B-122238, JANUARY 26, 1955, 34 COMP. GEN. 347

B-122238: Jan 26, 1955

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UNDER A DEFAULTED SUPPLY CONTRACT CONTAINING A CLAUSE WHICH PROVIDED FOR THE RECOVERY OF EXCESS COSTS AND THAT " THE RIGHTS AND REMEDIES OF THE GOVERNMENT PROVIDED IN THIS CLAUSE SHALL NOT BE EXCLUSIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THIS CONTRACT. THE MEASURE OF DAMAGES IS THE DIFFERENCE BETWEEN CONTRACT PRICE AND THE MARKET VALUE AT THE TIME OF THE BREACH. 1955: REFERENCE IS MADE TO 3RD ENDORSEMENT DATED JULY 20. REQUESTING INFORMATION AS TO WHETHER THE GOVERNMENT IS ENTITLED TO COMMON LAW DAMAGES UNDER THE DEFAULTED CONTRACT NO. INASMUCH AS NO REPURCHASE WILL BE MADE AND NO EXCESS COSTS WILL BE INCURRED. SPECIFICALLY STATES THAT " THE RIGHTS AND REMEDIES OF THE GOVERNMENT PROVIDED IN THIS CLAUSE SHALL NOT BE EXCLUSIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THIS CONTRACT.'.

B-122238, JANUARY 26, 1955, 34 COMP. GEN. 347

CONTRACTS - MEASURE OF DAMAGES - IN ABSENCE OF REPLACEMENT CONTRACT WHERE, UNDER A DEFAULTED SUPPLY CONTRACT CONTAINING A CLAUSE WHICH PROVIDED FOR THE RECOVERY OF EXCESS COSTS AND THAT " THE RIGHTS AND REMEDIES OF THE GOVERNMENT PROVIDED IN THIS CLAUSE SHALL NOT BE EXCLUSIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THIS CONTRACT," THE GOVERNMENT DOES NOT CONTEMPLATE REPURCHASE AGAINST THE CONTRACTOR'S ACCOUNT, THE MEASURE OF DAMAGES IS THE DIFFERENCE BETWEEN CONTRACT PRICE AND THE MARKET VALUE AT THE TIME OF THE BREACH.

ASSISTANT COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF THE ARMY, JANUARY 26, 1955:

REFERENCE IS MADE TO 3RD ENDORSEMENT DATED JULY 20, 1954, FROM THE OFFICE OF THE CHIEF OF FINANCE, FILE REFERENCE FINEY 167/72787 AND 167/68098 TESARSKI MANUFACTURING COMPANY ( IN BANKRUPTCY), REQUESTING INFORMATION AS TO WHETHER THE GOVERNMENT IS ENTITLED TO COMMON LAW DAMAGES UNDER THE DEFAULTED CONTRACT NO. QM 22995 ( O.I. 7754), INASMUCH AS NO REPURCHASE WILL BE MADE AND NO EXCESS COSTS WILL BE INCURRED.

SECTION 11 (F) OF THE GENERAL PROVISIONS OF THE SUBJECT CONTRACT, AFTER PROVIDING FOR THE RECOVERY OF EXCESS COSTS, SPECIFICALLY STATES THAT " THE RIGHTS AND REMEDIES OF THE GOVERNMENT PROVIDED IN THIS CLAUSE SHALL NOT BE EXCLUSIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THIS CONTRACT.' THIS SECTION WAS MADE A PART OF STANDARD FORM 32 SUBSEQUENT TO THE PASSAGE OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21, AND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, AND IS BELIEVED TO HAVE BEEN ADOPTED FOR THE PURPOSE OF AFFORDING THE GOVERNMENT PROTECTION IN SUCH INSTANCES AS THIS AND OBVIOUSLY LENDS ITSELF TO SUCH AN INTERPRETATION. WHILE IT DOES NOT APPEAR THAT THE QUESTION HAS PREVIOUSLY BEEN PRESENTED TO THIS OFFICE IN SUCH A WAY AS TO CALL FOR A FORMAL DECISION, THE RULE HAS BEEN ADOPTED THAT IN THE STATEMENT AND SETTLEMENT OF CLAIMS THE CLAUSE QUOTED WILL BE ACCEPTED AS PRESERVING TO THE GOVERNMENT THE RIGHT TO DAMAGES OCCASIONED BY VIRTUE OF A BREACH OF CONTRACT IN CASES WHERE NO REPURCHASE WILL BE MADE, THE MEASURE OF DAMAGES ORDINARILY TO BE THE DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE MARKET VALUE AT THE TIME OF THE BREACH.