B-127663, JUN. 20, 1956

B-127663: Jun 20, 1956

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TO ADAMS MANUFACTURING COMPANY: REFERENCE IS MADE TO YOUR LETTER OF APRIL 3. 400 TENT PINS WAS MADE BUT UPON YOUR FAILURE TO FURNISH THE REMAINING 253. YOUR RIGHT TO FURTHER PROCEED UNDER THE CONTRACT WAS TERMINATED BY THE CONTRACTING OFFICER ON OCTOBER 15. SUBSEQUENTLY A REPLACEMENT PURCHASE WAS MADE FOR THE UNDELIVERED 253. WHICH IS ACCEPTED AS AN APPEAL OF THE INDEBTEDNESS. - WHICH WAS TERMINATED AT THE SAME TIME AS CONTRACT NO. IN THE FIRST INSTANCE IT APPEARS NECESSARY TO STATE HERE THAT EVEN IF THIS MATTER WERE SUCH AS TO WARRANT EQUITABLE CONSIDERATION. THE GENERAL ACCOUNTING OFFICE IS WITHOUT AUTHORITY TO SETTLE CLAIMS OF THIS KIND SOLELY ON MORAL OR EQUITABLE GROUNDS. THE TWO CONTRACTS WERE ENTIRELY SEPARATE AGREEMENTS.

B-127663, JUN. 20, 1956

TO ADAMS MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 3, 1956, RELATIVE TO THE MATTER OF YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $4,810.83 UNDER CONTRACT NO. DA-11-009-QM-23925, DATED APRIL 21, 1954, AS SET FORTH IN OUR LETTERS OF MARCH 12 AND 27, 1956.

UNDER THE CONTRACT YOU AGREED TO FURNISH TO THE CHICAGO QUARTERMASTER DEPOT, DEPARTMENT OF THE ARMY, 365,300 WOODEN TENT PINS, 24-INCH, TYPE II, ET CETERA, AT UNIT PRICES RANGING FROM $0.0915 TO $0.1070, F. O. B. VARIOUS DELIVERY POINTS, OR FOR A TOTAL PRICE OF $36,186.53. DELIVERY OF 111,400 TENT PINS WAS MADE BUT UPON YOUR FAILURE TO FURNISH THE REMAINING 253,900, APPARENTLY DUE TO A MORTGAGE FORECLOSURE ON YOUR PLANT AND EQUIPMENT, YOUR RIGHT TO FURTHER PROCEED UNDER THE CONTRACT WAS TERMINATED BY THE CONTRACTING OFFICER ON OCTOBER 15, 1954. SUBSEQUENTLY A REPLACEMENT PURCHASE WAS MADE FOR THE UNDELIVERED 253,900 TENT PINS AT A PRICE OF $0.114 EACH WHICH RESULTED IN TOTAL EXCESS COSTS TO THE GOVERNMENT OF $4,810.83. THIS AMOUNT HAS BEEN CHARGED TO YOUR ACCOUNT AND RESULTED IN THE SUBJECT INDEBTEDNESS.

IN YOUR LETTER OF APRIL 3, 1956, WHICH IS ACCEPTED AS AN APPEAL OF THE INDEBTEDNESS, YOU MAKE REFERENCE TO WHAT YOU CALL A COMPANION CONTRACT--- NO. DA-11-009-QM-24050, COVERING 920,350 WOODEN TENT PINS, 16-INCH, TYPE I, ET CETERA--- WHICH WAS TERMINATED AT THE SAME TIME AS CONTRACT NO. DA- 11-009-QM-23925 AND YOU STATE THAT, SINCE THE DEPARTMENT OF THE ARMY SAVED $6,701.28 IN THE REPLACEMENT PURCHASE UNDER THE COMPANION CONTRACT AND LOST ONLY $4,810.83 IN THE REPLACEMENT TRANSACTION IN CONNECTION WITH CONTRACT NO. DA-11-009-QM 23925, BY EVERY RULE OF EQUITY THESE CONTRACTS SHOULD BE SET OFF AGAINST EACH OTHER IN DETERMINING ANY DAMAGE CAUSED THE GOVERNMENT.

IN THE FIRST INSTANCE IT APPEARS NECESSARY TO STATE HERE THAT EVEN IF THIS MATTER WERE SUCH AS TO WARRANT EQUITABLE CONSIDERATION, THE GENERAL ACCOUNTING OFFICE IS WITHOUT AUTHORITY TO SETTLE CLAIMS OF THIS KIND SOLELY ON MORAL OR EQUITABLE GROUNDS. WITH RESPECT TO THE LEGAL ASPECTS OF THE CASE WHILE THERE EXISTS CONSIDERABLE SIMILARITY REGARDING THE SUPPLIES TO BE FURNISHED, DATES OF TERMINATION, REPLACEMENT CONTRACT DATES, ET CETERA, THE TWO CONTRACTS WERE ENTIRELY SEPARATE AGREEMENTS, AND THE RIGHTS AND OBLIGATIONS CREATED BY THE RESPECTIVE INSTRUMENTS WERE COMPLETELY INDEPENDENT OF EACH OTHER. HENCE, THE RIGHT OF THE GOVERNMENT UNDER THE SPECIFIC TERMS OF CONTRACT NO. DA-11-009-QM-23925 TO BE MADE WHOLE BY CHARGING AGAINST YOUR ACCOUNT THE EXCESS COST OF $4,810.83 EXPERIENCED BY IT AS A RESULT OF YOUR DEFAULT MAY NOT BE ABROGATED OR IN ANY WAY AFFECTED BY THE FACT THAT A SAVING RESULTED UNDER AN ENTIRELY UNRELATED AND DISTINCTIVE TRANSACTION. OUR OFFICE BELIEVES THAT YOU WILL FULLY AGREE THAT, AS A DEFAULTING CONTRACTOR, GENERALLY YOU WOULD ACQUIRE NO RIGHT, TITLE OR INTEREST WHATSOEVER IN A SAVING THAT MIGHT ACCRUE TO THE GOVERNMENT BY REASON OF THE AWARD OF A REPLACEMENT CONTRACT. THEREFORE, THE MERE FACT, WITHOUT MORE, THAT THERE MIGHT BE IN EXISTENCE ANOTHER CONTRACT OR TRANSACTION INVOLVING A DEBT AGAINST WHICH SUCH A SAVING COULD BE SET OFF CERTAINLY SHOULD NOT ALTER THE LEGAL RIGHTS AND OBLIGATIONS OF THE PARTIES OTHERWISE FOUND TO BE PROPER BY PERMITTING A CREDIT AGAINST SUCH INDEBTEDNESS.

IN VIEW OF THE FOREGOING, IT WOULD NOT APPEAR THAT ANY ADDITIONAL FACTS WHICH YOU MIGHT BE ABLE TO FURNISH WOULD WARRANT A DIFFERENT CONCLUSION UNDER THE CIRCUMSTANCES REPORTED IN THIS CASE AND, THEREFORE, THERE IS NO BASIS FOR RELIEVING YOU OF THE INDEBTEDNESS OCCASIONED BY YOUR DEFAULT UNDER CONTRACT NO. DA-11-009-QM-23925.