B-131462, APR. 26, 1957

B-131462, APR. 26, 1957

TO THE SECRETARY OF STATE:

BY SIXTH ENDORSEMENT DATED JULY 5, 1955, THE OFFICE OF THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY, REFERRED TO OUR OFFICE FOR APPROPRIATE ACTION A CLAIM AGAINST THE NAKAMURA-GUMI COMPANY, LIMITED, NO. 344 SAKASE, TAKARASUKA CITY, HYOGO PREFECTURE, JAPAN, IN THE AMOUNT OF $12,615, REPRESENTING EXCESS COSTS INCURRED BY THE UNITED STATES BY REASON OF THE DEBTOR'S DEFAULT UNDER CONTRACT NO. DA/S/-92-557-FEC 2651, DATED MARCH 16, 1954.

THERE ARE TRANSMITTED TWO COPIES (ONE CERTIFIED) OF THE PAPERS FORWARDED HERE WITH THE ENDORSEMENT OF JULY 5, 1955, INCLUDING THE INDICATED CONTRACT WHICH SHOWS THAT BY INVITATION NO. 92-557-C-54-796, DATED JANUARY 21, 1954, THE QUARTERMASTER SECTION, HEADQUARTERS, U.S. ARMY FORCES IN THE FAR EAST, INVITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF CERTAIN ITEMS OF SURPLUS PROPERTY, INCLUDING ITEM NO. 2 COVERING FOUR CRAWLER TYPE TRACTORS IDENTIFIED AS CIRCLE NO. 804, THE BIDS TO BE OPENED ON MARCH 4, 1954. THE NAKAMURA-GUMI COMPANY, LIMITED, SUBMITTED A BID AT THE UNIT PRICE OF 1,880,000.00 YEN, OR A TOTAL OF 7,520,000.00 YEN FOR THE FOUR TRACTORS INVOLVED, TOGETHER WITH THE REQUIRED BID DEPOSIT, AND BEING THE HIGHEST BID RECEIVED A CONTRACT WAS AWARDED ACCORDINGLY ON MARCH 16, 1954.

BY LETTER OF MARCH 18, 1954, A COPY OF THE CONTRACT WAS TRANSMITTED TO THE CONTRACTOR, ATTENTION BEING INVITED TO THE FACT THAT UNDER THE TERMS OF THE CONTRACT THE MATERIAL PURCHASED WAS REQUIRED TO BE REMOVED WITHIN TWENTY DAYS AFTER DATE OF ACCEPTANCE. BY A FURTHER LETTER DATED APRIL 23, 1954, THE CONTRACTOR'S ATTENTION WAS INVITED TO PARAGRAPH 5 AND 7 OF THE GENERAL SALE TERMS AND CONDITIONS AND THE COMPANY WAS ADVISED THAT THE PROVISIONS OF THOSE PARAGRAPHS WOULD BE INVOKED ON MAY 10, 1954, UNLESS ARRANGEMENTS WERE MADE TO COMPLETE THE CONTRACT PRIOR TO THAT DATE. THE FILE INDICATES THAT FOLLOWING CONSIDERABLE CORRESPONDENCE BETWEEN THE PARTIES, THE CONTRACT WAS CANCELLED FOR DEFAULT, THE FOUR TRACTORS THEREAFTER BEING SOLD TO THE AKATSU MACHINERY COMPANY, LIMITED, AT THE UNIT PRICE OF 375,250.00 YEN, OR FOR A TOTAL OF 1,501,000.00 YEN. THE DEPARTMENT OF THE ARMY ON OCTOBER 27, 1954, FURNISHED THE DEBTOR A STATEMENT OF ACCOUNT SHOWING A BALANCE OF 4,541,400 YEN DUE THE UNITED STATES. IN REPORTING SUCH UNCOLLECTED BALANCE AS IN THE AMOUNT OF $12,615 IT IS ASSUMED THAT THE AUTHORIZED CONVERSION FACTOR WAS USED.

UNDER DATES OF MARCH 15, AUGUST 9, AND NOVEMBER 30, 1956, WE MADE DEMAND UPON THE DEBTOR FOR PAYMENT OF THE AMOUNT REPORTED TO BE DUE. THERE WERE NO RESPONSE TO OUR DEMANDS FOR PAYMENT. IN ORDER TO ASCERTAIN THE DEBTOR'S FINANCIAL CONDITION, WE OBTAINED FROM DUN AND BRADSTREET, INC., A CREDIT REPORT (COPY ENCLOSED) SHOWING THAT THE COMPANY SUSTAINED A LOSS IN OPERATIONS DURING THE TERM ENDING SEPTEMBER 1956, ATTRIBUTED TO UNCOMPLETED WORK ON HAND, IT IS ESTIMATED THAT WHEN NEW FIGURES ARE MADE AVAILABLE THEY WILL REFLECT A FAVORABLE TREND.

SINCE THE INDEBTEDNESS IN THIS CASE IS SUBSTANTIAL AND SINCE THE LIABILITY AND FINANCIAL ABILITY TO PAY APPEAR TO BE ESTABLISHED, THE MATTER IS PRESENTED FOR YOUR OFFICIAL CONSIDERATION TO THE END THAT RECOVERY MAY BE HAD FROM THE DEFAULTING CONTRACTOR OF THE AMOUNT REPORTED TO BE DUE. IN THIS CONNECTION, REFERENCE IS MADE TO A LETTER FROM THE UNDER SECRETARY OF YOUR DEPARTMENT DATED NOVEMBER 2, 1953, RECOMMENDING THE DISCONTINUANCE OF CERTAIN ARRANGEMENTS BETWEEN THE GENERAL ACCOUNTING OFFICE AND THE DEPARTMENT OF STATE FOR THE COLLECTION OF DEBTS DUE THE UNITED STATES BY CITIZENS OF FOREIGN COUNTRIES, AND TO OUR REPLY OF DECEMBER 3, 1953, B-84893, B-89807, PARTICULARLY THE CONCLUDING PARAGRAPH THEREOF.