B-153858, SEP. 30, 1964

B-153858, SEP. 30, 1964

TO VICE ADMIRAL JOSEPH M. LYLE, DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 15, 1964, DSAH-G, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, CONCERNING A REQUEST OF THE ERMAN- HOWELL DIVISION OF THE LURIA STEEL AND TRADING CORPORATION, CHICAGO, ILLINOIS, FOR REMISSION OF AN ASSESSMENT OF A STORAGE CHARGE IN THE AMOUNT OF $7,392 FOR DELAY IN REMOVAL OF APPROXIMATELY 500 GROSS TONS OF STEEL PROJECTILES SOLD UNDER ITEM NO. 13 OF CONTRACT NO. DA (S) 14-021-AV-628, DATED MAY 26, 1961, WHICH COVERED ACCEPTANCE OF THAT FIRM'S BIDS ON SEVEN OF THE ITEMS OF SURPLUS PROPERTY OFFERED FOR SALE BY THE CONSOLIDATED SURPLUS SALES OFFICE, FORT LEAVENWORTH, KANSAS, UNDER INVITATION FOR BIDS NO. 14-021-S-61-26, DATED MAY 2, 1961.

THE RECORD SHOWS THAT IN A DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS, DATED SEPTEMBER 10, 1963, AFFIRMED DECEMBER 23, 1963, ASBCA NO. 7783, IT WAS DETERMINED THAT LURIA SHOULD BE CHARGED THE AMOUNT OF $7,392 FOR STORAGE. THAT AMOUNT WAS COMPUTED ON THE BASIS OF A FINDING THAT THERE WAS A DELAY OF 22 DAYS IN REMOVING THE PARTICULAR MATERIAL, AND APPLICATION OF THE CONTRACT RATE OF $0.03 PER HUNDRED POUNDS FOR EACH DAY OF DELAY BEYOND THE TIME SPECIFIED FOR REMOVAL AFTER SALE.

LURIA REQUESTED OUR OFFICE TO CONSIDER THE MATTER UNDER THE PROVISIONS OF SECTION 256A OF TITLE 41, U.S.C. INVITING ATTENTION TO 40 COMP. GEN. 143, WHICH HELD THAT STORAGE CHARGES ASSESSED AGAINST PURCHASERS OF GOVERNMENT SURPLUS PROPERTY ON THE BASIS OF STORAGE RATES ESTABLISHED IN THE SALE CONTRACTS MAY BE REGARDED AS IN THE NATURE OF LIQUIDATED DAMAGES, AND THAT CONSIDERATION MAY BE GIVEN UNDER THE PROVISIONS OF 41 U.S.C. 256A TO REQUESTS OF PURCHASERS FOR THE REMISSION OF LIQUIDATED STORAGE CHARGES AS MAY BE JUST AND EQUITABLE. BY DECISION OF JULY 14, 1964, WE CONCURRED IN A RECOMMENDATION OF YOUR AGENCY TO REMIT $4,151.62 OF THE $7,392 ASSESSMENT, BUT SUCH CONCURRENCE WAS CONDITIONED UPON PAYMENT BY LURIA OF THE BALANCE OF $3,240.38 TO THE GOVERNMENT.

A CHECK FOR $4,151.62 HAS BEEN ISSUED IN FAVOR OF LURIA ON VOUCHER NO. S- 3362 IN THE AUGUST 1964 ACCOUNTS OF MAJOR BERT NEWMARK, TINKER AIR FORCE BASE, OKLAHOMA. THE CHECK AND OTHER EVIDENCE REFLECTING THE STATUS OF THE ACCOUNT BETWEEN LURIA AND THE GOVERNMENT WERE FORWARDED WITH THE LETTER OF SEPTEMBER 15, 1964, FOR OUR APPROVAL OF THE PROPOSED PAYMENT OF $4,151.62. AMONG THE PAPERS FORWARDED IS A COPY OF VOUCHER NO. S-14556 IN MAJOR NEWMARK'S FEBRUARY 1964 ACCOUNTS, COVERING PAYMENT TO LURIA OF THE NET AMOUNT OF $4,013.32 AFTER DEDUCTION OF THE SUM OF $7,392 FROM THE AMOUNT OF $11,405.32 WHICH WAS DETERMINED BY OUR CLAIMS DIVISION TO BE DUE LURIA ON ACCOUNT OF EXCESS FREIGHT CHARGES INCURRED BY LURIA AS THE RESULT OF THE GOVERNMENT'S FAILURE TO SHIP CERTAIN OF THE MATERIAL SOLD UNDER THE CONTRACT OF MAY 26, 1961, IN ACCORDANCE WITH LURIA'S SHIPPING INSTRUCTIONS.

WHEN OUR DECISION OF JULY 14, 1964, WAS RENDERED, IT WAS NOT KNOWN THAT THE AMOUNT OF $7,392 HAD BEEN RECOVERED BY THE GOVERNMENT IN A SETOFF AGAINST AN ALLOWABLE CLAIM UNDER THE CONTRACT OF SALE. IT THEREFORE APPEARS THAT LURIA IS NOT NOW REQUIRED TO PAY THE AMOUNT OF $3,240.38 IN ORDER TO OBTAIN AN EQUITABLE ADJUSTMENT OF THE $7,392 ASSESSMENT FOR STORAGE.

ACCORDINGLY, THE CHECK FOR $4,151.62, WHICH IS RETURNED HEREWITH, PROPERLY MAY BE MAILED TO THE PAYEE.