A-93087, MAY 4, 1938, 17 COMP. GEN. 901

A-93087: May 4, 1938

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WAS WITHOUT FORCE OR EFFECT TO RELIEVE CONTRACTOR OF ITS LIABILITY FOR LIQUIDATED DAMAGES. UNDER THE TERMS OF THE CONTRACT IT WAS AGREED THAT YOU WOULD FURNISH WIPING CLOTHS AND COTTON WASTE F.O.B. IT WAS FURTHER AGREED THAT SHIPMENT WOULD BE MADE FROM PHILADELPHIA. THE ORDER TO PROCEED WAS RECEIVED BY YOU ON NOVEMBER 2. IT APPEARS THE WIPING CLOTHS WERE SHIPPED ON JANUARY 5. 105.17 OTHERWISE PAYABLE BY THE GOVERNMENT LIQUIDATED DAMAGES WERE DEDUCTED IN THE SUM OF $17.68. IT FURTHER APPEARS THAT ACCEPTABLE COTTON WASTE WAS NOT SHIPPED UNTIL MAY 5. THERE WAS DEDUCTED THE SUM OF $337.31 AS LIQUIDATED DAMAGES. STATES THAT "THE EARLIEST DATE ON WHICH SHIPMENT COULD HAVE BEEN MADE WAS JANUARY 4.

A-93087, MAY 4, 1938, 17 COMP. GEN. 901

CONTRACTS - DAMAGES - LIQUIDATED - DELAYS FOR CAUSES SPECIFIED AS EXCUSING LIABILITY FOR EXCESS COSTS ONLY WHERE CONTRACT, PROVIDING THAT THE GOVERNMENT COULD TERMINATE CONTRACTOR'S RIGHT TO PROCEED AND CHARGE IT WITH EXCESS COST OF PURCHASES ELSEWHERE EXCEPT UPON TERMINATION FOR CERTAIN SPECIFIED CAUSES, INCLUDING "STRIKES" AND "FREIGHT EMBARGOES," ALSO PROVIDED FOR LIQUIDATED DAMAGES FOR DELAYS IN SHIPMENT WITHOUT PROVIDING FOR REMITTING OR EXCUSING THEREOF FOR SUCH CAUSES, AND CONTRACTOR NOTIFIED THE CONTRACTING OFFICER OF INABILITY TO SHIP BY WATER WITHIN THE TIME SPECIFIED BECAUSE OF A MARITIME STRIKE, THE ACTION OF THE CONTRACTING OFFICER PURPORTING TO EXTEND THE TIME FOR SHIPMENT, BEING UNAUTHORIZED AND PREJUDICIAL TO THE INTEREST OF THE UNITED STATES, WAS WITHOUT FORCE OR EFFECT TO RELIEVE CONTRACTOR OF ITS LIABILITY FOR LIQUIDATED DAMAGES, PARTICULARLY WHERE THE CONTRACT NEITHER REQUIRED NOR CONTEMPLATED THAT THE DELIVERY BE BY WATER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE J. MILTON HAGY WASTE WORKS, MAY 4, 1938:

IN YOUR LETTER OF JANUARY 13, 1938, YOU REQUEST REVIEW OF SETTLEMENT DATED JANUARY 11, 1938, WHICH DISALLOWED YOUR CLAIM FOR $111.62, AS PARTIAL REMISSION OF LIQUIDATED DAMAGES DEDUCTED IN MAKING PAYMENT FOR WIPING CLOTHS AND WASTE FURNISHED THE WAR DEPARTMENT, BENICIA ARSENAL, CALIF., UNDER CONTRACT NO. W-146-ORD-106, DATED OCTOBER 29, 1936.

UNDER THE TERMS OF THE CONTRACT IT WAS AGREED THAT YOU WOULD FURNISH WIPING CLOTHS AND COTTON WASTE F.O.B. BENICIA ARSENAL, CALIF., AT THE UNIT PRICES STIPULATED THEREIN. IT WAS FURTHER AGREED THAT SHIPMENT WOULD BE MADE FROM PHILADELPHIA, PA., WITHIN 15 CALENDAR DAYS AFTER THE DATE OF RECEIPT OF THE ORDER TO PROCEED, BUT THAT IN THE EVENT OF DELAY IN SHIPMENT THERE WOULD BE DEDUCTED FROM ANY PAYMENT DUE BY THE GOVERNMENT, AS LIQUIDATED DAMAGES, ONE-THIRTIETH OF 1 PERCENT OF THE PRICE OF THE MATERIAL DELAYED FOR EACH CALENDAR DAY OF DELAY. THE ORDER TO PROCEED WAS RECEIVED BY YOU ON NOVEMBER 2, 1936, THEREBY ESTABLISHING NOVEMBER 17, 1936, AS THE DUE DATE FOR SHIPMENT. IT APPEARS THE WIPING CLOTHS WERE SHIPPED ON JANUARY 5, 1937, AFTER A DELAY OF 49 CALENDAR DAYS, AND THAT FROM THE NET AMOUNT OF $1,105.17 OTHERWISE PAYABLE BY THE GOVERNMENT LIQUIDATED DAMAGES WERE DEDUCTED IN THE SUM OF $17.68. IT FURTHER APPEARS THAT ACCEPTABLE COTTON WASTE WAS NOT SHIPPED UNTIL MAY 5, 1937, AFTER A DELAY OF 169 CALENDAR DAYS, AND THAT FROM THE NET AMOUNT OF $6,023.33 OTHERWISE PAYABLE BY THE GOVERNMENT, THERE WAS DEDUCTED THE SUM OF $337.31 AS LIQUIDATED DAMAGES.

BY LETTER OF NOVEMBER 11, 1936, YOU NOTIFIED THE BENICIA ARSENAL THAT DUE TO A MARITIME STRIKE AND CONSEQUENT EMBARGO ON FREIGHT SHIPMENTS YOU WOULD BE UNABLE TO SHIP THE MATERIAL BY WATER WITHIN THE TIME SPECIFIED. THEREAFTER, DUE TO THE MARITIME STRIKE AND YOUR INABILITY TO SHIP BY WATER, THE CONTRACTING OFFICER PURPORTED TO GRANT EXTENSIONS OF TIME TOTALING 60 DAYS. YOUR LETTER OF AUGUST 9, 1937, STATES THAT "THE EARLIEST DATE ON WHICH SHIPMENT COULD HAVE BEEN MADE WAS JANUARY 4, 1937, AND SHIPMENT WAS MADE ON THAT DATE," AND YOU CONTEND THAT NO LIQUIDATED DAMAGES SHOULD HAVE BEEN DEDUCTED FOR DELAYS PRIOR THERETO, PARTICULARLY SINCE THE CONTRACT TIME HAD BEEN EXTENDED BEYOND JANUARY 4, 1937.

PARAGRAPH 5 OF THE "CONDITIONS" OF THE PURCHASE ORDER ACCEPTING YOUR BID AND FORMING A PART OF THE CONTRACT, PROVIDED AS FOLLOWS:

DELAYS--- DAMAGES.--- IF THE CONTRACTOR REFUSES OR FAILS TO MAKE DELIVERIES OF THE MATERIALS OR SUPPLIES WITHIN THE TIME SPECIFIED IN THE PURCHASE ORDER, 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: PROVIDED, THAT THE CONTRACTOR SHALL NOT BE CHARGED WITH ANY EXCESS COST OCCASIONED THE GOVERNMENT BY THE PURCHASE OF MATERIALS OR SUPPLIES IN THE OPEN MARKET, OR UNDER OTHER CONTRACTS, WHEN THE DELAY OF THE CONTRACTOR IN MAKING DELIVERIES 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 OF 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 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.

YOUR CLAIM WAS DISALLOWED FOR THE REASON THAT THE CONTRACT MADE NO PROVISION FOR RELIEVING YOU FROM THE ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY. IN YOUR LETTER OF JANUARY 13, 1938, REQUESTING REVIEW, YOUR REFER TO THE PROVISION ABOVE QUOTED AS RELIEVING YOU FROM THE PAYMENT OF LIQUIDATED DAMAGES FOR DELAYS DUE TO "STRIKES" AND "FREIGHT EMBARGOES," AND YOU URGE THAT YOU "MUST ACCEPT THE WRITTEN TERMS OF THE CONTRACT AT THEIR FACE VALUE" AND THAT THIS OFFICE SHOULD NOT "READ INTO A CONTRACT TERMS WHICH ARE NOT THERE.'

IT WILL BE NOTED THAT THE PARAGRAPH QUOTED ABOVE DOES NOT RELIEVE THE CONTRACTOR FROM THE ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAYS DUE TO THE SPECIFIED CAUSES; IT ONLY RELIEVES THE CONTRACTOR FROM THE PAYMENT OF EXCESS COSTS IN THE EVENT OF TERMINATION OF THE RIGHT TO PROCEED AS A RESULT OF DELAYS DUE TO SUCH CAUSES. NOWHERE IN THE CONTRACT IS IT PROVIDED THAT LIQUIDATED DAMAGES WILL NOT BE CHARGED FOR DELAYS DUE TO SUCH CAUSES, AND, AS SUGGESTED BY YOU, THIS OFFICE MAY NOT READ INTO A CONTRACT TERMS WHICH ARE NOT THERE.

IT IS WELL SETTLED THAT IF A PARTY CHARGES HIMSELF WITH AN OBLIGATION WHICH AT THE TIME WAS POSSIBLE OF PERFORMANCE, HE MUST ABIDE BY IT UNLESS PERFORMANCE IS RENDERED IMPOSSIBLE BY AN ACT OF GOD, BY THE LAW, OR BY THE OTHER PARTY. UNFORESEEN DIFFICULTIES, HOWEVER GREAT, WILL NOT EXCUSE PERFORMANCE UNLESS THE CONTRACT SO PROVIDES. WHERE THE PARTIES HAVE NO PROVISION FOR A DISPENSATION THE TERMS OF THE CONTRACT MUST PREVAIL. SEE UNITED STATES V. GLEASON, 175 U.S. 588; CARNEGIE STEEL CO. V. UNITED STATES, 240 U.S. 156; COLUMBUS RY. POWER AND LIGHT CO. V. CITY OF COLUMBUS, 249 U.S. 399; AND 13 CORPUS JURIS 635. THE DELAY IN THE PERFORMANCE OF THE SUBJECT CONTRACT ADMITTEDLY WAS NOT DUE TO AN ACT OF GOD, OF THE LAW, OR OF THE OTHER PARTY.

THE ATTEMPT OF THE CONTRACTING OFFICER TO GRANT YOU EXTENSIONS OF TIME WAS OF NO FORCE OR EFFECT SINCE A CONTRACT MAY NOT BE MODIFIED PREJUDICIALLY TO THE INTEREST OF THE UNITED STATES WITHOUT ADEQUATE CONSIDERATION THEREFOR. IN THE ABSENCE OF SPECIFIC STATUTORY PROVISION THEREFOR, OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO WAIVE A VALID LIQUIDATED DAMAGE PROVISION OF A CONTRACT OR TO REMIT A CLAIM OF THE GOVERNMENT FOR THE AMOUNT OF LIQUIDATED DAMAGES LEGALLY ACCRUING TO THE UNITED STATES THEREUNDER. SEE PACIFIC HARDWARE CO. V. UNITED STATES, 49 CT.CLS. 327, 335, 337; BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 CT.CLS. 584, 607; UNITED STATES V. AMERICAN SALES CORPORATION, 27 F/2D) 389, AFFIRMED 32 F./2D) 141, CERTIORARI DENIED 280 U.S. 574.

FURTHERMORE, WHILE THE CONTRACT OBLIGATED YOU TO MAKE DELIVERY F.O.B. BENICIA ARSENAL, CALIF., IT DID NOT REQUIRE THAT DELIVERY BE MADE BY WATER, NOR DID IT STATE THAT DELIVERY BY THAT METHOD WAS CONTEMPLATED. YOUR DUTY WAS TO MAKE SHIPMENT FROM PHILADELPHIA, PA., WITHIN 15 CALENDAR DAYS, AND YOUR LETTER OF NOVEMBER 11, 1936, IN EFFECT, ADMITS THAT RAIL SHIPMENT COULD HAVE BEEN MADE WITHIN THAT PERIOD. IT APPEARS, THEREFORE, THAT THE DELAY COULD HAVE BEEN AVOIDED HAD YOU NOT ELECTED TO EMPLOY A LESS EXPENSIVE MEANS OF TRANSPORTATION.

UNDER DATE OF APRIL 27, 1938, THE SECRETARY OF WAR ADVISED THIS OFFICE AS FOLLOWS:

YOUR LETTER DATED MARCH 19, 1938 (A-95087) (A-93087), WITH RESPECT TO THE CLAIM OF THE J. MILTON HAGY WASTE WORKS, 836 SOUTH SWANSON STREET, PHILADELPHIA, PENNSYLVANIA, UNDER CONTRACT W-146-ORD-106, HAS BEEN RECEIVED.

THERE WAS NO REASON WHY THE CONTRACTOR SHOULD NOT HAVE MADE SHIPMENT OF THE SUPPLIES BY RAIL WHEN THE MARITIME STRIKE DEVELOPED, AS THE CONTRACT PROVIDED FOR SHIPMENT BY RAIL OR WATER AT THE CONTRACTOR'S ELECTION. NEITHER WAS THERE ANY JUSTIFICATION FOR THE GRANTING BY THE CONTRACTING OFFICER OF EXTENSIONS OF TIME OF PERFORMANCE.

INSTRUCTIONS AS TO THE USE OF ACTUAL DAMAGES OR LIQUIDATED DAMAGES PROVISIONS IN CONTRACTS ARE FULLY SET OUT IN ARMY REGULATIONS. A COPY OF YOUR LETTER HAS BEEN TRANSMITTED TO THE CONTRACTING OFFICER IN THE INSTANT CASE FOR HIS GUIDANCE IN THE FUTURE AND HIS ATTENTION DIRECTED TO THE PERTINENT ARMY REGULATIONS.

UNDER THE CIRCUMSTANCES THE SETTLEMENT DISALLOWING YOUR CLAIM MUST BE AND IS SUSTAINED.