B-131041, APR. 17, 1957

B-131041, APR. 17, 1957

TO THE UNITED STATES CHAIN COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 9, 1957, REQUESTING RECONSIDERATION OF YOUR CLAIM FOR LOSSES STATED TO HAVE BEEN SUSTAINED IN THE PERFORMANCE OF CONTRACTS NOS. DA-20-113-ORD 1706 AND DA-20-113 PRD 8146, WITH THE DEPARTMENT OF THE ARMY. YOU ALLEGE, IN EFFECT, THAT SUCH LOSSES WERE THE RESULT OF DELAYS IN PRODUCTION CAUSED BY (1) THE GOVERNMENT'S FAILURE TO PROMPTLY APPROVE AND END LOCK WHICH YOU PROPOSED TO FURNISH, (2) THE ISSUANCE OF CHANGE ORDERS, (3) DIVERSIONS REQUIRED PURSUANT TO GOVERNMENT DIRECTIVES, AND (4) THE ISSUING OF "HOLD ORDERS" RESPECTING SHIPMENTS.

THE RECORD DISCLOSES THAT THE FIRST CONTRACT INVOLVED, NO. DA-20-113 ORD 1706, WAS AWARDED TO YOU ON JANUARY 18, 1952, AND PROVIDED FOR DELIVERY OF THE CHAINS IN EQUAL MONTHLY QUANTITIES STARTING 90 DAYS AFTER AWARD, OR ON OR ABOUT APRIL 18, 1952. SINCE DELIVERY OF 950 UNITS WAS MADE IN APRIL 1952, AND 1,900 CHAINS WERE DELIVERED DURING EACH OF THE TWO SUCCEEDING MONTHS, IT DOES NOT APPEAR THAT THE REPORTED CONTROVERSY CONCERNING THE TYPE OF AND LOCK TO BE USED CAUSED ANY DELAY IN THE INITIAL DELIVERIES, AND THEREFORE YOUR STATEMENT THAT APPROXIMATELY 3 MONTHS AND 10 DAYS WERE LOST IS NOT SUPPORTED BY THE RECORD. IF THE LOST TIME TO WHICH YOU REFER REPRESENTS THAT PERIOD FROM DATE OF AWARD TO APRIL 18, 1952, YOUR ATTENTION IS INVITED TO THE DELIVERY SCHEDULE ESTABLISHED BY THE CONTRACT AND THE ADDED PROVISION,"DELIVERY AS REQUIRED" PROHIBITING ANY DEVIATION SUCH AS ADVANCE DELIVERIES. MOREOVER, THERE IS NOTHING IN THE RECORD INDICATING THAT THE GOVERNMENT OFFICIALS INVOLVED WERE UNABLE TO DETERMINE THE TYPE OF END LOCK TO BE FURNISHED, AS YOU ALLEGE. THE CONTRACTING OFFICER HOWEVER, HAS REPORTED THAT THE LOCKS AND FASTENERS FURNISHED COMPLIED WITH THE SPECIFICATIONS ALTHOUGH IT IS POSSIBLE THAT THEY DIFFERED IN DESIGN FROM THOSE USED IN YOUR COMMERCIAL PRODUCTION. THE CONTRACTS REQUIRED THAT THE CHAINS BE FABRICATED IN ACCORDANCE WITH THOSE SPECIFICATIONS MADE A PART THEREOF, AND THEREFORE ANY DELAY INCURRED IN PRODUCTION AS DISTINGUISHED FROM DELIVERY RESULTING FROM THE GOVERNMENT'S REFUSAL OF YOUR REQUEST TO SUPPLY THE "LOCK THAT WE USED IN WORLD WAR II AND WERE USING ON CIVILIAN (ORDERS)," IS SOLELY YOUR RESPONSIBILITY.

WITH RESPECT TO YOUR COMPLAINT THAT THE GOVERNMENT REJECTED YOUR PROPOSAL TO MAKE DAILY SHIPMENTS, OR TO SHIP THE CHAINS FABRICATED AT 5 DAY INTERVALS, THE CONTRACTS PROVIDED FOR PARTIAL SHIPMENTS MONTHLY OF GIVEN QUANTITIES. THE AGREEMENTS DID NOT REQUIRE THE GOVERNMENT TO ACCEPT MULTIPLE DELIVERIES OF LESSER QUANTITIES, WHICH CLEARLY WOULD HAVE BEEN COSTLY AND IMPRACTICABLE. FURTHERMORE, IT IS NOT EXPLAINED, NOR IS IT APPARENT, HOW SUCH REFUSAL COULD HAVE IN ANY WAY IMPEDED YOUR PRODUCTION.

IN REGARD TO YOUR ALLEGATIONS THAT THE ISSUANCE OF CHANGE ORDERS, DIVERSIONS, AND HOLD ORDERS WERE RESPONSIBLE FOR YOUR FAILURE TO MEET DELIVERY SCHEDULES, RESULTING IN INCREASED PRODUCTION COSTS, YOUR ATTENTION IS INVITED TO PARAGRAPH 2 OF THE GENERAL PROVISIONS OF THE CONTRACTS WHICH RESERVED TO THE GOVERNMENT THE RIGHT TO MAKE SUCH CHANGES INCLUDING THE METHOD OF SHIPPING AND PACKING AND PLACE OF DELIVERY. SINCE THE SPECIFICATIONS FOR DOMESTIC AND EXPORT PACKING WERE THE SAME, AND SINCE THE ARTICLES WERE DELIVERED F.O.B. YOUR PLANT, IT DOES NOT APPEAR THAT THE CHANGES IN DESTINATION OF THE QUANTITIES SHIPPED UNDER A PARTICULAR ORDER COULD HAVE AFFECTED YOUR MANUFACTURING PROGRESS. THE RECORD DISCLOSES THAT THE CHANGES INVOLVED WERE ACCEPTED BY YOU WITHOUT PROTEST OR REQUEST FOR AN ADJUSTMENT OF THE CONTRACT PRICE WHICH INDICATES THAT NO ADDITIONAL COSTS AT THAT TIME WERE ANTICIPATED.

UPON RECEIPT OF YOUR ORIGINAL CLAIM, THE ADMINISTRATIVE OFFICE CONDUCTED AN EXAMINATION OF THE MATTER WHICH FAILED TO DISCLOSE ANY FACTS OR CIRCUMSTANCES TENDING TO SUPPORT YOUR ALLEGATIONS THAT THE DELAY IN DELIVERY OF THE CHAINS, RESULTING IN INCREASED COSTS, WAS DUE TO ACTS OF THE PROCUREMENT OFFICIALS. ON THE CONTRARY, IT APPEARS FROM A REPORT OF A GOVERNMENT PRICE ANALYST DATED MARCH 29, 1955, THAT OF THE TWO CONTRACTS; THAT A REEXAMINATION OF THE FINANCIAL CONDITION OF YOUR CONCERN AT TIME OF AWARD SHOWS THAT IT WAS IN FACT UNSATISFACTORY; AND THAT THE CONTRACTS WERE EXECUTED BY YOU WITH KNOWLEDGE OF YOUR PRODUCTION AND FINANCIAL LIMITATIONS. THE CONTRACTING AGENCY HAS REPORTED THAT IF THESE TWO CONDITIONS, WHICH OBVIOUSLY WERE THE BASIC CAUSES FOR YOUR DIFFICULTIES, HAD BEEN KNOWN PREVIOUSLY, THE CONTRACTS WOULD NOT HAVE BEEN AWARDED.

WITH RESPECT TO YOUR PROPOSAL THAT A HEARING BE HELD IN THE MATTER IN THE EVENT OF DISALLOWANCE OF YOUR CLAIM IN ITS ENTIRETY, YOU ARE ADVISED THAT SINCE DECISIONS OF THE GENERAL ACCOUNTING OFFICE UNDER ITS STATUTORY AUTHORITY MAY BE RENDERED ONLY ON THE WRITTEN RECORD, ORAL PRESENTATION OR ARGUMENT WOULD BE USELESS UNLESS THE SUBSTANCE THEREOF BE REDUCED TO WRITING. ALSO, IT APPEARS THAT ALL THE MATERIAL FACTS NECESSARY FOR A COMPLETE CONSIDERATION OF THE CASE ARE CONTAINED IN THE RECORDS AND REPORTS COMPILED BY THE DEPARTMENT OF THE ARMY, AND THEREFORE NO USEFUL PURPOSE WOULD BE SERVED IN A FURTHER INVESTIGATION OF THE MATTER. WHILE IT IS OUR FUNCTION TO PASS UPON THE VALIDITY OF CLAIMS PRESENTED HERE FOR SETTLEMENT, IT IS NO PART OF THE DUTIES OF OUR OFFICE TO ESTABLISH, OR AID IN THE DEVELOPMENT OF, THE VALIDITY OF SUCH CLAIMS.

IN VIEW OF THE FACTS OF RECORD AND APPLICABLE LAW, NO LEGAL BASIS EXISTS FOR THE ALLOWANCE OF ANY PART OF THE AMOUNT CLAIMED, AND THEREFORE, THE SETTLEMENT OF NOVEMBER 28, 1956, IS SUSTAINED.