B-134232, DEC. 6, 1957

B-134232: Dec 6, 1957

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INC.: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 15. WHEN AND IF "ACTUAL COST" IN SUCH MAXIMUM AMOUNT SHALL HAVE BEEN INCURRED OR OBLIGATED HEREUNDER. THE CONTRACTING OFFICER INFORMED YOU THAT YOUR REQUEST FOR ADDITIONAL FUNDS WOULD HAVE TO BE REDUCED TO A CLAIM INASMUCH AS THE COST ESCAPE ARTICLE HAD NOT BEEN COMPLIED WITH PRIOR TO THE COMPLETION OF THE CONTRACT. YOUR CLAIM WAS DISALLOWED FOR FAILURE TO COMPLY WITH THE TERMS OF THE CONTRACT. YOU STATED THAT YOU ARE FULLY AWARE OF THE LEGAL SIGNIFICANCE OF YOUR FAILURE TO COMPLY WITH THE COST ESCAPE PROVISION. 31 U.S.C. 236 PROVIDES: "WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE.

B-134232, DEC. 6, 1957

TO ARTHUR D. LITTLE, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 15, 1957, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED OCTOBER 7, 1957, WHICH DISALLOWED YOUR CLAIM FOR AN ADDITIONAL PAYMENT OF $1,114.81 ALLEGED TO BE DUE UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. DA 19-129-QM-298, DATED FEBRUARY 28, 1955.

THE SUBJECT CONTRACT REQUIRED YOU TO DEVELOP, DESIGN, AND DELIVER TO THE GOVERNMENT THREE PROTOTYPE STOVES ON A COST REIMBURSABLE BASIS NOT TO EXCEED $8,920 PLUS A FIXED FEE OF $749.28. CONTRACT ARTICLE 2 (B) PROVIDED:

"COST ESCAPE. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, WHEN AND IF "ACTUAL COST" IN SUCH MAXIMUM AMOUNT SHALL HAVE BEEN INCURRED OR OBLIGATED HEREUNDER, THE CONTRACTOR SHALL NOT BE REQUIRED TO INCUR OR OBLIGATE FURTHER "ACTUAL COST" HEREUNDER UNLESS AND UNTIL THE GOVERNMENT SHALL FIRST AGREE IN WRITING TO REIMBURSE THE CONTRACTOR THEREFOR.'

AFTER THE THREE PROTOTYPE STOVES HAD BEEN DELIVERED TO THE GOVERNMENT, BY LETTER DATED JULY 13, 1956, YOU REQUESTED FROM THE CONTRACTING OFFICER AN ADDITIONAL $1,400 BASED ON AN ESTIMATED COST OF $2,060 LESS A BALANCE ON HAND OF $660. BY LETTER DATED JULY 27, 1956, YOU FURNISHED THE CONTRACTING OFFICER WITH A BREAKDOWN OF THE ESTIMATED ADDITIONAL COST. LETTER DATED AUGUST 22, 1956, THE CONTRACTING OFFICER INFORMED YOU THAT YOUR REQUEST FOR ADDITIONAL FUNDS WOULD HAVE TO BE REDUCED TO A CLAIM INASMUCH AS THE COST ESCAPE ARTICLE HAD NOT BEEN COMPLIED WITH PRIOR TO THE COMPLETION OF THE CONTRACT. BY LETTER DATED JULY 12, 1957, TO OUR OFFICE THROUGH THE CONTRACTING OFFICER, YOU SUBMITTED A CLAIM FOR REIMBURSEMENT IN THE AMOUNT OF $1,114.81.

BY OUR SETTLEMENT DATED OCTOBER 7, 1957, YOUR CLAIM WAS DISALLOWED FOR FAILURE TO COMPLY WITH THE TERMS OF THE CONTRACT. IN YOUR LETTER DATED OCTOBER 15, 1957, YOU STATED THAT YOU ARE FULLY AWARE OF THE LEGAL SIGNIFICANCE OF YOUR FAILURE TO COMPLY WITH THE COST ESCAPE PROVISION, BUT YOU REQUESTED RECONSIDERATION OF YOUR CLAIM IN ACCORDANCE WITH EQUITY.

THE ACT OF APRIL 10, 1928, 45 STAT. 413, 31 U.S.C. 236 PROVIDES:

"WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM OR DEMAND IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS, HE SHALL SUBMIT THE SAME TO THE CONGRESS BY A SPECIAL REPORT CONTAINING THE MATERIAL FACTS AND HIS RECOMMENDATION THEREON.'

ALTHOUGH THE ACT AUTHORIZES OUR OFFICE TO REPORT TO CONGRESS FOR ITS CONSIDERATION CERTAIN CLAIMS FILED IN THE GENERAL ACCOUNTING OFFICE, THE PROVISIONS OF THE ACT MAY BE INVOKED ONLY WHEN IT IS DETERMINED DEFINITELY THAT THE CLAIM "CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS.'

THE CONTRACTING AGENCY HAS REPORTED THAT ON THREE OCCASIONS DURING THE DURATION OF THE CONTRACT RESPONSIBLE OFFICIALS OF YOUR ORGANIZATION WERE ADVISED THAT ADDITIONAL FUNDS WOULD NOT BE AVAILABLE, THAT ON THREE OCCASIONS THESE OFFICIALS STATED THAT EXISTING FUNDS WERE SUFFICIENT TO COMPLETE THE CONTRACT, AND THAT YOUR UNTIMELY REQUEST DEPRIVED THE GOVERNMENT OF THE OPPORTUNITY TO REVISE THE CONTRACT SPECIFICATIONS TO PERMIT YOU TO COMPLETE THE STOVES WITHIN THE FUNDS PROVIDED IN THE CONTRACT.

THE PURPOSE OF THE COST ESCAPE ARTICLE IS TO AFFORD THE CONTRACTING AGENCY AN OPPORTUNITY TO DETERMINE WHETHER A PARTICULAR PROJECT WARRANTS ADDITIONAL FUNDS AND TO PROTECT THE GOVERNMENT AGAINST OBLIGATIONS IN EXCESS OF AVAILABLE FUNDS IF THE PROJECT DOES NOT WARRANT IT. THE COST ESCAPE ARTICLE CONTAINS A CONDITION PRECEDENT. IN GOVERNMENT CONTRACTS, CONDITIONS PRECEDENT ARE RIGIDLY ENFORCED. SEE UNITED STATES V. HELPUCH CO., 328 U.S. 234; UNITED STATES. V. BLAIR, 321 U.S. 730; PLUMLEY V. UNITED STATES, 226 U.S. 545; HAWKINS V. UNITED STATES, 96 U.S. 689; UNITED STATES V. CUNNINGHAM, 125 F.2D 28; YUHASZ V. UNITED STATES, 109 F.2D 467; STANDARD ACCIDENT INSURANCE CO. V. UNITED STATES, 102 C.CLS. 770; HARDWICK V. UNITED STATES, 95 C.CLS. 336.

ALTHOUGH YOU REQUESTED TO HAVE YOUR CLAIM CONSIDERED ON THE BASIS OF EQUITY, YOU HAVE NOT PRESENTED ANY JUSTIFIABLE EXCUSE OR ANY EXTENUATING CIRCUMSTANCES FOR YOUR FAILURE TO TAKE ADVANTAGE OF THE COST ESCAPE ARTICLE. FURTHERMORE, THE GOVERNMENT RECEIVED NO MORE THAN IT WAS ENTITLED TO RECEIVE UNDER THE SUBJECT CONTRACT, AS ALL THE WORK PERFORMED AND FURNISHED WAS WITHIN THE "FOUR CORNERS" OF THE CONTRACT.

ACCORDINGLY, YOUR CLAIM DOES NOT CONTAIN SUCH ELEMENTS OF EQUITY AS TO JUSTIFY SUBMISSION OF IT TO THE CONGRESS PURSUANT TO THE ACT OF APRIL 10, 1928, AND THEREFORE THE DISALLOWANCE OF OCTOBER 7, 1957, IS SUSTAINED.