A-83179, APRIL 15, 1937, 16 COMP. GEN. 922

A-83179: Apr 15, 1937

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THE CONTRACTOR WAS PERMITTED TO DELIVER "BUTT BENDS" WHICH WERE SUBSEQUENTLY REJECTED BECAUSE THEY FAILED TO MEET CERTAIN SPECIFIED CHEMICAL TESTS. THE CONTRACTOR IS CHARGEABLE WITH THE EXCESS COST OF PROCUREMENT ELSEWHERE THROUGH READVERTISED SPECIFICATIONS IDENTICAL WITH THE ORIGINAL. WHEREBY WAS DISALLOWED YOUR CLAIM NO. THE FACTS IN CONNECTION WITH THE TRANSACTION WERE STATED IN THE SETTLEMENT. WILL NOT BE FULLY REPEATED HERE. YOUR LOW BID WAS ACCEPTED AFTER CONFIRMATION BY YOU. WHEN IT DEVELOPED THAT YOU WERE UNABLE TO FURNISH "SIDES" COMPLYING WITH THE REQUIREMENTS. " BUT UPON INSPECTION THE BUTT BENDS YOU OFFERED FAILED TO MEET SATISFACTORILY CERTAIN SPECIFIED CHEMICAL TESTS AND WERE REJECTED FOR THAT REASON.

A-83179, APRIL 15, 1937, 16 COMP. GEN. 922

CONTRACTS - INCREASED COSTS - DEFAULTING CONTRACTOR'S LIABILITY NOTWITHSTANDING ACCEPTANCE OF SUPERIOR MATERIALS ON READVERTISEMENT WHERE UNDER A CONTRACT TO FURNISH HYDRAULIC LEATHER, DESIGNATED AS "SIDES," MEETING CERTAIN MINIMUM SPECIFICATIONS, THE CONTRACTOR WAS PERMITTED TO DELIVER "BUTT BENDS" WHICH WERE SUBSEQUENTLY REJECTED BECAUSE THEY FAILED TO MEET CERTAIN SPECIFIED CHEMICAL TESTS, THE CONTRACTOR IS CHARGEABLE WITH THE EXCESS COST OF PROCUREMENT ELSEWHERE THROUGH READVERTISED SPECIFICATIONS IDENTICAL WITH THE ORIGINAL, NOTWITHSTANDING THE SECOND CONTRACTOR DELIVERED "BUTT BENDS," THERE BEING NO PROHIBITION AGAINST A CONTRACTOR FURNISHING OR THE GOVERNMENT ACCEPTING AT THE LOW BID PRICE MATERIALS SUPERIOR TO THAT REQUIRED TO BE DELIVERED UNDER THE CONTRACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE NATIONAL LEATHER BELTING COMPANY, INC., APRIL 15, 937:

THERE HAS BEEN CONSIDERED YOUR LETTER OF FEBRUARY 19, 1937, REQUESTING REVIEW OF SETTLEMENT OF JANUARY 30, 1937, WHEREBY WAS DISALLOWED YOUR CLAIM NO. O582011 FOR $652, REPRESENTING THE AMOUNT DEDUCTED ON PUBLIC VOUCHER NO. 9950, OCTOBER 8, 1935, TO COVER EXCESS COST TO THE GOVERNMENT OF CERTAIN LEATHER, RESULTING FROM YOUR DEFAULT UNDER CONTRACT NO. N-220S- 30972, JANUARY 14, 1935.

THE FACTS IN CONNECTION WITH THE TRANSACTION WERE STATED IN THE SETTLEMENT, SUPRA, AND WILL NOT BE FULLY REPEATED HERE.

THE NAVY DEPARTMENT ADVERTISED FOR BIDS FOR FURNISHING 400 POUNDS OF HYDRAULIC PACKING LEATHER, DESIGNATED AS "SIDES," MEETING CERTAIN MINIMUM SPECIFICATIONS; YOUR LOW BID WAS ACCEPTED AFTER CONFIRMATION BY YOU, AND YOUR CONTRACT OBLIGATED YOU TO FURNISH MATERIALS MEETING SUCH MINIMUM SPECIFICATION REQUIREMENTS. WHEN IT DEVELOPED THAT YOU WERE UNABLE TO FURNISH "SIDES" COMPLYING WITH THE REQUIREMENTS, THE NAVY DEPARTMENT EVENTUALLY AUTHORIZED YOU TO DELIVER "BUTT BENDS," BUT UPON INSPECTION THE BUTT BENDS YOU OFFERED FAILED TO MEET SATISFACTORILY CERTAIN SPECIFIED CHEMICAL TESTS AND WERE REJECTED FOR THAT REASON. THEREUPON, UNDER DATE OF APRIL 26, 1935, YOU WROTE THE NAVY DEPARTMENT AS FOLLOWS:

WE DESIRE TO INFORM YOU THAT WE AUTHORIZE YOU TO READVERTISE THIS MATERIAL AND CHARGE OUR ACCOUNT IF THERE IS ANY DIFFERENCE BETWEEN THE PRICE THAT WE QUOTED AND THE PRICE AT WHICH THE NAVY WILL HAVE TO PAY ON READVERTISING. IT IS DEFINITELY UNDERSTOOD, HOWEVER, THAT THE READVERTISING IS TO BE EXACTLY LIKE THE ORIGINAL ADVERTISEMENT; NAMELY, "HYDRAULIC SIDES.'

THE NAVY DEPARTMENT READVERTISED THE NEEDS OF THE GOVERNMENT. COMPARISON OF THE SPECIFICATIONS UNDER THE SECOND ADVERTISEMENT SHOWS THAT THEY WERE ABSOLUTELY IDENTICAL, VERBATIM ET LITERATIM, WITH THOSE UNDER THE FIRST. THE LOW ACCEPTABLE BID RECEIVED WAS ACCEPTED AT AN EXCESS COST OF $652 OVER THE AMOUNT OF YOUR DEFAULTED CONTRACT PRICE. THIS EXCESS WAS CHARGED TO YOU, AND WHEN YOU FAILED TO REMIT UPON DEMAND,THE AMOUNT WAS DEDUCTED FROM A PAYMENT OTHERWISE DUE YOU UNDER ANOTHER CONTRACT. STATED TO YOU IN A LETTER OF FEBRUARY 5, 1936, FROM THE NAVY DEPARTMENT, SUCH PROCEDURE IS A COMMON RULE SANCTIONED BY LAW AND SUSTAINED BY THE COURTS (BARRY V. UNITED STATES, 229 U.S. 47).

YOU HAVE CONTENDED THAT THE FACT THAT THE CONTRACTOR UNDER THE SECOND LETTING DELIVERED "BUTT BENDS" RATHER THAN "SIDES" RELIEVES YOU OF LIABILITY TO THE GOVERNMENT FOR THE EXCESS COST. SUCH A CONTENTION FINDS NO WARRANT OR SUPPORT IN LONG-RECOGNIZED PRINCIPLES OF LAW OR THE DECISION OF THE COURTS. THE RESPONSIBILITY OF THE GOVERNMENT IN YOUR BEHALF WAS TO SEE THAT THE CONTRACT OFFERED BIDDERS UPON READVERTISEMENT WAS THE SAME AS THE ONE DEFAULTED BY YOU. AS POINTED OUT ABOVE, THE SPECIFICATIONS ON THE SECOND ADVERTISEMENT WERE IDENTICAL IN EVERY RESPECT WITH THOSE ON THE FIRST AND, THEREFORE, THE CONTRACT OFFERED WAS THE SAME. THE LOW ACCEPTABLE BID WAS ACCEPTED AND YOUR LIABILITY TO THE GOVERNMENT WAS THEREUPON FIXED. THE SPECIFICATIONS UNDER THE SECOND AS UNDER THE FIRST ADVERTISEMENT STATED THE MINIMUM REQUIREMENTS OF THE GOVERNMENT. THE CONTRACTOR UNDER THE SECOND, AS UNDER THE FIRST CONTRACT, COULD ONLY BE REQUIRED TO DELIVER SIDES" SO LONG AS THEY MET THE ADVERTISED SPECIFICATIONS AS TO KIND, QUALITY, AND SERVICEABILITY. THE OBLIGATION OF A CONTRACTOR IS TO FURNISH MATERIALS AT LEAST MEETING AND NOT FALLING BELOW THE MINIMUM SPECIFICATIONS, BUT MANIFESTLY THERE IS NO PROHIBITION AGAINST A CONTRACTOR FURNISHING, OR THE GOVERNMENT ACCEPTING, MATERIALS EXCEEDING THE MINIMUM REQUIREMENTS, SO LONG AS THEY WILL SERVE AS WELL, OR EVEN BETTER, THE NEEDS OF THE GOVERNMENT. SO, IN THE PRESENT INSTANCE, THE FACT THAT THE SECOND CONTRACTOR DELIVERED BUTT BENDS UNDER A CONTRACT WHICH ONLY REQUIRED IT TO DELIVER SIDES WAS NO RESPONSIBILITY OF THE GOVERNMENT, WHICH WAS AT LIBERTY TO ACCEPT, AT THE SAME PRICE, MATERIALS SUPERIOR TO THOSE REQUIRED BY THE CONTRACT, AND COULD NOT SERVE TO RELIEVE YOUR COMPANY OF LIABILITY TO THE GOVERNMENT FOR THE EXCESS COST OCCASIONED BY YOUR DEFAULT UNDER YOUR CONTRACT.

YOUR LETTER PRESENTS NO FACTS AND NO ARGUMENT JUSTIFYING A DIFFERENT CONCLUSION FROM THAT STATED IN THE DISALLOWANCE OF JANUARY 30, 1937, WHICH MUST BE AND IS SUSTAINED.