B-141364, JAN. 10, 1963

B-141364, JAN. 10, 1963

TO MR. FRANK SACCO:

REFERENCE IS MADE TO THE INDEBTEDNESS OF YOUR FIRM TO THE UNITED STATES IN THE AMOUNT OF $4,987.02 WHICH REPRESENTS STORAGE CHARGES ASSESSED AND A BALANCE OTHERWISE DUE AS A RESULT OF YOUR FIRM'S DEFAULT UNDER SPOT BID SALE NO. 30-127-S-60-1, CONDUCTED BY THE SCHENECTADY GENERAL DEPOT, SCHENECTADY, NEW YORK.

THE SURPLUS PROPERTY WHICH YOUR FIRM FAILED TO PAY FOR AND REMOVE WAS ONE USED ELECTRIC REPAIR SHOP BODY, ITEM 25, AND ONE USED MOTORIZED ROAD GRADER, ITEM 26. THE RECORD SHOWS THAT AFTER AWARD OF ITEMS 25 AND 26 HAD BEEN MADE AND WHILE BIDS WERE BEING CONSIDERED FOR ITEM 27, BUT PRIOR TO THE CONTRACTING OFFICER ANNOUNCING THE SALE OF ITEM 27 TO THE HIGHEST BIDDER, YOU, WHILE ATTENDING THE SALE, STATED THAT YOU HAD MADE A MISTAKE IN YOUR FIRM'S BID, EXPLAINING THAT YOU WERE INTERESTED IN THE GRADERS COVERED BY ITEMS 26 AND 27 AND THAT YOU HAD NOT INTENDED TO BID ON ITEM 25 BUT INTENDED THAT THE BID PLACED ON THAT ITEM BE APPLIED TO ITEM 26 AND THE BID ON ITEM 26 BE APPLIED TO ITEM 27.

SUBSEQUENTLY, YOU REQUESTED THAT YOUR FIRM BE RELIEVED OF THE OBLIGATION OF ACCEPTING ITEMS 25 AND 26. THE MATTER OF THE ALLEGED MISTAKE WAS SUBMITTED TO OUR OFFICE FOR CONSIDERATION AND BY DECISION OF DECEMBER 16, 1959, B-141364, WE HELD THAT THE RELIEF SOUGHT BY YOUR FIRM COULD NOT BE GRANTED. THE DECISION OF DECEMBER 16, 1959, WAS AFFIRMED BY OUR DECISION OF JUNE 27, 1960. UPON THE DEFAULT OF YOUR FIRM, THE PROPERTY WAS READVERTISED UNDER ITEMS 65 AND 69 OF SPOT BID SALE NO. 30-127-S-61-44 AND WAS SOLD TO TWO OTHER BIDDERS. THE GOVERNMENT SUSTAINED A LOSS ON RESALE OF $1,962.76 AND YOUR FIRM WAS BILLED THIS AMOUNT PLUS STORAGE CHARGES OF $3,024.26, A TOTAL OF $4,987.02. ON JUNE 14, 1961, YOU REQUESTED THAT YOU BE ALLOWED TO SETTLE THE INDEBTEDNESS OF YOUR FIRM FOR 20 PERCENT OF THE PURCHASE PRICE OF ITEMS 25 AND 26, $548.64, UNDER THE LIQUIDATED DAMAGES CLAUSE OF THE CONTRACT. YOU WERE ADVISED THAT YOUR OFFER COULD NOT BE ACCEPTED BECAUSE THE CONTRACT DID NOT CONTAIN A LIQUIDATED DAMAGES CLAUSE.

UNDER DATE OF AUGUST 6, 1962, THE DEFENSE SUPPLY AGENCY DETERMINED THE INDEBTEDNESS AGAINST YOU TO BE ADMINISTRATIVELY UNCOLLECTIBLE AND FORWARDED SAME TO OUR OFFICE FOR APPROPRIATE ACTION. THE AGENCY RECOMMENDED THAT THE STORAGE CHARGES ASSESSED AGAINST YOUR FIRM BE REDUCED FROM $3,024.26 TO $914.82 BECAUSE IT CONSIDERED THE LATTER AMOUNT AS A REASONABLE CHARGE FOR THE STORAGE OF THE PROPERTY IN QUESTION. IN VIEW OF THIS STATEMENT, OUR OFFICE SUBMITTED THE MATTER TO THE DIRECTOR, DEFENSE SUPPLY AGENCY, FOR WHATEVER RECOMMENDATION HE MAY DEEM APPROPRIATE UNDER SECTION 10 (A) OF THE ACT OF SEPTEMBER 5, 1950, 41 U.S.C. 256A. THIS STATUTE PROVIDES THAT WHERE A CONTRACT MADE BY THE HEAD OF ANY FEDERAL AGENCY PROVIDES FOR LIQUIDATED DAMAGES, THE COMPTROLLER GENERAL, UPON THE RECOMMENDATION OF SUCH HEAD, IS AUTHORIZED TO REMIT ANY PART OF SUCH DAMAGES AS IN HIS DISCRETION MAY BE JUST AND EQUITABLE. WE HAVE HELD THAT STORAGE CHARGES MAY BE REGARDED AS LIQUIDATED DAMAGES AND REMITTED UNDER THE PROVISIONS OF THE ABOVE-CITED STATUTE. 40 COMP. GEN. 143, 146.

UPON A REVIEW OF THE MATTER OF YOUR INDEBTEDNESS TO THE GOVERNMENT UNDER THE SUBJECT CONTRACT, THE DEFENSE SUPPLY AGENCY RECOMMENDED AS JUST AND EQUITABLE THAT ALL STORAGE CHARGES (LIQUIDATED DAMAGES) AGAINST YOU BE REMITTED, AND THAT THE GOVERNMENT RETAIN FOR COLLECTION ITS CLAIM FOR $1,962.76 ADDITIONAL COSTS TO THE GOVERNMENT RESULTING FROM YOUR DEFAULT ON THE CONTRACT.

ACCORDINGLY, PURSUANT TO AUTHORITY VESTED IN ME BY THE PROVISIONS OF SECTION 10 (A) OF THE ACT OF SEPTEMBER 5, 1950, 41 U.S.C. 256A, AND IN ACCORDANCE WITH THE ADMINISTRATIVE RECOMMENDATION, REMISSION OF $3,024.26 LIQUIDATED DAMAGES IS APPROVED.

CONCERNING YOUR ORAL OFFER TO SETTLE THE GOVERNMENT'S CLAIM AGAINST YOUR FIRM FOR AN AMOUNT EQUAL TO 20 PERCENT OF THE PURCHASE PRICE OF THE ITEMS IN QUESTION, SUCH OFFER MAY NOT BE ACCEPTED BECAUSE THE CONTRACT DOES NOT CONTAIN ANY PROVISION FOR THE ASSESSMENT OF LIQUIDATED DAMAGES IN THE EVENT OF A DEFAULT BY THE PURCHASER. UNDER THE TERMS OF THE CONTRACT, YOUR FIRM IS RESPONSIBLE FOR ANY LOSS INCURRED BY THE GOVERNMENT AS A RESULT OF YOUR FAILURE TO COMPLY WITH THE TERMS OF THE CONTRACT. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 689, AFFIRMED 253 F.2D 956. ACCORDINGLY, IT IS REQUESTED THAT THE AMOUNT OF $1,962.76 BE PROMPTLY SENT TO THIS OFFICE. IF THE AMOUNT INDICATED IS NOT RECEIVED HERE WITHIN 30 DAYS FROM THE DATE OF THIS LETTER, WE WILL HAVE NO ALTERNATIVE BUT TO REFER THE MATTER TO THE DEPARTMENT OF JUSTICE FOR COLLECTION IN THE USUAL MANNER.