B-10348, JUNE 3, 1940, 19 COMP. GEN. 965

B-10348, JUNE 3, 1940, 19 COMP. GEN. 965

CONTRACTS - PERFORMANCE LIABILITY THE INABILITY OF A CONTRACTOR WITH PLACE OF BUSINESS IN THE UNITED STATES TO OBTAIN THE GERMAN PRODUCT WHICH HE HAD STATED HE INTENDED TO FURNISH, DOES NOT RELIEVE HIM OF HIS CONTRACT OBLIGATION TO FURNISH MATERIAL MEETING THE SPECIFICATIONS IF PROCURABLE ELSEWHERE, WHERE THERE WAS NO REQUIREMENT UNDER THE CONTRACT THAT HE FURNISH THE GERMAN PRODUCT TO THE EXCLUSION OF ANY OTHER MEETING THE SPECIFICATIONS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, JUNE 3, 1940:

I HAVE YOUR LETTER OF MAY 16, 1940, AS FOLLOWS:

ON MARCH 24, 1939, THE DEPARTMENT OPENED BIDS UNDER U.S.D.A. NO. 5010, FOR FURNISHING 100 POUNDS OF 1-1ASPARAGINE TO THE U.S. BUREAU OF ANIMAL INDUSTRY. THE FOLLOWING BIDS WERE RECEIVED:

WILLIAM F. EISSING, $8.40 PER LB. LESS 2 PERCENT 10, 1 PERCENT 20

DAYS (FOREIGN MATERIAL).

CITY CHEMICAL CORP., $12.00 PER LB. LESS 1 PERCENT 10, 1/2 PERCENT

20 DAYS (FOREIGN MATERIAL).

MERCK AND CO., INC., $12.00 PER LB. LESS 1 PERCENT 10TH PROX.

(FOREIGN MATERIAL).

HUMMEL CHEMICAL CO., $12.00 PER LB. LESS 1 PERCENT 10 DAYS

(FOREIGN MATERIAL).

DIFCO LABORATORIES, $17.50 PER LB. LESS 1 PERCENT 10 DAYS

( AMERICAN MANUFACTURE).

AWARD WAS MADE UNDER DATE OF MARCH 30, TO WILLIAM F. EISSING, WHO SUBMITTED THE LOWEST BID, AND THE AWARD WAS IN ACCORDANCE WITH THE DETERMINATION OF THE SECRETARY OF AGRICULTURE AS EVIDENCED BY HIS APPROVAL OF BUDGET AND FINANCE CIRCULAR NO. 2, REVISED, DATED APRIL 24, 1936, WITH REFERENCE TO PRICE DIFFERENTIAL BETWEEN FOREIGN AND AMERICAN GOODS.

UNDER THE TERMS OF THE CONTRACT, DELIVERY WAS TO HAVE BEEN MADE WITHIN 40 DAYS AFTER RECEIPT OF PURCHASE ORDER WHICH WAS ISSUED APRIL 5, 1939. DELIVERY HAS NOT YET BEEN MADE. AS THERE WAS NO IMMEDIATE NEED FOR THE 1- 1ASPARAGINE, THE BUREAU'S FIRST COMMUNICATION TO THE CONTRACTOR WITH REFERENCE TO HIS FAILURE TO MAKE DELIVERY WAS DATED JULY 21, 1939. RESPONSE, THE CONTRACTOR ADVISED ON JULY 27 THAT THE ORDER OF

1-1ASPARAGINE WAS SCHEDULED TO LEAVE EUROPE ON JULY 25. NOT HAVING HEARD FURTHER WITH REGARD TO THE ORDER, THE BUREAU AGAIN WROTE THE CONTRACTOR ON AUGUST 18 AND TELEGRAPHED ON AUGUST 28. IN RESPONSE, THE CONTRACTOR ADVISED THAT AFTER VARIOUS COMPLAINTS TO THE MAKER IN GERMANY, HE WAS ADVISED AS FOLLOWS:

"THE PRODUCTION OF ASPARAGINE THIS YEAR MET WITH UNUSUAL DIFFICULTIES, SINCE THE RAW MATERIAL HAS TURNED OUT VERY BADLY; THE YIELD IS MUCH LESS THAN THE EXPECTED AND USUAL QUANTITY AND THE PRODUCTION MUST BE CHANGED BY US COMPLETELY, RESULTING IN A DELAY OF DELIVERY OF YOUR ORDER.

"WE ASK YOU TO TAKE NOTICE THAT WE HAVE 25 LBS. AVAILABLE WITHIN ABOUT 10 DAYS, WHICH WE SHALL FORWARD TO YOU AS A FIRST INSTALLMENT.'

AS THE SHIPMENT OF 25 LBS. OF 1-1ASPARAGINE FAILED TO MATERIALIZE, THE BUREAU WROTE THE CONTRACTOR ON SEPTEMBER 14 BUT RECEIVED NO REPLY TO THAT LETTER. ON OCTOBER 14, THE CONTRACTOR WAS ADVISED THAT HE WOULD BE GIVEN UNTIL 4:00 P.M., E.S.T., OCTOBER 23 IN WHICH TO MAKE DELIVERY IN ACCORDANCE WITH HIS CONTRACT, AND IN THE EVENT HE FAILED TO DO SO, THE BUREAU WOULD PROCEED TO PURCHASE IN THE OPEN MARKET AND CHARGE ANY EXCESS COST TO HIM AS A DEFAULTING CONTRACTOR. UNDER DATE OF NOVEMBER 6, THE CONTRACTOR REPLIED AS FOLLOWS:

"REFERRING TO YOUR LETTER OF OCTOBER 14TH, 1939, AND MY LAST LETTER TO YOU OF AUGUST 28TH, 1939, I WISH TO INFORM YOU THAT THE PART SHIPMENT OF 25 LBS. OF 1-1ASPARAGINE, WHICH WAS SCHEDULED TO LEAVE GERMANY ON S.S.' NEW YORK," DID NOT REACH THIS STEAMER AND WAS THEN LOADED ON S.S.' HANSA" WHICH SAILED IN TIME BUT, WHEN TWO DAYS AT SEA, WAS RECALLED TO HAMBURG.

"SINCE THEN I HAVE NOT HEARD ANYTHING FURTHER REGARDING THIS SHIPMENT BUT NOW HAVE ADVICES BY CABLE THAT 50 POUNDS OF 1-1ASPARAGINE ARE READY TO BE SHIPPED FROM ROTTERDAM AND PAYMENT IN ADVANCE WAS ASKED BY THE SHIPPER.

" I HAVE COMPLIED WITH THE SHIPPER'S WISHES AND HAVE OPENED A LETTER OF CREDIT IN ROTTERDAM AND NOW HOPE THAT THESE 50 POUNDS WILL BE SHIPPED WITHOUT FURTHER DELAY AND I EXPECT THEIR ARRIVAL SOMETIME LATE IN NOVEMBER OR EARLY DECEMBER.

" I TRUST THAT UNDER THESE CIRCUMSTANCES, WHICH WERE ENTIRELY BEYOND MY CONTROL AND UNDOUBTEDLY REPRESENT A CASE OF "FORCE MAJEURE," YOU WILL ALLOW ME TO SHIP THESE 50 POUNDS ON ACCOUNT OF YOUR ORDER NO. 73156-A. * *

IN REPLY TO THE FOREGOING LETTER, THE BUREAU WROTE THE CONTRACTOR ON NOVEMBER 9 AS FOLLOWS:

"REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 6, WITH REGARD TO DELIVERY OF 1-1ASPARAGINE ON BUREAU PURCHASE ORDER NO. 73156A.

"AS YOU HAVE FURNISHED A CLEAR EXPLANATION WHICH INDICATES THAT FAILURE TO MAKE DELIVERY ON OUR ORDER WAS DUE TO CIRCUMSTANCES BEYOND YOUR CONTROL, THE BUREAU WILL RETRACT FROM THE POSITION TAKEN IN OUR LETTER OF OCTOBER 14. IT WILL THEREFORE, BE SATISFACTORY FOR YOU TO DELIVER ON OUR ORDER THE 50 POUNDS OF 1-1ASPARAGINE WHICH YOU ADVISE IS READY FOR SHIPMENT FROM ROTTERDAM. PLEASE ADVISE WHETHER OR NOT YOU HAVE ANY PROSPECTS OF OBTAINING AN ADDITIONAL QUANTITY SUFFICIENT TO COMPLETE THE ABOVE ORDER AT A LATER DATE.'

NO REPLY WAS RECEIVED FROM THE CONTRACTOR WHO WAS AGAIN WRITTEN TO ON FEBRUARY 2, 1940, AND AGAIN ON FEBRUARY 16. THE CONTRACTOR ADVISED ON FEBRUARY 17 THAT HE WOULD FURNISH A FULL REPORT ON WEDNESDAY, FEBRUARY 21. THIS REPORT WAS NOT RECEIVED. ON MARCH 13 THE BUREAU AGAIN WROTE THE CONTRACTOR, AND A REPLY WAS RECEIVED ON APRIL 9 WHICH READS AS FOLLOWS:

"REFERRING AGAIN TO THE MATTER OF 1-1ASPARAGINE, I HAD TO AWAIT FINAL REPORTS FROM ABROAD AND I AM NOW ADVISING THAT THE CONSIGNMENT OF 50 POUNDS NEVER LEFT ROTTERDAM, ALTHOUGH A LETTER OF CREDIT FOR IT WAS OPENED BY ME.

" I HAVE SINCE TRIED TO OBTAIN SOME 1-1ASPARAGINE IN FRANCE AND I COULD GET A LOT OF 25 KILOS EQUIVALENT TO ABOUT 55 POUNDS, WHICH I COULD SELL AT $12.50 PER LB. F.O.B. WASHINGTON ON TERMS OF CASH IN 10 DAYS FROM DATE OF INVOICE LESS 1 PERCENT.

" I IMMEDIATELY BOUGHT THIS LOT, OPENED A LETTER CREDIT AND AM IN RECEIPT OF ADVICES FROM FRANCE THIS MORNING THAT THE LOT IS READY FOR SHIPMENT, BUT THE PERMIT OF EXPORTATION ISSUED BY THE FRENCH AUTHORITIES HAS NOT BEEN RECEIVED AS YET, BUT IS EXPECTED ANY DAY.

"IT IS NEEDLESS I THINK, FOR ME TO ASSURE YOU THAT I HAVE TRIED EVERYTHING IN MY POWER TO OBTAIN THE ASPARAGINE FOR YOU, DISREGARDING ANY EXPENSES FOR CABLES AND I SHALL KEEP YOU INFORMED AS SOON AS I SHALL HAVE RECEIVED WORD THAT THE EXPORT PERMIT FOR THE 25 KILOS FROM FRANCE HAS BEEN GRANTED.

" P.S. I STILL HAVE ON HAND THE 3.2 LBS. OF 1-1ASPARAGINE, MENTIONED IN MY LETTER OF NOV. 6, 1939, WHICH I COULD SHIP IMMEDIATELY AT THE ORIGINAL PURCHASE PRICE. PLEASE ADVISE.'

ON APRIL 12, THE BUREAU WROTE THE CONTRACTOR AS FOLLOWS:

"RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF APRIL 9 WITH REGARD TO OUR PURCHASE ORDER NO. 73156-A COVERING 1-1ASPARAGINE.

"IT WILL BE APPRECIATED IF YOU WILL SHIP IMMEDIATELY THE 3 2/10 LBS. WHICH YOU HAVE AVAILABLE. WHILE THE 1-1ASPARAGINE WHICH YOU ARE PURCHASING FROM FRANCE WOULD BE ACCEPTABLE, THE BUREAU CANNOT AUTHORIZE YOU TO DELIVER AT ANY EXCESS COST OVER YOUR BID PRICE WHICH WAS ACCEPTED AND ON WHICH THE PURCHASE ORDER WAS BASED.'

THE FOLLOWING REPLY HAS BEEN RECEIVED:

"ACKNOWLEDGING RECEIPT OF YOUR LETTER OF APRIL 12TH REGARDING YOUR PURCHASE ORDER NO. 73156-A COVERING 1-1ASPARAGINE I SHALL BE GLAD TO SHIP THE 3.2 POUNDS OF THIS MATERIAL MENTIONED IN MY LETTER OF APRIL 9TH, AT THE ACCEPTED BID PRICE OF $8.40 PER LB. LESS 2 PERCENT DISCOUNT FOR PAYMENT IN 10 DAYS, F.O.B. WASHINGTON, D.C., ALTHOUGH MY PURCHASE PRICE WAS $11.88 PER LB., F.O.B. NEW YORK.

"SINCE THERE IS NO IMMEDIATE PROSPECT OF OBTAINING ADDITIONAL QUANTITIES TO COMPLETE THE ABOVE-MENTIONED ORDER AT A LATER DATE, EXCEPT THE LOT OF 25 KG. FROM FRANCE MENTIONED IN MY LETTER OF APRIL 9TH, AND SINCE YOUR LETTER TO ME OF NOVEMBER 9, 1939, YOU INDICATED THAT "THE BUREAU WILL RETRACT FROM THE POSITION TAKEN IN OUR LETTER OF OCTOBER 14, 1939," I.E., TO PROCEED TO PURCHASE IN THE OPEN MARKET AND CHARGE THE EXCESS COST TO ME AS A DEFAULTING CONTRACTOR (ALTHOUGH NOW DELIVERY CAN BE TRACED DIRECTLY TO CAUSES BEYOND MY CONTROL), I WOULD APPRECIATE YOUR RELEASING ME OF MY OBLIGATION ASSUMED PERTAINING TO THIS ORDER AFTER RECEIPT OF THE 3.2 POUNDS, FOR WHICH YOU WOULD AGREE TO PAY $8.40 PER POUND AS STATED ABOVE.

"PLEASE CONFIRM YOUR AGREEABLENESS.'

THE ACCEPTED BID CARRIED THE FOLLOWING STATEMENT: "MATERIAL IS MANUFACTURED IN GERMANY ONLY.' INASMUCH AS THE CONTRACT WAS BASED ON FURNISHING A GERMAN PRODUCT WHICH THE CONTRACTOR CLAIMS HE IS UNABLE TO SECURE, AND IN VIEW OF THE STIPULATION IN THE CONTRACT UNDER THE " DALAYS- DAMAGES" PROVISIONS WHICH WILL RELEASE A CONTRACTOR UNDER CERTAIN UNFORESEEABLE CAUSES BEYOND HIS CONTROL, YOUR DECISION IS REQUESTED AS TO WHETHER OR NOT THE CONTRACTOR MAY BE RELEASED IN THIS INSTANCE FROM FURTHER PERFORMANCE UNDER HIS CONTRACT AFTER DELIVERY HAS BEEN MADE OF THE 3.2 LBS. OF 1-1ASPARAGINE OFFERED.

THE ORIGINAL ACCEPTED BID WHICH WAS BEING RETAINED PENDING DELIVERY OF MATERIAL AND RENDITION OF VOUCHER IS HEREWITH.

WHILE IT IS NOTED THAT THE CONTRACTOR DEFINITELY STATED HIS INTENTION OF FURNISHING ASPARAGINE MANUFACTURED OR PRODUCED IN GERMANY, HIS PLACE OF BUSINESS WAS NEW YORK CITY AND THERE WAS NO REQUIREMENT THAT HE FURNISH A GERMAN PRODUCT TO THE EXCLUSION OF ANY OTHER MEETING THE SPECIFICATIONS. FURTHERMORE, THE RECORD DOES NOT DISCLOSE ANY UNDERSTANDING ON THE PART OF THE GOVERNMENT THAT THE ASPARAGINE WAS TO BE OBTAINED FROM GERMANY AFTER THE CONTRACTOR'S RECEIPT OF THE PURCHASE ORDER ISSUED APRIL 5, 1939. CONSEQUENTLY, EVEN IF IT COULD BE ESTABLISHED THAT, DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, THE ASPARAGINE COULD NOT BE PROCURED FROM GERMANY AT ANY TIME AFTER THE RECEIPT OF THE PURCHASE ORDER, THIS WOULD NOT RELIEVE THE CONTRACTOR FROM HIS OBLIGATION UNDER THE CONTRACT IF ASPARAGINE MEETING THE REQUIREMENTS OF THE SPECIFICATIONS IS PROCURABLE FROM ANY OTHER SOURCE --- PARTICULARLY IF ASPARAGINE OF GERMAN MANUFACTURE WAS PROCURABLE AT ANY TIME BETWEEN APRIL 5, 1939, AND THE PRESENT TIME, EITHER HERE OR ABROAD, ALTHOUGH AT AN INCREASED COST. SEE IN THIS CONNECTION, 16 COMP. GEN. 983; 17 ID. 793.

ACCORDINGLY, ON THE PRESENT RECORD, THE CONTRACTOR MAY NOT BE RELIEVED OF HIS OBLIGATION TO PERFORM IN ACCORDANCE WITH HIS CONTRACT OR TO PAY THE GOVERNMENT ANY DAMAGES RESULTING FROM HIS FAILURE SO TO PERFORM.