B-141498, JAN. 15, 1960

B-141498: Jan 15, 1960

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INC.: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 30. CERTAIN CHANGES WERE MADE IN THE DESIGN OF THE GAGE AND. THE QUANTITY OF THE GAGES TO BE MANUFACTURED WAS INCREASED FROM THREE TO FIVE. IN SUCH FINDING HE DENIED CERTAIN ITEMS OF YOUR CLAIM FOR THE REASON THAT THE CHANGES WERE MADE PRIOR TO BASIC APPROVAL. OTHER ITEMS OF YOUR CLAIM WERE DENIED FOR THE REASON THAT THE COST OF THOSE ITEMS WAS YOUR RESPONSIBILITY. THE CONTRACTING OFFICER ADMITTED THAT CERTAIN ITEMS WERE LEGITIMATE CLAIMS. STATED THAT BECAUSE NO FORMAL CHANGES WERE MADE UNDER THE CONTRACT FOR THESE ITEMS. HE WAS WITHOUT AUTHORITY TO AMEND THE CONTRACT. THE CONTRACTING OFFICER ADVISED YOU THAT THE ONLY COURSE OF ACTION AVAILABLE IN THE MATTER WAS TO PROCESS THE INFORMATION SUBMITTED BY YOU AS A CLAIM TO THE GENERAL ACCOUNTING OFFICE FOR SETTLEMENT.

B-141498, JAN. 15, 1960

TO WEBER AND SCHER MFG. CO., INC.:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 30, 1959, WITH ENCLOSURES, REQUESTING REVIEW OF SETTLEMENT DATED OCTOBER 20, 1959, WHICH DISALLOWED $3,927.50 OF YOUR CLAIM FOR $4,757.50, COVERING ALLEGED INCREASED COSTS ARISING FROM CHANGES ORDERED BY THE GOVERNMENT IN THE BASIC DESIGN OF GAGES FABRICATED UNDER CONTRACT NO. N171 14971A.

UNDER THE TERMS OF THE CONTRACT YOU AGREED TO DESIGN A GAGE IN ACCORDANCE WITH CERTAIN SKETCHES SUBMITTED WITH THE INVITATION AND AFTER BASIC APPROVAL THEREOF, TO MANUFACTURE THREE OF THE GAGES. BY AMENDMENTS NOS. 1 THROUGH 7, INCLUSIVE, CERTAIN CHANGES WERE MADE IN THE DESIGN OF THE GAGE AND, ALSO, THE QUANTITY OF THE GAGES TO BE MANUFACTURED WAS INCREASED FROM THREE TO FIVE.

IN A LETTER DATED SEPTEMBER 16, 1958, TO THE SUPPLY DEPARTMENT, U.S. NAVAL GUN FACTORY (NOW KNOWN AS U.S. NAVAL WEAPONS PLANT), IN WHICH YOU ITEMIZED EACH TASK PERFORMED AND THE COST THEREOF, YOU REQUESTED THAT THE CONTRACT PRICE OF THE GAGES BE INCREASED BY $4,757.50 TO COMPENSATE YOU FOR WORK PERFORMED SUBSEQUENT TO BASIC DESIGN APPROVAL ON ENGINEERING CHANGES, WHICH YOU ALLEGE HAD BEEN MADE BY THE GAGE DIVISION, U.S. NAVAL WEAPONS PLANT. IN RESPONSE TO THE ABOVE REQUEST, THE CONTRACTING OFFICER ISSUED A FORMAL FINDING DATED OCTOBER 30, 1958, AND IN SUCH FINDING HE DENIED CERTAIN ITEMS OF YOUR CLAIM FOR THE REASON THAT THE CHANGES WERE MADE PRIOR TO BASIC APPROVAL, AND OTHER ITEMS OF YOUR CLAIM WERE DENIED FOR THE REASON THAT THE COST OF THOSE ITEMS WAS YOUR RESPONSIBILITY. THE FINDING, THE CONTRACTING OFFICER ADMITTED THAT CERTAIN ITEMS WERE LEGITIMATE CLAIMS, BUT STATED THAT BECAUSE NO FORMAL CHANGES WERE MADE UNDER THE CONTRACT FOR THESE ITEMS, HE WAS WITHOUT AUTHORITY TO AMEND THE CONTRACT. THE CONTRACTING OFFICER ADVISED YOU THAT THE ONLY COURSE OF ACTION AVAILABLE IN THE MATTER WAS TO PROCESS THE INFORMATION SUBMITTED BY YOU AS A CLAIM TO THE GENERAL ACCOUNTING OFFICE FOR SETTLEMENT. YOUR CLAIM WAS SUBMITTED TO OUR OFFICE FOR SETTLEMENT WITH AN ADMINISTRATIVE RECOMMENDATION THAT $830 OF YOUR CLAIM FOR $4,757.50 BE ALLOWED. SETTLEMENT DATED OCTOBER 20, 1959, THE SUM OF $830 WAS ALLOWED TO YOU AND THE BALANCE OF YOUR CLAIM WAS DISALLOWED.

IT IS ADMINISTRATIVELY REPORTED THAT PRIOR TO THE SUBMISSION OF YOUR CLAIM TO OUR OFFICE FOR SETTLEMENT, THE U.S. NAVAL WEAPONS PLANT FORWARDED THE ENTIRE CORRESPONDENCE SUBMITTED BY YOU TO THE INSPECTOR OF NAVAL MATERIAL, NEWARK, NEW JERSEY, FOR VERIFICATION, COMMENT AND RECOMMENDATION. YOU CONTEND THAT THE INSPECTOR OF NAVAL MATERIAL WAS REQUESTED BY THE U.S. NAVAL WEAPONS PLANT TO REVIEW ONLY CERTAIN ITEMS OF YOUR CLAIM AND THAT, THEREFORE, YOUR CLAIM HAS NOT RECEIVED THE PROPER CONSIDERATION.

THE QUESTION OF WHETHER THE INSPECTOR OF NAVAL MATERIAL REVIEWED ALL ITEMS OF YOUR CLAIM IS IMMATERIAL IN THE PRESENT CASE BECAUSE OF THE FOLLOWING ENUMERATED CONTRACT PROVISIONS. ARTICLE 2 OF THE GENERAL PROVISIONS OF THE CONTRACT AUTHORIZED THE CONTRACTING OFFICER TO MAKE CHANGES WITHIN THE SCOPE OF THE CONTRACT AND PROVIDED FOR EQUITABLE ADJUSTMENTS IN THE CONTRACT PRICE. IT WAS PROVIDED ALSO THAT FAILURE TO AGREE TO ANY ADJUSTMENT WOULD BE A DISPUTE CONCERNING A QUESTION OF FACT WITHIN THE MEANING OF THE CLAUSE OF THE CONTRACT ENTITLED "DISPUTES," ARTICLE 29 OF THE ADDITIONAL GENERAL PROVISIONS. THIS CLAUSE PROVIDED THAT ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT WHICH WAS NOT DISPOSED OF BY AGREEMENT WOULD BE DECIDED BY THE CONTRACTING OFFICER WHO WOULD REDUCE HIS DECISION TO WRITING AND FURNISH A COPY TO THE CONTRACTOR. THE CONTRACTOR WAS GIVEN A RIGHT TO APPEAL FROM SUCH DECISION WITHIN 30 DAYS TO THE SECRETARY OR HIS DUTY AUTHORIZED REPRESENTATIVE, WHOSE DECISION OR THAT OF HIS REPRESENTATIVE WOULD BE FINAL AND CONCLUSIVE. IF NO APPEAL IS TAKEN THE DECISION OF THE CONTRACTING OFFICER WAS TO BE FINAL AND CONCLUSIVE.

IN THE PRESENT CASE, PURSUANT TO THE PROVISIONS OF ARTICLE 2 OF THE GENERAL PROVISIONS, AND ARTICLE 29 OF THE ADDITIONAL GENERAL PROVISIONS, THE CONTRACTING OFFICER RENDERED THE FINDING OF OCTOBER 30, 1958, PURSUANT TO YOUR LETTER OF SEPTEMBER 16, 1958. IN THE FINDING THE CONTRACTING OFFICER ADVISED YOU THAT HE DID NOT HAVE THE AUTHORITY TO AMEND THE CONTRACT BECAUSE NO FORMAL CHANGES WERE MADE UNDER THE CONTRACT AND THAT HE COULD ONLY RECOMMEND PAYMENT OF THE SUM OF $830 FOR THE ITEMS WHICH HE CONSIDERED LEGITIMATE. IF YOU WERE DISSATISFIED WITH THE AMOUNT RECOMMENDED BY THE CONTRACTING OFFICER IN THIS CASE, YOU SHOULD HAVE FOLLOWED THE APPEAL PROCEDURE OUTLINED IN THE "DISPUTES" CLAUSE OF THE CONTRACT. SINCE YOU FAILED TO EXERCISE YOUR RIGHT TO APPEAL TO THE HEAD OF THE DEPARTMENT FROM THE CONTRACTING OFFICER'S FINDING, SUCH FINDING BECAME FINAL AND CONCLUSIVE. IT IS WELL SETTLED THAT A CLAIM AGAINST THE UNITED STATES IS BARRED BY THE FAILURE OF THE CLAIMANT TO EXHAUST ITS ADMINISTRATIVE REMEDIES UNDER THE CONTRACT PROVISIONS SUCH AS WERE PRESCRIBED IN THE "DISPUTES" CLAUSE OF YOUR CONTRACT. SILAS MASON CONSTRUCTION COMPANY V. UNITED STATES, 90 C.CLS. 266; UNITED STATES V. CALLAHAN-WALKER COMPANY, 317 U.S. 56; UNITED STATES V. BLAIR, 321 U.S. 730, 735, 736; UNITED STATES V. HOLPUCH CO., 328 U.S. 234.

IN THE CIRCUMSTANCES, WE FIND NO LEGAL BASIS TO SUPPORT YOUR CLAIM, AND OUR PRIOR DISALLOWANCE IS ACCORDINGLY SUSTAINED.