B-131875, MAY 27, 1957

B-131875: May 27, 1957

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DEPARTMENT OF THE INTERIOR: REFERENCE IS MADE TO YOUR LETTER OF APRIL 3. FROM WHICH IT IS PROPOSED THAT THERE BE SET OFF TWO ITEMS FOR DAMAGES STATED TO HAVE BEEN SUSTAINED BY THE GOVERNMENT IN CONNECTION WITH THAT COMPANY'S PERFORMANCE OF CONTRACT NO. 14-03-001 10354. YOUR LETTER WILL BE TREATED AS A REQUEST FOR AN ADVANCE DECISION. 31 U.S.C. 82D. THIS CLAUSE ALSO PROVIDES THAT THE REMEDIES SPECIFIED ARE NOT EXCLUSIVE. ARE IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW. IT IS STATED IN YOUR LETTER THAT DELIVERY OF EVERY ITEM CALLED FOR BY THE CONTRACT WAS DELAYED. IT WAS DETERMINED BY YOUR ADMINISTRATION NOT TO EXERCISE ITS RIGHT TO TERMINATE THE CONTRACT AND SECURE THE SUPPLIES ELSEWHERE.

B-131875, MAY 27, 1957

TO MR. J. E. PERRY, AUTHORIZED CERTIFYING OFFICER, DEPARTMENT OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 3, 1957, ADDRESSED TO THE CLAIMS DIVISION OF OUR OFFICE, REQUESTING CONSIDERATION OF A FINAL PAYMENT VOUCHER FOR $7,283.10, IN FAVOR OF BOGUE ELECTRIC MANUFACTURING CO., FROM WHICH IT IS PROPOSED THAT THERE BE SET OFF TWO ITEMS FOR DAMAGES STATED TO HAVE BEEN SUSTAINED BY THE GOVERNMENT IN CONNECTION WITH THAT COMPANY'S PERFORMANCE OF CONTRACT NO. 14-03-001 10354, ENTERED INTO ON JULY 27, 1953. YOUR LETTER WILL BE TREATED AS A REQUEST FOR AN ADVANCE DECISION. 31 U.S.C. 82D.

UNDER THE TERMS OF THE CONTRACT, THE CONTRACTOR AGREED TO FURNISH CERTAIN MOTOR GENERATOR UNITS TO BONNEVILLE POWER ADMINISTRATION IN ACCORDANCE WITH DESIGNATED SPECIFICATIONS. THE INVITATION CONTAINED A SCHEDULE OF REQUIRED DELIVERY TIMES AND STATED THAT "DELIVERY TIME MAY BE CONSIDERED IN MAKING AWARD.' IN THE SPACE PROVIDED THEREFOR, THE CONTRACTOR STATED THAT DELIVERIES WOULD BE MADE "AS REQUESTED.'

THE CONTRACT DOES NOT CONTAIN A PROVISION FOR THE ASSESSMENT OF LIQUIDATED DAMAGES BUT DOES CONTAIN THE STANDARD "DEFAULT CLAUSE" ENTITLING THE GOVERNMENT TO TERMINATE THE CONTRACT OR SUCH PART THEREOF AS TO WHICH THERE HAS BEEN DELAY AND, IN SUCH EVENT, TO CHARGE THE CONTRACTOR WITH THE EXCESS COST INVOLVED IN THE PROCUREMENT OF THE SUPPLIES FROM OTHER SOURCES. THIS CLAUSE ALSO PROVIDES THAT THE REMEDIES SPECIFIED ARE NOT EXCLUSIVE, BUT ARE IN ADDITION TO ANY OTHER REMEDIES PROVIDED BY LAW.

IT IS STATED IN YOUR LETTER THAT DELIVERY OF EVERY ITEM CALLED FOR BY THE CONTRACT WAS DELAYED, THE DELAYS RANGING FROM 395 TO 686 DAYS; HOWEVER, IT WAS DETERMINED BY YOUR ADMINISTRATION NOT TO EXERCISE ITS RIGHT TO TERMINATE THE CONTRACT AND SECURE THE SUPPLIES ELSEWHERE. IT IS STATED FURTHER THAT NO REQUESTS FOR TIME EXTENSIONS FOR DELAYS THAT MIGHT BE EXCUSABLE UNDER THE "DEFAULT CLAUSE" WERE MADE BY THE CONTRACTOR AND YOU INDICATE THAT ANY SUCH REQUESTS, IF SUBMITTED, WOULD HAVE BEEN DENIED.

REGARDING ITEM 3, IT APPEARS THAT ON DECEMBER 16, 1953, THE CONTRACTOR WAS REQUESTED TO SPEED UP DELIVERY; THAT SEVERAL SUBSEQUENT REQUESTS, BOTH ORAL AND WRITTEN, WERE MADE BUT THAT COMPLETE DELIVERY OF THE ITEM WAS NOT ACCOMPLISHED UNTIL JULY OF 1955, OR 431 DAYS AFTER THE DELIVERY DATE ESTABLISHED BY THE CONTRACT. AS A RESULT OF THE DELAY, YOU STATE THAT IT BECAME NECESSARY TO PROVIDE POWER SERVICE BY MEANS OF A DIESEL GENERATOR UNIT WHICH WAS MORE EXPENSIVE TO OPERATE THAN THE MOTOR GENERATOR (ITEM 3), HAD IT BEEN AVAILABLE. ON THE BASIS OF THE FOREGOING, YOUR ADMINISTRATION PROPOSES TO SET OFF AGAINST MONEY STILL DUE UNDER THE CONTRACT THE COSTS OF OPERATING THE DIESEL GENERATOR UNIT, $6,274.93, PLUS THE SUM OF $569.93, REPRESENTING THE COST OF REPAIRS MADE BY THE ADMINISTRATION TO ITEM 3 AS A RESULT OF DAMAGE TO THE EQUIPMENT SUSTAINED WHILE IN TRANSIT. AS TO THE DELAYS OF THE OTHER UNITS COVERED BY THE CONTRACT, YOU STATE THAT THE COSTS INCURRED ARE NOT CAPABLE OF MEASUREMENT AND NO CLAIM, THEREFORE, IS BEING MADE AGAINST THE CONTRACTOR.

IN ADDITION TO THE REMEDIES EXPRESSLY PROVIDED FOR IN A CONTRACT, THE GOVERNMENT IS VESTED WITH THE RIGHT TO RESORT TO ITS COMMON-LAW RIGHT OF DAMAGES. IN THE INSTANT CASE IT WAS APPARENT WHEN THE AGREEMENT WAS EXECUTED THAT TIME OF DELIVERY WAS AN IMPORTANT FACTOR AND IT COULD BE FORESEEN THAT THE GOVERNMENT WOULD SUFFER ACTUAL DAMAGES IF THE PRESCRIBED DELIVERY SCHEDULES WERE NOT MET. IN CASES WHERE DAMAGES ARE FOR ASSESSMENT THE MEASURE OF THE DAMAGES IS THE LOSS SUSTAINED AS A RESULT OF THE CONTRACTUAL BREACH. 15 AM.JUR., CONTRACTS, SECTION 43, AND THE AUTHORITIES THERE COLLECTED. SEE, ALSO, 35 COMP. GEN. 228 AND THE COURT CASES THERE CITED.

THE ADDITIONAL EXPENSE OF $6,274.93 WHICH WAS INCURRED BY THE GOVERNMENT AS A RESULT OF THE CONTRACTOR'S FAILURE TO DELIVER ITEM 3 WITHIN THE PERIOD SPECIFIED BY THE CONTRACT WAS SUCH AS MIGHT REASONABLY BE EXPECTED TO FLOW FROM THE BREACH OF THE CONTRACT. ACCORDINGLY, THE DEDUCTION OF THAT SUM FROM THE FINAL PAYMENT VOUCHER- - TOGETHER WITH THE SUM OF $569.93, REFERRED TO ABOVE--- WOULD BE CORRECT AND PROPER, NOTWITHSTANDING THE FACT THAT DELAYED PERFORMANCE ON THE PART OF THE CONTRACTOR WAS ACCEPTED. 35 COMP. GEN. 228, SUPRA. ..END :