B-119175, MARCH 25, 1954, 33 COMP. GEN. 404

B-119175: Mar 25, 1954

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CONTRACTS - LIQUIDATED DAMAGES - DELIVERY DELAYS - CONTRACTING OFFICER'S FINDING THAT DELAY WAS NOT FAULT OF CONTRACTOR UNDER A CONTRACT CONTAINING STANDARD INSPECTION. THERE IS NO LEGAL BASIS FOR ASSESSING A CONTRACTOR LIQUIDATED DAMAGES FOR DELAY IN MAKING COMPLETE DELIVERY RESULTING FROM MISSING AND DAMAGED ITEMS WHERE THE GOVERNMENT CONTRACTING OFFICER HAS SPECIFICALLY FOUND THAT THE REPLACEMENT ITEMS. WERE DELIVERED IN ADVANCE OF THE GOVERNMENT'S NEED AND THAT THE DAMAGE AND DELAY WERE FROM UNFORESEEABLE CAUSES AND WITHOUT FAULT OR NEGLIGENCE ON THE PART OF THE CONTRACTOR. 1954: REFERENCE IS MADE TO YOUR LETTER DATED MARCH 1. AS TO THE PERIOD OF DELAY PROPERLY ASSESSABLE IN VIEW OF THE CIRCUMSTANCES UNDER WHICH FINAL DELIVERY OF THE CONTRACT ITEMS WAS ACTUALLY COMPLETED.

B-119175, MARCH 25, 1954, 33 COMP. GEN. 404

CONTRACTS - LIQUIDATED DAMAGES - DELIVERY DELAYS - CONTRACTING OFFICER'S FINDING THAT DELAY WAS NOT FAULT OF CONTRACTOR UNDER A CONTRACT CONTAINING STANDARD INSPECTION, DISPUTES, AND DEFAULT CLAUSES AND A PROVISION FOR ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAY IN DELIVERY, THERE IS NO LEGAL BASIS FOR ASSESSING A CONTRACTOR LIQUIDATED DAMAGES FOR DELAY IN MAKING COMPLETE DELIVERY RESULTING FROM MISSING AND DAMAGED ITEMS WHERE THE GOVERNMENT CONTRACTING OFFICER HAS SPECIFICALLY FOUND THAT THE REPLACEMENT ITEMS, WHILE DELIVERED AFTER FINAL DELIVERY DATE, WERE DELIVERED IN ADVANCE OF THE GOVERNMENT'S NEED AND THAT THE DAMAGE AND DELAY WERE FROM UNFORESEEABLE CAUSES AND WITHOUT FAULT OR NEGLIGENCE ON THE PART OF THE CONTRACTOR.

COMPTROLLER GENERAL WARREN TO WM. W. CRAWFORD, DEPARTMENT OF AGRICULTURE, MARCH 25, 1954:

REFERENCE IS MADE TO YOUR LETTER DATED MARCH 1, 1954, TRANSMITTING A VOUCHER IN THE AMOUNT OF $3,576.75, WITH SUPPORTING PAPERS, IN FAVOR OF THE NIEDERMEYER-1MARTIN CO., C/O THE FIRST NATIONAL BANK OF PORTLAND, FIFTH AVENUE AND STARK STEET, PORTLAND 5, OREGON, REPRESENTING FINAL PAYMENT FOR CERTAIN STRUCTURAL LUMBER FURNISHED THE DEPARTMENT OF AGRICULTURE, FOREST SERVICE, UNDER CONTRACT NO. A2FS-8610, DATED SEPTEMBER 9, 1953. YOU REQUEST A DECISION AS TO WHETHER THE VOUCHER MAY BE CERTIFIED FOR PAYMENT BECAUSE OF DOUBT WHETHER A DEDUCTION OF LIQUIDATED DAMAGES UNDER THE CONTRACT SHOULD BE MADE AND, IF SO, AS TO THE PERIOD OF DELAY PROPERLY ASSESSABLE IN VIEW OF THE CIRCUMSTANCES UNDER WHICH FINAL DELIVERY OF THE CONTRACT ITEMS WAS ACTUALLY COMPLETED.

THE AWARD OF THE CONTRACT WAS MADE TO THE ABOVE COMPANY AS OTHER THAN LOW BIDDER BECAUSE THAT COMPANY WAS THE ONLY BIDDER THAT OFFERED TO MEET THE 60-DAY DELIVERY REQUIREMENT, BASED ON THE GOVERNMENT'S NEED FOR THE PARTICULAR LUMBER, AS SPECIFIED IN THE INVITATION. THE CONTRACT, INSOFAR AS PERTINENT HERE, CONTAINS THE STANDARD INSPECTION, DISPUTES AND DEFAULT CLAUSES AND A PROVISION FOR ASSESSMENT OF LIQUIDATED DAMAGES AT THE RATE OF $10 PER STRUCTURE FOR EACH CALENDAR DAY OF DELAY IN DELIVERY.

THE DELIVERIES OF THE SIX SEPARATE LOTS OF SPECIFIED LUMBER, COMPRISING AN ESTIMATED TOTAL OF 105,269 B.F.M., WERE SCHEDULED ON OR BEFORE NOVEMBER 11, 1953. THE LUMBER WAS SHIPPED IN CARLOAD LOTS AND ARRIVED AT THE DESTINATION POINTS BETWEEN THE DATE OF NOVEMBER 2 AND 7, 1953, OR PRIOR TO EXPIRATION OF THE 60-DAY CONTRACT DELIVERY TIME. HOWEVER, UPON COMPLETION OF INSPECTION OF THE LUMBER ON DECEMBER 2, 1953, THE GOVERNMENT ADVISED THE CONTRACTOR RELATIVE TO CERTAIN MISSING AND DAMAGED ITEMS IN CONNECTION WITH LOTS NO. 1 THROUGH NO. 5, IT APPEARING LOT NO. 6 WAS ACCEPTED UPON INSPECTION. THE RECORDS FURTHER INDICATE THAT THE TOTAL MEASUREMENT OF THESE ITEMS CONSTITUTED APPROXIMATELY SEVEN-TENTHS OF ONE PERCENT OF THE TOTAL ESTIMATED BOARD FEET OF LUMBER SHIPPED UNDER THE CONTRACT. IN LINE WITH THE CONTRACTING OFFICER'S SUGGESTION IN LETTER OF DECEMBER 2, 1953, THE CONTRACTOR, IN LETTER DATED DECEMBER 10, 1953, CONSENTED TO LOCAL REPLACEMENT OF THE ITEMS AT HIS EXPENSE, REQUESTING FIRST TO BE INFORMED AS TO THE AMOUNT INVOLVED. THE CONTRACTOR WAS ADVISED BY TELEGRAM ON DECEMBER 21, 1953, REGARDING THE QUOTED PRICE OF $223.25 AND BY RETURN TELEGRAM THE SAME DATE AUTHORIZED THE PURCHASE AGAINST ACCOUNT. THE ACTUAL DELIVERY OF THE REPLACED ITEMS WAS NOT ACCOMPLISHED UNTIL JANUARY 20, 1954, OR FOLLOWING A PERIOD OF 30 DAYS.

A REVIEW OF THE CONTRACTING OFFICER'S STATEMENT OF FACT, INCLUDED IN THE FILE, INDICATES THAT THERE WAS CONSIDERABLE DELAY ON THE PART OF THE AGENCY REPRESENTATIVE DURING THE INITIAL INSPECTION BECAUSE OF UNLOADING DIFFICULTIES AND THE LACK OF TECHNICAL ABILITY AND THAT THE TIME CONSUMED IN COMPLETING THE "RECEIPT INSPECTION" EXTENDED FROM NOVEMBER 7, 1953 (THE FINAL DELIVERY DATE), TO DECEMBER 2, 1953. ASIDE FROM THE SUBSTANTIAL PERIOD OF TIME CONSUMED BY THE GOVERNMENT IN THE INSPECTION PROCESS AND IN EFFECTIVE REPLACEMENT, THE CONTRACTING OFFICER HAS SPECIFICALLY FOUND THAT, NOT ONLY WERE THE REPLACED ITEMS DELIVERED IN ADVANCE OF THE GOVERNMENT'S NEED THEREFOR BUT THAT THE "DAMAGE AND DELAY WERE FROM UNFORESEEABLE CAUSES AND WITHOUT THE FAULT OR NEGLIGENCE ON THE PART OF THE CONTRACTOR.' THIS FINDING IS FINAL AND CONCLUSIVE UNDER THE PLAIN MEANING OF THE DISPUTES CLAUSE OF THE CONTRACT. SEE UNITED STATES V. WUNDERLICH, 342 U.S. 95.

ACCORDINGLY, AND SINCE REPLACEMENT OF THE DAMAGED AND MISSING LUMBER WAS MADE AT THE CONTRACTOR'S EXPENSE, THERE APPEARS NO LEGAL BASIS FOR ASSESSING LIQUIDATED DAMAGES UNDER THE CONTRACT.

THE VOUCHER, TOGETHER WITH THE SUPPORTING PAPERS SUBMITTED, IS RETURNED HEREWITH AND MAY BE CERTIFIED FOR PAYMENT, IF OTHERWISE CORRECT.