A-84492, DECEMBER 15, 1937, 17 COMP. GEN. 503

A-84492: Dec 15, 1937

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THE AMOUNT CHARGED FOR DELAYS UP TO THE TIME THE SECOND CONTRACTOR WAS REQUIRED BY HIS CONTRACT TO MAKE DELIVERY. IT IS FOR THE ADMINISTRATIVE OFFICERS TO DETERMINE THE FACTS AND EXTENT OF DELAY. LIQUIDATED DAMAGES ARE TO BE RETAINED OR REMITTED. WILL WITHHOLD THE AMOUNT OF THE CONTRACTOR'S DEBT PLUS THE ESTIMATED CHARGES AND COSTS OF PROSECUTING SUCH DEBT TO FINAL JUDGMENT AS PROVIDED FOR IN 31 U.S.C. 227. 1937: THERE WAS RECEIVED A LETTER OF NOVEMBER 29. IN THE FIRST PLACE WE BELIEVE WHEN THE CONTRACTING OFFICER DETERMINED THE EXTENT OF THE ALLEGED LIQUIDATED DAMAGES PLUS THE EXCESS COSTS THAT HIS DETERMINATION WAS FINAL AND CONCLUSIVE UPON THE PARTIES. THE AMOUNT IN CONTROVERSY HERE IS THE SUM OF $4.

A-84492, DECEMBER 15, 1937, 17 COMP. GEN. 503

CONTRACTS - DAMAGES - LIQUIDATED - DEFAULTING CONTRACTOR'S LIABILITY BEYOND CONTRACT TERMINATION DATE - JURISDICTION AS TO FINDINGS OF FACT AND MATTERS OF LAW - SUIT AGAINST CONTRACTOR UNDER 31 U.S.C. 227 WHERE A CONTRACT PROVIDED FOR LIQUIDATED DAMAGES FOR DELAYS IN PROGRESSIVE DELIVERIES AND RESERVED THE RIGHT IN THE GOVERNMENT TO TERMINATE CONTRACTOR'S RIGHT TO PROCEED, TO MAKE SIMILAR PURCHASES IN THE OPEN MARKET OR OTHERWISE, AND TO CHARGE CONTRACTOR THE EXCESS COST,"TOGETHER WITH LIQUIDATED DAMAGES ACCRUING UNTIL SUCH TIME AS THE GOVERNMENT MAY REASONABLY PROCURE SIMILAR MATERIAL OR SUPPLIES ELSEWHERE," THE ACCRUAL OF LIQUIDATED DAMAGES DID NOT CEASE UPON TERMINATION OF CONTRACTOR'S RIGHT TO PROCEED OR UPON EXECUTION, ON THE SAME DAY, OF A CONTRACT FOR SIMILAR MATERIALS, PROVIDING FOR A SHORTER PERIOD FOR COMPLETE DELIVERY, AND THE AMOUNT CHARGED FOR DELAYS UP TO THE TIME THE SECOND CONTRACTOR WAS REQUIRED BY HIS CONTRACT TO MAKE DELIVERY, MAY NOT BE REMITTED. UNDER A CONTRACT PROVIDING FOR LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY, AND THAT THE CONTRACTING OFFICER'S FINDINGS OF FACT AS TO CAUSES AND EXTENT OF DELAYS SHALL BE FINAL AND CONCLUSIVE, SUBJECT ONLY TO APPEAL TO THE HEAD OF THE DEPARTMENT WITHIN A SPECIFIED PERIOD, IT IS FOR THE ADMINISTRATIVE OFFICERS TO DETERMINE THE FACTS AND EXTENT OF DELAY, BUT FOR THE GENERAL ACCOUNT OFFICE, OR THE COURTS, TO DETERMINE THE QUESTION OF LAW WHETHER, UNDER SUCH FACTS AND THE TERMS OF THE CONTRACT, LIQUIDATED DAMAGES ARE TO BE RETAINED OR REMITTED. WHERE A DEFAULTING CONTRACTOR REFUSES TO CONSENT TO DEDUCTION OF AN AMOUNT FOUND DUE THE GOVERNMENT BECAUSE OF THIS DEFAULT, FROM AMOUNT OTHERWISE DUE HIM ON A JUDGMENT OF THE COURT OF CLAIMS IN ANOTHER MATTER, THE GENERAL ACCOUNTING OFFICE, IN MAKING SETTLEMENT ON THE JUDGMENT, WILL WITHHOLD THE AMOUNT OF THE CONTRACTOR'S DEBT PLUS THE ESTIMATED CHARGES AND COSTS OF PROSECUTING SUCH DEBT TO FINAL JUDGMENT AS PROVIDED FOR IN 31 U.S.C. 227.

ACTING COMPTROLLER GENERAL ELLIOTT TO BATAVIA MILLS, INC., DECEMBER 15, 1937:

THERE WAS RECEIVED A LETTER OF NOVEMBER 29, 1937 (WITH ENCLOSURES), SIGNED BY YOUR ATTORNEY, AS FOLLOWS:

ON BEHALF OF BATAVIA MILLS, INC., I SHOULD LIKE BRIEFLY TO EXPRESS OUR VIEWS UPON YOUR CONTEMPLATED ACTION AS DESCRIBED IN YOUR LETTER OF OCTOBER 12, 1937.

IN THE FIRST PLACE WE BELIEVE WHEN THE CONTRACTING OFFICER DETERMINED THE EXTENT OF THE ALLEGED LIQUIDATED DAMAGES PLUS THE EXCESS COSTS THAT HIS DETERMINATION WAS FINAL AND CONCLUSIVE UPON THE PARTIES. THE RECORD DISCLOSES, HOWEVER, THAT BATAVIA MILLS, INC., PAID UNDER PROTEST THE ALLEGED LIQUIDATED DAMAGES AMOUNTING TO $6,704.24. THE AMOUNT IN CONTROVERSY HERE IS THE SUM OF $4,225.43 WHICH YOUR OFFICE ASSERTS SHOULD BE PAID AS ADDITIONAL LIQUIDATED DAMAGES FOR CERTAIN DELAYS AFTER THE CONTRACTING OFFICER HAD TERMINATED THE CONTRACT.

WE THINK IT IS EVIDENT THAT THE CONTRACTING OFFICER TERMINATED THE CONTRACT ON DECEMBER 27, 1935, IT APPEARING THAT THE CONTRACTOR, BATAVIA MILLS, INC., DEFAULTED ITS CONTRACT. ON THIS SAME DAY, DECEMBER 27, 1935, THE CONTRACTING OFFICER ENTERED INTO A NEW CONTRACT WITH THE CHATHAM MANUFACTURING COMPANY TO OBTAIN THE REQUIRED BLANKETS. UPON THESE FACTS AND UNDER THE PROVISIONS OF THE CONTRACT WE URGE, AS A MATTER OF LAW, THAT UPON THE GOVERNMENT'S TERMINATION OF THE CONTRACT NO LIQUIDATED (DAMAGES) COULD BE CHARGED TO OR BE RECOVERABLE FROM THE CONTRACTOR FOR DELAYS AFTER SAID TERMINATION OF THE ORIGINAL CONTRACT (FIDELITY AND CASUALTY COMPANY OF NEW YORK V. THE UNITED STATES, 81 C.CLS. 495, 502).

IN ADDITION TO THE FOREGOING WE URGE THAT WHEN CONTRACTING OFFICER ENTERED INTO THE NEW CONTRACT ON DECEMBER 27, 1935, WHICH WAS THE DATE THE CONTRACTING OFFICER TERMINATED THE CONTRACT OF BATAVIA MILLS, INC., IT WAS, AS A MATTER OF LAW, THE "PROCUREMENT OF SIMILAR MATERIAL OR SUPPLIES ELSEWHERE.' IF THIS VIEW IS INACCEPTABLE AND THE VIEW OF YOUR OFFICE IS FOLLOWED THAT THE CONTRACTING OFFICER UNDER THE SECOND CONTRACT DID NOT OBTAIN OR "PROCURE" THE MATERIAL UNTIL THE PHYSICAL DELIVERY OF THE BLANKETS MANY DAYS LATER, THAT IT SEEMS INESCAPABLE TO US THAT THE CONTRACTING OFFICER DID NOT ENTER INTO THE SECOND CONTRACT ON DECEMBER 27, 1935, AND, IN LAW, THERE WAS NO CONTRACT.

IN SPEAKING OF THE FIDELITY CASUALTY COMPANY CASE, SUPRA, YOUR OFFICE IN THE SEABOARD SURETY ., 15 C.G. 939, A-63404, DECIDED APRIL 24, 1936, SAID:

"THERE THE CONTRACTOR WAS IN DEFAULT ON THE DAY FIXED FOR COMPLETION OF THE CONTRACT AND THE GOVERNMENT TERMINATED HIS RIGHT TO PROCEED BY REASON OF SAID DEFAULT. THE DECISION OF THE COURT OF CLAIMS IN THE FIDELITY AND CASUALTY COMPANY CASE IS APPLICABLE ONLY WHERE THE GOVERNMENT EXCUSES ITS ALTERNATIVE RIGHT TO TERMINATE A CONTRACT FOR FAILURE TO COMPLETE WITHIN THE PRESCRIBED TIME AND HAS NO APPLICATION WHEN A CONTRACTOR ABANDONS A CONTRACT BEFORE ENTERING UPON PERFORMANCE.'

WHEN, THEREFORE, THE CONTRACTING OFFICER TERMINATED THE CONTRACT OF BATAVIA MILLS, INC., THE LIABILITY OF BATAVIA MILLS, INC., BECAME FIXED, IN POINT OF TIME, UPON SAID TERMINATION. IN OTHER WORDS, ALL OF THE TERMS ON THE ORIGINAL CONTRACT WERE CANCELLED AND DISPLACED BY ANOTHER NEW CONTRACT, RATHER THAN ALL THE TERMS OF THE ORIGINAL CONTRACT WERE CANCELLED EXCEPT THE CONTINUATION OF LIQUIDATED DAMAGES CLAUSE WHICH CLAUSE REMAINED IN FORCE WHILE A NEW CONTRACT WAS ENTERED INTO AND BEING CARRIED OUT. IF THIS IS SOUND, THEN UPON THE DEFAULT OF TWO OR THREE CONTRACTORS UNDER ONE CONTRACT WOULD ENABLE THE GOVERNMENT TO COLLECT SUFFICIENT LIQUIDATED DAMAGES IN THE AGGREGATE TO PAY THE COST OF THE SUPPLIES. IT APPEARS EVIDENT TO US THAT YOU DID NOT FOLLOW ENTIRELY YOUR VIEW THAT LIQUIDATED DAMAGES COULD BE ASSESSED AGAINST BATAVIA MILLS, INC., FOR ALL THE DELAYS UNTIL THE ACTUAL PHYSICAL DELIVERY OF THE BLANKETS. YOU MADE NO CALCULATION OF LIQUIDATED DAMAGES FOR THE PERIOD SUBSEQUENT TO FEBRUARY 7, 1936, DESPITE THE FACT THAT THE SECOND CONTRACTOR WAS IN DEFAULT, HENCE THE CONTRACTING OFFICER WAS NOT IN PHYSICAL POSSESSION OF THE SUPPLIES (A 84492, DATED JUNE 17, 1937, AT PAGE 10).

ACCORDINGLY WE RESPECTFULLY REQUEST A FURTHER CONSIDERATION OF THIS MATTER.

WE ARE ATTACHING HERETO THE REFUSAL OF BATAVIA MILLS, INC., TO CONSENT TO THE SET-OFF OF THE ALLEGED LIQUIDATED DAMAGES OF $4,225.43 AGAINST AN AMOUNT DUE BATAVIA MILLS, INC., PURSUANT TO A JUDGMENT RENDERED JUNE 1, 1937, BY THE COURT OF CLAIMS IN BATAVIA MILLS, INC., V. THE UNITED STATES, NO. 43176.

THE FACTS RELATIVE TO THE CLAIM ARE SET FORTH IN DETAIL IN THE DECISION OF JUNE 17, 1937, WHICH SUSTAINED THE SETTLEMENT OF APRIL 13, 1937, BY WHICH YOU WERE FOUND INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $4,225.43 AS A BALANCE DUE FROM YOU AS A RESULT OF YOUR DEFAULT UNDER CONTRACT NO. W-669-QM-ECW-326 OF AUGUST 12, 1935.

WITH RESPECT TO THE CONTENTIONS URGED IN YOUR ABOVE-QUOTED LETTER, TO THE EFFECT THAT THERE IS NO LEGAL AUTHORITY TO CHARGE ANY LIQUIDATED DAMAGES AGAINST YOU AFTER THE GOVERNMENT'S TERMINATION, ON DECEMBER 27, 1935, OF YOUR RIGHT TO PROCEED UNDER YOUR CONTRACT, AND THAT THE CONTRACTING OFFICER'S DETERMINATION THAT THE AMOUNT OF LIQUIDATED DAMAGES ACCRUED UNDER THE CONTRACT BECAUSE OF YOUR DEFAULT AMOUNTED TO $6,704.24--- WHICH AMOUNT YOU PAID TO THE GOVERNMENT ON JANUARY 8, 1936--- WAS FINAL AND CONCLUSIVE ON THE PARTIES TO THE CONTRACT, THERE WOULD SEEM TO BE NO MERIT IN SUCH CONTENTIONS, IN VIEW OF EXPRESS TERMS OF THE CONTRACT, THE REPORTED FACTS, AND THE LAW APPLICABLE THERETO.

ARTICLE 15 OF THE CONTRACT PROVIDED:

DELAYS--- LIQUIDATED DAMAGES.--- IF THE CONTRACTOR REFUSES OR FAILS TO MAKE DELIVERY OF THE MATERIALS OR SUPPLIES WITHIN THE TIME SPECIFIED IN ARTICLE 1, OR ANY EXTENSION THEREOF, THE ACTUAL DAMAGE TO THE GOVERNMENT FOR THE DELAY WILL BE IMPOSSIBLE TO DETERMINE, AND IN LIEU THEREOF THE CONTRACTOR SHALL PAY TO THE GOVERNMENT, AS FIXED, AGREED, AND LIQUIDATED DAMAGES FOR EACH CALENDAR DAY OF DELAY IN MAKING DELIVERY, THE AMOUNT AS SET FORTH IN THE SPECIFICATIONS OR ACCOMPANYING PAPERS, AND THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE FOR THE AMOUNT THEREOF: PROVIDED, HOWEVER, THAT THE GOVERNMENT RESERVES THE RIGHT TO TERMINATE THE RIGHT OF THE CONTRACTOR TO PROCEED AND TO PURCHASE SIMILAR MATERIAL OR SUPPLIES IN THE OPEN MARKET OR SECURE THE MANUFACTURE AND DELIVERY THEREOF BY CONTRACT OR OTHERWISE, CHARGING AGAINST THE CONTRACTOR AND HIS SURETIES ANY EXCESS COST OCCASIONED THE GOVERNMENT THEREBY, TOGETHER WITH LIQUIDATED DAMAGES ACCRUING UNTIL SUCH TIME AS THE GOVERNMENT MAY REASONABLY PROCURE SIMILAR MATERIAL OR SUPPLIES ELSEWHERE: PROVIDED FURTHER, THAT THE CONTRACTOR SHALL NOT BE CHARGED WITH LIQUIDATED DAMAGES OR ANY EXCESS COST WHEN THE DELAY IN DELIVERY IS DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD OR THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER BUT NOT INCLUDING DELAYS CAUSED BY UBCONTRACTORS: PROVIDED FURTHER, THAT THE CONTRACTOR SHALL, WITHIN TEN DAYS FROM THE BEGINNING OF ANY SUCH DELAY, NOTIFY THE CONTRACTING OFFICER IN WRITING OF THE CAUSES OF DELAY, WHO SHALL ASCERTAIN THE FACTS AND EXTENT OF THE DELAY AND HIS FINDINGS OF FACTS THEREON SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO, SUBJECT ONLY TO APPEAL, WITHIN THIRTY DAYS, BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION ON SUCH APPEAL AS TO THE FACTS OF DELAY SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO.

THE SPECIFICATIONS, A PART OF THE CONTRACT, PROVIDE:

LIQUIDATED DAMAGE.--- UNDER THE TERMS AND CONDITIONS STIPULATED IN ARTICLE 15 OF THIS CONTRACT, THE CONTRACTOR SHALL PAY TO THE GOVERNMENT, AS LIQUIDATED DAMAGES, FOR EACH UNIT UNDELIVERED, A SUM EQUAL TO ONE-FIFTH OF ONE PERCENTUM ( 1/5 OF 1 PERCENT) OF THE PRICE OF EACH UNIT FOR EACH DAY'S DELAY AFTER THE DATE OR DATES SPECIFIED.

UNDER THE CONTRACT TERMS THE BLANKETS TO BE FURNISHED BY YOU WERE TO BE DELIVERED, AS FOLLOWS: 640 BLANKETS (4 PERCENT OF CONTRACT TOTAL) BY SEPTEMBER 19, 1935; AND 960 BLANKETS (6 PERCENT OF CONTRACT TOTAL) EACH 7 DAYS THEREAFTER UNTIL ALL DELIVERIES UNDER THE CONTRACT WERE COMPLETED. IN THE EVENT OF DELAYS IN THE DELIVERIES THE CONTRACT PROVIDED THAT YOU WERE TO BE CHARGED WITH LIQUIDATED DAMAGES AS THEREIN SPECIFIED FOR EACH DAY OF DELAY IN PERFORMANCE, EXCEPT FOR THE DELAYS DUE TO THE UNFORESEEABLE CAUSES AS THEREIN SPECIFIED. IT APPEARS THAT YOU COMPLETELY DEFAULTED THE CONTRACT AND THAT ON DECEMBER 27, 1935, BECAUSE OF YOUR FAILURE TO DELIVER ANY SATISFACTORY BLANKETS THEREUNDER--- DUE TO YOUR SUBCONTRACTOR'S INABILITY TO PRODUCE BLANKETS MEETING THE REQUIREMENTS OF THE SPECIFICATIONS--- YOUR RIGHT TO PROCEED WAS TERMINATED BY THE CONTRACTING OFFICER, IN ACCORDANCE WITH THE ABOVE-QUOTED ARTICLE 15 OF THE CONTRACT; AND SUBSEQUENTLY, THE REQUIRED BLANKETS WERE PURCHASED FROM ANOTHER CONTRACTOR, CHATHAM MANUFACTURING CO., UNDER CONTRACT NO. W-669-QM -ECW-428, DATED DECEMBER 27, 1935, AT AN EXCESS COST TO THE GOVERNMENT OF $5,928.04.

WHERE, AS IN THIS CASE, A CONTRACT CONTAINS A PROVISION FOR LIQUIDATED DAMAGES, THE STIPULATION CONTROLS AS TO THE RIGHTS OF THE PARTIES AND MUST BE GIVEN EFFECT ACCORDING TO ITS TERMS. STONE, ETC. CO. V. UNITED STATES, 234 U.S. 270; MORRIS V. WILSON, 114 FED. 74; AND CARNEGIE STEEL CO. V. UNITED STATES, 49 CT.CLS. 403.

UNDER THE ABOVE-QUOTED LIQUIDATED DAMAGE PROVISION OF YOUR CONTRACT, IT IS TO BE NOTED THAT IN THE EVENT OF YOUR FAILURE TO DELIVER THE BLANKETS WITHIN THE AGREED TIME--- AND CONSEQUENT EXERCISE BY THE GOVERNMENT OF THE RIGHT RESERVED THEREIN TO TERMINATE YOUR RIGHT TO PROCEED AND PURCHASE SIMILAR BLANKETS ELSEWHERE--- THE LIQUIDATED DAMAGES DID NOT CEASE ACCRUING AT THE TIME OF SUCH TERMINATION, BUT YOU WERE CHARGEABLE WITH THE "LIQUIDATED DAMAGES ACCRUING UNTIL SUCH TIME AS THE GOVERNMENT REASONABLY MAY PROCURE SIMILAR" BLANKETS ELSEWHERE. THERE WAS NO UNREASONABLE DELAY IN PROCURING THE BLANKETS ELSEWHERE, CONTRACT THEREFOR HAVING BEEN AWARDED ON THE VERY DAY YOUR RIGHT TO PROCEED WAS TERMINATED AND THE TIME ALLOWED FOR DELIVERY UNDER THAT CONTRACT--- WITHIN 6 WEEKS AFTER DATE OF THE CONTRACT, OR BY FEBRUARY 7, 1936--- BEING MUCH SHORTER THAN THE TIME (OVER 20 WEEKS) ALLOWED UNDER YOUR CONTRACT. (SEE 15 COMP. GEN. 903.)

IT APPEARS THAT THE SECOND CONTRACT WAS COMPLETED BY DELIVERY OF 16,227 BLANKETS; THAT 12,600 OF SAID BLANKETS WERE DELIVERED ON OR BEFORE FEBRUARY 7, 1936, THE STIPULATED DATE FOR COMPLETION OF THE SECOND CONTRACT; AND THAT THERE WERE DELAYS IN COMPLETING DELIVERIES OF THE REMAINING 3,567 BLANKETS--- SAME BEING DELIVERED ON FEBRUARY 10, 13, AND MARCH 17, 1936--- AND THAT THE SECOND CONTRACTOR WAS CHARGED WITH THE ACCRUED LIQUIDATED DAMAGES RESULTING FROM ITS DELAYS, AMOUNTING TO $197.12. YOU HAVE NOT BEEN CHARGED WITH LIQUIDATED DAMAGES FOR ANY DELAY AFTER FEBRUARY 7, 1936, THE DUE DATE UNDER THE SECOND CONTRACT.

UNDER THE GOVERNMENT'S STANDARD FORM OF SUPPLY CONTRACT CONTAINING A LIQUIDATED-DAMAGE PROVISION SUCH AS THE ONE INVOLVED HERE, THE QUESTION WHETHER A CONTRACTOR IS CHARGEABLE WITH LIQUIDATED DAMAGES DEPENDS UPON THE TERMS OF THE CONTRACT AND THE FACTS AS FOUND BY THE CONTRACTING OFFICER, OR BY THE HEAD OF THE DEPARTMENT CONCERNED, ON APPEAL THEREFROM. WHEN THE CONTRACTING OFFICER OR THE HEAD OF THE DEPARTMENT HAS DETERMINED THE FACTS AS TO THE CAUSE OF THE DELAY, THE QUESTION AS TO THE AMOUNT OF DAMAGES ACCRUING UNDER THE TERMS OF THE CONTRACT AS A RESULT OF THE DELAY IS FOR DETERMINATION, IN THE FIRST INSTANCE, BY THIS OFFICE. THE ADMINISTRATIVE AUTHORITY IS LIMITED TO EITHER TERMINATING THE CONTRACT FOR DEFAULT IN DELIVERY OR PERMITTING THE CONTRACTOR TO CONTINUE UNTIL PERFORMANCE HAS BEEN COMPLETED AND IN REPORTING TO THIS OFFICE THE FACTS OF THE DELAY FOR CONSIDERATION AS TO WHAT AMOUNT OF LIQUIDATED DAMAGES, IF ANY, ARE TO BE CHARGED UNDER THE CONTRACT. IT IS FOR THE ADMINISTRATIVE OFFICER TO DETERMINE THE FACTS AND THE EXTENT OF THE DELAY AND FOR THE GENERAL ACCOUNTING OFFICE, OR THE COURTS, TO DETERMINE THE QUESTION OF LAW WHETHER UNDER SUCH FACTS AND THE TERMS OF THE CONTRACT LIQUIDATED DAMAGES ARE TO BE RETAINED OR REMITTED. IN THIS CONNECTION SEE DAVIS ET AL., TRUSTEE, V. UNITED STATES, 82 CT.CLS. 334-347; 6 COMP. GEN. 650; 7 ID. 505, 534; 8 ID. 13; 9 ID. 164; 10 ID. 252; 13 ID. 325; 14 ID. 431; AND 16 ID. 936. THE LAW REGARDS THE SANCTITY OF CONTRACTS. IT REQUIRES THE PARTIES THERETO TO DO WHAT THEY HAVE AGREED TO DO. IF UNEXPECTED IMPEDIMENTS BE IN THE WAY, AND A LOSS MUST ENSUE, IT LEAVES THE LOSS WHERE THE CONTRACT PLACES IT. IF THE PARTIES HAVE MADE NO PROVISION FOR A DISPENSATION, THE RULE OF LAW GIVES NONE. IT DOES NOT ALLOW A CONTRACT FAIRLY MADE TO BE ANNULLED, AND IT DOES NOT PERMIT TO BE INTERPOLATED WHAT THE PARTIES THEMSELVES HAVE NOT STIPULATED. DERMOTT V. JONES, 2 WALL. 8. THE CASE CITED IN YOUR LETTER OF NOVEMBER 29, 1937, TO WIT, FIDELITY AND CASUALTY CO., OF NEW YORK V. UNITED STATES, 81 CT.CLS. 495-502, WHEREIN IT WAS HELD THAT LIQUIDATED DAMAGES WERE NOT CHARGEABLE AGAINST THE CONTRACTOR AFTER TERMINATION OF THE CONTRACTOR'S RIGHT TO PROCEED, IS NOT APPLICABLE HERE, INASMUCH AS THE LIQUIDATED DAMAGE PROVISION IN THAT CONTRACT IS NOT SIMILAR TO THE ONE HERE UNDER CONSIDERATION BECAUSE IT DID NOT INCLUDE THE PROVISION CONTINUING THE ACCRUAL OF THE SPECIFIED LIQUIDATED DAMAGES "UNTIL SUCH TIME AS THE GOVERNMENT MAY REASONABLY PROCURE SIMILAR * * * SUPPLIES ELSEWHERE.'

YOUR CONTRACT MAKES NO PROVISION FOR REMISSION OF THE SPECIFIED LIQUIDATED DAMAGES IN THE EVENT OF DELAYS IN PERFORMANCE, EXCEPTING AS STIPULATED IN ARTICLE 15 THEREOF FOR "UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR.' THE FINDINGS OF THE CONTRACTING OFFICER ARE TO THE EFFECT THAT THE DELAYS IN PERFORMANCE WERE DUE NOT TO ANY UNFORESEEABLE CAUSES BUT TO THE INABILITY OF YOUR SUBCONTRACTOR TO SUPPLY BLANKETS MEETING THE REQUIREMENTS OF THE SPECIFICATIONS. UNDER SAID ARTICLE 15 OF YOUR CONTRACT, DELAYS DUE TO SUBCONTRACTORS ARE SPECIFICALLY EXCEPTED FROM THE SPECIFIED EXCUSABLE CAUSES FOR WHICH REMISSION OF LIQUIDATED DAMAGES IS AUTHORIZED. NONE OF THE DELAYS ARE SHOWN OR EVEN CLAIMED TO HAVE BEEN DUE TO CAUSES EXCUSABLE UNDER THE CONTRACT PROVISIONS. ACCORDINGLY, THERE IS NO LEGAL AUTHORITY TO REMIT ANY PART OF THE LIQUIDATED DAMAGES WHICH ACCRUED TO AND INCLUDING FEBRUARY 7, 1936, AS A RESULT OF YOUR FAILURE TO PERFORM THE CONTRACT.

INASMUCH AS THE FUNCTIONS OF THE ADMINISTRATIVE OFFICERS, WITH REFERENCE TO THE LIQUIDATED DAMAGES TO BE CHARGED AGAINST YOU UNDER THE CONTRACT HERE INVOLVED, ARE LIMITED TO A DETERMINATION AND REPORT OF THE FACTS WITH REFERENCE TO THE EXTENT AND CAUSES OF THE DELAYS, WHILE THE QUESTION OF LAW AS TO WHAT AMOUNT OF LIQUIDATED DAMAGES ACCRUED TO THE GOVERNMENT UNDER SUCH REPORTED FACTS AND THE TERMS OF THE CONTRACT FOR THE DELAYS IN PERFORMANCE IS FOR DETERMINATION BY THIS OFFICE AND THE COURTS, THE ACTION OF THE ADMINISTRATIVE OFFICER IN CHARGING ONLY THE LIQUIDATED DAMAGES WHICH ACCRUED UP TO DECEMBER 27, 1935, AND IN FAILING TO CHARGE LIQUIDATED DAMAGES FOR THE PERIOD FROM DECEMBER 27, 1935, TO FEBRUARY 1936, WAS NOT FINAL OR CONCLUSIVE. EVIDENTLY YOU RECOGNIZED THIS AS YOU FILED A CLAIM IN THIS OFFICE FOR REMISSION OF THE LIQUIDATED DAMAGES CHARGED BY THE DISBURSING OR ADMINISTRATIVE OFFICER.

UNDER THE TERMS OF THE CONTRACT, LIQUIDATED DAMAGES ACCRUED AGAINST YOU BECAUSE OF YOUR DEFAULT AT THE SPECIFIED RATE OF "ONE FIFTH OF 1 PERCENT" OF THE UNIT CONTRACT PRICE OF $4.87 FOR EACH BLANKET COVERED BY THE CONTRACT FOR EACH DAY OF DELAY BEYOND THE RESPECTIVE DUE DATES "UNTIL SUCH TIME AS THE GOVERNMENT MAY REASONABLY PROCURE SIMILAR * * * SUPPLIES ELSEWHERE.' THE ACCRUAL OF LIQUIDATED DAMAGES DID NOT CEASE UPON THE TERMINATION ON DECEMBER 27, 1935, OF YOUR RIGHT TO PROCEED BECAUSE OF YOUR DEFAULT, INASMUCH AS THE CONTRACT SPECIFICALLY PROVIDED OTHERWISE. YOUR CONTRACT ALLOWED 150 CALENDAR DAYS FOR THE DELIVERIES TO BE COMPLETED, WHILE THE SECOND CONTRACT, BECAUSE OF YOUR DEFAULT, ALLOWED BUT 42 CALENDAR DAYS FOR COMPLETING PERFORMANCE, THE FIXED COMPLETION DATE BEING FEBRUARY 7, 1936. WHILE THERE WERE SOME DELAYS IN A PORTION OF THE DELIVERIES BY THE SECOND CONTRACTOR, FOR WHICH IT WAS CHARGED LIQUIDATED DAMAGES, AS HEREINABOVE SHOWN, IT APPEARS THAT THE COMPLETION DATE FIXED BY THE SECOND CONTRACT, TO WIT, FEBRUARY 7, 1936, MUST BE REGARDED AS A REASONABLE TIME--- WITHIN THE MEANING OF THE TERMS OF THE ORIGINAL CONTRACT--- FOR THE PROCUREMENT OF THE BLANKETS AFTER YOUR RIGHT TO PROCEED WAS TERMINATED AND, ACCORDINGLY, THAT DATE IS THE DATE UPON WHICH LIQUIDATED DAMAGES CEASED TO ACCRUE AGAINST YOU BECAUSE OF YOUR DEFAULT.

UNDER THE REPORTED FACTS AND THE TERMS OF YOUR CONTRACT LIQUIDATED DAMAGES APPEAR TO HAVE ACCRUED AGAINST YOU FOR UNEXCUSED DELAYS BEYOND THE DELIVERY DATED SPECIFIED, BEGINNING SEPTEMBER 19, 1935, AND CONTINUING UNTIL FEBRUARY 7, 1936, IN THE RESPECTIVE AMOUNTS SHOWN ON PAGE 8 OF THE DECISION OF JUNE 17, 1937 (A-84492), AGGREGATING $11,481.63. FROM SUCH AMOUNT, HOWEVER, THERE WAS DEDUCTED THE TWO CREDITS OF $6,704.24 AND $551.96, TOTALING $7,256.20, REFERRED TO IN THE SETTLEMENT OF APRIL 13, 1937, LEAVING YET REMAINING DUE FROM AND UNPAID BY YOU A BALANCE OF $4,225.43.

UPON RECONSIDERATION, THEREFORE, THE DECISION OF JUNE 17, 1937, IS AFFIRMED. AND IN VIEW OF YOUR REFUSAL TO CONSENT TO THE DEDUCTION OF THE SAID SUM OF $4,225.43 FROM THE AMOUNT OTHERWISE DUE YOU ON THE JUDGMENT OF THE COURT OF CLAIMS IN THE CASE REFERRED TO IN THE LAST PARAGRAPH OF THE ABOVE-QUOTED LETTER, THERE WILL BE WITHHELD FROM THE AMOUNT OTHERWISE DUE UNDER SUCH JUDGMENT THE SUM OF $5,000 TO COVER THE INDEBTEDNESS OF $4,225.43 PLUS THE ESTIMATED AMOUNT OF CHARGES AND COSTS IN PROSECUTING THE DEBT OF THE UNITED STATES TO FINAL JUDGMENT AS PROVIDED FOR UNDER SECTION 227, TITLE 31, U.S.C. AND THE SAID INDEBTEDNESS WILL BE REPORTED TO THE ATTORNEY GENERAL OF THE UNITED STATES FOR APPROPRIATE ACTION.