A-65278, SEPTEMBER 21, 1936, 16 COMP. GEN. 277

A-65278: Sep 21, 1936

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THE GOVERNMENT IS NOT REQUIRED TO EXERCISE ITS OPTION TO TERMINATE THE CONTRACT BUT MAY PERMIT THE CONTRACTOR TO COMPLETE DELIVERY AND CHARGE HIM WITH ACTUAL DAMAGES INCURRED INCIDENT TO DELAY. 700 BARS EACH WEEK THEREAFTER UNTIL DELIVERIES UNDER THE CONTRACT WERE COMPLETED. THAT PAYMENT FOR THE BARS DELIVERED AND ACCEPTED WERE TO BE MADE AT A PRICE OF $5.57 EACH. THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COST OCCASIONED THE GOVERNMENT THEREBY: * * * AS THE CONTRACT WAS DATED SEPTEMBER 9. UNDER ITS TERMS THE DELIVERIES OF THE MOSQUITO BARS TO BE FURNISHED THEREUNDER WERE TO BE COMPLETED ON THE FOLLOWING SCHEDULE: 1. 000 BARS REQUIRED TO BE DELIVERED ONLY 4 BARS WERE DELIVERED PRIOR TO OCTOBER 21.

A-65278, SEPTEMBER 21, 1936, 16 COMP. GEN. 277

CONTRACTS - DAMAGES - ACTUAL - DELAYS IN DELIVERY UNDER A CONTRACT FOR SUPPLIES CONTAINING NO SPECIFIC PROVISION FOR EITHER LIQUIDATED OR ACTUAL DAMAGES UPON FAILURE OF THE CONTRACTOR TO COMPLETE DELIVERIES WITHIN THE TIME SPECIFIED, BUT CONTAINING A PROVISION AUTHORIZING THE GOVERNMENT TO TERMINATE THE CONTRACT, THE EXCESS COST OF SUPPLIES PROCURED ELSEWHERE TO BE CHARGED TO THE CONTRACTOR, THE GOVERNMENT IS NOT REQUIRED TO EXERCISE ITS OPTION TO TERMINATE THE CONTRACT BUT MAY PERMIT THE CONTRACTOR TO COMPLETE DELIVERY AND CHARGE HIM WITH ACTUAL DAMAGES INCURRED INCIDENT TO DELAY, SUCH AS INSPECTORS' SALARIES AND EXPENSES.

ACTING COMPTROLLER GENERAL ELLIOTT TO SIGMUND EISNER CO., SEPTEMBER 21, 1936:

CONSIDERATION HAS BEEN GIVEN TO YOUR REQUEST OF APRIL 22, 1936, FOR REVIEW OF SETTLEMENT OF DECEMBER 13, 1935, DISALLOWING YOUR CLAIM FOR A REFUND OF THE $631.76 DEDUCTED FROM THE AMOUNT OTHERWISE DUE YOU FOR COMPLETING PERFORMANCE OF WAR DEPARTMENT CONTRACT NO. W-669-QM-4895, DATED SEPTEMBER 9, 1933, FOR SPECIFIED QUANTITIES OF MOSQUITO BARS FURNISHED THEREUNDER TO THE PHILADELPHIA (PA.) QUARTERMASTER DEPOT, UNITED STATES ARMY. THE CONTRACT PROVIDED FOR DELIVERY OF 98,363 MOSQUITO BARS, AS SPECIFIED, F.O.B. YOU FACTORY AT RED BANK, N.J., AS FOLLOWS: 1,000 BARS WITHIN 6 WEEKS FROM DATE OF THE CONTRACT AND 1,700 BARS EACH WEEK THEREAFTER UNTIL DELIVERIES UNDER THE CONTRACT WERE COMPLETED; THAT PAYMENT FOR THE BARS DELIVERED AND ACCEPTED WERE TO BE MADE AT A PRICE OF $5.57 EACH; AND THAT A VARIATION OF NOT TO EXCEED 3 PERCENT OF THE SPECIFIED QUANTITY OF BARS TO BE FURNISHED WOULD BE ACCEPTED AS A COMPLIANCE WITH THE CONTRACT WHEN CAUSED BY CONDITIONS OF LOADING, SHIPPING, PACKING, OR ALLOWANCES IN MANUFACTURING PROCESSES.

ARTICLE 5 OF THE CONTRACT PROVIDED:

ARTICLE 5. DELAYS--- DAMAGES.--- IF THE CONTRACTOR REFUSES OR FAILS TO MAKE DELIVERIES OF THE MATERIALS OR SUPPLIES WITHIN THE TIME SPECIFIED IN ARTICLE 1, OR ANY EXTENSION THEREOF, THE GOVERNMENT MAY TERMINATE THE RIGHT OF THE CONTRACTOR TO PROCEED WITH DELIVERIES OR SUCH PART OR PARTS THEREOF AS TO WHICH THERE HAS BEEN DELAY. IN SUCH EVENT, THE GOVERNMENT MAY PURCHASE SIMILAR MATERIALS OR SUPPLIES IN THE OPEN MARKET OR SECURE THE MANUFACTURE AND DELIVERY OF THE MATERIALS AND SUPPLIES BY CONTRACT OR OTHERWISE, AND THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COST OCCASIONED THE GOVERNMENT THEREBY: * * *

AS THE CONTRACT WAS DATED SEPTEMBER 9, 1933, UNDER ITS TERMS THE DELIVERIES OF THE MOSQUITO BARS TO BE FURNISHED THEREUNDER WERE TO BE COMPLETED ON THE FOLLOWING SCHEDULE: 1,000 BARS BY OCTOBER 21, 1933, AND 1,700 BARS EACH WEEK THEREAFTER UNTIL COMPLETION. THE RECORDS SHOW THAT OF THE FIRST 1,000 BARS REQUIRED TO BE DELIVERED ONLY 4 BARS WERE DELIVERED PRIOR TO OCTOBER 21, 1933--- THE SPECIFIED DELIVERY DATE THEREFOR--- THE REMAINING 996 BEING DELIVERED (WITH OTHERS) ON NOVEMBER 1, 1933; AND THAT WEEKLY DELIVERIES OF THE REMAINING BARS WERE MADE IN VARIOUS QUANTITIES UNTIL JANUARY 22, 1935, WHEN FINAL DELIVERY WAS COMPLETED OF THE TOTAL 100,999 BARS FURNISHED AND ACCEPTED UNDER THE CONTRACT.

WITH REFERENCE TO THE ACTUAL DELIVERIES UNDER THE CONTRACT AND PAYMENTS THEREFOR, THE COMMANDING OFFICER OF THE PHILADELPHIA (PA.) QUARTERMASTER DEPOT REPORTED THE FACTS TO THE QUARTERMASTER GENERAL, WAR DEPARTMENT, IN LETTER DATED OCTOBER 16, 1935, AS FOLLOWS:

2. THE RECORDS SHOWED THAT THE CONTRACTOR DELIVERED 101,001 BARS, MOSQUITO, UNDER THIS CONTRACT AND WAS PAID THEREFOR IN THE GROSS AMOUNT OF $562,575.57.

3. IT LATER DEVELOPED THAT ONE CASE ALLEGED TO HAVE CONTAINED 30 BARS, MOSQUITO, WHEN OPENED AT THE CHICAGO QUARTERMASTER DEPOT, WAS FOUND TO CONTAIN ONLY 28 SUCH BARS, A SHORTAGE OF TWO (2) BARS.

4. UNDER DATE OF SEPTEMBER 4, 1935, CONTRACTOR WAS REQUESTED TO FURNISH TWO ADDITIONAL BARS OR EQUIVALENT VALUE THEREOF IN THE AMOUNT OF $11.14 TO COVER THIS SHORTAGE. CONTRACTOR COMPLIED WITH THIS REQUEST AND FORWARDED CHECK, IN THE AMOUNT OF $11.14, WHICH WAS IMMEDIATELY SENT TO THE FINANCE OFFICER, U.S. ARMY, PHILADELPHIA, PA., TO BE DEPOSITED TO THE CREDIT OF PROCUREMENT AUTHORITY FD 523 1--- 3010 A 8815-N.

5. AS A RESULT OF THIS ADJUSTMENT, TOTAL FIGURES FURNISHED UNDER 2ND INDORSEMENT, DATED MAY 17, 1935, AS AMENDED, ARE AS FOLLOWS:

CHART

(A) TOTAL QUANTITY DELIVERED ---------------------- 100,999

(B) GROSS AMOUNT PAID ----------------------------- $565,564.43

(C) DISCOUNT -------------------------------------- 562.56

(D) DEDUCTIONS FOR INSPECTION COSTS --------------- 965.74

(E) NET AMOUNT PAID CONTRACTOR -------------------- 561,036.13

IN MAKING PAYMENTS UNDER THE CONTRACT THE SUM OF $631.76 WAS DEDUCTED AS ADDITIONAL INSPECTION COSTS AND EXPENSES OF THE GOVERNMENT AFTER DECEMBER 1, 1934, THE ALLEGED COMPLETION DATE. YOU HAVE OBJECTED TO SUCH DEDUCTION AND CLAIM THAT UNDER THE CONTRACT TERMS THERE IS NO AUTHORITY TO CHARGE YOU THEREWITH.

THE CONTRACT CONTAINS NO SPECIFIC PROVISION AUTHORIZING PAYMENT BY THE CONTRACTOR OF THE GOVERNMENT'S COST OF INSPECTION OR OTHER EXPENSES RESULTING FROM ANY DELAYS IN DELIVERIES THEREUNDER, NOR FOR ANY DAMAGES OTHER THAN SET FORTH IN ARTICLE 5 THEREOF, SUPRA, WHICH ARTICLE NEVER CAME INTO OPERATION, IT APPEARING THAT ALTHOUGH THERE WERE DELAYS IN DELIVERIES, THE GOVERNMENT DID NOT TERMINATE THE CONTRACTOR'S RIGHT TO PROCEED THEREWITH, AS IT HAD THE RIGHT TO DO UNDER SAID ARTICLE 5 OF THE CONTRACT, BUT PERMITTED THE CONTRACTOR TO COMPLETE THE CONTRACT.

UNDER THE TERMS OF THE CONTRACT DELIVERY OF THE 100,999 MOSQUITO BARS FURNISHED AND ACCEPTED SHOULD HAVE BEEN COMPLETED ON OR BEFORE DECEMBER 8, 1934. HOWEVER, ALL DELIVERIES UNDER THE CONTRACT WERE NOT COMPLETED UNTIL JANUARY 22, 1935, A DELAY OF 45 CALENDAR DAYS.

IT HAS BEEN HELD THAT WHERE, AS IN THIS CASE, NO SPECIFIC PROVISION IS MADE IN THE CONTRACT FOR EITHER LIQUIDATED OR ACTUAL DAMAGES UPON FAILURE OF CONTRACTOR TO COMPLETE PERFORMANCE WITHIN THE SPECIFIED TIME, THE CONTRACTOR IS LIABLE FOR RESULTANT DAMAGES UNDER THE COMMON LAW IN THE EVENT OF DELAYS IN PERFORMANCE, AND PROPERLY IS CHARGEABLE WITH ALL THE EXPENSES INCURRED BY THE GOVERNMENT ON ACCOUNT OF THE CONTRACTOR'S DELAYS IN PERFORMANCE. SEE 15 COMP. DEC. 282 (SUBSEQUENTLY, BY COURT OF CLAIMS, OVERRULED ON OTHER GROUNDS, BUT SUSTAINED ON INVOLVED POINT, IN 50 CT. CLS. 191, CAMDEN IRON WORKS V. UNITED STATES); 8 COMP. GEN. 455; ALSO, PRIMROSE V. WESTERN UNION TELEGRAPH CO., 154 U.S. 1, 29-30; AND GLOBE REFINING CO. V. LANDA COTTON OIL CO., 190 U.S. 540.

THE RECORD BEFORE THIS OFFICE DOES NOT SHOW THAT ANY OF THE DELAYS IN DELIVERIES WERE DUE TO ACTS OF THE GOVERNMENT, OR ITS AGENTS. ON THE CONTRARY, THE DELAYS APPEAR TO HAVE BEEN DUE SOLELY TO YOUR OWN FAULT IN FAILING TO MAKE DELIVERIES IN ACCORDANCE WITH THE CONTRACT SCHEDULE THEREFOR. UNDER SUCH CIRCUMSTANCES YOU BECAME LIABLE FOR THE ACTUAL DAMAGES CAUSED THE GOVERNMENT BY YOUR FAILURE TO COMPLETE THE DELIVERIES IN ACCORDANCE WITH YOUR AGREEMENT. ACCORDINGLY, EXPENDITURES BY THE GOVERNMENT FOR SALARIES AND SUBSISTENCE OF ITS EMPLOYEES WHILE ENGAGED IN INSPECTING THE SAID SUPPLIES AFTER DECEMBER 8, 1934, THE DATE FIXED BY THE CONTRACT FOR FINAL COMPLETION OF THE DELIVERIES THEREUNDER, PROPERLY ARE TO BE CHARGED TO YOU. SUCH EXPENDITURES APPEAR TO HAVE BEEN $526.24 (INSTEAD OF $631.76 AS HERETOFORE REPORTED BY THE ADMINISTRATIVE OFFICER), AS FOLLOWS:

CHART

(1) INSPECTOR, HORACE DUCKWORTH:

SALARY, 36 DAYS (DEC. 9-JAN. 22, SUNDAYS AND HOLIDAYS

EXCLUDED), AT $4.24 PER DAY ----------------------- $152.64

SUBSISTENCE (SAME PERIOD) 45 CALENDAR DAYS, AT $2.40

PER DAY ------------------------------------------- 108.00

(2) INSPECTOR, STANLEY DOERNBACK:

SALARY, 39 CALENDAR DAYS (DEC. 9-JAN. 16) AT RATE OF

$1,680 PER ANNUM ($4.667 PER DAY) ----------------- 172.00

SUBSISTENCE, 39 DAYS (DEC. 9-JAN. 16), AT $2.40

PER DAY -------------------------------------------93.60

TOTAL ----------------------------------- 526.24

THERE WOULD APPEAR TO BE NO MERIT IN YOUR CONTENTION THAT, IF LIABLE FOR DAMAGES AT ALL FOR THE BREACH OF THE CONTRACT, THE MEASURE IS EXPRESSLY FIXED BY ARTICLE 5 OF THE CONTRACT, SUPRA, AND THAT THE GOVERNMENT, NOT HAVING AVAILED ITSELF OF ITS RIGHT TO PURCHASE THE MATERIALS IN THE OPEN MARKET, HAD NO AUTHORITY TO THEREAFTER DEDUCT FROM THE CONTRACT MONEYS DUE TO YOU ANYTHING AS DAMAGES. NOTHING IN THE CONTRACT REQUIRED THE EXERCISE BY THE GOVERNMENT OF ITS RIGHT TO TERMINATE YOUR RIGHT TO PROCEED WITH DELIVERIES UNDER THE CONTRACT, AS PROVIDED IN ARTICLE 5 THEREOF, AND NOT HAVING ELECTED TO DO SO SAID ARTICLE WAS OF NO EFFECT UNDER THE FACTS AS THEY EXISTED, IT HAVING PROVIDED A PARTICULAR MEASURE OF DAMAGES FOR ONLY ONE CONTINGENCY--- WHICH DID NOT ARISE IN THIS CASE. THE FACT THAT THE GOVERNMENT DID NOT EXERCISE THE RIGHT CONFERRED BY SAID ARTICLE 5, WHICH WAS OPTIONAL BY THE EXPRESS TERMS OF SAID ARTICLE, DID NOT PRECLUDE THE GOVERNMENT FROM PERMITTING YOU TO MAKE DELIVERIES OF THE MATERIAL AFTER THE SPECIFIED DUE DATES AND FROM CHARGING YOU WITH THE ACTUAL DAMAGES RESULTING FROM THE DELAYS.

RELATIVE TO YOUR CONTENTION THAT THE DELIVERY OF 2,939 MOSQUITO BARS IN EXCESS OF THE QUANTITY STIPULATED IN THE CONTRACT EXTENDED THE DELIVERY TIME SPECIFIED, THE EXCESS BEING WITHIN THE 3-PERCENT VARIATION ALLOWED UNDER THE CONTRACT, THIS WAS GIVEN DUE CONSIDERATION IN ARRIVING AT THE DATE FOR FINAL COMPLETION. IF YOU HAD DELIVERED ONLY 98,060 BARS, ALL BUT 160 WOULD HAVE BEEN FOR DELIVERY BY NOVEMBER 24, 1934, BUT SINCE YOU DELIVERED 100,999, THE EXCESS OF 2,939 PLUS THE 160 WERE FOR DELIVERY DURING THE 2-WEEK PERIOD ENDING DECEMBER 8, 1934.

UNDER THE FACTS AND CIRCUMSTANCES SHOWN, AND THE TERMS OF YOUR CONTRACT, YOU APPEAR TO BE ENTITLED TO A BALANCE OF $105.52 ($631.76 MINUS $526.24) IN FULL AND FINAL SETTLEMENT UNDER THE CONTRACT. SETTLEMENT WILL ISSUE, ACCORDINGLY, AND A CHECK FOR THE $105.52 ALLOWANCE WILL BE SENT TO YOU IN DUE COURSE.