B-136897, B-139976, NOV. 18, 1959

B-136897, B-139976, NOV. 18, 1959

TO U.S. DISPLAY CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF MAY 18 AND JUNE 18, 1959, AND SUBSEQUENT CORRESPONDENCE, RELATING TO YOUR CLAIMS FOR DAMAGES ALLEGED TO HAVE BEEN INCURRED IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NO. DA-30-280-52-QM-27563 DATED MAY 23, 1952, PROVIDING FOR THE FABRICATION OF 446,000 SLEEPING BAG CASES FROM GOVERNMENT-FURNISHED MATERIAL.

THE CLAIMS REPRESENT DAMAGES ALLEGED TO HAVE BEEN INCURRED FOR (1) LATE DELIVERY OF GOVERNMENT-FURNISHED MATERIAL AND ERRORS IN DRAWINGS IN THE AMOUNT OF $180,463.21; AND (2) FOR INSPECTION INTERFERENCE BY THE GOVERNMENT RESULTING IN EXCESS COSTS OF $61,397.49.

REGARDING THE FIRST CLAIM, ARTICLE 29 OF THE ADDITIONAL GENERAL PROVISIONS OF THE CONTRACT, ENTITLED "GOVERNMENT FURNISHED PROPERTY," PROVIDED:

"* * * THE GOVERNMENT SHALL NOT BE LIABLE TO THE CONTRACTOR FOR DAMAGES OR LOSS OF PROFIT BY REASON OF ANY DELAY IN DELIVERY OF OR FAILURE TO DELIVER ANY OR ALL OF THE GOVERNMENT-FURNISHED PROPERTY, EXCEPT THAT IN CASE OF SUCH DELAY OR FAILURE, UPON THE WRITTEN REQUEST OF THE CONTRACTOR, AN EQUITABLE ADJUSTMENT SHALL BE MADE IN THE DELIVERY OR PERFORMANCE DATES, OR PRICE, OR BOTH, AND IN ANY OTHER CONTRACTUAL PROVISION AFFECTED THEREBY, IN ACCORDANCE WITH THE PROCEDURES PROVIDED FOR IN THE CLAUSE OF THIS CONTRACT ENTITLED "CHANGES.'"

THIS CLAIM WAS CONSIDERED BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS, DESIGNATED AS ASBCA NO. 2850, AND BY OPINION DATED JULY 23, 1956, YOU WERE ALLOWED THE AMOUNT OF $2,417 AS EQUITABLE PRICE ADJUSTMENT FOR A TEN-DAY DELAY IN DELIVERY OF GOVERNMENT-FURNISHED CLOTH, PURSUANT TO THE ABOVE-QUOTED PROVISIONS OF THE CONTRACT. THE BOARD, ON NOVEMBER 23, 1956, DENIED YOUR MOTION FOR RECONSIDERATION OF THE OPINION AND FOR AN OPPORTUNITY TO SUBMIT ADDITIONAL EVIDENCE APPARENTLY ON THE BASIS THAT THE NOTION WAS NOT FILED, IN ACCORDANCE WITH THE PROCEDURES OF THE BOARD, WITHIN THIRTY DAYS OF THE ORIGINAL OPINION. THE AUTHORITY OF OUR OFFICE TO REVIEW DECISIONS OF ADMINISTRATIVE BOARDS OF CONTRACT APPEALS IS LIMITED BY THE FOLLOWING PROVISIONS OF 41 U.S.C. 321:

"NO PROVISION OF ANY CONTRACT ENTERED INTO BY THE UNITED STATES, RELATING TO THE FINALITY OR CONCLUSIVENESS OF ANY DECISION OF THE HEAD OF ANY DEPARTMENT OR AGENCY OR HIS DULY AUTHORIZED REPRESENTATIVE OR BOARD IN A DISPUTE INVOLVING A QUESTION ARISING UNDER SUCH CONTRACT, SHALL BE PLEADED IN ANY SUIT NOW FILED OR TO BE FILED AS LIMITING JUDICIAL REVIEW OF ANY SUCH DECISION TO CASES WHERE FRAUD BY SUCH OFFICIAL OR HIS SAID REPRESENTATIVE OR BOARD IS ALLEGED: PROVIDED, HOWEVER, THAT ANY SUCH DECISION SHALL BE FINAL AND CONCLUSIVE UNLESS THE SAME IS FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.'

WE HAVE EXAMINED AND REVIEWED THE VOLUMINOUS RECORD PERTAINING TO THIS CLAIM, INCLUDING EXHIBITS AND STATEMENTS FURNISHED BY YOU, THE ARMY AUDIT AGENCY AUDIT REPORT, AND OTHER PERTINENT DATA. THE EVIDENCE OF RECORD PERTAINING TO THE LATE DELIVERY OF GOVERNMENT FURNISHED MATERIAL ESTABLISHES THAT ONLY TEN DAYS' DELAY LEGALLY WAS CHARGEABLE TO THE GOVERNMENT UNDER THE TERMS OF THE CONTRACT. THE EQUITABLE PRICE ADJUSTMENT ALLOWED BY THE BOARD FOR SUCH PERIOD OF DELAY WAS BASED UPON COST FIGURES REVISED BY YOU TO CONFORM TO THE ARMY AUDIT AGENCY REPORT. WE FIND NOTHING IN THE RECORD WHICH WOULD CAST DOUBT ON THE LEGALITY OF THE BOARD'S CONCLUSION IN THIS RESPECT. THE DISPUTE AS TO THE EXTENT OF DELAY WAS, IN OUR VIEW, CORRECTLY RESOLVED BY THE BOARD ON THE BASIS OF COMPETENT EVIDENCE AND TESTIMONY AND THE TERMS OF THE CONTRACT ITSELF. UPON REVIEW OF THE RECORD, WE FIND THAT THE OPINION OF THE BOARD MET THE REQUIREMENTS OF THE ABOVE QUOTED STATUTE AND, AS SUCH, IS NOT SUBJECT TO QUESTION BY OUR OFFICE.

TURNING NOW TO THE OTHER PORTION OF THIS CLAIM FOR EQUITABLE PRICE ADJUSTMENT BECAUSE OF ERRORS IN GOVERNMENT DRAWINGS, IT APPEARS THAT YOU FAILED TO ESTABLISH TO THE BOARD'S SATISFACTION THAT INCREASED COSTS WERE INCURRED AND THAT, IF INCURRED, SUCH COSTS WERE ATTRIBUTABLE TO THE GOVERNMENT'S ACTIONS. THIS RELATIONSHIP BETWEEN CAUSE AND RESULT MUST BE ESTABLISHED BY CONVINCING EVIDENCE SO AS TO CONSTITUTE A LEGAL BASIS UPON WHICH EQUITABLE PRICE ADJUSTMENT MIGHT BE ACCOMPLISHED. IT IS WELL ESTABLISHED THAT THE UNITED STATES CAN BE REQUIRED TO MAKE COMPENSATION TO A CONTRACTOR FOR DAMAGES WHICH IT HAS ACTUALLY SUSTAINED AS A RESULT OF A BREACH OF THE CONTRACT BY THE GOVERNMENT AND THAT UNDER SUCH CIRCUMSTANCES THE BURDEN IS ON THE CONTRACTOR TO PROVE ITS DAMAGES, IF ANY, LIMITED TO THE ACTUAL LOSSES INCURRED. THE SUPREME COURT OF THE UNITED STATES HAS SO HELD. UNITED STATES V. SMITH, 94 U.S. 214; UNITED STATES V. MUELLER, 113 U.S. 153; UNITED STATES V. BARLOW, 184 U.S. 123; RIPLEY V. UNITED STATES, 223 U.S. 695; UNITED STATES V. WYCKOFF, 271 U.S. 263. OUR REVIEW OF THE ENTIRE RECORD LEADS TO THE CONCLUSION THAT YOU NEITHER ESTABLISHED THAT DAMAGES RESULTED FROM THE ERROR IN DRAWINGS NOR, EVEN IF DAMAGES WERE INCURRED, ANY REASONABLE BASIS UPON WHICH DAMAGES COULD BE COMPUTED. COMP. GEN. 980.

OVER THE SIGNATURE OF YOUR INDEPENDENT ACCOUNTANT, YOU SUBMITTED AN ADDITIONAL CLAIM IN THE AMOUNT OF $61,397.49, REPRESENTING YOUR DETERMINATION OF EXCESS COSTS ARISING FROM THE INTERFERENCE OF GOVERNMENT INSPECTORS PERFORMING DUTIES UNDER THE SUBJECT CONTRACT. WHILE YOUR AUDIT REPORT SHOWS THAT YOU SUFFERED A LOSS OF PLANT EFFICIENCY DURING THE PERIOD OF YOUR CLAIM, THERE IS NOTHING CONTAINED THEREIN OR ELSEWHERE IN THE RECORD, ASIDE FROM YOUR OWN CATEGORICAL STATEMENT, WHICH WOULD ESTABLISH THAT SUCH LOSS WAS ATTRIBUTABLE TO ACTS OR OMISSIONS OF THE GOVERNMENT. THAT IS TO SAY, THE AUDIT FACT OF LOSS OF EFFICIENCY IS NOT RELATED BY COMPETENT EVIDENCE TO THE ALLEGED GOVERNMENT INSPECTION INTERFERENCE. EVEN ASSUMING THAT SUCH INTERFERENCES MAY BE ESTABLISHED AS A FACT, IT DOES NOT NECESSARILY FOLLOW THAT LIABILITY THEREFOR ATTACHES TO THE GOVERNMENT IN THE ABSENCE OF PROOF OF CAUSAL RELATIONSHIP OR EVIDENCE SUFFICIENT TO OVERCOME THE ADMINISTRATIVE STATEMENT OF THE FACTS.

IT IS THE INVARIABLE RULE OF OUR OFFICE TO ACCEPT THE ADMINISTRATIVE VERSION OF THE DISPUTED FACTS OF A CONTRACT CLAIM IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF. 37 COMP. GEN. 568.

ACCORDINGLY, YOU ARE ADVISED THAT WE FIND NO LEGAL BASIS FOR ALLOWANCE OF ANY PART OF YOUR CLAIMS.