B-130975, APR. 3, 1957

B-130975, APR. 3, 1957

TO HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 5, 1957, REQUESTING A DECISION AS TO WHETHER PAYMENT IN THE AMOUNT OF $785.50 IS AUTHORIZED TO BE MADE TO CONTINENTAL TEXTILE COMPANY, INC., CHICAGO, ILLINOIS, UNDER CONTRACT NO. GS-03S-16370, PURCHASE ORDER NO. WA-S-61297-1, DATED MAY 19, 1955, IN VIEW OF THE FACTS AND FINDINGS CONTAINED IN DOCKET NO. 356 OF THE BOARD OF REVIEW, GSA, ENTITLED THE "APPEAL OF CONTINENTAL TEXTILE COMPANY, INC., " A COPY OF WHICH YOU ENCLOSED.

IT APPEARS FROM DOCKET NO. 356 THAT THE CONTRACT AND PURCHASE ORDER REQUIRED CONTINENTAL TO FURNISH TO THE GOVERNMENT A CERTAIN QUANTITY OF COTTON WIPING CLOTHS, DESIGNATED ITEM NO. 27-C-2710, AT A UNIT PRICE OF $0.2387 PER POUND, IN ACCORDANCE WITH FEDERAL SPECIFICATION NO. DDD W- 415A, DATED JULY 31, 1952. SUCH SPECIFICATION SETS FORTH, AMONG OTHER THINGS, THE FACT THAT THE NET WEIGHT TO BE USED IN ARRIVING AT THE PURCHASE PRICE OF THE CLOTHS IS BASED UPON THE MATERIAL HAVING A MOISTURE CONTENT WITHIN CERTAIN STATED PERCENTAGE LIMITS AND THAT THE NET WEIGHT WILL BE ADJUSTED IN ACCORDANCE WITH THE FORMULA GIVEN THEREIN IN EVENT THE MATERIAL FAILS TO COMPLY.

IT FURTHER APPEARS THAT ON JUNE 21, 1955, CONTINENTAL SUBMITTED TO GSA ITS INVOICE NO. 1642 IN THE AMOUNT OF $7,440.52 FOR 600 BALES, OR 31,171 POUNDS, OF THE WIPING CLOTHS INVOLVED (BASED UPON A UNIT PRICE OF $0.2387) WHICH HAD BEEN DELIVERED AND ACCEPTED UNDER THE CONTRACT AND PURCHASE ORDER; THAT GSA, IN MAKING PAYMENT TO CONTINENTAL ON THE INVOICE DEDUCTED THE AMOUNT OF $793.44 AS REPRESENTING THE ADJUSTMENT IN PURCHASE PRICE DUE THE GOVERNMENT UNDER THE FORMULA REFERRED TO ABOVE BECAUSE THE MOISTURE CONTENT OF THE MATERIAL EXCEEDED THE STIPULATED AMOUNT; THAT CONTINENTAL PROMPTLY PROTESTED THE DEDUCTION ON THE GROUNDS THAT THE MOISTURE CONTENT OF THE MATERIAL WAS NOT EXCESSIVE; AND THAT THE CONTRACTING OFFICER (PURCHASING AGENT, FEDERAL SUPPLY SERVICE, REGION 3) ADVISED CONTINENTAL BY LETTER OF AUGUST 8, 1955, THAT IT WAS HIS DECISION THAT THE MOISTURE DETERMINATION HAD BEEN PROPERLY MADE AT THE TIME OF THE RECEIPT OF THE MATERIAL ON JUNE 29, 1955, AND THE CLAIM FOR REMISSION OF THE AMOUNT INVOLVED WAS THEREFORE DENIED.

BY LETTER OF NOVEMBER 13, 1956, CONTINENTAL, THROUGH ITS ATTORNEY, APPEALED FROM THE CONTRACTING OFFICER'S DECISION TO THE ADMINISTRATOR OF GENERAL SERVICES UNDER PARAGRAPH 12 OF THE GENERAL PROVISIONS (S.F. 32) OF THE CONTRACT RELATING TO DISPUTED QUESTIONS OF FACT. AT THE HEARING HELD ON DECEMBER 13, 1956, BEFORE THE BOARD OF REVIEW, GSA, ON THE MERITS OF CONTINENTAL'S APPEAL, THE QUESTION WAS RAISED AS TO WHETHER THE SAMPLING OF THE WIPING CLOTHS HAD BEEN ACCOMPLISHED IN ACCORDANCE WITH THE PROCEDURE PRESCRIBED IN FEDERAL SPECIFICATION DDD W-415A, WHICH IS AS FOLLOWS:

"4.1 SAMPLING.

"4.1.1 UNLESS OTHERWISE SPECIFIED, ONE PERCENT OF THE NUMBER OF BALES IN A DELIVERY SHALL BE TAKEN AT RANDOM BY THE INSPECTOR FOR INSPECTION AND TESTS, EXCEPT THAT IN NO INSTANCE SHALL LESS THAN THREE BALES BE TAKEN.

"4.1.2 FROM EACH OF THE BALES TAKEN, THE INSPECTOR SHALL TAKE THREE SAMPLES, EACH CONTAINING APPROXIMATELY 1 POUND OF CLOTHS. TWO OF THE SAMPLES SHALL BE TAKEN FROM OPPOSITE SIDES OF THE BALE AND THE THIRD FROM NEAR THE CENTER. IF SCALES ARE AVAILABLE AT THE TIME OF SAMPLING, THE SAMPLES SHALL BE WEIGHED IMMEDIATELY AFTER REMOVAL FROM THE BALES. SCALES ARE NOT AVAILABLE, THE SAMPLES SHALL BE PLACED IMMEDIATELY IN AIR- TIGHT CONTAINERS, SEALED, AND FORWARDED TO THE LABORATORY FOR MOISTURE CONTENT DETERMINATIONS.'

PURSUANT TO A REQUEST RECEIVED FROM THE BOARD OF REVIEW FOR A STATEMENT DESCRIBING THE SAMPLING PROCEDURE WHICH HAD BEEN FOLLOWED IN THE INSTANT CASE, THE ATTORNEY FOR THE FEDERAL SUPPLY SERVICE BY LETTER OF JANUARY 22, 1957, TRANSMITTED TO THE BOARD A COPY OF A MEMORANDUM DATED JANUARY 18, 1957, WHICH HE HAD OBTAINED FROM THE ACTING CHIEF, QUALITY CONTROL DIVISION, FEDERAL SUPPLY SERVICE, GSA, REGION 3, WITH REFERENCE TO THE MATTER. THE MEMORANDUM, AS QUOTED IN DOCKET 356, IS, IN PERTINENT PART, AS FOLLOWS:

"FOR YOUR INFORMATION, THE PROPER SAMPLING PROCEDURE WAS NOT FOLLOWED AND ONLY ONE POUND OF WIPING CLOTHS WERE TAKEN FROM THREE BALES, A SMALL AMOUNT FROM THE ENDS AND MIDDLE OF EACH, WHEREAS SIX BALES SHOULD HAVE BEEN SELECTED FOR SAMPLING AND THREE POUNDS OF CLOTHS, ONE POUND TAKEN FROM THE ENDS AND MIDDLE OF EACH, OR A TOTAL OF EIGHTEEN POUNDS.

"ALTHOUGH THE INSPECTORS OF THIS OFFICE HAVE BEEN CONSTANTLY INSTRUCTED TO EFFECT THE PROPER SAMPLING OF ALL MATERIALS AS PER THE REQUISITES OF THE CONTRACT SPECIFICATION, IN THIS CASE SAME WAS NOT ACCOMPLISHED, AND SAME COULD BE CHARGEABLE TO A HUMAN ERROR IN JUDGMENT.'

ON THE BASIS OF THE FOREGOING EVIDENCE, THE BOARD OF REVIEW CONCLUDED, AS INDICATED IN DOCKET NO. 356, THAT THE FEDERAL SUPPLY SERVICE HAD FAILED TO TAKE AN ADEQUATE SAMPLE IN TESTING THE WIPING CLOTHS, AND, IN THIS RESPECT, BREACHED THE TERMS AND CONDITIONS OF THE CONTRACT. HENCE, THE BOARD CONCLUDED THAT THE DEDUCTION WHICH HAD BEEN MADE FOR EXCESS MOISTURE CONTENT WAS IMPROPER. HOWEVER, THE BOARD STATED THAT, SINCE CONTINENTAL HAD FAILED TO APPEAL FROM THE CONTRACTING OFFICER'S DECISION WITHIN THE 30 -DAY PERIOD STIPULATED IN THE DISPUTES CLAUSE, WITH THE RESULT THAT SUCH DECISION HAD BECOME FINAL AND CONCLUSIVE UNDER THE TERMS OF THE CONTRACT, THE ADMINISTRATOR OF GENERAL SERVICES APPEARED TO BE WITHOUT ANY AUTHORITY TO GRANT RELIEF TO THE CONTRACTOR ON THE BASIS THAT THE DECISION WAS ERRONEOUS AS TO THE FACTUAL ISSUE INVOLVED IN THE APPEAL. ACCORDINGLY, THE BOARD RECOMMENDED THAT THE MATTER BE REFERRED HERE FOR A DETERMINATION AS TO WHETHER THE CONTRACTING OFFICER'S DECISION MAY NOT BE SET ASIDE ON THE GROUNDS THAT IT IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

WE AGREE THAT THE CONTRACTING OFFICER'S DECISION OF AUGUST 8, 1955, ON THE FACTUAL ISSUE HERE INVOLVED MAY NOT BE SAID TO BE SUPPORTED BY SUBSTANTIAL EVIDENCE. IN FACT, THE CONTRACTING OFFICE IS IN AGREEMENT WITH THE CONTRACTOR THAT THE SAMPLE FOR TESTS WAS NOT PROPERLY COLLECTED. THUS, IF THE MEMORANDUM OF JANUARY 18, 1957, FROM THE CONTRACTING OFFICE IS TO BE ACCEPTED AS CORRECTLY STATING THE METHOD USED IN COLLECTING A SAMPLE FOR TESTING PURPOSES--- AND THERE APPEARS NO REASON WHY IT SHOULD NOT BE SO ACCEPTED--- THERE APPEARS NO LEGAL BASIS WHATEVER FOR THE DEDUCTION OF THE AMOUNT HERE INVOLVED FROM THE CONTRACTOR'S INVOICE.

THE BOARD OF REVIEW RECOMMENDED THAT CONTINENTAL'S CLAIM BE ADMINISTRATIVELY APPROVED IN THE AMOUNT OF $785.50, RATHER THAN $793.44, ON THE THEORY THAT THE GOVERNMENT IS ENTITLED TO DEDUCT FROM THE LATTER SUM THE ONE PERCENT DISCOUNT OFFERED ON CONTINENTAL'S ORIGINAL INVOICE FOR PROMPT PAYMENT. HOWEVER, THE TIME LIMIT PROVIDED IN THE INVOICE FOR TAKING DISCOUNT PRESUMABLY HAS EXPIRED, AND THE DELAY INCIDENT TO MAKING THE PRESENT PAYMENT PROPERLY IS NOT CHARGEABLE TO CONTINENTAL. THIS IS SO BECAUSE THERE IS NO BASIS FOR ASSUMING THAT THE WIPING CLOTHS WOULD NOT HAVE BEEN FOUND TO COMPLY WITH SPECIFICATIONS IN RESPECT TO MOISTURE CONTENT IF THEY HAD BEEN PROPERLY TESTED.

ACCORDINGLY, YOU ARE ADVISED THAT PAYMENT TO THE CONTRACTOR IN THE FULL AMOUNT OF $793.44 IS HEREBY AUTHORIZED.