The law of government contracts

Preface

JUL 24

Nearly one hundred thousand corporations and firms are interested in governmental contracts. It is therefore obvious that it would be of advantage to both the lawyer and the business man to have in readily accessible book form the statutes providing for and regulating contracts with the government, the leading decisions construing these statutes, and practical suggestions as to the status and duties of the government officers in calling for bids and awarding contracts. A clear statement of the rights and obligations of the bidders to whom these contracts are awarded, and a trustworthy description of the procedure for the collection of and enforcement of claims against the United States arising out of such contracts is of equal importance.

The preparation of the present volume was commenced prior to the outbreak of the Great War. War work of various kinds has interfered greatly with its progress. It is now complete and the confusion and perplexities of emergency war preparations, which naturally led to errors of judgment in regard to government contracts and misinterpretation of statutes and decisions bearing thereon, render the early production of the book most desirable.

At the suggestion of members of the National Association of Credit Men, with which organization the author has been pleasantly identified for some years, the book has been so written and compiled as to be of service not only to the trained lawyer but also to the intelligent business man. Thus it is that this work, in addition to the statutes and to the discussions of the cases interpreting them, also contains much material of a practical nature not ordinarily found in legal works.

iii iv PREFACE

In conclusion, the author desires to acknowledge his deep indebtedness for assistance in the preparation of this book to Oscar D. Clarke, Librarian of the Law Library of the Supreme Court of the United States.

R. Preston Shealey.

Washington, D. C.

May 2, 1919.

Part I — Preliminary Observations and Definitions Chapter Page

I Government and Individual Contracts Compared

AND Distinguished 3

§ I. Constituents of a Valid Contract

2. Power of United States to Contract

3. The Government as a Contractor

4. Burden of Proof as to Fraud

5. Estoppel as Affecting Authority of Government

Agent

II Contracts Classified

§ 6. Kinds of Contracts

7. Express Contracts

9. . Executed and Executory Contracts 10. Written and Oral or Parol Contracts

III When a Government Contract Is Valid .....

§ II. Authority of Government Agent to Contract

12. Validity as Affected by Statute

13. Application of Statute to Contracting Officer

14. Construction of Act by Court of Claims

15. Cases Where the Validity of the Contract is Ques-

tioned

16. Where Limit of Cost Is Not Fixed

17. Statutes Fixing Limit of Cost

18. Where Contracts Are Implied

19. Authority May be Inferred from Duties of Officer

Special Rules to be Observed

20. (i) Negotiable Paper Not Accepted

21. (2) Unauthorized Acts Cannot Establish Usage

22. (3) Appointment of Agent Must be Proved

23. (4) Enemy Contracts Are Void

24. (s) Recitation of Facts Not Material Does Not

Invalidate

25. (6) Warning of Lack of Authority Has Weight

26. (7) Refusal of Superior to Contract Binding on

Inferior Officers

27. (8) No Implied Contract Exists Where Express

One Would be Illegal

28. (9) Authority of Officer Rarely in Question

V vi CONTENTS

Part II — Implied Contracts Chapter ■ Page

IV When a Contract Will Be Implied 27

30. Liability of United States for Tortious Acts of Its

Officers

31. Fraudulent Taking by Officer and Recovery There-

for

32. Action for Wrong Done by Agent Not Maintain-

able Against Government

33. When Acceptance Is Presumed and Recovery Al-

lowed

34. Caution Necessary as to Implied Contracts

35. Declarations of Emergency Must be in Writing

36. Quartermaster Has No Authority to Contract for

Indefinite and Uncertain Amounts or Quantities

V When a Contract Will Be Implied (Continued) . 33

§ J,T. What Makes an Implied Contract

38. The Clark Case

39. When Private Property Is Used

40. Property Taken Without Occupation

41. Implied Contract Distinguished from Tort

42. When Property Is Received and Used, Payment

Due

43. Determination of Amount to be Recovered

44. Evidence of Contract

45. Recent Decisions on Implied Contracts

46. Measure of Recovery

VI The Implied Contracts to Pay for Use of Patents 40 § 47. Use of Patents Without Agreement with Owner

48. When Property Is Appropriated, Compensation Is

Implied

49. Condition of the Law Prior to 1910

50. Statutory Protection for Owners of Patents

51. The Act Protecting Patentees Construed

VII The Implied Contract to Pay for Goods Commandeered 44

§ 52. The Acts Giving Compensation for Goods Commandeered

53. Appeals

54. What Is Just Compensation?

SS- Just Compensation for Merchandise

Part III — Performance VIII Assignment or Transfer of Contract 51

§ 56. Prohibitory Statutes

57. Financing the Contract Is Not an Assignment

58. Partnership Changes Are Not Forbidden

59. Agreement With Sureties Is Not Illegal

CONTENTS vii

Chapter Page

60. Assumption of Control by Receiver Is Not an As-

signment

61. Leases of Property May be Transferred

62. The Government May Recognize the Assignment

IX Alterations and Modifications 56

§ 63. The Right to Alter

64. Oral Modifications

65. Need of Caution

66. Changes Permissible Without Readvertisement

67. Approval of Officer Designated in Contract Re-

quired

68. Changes by Proper Officer Valid as Implied Con-

tracts

69. Changes Must be Agreed to by Both Parties

70. Rulings as to Extra Work

71. Contractor Should Record Extra Costs

X Contracts for Uncertain Quantities or Involving

Unknown Conditions 65

§ 72. The Effect of Uncertainty

78. 79.

80 81 82, 83

The Phrase "More or Less"

Permissible Variation in Quantity "Such Quantity as May be Required"

Application of Rule to Building Contracts Uncertainty Regarding Conditions to be Encountered Rule as to Measurement in Building Embankment Representations as to Conditions, Without Warranty, Not Binding Specifications Are Binding Contract Provisions Control Measurements Are According to Custom Presumption of Law as to Excess Work

XI Tender of Performance 74

§ 84. When Tender Should be Made

85. Reasons Excusing Tender

86. When Tender Is Required

87. Extension of Time of Performance

88. Express and Implied Extensions

89. Acts of Government Constituting Implied Exten-

sion

90. Unavoidable and Other Causes of Delays

91. Rule of Law as to Time Limit

XII Construction or Interpretation of Contracts . . 80

§ 92. General Provisions

93. Contracts Partly Written and Partly Printed

94. Construction by the Parties

95. Other Rules of Construction

96. Correspondence a Guide to Correcting Ambiguity

97. Acts of Parties as Basis for Interpretation viii CONTENTS

Chapter Page

98. Clerical Error Is Not Binding

99. Contract and Specifications Irreconcilable, Con-

tract Is Void 100. Trade Usage or Custom

XIII Approval OF Performance by Officer or Board of

Survey 86

§ loi. Right to Waive Contract Provision : Boards of Survey

102. Approval of Board Not Necessary for Recovery

103. Decision of Board, if Invoked, Is Final

104. Decision of Designated Officer Is Binding

105. Agent's Judgment Must be Exercised Reasonably

106. Government Is Bound by Decision of Its Officers

107. The Inspection Officer Should be Clearly Desig-

nated

108. Certificate of Approval Necessary to Recovery

109. Approval Not to be Given in Advance of Accep-

tance

1 10. Defects Apparent After Acceptance

111. Conclusions to be Drawn

112. The Burden of Notifying the Inspecting Officer

113. Apparent and Latent Defects — Finality of Officer's

Decision

114. Superintending Officer Determines Facts Not Law

115. Meaning of "Final" as Applied to Officer's Deci-

sion: Latent Defects.

XIV Disputes and Compromises 100

§ 116. The Rule as to Compromises

117. Principles of Compromise

118. Ruling by the Comptroller

XV Statutory Protection of Material Men and

Laborers 103

§ 119. Ordinary Mechanic's Lien Not Applicable

120. "Public Work" Defined

121. Illustrative Cases

122. Further Interpretation of Act

Part IV — Breach XVI What Constitutes Breach 109

§ 123. How Breach Arises

124. Acts of Government Which Do Not Constitute

125. Rules of Acceptance Made After the Contract

126. Breach by the United States

127. Breach by the Contractor

128. Waiver of Breach

129. Impossibility of Performance as Excuse for Non-

130. Act of God Is Not Always a Legal Excuse

CONTENTS

IX

Chapter

Page

131. Impossibility Not Always Allowed

132. Rules Laid Down by Supreme Court

133. Consequence of Performance Being Prevented by

One of Parties

XVII Cancellation or Abandonment of Contracts

§ 134. Agreement to Terminate

135. Repudiation by One Party

136. Effect of Failure of One Party to Perform

137. Anticipatory Breaches of Contract

138. Grounds for Rescission

139. Termination of Contract by Government

140. Default by Contractor

141. When the Contractor Is Entitled to Damages

142. The Measure of Damages

143. The Case of War Contracts

144. The Treatment of Informal Contracts

145. Arbitration and Award

146. Not All Agreements to Arbitrate Bind

147. Conditions Precedent to Suit

148. What Agreements Will be Sustained

149. What Agreements Will Not be Sustained

150. Estimating Profits Upon Abandonment by Sub-

contractor

151. Breach by Government Justifies Abandonment

152. Result of Abandonment by Contractor

XVIII Damages 137

§ 153. Principles Generally Governing

154. Loss Due to Delay, Suspension, or Abrogation

155. Increased Cost of Labor and Materials Following

Delay

156. Cost of Inspection Owing to Contractor's Delay

157. Decrease in Contract Quantity

158. Recovery of Prospective Profits

159. When Prospective Profits Are Not Allowed

160. Exceptions to the Rule as to Prospective Profits

161. Distinction Between Penalties and Liquidated

162. Illustrative Cases

163. Statute as to Contracts of Treasury Department

164. Reletting Contract After Default; Withheld Pay-

ments as Security

165. Government's Right to Withhold Percentages

XIX

Bonds and Sureties 151

§ 166. Payment of Sureties Performing Work After Default

167. New Contract by Surety After Default

168. Cases on Sureties

169. Effect of Modification of Contract on Surety's

Liability

CONTENTS

Chapter

Page

Part V — Procedure XX Statutory Requirements for Advertisement

§ 170. What Contracts Must be Advertised

171. Necessity of Advertisement

172. Exceptions to the Rule

173. Personal Service

174. Immediate Delivery

175. "Public Exigency"

176. Military Emergency

177. The Time Element Important

178. Discretionary Powers

179. Other Exceptions

180. Contractor Need Not Advertise

181. Manner of Advertising

182. Various Methods

183. Proposals Addressed to Those Competent to Per-

form

XXI Bids

184. Bid or Proposal

185. Bidder Should Observe Instructions

186. Opening of Bids and the Award

187. Right to Modify or Withdraw Bid

188. Irresponsible Bidder May be Rejected

189. Bid Must Conform to Advertisement and Specifi-

cations

190. When Award Is Not a Contract

191. When Award Is a Contract

192. Notice of Award Must Actually Reach Bidder

XXII Reformation for Mistake in Bid

§ 193. Formal Errors and Errors in Calculation

194. Reformation for Mutual Errors

195. Rescission for Error of One Party ig6. Reformation and Rescission

197. Opposite Opinions of Attorney-Generals

198. Contractor Must Exercise Great Care

§ 199. When Approval Is Necessary

200. When Approval Implied

201. Express Approval Should be Secured

202. Ratification by Acquiescence

203. Power of Subordinate Officers to Contract

204. Approval as Distinguished from Ratification

XXIII

XXIV

§ 205. What Contracts Must be Written

206. Emergency Contracts to be Filed

207. Purpose of the Act

208. Complete Contract Must be Signed

209. Requirements Contractor Should Remember

CONTENTS

XI

Chapter

XXV

210. 211 212

213 214,

215 216. 217. 218, 219,

Consequence of Failure to Obey Act Meaning of "Quantum Meruit"

Act Applies to Emergency Contracts Not Advertised ■ Object of Act to Guide in Its Interpretation Terms of Written Contract Conclusive Preliminary Memoranda Not Contract Formal Contract Must Follow Accepted Proposal Common Law Rule vs. Government Contract Law Need of Caution by Contractor Summary

Page

Procedure to Secure Payment

§ 220. Analogy

221. Auditors

222. Appeals Within Executive Departments

223. Suits in the Court of Claims

224. Appeals under Commandeering Provisions

225. Weight of Decisions

Appendix A — Practical Suggestions 209

Appendix B — Governmental Purchasing Officers and

Agencies 212

Appendix C — Governmental Disbursing Officers and

Agencies 216

Appendix D — Statutes Relating to Contracts with United

States 219

Statutes of General Application

Suits Against the United States Agriculture, Department of Commerce, Department of

Bureau of Lighthouses District of Columbia, Purchases in and for Interior, Department of Labor, Department of

Immigration Service Navy, Department Post-Ofifice Department Public Printing Treasury Department

Public Building Contracts

Transportation and Other Contracts War Department

Supplies and Services for Army

Public Works Contracts of Secretary of War

The Law of Government Contracts

Part I Preliminary Observations And

DEFINITIONS

Chapter I Government And Individual Contracts Compared And Distinguished

§ I. Constituents of a Valid Contract

Chief Justice Marshall has, in brief terms, defined a contract as "an agreement to do, or not to do, a particular thing" (Sturgis V. Crowninshield, 4 Wheat. 122 [1819]), while a New York court has given another definition in broader terms, as follows : "A bargain or an agreement voluntarily made upon good consideration, between two or more persons, capable of contracting to do, or forbear to do, some lawful act." (Justice V. Lang, 42 N. Y. 493 [1870].)

To constitute a valid and complete contract there must be certain elements present. There must be an agreement which creates an obligation, and the agreement must be enforceable at law. The latter element has been very generally overlooked or lost sight of by judges and writers. To speak of a void contract is absurd, for, while an agreement may be void by lack of legal effect, it must ever be remembered that a contract is an agreement plus a legal obligation and, thus, where there is no obligation there is no contract. Pollock says: "A contract consists in an actionable promise or promises." (Pollock on Contracts, 8.)

Mutuality of understanding, legality of consideration and object, competency of the parties, definiteness as to terms, time of performance, and acceptance, formal requisites, and the absence of all illegality are the remaining factors which control in the making of contracts and in their enforcement.

§ 2. Power of United States to Contract

The United States is a sovereignty, but it can contract, and when, acting through its authorized agents, it agrees with one of its citizens — the term including partnerships and corporations as well as individuals — to do or not to do a particular thing, the law implies that it has so agreed, and this agreement becomes a government contract.

§ 3. The Government as a Contractor

In a broad sense and subject to statutory limitations, the United States, when it contracts with its citizens, is controlled by the same laws that govern citizens under similar conditions, and all obligations which would be implied against citizens under the same circumstances will be implied against it. (United States v. Tingey, 5 Peters 115 [1831]; United States v. Bradley, 10 Peters 343 [1836] ; United States v. Bostwick, 94 U. S. 53 [1876] ; United States v. Whiteside, 93 U. S. 247 [1876] ; and. United States v. North American Co., 74 Fed. 145 [1896].) The Supreme Court of the United States has expressed this thought in the following language : "If it (the United States) comes down from its position of sovereignty and enters the domain of commerce it submits itself to the same laws that govern individuals there." (Cooke V. United States, 91 U. S. 389, 398 [1875].)

While the Supreme Court has laid down this general rule in the cases cited yet there are several limitations to the rule. In certain respects the government, when it appears as a contractor, is regarded quite differently from the private citizen. These points must always be borne in mind. The more important of them may be explained here.

§ 4. Burden of Proof as to Fraud

As between man and man and when dealing under ordinary conditions fraud must be affirmatively proved if a

GOVERNMENT vs. INDIVIDUAL CONTRACTS 5

contract is to be set aside. But the rule is different when the domain of government contracts is entered, since in one noted case in which the government could not affirmatively show fraud to exist, a recovery was denied the claimant when it was shown that the government had paid many times the market value of an article, the unconscionable price supplying the place of positive evidence of fraud. (Hume v. United States, 132 U. S. 406 [1889].)

The case is referred to here only to illustrate one of the several limitations stated and not for the purpose of laying down any rule as to what price will be considered so excessive as to imply fraud, for as a matter of fact in Wentworth's case (5 Ct. CI. 302 [1869]), where there was in question a contract for the purchase of naval supplies from a middleman, a much higher price than the manufacturer's price was sustained. It was shown that there was not sufficient time to learn the place of manufacture nor the manufacturer's price, and that the public exigency demanded an immediate delivery and consequent payment of the higher price. In other words, while a high price will not always set aside a government contract and never, of course, invalidates a private contract, unless accompanied by certain other circumstances, nevertheless when an exceptionally high price has been shown to have been paid or contracted to be paid by the government, the burden of proof will be on the contractor to explain satisfactorily the high price. In private contracts this is not the case.

The subject will be discussed in detail later on. It is wise, however, to refer to pertinent decisions of the United States courts which explain the reasons for the view.

The United States Court of Claims said, in Carman, Adm. V. United States, 34 Ct. CI. 237 (1899) : "This court has always regarded the government as somewhat in the character of a ward, and its officers in the character of its guardian, and it has never given effect to a contract where it appeared that the contractor directly or indirectly, by direct briberies or corrupt influences, sought to impair the good faith of the guardian." The Supreme Court has also said that such influences in the awarding of contracts are most reprehensible and vitiate the contract, justifying its rescission (annulment), even though the contractor had no actual knowledge of the fact that his agents had made secret arrangements with government officials by which they shared in profits. (Crocker v. United States, 240 U. S. 74 [1916].)

In substance, when one is dealing with the government he must consider himself the trustee and the government as the beneficiary under the trust. If this be kept in mind much worry and care and possible loss may be avoided.

§ 5. Estoppel as Affecting Authority of Government Agent

A second and equally important distinction is laid down in Cooke v. United States, 91 U. S. 389 (1875), relating to the matter of estoppel (inability because of one's own act or admission) to deny the authority of an agent. Suppose, for instance, that the John Jones Company, a corporation, permits John Doe to appear in the public eye as its general manager or proper contracting officer, even though John Doe does not actually have the power to make contracts in its behalf as such. If John Doe does make such a contract the corporation will be estopped (barred by its own act or admission) from denying his authority and will have to carry out the contract or be liable in 'damages for its breach. With respect to such acts and declarations on the part of public agents, however, different rules prevail. To quote the court : " . . . . principals in the latter category are in many cases bound by the acts and declarations of their agents, even where the act or declaration was done or made without authority, if it appear that the act was done or declaration was made by the agent in

GOVERNMENT vs. INDIVIDUAL CONTRACTS 7

the course of his regular employment; but the government or public authority is not bound in such a case, unless it manifestly appears that the agent was acting within the scope of his authority, or that he had been held out as having authority to do the act, or was employed in his capacity as a public agent to do the act or make the declaration for the government." (Whiteside v. United States, 93 U. S. 247, 256 [1876].)

In the following case the same principle appears in slightly different form. A private agent, acting in violation of specific instructions, yet within the scope of his general authority, may bind his principal, but the rule as to the effect of a like act of a public agent is otherwise. The reason for this second general exception seems to be that it is better that an individual should occasionally suffer from the mistakes of public officers or agents, than that a rule should be adopted which, through improper combinations or collusion, might be turned to the injury of the public. Individuals as well as courts must take notice of the extent of authority conferred by law upon a person acting in an official capacity, and the rule of law that ignorance of the law furnishes no excuse for any mistake or wrongful act, applies with particular force in matters of government contracts.

Chief Justice Nott of the Court of Claims in a dissenting opinion reported in the case of Saloman v. United States, 7 Ct. CI. 491 (1871), uses language touching on this point which is applicable here and correctly states the law : ". . . . there is this difference between individuals and the government — that the former are liable to an extent of the power that they have apparently given to their agents, while the government is liable only to the extent of the power it has actually given to its officers."

In other words, government officers are agents with limited powers and certain prescribed discretion, and the contractor must in all circumstances see for himself that his contract comes within the terms of the law. The unauthorized acts of officers of the United States in the making of agreements "cannot estop the government from insisting upon their invahdity, however beneficial they may have proved to the United States." (Filor v. United States, 9 Wall. 45 [1869], affirming 3 Ct. CI. 25 [1867].)

The authority of government officers to contract is one of such importance that it will be treated more extensively in another section of this work. Before closing this subject the general rule may again be emphasized as stated in the Cooke case, namely, that the United States has the power — just as an individual has — to make a valid contract; and that this power may be exercised without express authority of statutory direction, though subject to statutory limitation. For instance, the United States can require a bond from a contractor even though the statute under which the particular contract has been let makes no mention of a bond. So it follows that when the government has required bonds where no statute is in existence requiring them, suits on such bonds will be sustained. This idea has been carried out in recent contracts of the War Department in which the contractor has given not only the bond required by the Heard Act, but also another bond which is to be held valid, directly guaranteeing the payment of subcontractor's bills. (Jessup v. United States, 106 U. S. 147 [1882] ; Diamond Match Co. v. United States, 31 Fed. 271 [1887] ; Rogers v. United States, 32 Fed. 890 [1887]; United States v. Jones, 'j'j Fed. 717 [1896]; Laffan v. United States, 122 Fed. 333 [1903] ; Howgate v. United States, 3 App. D. C. 277, 295 [1894] ; United States V. Pumphrey, 11 App. D. C. 44, 48 [1897].)

Chapter II Contracts Classified

§ 6. Kinds of Contracts

Having defined a contract and outlined some of the general differences between government and private contracts, the classes into which contracts generally, and government contracts especially, are divided may next be considered :

1. Express and implied contracts

2. Executed and executory contracts

3. Written and oral contracts

§ 7. Express Contracts

Express contracts may be defined to be those in which the terms of the agreement are fully stated and agreed upon at the time of making. To quote the language of the Court of Claims (Mayer v. United States, 5 Ct. CI. 317 [1869]), an express contract may be said to have been made "when a proposition made by one party is met by an acceptance on the part of the other, which corresponds with it entirely and adequately."

Express contracts may be either written or oral, executed or executory.

Implied contracts, in the ordinary sense, arise in those cases in which no contract of any kind was explicitly made, but in which, from the circumstances and facts, the law raises the presumption that the parties had intended to contract and did in fact contract. Implied contracts arise as between individuals, and also as between individuals and the government.

Under its sovereign rights set forth in the Federal Constitution and its amendments, the government can seize personal as well as real property, and when it does so the law will imply an agreement on the part of the government to pay for property so taken. (See Act of October 6, 1917, and July i, 1918, authorizing commandeering of property by officials and specifying methods of compensation.)

§ 9. Executed and Executory Contracts

Executed contracts are : ( i ) those contracts which have been performed so that nothing remains to be done by either party, and (2) those in which the transaction was completed at the time the contract or agreement was made, as where an article is sold and delivered and payment therefor is made on the spot.

Executory contracts are those in which some act remains to be done, as when an agreement is made to build a house in six months, to do an act before some future date, etc. (Fletcher v. Peck, 6 Cra. U. S. 87, 136 [1810] ; 3 L. Ed. 162.)

§ 10. Written and Oral or Parol Contracts

Written contracts are defined to be those express contracts the terms of which have been put in writing.

Under federal statutes, particularly Section 3744 of the Revised Statutes, certain of the government departments are required to evidence their agreements by a formal written contract signed by both parties, at the end thereof, and as to those departments such a written contract alone is valid. When there is no such statute applicable, a written bid, accepted in writing, will be sufficient to constitute a valid, informal written contract.

Oral or parol contracts are stated to be express contracts made orally.

Chapter III When A Government Contract Is Valid

§ II. Authority of Government Agent to Contract

The United States, as was pointed out in the first chapter, has the right, subject to self-imposed restrictions and Hmitations, to make a vaHd and binding contract. As an attribute of sovereignty, the right may be exercised even without express authority and direction. In order, however, to safeguard the interests of the government, Congress has seen fit to enact sundry statutes — directory, mandatory, or prohibitive in character — for the guidance of the executive departments and officers of the United States in entering into agreements or assuming financial obligations.

As the question of the authority by which a contracting officer assumes to bind the government by contract is a fundamental one, and one which should present itself to the contractor before he enters into any agreement, it is proper to consider here this phase of the law. The subject naturally divides itself into two branches. These are :

1. The validity of the contract as affected by directory,

mandatory, or prohibitive statutes.

2. The validity of the contract as afifected by lack of

authority in the particular officer representing the United States.

§ 12. Validity as Affected by Statute

Subject to certain exceptions, named in Revised Statutes, Section 3648 (see Appendix D), and others made by later statutes (principally war legislation), to which attention will be directed, in all cases of contract for the performance of

II any service or for the delivery of articles of any description for the use of the United States, payment must not exceed the value of the service rendered, or of the articles delivered previously to such payment. In general it may be said that the Act of 1820, as well as that of 1861, expressly forbid the making of contracts when there is not a law authorizing them, nor appropriation adequate to their fulfilment. (See Fowler V. United States, 3 Ct. CI. 43, 48 [1867].)

The first act referred to does not preclude a payment where the money has been actually earned and the government has received an equivalent therefor (18 Op. Atty. Gen. 105 [1885]), or where the contractor has performed some service, even if the government has received no benefit therefrom (McClure v. United States, 19 Ct. CI. 173 [1884]), but it does prevent part payments upon contracts unless the United States thereupon becomes the owner of the work paid for (20 Op. Atty. Gen. 746 [1894] ).

By another statute (Act of June 30, 1906 [Appendix D] ), Congress has provided that : "No act of Congress hereafter passed shall be construed to make an appropriation out of the Treasury of the United States or to authorize the execution of a contract involving the payment of money in excess of appropriation made by law, unless such act shall in specific terms declare an appropriation to be made or that a contract may be executed." Another act (34 Stat. 764; R. S. 3679 as amended) makes it unlawful for any executive department or other governmental establishment to involve the government in any contract or other obligation for the future payment of money in excess of such appropriation, unless such contract or obligation is authorized by law, or unless the obligation is capable of definite ascertainment by the terms of the contract. This section, together with Section 3732, Revised Statutes, in effect prohibits any expenditure or contract in behalf of the government in excess of appropriations therefor, except in the War and Navy Departments for specific purposes named in the latter statute. The Act of March 4, 1909, 35 Stat. 1 106, applicable to public building contracts, provides a penalty for contracting in excess of an appropriation. (Appendix D.) At this point it is well to point out that the Army Appropriation Bill, approved July 9, 1918 (see Appendix D), authorizes disbursing officers of the army in an emergency, and when obligations are pressing, to make the payments from other balances. Statutory limitations on the authority of these officers to contract must, therefore, be read in the light of this provision.