating any restrictions as to delivery within the stated zone 15. Thereafter, under date of May 28, 1941, the contractor was awarded contract No. Tps-40640 covering the delivery of gasoline to Federal agencies within the foregoing zone 15. Subsequent to such award, the contractor communicated with this office, both by letter and in person, stating that a misunderstanding had occurred in preparing the bid for submission to the Government, as it was the intention of such contractor to limit its obligation to supply gasoline to Federal agencies located in Clay County, Ky. To substantiate this contention, it is understood that the contractor submitted to the Procurement Division for examination a copy of its contract with its supplier, which contract indicated that the contractor was restricted to deliveries within a certain specified territory, such territory not including Whitley, Knox, or Bell Counties. In view of the foregoing restrictions, the contractor requested to be relieved of that portion of its responsibility under contract No. Tps-40640 requiring the delivery of gasoline to Federal agencies located in the counties of Whitley, Knox, and Beli. The contractor was advised that the Department was without authority to grant such relief, and was further advised that, in the event of its failure to perform, Federal agencies located within the specified zone would be required to purchase the gasoline in the open market, and any excess costs incurred by the Government as a result thereof would be charged to the contractor.

The contractor subsequently submitted a claim for relief to the Comptroller General of the United States, who, after requesting report of the facts from this Department, under date of September 5, 1941, ruled in a decision to the Secretary of the Treasury that the Government was without authority to grant any relief to the contractor.

This Department is without information as to the amount of excess costs incurred by the Government as a result of the contractor's default on its contract, and, accordingly, is unable to express an opinion as to whether such contractor is properly chargeable with the sum of $525.10, alleged to be the sum withheld from the contractor by the Secretary of the Treasury, or as to whether it should be relieved of liability from the claim of the Government amounting to $101.21, presumably representing the balance of excess costs incurred by the Government.

Since, as heretofore stated, the records of this Department contain no information which would permit an expression of opinion as to the validity of the claims for refund of the amount of $525.10 or for relief from liability to the Government for the sum of $101.21, this Department is not in a position to recom. mend the enactment of the proposed legislation. Furthermore, the Director of the Bureau of the Budget has advised that the enactment of the above legislation would not be in accord with the program of the President for the following reasons:

1. There is nothing to indicate that the claimant has as yet filed any claim for final settlement under the foregoing contract; and

2. There is an entire absence of information to the merits of the claim for $525.10.

There are enclosed herewith, as per list attached, copies of pertinent documents relating to this matter. Very truly yours,

JOHN L. SULLIVAN, Acting Secretary of the Treasury.

STATE OF KENTUCKY,

Clay County, 8: Before me the undersigned notary publio, within and for county and Stato aforesaid, personally came T. L. Britton, well known to me to be the person mentioned herein, who being first duly sworn deposes and says that: He is the president of the Daniel Baker Co., of Manchester, Ky., & corporation doing business as a wholesale jobber of petroleum products in a certain territory called a franchise which comprises Clay, Leslie, Perry, a portion of Owsley and a portion of Jackson. He further says that as owner and president of the corporation that he did erroneously and ignorantly, too, furnish regular gasoline to a Government agency in Clay County, a veterans' camp, and that by bidding he used only check marks and that the period for which he did bid was the quarter beginning July 1, 1941, and ending September 30, 1941. He further says that he did not know he was held for any other agencies until July 8, when he received a message from Pineville Civilian Conservation Corps camp almost 100 miles away, that he was to make deliveries to that camp. He further states that he made a trip immediately to the camp at Pineville, explaining that it was an error and that he did not know about it till the message came. He further says that he went directly to the city of Washington and appeared before the Treasury Department in the Procurement Division and that after the head of this department heard his appeal and saw his franchise that they did ask him to go to the Accounting Department of the comptroller and that they would recommend relief without penalty. This they did but relief was not granted. The'said T. L. Britton further states that he did furnish the governmental agencies within Clay County and that the Government did not release him from the contract and that money was deducted from his checks to pay the deficit charged by other companies. He further says that he is independent, having no connection with Shell Oil Co., other than buying and paying cash for the products he gets and that he was in nowise financially able to buy more than one tank car of gasoline at a time. He further states that according to his record he has furnished the governmental agencies in Clay County invoices to the amount of $1,627.45 and that the Government has paid him $1,144.72 leaving a balance of $483.73. He further states that there is also a deduction of $32.79 and one for $8.58 which are not included in the above--making a total of $525.10. The facts herein stated are within his personal knowledge and are true to his best knowledge and belief.

T. L. BRITTON, President

(For Daniel Baker Co.). Subscribed and sworn to before me by T. L. Britton whom I certify to be a reputable person and worthy of belief. This 10th day of April 1943. (SEAL)

PLEAY W. MOBLEY, Notary Public, Clay County. Ky.,

By B. C. BOWLING, D. C.

DANIEL BAKER Co.,

Manchester, Ky., July 17, 1941. Mr. G. A. PARKHURST,

Procurement Division, Washington, D. C. DEAR MR. PARKHURST: It is through ignorance perhaps that I have gotten into the predicament on the invitation bid 24997 G-5-5-41. It does not make sense that a small jobber would bid for business outside of his franchise. My franchise calls for Clay, Owsley, Leslie, and a part of Jackson County. I have no right to sell in any other part of zone 15 and had no intentions whatsoever. I am 60 years of age and have tried to live a Golden Rule life. In this appeal I am asking for relief from these counties, viz, Bell, Whitley, and Knox. I talked to Mr. Zody at Pineville which is more than 75 miles from here. He understands the error and if the Government is fair you will see to it that I get relief. This little company is mine and I am absolutely not able to stand the pressure. I waged all I had to get into the business and through ignorance am expected to do that for which I did not intend. Look at schedule 3, region 2, and see if Clay is not checked from the four counties. That should be proof that I am sincere and honest in this matter. I should like to hear at once. Very sincerely yours,

T. L. Britton, President.

JULY 22, 1941. DANIEL BAKER Co.,

Manchester, Ky. GENTLEMEN: Reference is made to your letter of July 17, 1941, advising this office that your quotation under bid invitation 24797-G-5-5-41, item 142, for the delivery of regular grade gasoline by tank wagon or in drums to all Federal activities in zone 15 of Kentucky did not include delivery throughout all counties of this zone.

This office sincerely regrets your failure to have carefully read the special instructions to bidders and the special conditions of this bid invitation prior to the submission of your quotation in response thereto, as paragraph 13 of special instructions to bidders states in part: "Bids will not be considered restrict delivery

to certain counties of a zone."

that

The bid which you submitted in response to this invitation did not indicate that you were restricting deliveries to certain counties. A check mark alongside of one of the counties listed in the zone under schedule 3 of the bid invitation would not be interpreted by this office to mean that deliveries are restricted to that county, but rather as a check by you to be sure that the zone in which you were submitting a quotation included the right counties. Your quotation not being out of line with the quotations received from others for delivery of gasoline throughout this zone did not indicate a specially low price—that is, a price só much lower than the prices quoted by the other bidders as to indicate any question of doubt, and require clarification.

This office is without authority to cancel your contract or relieve you from any of the contract conditions. It is therefore suggested that if you do not wish to accomplish deliveries with your equipment, it may be possible for you to arrange with others to cooperate with you in their accomplishment. Any failure on your part to effect delivery to any of the participating activities in this zone will be sufficient cause for such activities to purchase in the open market and charge all costs in excess of your maximum quoted price against your account.

It is hoped that you can negotiate arrangements whereby these activities will not have cause to make open-market purchases. Very truly yours,

G. A. PARKHURST, Acting Chief, Purchase Division.

JULY 25, 1941. Hon. CLIFTON E. Mack,

Director, Procurement Division, Treasury Department.

(Attention Miss Parkhurst.) HONORABLE SIR: Agreeable with the wishes of your representatives, I am submitting the following memorandum for your information:

It was the purpose of the Daniel Baker Co. to submit a bid to furnish gasoline for the agencies of the Federal Government located in Clay County, Ky., for 3 months, beginning July 1, 1941. However, through a misunderstanding and misapprehension on the part of the Daniel Baker Co., owned by myself, my son, and my wife, it is now claimed by the Treasury Department that this company submitted a bid to furnish gasoline to four counties—Clay, Whitely, Knox, and Bell, in zone 15, Kentucky.

Representing the Daniel Baker Co., I marked on one of the papers sent to me the county of Clay, indicating that that was the county we were bidding on.

Our little business is located in Manchester, Clay County, Ky., working under & contract or franchise from the Shell Oil Co. which restricts our company to certain specified territory. It includes Clay County but does not include either Whitley, Knox, or Bell County.

I have charge of the business of the Daniel Baker Co, and the first intimation I had that Whitley, Knox, and Bell Counties were included in this contract was when I received telephone calls from Federal agencies in Whitley and Bell Counties to deliver gasoline to them in those counties. I had no purchase orders to deliver gasoline in those counties, but I had received purchase orders to deliver gasoline to Federal agencies in Clay County.

The Daniel Baker Co. could not furnish in any event Shell gasoline in Whitley, Knox, or Bell County because it does not have any contract or franchise from the Shell Oil Co. that would permit the Daniel Baker Co. to furnish gasoline in Whitley, Knox, or Bell County.

The Daniel Baker Co. has no control over the Shell Oil Co. or its jobbers in Whitley, Bell, or Knox County. These jobbers, like the Daniel Baker Co., have no contact with the Shell Co, except to purchase Shell products and to reselí same in certain specified territory.

My wife, son, and myself were induced to buy out the Daniel Baker Co, for $7,500. It had a lot of run-down equipment. At that time we owned some real estate that would not sell for in excess of $4,500. It was necessary for us to borrow $4,500 and give our personal note to the bank for that sum and a mortgage on all of the real estate that we owned; and this cash was paid to the Daniel Baker Co. owners for its stock. We gave to those who held the stock of the Daniel Baker Co. our note to pay the other $3,000 and put up the $7,500 of stock to secure the $3,000 note.

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