B-151622, DEC. 9, 1963

B-151622, DEC. 9, 1963

TO MR. ALFREDO BALLADINO:

YOUR LETTER OF SEPTEMBER 16, 1963, REQUESTS, IN EFFECT, REVIEW OF OUR PROPOSAL TO AUTHORIZE PAYMENT TO YOU OF THE SUM OF 149,122 ITALIAN LIRE AS FULL AND FINAL SETTLEMENT OF ALL CLAIMS ARISING OUT OF CONTRACT NO. DA/S/91-214-EUC-1. YOU STATE THAT THE COMPUTATION MADE BY THIS OFFICE, ON THE BASIS OF WHICH THE PRICE DIFFERENCE ON THE 71.12 TONS OF LIGHT SCRAP IRON DELIVERED IN EXCESS OF THE RIGHT PROPORTION BETWEEN THE LIGHT SCRAP AND THE HEAVY SCRAP PURCHASED WOULD BE 6,315 LIRE PER TON, IS NOT IN LINE WITH THE SPIRIT OF THE CONTRACT. YOU STATE FURTHER THAT INASMUCH AS THIS OFFICE HAS RECOGNIZED THAT THE CONDITIONS SET FORTH IN THE CALL FOR BIDS AND INCORPORATED INTO THE CONTRACT ARE SUCH THAT THE CONTRACTOR CAN EXPECT TO RECEIVE AT LEAST 75 PERCENT OF THE ESTIMATED QUANTITIES OF HEAVY AND LIGHT SCRAP IRON, AND THAT SUCH QUANTITIES SHOULD BE PROPORTIONAL, THAT THE COMPUTATION OF THE RESPECTIVE COMPENSATION MUST BE (A) HEAVY SCRAP IRON TO BE DELIVERED (75 PERCENT) 187.5 TONS, AND THAT THE QUANTITY DELIVERED TO YOU WAS 123.4 TONS, RESULTING IN A SHORTAGE OF 64.1 TONS FOR WHICH YOU ARE TO RECEIVE 11,500 LIRE PER TON; AND (B) LIGHT SCRAP IRON TO BE DELIVERED (75 PERCENT) 150 TONS, THAT THE QUANTITY DELIVERED TO YOU WAS 169.84 TONS, RESULTING IN AN EXCESS DELIVERED OF 19.84 TONS FOR WHICH YOU ARE TO PAY 16,500, AND NOT 22,815 LIRE PER TON, THE DIFFERENCE BEING 6,315 LIRE PER TON IN YOUR FAVOR. THERE IS SET FORTH IN YOUR LETTER THE FOLLOWING COMPUTATION OF YOUR MEASURE OF THE DAMAGES:

TABLE

UNDER (A/--- 64.1 TONS AT 11,500 LIRE PER TON EQUALS 737,150 LIRE

UNDER (B/--- 19.84 TONS AT 6,315 LIRE PER TON EQUALS 125,289 LIRE

TOTAL AMOUNT 862,439 LIRE

YOU POINT OUT THAT THE METHOD USED IN FIGURING THE PRICE OF THE COUNTER- OFFER IS AN INTERNAL MATTER THAT CANNOT CONCERN THE SELLER, WHO, HOWEVER, IS SAID TO BE NOT UNAWARE OF THE CONSIDERABLE PRICE DIFFERENCE BETWEEN THE TWO TYPES OF SCRAP.

IN ADDITION YOU STATE THAT, SINCE THE VARIOUS PROPOSALS MADE TO THE PROPERTY DISPOSAL OFFICER FOR A FRIENDLY SETTLEMENT HAVE NOT BEEN ACCEPTED, YOU WERE FORCED TO INCUR EXPENSES FOR PROFESSIONAL SERVICES AND ALSO FOR GOING TO HEIDELBERG, GERMANY, TO APPEAR BEFORE THE USAREUR BOARD OF CONTRACT APPEALS. CONSEQUENTLY YOU ASK THAT YOU BE AWARDED A COMPENSATION OF 1 MILLION LIRE AND STATE THAT IF THE DISPUTE IS SETTLED ON THESE TERMS YOU WILL WAIVE ALL FURTHER CLAIMS, INCLUDING THOSE FOR ADDITIONAL EXPENSE IN THE TRANSPORTATION OF THE GOODS AND FOR LOSS OF INCOME FROM THE IDLE CAPITAL.

IN OUR LETTER, B-151622, DATED AUGUST 21, 1963, TO YOU, IT WAS SHOWN THAT A REFUND OF 2,435,683 LIRE HAD BEEN MADE TO YOU BY THE DEPARTMENT OF THE ARMY AS AN ADJUSTMENT FOR THE DIFFERENCE BETWEEN THE QUANTITIES FOR WHICH YOU PAID AND THOSE ACTUALLY RECEIVED. IN ADDITION, WE PROPOSED TO AUTHORIZE PAYMENT TO YOU IN THE AMOUNT OF 449,122 LIRE, IF ACCEPTABLE AS FULL AND FINAL SETTLEMENT OF YOUR CLAIM FOR DAMAGES OF 1,603,500 LIRE BASED ON EVALUATION DIFFERENCES BETWEEN THE LIGHT AND HEAVY SCRAP METALS OF 1,123,500 LIRE, THE ADDITIONAL EXPENSES INCURRED DUE TO THE LARGER BURDEN OF TRANSPORTATION COSTS IN CARRYING AWAY THE LIGHT SCRAP IRON AMOUNTING TO 330,000 LIRE, AND LOSS OF INVESTMENT PROFITS OF 250,000 LIRE. THE SETTLEMENT OFFER OF 449,122 LIRE WAS COMPUTED ON THE BASIS OF THE DISPROPORTIONATE RATIO OF LIGHT TO HEAVY SCRAP METAL RECEIVED BY YOU, AT THE DIFFERENCE BETWEEN THE EVALUATION ASSIGNED TO YOU TO THIS TYPE AND THE AMOUNT BID THEREFOR, OR 6,315 LIRE PER SHORT TON. THIS METHOD TAKES INTO CONSIDERATION INSOFAR AS PRACTICABLE YOUR PROBABLE LOSSES BASED ON THE AMOUNT OF SCRAP ACTUALLY HANDLED BY YOUR FIRM UNDER THE CONTRACT. YOUR CLAIM APPEARS TO BE BASED ON THE NONRECEIPT OF A FULL 75 PERCENT OF THE HEAVY SCRAP AS WELL, AND APPARENTLY FAILS TO TAKE INTO ACCOUNT YOUR OPERATING COSTS IN TRANSPORTING, PROCESSING AND OTHER HANDLING OF THESE TONNAGES.

YOUR COUNTER-OFFER FOR SETTLEMENT REVEALS THAT IT IS BASED IN LARGE MEASURE UPON THE NONRECEIPT OF ALL THE HEAVY SCRAP PROVIDED FOR BY THE CONTRACT WITH DAMAGES APPARENTLY SET AT A CLEARLY ARBITRARY FIGURE SINCE YOU FURNISH NO JUSTIFICATION THEREFOR. YOUR CLAIM AS NOW SET FORTH IN THE AMOUNT OF 1 MILLION LIRE INCLUDES COSTS OF PRESENTING YOUR DISPUTE BEFORE THE USAREUR BOARD OF CONTRACT APPEALS AND FOR PROFESSIONAL SERVICES INCURRED IN THE MATTER, HENCE IS ONE FOR COSTS INCURRED IN PROCESSING YOUR DISPUTE THROUGH ADMINISTRATIVE CHANNELS AS WELL AS ONE FOR LOSS OF PROFITS.

AS YOU WERE ADVISED IN OUR LETTER OF AUGUST 21, 1963, THE CONTRACT TERMS PROVIDED THAT THE EXTREME MEASURE OF THE GOVERNMENT'S LIABILITY SHALL NOT EXCEED REFUND OF THE PURCHASE PRICE OR SUCH PORTION THEREOF AS THE GOVERNMENT MAY HAVE RECEIVED, AND THAT YOUR CLAIM FOR LOSS OF INVESTMENT PROFITS WAS A CLEARLY UNLIQUIDATED CLAIM. GENERALLY, ANTICIPATED PROFITS ARE NOT ALLOWABLE AS DAMAGES FOR BREACH OF SALES AGREEMENTS UNLESS SUCH IS WITHIN THE CONTEMPLATION OF BOTH PARTIES TO THE CONTRACT. FURTHER, A STATUTORY OR CONTRACTUAL PROVISION THEREFOR IS ESSENTIAL TO THE ALLOWANCE OF PROFESSIONAL FEES INCURRED IN PROCESSING OR LITIGATING ADMINISTRATIVELY A DISPUTED MATTER. COSTS ORDINARILY MAY BE IMPOSED ONLY IN CASES WHERE THERE IS STATUTORY AUTHORITY THEREFOR AND ONLY IN THE INSTANCES, TO THE EXTENT, AND IN THE MANNER PROVIDED FOR BY THE STATUTE. THE POWER TO MAKE RULES, OR ORDERS FOR THE IMPOSITION OF COSTS, EXISTS ONLY WHERE IT IS GIVEN OR RATIFIED BY STATUTE. OUR OFFICE IS NOT SO EMPOWERED, AND HAS NO FACILITIES FROM WHICH IT MIGHT ASCERTAIN WHAT AMOUNTS WOULD BE CONSIDERED FAIR AND REASONABLE ON THE BASIS AS CLAIMED AND, EXCEPT FOR OUR OFFER BASED UPON THE DISPROPORTIONATE AMOUNT OF THE LIGHT TO HEAVY SCRAP ACTUALLY HANDLED, WE WOULD NOT BE LEGALLY JUSTIFIED IN ALLOWING ANY PORTION OF THE ADDITIONAL ITEMS OF YOUR CLAIM AS PROPOSED BY YOU. IT IS WELL SETTLED IN OUR COURTS THAT IN SALES UNDER TERMS SUCH AS THOSE EMBODIED IN YOUR CONTRACT THE VENDEE HAS NO RIGHT OF RECOVERY BECAUSE IT DEVELOPS THAT THE QUANTITY AVAILABLE IS LESS, EVEN GREATLY LESS, THAN THE ESTIMATE. SEE LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; ALLOYS AND CHEMICALS CORP. V. UNITED STATES, U.S. COURT OF CLAIMS NO. 8-62, NOVEMBER 15, 1963.

UPON DUE CONSIDERATION YOUR COUNTER-OFFER FOR SETTLEMENT IN THE PREMISES IS REJECTED AND OUR OFFER OF SETTLEMENT IS REPEATED. IF YOU DO NOT CARE TO ACCEPT THE AMOUNT PROPOSED AS FULL SETTLEMENT OF YOUR CLAIM, YOU ARE FREE TO PURSUE ANY JUDICIAL REMEDIES WHICH MAY BE AVAILABLE.