B-124586, SEP. 26, 1955

B-124586: Sep 26, 1955

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO THE ADMINISTRATIVE ASSISTANT SECRETARY'S LETTER OF JUNE 30. COMPLETE SHIPMENT WITHIN 60 DAYS AFTER DATE OF RECEIPT OF NOTICE OF AWARD WAS STIPULATED BY THE CONTRACTOR IN ITS BID. NOTICE OF AWARD WAS RECEIVED ON NOVEMBER 27. SHIPMENT WAS NOT COMPLETED UNTIL OCTOBER 8. IN THE FINDINGS OF FACT WHICH WAS TRANSMITTED WITH THE LETTER OF JUNE 30. WHICH IS REPORTED NEVER TO HAVE BEEN SERVED ON THE CONTRACTOR. IT IS STATED THAT 41 DAYS OF THE DELAY WERE EXCUSABLE BECAUSE OF DELAY BY THE GOVERNMENT IN MAKING INSPECTION OF THE DISTRIBUTION BOARDS. THE CONTRACTING OFFICER EXPRESSES THE VIEW THAT THE CONTRACT SHOULD HAVE BEEN TERMINATED 35 DAYS AFTER THE BEGINNING OF ACCRUAL OF LIQUIDATED DAMAGES IN ORDER TO MITIGATE DAMAGES UNDER THE DOCTRINE OF DECISION B-80576.

B-124586, SEP. 26, 1955

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO THE ADMINISTRATIVE ASSISTANT SECRETARY'S LETTER OF JUNE 30, 1955, WITH ENCLOSURES, REQUESTING ADVICE AS TO WHETHER A PROPOSED PAYMENT OF $1,359, AS THE BALANCE DUE THE PELHAM ELECTRIC MANUFACTURING CORPORATION UNDER CONTRACT NO. 12R-19295, WOULD BE PROPER, OR WHETHER THE CONTRACTOR SHOULD BE CHARGED WITH LIQUIDATED DAMAGES IN AN AMOUNT EXCEEDING THE CONTRACT PRICE.

BY THE TERMS OF THE CONTRACT, PELHAM ELECTRIC MANUFACTURING CORPORATION, ERIE, PENNSYLVANIA, AGREED TO FURNISH DISTRIBUTION BOARDS UNDER SCHEDULES NOS. 1 AND 3 OF SPECIFICATIONS NO. 3192 FOR WASHBURN AND BISMARCK SUBSTATIONS, TRANSMISSION DIVISION, NORTH DAKOTA, MISSOURI RIVER BASIS PROJECT, FOR A TOTAL CONSIDERATION OF $2,059. COMPLETE SHIPMENT WITHIN 60 DAYS AFTER DATE OF RECEIPT OF NOTICE OF AWARD WAS STIPULATED BY THE CONTRACTOR IN ITS BID, AND PARAGRAPH 19 OF THE SPECIFICATIONS PROVIDED FOR CHARGING LIQUIDATED DAMAGES IN THE AMOUNT OF $10 PER DAY FOR EACH OF THE TWO ITEMS IF COMPLETE SHIPMENT SHOULD NOT BE MADE WITHIN 180 DAYS AFTER RECEIPT BY THE CONTRACTOR OF NOTICE OF AWARD. NOTICE OF AWARD WAS RECEIVED ON NOVEMBER 27, 1950, BUT SHIPMENT WAS NOT COMPLETED UNTIL OCTOBER 8, 1952--- A DELAY OF 501 CALENDAR DAYS FOR WHICH LIQUIDATED DAMAGES AT THE CONTRACT RATE WOULD AMOUNT TO $10,020.

IN THE FINDINGS OF FACT WHICH WAS TRANSMITTED WITH THE LETTER OF JUNE 30, 1955, BUT WHICH IS REPORTED NEVER TO HAVE BEEN SERVED ON THE CONTRACTOR, IT IS STATED THAT 41 DAYS OF THE DELAY WERE EXCUSABLE BECAUSE OF DELAY BY THE GOVERNMENT IN MAKING INSPECTION OF THE DISTRIBUTION BOARDS, LEAVING 460 DAYS OF DELAY NOT EXCUSABLE UNDER THE CONTRACT. THAT PORTION OF THE DELAY FOUND NOT EXCUSABLE RESULTED IN PART FROM INADEQUATE CREDIT AND FINANCING AND IN PART FROM THE ACTION OF CERTAIN EMPLOYEES OF THE CONTRACTOR IN CANCELING ORDERS WITH WESTINGHOUSE ELECTRIC CORPORATION FOR CIRCUIT BREAKERS BEFORE LEAVING THE CONTRACTOR'S EMPLOYMENT, WHICH CANCELLATION GAVE RISE TO PRIORITY DIFFICULTY AND DELAY IN OBTAINING THE CIRCUIT BREAKERS LATER.

IN A MEMORANDUM DATED JUNE 8, 1955, THE CONTRACTING OFFICER EXPRESSES THE VIEW THAT THE CONTRACT SHOULD HAVE BEEN TERMINATED 35 DAYS AFTER THE BEGINNING OF ACCRUAL OF LIQUIDATED DAMAGES IN ORDER TO MITIGATE DAMAGES UNDER THE DOCTRINE OF DECISION B-80576, MAY 1, 1951, AND THEREFORE HE RECOMMENDS THAT ALL LIQUIDATED DAMAGES BE REMITTED EXCEPT THE AMOUNT OF $700 FOR 35 DAYS' DELAY AND THAT THE CONTRACTOR BE PAID THE SUM OF $1,359 AS THE NET AMOUNT DUE UNDER THE CONTRACT. HIS RECOMMENDATION IS APPROVED IN THE LETTER OF JUNE 30, 1955.

IT IS TO BE OBSERVED THAT THE LIQUIDATED DAMAGES ASSESSABLE FOR DELAYS NOT REGARDED AS EXCUSABLE WOULD TOTAL $9,200--- APPROXIMATELY 4 1/2 TIMES THE CONTRACT PRICE--- INDICATING EITHER THAT THE CONTRACT SHOULD HAVE BEEN TERMINATED BEFORE COMPLETION AND THE DISTRIBUTION BOARDS OBTAINED ELSEWHERE OR THAT IT WAS DEEMED PRACTICALLY IMPOSSIBLE TO OBTAIN THE BOARDS ELSEWHERE AT AN EARLIER DATE.

IN VIEW OF THE FACTS OF THIS MATTER AS REPORTED AND IN VIEW OF THE WELL- ESTABLISHED RULE THAT A PARTY INJURED BY BREACH OF CONTRACT IS NOT ENTITLED TO RECOVER FROM THE DELINQUENT PARTY DAMAGES WHICH THE INJURED PARTY COULD HAVE AVOIDED WITH REASONABLE EFFORT OR EXPENSE, THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO THE PAYMENT PROPOSED, WITHOUT ASSESSMENT OF LIQUIDATED DAMAGES IN EXCESS OF THOSE CHARGEABLE FOR 35 DAYS' DELAY. SEE B-80576, MAY 1, 1951, REFERRED TO IN YOUR DEPARTMENT'S LETTER OF JUNE 30, 1955. SEE, ALSO, 11 COMP. GEN. 384; 16 COMP. GEN. 344.