Exhibit 20--Performance bond, Henges Company, Inc., of Kansas City, SURETY Kansas City, Missour! Ennens City, & corporation, myanised and existing State of Missouri and hering emoutive offices ia General Insurance Company of Americs, a serperation organised and existing under the lars of the State of Washington with principal effies in the City of Seattle, Washington PENAL SUM OF BOND (express in words and figures: FIVE HROUSSARD SEVES HUNDRED NOVELY WHIRLS AND CONTRACT NO. DATE OF CONTRACT KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL and SURETY above named, are held and firmly bound unto the United States of America, hereinafter called the Government, in the penal sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal entered into a certain contract with the Government, numbered and dated as shown above and hereto attached; NOW THEREFORE, if the principal shall well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of said contract during the original term of said contract and any extensions thereof that may be granted by the Government, with or without notice to the surety, and during the life of any guaranty required under the contract, and shal! also well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of said contract that may hereafter be made, notice of which modifications to the surety being hereby waived, then, this obligation to be void; otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. Exhibit 21--Memorandum from Earl H. Lund, Regional Director, Public SUBJECT: : Regional Director, PBS (Lund) DATE: January 26, 1960 6P Commodity Stabilization Service, Kansas City, Missouri The Regional Office of GSA had been experiencing some difficulty as to An effort has been made to work out the problem with CSS of such constant In the fall of 1959, it was discovered that certain partitions had been installed' in the building without approval of GSA. The Regional Commissioner of GSA and the Regional Director, PBS, visited with Mr. Donald Smith, Director of CSS, to see if all our mutual problems could not be resolved. This memorandum has direct reference only to the problem of approximately $5,800 worth of movable partitions. At the time of the visit, the following situation prevailed: 1. 2. 3. 4. 5. The partitions had been installed by the Henges Company, Inc. of Kansas City, Missouri. No written order had been given to this company by either CSS or GSA. An invoice had been received by GSA in the amount of $5,793.60 for the partitions. This invoice had been approved by Mr. Joe Collins, Area Manager, Kansas City, Missouri. Mr. Collins had not issued any order to Henges, either verbally The invoice was returned to CSS as GSA had no contract, either written, verbal or implied. CSS was not in a position to enter into a contract because of advice from its Counsel to the effect although it had legal right to purchase partitions as a 6. dth and his staff indicated that they had not given the 7. of previous practices prevailing in this building, the parer at the building had not questioned the authority to order these partitions and had not, as was his responquestioned the propriety of their installation in the which was under his custody. 8. A representative of Henges Company admitted he had no written At the time Moran, (Mr. and Land, drawn: conference between Messrs. Smith, his Assistant, Gene derson vas absent on leave) Jay, Regional Commissioner, rector, PBS, the following three conclusions vere 2. b written order had been issued, and there vás some difference of option between the contractor and officials of CSS as to wheter any verbal order had been given.. Regional Commissioner, advised Mr. Baith that it seemed we had situation where a contractor had installed partitions without proper authority, and the partitions, therefore, could be considered to be the property of the soutractor. and the wished to have the partitions removed, 1 be satisfied with any partition of stay, "eeded the , Henges, etc. e indicated that the partitions as installed were in use and had proved satisfactory, and he would not object to their remaining in place, but he also would have no objection to their removal and Installation of a similar type partition. He admitted, however, removal would came some interruption to the functions The File Mr. Smith indicated that inasmuch as he was precluded by the CSS Counsel to arrange for the furnishing and installation of this type partition directly, that he requested GSA to arrange for such an installation on a reimbursable basis. The Regional Commissioner, GSA, advised Mr. Smith that this would be accomplished, but also pointed out that competitive bids would be necessary. He made it quite clear that, in his opinion, the partitions already installed must be considered to be the property of the contractor and were in the building by sufferance. The question arose as to the possibility of there being an implied contract. This was eliminated in view of the statements by Mr. Gene Moran, CS8, that he had verbally advised the contractor while the partitions were being installed that he was doing so without any written or verbal contract and at his own risk. GSA took no action during the installation of these partitions because there was no information in the Regional Office as to their installation. Further, there was no information in the Area Manager's office as to their installation. Even if there had been information in the Area Manager's office, it is to be noted that the amount involved exceeded his authorities which are limited to $2,000. The Buildings Manager can only be charged with constructive notice as his supervisor at the building was aware of the partition installation, but it is not determined as to whether the Buildings Manager had actual notice. In any event, it was also beyond his limitation. Based upon directions of the Regional Director to D&C, bids were opened on December 29, 1959, for the installation of approximately 578 lineal feet of partitions. Specifications were prepared to permit adequate competition between different manufacturers. The D&C Division circularized numerous contractors who had indicated an interest in being placed on the bidding list for this type of work. Some contractors called Mr. Jay and were encouraged to bid. Two bids were received one from the Henges Company, Inc. of Kansas City, Kansas City, Missouri, in the amount of $5,793,60; and one from E. H. Hauserman Co. in the amount of $9,300. The low bidder was Henges Co., Inc., whose partitions were already in place. The amount of the low bid was considered reasonable and did not exceed the amount of the invoice which had been previously submitted by this company to CSS, then to GSA, and then returned to CSS. The contract was signed by the Regional Director, the acceptability of bands were verified, and notice to proceed was in order. On January 14, 1960, the Regional Counsel returned the contract without approval "for legal sufficiency" as he had been "informally advised that there will be no work performed by the contractor under said contract" and because, in his opinion, there had been "violence to competitive bidding." -3 The File Informally, the question was raised as to whether it was normal procedure for da contract to be signed by the Regional Director, PBS, rather than by the Chief of D&C Division. It was not normal procedure; however, Mr. Ralph Warren, Chief of D&C Division, had indicated in conference that he did not prefer to sign this contract because of the explicit directions which had been given to him as to the preparation of the specifications. He was unable to point out specifically his objection to the specifications, but did indicate generally that the technical provisions were very loose in permitting almost anyone to submit a bid. It was pointed out to him that it had been intended to make the specifications as wide open as possible to assure as much competition as possible, but that if he did not prefer to sign the contract, he could prepare it for the signature of the Regional Director, PBS. At the time, there was no indication that, in his opinion, there was any "violence to competitive bidding" or lack of "lega mfficiency" but merely a pique because of the instruction given to obtain the bid and because he felt that the entire matter could have been handled in another manner more preferable to himself. Be admitted that the amount of the proposal was not unreasonable. Because the general tenor of the observation of the Regional Counsel could well convey the possibility of collusion or fraud - neither one was at all in the slightest degree intended or present - a conference was held by the Regional Commissioner, Regional Director, PBS, Regional Counsel and the Regional Comptroller. The Regional Counsel admitted at the time of his memorandum on January 14, that he had not known all the preceding facts. He did indicate that possibly it should have been handled by the contractor as a claim of an implied contract. It was pointed out to him that such a procedure could hardly be followed by CSS who by the interpretation of its Coungel had no authority to enter into a contract for "installation" of partitions. It was also pointed out that their Mr. Gene Moran had indicated to the contractor that he was proceeding without authority. This action itself appeared to eliminate any action of a claim through the C88 by the contractor for payment on an implied contract. facts as outlined above, there was no basis for proceeding for payment on the basis of an expressed contract, either written or verbal. By the It was further pointed out to the Regional Counsel that GSA could hardly support a claim of the contractor under an implied contract when G8A had no knowledge of the installation of the partitions except possibly to the extent of its supervisor at the building, who had no authority with respect to construction in this amount. The Regional Commissioner invited the Regional Counsel, if he so desired, to submit the matter to the General Counsel of G8A. The Regional Counsel suggested that the entire matter be documented, attached to the contract for file and that no further action be taken. Bence this memorandum. A representative of the Regional Comptroller's office suggested that the local representative of GAO be consulted. Such a representative was available the next day, and he concurred in the precedure of having the entire matter dochwarted and filed. Both the Regional Commissioner and the Regional Director, MS, do not |