A-83922, MARCH 10, 1937, 16 COMP. GEN. 834

A-83922: Mar 10, 1937

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THE MEASURE OF DAMAGES MAY NOT BE FIXED AS THE DIFFERENCE BETWEEN THE BILLING PRICE TO THE CONTRACTOR OF THE TWO TYPES OF GAUGES BUT IS FOR DETERMINATION ON THE BASIS OF THE "QUOTED" PRICE OF VISCOMETERS AT TIME OF CONTRACT AWARD. AS FOLLOWS: REFERENCE IS MADE TO CONTRACT ER-ALS-ECW 850. UNDER WHICH THE CONTRACTOR WAS TO DELIVER SIXTY -SIX ONE-HALF TON PICK-UP TRUCKS. THE SPECIFICATIONS UNDER WHICH BIDS WERE SOLICITED CONTAINED. FROM WHICH IT WAS ASSUMED THAT THE BIDDER WAS OFFERING TRUCKS IN FULL COMPLIANCE WITH THE SPECIFICATIONS. THE RECORD DISCLOSES THAT THE TRUCKS WERE DELIVERED TO THE SOIL CONSERVATION SERVICE AT ZANESVILLE. UPON LEARNING THAT THERE WAS DOUBT AS TO WHETHER THE TRUCKS WERE EQUIPPED WITH VISCOMETERS AS REQUIRED UNDER PARAGRAPH D-17.

A-83922, MARCH 10, 1937, 16 COMP. GEN. 834

CONTRACTS - DAMAGES - FAILURE TO FURNISH SPECIFIED AUTOMOBILE EQUIPMENT BASIS FOR MONEY SETTLEMENT WHERE A CONTRACTOR FURNISHES TRUCKS EQUIPPED WITH STANDARD OIL GAUGES UNDER A CONTRACT REQUIRING VISCOMETERS, AND, AFTER A CONSIDERABLE DELAY, NOTWITHSTANDING HIS ASSURANCE OF COMPLIANCE WITH ADMINISTRATIVE REQUESTS THAT THE ERROR BE CORRECTED, OFFERS ADJUSTMENT OF THE MATTER ON A MONEY BASIS, THE MEASURE OF DAMAGES MAY NOT BE FIXED AS THE DIFFERENCE BETWEEN THE BILLING PRICE TO THE CONTRACTOR OF THE TWO TYPES OF GAUGES BUT IS FOR DETERMINATION ON THE BASIS OF THE "QUOTED" PRICE OF VISCOMETERS AT TIME OF CONTRACT AWARD, PLUS A REASONABLE INSTALLATION CHARGE, MINUS THE BILLING PRICE TO THE CONTRACTOR OF A STANDARD OIL GAUGE, PRESUMING SAID PRICE INCLUDES COST OF INSTALLATION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, MARCH 10, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF FEBRUARY 15, 1937, WITH INCLOSURES, AS FOLLOWS:

REFERENCE IS MADE TO CONTRACT ER-ALS-ECW 850, AWARDED TO J. E. OWENS COMPANY, ZANESVILLE, OHIO, UNDER WHICH THE CONTRACTOR WAS TO DELIVER SIXTY -SIX ONE-HALF TON PICK-UP TRUCKS, EQUIPPED IN ACCORDANCE WITH THE SPECIFICATIONS, TO THE SOIL CONSERVATION SERVICE OF THIS DEPARTMENT AT ZANESVILLE, OHIO.

THE SPECIFICATIONS UNDER WHICH BIDS WERE SOLICITED CONTAINED, AMONG OTHER THINGS, THE FOLLOWING REQUIREMENT:

"D-17. THE CHASSIS EQUIPMENT SHALL INCLUDE, BUT NOT BE LIMITED TO, FRONT BUMPER, FRONT AND REAR FENDERS, HOOD, ELECTRIC HORN, AMMETER, TWO BEAM HEAD LIGHT, TAIL LIGHT, STOP LIGHT, STOP LIGHT SWITCH, DASH LIGHT, SPEEDOMETER, GASOLINE GAUGE, VISCOMETER, TEMPERATURE GAUGE.'

THE BID SUBMITTED BY THE J. E. OWENS COMPANY TOOK NO EXCEPTION TO THIS REQUIREMENT, FROM WHICH IT WAS ASSUMED THAT THE BIDDER WAS OFFERING TRUCKS IN FULL COMPLIANCE WITH THE SPECIFICATIONS.

THE RECORD DISCLOSES THAT THE TRUCKS WERE DELIVERED TO THE SOIL CONSERVATION SERVICE AT ZANESVILLE, OHIO, ON JANUARY 28, 1936. ON JANUARY 31, 1936, UPON LEARNING THAT THERE WAS DOUBT AS TO WHETHER THE TRUCKS WERE EQUIPPED WITH VISCOMETERS AS REQUIRED UNDER PARAGRAPH D-17, QUOTED ABOVE, THE REGIONAL CONSERVATOR OF THE SOIL CONSERVATION SERVICE WAS REQUESTED TO MAKE A DEFINITE DETERMINATION ON THE POINT. UPON THIS OFFICER'S ADVICE THAT THE TRUCKS WERE EQUIPPED WITH THE STANDARD FORD OIL GAUGE, THE DEPARTMENT WIRED THE CONTRACTOR UNDER DATE OF FEBRUARY 4, 1936, AS FOLLOWS:

"REGIONAL CONSERVATOR, SOIL CONSERVATION SERVICE, ZANESVILLE, REPORTS SIXTY-SIX PICK-UP TRUCKS DELIVERED BY YOU UNDER OUR ORDER ONE NINE FOUR SIX NAUGHT DASH THREE SIX ARE EQUIPPED WITH OIL GAUGES BUT WITHOUT VISCOMETERS STOP SPECIFICATIONS SPECIFICALLY CALL FOR VISCOMETER AND OIL GAUGE IS ALSO TO BE FURNISHED AS STANDARD EQUIPMENT. STOP ADVISE ACTION YOU PROPOSE TO TAKE IN ORDER TO EQUIP TRUCKS IN ACCORDANCE WITH THE SPECIFICATIONS.'

THE CONTRACTOR RESPONDED BY LETTER DATED FEBRUARY 5, 1936, COPY OF WHICH IS ATTACHED, IN WHICH HE AGREED TO REMOVE THE GAUGES AND REPLACE THEM WITH THOSE SPECIFIED. THE DEPARTMENT ACCORDINGLY ADVISED THE CONTRACTOR BY LETTER DATED FEBRUARY 13, 1936, COPY OF WHICH IS ALSO ENCLOSED, THAT IT WOULD BE NECESSARY TO INSTALL VISCOMETERS TO FULLY COMPLY WITH THE SPECIFICATIONS. IN RESPONSE TO THIS LATTER LETTER, THE CONTRACTOR, UNDER DATE OF FEBRUARY 28, 1936, ADVISED THAT HE HAD REFERRED THE MATTER TO THE ENGINEERING DEPARTMENT OF THE FORD MOTOR COMPANY FOR AN OPINION AS TO WHETHER THE INSTALLATION OF THE VISCOMETERS WOULD AFFECT THE FORD MOTOR COMPANY'S GUARANTEE. IN THE ABSENCE OF ANY FURTHER ADVICE, THE DEPARTMENT ASSUMED THAT THE CONTRACTOR WAS TAKING THE NECESSARY ACTION TO EQUIP THE TRUCKS WITH VISCOMETERS, BUT LATER CONTACT WITH THE REGIONAL CONSERVATOR DEVELOPED THE FACT THAT THE TRUCKS WERE NOT SO EQUIPPED.

SUBSEQUENT THERETO, IN THE BELIEF THE OIL GAUGES FURNISHED BY THE FORD MOTOR COMPANY ARE A VISCOMETER TYPE OF GAUGE AND, THEREFORE, FULFILLED THE SPECIFICATIONS, THE FIELD REPRESENTATIVE OF THE SOIL CONSERVATION SERVICE CERTIFIED THE ACCOUNT FOR PAYMENT. NOTWITHSTANDING THIS PREMATURE PAYMENT, THE CONTRACTOR WAS NOTIFIED BY LETTER DATED APRIL 16, 1936, COPY ATTACHED, THAT THERE WAS NO AUTHORITY TO WAIVE FULL COMPLIANCE WITH THE PROVISIONS OF THE CONTRACT. SUBSEQUENT NEGOTIATIONS WITH THE BUREAU FIELD REPRESENTATIVE LED TO THE CONTRACTOR'S LETTER DATED OCTOBER 9, 1936, ADDRESSED TO THE ZANESVILLE OFFICE OF THE SOIL CONSERVATION SERVICE, COPY OF WHICH IS ENCLOSED, IN WHICH HE OFFERED TO ADJUST THE MATTER BY REFUNDING TO THE GOVERNMENT $1.00 PER VEHICLE, OR A TOTAL OF $66.00. THIS OFFER IS BASED UPON THE FACT THAT THE TRUCKS WERE EQUIPPED WITH STANDARD OIL GAUGES WHICH ARE LISTED AND FURNISHED BY THE FORD MOTOR COMPANY AT $3.75 EACH, WHEREAS THE COST OF THE VISCOMETERS, AS QUOTED BY THE VISCO- METER CORPORATION TO THE CONTRACTOR, IS $4.75 EACH, A NET DIFFERENCE OF $1.00 EACH. AT THE TIME TELEGRAM OF FEBRUARY 4, 1936, SUPRA, WAS DISPATCHED IT WAS BELIEVED THAT OIL GAUGES WERE STANDARD EQUIPMENT ON THE 1936 FORD PICK-UP TRUCKS BUT THIS WAS LATER FOUND TO BE INCORRECT AND TO THAT EXTENT THE TELEGRAM IS IN ERROR, AND CITATION OF THE PRICE OF THE OIL GAUGE IS IN ORDER.

THE VISCOMETER IS A HIGHER TYPE INSTRUMENT THAN THE OIL GAUGE IN THAT IT INDICATES THE LUBRICATING QUALITY OF THE OIL IN THE CRANK CASE, WHEREAS THE GAUGE MERELY SHOWS THE PHYSICAL PRESENCE OF THE OIL BY MEANS OF INDICATING ON THE OIL GAUGE THE PRESSURE IN THE OIL FEED LINES. THE FORMER IS, THEREFORE, CONSIDERED A MORE EFFICIENT OPERATING INSTRUMENT IN SAFEGUARDING THE MOTOR AGAINST FAULTY LUBRICATION.

TWENTY-SIX BIDS WERE RECEIVED IN RESPONSE TO THE ADVERTISED SPECIFICATIONS, ANALYSIS OF WHICH DEVELOPED THAT THE J. E. OWENS COMPANY WAS THE LOW BIDDER ON SIXTY-SIX UNITS UNDER ITEM 16 FOR DELIVERY TO ZANESVILLE, OHIO. IN THIS CONNECTION IT IS POINTED OUT THAT IN INSTANCES WHERE TRUCKS WERE OFFERED UNEQUIPPED WITH VISCOMETERS, THE DEPARTMENT EVALUATED AT THE RATE OF $8.00 PER VEHICLE (THE TOTAL OF THE THEN QUOTED PRICE OF $5.50 FOR THE INSTRUMENT AND $2.50, THE ESTIMATED INSTALLATION CHARGES). SUCH EVALUATION DID NOT, HOWEVER, INFLUENCE THE AWARD TO THE J. E. OWENS COMPANY, THIS BIDDER BEING LOW IN HIS OWN RIGHT.

AS STATED ABOVE, THE TRUCKS WERE DELIVERED AND PLACED IN SERVICE ON JANUARY 28, 1936, WHEREFORE INSTALLATION OF VISCOMETERS AT THIS LATE DATE WOULD APPEAR OF DOUBTFUL VALUE. ADVICE IS, THEREFORE, REQUESTED WHETHER THE DEPARTMENT MAY ACCEPT THE PROFFERED TOTAL REFUND OF $66.00 IN COMPENSATION OF THE CONTRACTOR'S DEVIATION FROM THE SPECIFICATIONS.

THE OBLIGATION OF THE CONTRACTOR WAS TO DELIVER 66 TRUCKS EQUIPPED WITH VISCOMETERS, WHICH HE FAILED TO DO. THE TRUCKS DELIVERED WERE EQUIPPED WITH OIL GAUGES FURNISHED BY THE FORD MOTOR CO., WHICH THE CONTRACTOR IN HIS LETTER OF FEBRUARY 5, 1936, REFERRED TO AS "VISCOMETER TYPE" GAUGES AND WHICH, IT DEVELOPED, WERE NOT VISCOMETERS AND WOULD NOT SERVE THE PURPOSE OF THE SUPERIOR INSTRUMENT. IMMEDIATELY UPON DISCOVERY OF THIS FACT THE CONTRACTOR WAS NOTIFIED TO FURNISH VISCOMETERS. THE CONTRACTOR STATED IN HIS LETTER OF FEBRUARY 5, SUPRA, THAT HE WANTED "TO COOPERATE WITH THE DEPARTMENT 100 PERCENT AND IF IT IS YOUR WISH WE WILL REMOVE THE GAUGES WE HAD INSTALLED AND REPLACE THEM WITH A GAUGE THAT YOU MAY SPECIFY.' ON FEBRUARY 13, 1936, APPARENTLY AFTER INVESTIGATION BY THE DEPARTMENT AS TO THE CHARACTER OF THE OIL GAUGES FURNISHED AND THE CONCLUSION THAT IT WOULD NOT COMPLY WITH THE SPECIFICATIONS, THE CONTRACTOR WAS NOTIFIED THAT VISCOMETERS MUST BE INSTALLED, AND INSTRUCTED TO ADVISE THE DEPARTMENT WHAT ARRANGEMENTS WOULD BE MADE FOR INSTALLATION OF THE INSTRUMENTS. INSTEAD OF COMPLYING WITH THESE INSTRUCTIONS IMMEDIATELY, YOUR LETTER STATES THAT HE WROTE THE DEPARTMENT ON FEBRUARY 28, 1936, THAT HE HAD REFERRED THE MATTER TO THE ENGINEERING DEPARTMENT OF THE FORD MOTOR CO. FOR AN OPINION AS TO WHETHER THE INSTALLATION OF THE VISCOMETER WOULD AFFECT THE FORD MOTOR CO. GUARANTEE. THE OPINION OF THE ENGINEERING DEPARTMENT OF THE FORD MOTOR CO. WAS, OF COURSE, NO CONCERN OF THE GOVERNMENT AT THAT TIME, NOR IS IT MATERIAL NOW. THE CONTRACTOR HAD UNDERTAKEN TO DELIVER TRUCKS EQUIPPED WITH VISCOMETERS, AND NO EX POST FACTO OPINION OF A THIRD PARTY OR PARTIES COULD VARY HIS OBLIGATION IN ANY MEASURE.

WHATEVER THE REASON, THE FACT REMAINS THAT DESPITE HIS PROTESTATION OF 100 PERCENT COOPERATION, FOLLOWED BY THE POSITIVE DEMAND BY THE DEPARTMENT THAT THEY BE INSTALLED, THE VISCOMETERS WERE NOT INSTALLED, AND APPARENTLY IT WAS NOT UNTIL OCTOBER 9, 1936, MORE THAN 9 MONTHS AFTER THE TRUCKS HAD BEEN DELIVERED, THAT THE CONTRACTOR OFFERED A REFUND OF $1 PER TRUCK BY WAY OF "OUR PROPOSAL TO BRING THE MATTER TO A SETTLEMENT.' THIS PROPOSAL WAS BASED UPON THE ALLEGED FACT THAT THE OIL GAUGES FURNISHED WERE LISTED AND BILLED TO THE CONTRACTOR AT $3.75 EACH, WHICH PRESUMABLY INCLUDED THE COST OF INSTALLATION, WHILE THE VISCOMETERS REQUESTED BY THE DEPARTMENT "LISTS" AT $4.75 AT THE TIME THE OFFER WAS MADE. IT IS NOT SUGGESTED THAT THIS LIST PRICE WOULD INCLUDE INSTALLATION COSTS, WHICH WOULD BE AN ADDITIONAL ITEM FOR CONSIDERATION.

YOU STATE THAT THE QUOTED PRICE OF THE VISCOMETERS AT THE TIME OF AWARD WAS $5.50 AND THAT THE ESTIMATED INSTALLATION CHARGE WAS $2.50, A TOTAL OF $8 PER VEHICLE. ACCEPTING THE ESTIMATED INSTALLATION CHARGE AS CORRECT, IT IS EVIDENT THAT THE FAILURE OF THE CONTRACTOR TO FURNISH THE VISCOMETERS RESULTED IN A SAVING TO HIM OF ($8 MINUS $3.75) $4.25 PER VEHICLE AT THE EXPENSE OF THE GOVERNMENT, RATHER THAN $1, THE AMOUNT PROFFERED IN SETTLEMENT. THAT IS TO SAY, THE GOVERNMENT DID NOT RECEIVE WHAT THE CONTRACT REQUIRED AND WHICH WOULD HAVE COST THE CONTRACTOR AN ADDITIONAL $4.25 TO FURNISH. IF PAYMENT TO THE CONTRACTOR HAD NOT BEEN ERRONEOUSLY MADE WHILE THE MATTER WAS IN ISSUE, IT IS TO BE PRESUMED THERE WOULD HAVE BEEN WITHHELD PENDING INSTALLATION OF THE VISCOMETERS, OR BY WAY OF ADJUSTMENT IN CONTRACT PRICE, AN AMOUNT EQUIVALENT TO THE ACTUAL DIFFERENCE IN THE INSTALLED PRICE BETWEEN THE INSTRUMENTS FURNISHED AND THOSE REQUIRED. THAT THE FIELD REPRESENTATIVE OF THE SOIL CONSERVATION SERVICE ERRONEOUSLY CERTIFIED THE ACCOUNT FOR PAYMENT IN THE MISTAKEN BELIEF THAT THE OIL GAUGES FURNISHED FULFILLED THE SPECIFICATIONS, WHEN IN FACT THEY DID NOT, DID NOT HAVE ANY BEARING ON THE CONTRACTOR'S LIABILITY TO THE GOVERNMENT. THE PRINCIPLE IS TOO WELL SETTLED TO REQUIRE CITATION THAT MONEY ERRONEOUSLY PAID BY OFFICERS OR AGENTS OF THE GOVERNMENT MAY BE RECOVERED.

MOREOVER, A CONTRACTOR CANNOT ESCAPE ANY PART OF HIS RESPONSIBILITY TO THE GOVERNMENT BY INDULGING IN EVASIVE AND DILATORY TACTICS TO AVOID COMPLIANCE WITH HIS CONTRACT, AND THEN BE PERMITTED TO FIX THE BASIS UPON WHICH HE IS "WILLING" TO SETTLE THE GOVERNMENT'S CLAIM AGAINST HIM.

FOR THE FOREGOING REASONS YOU ARE INFORMED THAT THERE WOULD APPEAR NO AUTHORITY TO COMPROMISE OR SETTLE THE CLAIM THROUGH PAYMENT BY THE CONTRACTOR OF $1 PER VEHICLE. ON THE BASIS OF THE PRESENT RECORD IT WOULD APPEAR THAT THE AMOUNT DUE THE GOVERNMENT AND FOR COLLECTION FROM J. E. OWENS CO. IS $4.25 PER TRUCK OR $280.50.

IF THE CONTRACTOR FAILS OR REFUSES TO MAKE SETTLEMENT ON SUCH BASIS AND REMIT THE AMOUNT DEMANDED, THE MATTER SHOULD BE REFERRED TO THIS OFFICE, TOGETHER WITH ALL RELEVANT PAPERS AND AN ADMINISTRATIVE RECOMMENDATION, FOR CONSIDERATION UNDER THE PROVISIONS OF SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24.