B-140803, JAN. 20, 1960

B-140803: Jan 20, 1960

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THE PURCHASE ORDER WAS EXAMINED BY AIR FORCE PERSONNEL UPON RECEIPT OF THE SUPPLIES AND IT WAS DISCOVERED THAT THE PRICES CHARGED WERE EXCESSIVE. AFTER AN UNSUCCESSFUL ATTEMPT TO HAVE THE PRICES REDUCED TO A REASONABLE LEVEL. THE SUPPLIES WERE RETURNED TO THE SELLER. DELIVERY WAS REFUSED. THE GOODS ARE STILL STORED AT THE NIAGARA FALLS MUNICIPAL AIRPORT. SUBSTANTIALLY IDENTICAL SUPPLIES HAVE SINCE BEEN PROCURED FROM OTHER SOURCES AT PRICES BELIEVED TO APPROXIMATE THEIR FAIR MARKET VALUE. THE PRICES UPON REPROCUREMENT ARE AS FOLLOWS: CHART ITEM DELTA REPROCUREMENT QUANTITY UNIT PRICE UNIT PRICE OIL MOLASSES GATE 2 $140.00* $3.26 SEALING COMPOUND (PINTS) 36 14.00 3.60 ADHESIVE RUBBER THINNER 2 38.00 1.768 (GALLONS) */VOLUNTARILY REDUCED TO $100 PER UNIT BY LETTER OF OCTOBER 9.

B-140803, JAN. 20, 1960

TO FRED L. ROTHSCHILD, ESQUIRE:

WE REFER TO YOUR LETTER OF DECEMBER 11, 1959, ON BEHALF OF THE DELTA CHEMICAL WORKS, INC., WITH RESPECT TO AN AMICABLE ADJUSTMENT ON THAT FIRM'S CLAIM AGAINST THE UNITED STATES, CLAIM NO. Z 1494717 (3), ARISING OUT OF PERFORMANCE UNDER PURCHASE ORDER NO. (30-617) 58-457, ISSUED AUGUST 14, 1957, BY THE AIR FORCE PROCUREMENT OFFICE, NIAGARA FALLS MUNICIPAL AIRPORT, NIAGARA FALLS, NEW YORK.

THE PURCHASE ORDER, ISSUED PURSUANT TO THE AUTHORITY IN 10 U.S.C. 2304 (A) (3), CALLED FOR DELIVERY OF ITEMS AT PRICES AS ORIGINALLY OFFERED BY DELTA. THE PURCHASE ORDER WAS EXAMINED BY AIR FORCE PERSONNEL UPON RECEIPT OF THE SUPPLIES AND IT WAS DISCOVERED THAT THE PRICES CHARGED WERE EXCESSIVE. AFTER AN UNSUCCESSFUL ATTEMPT TO HAVE THE PRICES REDUCED TO A REASONABLE LEVEL, THE SUPPLIES WERE RETURNED TO THE SELLER, DELIVERY WAS REFUSED, AND THE GOODS ARE STILL STORED AT THE NIAGARA FALLS MUNICIPAL AIRPORT.

SUBSTANTIALLY IDENTICAL SUPPLIES HAVE SINCE BEEN PROCURED FROM OTHER SOURCES AT PRICES BELIEVED TO APPROXIMATE THEIR FAIR MARKET VALUE. THE ITEMS, THE PRICES ASKED BY DELTA, AND THE PRICES UPON REPROCUREMENT ARE AS FOLLOWS:

CHART

ITEM DELTA REPROCUREMENT

QUANTITY UNIT PRICE UNIT PRICE OIL MOLASSES GATE

2 $140.00* $3.26 SEALING COMPOUND (PINTS) 36 14.00

3.60 ADHESIVE RUBBER THINNER 2 38.00 1.768 (GALLONS)

*/VOLUNTARILY REDUCED TO $100 PER UNIT BY LETTER OF OCTOBER 9, 1957.)

THE CLAIM, ORIGINALLY SUBMITTED BY DELTA UNDER LETTER OF AUGUST 14, 1958, WAS DENIED AFTER FULL INVESTIGATION AND CONSIDERATION BY OUR SETTLEMENT OF OCTOBER 13, 1959. THE BASIS FOR THE DENIAL WAS THAT THE PRICES CHARGED BY DELTA WERE SO GROSSLY EXORBITANT AS TO RENDER THE BARGAIN UNCONSCIONABLE AND, THEREFORE, VOID. SEE IN THIS CONNECTION, HUME V. UNITED STATES, 21 C.CLS. 328, AFFIRMED 132 U.S. 406; AND BEARD'S CASE, 3 C.CLS. 122, 130. THE CONCLUSION EXPRESSED IN OUR SETTLEMENT OF OCTOBER 13, 1959, IS BASED ON SOUND JUDICIAL PRECEDENT, AND INDEED APPEARS TO BE THE ONLY POSSIBLE CONCLUSION UNDER THE FACTS AND CIRCUMSTANCES. IN ANY CASE, THERE IS NO AUTHORITY IN OUR OFFICE TO COMPROMISE CLAIMS EITHER BY OR AGAINST THE UNITED STATES. ACCORDINGLY, IT DOES NOT APPEAR THAT ANY FURTHER CONTACT WITH OUR OFFICE RESPECTING THE MATTER WILL SERVE ANY USEFUL PURPOSE.