B-143810, SEP. 2, 1960

B-143810: Sep 2, 1960

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FEDERAL HOUSING ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22. THE TWO STACKERS WERE DELIVERED TO. EACH STACKER WAS EQUIPPED WITH A SET OF FOUR AUTOMOTIVE-TYPE. THE CONTRACTOR GUARANTEED THE EQUIPMENT AGAINST DEFECTS IN WORKMANSHIP AND MATERIAL FOR A PERIOD OF ONE YEAR AND THE CONTRACT FURTHER STIPULATED THAT "SUCH PARTS REQUIRING REPLACEMENT WILL BE AT NO COST TO THE GOVERNMENT FOR LABOR AND MATERIAL.'. BEFORE THE EXPIRATION OF THE GUARANTEE PERIOD ONE OF THE BATTERY CHARGERS BECAME DEFECTIVE AND IT WAS REPAIRED BY THE CONTRACTOR AT NO CHARGE TO THE GOVERNMENT. THE LIFE OF THE BATTERIES WAS SHORTENED AND CONSIDERATION WAS GIVEN TO THE QUESTION AS TO WHETHER THE CONTRACTOR SHOULD BE PERMITTED TO REPLACE THEM WITH USED BATTERIES WHICH WOULD LAST FOR THE REMAINING PART OF THE GUARANTEE PERIOD.

B-143810, SEP. 2, 1960

TO MR. LESTER H. THOMPSON, AUTHORIZED CERTIFYING OFFICER, COMPTROLLER'S DIVISION, FEDERAL HOUSING ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22, 1960, FB:HS, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER IT WOULD BE PROPER FOR YOU TO CERTIFY FOR PAYMENT BUREAU VOUCHER NO. 75385, FOR $75.60, STATED IN FAVOR OF PAUL H. WERRES COMPANY, INC., WASHINGTON, D.C., ON ACCOUNT OF THE FURNISHING OF EIGHT NEW BATTERIES FOR THE TWO RAYMOND WALKIE ELECTRIC STACKERS WHICH HAD BEEN PURCHASED BY THE FEDERAL HOUSING ADMINISTRATION AT A PRICE OF $2,945 EACH UNDER CONTRACT NO. HA/--- (FH-794, DATED JUNE 25, 1959, WITH THAT COMPANY.

THE TWO STACKERS WERE DELIVERED TO, AND ACCEPTED BY, THE FEDERAL HOUSING ADMINISTRATION ON AUGUST 19, 1959, AND EACH STACKER WAS EQUIPPED WITH A SET OF FOUR AUTOMOTIVE-TYPE, SIX-VOLT BATTERIES. THE CONTRACTOR ALSO FURNISHED, AS A PART OF ITS UNDERTAKING UNDER THE CONTRACT, TWO BATTERY CHARGERS CAPABLE OF OPERATING ON 110-120 VOLT, 60 CYCLE, ALTERNATING CURRENT. THE CONTRACTOR GUARANTEED THE EQUIPMENT AGAINST DEFECTS IN WORKMANSHIP AND MATERIAL FOR A PERIOD OF ONE YEAR AND THE CONTRACT FURTHER STIPULATED THAT "SUCH PARTS REQUIRING REPLACEMENT WILL BE AT NO COST TO THE GOVERNMENT FOR LABOR AND MATERIAL.'

BEFORE THE EXPIRATION OF THE GUARANTEE PERIOD ONE OF THE BATTERY CHARGERS BECAME DEFECTIVE AND IT WAS REPAIRED BY THE CONTRACTOR AT NO CHARGE TO THE GOVERNMENT. HOWEVER, IT DEVELOPED THAT, AS THE APPARENT RESULT OF USING THE DEFECTIVE CHARGER, THE LIFE OF THE BATTERIES WAS SHORTENED AND CONSIDERATION WAS GIVEN TO THE QUESTION AS TO WHETHER THE CONTRACTOR SHOULD BE PERMITTED TO REPLACE THEM WITH USED BATTERIES WHICH WOULD LAST FOR THE REMAINING PART OF THE GUARANTEE PERIOD, OR BE REQUIRED TO INSTALL NEW BATTERIES WHICH MIGHT LAST FOR AN ADDITIONAL ONE- OR TWO-YEAR PERIOD. THE CONTRACTOR OFFERED TO INSTALL NEW BATTERIES FOR ONE-HALF OF THEIR COST AND THAT OFFER WAS ACCEPTED BY THE CONTRACTING OFFICER, SUBJECT TO THE CONDITION THAT THE VOUCHER PROPOSING PAYMENT OF THE AMOUNT IN ADDITION TO THE CONTRACT PRICE WOULD BE SUBMITTED TO OUR OFFICE FOR APPROVAL. THE CONTRACTOR THEN PURCHASED EIGHT NEW EXIDE BATTERIES FOR THE NET AMOUNT OF $151.60 AFTER DEDUCTION OF A TRADE-IN ALLOWANCE OF $8. AN INVOICE FOR $75.60 WAS SUBMITTED TO THE GOVERNMENT BY LETTER DATED JUNE 15, 1960, BUT THE LETTER ITSELF SHOWS THAT IT WAS INTENDED TO BILL THE GOVERNMENT FOR $75.80, OR EXACTLY ONE-HALF OF THE AMOUNT OF $151.60, PAID TO THE SUPPLIER OF THE NEW BATTERIES.

THE RECORD SHOWS THAT, WHEN THE GOVERNMENT NOTIFIED THE CONTRACTOR THAT ONE OF THE CHARGERS WAS DEFECTIVE, THE CONTRACTOR REMOVED THE CHARGER AND SUPPLIED A "LOANER CHARGER" FOR USE BY THE GOVERNMENT WHILE THE DEFECTIVE CHARGER WAS BEING REPAIRED. ALSO, FROM INFORMATION OBTAINED INFORMALLY FROM THE CONTRACTOR'S REPRESENTATIVE, IT APPEARS THAT SUBSTITUTE USED BATTERIES WERE SUPPLIED WHEN THE ORIGINAL BATTERIES NO LONGER HAD THE REQUIRED CAPACITY TO PERMIT OPERATION OF THE STACKERS FOR AN EIGHT-HOUR SHIFT UNDER NORMAL USE. THE CONTRACTOR'S REPRESENTATIVE SUGGESTED THE POSSIBILITY THAT THE DEFECTIVE CHARGER WAS USED FOR SOME TIME AFTER IT WAS DISCOVERED BY THE OPERATORS OF THE STACKERS THAT THE CHARGER WAS NOT IN GOOD CONDITION. WE WERE ADVISED, FURTHER, THAT THE SUPPLIER OF THE ORIGINAL BATTERIES DID NOT GUARANTEE THEM ON A PRO RATA OR OTHER BASIS.

ALTHOUGH THE CONTRACTOR INDICATED TO THE FEDERAL HOUSING ADMINISTRATION THAT IT WOULD ASSUME RESPONSIBILITY FOR THE SHORTENED LIFE OF THE BATTERIES, THE CONTRACTOR MAINTAINED THAT THE BATTERIES THEMSELVES HAD NO DEFECTS IN WORKMANSHIP AND MATERIAL WHICH WOULD HAVE REQUIRED REPLACEMENT UNDER THE ONE-YEAR GUARANTEE OF THE STACKERS AND CHARGERS. WE DOUBT THAT THE CONTRACTOR'S RESPONSIBILITY CONCERNING THE DEFECTIVE CHARGER COULD BE SAID TO EXTEND SO FAR AS TO REQUIRE THE FURNISHING OF NEW BATTERIES AFTER THE STACKERS HAD BEEN USED FOR APPROXIMATELY TEN MONTHS AND WE BELIEVE THAT THE TENTATIVE AGREEMENT REACHED IN THE MATTER WAS PROPER IN THE PARTICULAR CIRCUMSTANCES.

WE SUGGEST THAT THE AMOUNT OF THE VOUCHER BE CHANGED TO $75.80 AND YOU ARE ADVISED THAT WE WOULD HAVE NO OBJECTION TO YOUR CERTIFYING THE VOUCHER FOR PAYMENT IN THAT AMOUNT. AS REQUESTED, THE VOUCHER AND ITS ACCOMPANYING PAPERS ARE RETURNED HEREWITH.