A-21150, JANUARY 26, 1928, 7 COMP. GEN. 444

A-21150: Jan 26, 1928

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UNDER A CONTRACT IN WHICH NO PROVISION WAS MADE FOR THE DEDUCTION OF LIQUIDATED DAMAGES. A HIGHER BID WAS ACCEPTED MERELY FOR THE PURPOSE OF SECURING EARLIER DELIVERY OF CERTAIN SUPPLIES URGENTLY NEEDED BUT THE CONTRACTOR FAILED TO MAKE DELIVERY BY THE TIME AGREED UPON AND NOT BEFORE THE TIME THE LOWEST BIDDER AGREED TO MAKE DELIVERY. IS THE DIFFERENCE IN PRICE BETWEEN THAT SUBMITTED BY THE LOWEST BIDDER AND THAT FORMING THE CONSIDERATION OF THE CONTRACT. 1928: THERE IS FOR CONSIDERATION THE REQUEST OF J. WHEREIN THERE WAS WITHHELD AS ACTUAL DAMAGES THE SUM OF $200.57 FROM THE AMOUNT ACCRUING UNDER NAVY DEPARTMENT CONTRACT NO. NO PROVISION WAS MADE IN THE CONTRACT FOR THE DEDUCTION OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY BUT TIME WAS OF THE ESSENCE OF THE AGREEMENT.

A-21150, JANUARY 26, 1928, 7 COMP. GEN. 444

CONTRACTS - ACTUAL DAMAGES FOR DELAYED DELIVERIES WHERE, UNDER A CONTRACT IN WHICH NO PROVISION WAS MADE FOR THE DEDUCTION OF LIQUIDATED DAMAGES, A HIGHER BID WAS ACCEPTED MERELY FOR THE PURPOSE OF SECURING EARLIER DELIVERY OF CERTAIN SUPPLIES URGENTLY NEEDED BUT THE CONTRACTOR FAILED TO MAKE DELIVERY BY THE TIME AGREED UPON AND NOT BEFORE THE TIME THE LOWEST BIDDER AGREED TO MAKE DELIVERY, THE CONSIDERATION FOR AWARDING THE CONTRACT TO THE HIGHER BIDDER THEREBY FAILED BY REASON OF THE CONTRACTOR'S DEFAULT AND THE MEASURE OF ACTUAL DAMAGES TO THE UNITED STATES, NO OTHER DAMAGES BEING CAPABLE OF DEFINITE ASCERTAINMENT, IS THE DIFFERENCE IN PRICE BETWEEN THAT SUBMITTED BY THE LOWEST BIDDER AND THAT FORMING THE CONSIDERATION OF THE CONTRACT.

DECISION BY COMPTROLLER GENERAL MCCARL, JANUARY 26, 1928:

THERE IS FOR CONSIDERATION THE REQUEST OF J. A. MALONEY AND CO. (INC.), FOR REVIEW OF THAT PART OF SETTLEMENT NO. 0155784, DATED JUNE 1, 1927, WHEREIN THERE WAS WITHHELD AS ACTUAL DAMAGES THE SUM OF $200.57 FROM THE AMOUNT ACCRUING UNDER NAVY DEPARTMENT CONTRACT NO. NOS-932, DATED OCTOBER 6, 1926, FOR THE FURNISHING AND DELIVERING OF 1,100 RAILROAD TIES, AT A PRICE OF $1.74 EACH, TO THE SUPPLY OFFICER, NAVAL ORDNANCE PLANT, F.O.B. SOUTH CHARLESTON, W.VA.

NO PROVISION WAS MADE IN THE CONTRACT FOR THE DEDUCTION OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY BUT TIME WAS OF THE ESSENCE OF THE AGREEMENT. IN THE SCHEDULE REQUESTING BIDS, WHICH WERE TO BE OPENED ON SEPTEMBER 28, 1926, PROSPECTIVE BIDDERS WERE ADVISED THAT THE TIES WERE FOR IMMEDIATE USE AND TO BE DELIVERED NOT LATER THAN OCTOBER 11, 1926, AND THAT IF BIDDERS WERE UNABLE TO MAKE DELIVERY WITHIN THE TIME SPECIFIED, TO STATE THE ACTUAL TIME REQUIRED. THEY WERE ALSO ADVISED THAT ALTERNATIVE BIDS WITH GREATER TIMES FOR DELIVERY MIGHT BE SUBMITTED AND WOULD BE CONSIDERED BUT THAT THE RIGHT WAS RESERVED TO MAKE THE AWARD ON THE TIME SPECIFIED.

THE CLAIMANT COMPANY DID NOT SUBMIT AN ALTERNATIVE BID BUT SUBMITTED A STRAIGHT BID AGREEING, IN EFFECT, TO MAKE DELIVERY BY THE TIME SPECIFIED IN THE SCHEDULE, TO WIT, OCTOBER 11, 1926, AND IT WAS DUE TO THE FACT THAT THE TIES WERE URGENTLY NEEDED AND TO THE EARLIER DELIVERY PROMISED BY CLAIMANT COMPANY THAT THE AWARD WAS MADE, TWO LOWER BIDS THEREFOR BEING REJECTED BECAUSE OF THE LONGER DELIVERY PERIOD STIPULATED.

THE EXPLANATION MADE BY THE BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT, FOR THE REJECTION OF THE LOWER BIDS, IS AS FOLLOWS:

THE LOWER BIDS OF THE ARROW LUMBER COMPANY, AND G. ELIAS AND BROS., INC., REJECTED. SCHEDULE 6028 SPECIFIES THAT THE RAILROAD TIES ARE TO BE DELIVERED TO THE NAVAL ORDNANCE PLANT, SOUTH CHARLESTON, WEST VIRGINIA, NOT LATER THAN OCTOBER 11, 1926. ON OCTOBER 19, 1926, THE SALE OF ABOUT $1,000,000.00 WORTH OF MATERIAL WILL TAKE PLACE, AND THE REMOVAL OF THIS MATERIAL FROM THE NAVAL ORDNANCE PLANT, SOUTH CHARLESTON, WEST VIRGINIA, WILL COMMENCE NOVEMBER 1, 1926, AND TRACKAGE FOR SUCH REMOVAL IS ABSOLUTELY NECESSARY. THE ARROW LUMBER COMPANY, AND G. ELIAS AND BROS., INC., QUOTED A DELIVERY DATE OF 30 DAYS EACH, WHILE J. A. MALONEY AND COMPANY, INC., HAVE BEEN AWARDED CONTRACT NOS 932, CONDITIONAL UPON IMMEDIATE SHIPMENT. TIME OF DELIVERY IS AN IMPORTANT FACTOR IN THE PLACING OF THIS AWARD.

THIS EXPLANATION WAS ATTACHED TO THE FORMAL CONTRACT WHICH WAS SIGNED BY THE CLAIMANT.

THE CONTRACTOR'S CONTENTION THAT IT PROMISED TO SHIP, NOT TO DELIVER, THE TIES BY THE DATE SPECIFIED IN THE SCHEDULE IS NEGATIVED BY THE ABOVE REFERRED TO INSTRUCTIONS IN THE SCHEDULE, WHICH SCHEDULE SUBSEQUENTLY BECAME A PART OF THE CONTRACT, AND IF THE FORMAL AGREEMENT ENTERED INTO BY THE CONTRACTOR WITH THE NAVY DEPARTMENT DID NOT EXPRESS ITS REAL INTENTION IN THE MATTER, THE INSCRIBING OF THE CORPORATE SIGNATURE THERETO AND THUS AGREEING TO THE TERMS AS REDUCED TO WRITING, WAS AT ITS OWN PERIL AS ALL PREVIOUS NEGOTIATIONS AND UNDERSTANDINGS RESPECTING THE TERMS AND CONDITIONS UNDER WHICH THE TIES WERE TO BE DELIVERED, WERE MERGED IN THE TERMS AND CONDITIONS AS EXPRESSED IN THE EXECUTED AGREEMENT. BRAWLEY V. UNITED STATES, 96 U.S. 168; INTERNATIONAL CONTRACTING CO. V. LAMONT, 155 U.S. 303; SIMPSON V. UNITED STATES, 172 U.S. 372.

A TOTAL OF 1,121 TIES WERE DELIVERED AND ACCEPTED UNDER THE CONTRACT, NONE OF WHICH, HOWEVER, WERE DELIVERED BY THE TIME AGREED UPON. OF THE TOTAL QUANTITY DELIVERED, 299 WERE DELIVERED ON OCTOBER 15, 1926; 131 ON OCTOBER 21, 1926; 241 ON OCTOBER 29, 1926; 250 ON NOVEMBER 12, 1926; AND 200 ON NOVEMBER 15, 1926, AND THE CONTRACTOR HAS BEEN PAID FOR ALL TIES DELIVERED AT THE RATE OF $1.56 EACH, THAT PRICE BEING THE PRICE BID FOR FURNISHING AND DELIVERING THE TIES BY THE LOWEST BIDDER, BUT FROM THAT PRICE THERE WAS DEDUCTED A DISCOUNT FOR EARLY PAYMENTS IN THE TOTAL AMOUNT OF $11.65 IN ACCORDANCE WITH THE TERMS OF THE CONTRACT FOR THE TIES DELIVERED ON OCTOBER 15, OCTOBER 29, AND NOVEMBER 12, 1926.

THAT THE UNITED STATES SUFFERED DAMAGES BY THE ACCEPTANCE OF CLAIMANT COMPANY'S HIGHER BID FOR THE FURNISHING OF THE TIES, IN ADDITION TO THE HIGHER PRICE IT AGREED TO PAY THEREFOR TO SECURE THEM ON THE PROMISE OF EARLY DELIVERY, IS EVIDENT, BUT THE AMOUNT OF SUCH DAMAGE IS NOT SUSCEPTIBLE OF READY DETERMINATION. THE TIES WERE NEEDED FOR THE PURPOSE OF PUTTING THE TRACKAGE CONTIGUOUS TO THE NAVAL ORDNANCE PLANT IN CONDITION FOR THE REMOVAL, BEGINNING ON NOVEMBER 1, 1926, OF A LARGE QUANTITY OF MATERIAL FROM THAT PLANT BUT DELIVERY OF ONLY APPROXIMATELY 40 PERCENT OF THE TIES WAS MADE BY THE TIME THE REMOVAL OF THE SUPPLIES WAS TO BEGIN AND COMPLETION OF DELIVERY OF THE BALANCE OF THE TIES, OR APPROXIMATELY 60 PERCENT THEROF, WAS NOT MADE UNTIL MORE THAN 30 DAYS HAD ELAPSED AFTER THE DATE AGREED UPON FOR COMPLETING DELIVERY.

THE ONLY POSSIBLE BASIS ON WHICH THE PARTIAL MEASURE OF ACTUAL DAMAGES SUFFERED BY THE UNITED STATES IN THIS MATTER MAY BE DETERMINED, WHICH DAMAGE IS SELF-EVIDENT ON THE FACTS AS THEY APPEAR, IS THE DIFFERENCE BETWEEN THE CONTRACTOR'S BID AND THAT OF THE LOWEST BIDDER, OR 18 CENT PER TIE, AND THAT BASIS WOULD APPEAR TO BE THE PROPER BASIS IN THIS INSTANCE UPON WHICH THE INTEREST OF THE UNITED STATES IS TO BE PROTECTED BY REASON OF THE FAILURE OF THE CLAIMANT COMPANY TO MAKE DELIVERY WITHIN THE TIME AGREED UPON. THE CLAIMANT COMPANY FAILED TO MAKE DELIVERY OF ANY TIES WITHIN THE TIME SPECIFIED IN THE CONTRACT AND DELIVERIES WERE NOT COMPLETED UNTIL MORE THAN 30 DAYS HAD ELAPSED AFTER THE DATE COMPLETION WAS DUE, AND HAD THE CONTRACT BEEN AWARDED TO THE LOWEST BIDDER, WHO PROPOSED TO COMPLETE DELIVERY WITHIN 30 DAYS OR BY NOVEMBER 5, 1926, IT MAY BE ASSUMED THAT THE TIES WOULD HAVE BEEN DELIVERED AT AS EARLY DATES AS THEY WERE DELIVERED BY THE CLAIMANT COMPANY UNDER ITS CONTRACT CALLING FOR DELIVERY BY OCTOBER 11, 1926. THEREFORE, THE BASIS UPON WHICH THE GOVERNMENT'S ACTUAL DAMAGES WERE COMPUTED APPEARS TO BE PROPER.

UPON REVIEW OF THE MATTER, THE SETTLEMENT OF JUNE 1, 1927, IS SUSTAINED.