B-128218, AUGUST 23, 1956, 36 COMP. GEN. 143

B-128218, AUGUST 23, 1956, 36 COMP. GEN. 143

CONTRACTS - LIQUIDATED DAMAGES - REMISSION BY THE COMPTROLLER GENERAL - EQUITY A DELAY IN THE COMPLETION OF A GOVERNMENT CONTRACT CAUSED BY THE CONTRACTOR'S UNSUCCESSFUL EFFORTS TO LOCATE A CHEAPER SOURCE OF SUPPLY FOR ONE ITEM OF EQUIPMENT DOES NOT CONTAIN ANY ELEMENTS OF EQUITY WHICH WOULD WARRANT REMISSION OF LIQUIDATED DAMAGES BY THE COMPTROLLER GENERAL UNDER SECTION 6 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947.

TO GRAHAM AND COLLINS ELECTRIC COMPANY, AUGUST 23, 1956:

REFERENCE IS MADE TO LETTERS DATED JUNE 5 AND 8, 1956, FROM YOUR ATTORNEYS, REQUESTING THAT THE LIQUIDATED DAMAGES OF $3,050 ASSESSED AGAINST YOU BY REASON OF A 61-DAY DELAY IN THE COMPLETION OF YOUR CONTRACT NO. DA-34-066-ENG-4545, DATED JANUARY 21, 1955, WITH THE DEPARTMENT OF THE ARMY, BE REMITTED TO YOU UNDER THE PROVISIONS OF SECTION 6 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 24, 41 U.S.C. 155.

THE CONTRACT PROVIDED, GENERALLY, FOR THE FURNISHING OF ADDITIONAL POWER FACILITIES AT THE WEATHER STATION LOCATED AT AMARILLO, TEXAS. IT APPEARS THAT YOU UNDERTOOK TO PERFORM THE REQUIRED WORK FOR THE SPECIFIED CONSIDERATION OF $10,370.14. THE CONTRACT CONTAINED A LIQUIDATED DAMAGE STIPULATION PROVIDING FOR AN ASSESSMENT OF $50 PER DAY FOR EACH CALENDAR DAY OF UNEXCUSED DELAY. THE TIME SPECIFIED FOR COMPLETION OF THE PROJECT WAS JULY 31, 1955. INCLUDED AS A PART OF THE CONTRACT WORK WERE THE FURNISHING AND INSTALLATION BY YOU OF THREE VOLTAGE REGULATORS, AS DESCRIBED IN THE PERTINENT SPECIFICATIONS, AS AMENDED BY ADDENDUM NO. 1. ADDENDUM NO. 2 TO THE SPECIFICATIONS, ISSUED ON JANUARY 12, 1955, OR 9 DAYS PRIOR TO THE AWARD, SPECIFICALLY PROVIDED, WITH RESPECT TO THE SAID REGULATORS: " REGULATORS SHALL BE SIMILAR AND EQUAL TO MODEL 15,000S AS MANUFACTURED BY SORENSEN AND COMPANY, INC., 375 FAIRFIELD AVENUE, STAMFORD, CONNECTICUT.' IT APPEARS THAT THE REGULATORS YOU ORIGINALLY PROPOSED TO FURNISH WERE OF A TYPE MANUFACTURED BY THE GENERAL ELECTRIC COMPANY, BUT WHICH DID NOT COMPLY WITH THE REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS. IT FURTHER APPEARS FROM THE RECORD THAT BY REASON OF THE DELAY ENTAILED IN LOCATING ANOTHER SUITABLE SOURCE OF SUPPLY FOR THE REQUIRED REGULATORS, THEY WERE NOT INSTALLED NOR WAS THE PROJECT FULLY COMPLETED UNTIL SEPTEMBER 30, 1955, OR 61 DAYS LATER, FOR WHICH LIQUIDATED DAMAGES ACCRUED AT THE SPECIFIED RATE OF $50 PER DAY, MAKING A TOTAL LIQUIDATED DAMAGE ASSESSMENT OF $3,050.

THE RECORD FURTHER INDICATES THAT YOUR FORMAL REQUEST FOR AN EXTENSION OF THE CONTRACT TIME FOR PERFORMANCE WAS DENIED BY THE GOVERNMENT CONTRACTING OFFICER, WHICH ACTION WAS AFFIRMED ON YOUR APPEAL BEFORE THE CORPS OF ENGINEERS AND APPEALS BOARD IN ITS DECISION NO. 951. YOU NOW SEEK REMISSION OF THE LIQUIDATED DAMAGES INVOLVED UNDER THE DISCRETIONARY POWERS CONFERRED UPON THE COMPTROLLER GENERAL UNDER THE PROVISIONS OF SECTION 6 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947.

BRIEFLY SUMMARIZED, THE REASONS GIVEN BY YOU IN SUPPORT OF YOUR CLAIM FOR SUCH EQUITABLE RELIEF ARE, THAT (1) THE SPECIFICATIONS COVERING THE VOLTAGE REGULATORS REQUIRED THE FURNISHING OF A PROPRIETARY ARTICLE; (2) YOU WERE NOT NOTIFIED OF SUCH FACT UNTIL SHORTLY BEFORE THE TIME SCHEDULED FOR THE OPENING OF THE BIDS; (3) THE REPRESENTATIVE OF THE GENERAL ELECTRIC COMPANY, WHOSE REGULATORS YOU HAD PROPOSED TO FURNISH, HAD ASSURED YOU THAT ITS PRODUCT WOULD MEET THE SPECIFICATION REQUIREMENTS, (4) THE ASSESSMENT OF LIQUIDATED DAMAGES IN THE AMOUNT OF $3,050 OUT OF A CONTRACT TOTALING $10,370.14 IS UNCONSCIONABLE, AND (5) THE GOVERNMENT DID NOT SUFFER ANY DAMAGES BY REASON OF THE DELAY.

THE MATERIALITY OF YOUR CONTENTION THAT THE SPECIFICATIONS DESCRIBED A PROPRIETARY ARTICLE IS NOT APPARENT. BY YOUR CONTRACT, YOU AGREED TO FURNISH AN ITEM IN ACCORDANCE WITH THE SPECIFICATIONS "SIMILAR AND EQUAL TO" THAT MANUFACTURED BY SORENSEN AND COMPANY, INC. THE CONTRACT WAS BASED UPON YOUR BID WHICH WAS SUBMITTED WITHOUT RESERVATION, QUALIFICATION OR PROTEST OF ANY KIND IN RESPECT TO THE RESTRICTIVENESS OF THE SPECIFICATIONS. MOREOVER, IT APPEARS THAT THE ITEM WAS AT ALL TIMES AVAILABLE TO YOU FROM SORENSEN AND COMPANY, INC., AND, IN FACT, YOU DID EVENTUALLY PROCURE IT FROM THAT SOURCE. UNDER THESE CIRCUMSTANCES, YOU OBVIOUSLY HAVE NO STANDING TO COMPLAIN AT THIS TIME THAT THE SPECIFICATIONS WERE DRAWN AROUND THE PRODUCT OF A PARTICULAR MANUFACTURER. CF. 34 COMP. GEN. 336; ID. 79.

WITH RESPECT TO YOUR SECOND CONTENTION THAT YOU WERE NOT NOTIFIED OF THE SOURCE OF SUPPLY OF THE VOLTAGE REGULATORS UNTIL SHORTLY PRIOR TO THE TIME SCHEDULED FOR OPENING OF THE BIDS, THE RECORD DISCLOSES THAT BY ADDENDUM NO. 2 TO THE SPECIFICATIONS, ISSUED JANUARY 12, 1955, OR ONE WEEK PRIOR TO THE DATE SCHEDULED FOR OPENING OF THE BIDS ON JANUARY 19, 1955, AND 9 DAYS PRIOR TO THE AWARD MADE ON JANUARY 21, 1955, THE BIDDERS EXPRESSLY WERE ADVISED OF THE GOVERNMENT'S REQUIREMENT FOR REGULATORS OF A TYPE SIMILAR AND EQUAL TO THE MODEL 15,000S MANUFACTURED BY SORENSEN AND COMPANY, INC. WHETHER OR NOT THIS WAS ADEQUATE NOTICE WOULD SEEM TO BE BESIDE THE POINT, SINCE THERE WAS NO MANDATORY DUTY UPON THE PURCHASING AGENCY TO HAVE DISCLOSED TO THE BIDDERS ANY KNOWN SOURCE OF SUPPLY FOR THIS PRODUCT, THIS INFORMATION HAVING BEEN GRATUITOUSLY OFFERED SOLELY FOR THE CONVENIENCE AND GUIDANCE OF THOSE BIDDERS WHO, BY THE SUBMISSION OF PROPOSALS UNDER THE INVITATION, UNEQUIVOCALLY OFFERED TO SUPPLY THE EQUIPMENT DESCRIBED IN THE SPECIFICATIONS, OR ITS EQUAL. CERTAINLY, IF ANY BIDDER FELT THAT HE WAS NOT QUALIFIED TO BID ON THE EQUIPMENT DESCRIBED, A PERIOD OF 7 DAYS BEFORE THE SCHEDULED BID OPENING DATE WOULD HAVE AFFORDED HIM AMPLE TIME IN WHICH TO HAVE WITHDRAWN HIS OFFER.

IN CONNECTION WITH THE FOREGOING, HOWEVER, IT MAY BE OBSERVED THAT THE RESPONSIBILITY OF FURNISHING AN ARTICLE WHICH COMPLIES WITH THE ADVERTISED SPECIFICATIONS IS SOLELY THAT OF THE BIDDER WHO, BY THE MERE ACT OF SUBMITTING A BID, UNDERTAKES TO FURNISH THE ITEM DESCRIBED IN THE ADVERTISED SPECIFICATIONS, OR ITS EQUIVALENT. AS STATED BY THE UNITED STATES SUPREME COURT IN THE CASE OF CARNEGIE STEEL COMPANY V. UNITED STATES, 240 U.S. 156, AT PAGE 164: " IT WOULD SEEM THAT THE VERY ESSENCE OF THE PROMISE OF A CONTRACT TO DELIVER ARTICLES IS ABILITY TO PROCURE OR MAKE THEM.'

NEITHER DO WE REGARD AS A PROPER GROUND FOR RELIEF THE FACT THAT YOUR SUPPLIER, ALLEGEDLY A REPRESENTATIVE OF THE GENERAL ELECTRIC COMPANY, HAD PREVIOUSLY ASSURED YOU THAT ITS PRODUCT WOULD BE THE EQUIVALENT OF THAT DESCRIBED IN THE SPECIFICATIONS, SINCE THE FURNISHING OF SPECIFICATION ITEMS WAS A MATTER FOR WHICH YOU WERE SOLELY RESPONSIBLE.

IN ANSWER TO YOUR CONTENTION THAT IT WOULD BE UNCONSCIONABLE TO EXACT A $3,050 LIQUIDATED DAMAGE ASSESSMENT UNDER A CONTRACT FOR ONLY $10,370.14, THE COURTS UNIFORMLY HAVE HELD THAT THE PARTIES TO CONTRACT PROPERLY MAY STIPULATE IN ADVANCE THE AMOUNT OF DAMAGES RECOVERABLE IN THE EVENT OF A BREACH OF THE PERFORMANCE CONDITIONS THEREOF, AND SUCH REASONABLE AGREEMENTS FOR LIQUIDATED DAMAGES WILL BE ENFORCED. SEE SUN PRINTING AND PUBLISHING ASSOCIATION V. MOORE, 183 U.S. 642; KOTHE V. R. C. TAYLOR TRUST, 280 ID. 224; WISE V. UNITED STATES, 249 ID. 361. MOREOVER, IT IS WELL SETTLED THAT THE VALIDITY OF SUCH A LIQUIDATED DAMAGE STIPULATION IS UNAFFECTED BY THE CIRCUMSTANCE THAT NO ACTUAL DAMAGE CAN BE SHOWN TO HAVE RESULTED FROM THE BREACH OR, FOR THAT MATTER, THAT THE ACCRUAL OF LIQUIDATED DAMAGES IN A PARTICULAR CASE MAY EQUAL OR EVEN EXCEED THE STIPULATED CONTRACT PRICE. SEE SOUTHERN PACIFIC COMPANY V. GLOBE INDEMNITY COMPANY, 21 F.2D 288; UNITED STATES V. KANTER, 137 ID. 828; UNITED STATES V. UNITED ENGINEERING COMPANY, 234 U.S. 236, 241; 28 COMP. GEN. 435.

IN OUR CONSIDERATION OF REQUESTS OF THIS CHARACTER, DUE EMPHASIS MUST BE STRESSED UPON THE FACT THAT THE RESPONSIBILITY FOR THE PERFORMANCE OF WORK IN ACCORDANCE WITH THE SPECIFICATIONS OF A CONTRACT IS UPON THE CONTRACTOR, AND IF HE FAILS TO ASCERTAIN THE EXACT REQUIREMENTS OF THE SPECIFICATIONS OR TO ESTIMATE THE SUFFICIENCY OF TIME IN THE PROSECUTION OF THE WORK, ORDINARILY BE MAY NOT BE RELIEVED OF LIABILITY FOR HIS FAILURE TO DO SO. IN OUR OPINION, THE AUTHORITY CONFERRED UPON US BY SECTION 6 OF THE ARMED SERVICES PROCUREMENT ACT, AS AMENDED, WAS NOT INTENDED TO BE EXERCISED IN THE ABSENCE OF SUBSTANTIAL EQUITIES RUNNING TO THE CONTRACTOR. HERE, NO SUCH EQUITIES ARE ESTABLISHED, PARTICULARLY SINCE IT APPEARS THAT THE DELAY INVOLVED RESULTED PRINCIPALLY BECAUSE OF YOUR EFFORTS TO LOCATE A SOURCE OF SUPPLY WHICH COULD PROVIDE THE REQUIRED REGULATORS AT A PRICE MORE COMMENSURATE WITH YOUR ORIGINAL ESTIMATES THAN THAT QUOTED BY THE SORENSEN AND COMPANY, INC. THUS, IF COMPLETION WAS DELAYED BY YOUR INABILITY TO PROCURE CERTAIN ITEMS NECESSARY FOR PERFORMANCE, EITHER THROUGH YOUR FAILURE TO OBTAIN TIMELY FIRM COMMITMENTS OR TO ASCERTAIN THE AVAILABILITY OF SUCH ITEMS PRIOR TO THE SUBMISSION OF YOUR BID, THAT IS A MATTER FOR WHICH, EVEN IN EQUITY, YOU MAY NOT BE RELIEVED. THE RECORD HERE CLEARLY ESTABLISHES THAT YOUR DELAY WAS THE RESULT OF YOUR FAILURE TO EXERCISE PROPER AND REASONABLE DILIGENCE IN THE PROCUREMENT OF CERTAIN OF THE BASIC EQUIPMENT NEEDED FOR THE PERFORMANCE OF YOUR CONTRACT.

IN THE LIGHT OF THE FOREGOING, WE ARE CONSTRAINED TO CONCLUDE THAT YOUR CLAIM DOES NOT CONTAIN SUCH ELEMENTS OF EQUITY AS WOULD WARRANT REMISSION OF THE LIQUIDATED DAMAGES WHICH HAVE ACCRUED TO THE GOVERNMENT UNDER YOUR CONTRACT.