A-84472, MAY 6, 1937, 16 COMP. GEN. 983

A-84472: May 6, 1937

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CONTRACTS - FAILURE OF PERFORMANCE BECAUSE OF FLOOD CONDITIONS - CONTRACTOR'S LIABILITY WHERE THE SUPPLIES INVOLVED WERE POSSIBLE OF PROCUREMENT ELSEWHERE. THE FACT THAT A RIVER AT FLOOD STAGE MAY HAVE INTERFERED WITH. THE CONTRACTOR IS CHARGEABLE WITH THE INCREASED COST TO THE GOVERNMENT BECAUSE OF THE CONSEQUENT NECESSITY FOR SUCH OTHER PROCUREMENT. 1937: RECEIPT WAS ACKNOWLEDGED MARCH 13. CINCINNATI (AS YOU NO DOUBT KNOW) WAS VISITED BY ONE OF THE MOST DISASTROUS FLOODS ON RECORD HERE. WAS UNDER EIGHTEEN FEET OF WATER AND ALL OF OUR MACHINERY WAS COMPLETELY SUBMERGED. WE WERE UNABLE TO DELIVER TO ABOUT FOUR OR FIVE OF THE VARIOUS VETERANS ADMINISTRATIONS THROUGHOUT THE COUNTRY. WE NOW FIND THEY ARE BILLING US BACK FOR THE DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE PURCHASE PRICE OF THE PRODUCT.

A-84472, MAY 6, 1937, 16 COMP. GEN. 983

CONTRACTS - FAILURE OF PERFORMANCE BECAUSE OF FLOOD CONDITIONS - CONTRACTOR'S LIABILITY WHERE THE SUPPLIES INVOLVED WERE POSSIBLE OF PROCUREMENT ELSEWHERE, THE FACT THAT A RIVER AT FLOOD STAGE MAY HAVE INTERFERED WITH, OR EVEN PREVENTED, THE OPERATION OF THE CONTRACTOR'S PLANT AFFORDS NO LEGAL JUSTIFICATION FOR THE FAILURE TO MAKE DELIVERIES AS REQUIRED BY THE TERMS OF THE CONTRACT, AND THE CONTRACTOR IS CHARGEABLE WITH THE INCREASED COST TO THE GOVERNMENT BECAUSE OF THE CONSEQUENT NECESSITY FOR SUCH OTHER PROCUREMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO E. KAHN'S SONS CO., MAY 6, 1937:

RECEIPT WAS ACKNOWLEDGED MARCH 13, 1937, OF YOUR LETTER OF MARCH 9, 1937, AS FOLLOWS:

DURING THE LATTER PART OF JANUARY AND THE EARLY PART OF FEBRUARY THIS YEAR, CINCINNATI (AS YOU NO DOUBT KNOW) WAS VISITED BY ONE OF THE MOST DISASTROUS FLOODS ON RECORD HERE. DURING THIS FLOOD, OUR PLANT, INCLUDING OUR ENGINE ROOM, WAS UNDER EIGHTEEN FEET OF WATER AND ALL OF OUR MACHINERY WAS COMPLETELY SUBMERGED.

AS A CONSEQUENCE, WE WERE UNABLE TO DELIVER TO ABOUT FOUR OR FIVE OF THE VARIOUS VETERANS ADMINISTRATIONS THROUGHOUT THE COUNTRY, WITH WHOM WE HAD CONTRACTS. WE ADVISED THEM IN DUE TIME TO MAKE THEIR PURCHASE ELSEWHERE, BUT WE NOW FIND THEY ARE BILLING US BACK FOR THE DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE PURCHASE PRICE OF THE PRODUCT.

THIS FLOOD WAS AN ACT OF GOD AND THE E. KAHN'S SONS CO. HAD NO CONTROL OVER IT. WE FEEL IT IS VERY UNJUST TO HAVE THESE DIFFERENCES, WHICH TOTAL SLIGHTLY LESS THAN $35.00 TO DATE, CHARGED BACK TO OUR ACCOUNT.

WE WOULD CERTAINLY APPRECIATE A LETTER FROM YOU, ADVISING THAT IT WILL BE SATISFACTORY FOR US TO REBILL THESE VARIOUS DEDUCTIONS TO THE INSTITUTIONS CONCERNED, SO THAT WE MAY RECEIVE OUR PAYMENTS IN FULL.

THE MATTER HAS BEEN INVESTIGATED AND IT APPEARS FROM REPORT DATED APRIL 29, 1937, FROM THE ADMINISTRATOR OF VETERANS' AFFAIRS THAT YOU DID, IN FACT, DEFAULT IN THE PERFORMANCE OF CERTAIN CONTRACTS FOR THE DELIVERY OF PACKING HOUSE PRODUCTS DURING THE PERIOD FROM JANUARY 25 TO FEBRUARY 11, 1937. ALSO, IT APPEARS THAT THE OHIO RIVER AT CINCINNATI, OHIO, WHERE YOUR PLANT WAS LOCATED, WAS AT FLOOD STAGE FROM JANUARY 18 TO FEBRUARY 5, 1937, BUT THE FACT THAT THE RIVER WAS AT FLOOD STAGE AND MAY HAVE INTERFERED WITH, OR EVEN PREVENTED, THE OPERATION OF YOUR PLANT, AFFORDS NO LEGAL JUSTIFICATION FOR DEFAULT IN THE PERFORMANCE OF YOUR CONTRACTS WITH THE UNITED STATES. WHILE IT MAY HAVE BEEN POSSIBLE THAT YOU WERE NOT ABLE TO MAKE DELIVERIES FROM YOUR PLANT IN CINCINNATI, THE FACT REMAINS THAT YOU WERE LEGALLY OBLIGATED TO MAKE DELIVERIES AND SUCH PACKING HOUSE PRODUCTS COULD HAVE BEEN OBTAINED BY YOU FROM OTHER SOURCES AND DELIVERED TO THE GOVERNMENT. AS YOU DOUBTLESS KNOW, THE GOVERNMENT DID OBTAIN PACKING HOUSE PRODUCTS FROM OTHER SOURCES WHEN YOU DEFAULTED IN THE PERFORMANCE OF THE CONTRACT, AND, UNDER THE LAW, YOU MUST BE CHARGED WITH THE EXCESS COST OF THE PACKING HOUSE PRODUCTS WHICH WERE PURCHASED FROM OTHER PACKERS OR DEALERS WHEN YOU FAILED TO MAKE DELIVERY IN ACCORDANCE WITH THE TERMS OF YOUR CONTRACT.

YOU WILL BE ADVISED AT A LATER DATE AS TO THE EXACT AMOUNT OF THE EXCESS COST SO THAT YOU MAY REMIT THE AMOUNT TO THE UNITED STATES.