tracting officer will not be required to furnish a certificate to that effect, except as provided by this section. In all cases where the voucher is not accompanied by a statement as to damages, it will be assumed that the contracting officer has determined that no actual damage resulted or that the contractor was not responsible for the delay, and the disbursing officer will make full payment of the voucher, if otherwise correct. If in any such case the General Accounting Office should, after payment of the voucher, request a certificate, the contracting officer will prepare and furnish a certificate that the delay did not result in any actual damage to the Government.

(e) Disposition of amounts collected because of contractor's default or unsatisfactory supplies-(1) Default. Amounts collected on account of actual damages or excess costs charged to defaulting contractors will be credited to (See MS. "Miscellaneous Receipts." Comp. Gen. A 26073, March 20, 1929; August 8, 1929; 10 Comp. Gen. 510.)

(2) Unsatisfactory supplies. Amounts refunded because of the rejection of unsatisfactory supplies will be credited to the appropriations from which the orig(See 8 Comp. inal payments were made. Gen. 103.)

(f) Set-offs. The Government always has the right to set-off against an amount due to a claimant any sum the claimant owes the Government, either under the same or other contracts or obligations. (Barry v U. S., 229 U. S. 47; 37 Op. Atty. Gen. 215; 7 Comp. Gen. 186; 18 id. 524.) The right of set-off does not apply to unliquidated demands, but the Government has the equitable right to withhold payment of moneys due under one contract to a contractor who is in default under another contract until his indebtedness thereunder can be liquidated (7 Comp. Dec. 213). Where a contract so provides, payment to an assignee shall not be subject to reduction or set-off for any indebtedness of the assignor arising independently of the assigned contract. (See 31 Comp. Gen. 90.)

[17 F. R. 8357, Sept. 17, 1952]

§ 535.9a Miscellaneous special cases(a) Indefinite quantities and unlimited amounts. It has been stated that contracts for indefinite quantities are invalid. This is merely the statement of the general legal principle that the un

dertakings of the parties to a contract must be sufficiently definite to be capable of enforcement. Thus in 14 Comp. Gen. 446, is was stated that one of the first and most important requisites of a valid contract is that the terms thereof shall be certain, definite, and specific and that, while it may not be possible to determine definitely the quantities which may be required under certain conditions, there appears no reason why there should not be an estimated quantity specified with a variance of 10, 20, or 25 percent. It has also been stated that contracts purporting to obligate the Government to pay unlimited amounts are not authorized. This statement reflects the principle that, with certain exceptions, no contract or purchase on behalf of the United States shall be made unless the same is authorized by law or is under an appropriation adequate to its fulfillment (R. S. 3732; 41 U. S. C. 11); whereas an obligation involving payment of an unlimited amount might exceed the appropriation. (15 Comp. Dec. 405, 407; 5 Comp. Gen. 450, 454.) The obligation of funds in advance of or in excess of available appropriation is prohibited. (R. S. 3679; sec. 1211, Act September 6, 1950 (64 Stat. 765; 31 U.S. C. Sup. IV, 665)). These principles do not invalidate the so-called "indefinite quantity contracts" under which the contractor undertakes to furnish all of the actual requirements of a Government agency for a particular item and the Government agency in turn agrees to purchase from the contractor all of its requirements of that item during the specified period. (19 Comp. Gen. 599.) Likewise, these principles do not affect the validity of cost-plus-a-fixed-fee contracts authorized by law, pursuant to which a contractor agrees to deliver a specified quantity of items or to perform a specified service, and to pay an undetermined amount to be computed by adding to the fixed fee the actual cost incurred.

(b) Rates effective "until further notice." In the absence of competition there is no objection to entering into agreements for public utilities services at stipulated rates "until further notice," without necessity for new agreements or annual renewals except to cover changes in rates or services. Unless the interests of the Government require otherwise in a particular case, the original agreements and all changes will be filed in the General Accounting Office and the vouchers

will cite the agreement involved and bear a statement by a responsible officer of the public utility concerned as to the rates charged. Payment may not be made for service in an amount stipulated in a substitute agreement which is in excess of the rate stated in the original contract, effective "until further notice," prior to the date of actual receipt of the substitute agreement by the proper administrative representative of the Government. (See 15 Comp. Gen. 920; MS. Comp. Gen. A 65231, December 15, 1936.)

(c) Customs duties on foreign purchases (1) Duty free purchases. The Act June 30, 1914 (38 Stat. 399; 34 U. S. C. 568) authorized the Secretary of the Navy to make emergency purchases of war material abroad and provided that the same shall be admitted free of duty. By Executive Order 9177, May 30, 1942 (3 CFR 1943 Cum. Supp.), this authority was extended to the Secretary of the Army and others.

(2) Payment of customs duties. Where the importation is not duty free, the amount of the customs duty is properly chargeable to the same appropriation as the purchase, notwithstanding the fact that the importation and the purchase are in different fiscal years. (See 26 Comp. Dec. 610.)

(3) Philippine export tax. No export tax shall be imposed or collected by the Philippines or the United States on articles exported to or from one another.

(d) No valid contract-(1) Approval of contract. If approval of a contract by any officer or official of the Army Establishment other than the contracting officer is required, the "Approval of Contract" clause set forth in § 7.105-2 of this title will be included, all changes and deletions will have been made before such approval is requested, and the contract will not be valid until such approval has been obtained. (See § 606.204-13 of this chapter.)

(2) Lost contract. Where a contract properly executed has been lost, its contents may be proved by the production of the original proposal, a certified copy of its acceptance, and an unsigned copy of the contract, so as to authorize payment at the contract rates for supplies which have been actually delivered. (See 4 Comp. Dec. 82.)

(3) Informally executed agreements. When payment has been made and accepted under an agreement shown to be

reasonable, but informally executed, the transaction is complete and both parties are bound thereby. (See 24 Comp. Dec. 226.)

(4) [Reserved]

(5) Informal commitments. Informal commitments will be entered into under the circumstances only as authorized by § 606.409-1 (c) of this chapter, and pursuant to the instructions of the head of a procuring activity. Informal commitments will not be entered into for specific amounts. The basis of payment will be "fair compensation" as approved by the appropriate approving authority, depending upon the amount involved. (See § 592.409 of this chapter.)

(e) Penalty for nonpayment. The United States is liable under an implied contract for the payment of a penalty prescribed by a city ordinance to be added to delinquent water rents for their nonpayment within a prescribed time when it takes the water from the city while such an ordinance is in force and is delinquent in paying therefor. (See 12 Comp. Dec. 640.)

(f) Postal charges. Where a procuring instrument provides for payment by the Government of transportation charges and the vendor is directed by proper authority, either in the procuring instrument or by separate instructions, to ship via parcel post, postal charges are reimbursable and will be included in the vendor's invoice as a separate item. The vendor's certificate on the invoice will be accepted as sufficient evidence of the correctness of such charges and it will not be required that any additional certificate or other supporting evidence, such as verification by weight or postal zone, be furnished.

(g) Subsistence claims. Claims received from railroad companies and others concerned covering incidental expenses of subsistence incurred by troops while en route, where reimbursement by train commanders is impossible because the organizations have departed for oversea destinations, will be forwarded to the Chief of Finance, Washington 25, D. C., Attn: Receipts and Disbursements Division.

(h) Withholding final payment due to Notices of Exceptions. The fact that Notices of Exceptions are outstanding which can be cleared by furnishing certain information or supporting papers, or that the General Accounting Office has not audited prior payments, is no

Against the United States for Amounts Due in the Case of a Deceased Creditor). Claims to be submitted on such form are for direct settlement by the General Accounting Office and will include, among other things, payment due deceased contractors and other public creditors for supplies furnished or services rendered. Claim for payment of Government checks drawn on the Treasurer of the United States or other authorized Government depositary to the order of such public creditors, which cannot be paid because of the death of the payee, will also be stated on the newly revised claim form. (See General Regulations 104-Revised.)

(2) Incompetent. No form is prescribed for use of guardians or committees of estates of minors or incompetents in making claim for sums due from the United States. However, an application setting forth the entitlement of the minor or incompetent to sums due from the Government, giving the name of the department and bureau, establishment, or agency, must be submitted by the guardian or committee over his or her signature and address accompanied by a short certificate of the court showing the appointment and qualifications of the claimant as guardian or committee. All Government checks drawn on the Treasurer of the United States or other authorized Government depositary to the order of individuals, which cannot be paid because of the incompetency of the payee, should accompany the claim. Applications for subsequently recurring payments need not be accompanied by an additional certificate of the court, but must be supported by a statement that the appointment is still in full force and effect. Where the total amount due the estate of the minor or incompetent is small, and no guardian or committee of the estate has been or will be appointed, payment may be made, in the discretion of the Comptroller General, to the person, or persons, having care or custody of the minor or incompetent, or to close relatives who will hold the amount for the use and benefit of the minor or incompetent. (See General Regulations 104-Revised.)

(1) Patent fees. Payment of patent fees for services rendered by the Patent Office or the transfer of funds to the Patent Office for such services is not authorized. (See 32 Comp. Gen. 392; and 33id. 27.)

(m) Fees for motor-vehicle-operators' permits. When United States personnel assigned to duty in foreign countries are required to secure motor-vehicle-drivers' permits for the performance of their official duties, the fees for the payment of the permits will be paid from Government funds provided the employee's tenure of duty in such foreign country can be reasonably expected to be of such duration as to warrant the expenditure. (See B 115463, Sept. 18, 1953.)

(n) Payment for supplies or services furnished subsequent to filing petition in bankruptcy. (1) Where amounts have become due for supplies or services furnished the Government subsequent to the date the firm files a petition in bankruptcy, whether it be straight bankruptcy, arrangement or reorganization proceedings, payments for such services or supplies to operating trustees, receivers, or debtors in possession will be made, provided a proper court order has been issued authorizing the designee of the bankrupt to continue operation of the business, with apparent authority to assume and/or complete Government contracts and to collect amounts due or to become due the estate. The finance officer will require a copy of such orders for his records before making payments. It is not necessary to forward such claims to the Claims Division, General Accounting Office for direct settlement unless payment otherwise is doubtful, or there is a change in the status of the bankruptcy proceedings that will warrant forwarding of such claims to the General Accounting Office in order to protect the interest of the United States.

(2) Payments also may be made to a proper court designee in State insolvency proceedings for services and supplies furnished the United States subsequent to the initiating of such proceedings. Where State insolvency proceedings develop into Federal Bankruptcy Act proceedings the receiver or trustee under the Federal Bankruptcy Act proceedings who is authorized by the court to complete a Government contract, is entitled to payment of all amounts earned in the performance of such contract. This right to payment reverts back to the date the State insolvency proceedings were initiated provided there is no dispute between the State and Federal court designees as to who is entitled to payment of the amounts due or any portion thereof.

(3) No right of set-off exists in favor of the Government under subsection 68 (a) of the Bankruptcy Act (30 State. 565, as amended; 11 U. S. C. 108 (a)) on account of a bankrupt's indebtedness to the United States where amounts have become due for supplies and services furnished the Government subsequent to the filing of the petition in bankruptcy, whether it be straight bankruptcy, arrangement or reorganization proceedings. Amounts due from the Government which were earned by the bankrupt prior to the date the petition in bankruptcy was filed and where there are preexisting debts in favor of the Government from the bankrupt, are subject to the Government's right of set-off pursuant to the mutual debts and credits provision of that subsection.

(0) Registry fees on domestic airmail. The appropriations of the various Government agencies are available for payment of registry fees on domestic matter sent by registered airmail from Washington, D. C., notwithstanding such appropriations are not available for payment of registry fees on domestic surface mail. See B 119219, May 18, 1954.

[17 F. R. 8359, Sept. 17, 1952, as amended at 18 F. R. 6562, Oct. 15, 1953; 19 F. R. 6335, Oct. 1, 1954]

§ 535.9b Adjustments—(a) Mistakes in contract price. Where a contractor claims payment in addition to the contract price on the ground that a mistake was made in the contract price, consideration may be given to whether the contract should be amended in accordance with the procedure outlined in § 591.405 of this chapter and Part 590 of this chapter. In the event that the contract is amended in accordance therewith, payment will be made in accordance with the contract as amended. Otherwise, only the price specified in the contract will be paid and the contractor will be advised to present to the General Accounting Office any protests he may have in connection with the settlement as made.

(b) Contract provisions for price adjustment. Where contracts contain price escalation or price redetermination clauses, payment will be made in accordance with the terms thereof.

(c) Inferior goods. Varying contract provisions are found dealing with goods

which do not conform to specifications but are, nevertheless, retained and used by the Government. For instance, certain quartermaster contracts dealing with canned foods provide for deductions from the contract price and for cash reimbursement, in lieu of the right to reject and require replacement of defective cans. Other contracts provide that if public necessity requires use of rejected goods not conforming to specifications, payment therefor shall be made at a proper reduction in price. Payment for rejected goods so retained and used has usually been on the basis of their reasonable value as distinguished from the contract price. (See Barry v. United States, 229 U. S. 47; Corr & Sons v. United States, 55 Ct. Cl. 7; 5 Comp. Gen. 993.) Where contract terms provide for payment of a lesser amount in the event that inferior goods are accepted under proper authority, payment may be made by disbursing officer on the basis of the determination of the contracting officer without reference to the Chief of Finance, provided there is received by the disbursing officer an invoice certified by the contractor in the reduced amount covering the inferior goods. In all cases where inferior goods are accepted at reduced prices, and the covering contract does not provide for such acceptance, the disbursing officer will submit the voucher for such reduced payment to the Chief of Finance for consideration.

(d) Violations of the 8-hour law-(1) Disposition of amounts collected. Amounts withheld from a contractor as a penalty for violation of the 8-hour law of June 19, 1912 (37 Stat. 137; 40 U. S. C. 324), as amended, are moneys collected for the use of the United States as specifically provided in said law, and, accordingly, are for depositing and covering into the Treasury as miscellaneous receipts as provided by sections 3617 and 3618, Revised Statutes. Such amounts, however, may be permitted to remain to the credit of the appropriation involved until such time as the right of appeal to the head of the department, as provided in the act of June 19, 1912, as amended, has expired (6 months), or until final action on such appeal in case same is duly filed. (See 10 Comp. Gen. 504.)

(2) Suspension of law. Because of the national emergency, Congress pro