B-133964, MARCH 5, 1958, 37 COMP. GEN. 568

B-133964: Mar 5, 1958

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CONTRACTOR'S ALLEGATIONS - FAILURE TO EXHAUST CONTRACT RELIEF PROCEDURE IN CASES OF DISPUTED QUESTIONS OF FACT BETWEEN A CONTRACTOR WHO ALLEGES THAT THE EQUIPMENT FURNISHED WAS DAMAGED BY GOVERNMENT HANDLING AND THE ADMINISTRATIVE AGENCY REPORT WHICH INDICATES THAT THE DAMAGE DID NOT OCCUR WHILE THE EQUIPMENT WAS IN THE GOVERNMENT'S POSSESSION. IT IS THE LONG ESTABLISHED RULE OF THE GENERAL ACCOUNTING OFFICE TO ACCEPT THE ADMINISTRATIVE REPORT IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF CORRECTNESS OF THE REPORT. 1958: REFERENCE IS MADE TO LETTER DATED SEPTEMBER 23. ALLEGED TO HAVE BEEN INCURRED AS EXTRA EXPENSE IN FURNISHING WARDROBES TO OTIS AIR FORCE BASE.

B-133964, MARCH 5, 1958, 37 COMP. GEN. 568

CONTRACTS - DISPUTES - ADMINISTRATIVE REPORT V. CONTRACTOR'S ALLEGATIONS - FAILURE TO EXHAUST CONTRACT RELIEF PROCEDURE IN CASES OF DISPUTED QUESTIONS OF FACT BETWEEN A CONTRACTOR WHO ALLEGES THAT THE EQUIPMENT FURNISHED WAS DAMAGED BY GOVERNMENT HANDLING AND THE ADMINISTRATIVE AGENCY REPORT WHICH INDICATES THAT THE DAMAGE DID NOT OCCUR WHILE THE EQUIPMENT WAS IN THE GOVERNMENT'S POSSESSION, IT IS THE LONG ESTABLISHED RULE OF THE GENERAL ACCOUNTING OFFICE TO ACCEPT THE ADMINISTRATIVE REPORT IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF CORRECTNESS OF THE REPORT. THE FAILURE OF A CONTRACTOR TO REFER TO THE CONTRACTING OFFICER A DISPUTE CONCERNING EXTRA EXPENSES INCURRED IN THE REPLACEMENT OF EQUIPMENT TO CONFORM WITH THE SPECIFICATIONS AS REQUIRED BY THE CONTRACT DISPUTES CLAUSE PRECLUDES THE CONTRACTOR FROM RECOVERING ON THE CLAIM.

TO THE KNOX-WARRENTON COMPANY, MARCH 5, 1958:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 23, 1957, AND SUBSEQUENT CORRESPONDENCE, REQUESTING REVIEW OF SETTLEMENT DATED SEPTEMBER 9, 1957, WHICH DISALLOWED YOUR CLAIM IN THE AMOUNT OF $4,612.97, ALLEGED TO HAVE BEEN INCURRED AS EXTRA EXPENSE IN FURNISHING WARDROBES TO OTIS AIR FORCE BASE, MASSACHUSETTS, PURSUANT TO PURCHASE ORDERS FNW-D-1686/3 AND FNW-D- 3115/3.

WE HAVE RECEIVED A FURTHER REPORT FROM THE GENERAL SERVICES ADMINISTRATION WITH RESPECT TO YOUR CONTENTIONS, FROM WHICH THE FOLLOWING FACTS APPEAR.

UNDER PURCHASE ORDER FNW-D-1686/3, YOU SUPPLIED OTIS AIR FORCE BASE WITH 268 WARDROBES, KNOCKED-DOWN. UPON RECEIPT OF NOTIFICATION THAT THE WARDROBES DID NOT CONFORM TO SPECIFICATIONS AND THAT THE SHIPMENT WOULD BE REJECTED UNLESS NECESSARY ADJUSTMENTS WERE MADE, YOU SENT TWO WORKMEN TO OTIS TO CORRECT THE DEFECTS IN THE WARDROBES. HOWEVER, AFTER THEY WORKED APPROXIMATELY FOUR HOURS, THEY FOUND IT IMPOSSIBLE TO MAKE ADJUSTMENTS. AS A RESULT, YOU REPLACED THE ENTIRE SHIPMENT.

SUBSEQUENTLY, UNDER PURCHASE ORDER FNW-D-3115/3, YOU SUPPLIED OTIS AIR FORCE BASE WITH 149 WARDROBES, KNOCKED-DOWN, WHICH WERE REJECTED BY THE AIR FORCE OFFICIALS. BECAUSE OF THE REJECTION, YOU AGAIN SENT TWO WORKMEN TO OTIS. THEY ASSEMBLED A NUMBER OF THESE WARDROBES WITHOUT ANY DIFFICULTY. THE AIR FORCE OFFICIALS, WHEN THEY OBSERVED THAT THE ASSEMBLY COULD BE ACCOMPLISHED EASILY, DISMISSED YOUR WORKMEN AND ACCEPTED THE SHIPMENT.

YOU CLAIM THAT THE ORIGINAL SHIPMENT THAT WAS DELIVERED UNDER PURCHASE ORDER FNW-D-1686/3 WAS DAMAGED TO SUCH AN EXTENT BY GOVERNMENT HANDLING THAT IT WAS IMPOSSIBLE FOR YOUR WORKMEN TO CORRECT THE DEFICIENCIES OF THE FABRICATED PRODUCT. IN SUPPORT OF YOUR CONTENTION, YOU HAVE PRESENTED AN AFFIDAVIT FROM YOUR WORKMEN WHO WENT TO OTIS TO THE EFFECT THAT WHILE AT OTIS THEY WERE TOLD BY CERTAIN INDIVIDUALS, WHO THEY COULD NOT IDENTIFY, THAT ROUGH HANDLING BY THE GOVERNMENT WAS AT FAULT FOR THE DAMAGED CONDITION. ON THE BASIS OF THIS AFFIDAVIT, YOU REQUEST TO BE REIMBURSED SHIPPING COSTS FOR THE WARDROBE REPLACEMENTS, LABOR COSTS AND EXPENSES OF YOUR TWO WORKMEN, LABOR COSTS TO LOAD AND UNLOAD THE RETURNED AND REPLACED WARDROBES, AND THE COST OF WARDROBES DAMAGED BEYOND REPAIR. IN REGARD TO THE SHIPMENT DELIVERED UNDER PURCHASE ORDER FNW-D-3115/3, YOU REQUEST REIMBURSEMENT FOR THE LABOR COSTS AND EXPENSES OF THE TWO WORKMEN YOU SENT TO OTIS. YOU CONTEND THAT IN BOTH INSTANCES YOU PERFORMED AS REQUESTED BECAUSE YOU WERE THREATENED WITH REJECTION OF YOUR WARDROBES AND WITHHOLDING OF THE FINAL PAYMENT ON THOSE ITEMS PENDING THE GOVERNMENT'S SATISFACTION.

ACCORDING TO THE ADMINISTRATIVE RECORD, THE SHIPMENT DELIVERED UNDER PURCHASE ORDER FNW-D-1686/3 ARRIVED AT OTIS IN GOOD CONDITION. THE UNASSEMBLED WARDROBES WERE UNLOADED ONTO FLAT BEDS AND WERE DELIVERED TO THE ASSEMBLY WAREHOUSE WHERE THEY WERE STACKED IN ACCORDANCE WITH AIR FORCE WAREHOUSE REGULATIONS. AN INVESTIGATIVE REPORT BY THE FEDERAL SUPPLY SERVICE QUALITY CONTROL DIVISION DATED JULY 31, 1956, STATES:

* * * 20 WARDROBES WERE SET UP FOR ASSEMBLY. THE ENTIRE PROJECT HAD TO BE ABANDONED BECAUSE THE HOLES IN THE PANELS WOULD NOT LINE UP WITH THE HOLES IN THE COMPONENT PARTS.

THE TWENTY WARDROBES IN VARIOUS STAGES OF ASSEMBLY WERE EXAMINED FOR ALIGNMENT OF SIDE AND REAR PANELS IN RELATION WITH ADJOINING PARTS. THE LEFT AND RIGHT SIDE PANEL HOLES DO NOT LINE UP WITH DOOR JAMBS. SEVERAL CASES HOLES DO NOT LINE UP BY AS MUCH AS 3 INCHES. IN SOME CASES WHERE DRIFTING PINS WERE USED TO LINE UP HOLES THE PANELS BECAME TWISTED AND WAVY AND THE HEADS OF BOLTS WERE NOT FLUSH WITH PANELS.

FURTHERMORE, IT IS RECOMMENDED THAT THESE WARDROBES BE REJECTED.

IN REGARD TO YOUR CLAIM THAT THE WARDROBES WERE DAMAGED BECAUSE OF GOVERNMENT HANDLING, THE ADMINISTRATIVE REPORT STATES:

* * * HAD THE DAMAGE OCCURRED IN THE INITIAL TRANSPORTATION BY RAILROAD OR HANDLING AFTER DELIVERY IT WOULD HAVE BEEN IN EVIDENCE AT TIME OF RECEIPT BY THE CONSIGNEE OR INSPECTION BY FEDERAL SUPPLY SERVICE QUALITY CONTROL DIVISION. AS STATED IN THE FOREGOING, NEITHER OF THESE MADE NOTATION OF SUCH CONDITION IN THEIR RESPECTIVE REPORTS. * * *

YOU ALLEGE THAT THE DAMAGE TO THE WARDROBES WAS CAUSED BY GOVERNMENT HANDLING AND YOU SEEK TO PROVE THAT AVERMENT BY AN AFFIDAVIT MADE BY YOUR EMPLOYEES. HOWEVER, THE ADMINISTRATIVE OFFICE REPORTS THAT THE DAMAGE DID NOT OCCUR WHILE THE WARDROBES WERE IN THE GOVERNMENT'S POSSESSION. THIS CREATES A DISPUTED QUESTION OF FACT. WHEN THERE IS A CONFLICT BETWEEN THE STATEMENT OF A CLAIMANT AND THE REPORT OF THE ADMINISTRATIVE OFFICE, IT IS A LONG ESTABLISHED RULE OF THIS OFFICE TO ACCEPT THE LATTER, IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF.

THE PHOTOGRAPHS YOU HAVE SUBMITTED SHOWING THE ALLEGED DAMAGE TO THE REJECTED WARDROBES WERE TAKEN AFTER YOUR EMPLOYEES RETURNED THE WARDROBES TO YOUR WAREHOUSE, WHICH LEAVES OPEN THE POSSIBILITY THAT THE WARDROBES WERE DAMAGED WHILE THEY WERE IN THE POSSESSION OF YOUR EMPLOYEES. WHILE THE PHOTOGRAPHS DO ESTABLISH DAMAGE TO WARDROBES, THEY DO NOT ESTABLISH WHEN OR WHERE THE DAMAGE OCCURRED OR HOW IT WAS INFLICTED.

IN ANY EVENT, PARAGRAPH 12 OF THE GENERAL PROVISIONS, STANDARD FORM 32, NOVEMBER 1949 EDITION, INCORPORATED BY REFERENCE AS PART OF THE CONTRACT, PROVIDES THAT ANY DISPUTE CONCERNING A QUESTION OF FACT SHALL BE DECIDED BY THE CONTRACTING OFFICER. FAILURE TO COMPLY WITH THE DISPUTES AUSE,"THE ONLY AVENUE FOR RELIEF" AVAILABLE FOR THE SETTLEMENT OF DISPUTES CONCERNING QUESTIONS ARISING UNDER THE CONTRACT, IS SUFFICIENT WITHOUT ANYTHING ELSE TO PREVENT RECOVERY. UNITED STATES V. CALLAHAN WALKER CO., 317 U.S. 56, 61. THE GOVERNMENT CANNOT BE DEPRIVED OF THE BENEFITS OF THE ADMINISTRATIVE MACHINERY IT HAS PROVIDED TO ADJUDICATE DISPUTES AND TO AVOID LARGE DAMAGE CLAIMS. UNITED STATES V. BLAIR, 321 U.S. 730, 735; UNITED STATES V. HOLPUCH CO., 328 U.S. 234, 239-240; YUHASZ V. UNITED STATES, 109 F.2D 467, 468; AND J. AND J. W. STOLTS ASSOCIATION V. UNITED STATES, 66 C.1CLS. 1, 8 9.

IN REGARD TO YOUR CLAIM UNDER PURCHASE ORDER FNW-D-3115/3, PARAGRAPH 3 OF THE GENERAL PROVISIONS, STANDARD FORM 32, NOVEMBER 1949 EDITION, INCORPORATED BY REFERENCE AS A PART OF THE CONTRACT, PROVIDES THAT NO PAYMENT FOR EXTRAS SHALL BE MADE UNLESS SUCH EXTRAS AND THE PRICE THEREOF HAVE BEEN AUTHORIZED IN WRITING BY THE CONTRACTING OFFICER.

A CASE VERY MUCH IN POINT WITH THIS PART OF YOUR CLAIM IS UNITED STATES V. BLAIR, SUPRA. IN THAT CASE, THE CONTRACTOR FILED A CLAIM FOR EXTRA LABOR, MATERIALS AND MISCELLANEOUS COSTS ALLEGED TO HAVE BEEN IMPOSED ON HIM BY THE "ARBITRARY, CAPRICIOUS AND UNFAIR CONDUCT OF GOVERNMENT AGENTS.' THE CONTRACTOR HAD NEVER REFERRED THE DISPUTE TO THE CONTRACTING OFFICER AS WAS REQUIRED BY THE DISPUTES CLAUSE SIMILAR TO PARAGRAPH 12 CONTAINED IN THE IMMEDIATE CONTRACT. THE SUPREME COURT HELD THAT THE CONTRACTOR SHOULD BE PRECLUDED FROM RECOVERING ON ITS CLAIM. THE COURT SAID THAT EVEN IF THE CONDUCT OF THE GOVERNMENT SUPERINTENDENT OR CONTRACTING OFFICER, OR THEIR ASSISTANTS, WAS SO FLAGRANTLY UNREASONABLE OR SO GROSSLY ERRONEOUS AS TO IMPLY BAD FAITH, THE APPEAL PROVISIONS OF THE CONTRACT MUST BE EXHAUSTED. BLAIR CASE, SUPRA, AT 736.

IN REGARD TO YOUR CONTENTION THAT IN BOTH INSTANCES YOU AGREED TO PERFORM AS REQUESTED BECAUSE YOUR FINANCIAL CONDITION LEFT YOU NO CHOICE, IT IS SETTLED LAW THAT THE MERE STRESS OF BUSINESS CONDITIONS WILL NOT CONSTITUTE DURESS WHERE THE GOVERNMENT WAS NOT RESPONSIBLE FOR THOSE CIRCUMSTANCES. FRUHAUF SOUTHWEST GARMENT COMPANY V. UNITED STATES, 111 F.1SUPP. 945, 951.

WE FIND NO LEGAL BASIS TO SUPPORT YOUR CLAIM, AND OUR PRIOR DISALLOWANCE IS ACCORDINGLY SUSTAINED.