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Affiant further says he has been associated with the United States Fidelity & Guaranty Co. of Baltimore, Md., for the last 8 years, as district engineer, working out of the Pittsburgh, Pa., office.

Affiant says on the morning of May 12, 1941, he was in the room of R. Paul Mauger at the Lord Baltimore Hotel, Baltimore, Md., and that H. R. Anderson was present, when the question was raised as to whether or not the bid on the Cumberland Airport was to include sales tax.

Affiant says that at the request of R. Paul Mauger he went to the Work Projects Administration office at Baltimore and inquired if the bid on the Cumberland Airport was to include West Virginia sales tax, and he was informed by that office that the bid was not to include the sales tax, as an addendum had been issued instructing all bidders not to include the sales tax.

Affiant says he immediately returned to R. Paul Mauger's room and in the presence of H. R. Anderson informed Mr. Mauger that the bid was not to include the sales tax.

And further affiant saith not.

T. RAY KUHNS.

Subscribed and sworn to before me this 5th day of May 1943. [SEAL]

My commission expires May 19, 1944.

E. B. GRAHAM, Notary Public.

STATE OF WEST VIRGINIA,

County of

AFFIDAVIT OF H. R. ANDERSON

88:

H. R. Anderson, being first duly cautioned and sworn, says he is president of the West Virginia Tractor & Equipment Co., of Charleston, W. Va.

Affiant says he was with R. Paul Mauger, president of Mauger Construction Co., at Baltimore, Md., at the Lord Baltimore Hotel, and assisted Mr. Mauger in the preparation of the Mauger Construction Co.'s bid on the Cumberland airport project; and that a true photostatic copy of said recap bid sheet is hereto attached and made a part hereof.

Affiant further says after the bid had been prepared by Mr. Mauger, Mr. T. R. Kuhns of the United States Fidelity & Guaranty Co. informed Mr. Mauger, in the presence of this affiant, that the sales tax was to be deducted from the bid, and immediately Mr. Mauger reduced said bid by the sum of $8,000 as shown by said photostatic copy of the recap bid sheet attached hereto.

Affiant further says he was present on May 12, 1941, at 11 a. m. in company with Mr. Mauger, in Mr. Williar's office, relative to said bid and that the following gentlemen were also present at said conference; H. O. Grimes, procurement officer; C. F. Bornefeld, director of operations; E. F. Hovermill, area manager; J. H. Seibert, assistant area manager, and that during that conference Mr. Mauger informed the representative of the Federal Government that the Mauger Construction Co. bid of $373,910 did not include gross sales tax that might possibly be levied by the State of West Virginia. Mr. Grimes thereupon made the statement that the sales tax would not b levied by the State of West Virginia. Affiant says that all of this conversation took place prior to the acceptance of the bid by the Federal Government.

H. R. ANDERSON.

Sworn to before me and subscribed in my presence this 11th day of April 1943. [SEAL] L. A. WILSON, Notary Public.

My commission expires May 29, 1950.

JUNE 3, 1943.

Re: Mauger Construction Co. Our file No. 56-3116 B Nov.
GRAHAM & GRAHAM,

Attorneys at Law, Zanesville, Ohio.

(Attention of Mr. E. B. Graham.)

GENTLEMEN: Your letter of May 28 addressed to the treasurer of the State of West Virginia has just been transmitted to this office today for reply. In answer thereto I wish to state that the file of the Mauger Construction Co. in this office shows the following:

"The Mauger Construction Co.'s check in the amount of $3,577.04 was paid in this office November 3, 1941, and covered tax for the period May 24 to August 25, 1941. Also their check in the amount of $16.91 paid January 5, 1943, covered tax exemption claimed in error on the above period. Their check in the amount of $3,746.79 was paid in this office January 8, 1942, and covered the period September 1 to November 30, 1941. The correspondence in this file does not indicate what job was covered by the returns listed above."

For the reason that Mauger Construction Co. did not specify on its tax return or by correspondence what Government project the payment of the abovementioned taxes were for or what part thereof was in payment of Government work I am unable to inform you exactly on what Government contracts taxes have been paid by the Mauger Construction Co.

If any part of the checks mentioned above included payment of taxes for Government work please specify the name of the contract or the project and the amount of the tax paid thereon and I shall be glad to prepare official receipts showing payment of the same so that application for reimbursement of these taxes can be made by your client to either the War Department or the Navy Department or any other department of the Government for which the work was performed.

The Government ordinarily does not reimburse contractors for taxes unless it is a cost-plus-a-fixed-fee contract providing that if the contractor has to pay State or local taxes the Government will reimburse him. In this respect I am enclosing a directive that was prepared by the War Department under date of April 16, 1942, for the guidance of defense contractors in this State and you may be able to secure some information which will be of assistance to you from this directive. Very truly yours,

MAUGER CONSTRUCTION CO.,

GEO. P. ALDERSON,
State Tax Commissioner.

GENERAL ACCOUNTING OFFICE,
Washington, August 20, 1943.

Care of E. B. Graham, Esq., Zanesville, Ohio. GENTLEMEN: Reference is made to your letter of July 6, 1943, with enclosures, requesting review of settlement dated September 16, 1942, which disallowed your claim for $7,323.83, represented as being the additional compensation due you to cover the amount of the gross sales tax required to be paid by you to the State of West Virginia in connection with the performance of your contract No. ERT25ps-6260, dated May 14, 1941.

The record in the instant case shows that on April 23, 1941, the State procurement officer of the Procurement Division, Treasury Department, at Baltimore, Md., issued an invitation for bids-to be opened May 7, 1941-for the rental to the Federal Works Agency, Work Projects Administration, on a production basis, of the equipment with operating and maintenance personnel and necessary operating materials and accessories required in excavating certain material at the Cumberland (Md.) Municipal Airport near Wiley Ford, W. Va. Said invitation did not contain any provision with respect to the matter of taxes other than the standard clause concerning Federal taxes. However, on May 2, 1941, an addendum was issued to the invitation wherein it was stated, in pertinent part

"Tax: Bidder is not to include any sales or other tax in his bid. However, the statement may be made that if any tax is levied, the price bid will be increased by such an amount."

In response to the invitation, you submitted a bid dated May 7, 1941, wherein you proposed to furnish the necessary equipment at a rental of $0.278 per cubic yard, or for an estimated total consideration of $373,910, but the bid did not contain any statement in respect to taxes such as was authorized by the terms of the above-mentioned addendum. Upon the opening of the bids on May 7, 1941, your bid was found to be the lowest received and on May 14, 1941, it was accepted and designated as contract No. ER-T25ps-6260.

In support of your present request for a review of the above-mentioned settlement you submit the affidavits of your president, R. Paul Mauger, and of two other individuals, H. R. Anderson and T. Ray Kuhns; a photostatic copy of a paper represented to be the "recap bid sheet" on which your bid was based and from which it appears that an item in the amount of $8,000 designated "Sales tax" was deducted from the amount of your bid as previously computed; and a

letter from the State Tax Commission of West Virginia relative to the amount of taxes paid by you to that State to cover the period May 24 to November 30, 1941.

The affidavit of the said R. Paul Mauger, executed on May 28, 1943, reads, so far as here material, as follows:

"3. Affiant says that with the assistance of Mr. H. R. Anderson of the West Virginia Tractor & Equipment Co. he prepared the Mauger Construction Co. bid at the Lord Baltimore Hotel, Baltimore, Md., and that a photostatic copy of the recap bid sheet is hereto attached, marked 'Exhibit A' and made a part hereof.

"4. Affiant says the last item, to wit: 'Sales tax, $8,000,' deducted from said bid, was deducted by this affiant after Mr. T. R. Kuhns of the United States Fidelity & Guaranty Co. informed this affiant that the Government had issued an addendum requesting the sales tax not be included in the bid. The addendum Mr. Kuhns referred to was the fourth paragraph of a letter issued by the Treasury Department dated May 2, 1941. The following is a true copy:

Tax: Bidder is not to include any sales tax or other tax in his bid. However, the statement may be made, that if any tax is levied, the price bid will be increased by such an amount."

"5. Affiant says that a copy of this letter was mailed to the Mauger Construction Co. at its home office at Columbus, Ohio, but this affiant did not receive said letter or see a copy thereof until his return home. The reason this occurred is as follows: Mr. Mauger left Columbus, Ohio, on Sunday, May 4, for Charleston, W. Va.; left Charleston on Monday, May 5, and arrived in Baltimore late Monday night. May 6 was spent estimating the job in Mr. Mauger's room at the Lord Baltimore Hotel. The letter reached Mr. Mauger's office after he had left the same and he had no knowledge of said letter until his return to Columbus. "6. Affiant says Mr. T. R. Kuhns came to his room at the hotel on the morning of May 12 at approximately 10 a. m., bringing with him a bid bond that was to be used, and was used, as the bond submitted with the Mauger Construction Co. bid, and it was at this time Mr. Kuhns advised Mr. H. R. Anderson and this affiant that the sales tax was not to be included, and due to the lateness of the hour it was impossible for this affiant to go to the Work Projects Administration office and personally check the addendum; but relying upon Mr. Kuhn's information this affiant deducted the sales tax from the bid.

And

"7. Affiant says the Mauger Construction Co. bid was filed and on May 12, 1941, at 11 a. m., Mr. Mauger was in Mr. Williar's office relative to said bid. The following gentlemen were also present at said conference: H. O. Grimes, procurement officer; C. F. Bornefeld, director or operations; E. F. Hovermill, area manager; J. H. Seibert, assistant area manager; and H. R. Anderson, sales manager of the West Virginia Tractor & Equipment Co., Charleston, W. Va. during that conference Mr. Mauger informed the gentlemen present that the Mauger Construction Co. bid of $373,910 did not include the gross sales tax that might possibly be levied by the State of West Virginia. Mr. Grimes thereupon stated that the sales tax would not be levied by the State of West Virginia-and all of this conversation took place prior to the acceptance of the bid.

"Affiant says that the Mauger Construction Co. was compelled to and did pay a tax to the State of West Virginia by virtue of this contract, on the dates and in the amounts as follows: Check No. 438, dated October 31, 1941, $3,577.04; check No. 749, dated December 29, 1941, $3,746.79."

Also, it appears that the references made in the above-quoted affidavit to H. R. Anderson and T. Ray Kuhns are supported by the averments contained in the affidavits executed by them and that H. S. Grimes, the procurement officer who acted as the representative of Government in accepting your bid, has reported that R. Paul Mauger stated at a conference held on May 12, 1941, that the bid submitted by you did not include the gross sales tax that might possibly be levied by the State of West Virginia. But there is no corroboration on the part of said procurement officer of the statement alleged to have been made by him at that conference to the effect that no sales tax would be levied by the State of West Virginia in connection with the performance of the subject contract. And, aside from the unimportance from a legal standpoint of the question as to whether such remark was, in fact, made, it is apparent that any inference that the failure on your part to stipulate for the payment by the United States of an amount representing the tax in addition to the price quoted in your bid was due to the alleged remark of the procurement officer obviously would be inconsistent with the statement contained in your letter of February 27, 1942, signed by R. Paul

Mauger and addressed for the attention of said procurement officer, wherein it was said:

"Again I would like to point out, as we have done in previous letters, that our interpretation of your addendum was that we were not to include sales tax, and we did advise you that we did not include sales tax before the project was awarded to us, and it has not been the policy of this company as well as the policy of contractors offices to write statements on the bid as there is no place provided for same, and the addendum did not require, as we interpreted it, a written statement."

Moreover, even though it should be assumed for present purposes that the terms of the above-mentioned addendum to the invitation for bids here involved did not contemplate that the statement by a bidder "that if any tax is levied, the price bid will be increased by such an amount" would be in writing and incorporated in his bid-and such an assumption obviously is contrary to a reasonable interpretation of the language of the addendum-it is to be observed that there is nothing in the record tending to indicate that any oral statement to that effect was made to the procurement officer by your representative prior to the time of the acceptance of your bid. Nor is there anything to suggest that the procurement officer then had any reason to, suppose that your representative prepared your bid without a knowledge of the exact contents of the addendum. Hence, it is clear that your bid was accepted on the basis that you were willing to bear the burden of the gross sales tax prescribed by the laws of West Virginia, if it should be levied in connection with the performance of the subject contracts, and absorb it in your estimated profit.

Furthermore, the representative in the affidavit dated May 28, 1943, of R. Paul Mauger with respect to his lack of knowledge as to the exact contents of the addendum does not furnish a sufficient basis for the allowance of the instant claim. The addendum was mailed to your home office at Columbus, Ohio, on May 2, 1941, and, according to the contents of your letter of February 18, 1942, it was received there on May 4, 1941-3 days before the submission of your bid. Thus it is apparent that the alleged lack of knowledge on the part of R. Paul Mauger as to the contents of the addendum at the time of the submission of your bid or at the time of the above-mentioned conference of May 12, 1941, was due, not to any fault on the part of the Government, but to the failure of your home office to forward the addendum to him or otherwise advise him with respect thereto.

It has been held in numerous decisions of the accounting officers of the Government that the formulation, preparation and submission of a bid for Government business is solely the responsbility of a bidder; that it is incumbent upon the bidder to submit his bid in conformity with the invitation for bids and in such substance as to protect himself from the consequences of error; that if, thereafter, it develops that a bidder through inadvertence, negligence, or otherwise has omitted from or included in his bid some provision to his detriment the consequence must be borne by him (19 Comp. Gen. 1021).

Also, it is an established rule that the rights and liabilities of the parties to a contract are limited by its terms and that where a contract contains an express stipulation as to the amount to be paid, such stipulation is conclusive on the parties and measures the amount of recovery for performance. Simpson v. United States (172 U. S. 372, 379); International Contracting Company v. Lamont (155 U. S. 303, 310).

Here there was nothing in your bid to suggest that the United States would be obligated to reimburse you for the amount of the West Virginia gross sales tax if you were required to pay such tax in connection with the performance of the subject contract. In fact, as previously pointed out, the procurement officer who accepted your bid in behalf of the Government was not advised previous to the acceptance that the bid was submitted on that basis, and since you were responsible for the formulation, preparation, and submission of your bid, it was the duty of the individual who prepared and submitted your bid to apprise himself as to all instructions which had been issued concerning such preparation and submission and the legal effect thereof. But he failed to do so and your bid quoted a pricewhich upon acceptance became the total contract price-without any provision for an increase in the amount thereof in the event you should be required to pay the State tax here involved. Consequently, your failure in this respect must be regarded as a unilateral mistake on your part due entirely to your own negligence and for which no relief may be granted. Ellicott Machine Company v. United States (44 C. Cls. 127); United States v. Conti (119 F. 2d. 652).

[graphic]

It is, of course, fundamental that no agent, officer, or representative of the Government is authorized to alter, modify, add to, or subtract from a Government contract in any way except it be in the interest of the Government. Pacific Hardware Co. v. United States (49 C. Cls. 327; 17 Comp. Gen. 452, 454). Nor is there any authority in any agent or officer of the Government to give away the money or property of the United States. Bausch & Lomb Optical Co. v. United States (78 C. Cls. 584, 607).

In view of the foregoing, the settlement of September 16, 1942, must be, and is, sustained.

Respectfully,

LINDSAY C. WARREN, Comptroller General of the United States.

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