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B-138336, OCT. 30, 1962

B-138336 Oct 30, 1962
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ESQUIRE: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 1. 932.54 WHICH WAS WITHHELD FROM PAYMENT UNDER CONTRACT NO. THE BASIS FOR THE WITHHOLDING WAS THE ADMINISTRATIVE DETERMINATION THAT THE CONTRACT REFERRED TO REQUIRED PACKING OF THE SUPPLIES FURNISHED AS TYPE 2 LOADS. THIS PROPOSAL WAS ACCEPTED AND EMBODIED IN CONTRACT MODIFICATION NO. 3. UNDER THIS MODIFICATION THE CONTRACT PRICE WAS REDUCED BY $3. WHILE THE ACTION WAS PENDING IN THE COURT OF CLAIMS. THE LAST PARAGRAPH OF THAT LETTER WAS AS FOLLOWS: "IF THE AMOUNT OF THE ASSESSMENT IS IN DISPUTE (AS DISTINGUISHED FROM THE ISSUES BEFORE THE COURT OF CLAIMS). IT IS REQUESTED THAT YOU ADVISE THE UNDERSIGNED AND SUBMIT ANY PERTINENT INFORMATION.'.

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B-138336, OCT. 30, 1962

TO EDWIN J. MCDERMOTT, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 1, 1962, AND PRIOR CORRESPONDENCE, CONCERNING THE CLAIM OF ABE L. GREENBERG COMPANY, INC., FOR $1,932.54 WHICH WAS WITHHELD FROM PAYMENT UNDER CONTRACT NO. DA-36-243 -QM/CTM/-1902.

THE BASIS FOR THE WITHHOLDING WAS THE ADMINISTRATIVE DETERMINATION THAT THE CONTRACT REFERRED TO REQUIRED PACKING OF THE SUPPLIES FURNISHED AS TYPE 2 LOADS, AS DEFINED IN FEDERAL SPECIFICATION PPP-B 585, RATHER THAN AS TYPE 1, AS CONTENDED BY THE CONTRACTOR. THE CONTRACTOR PROTESTED THIS DETERMINATION AND REQUESTED PERMISSION TO USE TYPE 1 PACKING, OFFERING A PRICE REDUCTION OF $0.35 PER UNIT AS CONSIDERATION THEREFOR, SUBJECT TO ITS RIGHT TO MAKE CLAIM FOR THAT AMOUNT. THIS PROPOSAL WAS ACCEPTED AND EMBODIED IN CONTRACT MODIFICATION NO. 3, WHICH ALSO PROVIDED THAT THE CONTRACTOR WOULD ALLOW THE GOVERNMENT THE SAVINGS IN FREIGHT RESULTING FROM USE OF THE LIGHTER PACKING.

UNDER THIS MODIFICATION THE CONTRACT PRICE WAS REDUCED BY $3,584. THE CONTRACTOR APPEALED THE ADMINISTRATIVE DETERMINATION TO THE ASBCA, WHICH AFFIRMED IT. CONTRACTOR THEN BROUGHT AN ACTION IN THE COURT OF CLAIMS, WHICH HELD, IN A DECISION OF MARCH 7, 1962, THAT THE CONTRACT DID NOT REQUIRE THE USE OF TYPE 2 PACKING AND GAVE JUDGMENT FOR THE PLAINTIFF FOR THE AMOUNT OF $3,584.

WHILE THE ACTION WAS PENDING IN THE COURT OF CLAIMS, THE CONTRACTING OFFICER, ON THE BASIS OF SHIPPING WEIGHTS FURNISHED BY THE CONTRACTOR, DETERMINED THAT THE FREIGHT SAVING RESULTING FROM THE USE OF TYPE 1 CONTAINERS AMOUNTED TO $1,932.54, AND NOTIFIED THE CONTRACTOR TO THAT EFFECT BY LETTER DATED JULY 1, 1959. THE LAST PARAGRAPH OF THAT LETTER WAS AS FOLLOWS:

"IF THE AMOUNT OF THE ASSESSMENT IS IN DISPUTE (AS DISTINGUISHED FROM THE ISSUES BEFORE THE COURT OF CLAIMS), IT IS REQUESTED THAT YOU ADVISE THE UNDERSIGNED AND SUBMIT ANY PERTINENT INFORMATION.'

AT THE BOTTOM OF THE GOVERNMENT COPY OF THE LETTER THERE APPEARS THE FOLLOWING "MEMO FOR ECORD: "

"CONTR DISPUTES DETERMINATION OF KO THAT TYPE II LOAD CONTAINERS WERE REQUIRED BY APPLICABLE SPECIFICATIONS HOWEVER, IT AGREED WITHOUT PREJUDICE TO ITS RIGHTS, TO REIMBURSE THE GOVERNMENT FOR SAVINGS REALIZED BY IT IN THE PURCHASE OF CONTAINERS AND FOR FREIGHT SAVINGS REALIZED BY THE USE OF THE LIGHTER CONTAINER. CONTR'S APPEAL WAS DENIED BY THE ASBCA AND THE MATTER IS PRESENTLY PENDING BEFORE THE COURT OF CLAIMS.'

UNDER DATE OF JULY 13, 1959, CONTRACTOR'S COUNSEL REPLIED AS FOLLOWS:

"YOU ARE ADVISED THAT THE AMOUNT OF THE ASSESSMENT BASED UPON THE DIFFERENTIAL IN WEIGHTS BETWEEN TYPE 1 LOAD BOX AND TYPE II TIMES THE NUMBER OF BOXES USED TIMES THE FREIGHT RATE IS NOT IN DISPUTE ALTHOUGH THE COMPANY DOES DISPUTE THE PROPRIETY OF THE ASSESSMENT THEREFOR WHICH IS THE ISSUE WHICH WAS BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS AT DOCKET NO. ASBCA NOS. 5093 AND 5306 AND WHICH IS NOW PENDING BEFORE THE UNITED STATES COURT OF CLAIMS IN ABE L. GREENBERG CO., INC. V. THE UNITED STATES, DOCKET NO. 196-59.'

THE AMOUNT OF $1,932.54 REFERRED TO IN THE ABOVE CORRESPONDENCE WAS DEDUCTED AND WITHHELD FROM AMOUNTS OTHERWISE DUE THE CONTRACTOR ON A VOUCHER DATED FEBRUARY 21, 1961. CONTRACTOR BY LETTER OF JULY 6, 1961, REFERRED TO THIS DEDUCTION AND REQUESTED THE CONTRACTING OFFICER TO MAKE A FINDING THAT THE CONTRACT PROVIDED FOR TYPE 1 LOAD CONTAINERS AND TO REFUND THE $1,932.54. THE CONTRACTING OFFICER REPLIED BY LETTER DATED JULY 14, 1961, WHICH CONCLUDED AS FOLLOWS:

"SINCE THE ARMED SERVICES BOARD OF CONTRACT APPEALS DECIDED THAT A TYPE 2 BOX WAS REQUIRED UNDER THE TERMS OF THE CONTRACT AND SINCE THIS MATTER IS PRESENTLY PENDING BEFORE THE U.S. COURT OF CLAIMS, THE CONTRACTING OFFICER IS OF THE OPINION THAT THERE IS NO BASIS FOR ISSUING FINDINGS OR REFUNDING THE AMOUNT DEDUCTED FOR SAVINGS INTRANSPORTATION COSTS.'

CONTRACTOR APPEALED THIS RULING OF THE CONTRACTING OFFICER TO THE ASBCA; THE GOVERNMENT MOVED TO DISMISS ON THE GROUND THAT THE PRIOR DECISION OF THE BOARD ON THE $3,584 DEDUCTION MADE THE MATTER RES JUDICATA; AT THE REQUEST OF THE CONTRACTOR HEARING ON THE MOTION WAS DEFERRED PENDING THE DECISION OF THE COURT OF CLAIMS IN THE PENDING SUIT, AND THE BOARD HAS NOT YET TAKEN ANY ACTION WITH RESPECT TO THE APPEAL.

UPON THE ENTRY OF THE JUDGMENT OF THE COURT OF CLAIMS ON MARCH 7, 1962, THE CONTRACTING OFFICER, BEING OF OPINION THAT UNDER THE RULING OF THE COURT THERE WAS NO LONGER ANY BASIS FOR WITHHOLDING $1,932.54, UNDERTOOK TO SETTLE THE MATTER BY PREPARING A SUPPLEMENTAL AGREEMENT PROVIDING FOR REFUND TO THE CONTRACTOR OF THAT AMOUNT AND WITHDRAWAL BY THE CONTRACTOR OF THE APPEAL PENDING BEFORE THE ASBCA. THIS AGREEMENT WAS SIGNED BY CONTRACTOR'S COUNSEL, BUT BEFORE IT WAS SIGNED BY THE CONTRACTING OFFICER THERE WAS RECEIVED BY THE DEFENSE SUPPLY AGENCY A LETTER FROM THE DEPARTMENT OF JUSTICE, WHICH STATED THE OPINION THAT THE CONTRACTOR SHOULD HAVE PLEADED AND PROVED THIS CLAIM IN THE COURT OF CLAIMS PROCEEDING, AND THAT BECAUSE IT HAD FAILED TO DO SO ANY ACTION THEREON WOULD BE SUBJECT TO THE DEFENSE OF RES JUDICATA. THE LETTER FURTHER STATED, HOWEVER, THAT IF UNDER THE PECULIAR CIRCUMSTANCES OF THE CASE IT WAS BELIEVED THAT THE CLAIM WAS MERITORIOUS AND ONE THAT SHOULD BE PAID THE DEPARTMENT OF JUSTICE HAD NO BASIS FOR OBJECTING TO SUCH PAYMENT.

IN CONSEQUENCE OF THIS LETTER THE CLAIM WAS REFERRED TO THIS OFFICE FOR SETTLEMENT, WITH ADMINISTRATIVE RECOMMENDATION FOR PAYMENT.

IT DOES NOT APPEAR THAT THE DEPARTMENT OF JUSTICE, AT THE TIME OF WRITING OF THE LETTER LAST REFERRED TO, WAS AWARE OF THE CORRESPONDENCE AND ACTIONS HEREIN RECITED WITH REFERENCE TO THE $1,932.54 CLAIM. THAT LETTER APPARENTLY WAS WRITTEN AS THE RESULT OF AN "INFORMAL TELEPHONE CONVERSATION OF MAY 21ST" WITH THE OFFICE OF GENERAL COUNSEL OF THE DEFENSE SUPPLY AGENCY, WHEREBY THE DEPARTMENT OF JUSTICE WAS ADVISED THAT THE CONTRACTOR HAD A CLAIM PENDING BEFORE THE ASBCA FOR FREIGHT SAVINGS, WHICH "APPARENTLY ARISES OUT OF THE SELF-SAME CONTRACT * * * THAT HAS BEEN LITIGATED TO A FINAL JUDGMENT IN THE UNITED STATES COURT OF CLAIMS * * *.' THE LETTER THEN REFERS TO AN ATTEMPT BY THE PLAINTIFF (CONTRACTOR) DURING THE TRIAL OF THE COURT ACTION ON APRIL 20, 1960, TO INTRODUCE IN EVIDENCE A LETTER FROM THE CONTRACTING OFFICER ADVISING THE PLAINTIFF THAT ITS ACCOUNT HAD BEEN ASSESSED $1,932.54 FOR FREIGHT SAVINGS, WHICH WAS OBJECTED TO BY THE GOVERNMENT AND REJECTED BY THE TRIAL COMMISSIONER. THE LETTER THEN PROCEEDS TO STATE THE CONCLUSION THAT THE CLAIM "FOR ADDITIONAL DAMAGES" SHOULD HAVE BEEN PLEADED AND PROVED IN THE ACTION.

IT IS CLEAR FROM THE RECORD THAT AT THE TIME OF THE TRIAL THE FREIGHT CLAIM DID NOT EXIST AND COULD NOT HAVE BEEN PLEADED OR PROVED. ALTHOUGH THE CONTRACTING OFFICER'S LETTER OF JULY 1, 1959, ADVISED THE CONTRACTOR THAT ITS "ACCOUNT HAS BEEN ASSESSED THE SUM OF $1,932.54," IT WAS NOT UNTIL FEBRUARY 21, 1961, THAT THE AMOUNT WAS IN FACT COLLECTED BY WITHHOLDING FROM AN AMOUNT OF SOME $10,000 FOUND DUE THE CONTRACTOR UPON FINAL SETTLEMENT FOR GOVERNMENT-FURNISHED MATERIAL USED IN PERFORMANCE OF THE CONTRACT. AT THAT TIME IT APPEARS THAT TESTIMONY IN THE COURT ACTION HAD BEEN CLOSED, BOTH PARTIES HAD FILED THEIR REQUESTS FOR FINDINGS AND OBJECTIONS THERETO, AND THE ACTION WAS AWAITING FINAL DECISION ON THE TESTIMONY TAKEN.

WHETHER OR NOT THE COURT WOULD AT THAT POINT HAVE PERMITTED AMENDMENT OF THE COMPLAINT AND REOPENING OF TESTIMONY TO DEAL WITH THE FREIGHT CLAIM, WE ARE SATISFIED THAT THE ACTIONS OF THE CONTRACTING OFFICER AND THE CORRESPONDENCE BETWEEN THE PARTIES WOULD PRECLUDE APPLICATION OF THE DOCTRINE OF RES JUDICATA AS A BAR TO THE CLAIM BEFORE US. THE CORRESPONDENCE ABOVE REFERRED TO SHOWS COMPLETE AGREEMENT BETWEEN THE PARTIES THAT THERE WAS NO DISPUTED ISSUE IN CONNECTION WITH THE FREIGHT SAVINGS EXCEPT THE LEGAL QUESTION OF INTERPRETATION OF THE CONTRACT, WHICH WAS FULLY BEFORE THE COURT OF CLAIMS, AND THAT THE GOVERNMENT'S RIGHT TO SUCH SAVINGS DEPENDED UPON THE SAME ISSUE AS ITS RIGHT TO THE $3,584 PRICE REDUCTION. THE CONTRACTING OFFICER'S LETTER OF JULY 1, 1959, AND HIS REFUSAL OF JULY 14, 1961, TO ISSUE FINDINGS AS TO THE ASSESSMENT OF THE FREIGHT SAVINGS, AND HIS ACTION IN PREPARING FOR THE CONTRACTOR'S SIGNATURE THE SUPPLEMENTAL AGREEMENT FOR SETTLEMENT, AS WELL AS HIS POSITIVE STATEMENT IN HIS ADMINISTRATIVE REPORT FORWARDING THE CLAIM TO OUR OFFICE, ALL EVIDENCE HIS CLEAR UNDERSTANDING AND INTENTION THAT THE FREIGHT ITEM WOULD BE SETTLED IN ACCORDANCE WITH THE DECISION OF THE COURT OF CLAIMS ON THE CONTRACT PRICE REDUCTION. WE ARE AWARE OF NO GROUND FOR CONSIDERING HIS ACTIONS AND INTENTIONS IN THAT RESPECT IN ANY WAY IMPROPER OR UNAUTHORIZED OR NOT BINDING UPON THE GOVERNMENT. WHETHER THE EFFECT OF THOSE ACTIONS BE CONSIDERED AS A WAIVER OF THE DEFENSE OF RES JUDICATA OR A CONSENT TO SPLITTING A CAUSE OF ACTION OR AN IMPLIED PROMISE TO PAY IN ACCORDANCE WITH THE COURT'S DECISION, WE CANNOT AVOID THE CONCLUSION THAT THE CONTRACTOR IS ENTITLED BOTH EQUITABLY AND LEGALLY TO PAYMENT OF THE AMOUNT IN QUESTION, AND WE ARE ACCORDINGLY DIRECTING OUR CLAIMS DIVISION TO CERTIFY THE VOUCHER THEREFOR FOR PAYMENTS.

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