B-125429, NOV. 22, 1955

B-125429: Nov 22, 1955

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TO ALLIS-CHALMERS MANUFACTURING COMPANY: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22. THE PERTINENT TERMS AND CONDITIONS OF THE CONTRACT ARE SET FORTH IN THE SETTLEMENT AND NEED NOT BE REPEATED HERE. EXCEPT TO STATE THAT THE STIPULATED CONTRACT PRICE WHICH HAS BEEN PAID WAS SUBJECT TO PRICE ADJUSTMENT IN ACCORDANCE WITH PARAGRAPH GP-11 OF THE CONTRACT SPECIFICATIONS. YOUR CLAIM WAS DISALLOWED IN THE SETTLEMENT PRIMARILY FOR THE REASON THAT THERE WAS NO EVIDENCE OF RECORD THAT YOU MADE A WRITTEN REQUEST WITHIN THE TIME REQUIRED UNDER THE SPECIFICATIONS OR THAT THE CONTRACTING OFFICER HAD APPROVED IN WRITING ANY PROPOSED CHANGE IN THE CONTRACT PRICE FOR THE ITEMS DELIVERED. IN THE REQUEST FOR REVIEW YOU CONTEND THAT THE DENIAL OF YOUR CLAIM IS NOT JUSTIFIED UNDER ANY PRINCIPLE OF LAW OR LOGIC IN VIEW OF THE AUTHORITIES CITED BY YOU.

B-125429, NOV. 22, 1955

TO ALLIS-CHALMERS MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22, 1955, REQUESTING REVIEW OF SETTLEMENT DATED JULY 14, 1955, WHICH DISALLOWED THE AMOUNT OF $35,010, REPRESENTING THE ALLEGED INCREASED PRICE DUE AND PAYABLE TO YOU FOR NINE OIL CIRCUIT BREAKERS FURNISHED TO THE DEPARTMENT OF THE INTERIOR, SOUTHWESTERN POWER ADMINISTRATION, UNDER CONTRACT NO. ISPA 535-A, DATED JUNE 23, 1952.

THE PERTINENT TERMS AND CONDITIONS OF THE CONTRACT ARE SET FORTH IN THE SETTLEMENT AND NEED NOT BE REPEATED HERE, EXCEPT TO STATE THAT THE STIPULATED CONTRACT PRICE WHICH HAS BEEN PAID WAS SUBJECT TO PRICE ADJUSTMENT IN ACCORDANCE WITH PARAGRAPH GP-11 OF THE CONTRACT SPECIFICATIONS. NOTWITHSTANDING THE FACT THAT YOU FAILED TO GIVE PROPER NOTICE OF A PRICE INCREASE, YOU SUBMITTED NINE SEPARATE INVOICES DURING THE PERIOD JULY 6 THROUGH NOVEMBER 6, 1953, COVERING THE REQUIRED DELIVERIES, EACH REFLECTING A10 PERCENT INCREASE IN THE CONTRACT PRICE EFFECTIVE MAY 18, 1953, BASED SOLELY ON YOUR COMPANY'S CIRCULAR LETTER NO. 47, DATED MAY 15, 1953. THEREAFTER, THE ADMINISTRATIVE OFFICE, BEING WITHOUT NOTICE OF ANY AUTHORIZED CONTRACT PRICE ADJUSTMENT, DEDUCTED THE INCREASED AMOUNT FROM YOUR INVOICES IN MAKING THE CONTRACT PAYMENTS. YOUR CLAIM WAS DISALLOWED IN THE SETTLEMENT PRIMARILY FOR THE REASON THAT THERE WAS NO EVIDENCE OF RECORD THAT YOU MADE A WRITTEN REQUEST WITHIN THE TIME REQUIRED UNDER THE SPECIFICATIONS OR THAT THE CONTRACTING OFFICER HAD APPROVED IN WRITING ANY PROPOSED CHANGE IN THE CONTRACT PRICE FOR THE ITEMS DELIVERED, AS REQUIRED BY THE CONTRACT.

IN THE REQUEST FOR REVIEW YOU CONTEND THAT THE DENIAL OF YOUR CLAIM IS NOT JUSTIFIED UNDER ANY PRINCIPLE OF LAW OR LOGIC IN VIEW OF THE AUTHORITIES CITED BY YOU, AND SUGGEST THAT PAYMENT OF THE INCREASED PRICE BY OUR OFFICE WOULD NOT ESTABLISH ANY PRECEDENT SINCE SUCH ACTION NECESSARILY WOULD BE CONFINED TO THE PROVISIONS OF THE CONTRACT. ALSO, YOU STATE THAT NO JUDICIAL DECISION HAS BEEN CITED IN SUPPORT OF THE BASIS USED IN THE SETTLEMENT FOR DISALLOWANCE OF YOUR CLAIM AND YOU INVITE ATTENTION TO THE DECISION FOUND IN SOUTHERN SURETY CO. V. MACMILLAN CO., 58 F.2D 541, AND YOU CONTEND THAT THE HOLDING IN THAT CASE CAN HARDLY BE RECONCILED WITH THE RULE STATED IN THE SETTLEMENT.

YOU ARE ADVISED THAT THE AUTHORITIES ORIGINALLY CITED BY YOU WERE FULLY CONSIDERED BY BOTH THE ADMINISTRATIVE OFFICE AND OUR OFFICE IN THE RESPECTIVE DISPOSITIONS OF THE CLAIM. UNDER THE PRICE ADJUSTMENT PROVISIONS OF THE CONTRACT THERE ARE CONTAINED TWO PRINCIPAL CONDITIONS WHICH MUST BE MET TO EFFECT ANY PROPOSED PRICE ADJUSTMENT--

(1) "THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER IN WRITING CONCERNING ANY PROPOSED CHANGE IN THE PRICE OF ARTICLES TO BE DELIVERED UNDER THE CONTRACT NOT LATER THAN THIRTY (30) DAYS SUBSEQUENT TO CHANGE IN PRICES, OR FIFTEEN (15) DAYS PRIOR TO THE DAY ON WHICH SHIPMENT IS TO BE MADE, WHICHEVER DATE IS EARLIER.'

(2) "* * * THE CONTRACTING OFFICER HAS APPROVED IN WRITING ANY PROPOSED CHANGE IN THE PRICE OF ARTICLES TO BE DELIVERED UNDER THE CONTRACT IN ACCORDANCE WITH THE PROCEDURE SET FORTH REUNDER.'

YOU DO NOT DISPUTE THAT YOU FAILED TO COMPLY WITH THE SPECIFIC WRITTEN NOTICE REQUIREMENT WITH RESPECT TO THE 10 PERCENT PRICE INCREASE IN QUESTION. FURTHERMORE, IT APPEARS ESTABLISHED THAT THE PROPOSED ADJUSTMENT IS WITHOUT THE CONSIDERATION OF OR WRITTEN APPROVAL BY THE CONTRACTING OFFICER, A REQUIRED PROCEDURE IN EFFECTING ANY ADJUSTMENT OF PRICE UNDER THE CONTRACT.

THE BURDEN WAS UPON YOU TO GIVE THE REQUIRED NOTICE WITH RESPECT TO THE INCREASE ANNOUNCED IN THE COMPANY LETTER OF MAY 15, 1953, IN STRICT ACCORDANCE WITH THE PROCEDURE SET FORTH IN THE PERTINENT SPECIFICATION PROVISIONS. THE FACT THAT THE PURCHASING OFFICE MAY HAVE ACQUIRED SOME KNOWLEDGE REGARDING A TENTATIVELY PROPOSED PRICE CHANGE FROM DISCUSSIONS WITH YOUR REPRESENTATIVE--- AND THAT FACT IS DISPUTED--- WOULD APPEAR TO HAVE NO BEARING WITH RESPECT TO YOUR STRICT ADHERENCE TO THE NOTICE REQUIREMENTS. THIS CONDITION WAS NEITHER ONEROUS NOR DIFFICULT TO COMPLY WITH AND ANY NEGLIGENCE OR INADVERTENCE ON THE PART OF YOUR REPRESENTATIVE TO COMPLY WITH CONTRACT REQUIREMENTS IN THE MATTER IN NOWISE SERVES AS A WAIVER OF THE NOTICE TERMS. FURTHERMORE, THERE CAN BE NO ASSURANCE THAT THE CONTRACTING OFFICER WOULD HAVE APPROVED ANY PROPOSED CHANGE IN PRICE EVEN IF RECEIVED IN THE PRESCRIBED MANNER. THEREFORE, THE RULE MENTIONED IN THE SETTLEMENT FINDS SUPPORT, IN THE CIRCUMSTANCES PREVAILING HERE, IN THE CASE OF UNITED STATES V. JOSEPH A. HOLPUCH CO., 328 U.S. 234, WHERE THE CONTRACTOR HAD CLAIMED PAYMENT OF CERTAIN INCREASED COSTS, BUT WAS DENIED RELIEF FOR HAVING FAILED TO PURSUE THE PROCEDURE PRESCRIBED FOR RELIEF AS AGREED UPON AND EXPRESSLY SET FORTH IN THE CONTRACT THERE UNDER CONSIDERATION. ALSO, CF. UNITED STATES V. CALLAHAN-WALKER CONSTRUCTION COMPANY, 317 U.S. 56; UNITED STATES V. CUNNINGHAM, 125 F.2D 28; AND PLUMLEY V. UNITED STATES, 226 U.S. 545.

THE FACTS HERE MERELY EVIDENCE FAILURE BY YOUR REPRESENTATIVE,BECAUSE OF ALLEGED PRESSURE OF DUTIES, TO GIVE REQUIRED NOTICE REGARDING THE PROPOSED ADJUSTMENT IN THE CONTRACT PRICE FOR WHICH YOU NOW SEEK RELIEF ON THE BASIS OF YOUR PERSONAL INTERPRETATIONS OF THE LANGUAGE USED IN THE CONTRACT ADJUSTMENT PROVISIONS. YOU HAVE CITED NUMEROUS DISCUSSIONS FOUND IN WILLISTON ON CONTRACTS, SEC. 675, REGARDING VARIOUS GROUNDS FOR EXCUSING NONPERFORMANCE OF CONTRACT CONDITIONS. HOWEVER, SUCH EXCUSES DO NOT APPEAR TO BE CONTROLLING IN THE SITUATION HERE, WHERE THE CONTRACT CLEARLY SETS FORTH THE CONDITIONS YOU WERE TO FOLLOW IN THE EVENT THAT YOU WANTED AND WERE GRANTED ANY ADJUSTMENT. THESE CONDITIONS WERE NOT COMPLIED WITH AND AS ANNOUNCED IN THE CASE OF NORTHERN PACIFIC RAILWAY COMPANY V. UNITED STATES, 70 F.SUPP. 836,"A CONTRACT IS NOT "AMBIGUOUS" WHERE THE COURT CAN DETERMINE ITS MEANING WITHOUT ANY OTHER GUIDE THAN A KNOWLEDGE OF THE SIMPLE FACTS ON WHICH THE LANGUAGE USED DEPENDS FOR ITS MEANING," AND "THE LAW DOES NOT PROTECT AGAINST CONDITIONS, HARSH THOUGH THEY MAY BE, WHICH A PARTY TO A CONTRACT HAS VOLUNTARILY IMPOSED ON HIMSELF.' SEE THE CASE OF M. M. STONE AND CO. V. POSTAL TELEGRAPH CABLE CO., 87 A. 319, WHEREIN THE COURT UPHOLDS AS CONTRACTUALLY BINDING A CONDITION PRINTED ON TELEGRAPH BLANKS THAT THE COMPANY WOULD NOT BE LIABLE FOR DAMAGES, FOR DELAYS OR ERRORS, UNLESS WRITTEN NOTICE WAS GIVEN WITHIN 60 DAYS--- IT APPEARING THAT VERBAL NOTICE HAD BEEN GIVEN BOTH TO AN EMPLOYEE AND TO THE COMPANY'S LOCAL MANAGER WELL WITHIN THE 60-DAY PERIOD, BUT NO WRITTEN NOTICE WAS GIVEN UNTIL 10

DAYS THEREAFTER. THE DECISION HANDED DOWN IN THE CASE OF THE SOUTHERN SURETY COMPANY V. MACMILLAN COMPANY, SUPRA, CONCERNED, IN THE FINAL ANALYSIS, THE QUESTION OF WHAT THE PARTIES THERE INTENDED BY THE USE OF THE CONTRACT LANGUAGE. HERE THE GIVING OF WRITTEN NOTICE CANNOT BE CONSIDERED MERELY AS A PERFUNCTORY ACT SINCE THE CONTRACTING OFFICER HAD AN ELECTION AFTER RECEIPT OF SUCH NOTICE TO ACCEPT DELIVERY AT THE INCREASED PRICE OR TERMINATE ANY PORTION OF THE CONTRACT WHICH HAD NOT BEEN PERFORMED, WHICH, IN THE CIRCUMSTANCES HERE INVOLVED, MIGHT HAVE RESULTED IN TERMINATION OF THE CONTRACT AS TO THE 10 BREAKERS UPON PAYMENT OF REASONABLE CHARGES FOR WORK PERFORMED PRIOR TO TERMINATION.