B-134892, FEBRUARY 7, 1958, 37 COMP. GEN. 513

B-134892: Feb 7, 1958

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CONTRACTS - DELIVERIES - DELAYS - SUPPLIER DEFAULT A DELAY BY A CONTRACTOR DUE SOLELY TO THE DEFAULT OF A SUPPLIER IN FAILING TO FURNISH MATERIAL WHICH IS IN SHORT SUPPLY AND NECESSARY IN THE MANUFACTURE OF THE EQUIPMENT NEEDED BY THE GOVERNMENT MAY BE DETERMINED TO BE A DELAY ARISING OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR AND. 1958: REFERENCE IS MADE TO LETTER OF JANUARY 13. STATES THAT THE CONTRACTOR'S DELAY WAS CAUSED BY THE DELAY OF ITS SUPPLIER IN FURNISHING A PARTICULAR KIND OF SHEET STEEL NECESSARY FOR THE MANUFACTURE OF AUTOTRANSFORMERS. 450 AT THE RATE OF $150 PER DAY FOR 243 DAYS OF DELAY IN DELIVERY ARE CHARGEABLE AGAINST THE CONTRACTOR.

B-134892, FEBRUARY 7, 1958, 37 COMP. GEN. 513

CONTRACTS - DELIVERIES - DELAYS - SUPPLIER DEFAULT A DELAY BY A CONTRACTOR DUE SOLELY TO THE DEFAULT OF A SUPPLIER IN FAILING TO FURNISH MATERIAL WHICH IS IN SHORT SUPPLY AND NECESSARY IN THE MANUFACTURE OF THE EQUIPMENT NEEDED BY THE GOVERNMENT MAY BE DETERMINED TO BE A DELAY ARISING OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR AND, THEREFORE, EXCUSABLE UNDER A CONTRACT CONTAINING A PROVISION THAT AUTHORIZES EXTENSIONS OF TIME FOR DELAYS BEYOND THE CONTROL AND WITHOUT THE FAULT OF THE CONTRACTOR, INCLUDING DEFAULTS OF SUBCONTRACTORS.

TO THE SECRETARY OF THE INTERIOR, FEBRUARY 7, 1958:

REFERENCE IS MADE TO LETTER OF JANUARY 13, 1958, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING OUR DECISION WHETHER THE CONTRACTING OFFICER MAY PROPERLY EXCUSE THE DELAY INCURRED BY THE AMERICAN ELIN CORPORATION IN FURNISHING CERTAIN ELECTRICAL EQUIPMENT FOR THE GRANITE FALLS SUBSTATION, MISSOURI RIVER BASIN PROJECT, UNDER CONTRACT NO. 14-06-D -1803 WITH THE BUREAU OF RECLAMATION.

THE CONTRACTING OFFICER'S MEMORANDUM OF DECEMBER 6, 1957, STATES THAT THE CONTRACTOR'S DELAY WAS CAUSED BY THE DELAY OF ITS SUPPLIER IN FURNISHING A PARTICULAR KIND OF SHEET STEEL NECESSARY FOR THE MANUFACTURE OF AUTOTRANSFORMERS. BECAUSE OF SUCH DELAY, LIQUIDATED DAMAGES IN THE AMOUNT OF $36,450 AT THE RATE OF $150 PER DAY FOR 243 DAYS OF DELAY IN DELIVERY ARE CHARGEABLE AGAINST THE CONTRACTOR, UNLESS THE DELAY IS FOUND TO HAVE BEEN EXCUSABLE UNDER THE TERMS OF THE CONTRACT.

THE PROVISIONS OF THE CONTRACT, AS QUOTED IN THE CONTRACTING OFFICER'S REPORT, AUTHORIZE THE EXTENSION OF THE TIME FOR MAKING DELIVERY IF THE FAILURE TO MAKE TIMELY DELIVERY ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING DEFAULTS OF SUBCONTRACTORS. HOWEVER, SUCH PROVISION IS NOT LIMITED TO "UNFORESEEABLE" CAUSES AS WAS THE CASE WITH THE PROVISION CONSIDERED IN UNITED STATES V. BROOKS-CALL AWAY CO., 318 U.S. 120. HENCE, IT IS NOT NECESSARY TO ESTABLISH HERE THAT THE CAUSE OF THE DELAY--- SUPPLIER DEFAULT--- WAS SO ABNORMAL, EXTRAORDINARY, OR UNUSUAL THAT IT COULD NOT HAVE BEEN REASONABLY FORESEEN AND PROVIDED FOR IN THE CONTRACT. CF. 23 COMP. GEN. 25, AND POLORON PRODUCTS, INC. V. UNITED STATES, 116 F.1SUPP. 588.

IT APPEARS THAT THE CONTRACTOR GAVE TIMELY NOTICE IN WRITING OF THE CAUSE OF THE DELAY AND, AS TO SUCH CAUSE, THE CONTRACTING OFFICER IS PREPARED TO MAKE THE FOLLOWING FINDING OF FACT:

THAT AT THE TIME OF THE BID OPENING THE CONTRACTOR HAD SUBMITTED TO THE ARMCO INTERNATIONAL CORPORATION, HIS APPARENTLY RESPONSIBLE SUPPLIER OF YEARS STANDING, HIS REQUIREMENTS FOR THE LOW-CORE-LOSS GRAIN ORIENTED SHEET STEEL NECESSARY FOR THE MANUFACTURE AND DELIVERY OF THE AUTOTRANSFORMERS IN ACCORDANCE WITH HIS BUREAU OF RECLAMATION APPROVED DESIGN WITHIN THE CONTRACT DELIVERY PERIOD.

THAT, FOLLOWING HIS RECEIPT OF THE NOTICE OF AWARD, THE CONTRACTOR WAS INFORMED BY ARMCO INTERNATIONAL THAT IT WOULD NOT FULFILL THE CONTRACTOR'S REQUIREMENTS FOR THE SHEET STEEL WITHIN THE CONTEMPLATED DELIVERY PERIOD, THAT THE REASON FOR THIS DEFAULT WAS DUE TO INCREASED DEMANDS FOR SUCH STEEL RECEIVED FROM THE ARMCO INTERNATIONAL'S DOMESTIC CUSTOMERS, AND THAT SUCH STEEL WAS THEN IN COMPARATIVELY SHORT SUPPLY; THAT UPON RECEIPT OF SUCH INFORMATION THE CONTRACTOR MADE DILIGENT, BUT UNSUCCESSFUL, ATTEMPTS TO OBTAIN THE STEEL ELSEWHERE; THAT THE DELAY OF SAID SUPPLIER IN FURNISHING THE REQUIRED STEEL WAS THE SOLE CAUSE OF THE DELAY OF THE PRIME CONTRACTOR IN FULFILLING HIS DELIVERY REQUIREMENT UNDER THE CONTRACT; AND THAT THE SUPPLIER'S DELAY WAS BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR.

ON THE BASIS OF THE RECORD SUBMITTED, THE ABOVE FINDING APPEARS TO SATISFY THE REQUIREMENT THAT THE DELAY IN OBTAINING THE REQUIRED SHEET STEEL WAS DUE TO THE DEFAULT OF THE SUPPLIER AND WAS A CAUSE "BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR" WITHIN THE MEANING OF PARAGRAPHS A-9 AND B-8 OF THE SPECIAL CONDITIONS OF THE CONTRACT. HOWEVER, THE REPORT OF THE CONTRACTING OFFICER ALSO INDICATES THAT HE IS IN DOUBT AS TO THE PROPRIETY OF EXCUSING THE DELAY BECAUSE IT DOES NOT APPEAR THAT THE PARTICULAR SUBCONTRACTOR INVOLVED WAS THE SOLE SOURCE OF SUPPLY FOR THE REQUIRED MATERIAL. IN VIEW OF THE QUALIFICATION IN THE PERTINENT CONTRACT CLAUSES,"UNLESS THE CONTRACTING OFFICER SHALL DETERMINE THAT THE MATERIALS OR SUPPLIES TO BE FURNISHED UNDER THE SUBCONTRACT ARE PROCURABLE IN THE OPEN MARKET," ANY DOUBT AS TO THIS POINT MUST BE RESOLVED BY THE CONTRACTING OFFICER BEFORE HE MAY PROPERLY ENTER THE PROPOSED FINDING AND EXTEND THE TIME.