B-126045, JAN. 6, 1956

B-126045: Jan 6, 1956

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INC.: REFERENCE IS MADE TO AN UNDATED LETTER FROM MR. THE RECORD SHOWS THAT UPON TERMINATION OF YOUR RIGHT TO PROCEED AS TO ITEM (C) OF THE CONTRACT AND AS TO THE UNDELIVERED PORTION OF ITEM (F) THE MATERIALS INVOLVED WERE SECURED UNDER REPLACING CONTRACTS NOS. HEINZ'S LETTER IT IS ADMITTED THAT THE FINDINGS OF FACT BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS IS FINAL AND CONCLUSIVE. IT IS CONTENDED THAT YOU ARE ENTITLED TO $3. THAT THE MATERIALS AND EQUIPMENT IN QUESTION WERE VOLUNTARILY DELIVERED BY YOU FREE OF CHARGE TO OR FOR USE BY THE REPLACING CONTRACTOR. THE CONTRACTOR WILL SUBMIT TO THE CONTRACTING OFFICER A DETAILED STATEMENT OF THE COSTS OF PERFORMING THIS CONTRACT. THE CONTRACTOR WILL NEGOTIATE TO REDUCE THE CONTRACT PRICE TO AN AMOUNT REPRESENTING FAIR AND REASONABLE COMPENSATION FOR THE PERFORMANCE OF THE CONTRACT.

B-126045, JAN. 6, 1956

TO GEDRE, INC.:

REFERENCE IS MADE TO AN UNDATED LETTER FROM MR. JAMES I. HEINZ, YOUR ATTORNEY, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $21,704.97 REPRESENTING EXCESS COSTS INCURRED AS THE RESULT OF YOUR DEFAULT UNDER CONTRACT NO. DA-19-058-ORD-721, DATED MARCH 20, 1950.

THE RECORD SHOWS THAT UPON TERMINATION OF YOUR RIGHT TO PROCEED AS TO ITEM (C) OF THE CONTRACT AND AS TO THE UNDELIVERED PORTION OF ITEM (F) THE MATERIALS INVOLVED WERE SECURED UNDER REPLACING CONTRACTS NOS. DA 19-059- ORD-43 AND DA-19-059-ORD-506, WITH MILLACO CORPORATION AND BAY STATE TOOL AND MACHINE CO., RESPECTIVELY, AT EXCESS COSTS IN THE AMOUNT OF $21,704.97; THAT YOU APPEALED FROM THE FINDINGS OF FACT BY THE CONTRACTING OFFICER REGARDING YOUR DEFAULT; AND THAT THE ARMED SERVICES BOARD OF CONTRACT APPEALS BY DECISION ASBCA NO. 952 DATED JANUARY 22, 1953, SUSTAINED THE ACTION OF THE CONTRACTING OFFICER.

WHILE IN MR. HEINZ'S LETTER IT IS ADMITTED THAT THE FINDINGS OF FACT BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS IS FINAL AND CONCLUSIVE, IT IS CONTENDED THAT YOU ARE ENTITLED TO $3,535.78 AS THE VALUE OF EQUIPMENT AND MATERIALS "TAKEN BY THE GOVERNMENT AGENT" AND DELIVERED TO ONE OF THE REPLACING CONTRACTORS. THE BOARD CONCLUDED, IN EFFECT, THAT THE MATERIALS AND EQUIPMENT IN QUESTION WERE VOLUNTARILY DELIVERED BY YOU FREE OF CHARGE TO OR FOR USE BY THE REPLACING CONTRACTOR, IN AN EFFORT, AS STATED IN YOUR LETTER OF SEPTEMBER 27, 1950,"TO FACILITATE THE MOST ECONOMICAL REPROCUREMENT" OF THE SUPPLIES. THE SAID LETTER MUST BE REGARDED AS SUBMITTED BY YOU VOLUNTARILY. IN VIEW OF SUCH CONCLUSION THERE APPEARS NO LEGAL BASIS FOR ALLOWING YOUR CLAIM FOR THE VALUE OF MATERIALS AND EQUIPMENT DELIVERED TO THE REPLACING CONTRACTOR.

EACH OF THE TWO CONTRACTS COVERING REPLACEMENT OF ITEMS (C) AND (F), CONTAINED IN ARTICLES 24 AND 30, RESPECTIVELY, A PROVISION IN PART AS FOLLOWS:

"/A) WITHIN SIXTY DAYS AFTER THE COMPLETION OR TERMINATION OF THIS CONTRACT, THE CONTRACTOR WILL SUBMIT TO THE CONTRACTING OFFICER A DETAILED STATEMENT OF THE COSTS OF PERFORMING THIS CONTRACT. UPON THE WRITTEN DEMAND OF THE CONTRACTING OFFICER, MADE AT ANY TIME WITHIN THIRTY DAYS AFTER THE SUBMISSION OF SUCH STATEMENT, THE CONTRACTOR WILL NEGOTIATE TO REDUCE THE CONTRACT PRICE TO AN AMOUNT REPRESENTING FAIR AND REASONABLE COMPENSATION FOR THE PERFORMANCE OF THE CONTRACT. IN SUCH NEGOTIATIONS THE EFFICIENCY OF THE CONTRACTOR IN PRODUCTION, BUYING AND MANAGEMENT WILL BE GIVEN DUE WEIGHT.'

REDETERMINATION OF THE PRICE UNDER CONTRACT NO. DA-19-059-ORD-506 WITH BAY STATE TOOL AND MACHINE CO. WAS MADE AND THE CONTRACTING OFFICER DETERMINED THAT THE PRICE SPECIFIED IN THE ORIGINAL CONTRACT WAS REASONABLE. IT IS YOUR CONTENTION THAT NO SUCH REDETERMINATION WAS MADE UNDER CONTRACT NO. DA-19-059-ORD-43 WITH MILLACO CORPORATION AND THAT THEREFORE THE DIFFERENCE BETWEEN THE PRICES SPECIFIED IN THAT CONTRACT AND YOUR CONTRACT DOES NOT CONSTITUTE A VALID BASIS FOR DETERMINING THE EXCESS COST CHARGEABLE TO YOU FOR DEFAULT AS TO ITEM (C) OF YOUR CONTRACT. THE RECORD PRESENTED TO OUR OFFICE DOES NOT SHOW WHETHER MILLACO CORPORATION FURNISHED A STATEMENT OF THE COSTS OF PERFORMING THE CONTRACT AS PROVIDED IN ARTICLE 24, SUPRA. HOWEVER, UNDER THE ABOVE-QUOTED PROVISIONS OF THE CONTRACT NEGOTIATION FOR A REDUCTION OF THE PRICE SPECIFIED WAS LEFT TO THE DISCRETION OF THE CONTRACTING OFFICER. IN VIEW THEREOF AND OF THE RECORD WHICH INDICATES THAT THE CONTRACTING OFFICER REGARDED THE PRICE SPECIFIED IN MILLACO CORPORATION'S ORIGINAL CONTRACT AS FAIR AND REASONABLE, THERE APPEARS NO LEGAL BASIS FOR CONCLUDING THAT THE EXCESS OVER YOUR CONTRACT PRICE WHICH THE GOVERNMENT WAS REQUIRED TO PAY UNDER THAT CONTRACT DOES NOT REPRESENT THE AMOUNT OF THE EXCESS COSTS FOR WHICH YOU ARE LIABLE UNDER THE TERMS OF YOUR CONTRACT.

WHILE THE ADMINISTRATIVE OFFICE MADE DEMAND UPON YOU FOR $20,142.28 ($21,106.22 LESS CREDIT OF $963.94 FOR SUPPLIES DELIVERED), THE COMPUTATION MADE BY THE CLAIMS DIVISION OF THE GENERAL ACCOUNTING OFFICE SHOWS THE AMOUNT OF THE EXCESS COSTS AS $21,704.97. PROPER CREDITS AGAINST SUCH AMOUNT ARE $963.94, CONTRACT PRICE OF SUPPLIES DELIVERED BY YOU UNDER THE CONTRACT HERE IN QUESTION; $1,186.44 FOR SUPPLIES DELIVERED TO THE MARINE CORPS UNDER CONTRACT NO. N50M-11459; AND $372.92 FOR SUPPLIES DELIVERED TO THE AIR FORCE UNDER CONTRACT NO. AF33 (600) 21100, OR A TOTAL OF $2,523.30.

ACCORDINGLY, A REMITTANCE TO COVER THE BALANCE OF YOUR INDEBTEDNESS IN THE AMOUNT OF $19,181.67 ($21,704.97 LESS CREDITS IN THE AMOUNT OF $2,523.30) SHOULD BE FORWARDED WITHOUT FURTHER DELAY. A DRAFT OR CHECK FOR THE AMOUNT SHOULD BE DRAWN TO THE ORDER OF "U.S. GENERAL ACCOUNTING OFFICE," AND FORWARDED TO THAT OFFICE AT WASHINGTON 25, D.C. ..END :