B-126791, FEB. 21, 1956

B-126791: Feb 21, 1956

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INC.: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 17 AND FEBRUARY 14. THE RECORD SHOWS THAT YOU WERE AWARDED THIS PURCHASE ORDER. SHIPMENT OF THE ITEMS WAS TO HAVE BEEN MADE WITHIN 60 DAYS. YOU WERE REMINDED OF THE CONTRACT DELIVERY DATE. WERE GRANTED AN EXTENSION UNTIL AUGUST 1. AFTER STRESSING THE FURTHER POINT THAT THESE TRANSFORMERS WERE "URGENTLY NEEDED. YOUR RIGHT FURTHER TO PROCEED UNDER THE PURCHASE ORDER WAS FORMALLY TERMINATED EFFECTIVE AS OF THAT DATE. FOUR TRANSFORMERS WHICH MET THE SPECIFICATION REQUIREMENT IN EVERY RESPECT WERE LOCATED AND PURCHASED FROM THE STOCK OF A PORTLAND. WHILE YOU COMPLAIN THAT THIS PRICE IS EXCESSIVE. WIRES WERE SENT TO FOUR MANUFACTURERS BUT NONE HAD ANY FOR PROMPT DELIVERY EXCEPT GENERAL ELECTRIC COMPANY AT PORTLAND.

B-126791, FEB. 21, 1956

TO MANHATTAN LIGHTING EQUIPMENT COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 17 AND FEBRUARY 14, 1956, AND ENCLOSURES, WHEREIN YOU PROTEST THE ACTION OF THE U.S. DEPARTMENT OF COMMERCE MARITIME ADMINISTRATION, PACIFIC COAST DISTRICT, IN HAVING TERMINATED YOUR RIGHT FURTHER TO PROCEED UNDERPURCHASE ORDER NO. MA55-984, DATED MAY 11, 1955, AND IN HAVING REPURCHASED THE DEFAULTED ITEMS AGAINST YOUR ACCOUNT.

THE RECORD SHOWS THAT YOU WERE AWARDED THIS PURCHASE ORDER, COVERING FOUR ELECTRIC POWER DISTRIBUTION TRANSFORMERS, BY VIRTUE OF YOUR LOW BID THEREON OF $493.97 EACH, MAKING A TOTAL OF $1,975.88 FOR THE QUANTITY SPECIFIED. UNDER THE PERTINENT TERMS OF THE ORDER, SHIPMENT OF THE ITEMS WAS TO HAVE BEEN MADE WITHIN 60 DAYS, OR BY JULY 11, 1955, TO THE FLEET SUPERINTENDENT, U.S. MARITIME COMMISSION, ASTORIA RESERVE FLEET, ASTORIA, OREGON. IN THE ADMINISTRATIVE LETTER OF JULY 22, 1955, YOU WERE REMINDED OF THE CONTRACT DELIVERY DATE, JULY 11, WHICH ALREADY HAD EXPIRED, AND WERE GRANTED AN EXTENSION UNTIL AUGUST 1, 1955, IN WHICH TO PERFORM YOUR CONTRACT. IN ANOTHER LETTER DATED SEPTEMBER 16, 1955, THE ADMINISTRATIVE ASSISTANT OF THE PACIFIC COAST DISTRICT, ASTORIA RESERVE FLEET, CALLED YOUR ATTENTION TO THE FACT THAT APPROXIMATELY TWICE THE SPECIFIED PERFORMANCE TIME ALREADY HAD ELAPSED AND, AFTER STRESSING THE FURTHER POINT THAT THESE TRANSFORMERS WERE "URGENTLY NEEDED," REQUESTED THAT YOU EITHER MAKE IMMEDIATE SHIPMENT OF THE ITEMS OR FURNISH SPECIFIC ADVICE AS TO WHEN THEY WOULD BE SHIPPED.

NO SATISFACTORY ASSURANCE OF DELIVERY HAVING BEEN RECEIVED BY THE PURCHASING OFFICER AS LATE AS OCTOBER 5, 1955, YOUR RIGHT FURTHER TO PROCEED UNDER THE PURCHASE ORDER WAS FORMALLY TERMINATED EFFECTIVE AS OF THAT DATE, WHEREUPON UNDER DATE OF OCTOBER 6, 1955, THE FOLLOWING DAY, FOUR TRANSFORMERS WHICH MET THE SPECIFICATION REQUIREMENT IN EVERY RESPECT WERE LOCATED AND PURCHASED FROM THE STOCK OF A PORTLAND, OREGON, DEALER AT A PRICE OF $427.24 IN EXCESS OF THAT QUOTED BY YOU ON THESE ITEMS. WHILE YOU COMPLAIN THAT THIS PRICE IS EXCESSIVE, THE MARITIME ADMINISTRATION REPORTS THAT, IN ENDEAVORING TO LOCATE THE FOUR TRANSFORMERS, WIRES WERE SENT TO FOUR MANUFACTURERS BUT NONE HAD ANY FOR PROMPT DELIVERY EXCEPT GENERAL ELECTRIC COMPANY AT PORTLAND, OREGON. IN THIS CONNECTION YOU WILL NOTE THAT IN SIGNING THE CONTRACT, CONTAINING AS IT DID ARTICLE 11 (C) OF THE GENERAL PROVISIONS, YOU EXPRESSLY AGREED THAT IN THE EVENT THE GOVERNMENT SHOULD FIND IT NECESSARY TO TERMINATE YOUR CONTRACT IT WOULD HAVE THE RIGHT TO PROCURE THE TRANSFORMERS "UPON SUCH TERMS AND IN SUCH MANNER" AS DEEMED APPROPRIATE BY THE CONTRACTING OFFICER, AND THAT YOU WOULD BE LIABLE FOR ANY RESULTING EXCESS COSTS. UNDER THE PLAIN AND UNAMBIGUOUS TERMS OF ARTICLE 11 OF THE PRINTED CONDITIONS OF YOUR ORDER, THESE EXCESS COSTS ARE CHARGEABLE DIRECTLY TO YOU, IN ORDER TO COMPENSATE THE UNITED STATES FOR THE LOSS SUSTAINED BY REASON OF YOUR DEFAULT.

THE RECORD FURTHER SHOWS THAT BY LETTER DATED OCTOBER 5, 1955--- THE TERMINATION DATE--- YOU ADVISED THE CONTRACTING OFFICER THAT THE DELAYS IN COMPLETING THIS ORDER WERE DUE TO DIFFICULTIES EXPERIENCED BY YOUR SUPPLIER IN ACQUIRING CERTAIN ESSENTIAL RAW MATERIALS. IN STILL ANOTHER LETTER DATED OCTOBER 8, 1955, YOU REQUESTED AN EXTENSION IN THE DELIVERY TIME UNTIL NOVEMBER 1, 1955, DUE TO SUCH CAUSES, AND ALSO REQUESTED THAT THE GOVERNMENT RESCIND ITS TERMINATION NOTICE OF OCTOBER 5. THESE REQUESTS WERE DENIED IN ADMINISTRATIVE LETTER DATED OCTOBER 13, 1955, WHEREIN YOU SPECIFICALLY WERE ADVISED THAT THE URGENT REQUIREMENTS OF THE ASTORIA RESERVE FLEET FOR THESE ITEMS RENDERED IT IMPOSSIBLE TO GIVE ANY CONSIDERATION THERETO.

THE LAW IS WELL SETTLED THAT WHEN A PARTY AGREES, FOR A STIPULATED PRICE, TO DO A THING OR PERFORM AN ACT WHICH AT THE TIME IS POSSIBLE OF FULFILLMENT, HE WILL NOT BE EXCUSED FROM PERFORMANCE MERELY BECAUSE HARDSHIPS OR INCONVENIENCES HAD BEEN ENCOUNTERED. SEE COLUMBUS RAILWAY, POWER AND LIGHT COMPANY V. COLUMBUS, 249 U.S. 399, 412; DAY V. UNITED STATES, 245 U.S. 159, 161. THUS, THE MERE CIRCUMSTANCES THAT YOUR SUPPLIER HAD EXPERIENCED SOME DIFFICULTIES IN PROCURING CERTAIN RAW MATERIALS NEEDED IN THE MANUFACTURE OF THESE TRANSFORMERS CANNOT BE REGARDED AS A VALID EXCUSE FOR YOUR FAILURE TO PERFORM YOUR CONTRACT TO DELIVER THOSE ITEMS WITHIN THE PERFORMANCE PERIOD SPECIFIED. THE LEGAL PRINCIPLE PROPERLY FOR APPLICATION TO THE FACTS IN THE INSTANT CASE WAS APTLY STATED BY THE UNITED STATES SUPREME COURT IN THE CASE OF CARNEGIE STEEL COMPANY V. UNITED STATES, 240 U.S. 156, AT PAGE 164, AS FOLLOWS: "IT WOULD SEEM THAT THE VERY ESSENCE OF THE PROMISE OF A CONTRACT TO DELIVER ARTICLES IS ABILITY TO PROCURE OR MAKE THEM.'

YOUR CONTENTION THAT THESE ITEMS COULD HAVE BEEN PROCURED FROM CERTAIN OF THE ORIGINAL BIDDERS UNDER THIS INVITATION IS CLEARLY WITHOUT MERIT. CONSIDERING THE EXTENSIVE DELAYS WHICH ALREADY HAD OCCURRED PRIOR TO TERMINATION OF THE ORDER, AND ALSO THE URGENCY OF THE GOVERNMENT'S NEED FOR THIS EQUIPMENT, THE TIME ELEMENT INVOLVED WOULD NOT HAVE PERMITTED STILL FURTHER DELAYS INCIDENT TO THE CONDUCTING OF SUBSEQUENT NEGOTIATIONS LEADING TO THE REPURCHASE OF THESE ITEMS FROM SOME DISTANT DEALER, BUT RATHER, DICTATED THE PROCUREMENT OF THE NEEDED EQUIPMENT FROM THE NEAREST AVAILABLE SOURCE, WHICH WAS DONE HERE.

ACCORDINGLY, THE ADMINISTRATIVE ACTION TAKEN IN THIS MATTER IS AFFIRMED, AND IT IS SUGGESTED THAT YOU MAKE APPROPRIATE ARRANGEMENTS TO LIQUIDATE YOUR ESTABLISHED INDEBTEDNESS TO THE UNITED STATES WITHOUT FURTHER DELAY.