B-123530, JUL. 7, 1955

B-123530, JUL. 7, 1955

TO CLARKE L. SMITH AERIAL SURVEYS:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 21, 1955, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $103,376.08, REPRESENTING EXCESS COSTS INCURRED BY THE GOVERNMENT DUE TO YOUR DEFAULT UNDER CONTRACT NO. W-49-018-ENG-1355, DATED MAY 29, 1947.

UNDER THE TERMS OF THE CONTRACT YOU AGREED TO FURNISH AND DELIVER CERTAIN AERIAL PHOTOGRAPHY TO THE ARMY MAP SERVICE BY DECEMBER 31, 1948, AT THE RATE PER SQUARE MILE AS SET FORTH IN THE CONTRACT. UNDER CONTRACT CONDITION 13 THE PARTIES AGREED THAT "IF THE CONTRACTOR REFUSES OR FAILS TO PERFORM THIS CONTRACT WITHIN THE TIME SPECIFIED, OR ANY EXTENSION THEREOF, THE GOVERNMENT MAY, BY WRITTEN NOTICE, TERMINATE THE RIGHT OF THE CONTRACTOR TO PROCEED WITH DELIVERIES OR WITH SUCH PART OR PARTS THEREOF AS TO WHICH THERE HAS BEEN DELAY, AND MAY HOLD THE CONTRACTOR LIABLE FOR ANY DAMAGE CAUSED THE GOVERNMENT BY REASON OF SUCH TERMINATION.'

YOU WERE NOTIFIED IN WRITING BY THE CONTRACTING OFFICER TO COMMENCE THE CONTRACT WORK ON AUGUST 19, 1947, PARTICULAR ATTENTION BEING INVITED TO THE PROVISIONS OF PARAGRAPH 1-04 OF THE SPECIFICATIONS COVERING THE COMMENCEMENT, PROSECUTION, AND COMPLETION OF THE REQUIRED WORK. THE RECORD SHOWS THAT BY AUGUST 30, 1948, YOU HAD COMPLETED ONE SEGMENT OF THE WORK, COVERING 1,863 SQUARE MILES, FOR WHICH YOU WERE PAID AT THE CONTRACT RATE. HOWEVER, DUE TO YOUR FAILURE TO COMPLETE THE REMAINING CONTRACT WORK ON THE SPECIFIED DATE, THE CONTRACTING OFFICER, BY LETTER DATED MARCH 23, 1949, NOTIFIED YOU THAT YOUR RIGHT TO PROCEED FURTHER UNDER THE CONTRACT WAS TERMINATED PURSUANT TO THE PROVISIONS OF CONTRACT CONDITION 13 AND REQUESTED THAT YOU RETURN TO THE ADMINISTRATIVE OFFICE ALL GOVERNMENT FURNISHED MATERIALS, ETC. ALSO, YOU WERE NOTIFIED THAT THE UNCOMPLETED WORK WOULD BE READVERTISED AND THAT YOU WOULD BE HELD RESPONSIBLE FOR ANY EXCESS COSTS AND DAMAGES INCURRED THEREBY. BY LETTER DATED DECEMBER 15, 1950, YOU WERE INFORMED REGARDING THE RELETTING OF THE UNCOMPLETED WORK AND THE AMOUNT OF THE EXCESS COSTS CHARGEABLE TO YOUR ACCOUNT AND REQUESTED TO REMIT THE SAME. IN LETTER OF JANUARY 4, 1951, YOU ADVISED THE CONTRACTING OFFICER THAT YOUR FIRM WAS NO LONGER OPERATING. YOU DENIED LIABILITY FOR THE INDEBTEDNESS PRIMARILY FOR THE REASON THAT THE CONTRACT REPRESENTED AN INITIAL ATTEMPT AT PRECISION MAPPING AT AN ALTITUDE OF 36,000 FEET AND THAT SUCH ATTEMPT WAS CONSIDERED EXPERIMENTAL BY THE CONTRACTING PARTIES BECAUSE OF THE NATURE OF THE WORK. ALSO, YOU CONTEND THAT THE AWARD OF THE CONTRACT TO YOU WITHOUT REQUIRING A PERFORMANCE BOND FOR THE PROTECTION OF THE GOVERNMENT SUPPORTS THE FACT THAT THE CONTRACT WAS INTENDED AS AN EXPERIMENT. YOU STATE THAT, AFTER OVERCOMING THE MECHANICAL, PHYSICAL, AND OPTICAL PROBLEMS ENCOUNTERED, YOU COMPLETED AND DELIVERED CONSIDERABLE FILM FOR WHICH PAYMENT WAS NOT MADE BECAUSE SUCH FILM DID NOT COMPRISE A COMPLETED BLOCK, BUT THAT YOUR FIRM CEASED OPERATIONS ONLY AFTER PROVING HIGH ALTITUDE PRECISION MAPPING COULD BE ACCOMPLISHED.

NOTWITHSTANDING YOUR CONTENTIONS THE RECORD SHOWS THAT THE ADMINISTRATIVE OFFICE CONTINUED ITS EFFORTS TO COLLECT THE EXCESS COSTS. FOR THIS REASON YOUR INDEBTEDNESS WAS FORWARDED TO OUR OFFICE FOR DISPOSITION UNDER APPLICABLE LAW. HENCE, THE LETTER OF MARCH 8, 1955, REQUESTING PAYMENT OF THE SUM OF $103,376.08.

IN YOUR LETTER OF MARCH 21, 1955, WHILE ADDING NO EVIDENCE NOT HERETOFORE CONSIDERED BY THE ARMY MAP SERVICE AND OUR OFFICE, YOU STRESS YOUR PRIOR CONTENTION REGARDING THE WAIVER OF ANY BOND REQUIREMENT AND FURTHER STRESS THAT YOU WERE TOLD AND STRICTLY UNDERSTOOD THAT THE CONTRACT WAS EXPERIMENTAL. HOWEVER, YOU ADMIT YOU WERE ANTICIPATING A PROFIT IN THE TRANSACTION NOTWITHSTANDING A COMPLETE UNDERSTANDING OF THE DIFFICULTIES TO BE ENCOUNTERED AND THE PROBABLY HIGH COSTS OF OPERATION. YOU FURTHER EMPHASIZE YOUR PROBLEMS IN ADJUSTING YOUR AIRCRAFT FOR THE REQUIRED PHOTOGRAPHY AND, WHILE SUCCESSFULLY DEVELOPING A B-17 BOMBER FOR THE PURPOSE, YOU STATE THAT THE SAID AIRCRAFT, LEASED BY YOU FROM THE GOVERNMENT, SUBSEQUENTLY WAS SOLD WITHOUT YOUR KNOWLEDGE LEAVING YOU WITHOUT THE NECESSARY FACILITIES TO COMPLETE THE WORK. YOU INFER SUCH CONDITIONS ARE EXCUSABLE UNDER THE TERMS OF YOUR CONTRACT.

THE ADMINISTRATIVE REPORT FURNISHED OUR OFFICE SHOWS YOUR INABILITY TO COMPLETE THE CONTRACT WAS NOT DUE TO ANY EXPERIMENTAL NATURE OF THE WORK BUT, RATHER, TO YOUR FAILURE TO MEET THE ESTABLISHED REQUIREMENTS AT ALL STAGES OF THE CONTRACT. AS A MATTER OF FACT, IT IS ESTABLISHED BY THE RECORDS THAT THE ARMY MAP SERVICE ENTERED INTO A SIMILAR CONTRACT ABOUT ONE YEAR PRIOR TO THE CONTRACT IN QUESTION WHEREUNDER THE PHOTOGRAPHY WAS SUCCESSFULLY MADE AT APPROXIMATELY THE SAME ALTITUDE. ALSO, IT IS SHOWN THAT THE RELET PHOTOGRAPHY FOLLOWING YOUR DEFAULT WAS SUCCESSFULLY COMPLETED AND DELIVERED ON JANUARY 16 AND DECEMBER 8, 1950. SO FAR AS CONCERNS THE WAIVER OF ANY BOND REQUIREMENT, AND IRRESPECTIVE OF THE PURPOSE FOR WHICH THE CONTRACTING OFFICER MADE SUCH ELECTION, THE NECESSITY FOR OR THE EXCLUSION OF A BOND IN THE SITUATION HERE WAS ENTIRELY A MATTER OF ADMINISTRATIVE DISCRETION. FURTHERMORE, IT IS SPECIFICALLY REPORTED THAT YOUR CONTENTIONS REGARDING THE EXPERIMENTAL NATURE OF THE WORK REQUIRED UNDER THE CONTRACT ARE SOLELY YOUR OWN, THERE APPEARING NO OTHER STATEMENTS OF RECORD IMPLYING THAT THE CONTRACT WAS ANY TIME CONSIDERED EXPERIMENTAL.

IN ADDITION, THE REPORTS SHOW THAT AT THE TIME OF AWARD NO QUESTION WAS RAISED AS TO YOUR ABILITY TO PERFORM THE REQUIRED WORK INASMUCH AS THE CERTIFICATE SUBMITTED BY YOU STATES, IN PART, THAT YOU HAD AVAILABLE IN GOOD SERVICEABLE CONDITION FOR USE IN TAKING AND FURNISHING THE AERIAL PHOTOGRAPHS REQUIRED BY THE SPECIFICATIONS "TWO AIRCRAFT CAPABLE OF MAPPING ABOVE 36,000 FT. ALTITUDE" AND "TWO MAPPING PILOTS AND PHOTOGRAPHERS FULLY QUALIFIED WHO HAVE WORKED ON ARMY MAP SERVICE WORK.' YOUR CAPACITY FOR PERFORMING THE REQUIRED WORK IS SHOWN BY YOUR SATISFACTORY COMPLETION OF THE PHOTOGRAPHY REQUIRED IN CONNECTION WITH AREA "C.'

THE CONTRACT IN THIS CASE WAS A VALID AND BINDING AGREEMENT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES AND OBLIGATED YOU TO FURNISH THE REQUIRED WORK AT THE PRICE SPECIFIED THEREFOR IN THE CONTRACT. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 275; UNITED STATES V. CONTI, 119 F.2D 652. UNDER THE PROVISIONS OF CONTRACT CONDITION 13, YOU WERE ON NOTICE THAT, IN THE EVENT OF YOUR FAILURE TO PERFORM THE CONTRACT WITHIN THE SPECIFIED TIME, THE GOVERNMENT WAS AUTHORIZED, BY WRITTEN NOTICE, TO TERMINATE YOUR RIGHT TO PROCEED THEREUNDER AND HOLD YOU LIABLE FOR ANY DAMAGES CAUSED BY SUCH TERMINATION.

YOUR CONTENTION THAT YOU ARE NOT INDEBTED TO THE GOVERNMENT IN ANY AMOUNT UNDER THE CONTRACT BUT THAT YOU DELIVERED THOUSANDS OF MILES OF PHOTOGRAPHY FOR WHICH YOU WERE NEVER PAID IS NOT CONSISTENT WITH THE ADMINISTRATIVE REPORT WHICH SHOWS YOU SATISFACTORILY COMPLETED THE MILEAGE UNDER AREA "C" FOR WHICH YOU WERE PAID THE SUM OF $866.29 BY CHECK DATED OCTOBER 6, 1948, AND THAT THE 25 PERCENT WITHHELD AT THAT TIME, OR $288.77, WAS APPLIED AND CREDITED AGAINST THE TOTAL EXCESS COSTS CHARGEABLE TO YOU.

ACCORDINGLY, ON THE BASIS OF THE RECORD NOW BEFORE OUR OFFICE, YOU APPEAR TO BE INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $103,376.08. UNLESS SATISFACTORY ARRANGEMENTS ARE MADE FOR THE LIQUIDATION OF THE INDEBTEDNESS, OUR OFFICE WILL HAVE NO CHOICE IN THE MATTER BUT TO REFER THE INDEBTEDNESS TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE COLLECTION ACTION.