B-136224, MAR. 7, 1961

B-136224: Mar 7, 1961

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO THE MEMORANDUM OF FEBRUARY 17. IS UNDERSTOOD THAT THE GENERAL SERVICES ADMINISTRATION PAID ALL ACCRUED PIER DEMURRAGE DURING THE PERIOD WITH THE UNDERSTANDING THAT THE DEALERS WOULD REIMBURSE THE ADMINISTRATION FOR ANY CHARGES SO PAID FOR WHICH THEY WERE LIABLE UNDER THE PURCHASE CONTRACTS. MANY OF THE CLAIMS ASSERTED AGAINST VARIOUS DEALERS HAVE BEEN COLLECTED BUT SOME ARE STILL OUTSTANDING. IT WAS DETERMINED IN 1958 TO CONDUCT A JOINT SURVEY OF NEW YORK REGIONAL RECORDS TO ASCERTAIN WHETHER SUFFICIENT DOCUMENTARY EVIDENCE WAS AVAILABLE TO ESTABLISH THE LIABILITY OF THE DEALERS FOR THE AMOUNTS THEN OUTSTANDING IN GSA ACCOUNTS. IT WAS DISCOVERED THAT THE MAGNITUDE OF THE PROGRAM AND THE NECESSARY PROCEDURAL INNOVATIONS REQUIRED TO HANDLE SUCH LARGE QUANTITIES OF RUBBER HAD RENDERED IT DIFFICULT.

B-136224, MAR. 7, 1961

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO THE MEMORANDUM OF FEBRUARY 17, 1961, AND ENCLOSURE, FROM MR. HENRY H. PIKE, ASSOCIATE GENERAL COUNSEL, GENERAL SERVICES ADMINISTRATION, CONCERNING PROCEDURE FOR SETTLEMENT OF PIER DEMURRAGE CLAIMS ARISING FROM THE GSA RUBBER PURCHASE PROGRAM DURING 1950-1952. IS UNDERSTOOD THAT THE GENERAL SERVICES ADMINISTRATION PAID ALL ACCRUED PIER DEMURRAGE DURING THE PERIOD WITH THE UNDERSTANDING THAT THE DEALERS WOULD REIMBURSE THE ADMINISTRATION FOR ANY CHARGES SO PAID FOR WHICH THEY WERE LIABLE UNDER THE PURCHASE CONTRACTS. MANY OF THE CLAIMS ASSERTED AGAINST VARIOUS DEALERS HAVE BEEN COLLECTED BUT SOME ARE STILL OUTSTANDING.

BECAUSE THE APPORTIONMENT OF DEMURRAGE CHARGES BETWEEN THE DEALERS AND THE GOVERNMENT TURNED ON COMPLEX QUESTIONS OF FACT AND LAW ARISING UNDER CONTRACT PROVISIONS COVERING TENDER AND AVAILABILITY, DELIVERIES F.O.B. CARS AND EX-DOCK, AND DETERMINATIONS OF GRADE, QUALITY AND CONDITION INCIDENT TO INSPECTION AND ACCEPTANCE, IT WAS DETERMINED IN 1958 TO CONDUCT A JOINT SURVEY OF NEW YORK REGIONAL RECORDS TO ASCERTAIN WHETHER SUFFICIENT DOCUMENTARY EVIDENCE WAS AVAILABLE TO ESTABLISH THE LIABILITY OF THE DEALERS FOR THE AMOUNTS THEN OUTSTANDING IN GSA ACCOUNTS. IT WAS DISCOVERED THAT THE MAGNITUDE OF THE PROGRAM AND THE NECESSARY PROCEDURAL INNOVATIONS REQUIRED TO HANDLE SUCH LARGE QUANTITIES OF RUBBER HAD RENDERED IT DIFFICULT, IN SOME CASES IMPOSSIBLE, TO DOCUMENT ALL OF THE FACTORS UPON WHICH QUESTIONS OF LIABILITY TURNED. ALSO, THE LAPSE OF TIME SINCE THE TERMINATION OF THE PROGRAM MADE IT UNLIKELY THAT MANY QUESTIONS OF FACT COULD BE RESOLVED BY PAROL EVIDENCE.

IN THESE CIRCUMSTANCES, THERE WAS SUBMITTED IN 1959 A PROPOSAL, IN WHICH WE CONCURRED, TO RUN A 10 PERCENT TEST CHECK TO DETERMINE WHETHER IT WAS WORTHWHILE TO EXPEND ANY FURTHER EFFORT TOWARD COLLECTION OF THESE CLAIMS. THAT CHECK HAS NOW BEEN COMPLETED AND INDICATES THAT, CONSIDERING POSSIBLE LITIGATION EXPENSE AND OTHER COSTS, THERE IS LITTLE LIKELIHOOD THAT FURTHER EFFORTS TOWARD COLLECTION WOULD RESULT IN ANY SUBSTANTIAL NET RECOVERY BY THE GOVERNMENT. ACCORDINGLY, WE CONCUR IN THE RECOMMENDATION THAT THE GENERAL SERVICES ADMINISTRATION DISCONTINUE FURTHER EFFORTS TO COLLECT THESE CLAIMS AGAINST RUBBER DEALERS FOR PIER DEMURRAGE THAT AROSE FROM THE GSA RUBBER IMPORT PROGRAM DURING 1950-52 CONSISTENT WITH THE PROCEDURES AUTHORIZED BY SECTION 5040.30, TITLE 4 GAO POLICY AND PROCEDURES MANUAL.