B-136738, AUG. 4, 1958

B-136738: Aug 4, 1958

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INC.: REFERENCE IS MADE TO YOUR LETTER OF JUNE 24. BASICALLY IT IS YOUR CONTENTION THAT IN PURCHASING THE DEFAULTED ITEMS AGAINST YOUR ACCOUNT. WAS ?00637 EACH. THEY ALL WERE REJECTED AS NOT CONFORMING TO THE MINIMUM REQUIREMENTS OF THE SPECIFICATIONS. FURTHER THAT UNLESS A SATISFACTORY DATE WAS FURNISHED BY NOVEMBER 5. IT WAS ADMINISTRATIVELY CONSIDERED THAT NO USEFUL OBJECTIVE WOULD BE SERVED BY THEN TERMINATING YOUR CONTRACT. THE DELIVERY PERIOD WAS EXTENDED BY MODIFICATION NO. 2. THE STATUS OF YOUR DELINQUENT CONTRACT WAS CHECKED AGAIN ON APRIL 22. IT WAS FOUND THAT NO DELIVERIES THEREUNDER HAD BEEN MADE BY YOU. THE GOVERNMENT INSPECTOR ADVISED THE PURCHASING DEPOT THAT STILL FURTHER SAMPLES WERE TESTED.

B-136738, AUG. 4, 1958

TO MANHATTAN LIGHTING EQUIPMENT CO., INC.:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 24, 1958, REQUESTING RECONSIDERATION OF OUR SETTLEMENT OF MAY 23, 1958, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF $251.10 COLLECTED FROM YOU AS EXCESS COSTS OCCASIONED THE UNITED STATES BY REASON OF YOUR DEFAULT UNDER CONTRACT NO. N155S- 23521, DATED MAY 21, 1956, AS AMENDED.

BASICALLY IT IS YOUR CONTENTION THAT IN PURCHASING THE DEFAULTED ITEMS AGAINST YOUR ACCOUNT, THE GOVERNMENT PROCUREMENT OFFICE PAID TOO HIGH A PRICE THEREFOR, AND THUS FAILED TO MITIGATE THE AMOUNT OF THE DAMAGES SUSTAINED.

THE DEFAULTED CONTRACT NO. N155S-23521, CALLED FOR THE DELIVERY OF 18,000 TERMINAL LUGS, AS SPECIFIED, WITHIN 90 DAYS, OR BY AUGUST 21, 1956. YOUR CONTRACT PRICE FOR THE ITEMS, AS REVISED BY MODIFICATION NO. 2, ISSUED JANUARY 16, 1957, WAS ?00637 EACH, OR $114.66 FOR THE TOTAL QUANTITY ORDERED. THE CONTRACT PROVIDED FOR THE SUBMISSION OF SAMPLES FOR APPROVAL BY THE GOVERNMENT. IT APPEARS THAT YOUR SUPPLIER, THE HOLLINGSWORTH COMPANY, PHOENIXVILLE, PENNSYLVANIA, SUBMITTED SEVERAL SAMPLES OF THE PRODUCT THEY PROPOSED TO FURNISH, BUT THEY ALL WERE REJECTED AS NOT CONFORMING TO THE MINIMUM REQUIREMENTS OF THE SPECIFICATIONS.

DELIVERY NOT HAVING BEEN ACCOMPLISHED BY SEPTEMBER 21, 1956, THE PROCUREMENT AGENCY ON THAT DATE REQUESTED THAT YOU FURNISH THE REASONS FOR THE DELAY, AND ALSO A FIRM REVISED DELIVERY DATE FOR THE ITEMS. SATISFACTORY RESPONSE THERETO HAVING BEEN RECEIVED, THE PURCHASING OFFICE BY REGISTERED LETTER OF OCTOBER 25, 1956, ADVISED YOU OF THE CRITICAL NEED FOR THESE, AND OTHER ITEMS UNDER ANOTHER DELINQUENT CONTRACT, AND FURTHER THAT UNLESS A SATISFACTORY DATE WAS FURNISHED BY NOVEMBER 5, 1956, IMMEDIATE ACTION WOULD BE TAKEN TO TERMINATE THE CONTRACT FOR DEFAULT. WITH YOUR LETTER OF RESPONSE DATED NOVEMBER 2, 1956, YOU FORWARDED TO THE PURCHASING OFFICE A LETTER FROM YOUR SUPPLIER OUTLINING THE DIFFICULTIES WHICH THE LATTER EXPERIENCED IN GETTING ITS SAMPLES APPROVED BY THE GOVERNMENT TESTING LABORATORY. SINCE, IN VIEW OF YOUR FURTHER PROMISE TO MAKE PROMPT SHIPMENT, IT WAS ADMINISTRATIVELY CONSIDERED THAT NO USEFUL OBJECTIVE WOULD BE SERVED BY THEN TERMINATING YOUR CONTRACT, THE DELIVERY PERIOD WAS EXTENDED BY MODIFICATION NO. 2, TO MARCH 31, 1957.

THE STATUS OF YOUR DELINQUENT CONTRACT WAS CHECKED AGAIN ON APRIL 22, 1957, AND IT WAS FOUND THAT NO DELIVERIES THEREUNDER HAD BEEN MADE BY YOU. FURTHERMORE, ON MAY 23, 1957, THE INSPECTOR OF NAVAL MATERIAL NOTIFIED THE GENERAL STORES SUPPLY OFFICE THAT THE SAMPLE TESTED BY THEM ON MAY 21 HAD AGAIN FAILED TO MEET THE REQUIRED TESTS. ON JUNE 14, 1957, THE GOVERNMENT INSPECTOR ADVISED THE PURCHASING DEPOT THAT STILL FURTHER SAMPLES WERE TESTED, BUT FAILED TO MEET THE SPECIFICATION REQUIREMENTS. SINCE OVER A YEAR--- INSTEAD OF 90 DAYS, AS ORIGINALLY PROMISED--- HAD ELAPSED WITHOUT HAVING RECEIVED ANY DELIVERIES UNDER YOUR CONTRACT, THE AGREEMENT WAS TERMINATED EFFECTIVE JUNE 28, 1957, AND YOU WERE ADVISED THAT THE DELINQUENT ITEMS WOULD THENCEFORTH BE PROCURED AGAINST YOUR ACCOUNT.

DUE TO THE URGENCY OF THE GOVERNMENT'S NEED FOR THESE ITEMS, TELEPHONE NEGOTIATIONS WERE IMMEDIATELY INSTITUTED WITH TWO SUPPLIERS, THE WHITE PLAINS ELECTRICAL SUPPLY COMPANY AND THE WESTINGHOUSE ELECTRIC SUPPLY COMPANY, WHICH FIRMS INCIDENTALLY WERE THE SECOND AND FOURTH LOW BIDDERS UNDER THE ORIGINAL INVITATION. THE LOWEST PRICE ELICITED FROM THESE NEGOTIATIONS WAS .02045 EACH, AS QUOTED BY WESTINGHOUSE, THE PRICE FOR THE ITEM HAVING MATERIALLY INCREASED IN THE INTERIM FROM MAY 1956, TO JULY 1957. ACCORDINGLY, THE DEFAULTED ITEMS WERE PURCHASED FROM WESTINGHOUSE AT A TOTAL COST OF $368.10, OR AT A NET EXCESS COST TO THE UNITED STATES OF $251.10.

CONCERNING YOUR CONTENTION THAT THE EXCESS COSTS WERE EXCESSIVE IN THIS INSTANCE, CONSIDERING YOUR DELINQUENCY OF OVER A YEAR IN THE FURNISHING OF THIS COMMODITY, AND THE URGENCY OF THE GOVERNMENT'S NEED FOR THE ITEM AFTER THE LAPSE OF SUCH A LONG PERIOD OF DELAY, IT MUST BE CONCLUDED THAT THE METHOD OF NEGOTIATION FINALLY RESORTED TO BY THE GOVERNMENT IN CONNECTION WITH THE REPURCHASE OF THIS ITEM WAS ENTIRELY PROPER AND JUSTIFIABLE UNDER THE FACTS AS HEREINABOVE RELATED.

ACCORDINGLY, OUR SETTLEMENT OF MARCH 23, 1958, DENYING YOUR CLAIM, IS HEREBY AFFIRMED.