A-30818, MARCH 15, 1930, 9 COMP. GEN. 406

A-30818: Mar 15, 1930

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WHERE LIQUIDATED DAMAGES ARE NOT DEDUCTED FOR DELAYS IN COMPLETION OF SUCH CONTRACT. THERE ARE FOR ADMINISTRATIVE SHOWING IN CONNECTION WITH THE AUDIT OF THE ACCOUNTS OF DISBURSING OFFICERS CLAIMING CREDIT FOR EXPENDITURES UNDER SUCH CONTRACTS THE FACTS WHY LIQUIDATED DAMAGES DID NOT ACCRUE TO THE GOVERNMENT OR FACTS ON WHICH IT WAS CONCLUDED TO BE JUST AND EQUITABLE TO REMIT SUCH DAMAGES. WHERE DELAYS IN COMPLETION ARE INVOLVED. A WAIVER STAMP OVER THE SIGNATURE OF AN ASSISTANT SECRETARY OF THE TREASURY THAT "NO LOSS RESULTING FROM DELAY IN COMPLETION OF THIS WORK THE LIQUIDATED DAMAGES STATED IN SPECIFICATION RELATING THERETO ARE HEREBY WAIVED. THERE IS SOME SUGGESTION IN THE SUBMISSION OF FEBRUARY 8.

A-30818, MARCH 15, 1930, 9 COMP. GEN. 406

CONTRACTS - LIQUIDATED DAMAGES - TREASURY DEPARTMENT SECTION 21 OF THE ACT OF JUNE 6, 1902, 32 STAT. 326, REQUIRES THE INSERTION OF A LIQUIDATED DAMAGE STIPULATION IN CONTRACTS UNDER THE TREASURY DEPARTMENT FOR THE CONSTRUCTION OR REPAIR OF PUBLIC BUILDINGS OR PUBLIC WORKS, AND WHERE LIQUIDATED DAMAGES ARE NOT DEDUCTED FOR DELAYS IN COMPLETION OF SUCH CONTRACT, THERE ARE FOR ADMINISTRATIVE SHOWING IN CONNECTION WITH THE AUDIT OF THE ACCOUNTS OF DISBURSING OFFICERS CLAIMING CREDIT FOR EXPENDITURES UNDER SUCH CONTRACTS THE FACTS WHY LIQUIDATED DAMAGES DID NOT ACCRUE TO THE GOVERNMENT OR FACTS ON WHICH IT WAS CONCLUDED TO BE JUST AND EQUITABLE TO REMIT SUCH DAMAGES. THE FACT THAT THE CONTRACT DOES NOT INVOLVE EXPENDITURES EXCEEDING $1,000 CAN NOT CHANGE THE REQUIREMENT OF THE LAW.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, MARCH 15, 1930:

THERE HAS BEEN RECEIVED IN REFERENCE TO CERTAIN VOUCHERS IN THE ACCOUNTS OF THE DISBURSING CLERK OF THE TREASURY DEPARTMENT COVERING PAYMENTS UNDER INFORMAL CONTRACTS, WHERE DELAYS IN COMPLETION ARE INVOLVED, YOUR LETTER OF FEBRUARY 8, 1930, WHEREIN YOU REQUEST THAT IN SUCH CONTRACTS INVOLVING EXPENDITURES FROM $500 TO $1,000 IN AMOUNT THIS OFFICE ACCEPT, IN THE AUDIT AND SETTLEMENT OF THE ACCOUNTS OF DISBURSING OFFICERS MAKING PAYMENTS UNDER THE CONTRACTS, WITHOUT FURTHER EXPLANATION OR STATEMENT OF FACTS, A WAIVER STAMP OVER THE SIGNATURE OF AN ASSISTANT SECRETARY OF THE TREASURY THAT "NO LOSS RESULTING FROM DELAY IN COMPLETION OF THIS WORK THE LIQUIDATED DAMAGES STATED IN SPECIFICATION RELATING THERETO ARE HEREBY WAIVED. BY DIRECTION OF THE SECRETARY.' THE REASON FOR THIS REQUEST APPEARS TO BE THAT LETTERS ATTACHED TO THE VOUCHERS EXPLAINING THE CIRCUMSTANCES OF DELAY, ETC., WOULD ENTAIL A LARGE AMOUNT OF WORK.

THERE IS SOME SUGGESTION IN THE SUBMISSION OF FEBRUARY 8, 1930, THAT AT AN INFORMAL CONFERENCE BETWEEN EMPLOYEES OF THE OFFICE OF THE SUPERVISING ARCHITECT AND OF THIS OFFICE AN AGREEMENT WAS REACHED IN APRIL, 1928, THAT SUCH A WAIVER STAMP WOULD BE ACCEPTED IN THE AUDIT AND SETTLEMENT OF ACCOUNTS. THERE SEEMS TO BE NO RECORD IN THIS OFFICE OF SUCH A CONFERENCE BUT EVEN IF SUCH EXISTED, ANY CONCLUSION THEREIN REACHED NOT HAVING BEEN SUBMITTED TO ME FOR DECISION AND APPROVAL IS NOT BINDING WHEN THE MATTER IS FORMALLY SUBMITTED FOR SUCH DECISION. SEE 4 COMP. GEN. 1024.

IT IS EVIDENT FROM THE ENACTMENT OF SECTION 21 OF THE ACT OF JUNE 6, 1902, 32 STAT. 326, THAT THE CONGRESS DEEMED IT NECESSARY OR AT LEAST DESIRABLE TO REQUIRE A LIQUIDATED DAMAGE STIPULATION IN CONTRACTS UNDER THE TREASURY DEPARTMENT FOR THE CONSTRUCTION OR REPAIR OF ANY PUBLIC BUILDINGS OR PUBLIC WORK, AND THE PROCEDURE IN THE MATTER OF REMITTING LIQUIDATED DAMAGES UNDER SUCH STIPULATIONS HAS BEEN HERETOFORE STATED IN A NUMBER OF DECISIONS IN THIS OFFICE. SEE PARTICULARLY 4 COMP. GEN. 306 THE STANDARD FORM OF CONSTRUCTION CONTRACT WHICH HAS BEEN APPROVED BY THE PRESIDENT FOR USE THROUGHOUT THE GOVERNMENT SERVICE CONTAINS, IN ARTICLE 9, A STIPULATION FOR LIQUIDATED DAMAGES AND IT IS ASSUMED THAT WHEN AN INFORMAL CONTRACT IS ENTERED INTO; THAT IS, WHEN THE STANDARD FORM OF CONSTRUCTION CONTRACT IS NOT USED, THE FORM USED LIKEWISE CONTAINS A STIPULATION FOR LIQUIDATED DAMAGES, AND IT IS BELIEVED THAT THERE WILL BE BUT FEW INSTANCES WHERE THE MATTER OF LIQUIDATED DAMAGES FOR DELAYS UNDER SUCH INFORMAL CONTRACTS CAN NOT BE SETTLED ON THE BASIS OF THE CONTRACT STIPULATIONS RATHER THAN REMITTED UNDER THE TERMS OF THE ACT OF 1902. EITHER EVENT, THE FACTS ON WHICH THE RESPONSIBLE OFFICERS OF THE TREASURY DEPARTMENT HAVE CONCLUDED THAT LIQUIDATED DAMAGES DID NOT ACCRUE TO THE UNITED STATES OR THAT IT WOULD BE JUST AND EQUITABLE TO REMIT SAME, MUST BE SHOWN ON OR ACCOMPANY THE VOUCHER TO THIS OFFICE IN CONNECTION WITH THE AUDIT AND SETTLEMENT OF THE ACCOUNTS OF THE DISBURSING OFFICER WHO CLAIMS CREDIT FOR THE EXPENDITURE, THAT IS, FOR AN AMOUNT OF PUBLIC FUNDS EQUAL TO THE LIQUIDATED DAMAGES NOT DEDUCTED ON ACCOUNT OF DELAYS IN COMPLETION OF THE WORK.

THE SIZE, OR AMOUNT OF PAYMENT MADE ON THE VOUCHER IS NOT FOR CONSIDERATION IN DETERMINING WHETHER CREDIT THEREFOR CAN BE ALLOWED IN THE SETTLEMENT OF THE DISBURSING OFFICER MAKING THE PAYMENT. SEE MCKNIGHT V. UNITED STATES, 13 CT.CLS. 299. THEREFORE, THE SUGGESTION THAT THIS OFFICE ACCEPT THE ADMINISTRATIVE WAIVER BASED ON AN ADMINISTRATION CONCLUSION THAT NO LOSS RESULTED FROM THE DELAY WHERE THE CONTRACT DOES NOT INVOLVE EXPENDITURES EXCEEDING $1000 CAN NOT BE APPROVED.

THAT THE RIGHT TO DEDUCT LIQUIDATED DAMAGES UNDER THESE CONTRACTS WAS NOT INTENDED TO BE DEPENDENT UPON WHETHER ANY LOSS RESULTED FROM THE DELAY IS CLEARLY SHOWN BY THE CONCLUDING CLAUSE OF THE SAID SEC. 21 OF THE ACT OF JUNE 6, 1902.