B-123987, MAR. 13, 1956

B-123987, MAR. 13, 1956

TO BASSONS INDUSTRIES CORPORATION:

WE REFER TO YOUR LETTER OF FEBRUARY 24, 1956, WITH FURTHER REFERENCE TO THE DEDUCTION OF CASH DISCOUNTS OF ONE PERCENT ON ADVANCES PAID TO YOU UNDER CHANGE ORDERS NOS. 4 AND 8, DATED SEPTEMBER 17, 1951, AND JANUARY 21, 1953, RESPECTIVELY, TO CONTRACT NO. AF (038/ 25672, DATED JUNE 1, 1951, WITH THE DEPARTMENT OF THE AIR FORCE.

THE CONTRACT PROVIDED FOR A CASH DISCOUNT OF ONE PERCENT ON PAYMENTS MADE WITHIN 10 DAYS AFTER RECEIPT AND ACCEPTANCE OF DELIVERIES OR SUBMISSION OF PROPER INVOICES, WHICHEVER WAS LATER. UNDER CHANGE ORDERS NOS. 4 AND 8, THE GOVERNMENT AGREED TO MAKE PROGRESS PAYMENTS UNDER THE CONTRACT IN CONSIDERATION OF A REDUCTION IN THE CONTRACT PRICE OF ONE QUARTER OF ONE PERCENT. NO CHANGE WAS MADE IN THE CASH DISCOUNT PROVISION OF THE CONTRACT. THE ONE PERCENT CASH DISCOUNT WAS TAKEN ON THE PROGRESS PAYMENTS EVEN THOUGH THE INVOICES WERE NOT PAID WITHIN 10 DAYS OF THE BASIS THAT THE PROGRESS PAYMENTS HAD BEEN MADE WITHIN THE TIME CASH DISCOUNTS COULD PROPERLY BE TAKEN. YOU STILL QUESTION THE PROPRIETY OF SUCH ACTION IN LIGHT OF THE REDUCTION IN THE CONTRACT PRICE ALREADY MADE IN CONSIDERATION OF THE PROGRESS PAYMENTS.

THE USUAL PARTIAL PAYMENT INVOICE SUBMITTED BY YOU UNDER THE CONTRACT WAS COMPUTED ON THE AMOUNT EARNED, LESS THE AMOUNT DEDUCTED FOR REPAYMENT OF THE PARTIAL PAYMENT. FOR EXAMPLE, YOUR INVOICE OF JANUARY 31, 1954, COVERING PARTIAL PAYMENT 29 SHOWS A PAYMENT DUE OF $1,287.02 ARRIVED AT BY DEDUCTING THE AMOUNT IN LIQUIDATION OF THE PROGRESS PAYMENT ($45,766.78) FROM THE PARTIAL PAYMENT OTHERWISE DUE ($47,053.80). IT IS APPARENTLY YOUR CONTENTION THAT HAD THE NET INVOICE PAYMENT OF $1,287.02 BEEN MADE WITHIN THE DISCOUNT PERIOD,A PROMPT PAYMENT DEDUCTION OF ONE PERCENT OF $47,053.80, OR $470.54 COULD HAVE BEEN TAKEN; BUT THAT SINCE PROMPT PAYMENT ON THE $1,287.02 WAS NOT MADE THE DISCOUNT COULD NOT BE TAKEN ON ANY PART OF THE $47,053.80.

UNDER YOUR REASONING NO PROMPT PAYMENT DISCOUNT COULD BE TAKEN ON THE 97 PERCENT OF THE PAYMENT MADE WITHIN THE REQUIRED TIME UNLESS THE REMAINING 3 PERCENT WAS ALSO PAID WITHIN THE DISCOUNT PERIOD.

THIS POSITION IS INCONSISTENT WITH THE CONTRACT WHICH PROVIDED ONLY FOR A CASH DISCOUNT OF ONE PERCENT IF PAYMENT WERE MADE WITHIN 10 DAYS. THE CONTRACT DID NOT REQUIRE THAT THE TOTAL AMOUNT OF ANY INVOICE BE PAID WITHIN THE 10-DAY PERIOD TO PERMIT DEDUCTION OF THE DISCOUNT.

THE PROVISION ON THE FACE OF CHANGE ORDER NO. 4 STATES THAT "EXCEPT AS CHANGE, EITHER EXPRESSLY OR BY NECESSARY IMPLICATION, ALL TERMS, COVENANTS, AND CONDITIONS OF THE SUBJECT CONTRACT SHALL CONTINUE IN FULL FORCE AND EFFECT.' CHANGE ORDER NO. 8 CONTAINS A SIMILAR PROVISION. THEREFORE, THE CONTRACT, AS AMENDED, PROVIDED (1) THAT THE CONTRACT PRICE BE REDUCED BY ONE QUARTER OF ONE PERCENT AND (2) THAT A CASH DISCOUNT OF ONE PERCENT COULD BE TAKEN BY THE GOVERNMENT ON ALL PAYMENTS MADE WITHIN 10 DAYS OF DELIVERY AND ACCEPTANCE OF THE SUPPLIES OR OF RECEIPT OF A PROPERLY CERTIFIED VOUCHER, WHICHEVER WAS LATER. SINCE THE PROGRESS PAYMENTS WERE MADE WITHIN THE REQUIRED TIME, THE CASH DISCOUNT WAS PROPERLY TAKEN.

ON THE BASIS OF THE FOREGOING, WE MUST ADHERE TO OUR PRIOR ACTION IN DENYING YOUR CLAIM. FURTHER CORRESPONDENCE WITH OUR OFFICE ON THE MATTER WOULD SERVE NO USEFUL PURPOSE.