A-21015, JANUARY 9, 1928, 7 COMP. GEN. 409

A-21015: Jan 9, 1928

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REQUESTING DECISION OF A QUESTION PRESENTED AS FOLLOWS: YOUR CONSIDERATION IS REQUESTED REGARDING THE ASSESSMENT OF LIQUIDATED DAMAGES IN THE FOLLOWING CASE. THE WORK WAS TO BE COMPLETED WITHIN 60 DAYS AND THE SPECIFICATION PROVIDED FOR THE ASSESSMENT OF LIQUIDATED DAMAGES AT THE RATE OF $5.00 PER DAY FOR EACH DAY'S DELAY IN COMPLETION OF THE WORK. THE CONTRACTOR SUBMITTED A PROPOSITION SUGGESTING CERTAIN CHANGES IN THE SPECIFICATIONS WHICH WAS REJECTED BY THE DEPARTMENT ON SEPTEMBER 24TH. THE DEPARTMENT WAS ADVISED BY THE CUSTODIAN THAT THE WORK HAD NOT BEEN COMPLETED. SOME OF THE MATERIAL WAS DEFECTIVE AND INOPERATIVE. THE CONTRACTOR'S ATTENTION WAS CALLED TO THE MATTER ON MARCH 8TH. NO ANSWER WAS RECEIVED AND ON APRIL 2ND THE CUSTODIAN ADVISED THAT NOTHING FURTHER HAD BEEN DONE.

A-21015, JANUARY 9, 1928, 7 COMP. GEN. 409

CONTRACTS - TERMINATION - LIQUIDATED DAMAGES WHERE A CONTRACTOR ABANDONS ITS CONTRACT, NECESSITATING THE TERMINATION THEREOF BY THE GOVERNMENT AND THE SUBSEQUENT RELETTING OF THE UNCOMPLETED PORTION OF THE WORK CONTRACTED FOR TO ANOTHER CONTRACTOR, NO LIQUIDATED DAMAGES ACCRUE TO THE UNITED STATES UNDER THE PROVISIONS OF THE CONTRACT AFTER THE DATE OF ITS TERMINATION.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, JANUARY 9, 1928:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 15, 1927, REQUESTING DECISION OF A QUESTION PRESENTED AS FOLLOWS:

YOUR CONSIDERATION IS REQUESTED REGARDING THE ASSESSMENT OF LIQUIDATED DAMAGES IN THE FOLLOWING CASE.

UNDER DATE OF AUGUST 27, 1926, THE TREASURY DEPARTMENT ACCEPTED THE PROPOSAL OF THE FOREST PARK SCREEN COMPANY IN THE AMOUNT OF $498.00 FOR FURNISHING AND INSTALLING DOOR AND WINDOW SCREENS, C., IN THE POST OFFICE BUILDING AT HINTON, W.VA., SAID PROPOSAL HAVING BEEN THE LOWEST OF TWO SUBMITTED IN COMPETITION BASED UPON SPECIFICATIONS DATED AUGUST 3, 1926. THE WORK WAS TO BE COMPLETED WITHIN 60 DAYS AND THE SPECIFICATION PROVIDED FOR THE ASSESSMENT OF LIQUIDATED DAMAGES AT THE RATE OF $5.00 PER DAY FOR EACH DAY'S DELAY IN COMPLETION OF THE WORK.

ON SEPTEMBER 14, 1926, THE CONTRACTOR SUBMITTED A PROPOSITION SUGGESTING CERTAIN CHANGES IN THE SPECIFICATIONS WHICH WAS REJECTED BY THE DEPARTMENT ON SEPTEMBER 24TH. THE CONTRACTOR SUBMITTED SAMPLES OF SCREEN FRAME AND WIRE CLOTH ON SEPTEMBER 29TH, WHICH THE DEPARTMENT APPROVED ON OCTOBER 2ND.

UNDER DATE OF FEBRUARY 23, 1927, THE DEPARTMENT WAS ADVISED BY THE CUSTODIAN THAT THE WORK HAD NOT BEEN COMPLETED, THAT SCREENS AND OTHER MATERIAL HAD BEEN SHIPPED TO HINTON IN THE PRECEDING FALL AND PART OF THEM INSTALLED BY THE HINTON CONSTRUCTION COMPANY, WHICH THE CONTRACTOR ENGAGED AS SUBCONTRACTORS FOR MAKING INSTALLATION. HOWEVER, SOME OF THE MATERIAL WAS DEFECTIVE AND INOPERATIVE, AND THE SUBCONTRACTOR HAD RETURNED SUCH MATERIAL TO THE CONTRACTOR, BUT RECEIVED NO REPLY NOR FURTHER INSTRUCTIONS.

UNDER DATE OF FEBRUARY 24TH THE SUBCONTRACTOR ADVISED THAT IT HAD COMPLETED ITS WORK ON NOVEMBER 22ND, SO FAR AS IT COULD GO AND HAD BILLED THE CONTRACTOR, BUT COULD GET NO REPLY. THE CONTRACTOR'S ATTENTION WAS CALLED TO THE MATTER ON MARCH 8TH, WITH REQUEST THAT THE WORK BE EXPEDITED. NO ANSWER WAS RECEIVED AND ON APRIL 2ND THE CUSTODIAN ADVISED THAT NOTHING FURTHER HAD BEEN DONE. ON APRIL 11TH THE CONTRACTOR WAS ADVISED THAT IF IT DID NOT COMPLETE THE WORK, BIDS WOULD BE ASKED FOR ITS COMPLETION AND THE COST CHARGED TO ITS ACCOUNT. NO REPLY HAVING BEEN RECEIVED, THE CUSTODIAN WAS DIRECTED ON JUNE 2, 1927, TO OBTAIN BIDS FOR THE COMPLETION OF THE WORK. THE ONLY BID RECEIVED WAS THAT OF THE HINTON CONSTRUCTION COMPANY IN THE AMOUNT OF $37.00, WHICH WAS ACCEPTED ON JUNE 30, 1927. THE WORK WAS PROMPTLY COMPLETED BY THIS CONCERN AND THE AMOUNT THEREOF CHARGED AGAINST THE CONTRACTOR'S ACCOUNT.

UNDER DATE OF NOVEMBER 3, 1927, THE FOREST PARK SCREEN COMPANY REQUESTED SETTLEMENT. AN INQUIRY WAS MADE OF THE CONTRACTOR, AS WELL AS THE CUSTODIAN, REQUESTING THE REASON FOR THE DELAY. COPIES OF THE RESPONSES OF THE CONTRACTOR AND THE CUSTODIAN DATED DECEMBER 3, 1927, AND NOVEMBER 23, 1927, RESPECTIVELY, ARE INCLOSED.

IT WILL BE NOTED THAT THE CONTRACT WITH THE FOREST PARK SCREEN COMPANY WAS TERMINATED ON JUNE 30TH, BY ACCEPTANCE OF THE BIDS WHICH THE CUSTODIAN WAS DIRECTED TO SECURE FOR THE COMPLETION OF THE WORK AND THAT THE WORK WAS FINALLY COMPLETED ON JULY 20, 1927. THE WORK WAS COVERED BY AN INFORMAL CONTRACT, AND NO BOND WAS REQUIRED SINCE THE AMOUNT OF THE CONTRACT WAS BELOW $500.

THE ORIGINAL CONTRACTOR COMPLETED THE WORK EXCEPT TO THE EXTENT OF THE PORTION COVERED BY THE CHARGE OF $37.00, ABOVE REFERRED TO, AND THE GOVERNMENT WAS INCONVENIENCED ONLY TO THE EXTENT THAT THE OCCUPANTS OF THE BUILDING WERE DEPRIVED OF THE USE OF THE SCREENS DURING THE PERIOD ENSUING AFTER THE FLY SEASON BEGAN IN 1927, SO THAT TO CHARGE LIQUIDATED DAMAGES TO THE DATE WHEN THE NEW CONTRACT WAS ENTERED INTO WOULD AMOUNT TO A FORFEITURE OF THE ENTIRE CONTRACT PRICE AND WOULD APPEAR TO BE INEQUITABLE TO THE CONTRACTOR.

IN VIEW OF THE CIRCUMSTANCES AS ABOVE SET FORTH, THE DEPARTMENT DESIRES YOUR DECISION AS TO WHETHER THE SECRETARY OF THE TREASURY, IN DETERMINING THE EXTENT TO WHICH THE PROVISION FOR LIQUIDATED DAMAGES MIGHT BE ENFORCED, SHOULD TAKE INTO CONSIDERATION ANY PART OF THE TIME WHICH ELAPSED AFTER TERMINATION OF THE CONTRACTOR'S RIGHT TO PROCEED.

IT APPEARS FROM YOUR SUBMISSION THAT THE FOREST PARK SCREEN CO. WAS OBLIGATED BY THE CONTRACT OF AUGUST 27, 1926, TO FURNISH AND INSTALL WITHIN 60 DAYS CERTAIN DOOR AND WINDOW SCREENS IN THE POST OFFICE BUILDINGS AT HINTON, W.VA., IN ACCORDANCE WITH THE PLANS AND SPECIFICATIONS THEREFOR, FOR THE SUM OF $498, AND THAT THE CONTRACT PROVIDED THAT IF THE CONTRACTOR SHOULD FAIL TO COMPLETE THE WORK WITHIN THE AGREED TIME LIQUIDATED DAMAGES WOULD BE DEDUCTED FROM THE CONTRACT PRICE AT THE RATE OF $5 PER DAY FOR EACH DAY OF UNEXCUSED DELAY. THE FOREST PARK SCREEN CO. HAVING FAILED TO COMPLETE THE WORK CONTRACTED FOR, THE GOVERNMENT TERMINATED THE CONTRACT ON JUNE 30, 1927, AND SUBSEQUENTLY ENTERED INTO A CONTRACT WITH THE HINTON CONSTRUCTION CO. TO COMPLETE SAID WORK.

INASMUCH AS THE INVOLVED CONTRACT WAS TERMINATED BY THE GOVERNMENT ON JUNE 30, 1927, NO LIQUIDATED DAMAGES ACCRUED TO THE UNITED STATES THERE UNDER AFTER THAT DATE.