A-6021, AUGUST 24, 1925, 5 COMP. GEN. 138

A-6021: Aug 24, 1925

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OBJECTION WILL NOT BE MADE TO INFORMAL CONTRACTS FOR MINOR REPAIRS OR ADDITIONS TO PUBLIC BUILDINGS. YOU STATED THAT THE "DEPARTMENT REALIZES THAT THE PROVISIONS OF THE STATUTE ARE PLAIN AND UNAMBIGUOUS. " AND THAT IT IS AWARE "OF THE FACT THAT THE COMPTROLLER GENERAL CAN NOT WAIVE THE . WILL LEAD TO SUCH ABSURDITY AS CLEARLY TO INDICATE NO INTENT ON THE PART OF CONGRESS TO REQUIRE CONTRACTS FOR REPAIRS. TO INSERT A PROVISION FOR LIQUIDATED DAMAGES IN INFORMAL CONTRACTS FOR REPAIRS WHERE THE AMOUNT INVOLVED IS BETWEEN $1. TO INSERT A CLAUSE FOR LIQUIDATED DAMAGES IN ALL INFORMAL CONTRACTS INVOLVING LESS THAN LIMITS FIXED UNDER NEXT PRECEDING PARAGRAPH WHEN TIME IS ACTUALLY OF THE ESSENCE OF THE CONTRACT.

A-6021, AUGUST 24, 1925, 5 COMP. GEN. 138

PUBLIC BUILDING CONTRACTS - LIQUIDATED DAMAGES SECTION 21 OF THE ACT OF JUNE 6, 1902, 32 STAT. 326, REQUIRES THE INSERTION OF A LIQUIDATED DAMAGE PROVISION IN ALL CONTRACTS FOR THE CONSTRUCTION OR REPAIR OF PUBLIC BUILDINGS UNDER THE CONTROL OF THE TREASURY DEPARTMENT, BUT OBJECTION WILL NOT BE MADE TO INFORMAL CONTRACTS FOR MINOR REPAIRS OR ADDITIONS TO PUBLIC BUILDINGS, INVOLVING EXPENDITURES OF $500 OR LESS, WHICH DO NOT CONTAIN STIPULATIONS FOR THE DEDUCTION OF LIQUIDATED DAMAGES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, AUGUST 24, 1925:

THERE HAS BEEN RECEIVED YOUR LETTER DATED AUGUST 4, 1925, YOUR FILE SA-L, IN REFERENCE TO LETTER OF THIS OFFICE DATED JULY 27, 1925, A 6021, INVITING YOUR ATTENTION TO CERTAIN CONTRACTS FOR ADDITIONS OR REPAIRS TO PUBLIC BUILDINGS UNDER THE CONTROL OF THE TREASURY DEPARTMENT WHICH DO NOT COMPLY WITH THE REQUIREMENTS OF SECTION 21 OF THE ACT OF JUNE 6, 1902, 32 STAT. 326, AND STATING THAT THIS OFFICE WOULD EXPECT ALL SUCH FUTURE CONTRACTS OF THE TREASURY DEPARTMENT, WHETHER FORMAL OR INFORMAL, TO CONTAIN A STIPULATION FOR THE DEDUCTION OF LIQUIDATED DAMAGES FOR DELAY IN PERFORMANCE.

YOU STATED THAT THE "DEPARTMENT REALIZES THAT THE PROVISIONS OF THE STATUTE ARE PLAIN AND UNAMBIGUOUS," AND THAT IT IS AWARE "OF THE FACT THAT THE COMPTROLLER GENERAL CAN NOT WAIVE THE ," BUT URGE THAT LITERAL OBSERVANCE OF THE TERMS OF THE ACT OF JUNE 6, 1902, WILL LEAD TO SUCH ABSURDITY AS CLEARLY TO INDICATE NO INTENT ON THE PART OF CONGRESS TO REQUIRE CONTRACTS FOR REPAIRS, ETC., OF PUBLIC BUILDINGS INVOLVING SMALL SUMS TO CONTAIN A STIPULATION FOR THE DEDUCTION OF LIQUIDATED DAMAGES. YOU SUGGEST THAT THE REQUIREMENTS OF THE STATUTE WOULD BE SUBSTANTIALLY SATISFIED BY THE FOLLOWING PROCEDURE:

A. TO INSERT A CLAUSE FOR LIQUIDATED DAMAGES IN ALL FORMAL CONTRACTS FOR CONSTRUCTION OR REPAIR OF PUBLIC BUILDINGS OR PUBLIC WORKS;

B. TO INSERT A PROVISION FOR LIQUIDATED DAMAGES IN INFORMAL CONTRACTS FOR REPAIRS WHERE THE AMOUNT INVOLVED IS BETWEEN $1,000 AND $2,000, OR WITHIN SUCH OTHER LIMITS APPROXIMATING $1,000 AS YOU MAY SUGGEST;

C. TO INSERT A CLAUSE FOR LIQUIDATED DAMAGES IN ALL INFORMAL CONTRACTS INVOLVING LESS THAN LIMITS FIXED UNDER NEXT PRECEDING PARAGRAPH WHEN TIME IS ACTUALLY OF THE ESSENCE OF THE CONTRACT, OR WHERE THERE IS A LIKELIHOOD THAT DELAY WOULD RESULT IN PECUNIARY DAMAGE TO THE GOVERNMENT OR CAUSE MATERIAL INCONVENIENCE TO THE GOVERNMENT OR THE PUBLIC;

D. TO INSERT A STIPULATION FOR LIQUIDATED DAMAGES IN ANY OTHER CONTRACTS WHERE PECULIAR CONDITIONS SUGGEST THAT SUCH PROCEDURE SHOULD BE HAD.

THIS OFFICE APPRECIATES THE DIFFICULTIES WHICH YOU FEAR MAY BE ENCOUNTERED BY THE TREASURY DEPARTMENT IN CONTRACTING FOR MINOR REPAIRS UNDER A LITERAL INTERPRETATION OF SECTION 21 OF THE ACT OF JUNE 6, 1902, IN VIEW OF WHICH I FEEL JUSTIFIED IN INTERPRETING THE ACT OF JUNE 6, 1902, AS NOT APPLICABLE TO INFORMAL CONTRACTS FOR MINOR REPAIRS OR ADDITIONS TO PUBLIC BUILDINGS WHERE THE AMOUNT INVOLVED IS REPUGNANT TO LIQUIDATED DAMAGE LIABILITIES. ACCORDINGLY, YOUR SUGGESTIONS (A), (C), AND (D) ARE APPROVED, BUT IT IS BELIEVED THAT THIS OFFICE WOULD NOT BE JUSTIFIED IN APPROVING SUGGESTION (B), TO PERMIT A STIPULATION FOR LIQUIDATED DAMAGES TO BE OMITTED FROM INFORMAL CONTRACTS EXCEEDING $500 IN AMOUNT.

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