B-144319, DEC. 16, 1960

B-144319, DEC. 16, 1960

TO SYSTRON-DONNER CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 17, 1960, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED SEPTEMBER 26, 1960, WHICH DISALLOWED $1,660 FROM AMOUNTS OTHERWISE DUE YOU UNDER PURCHASE ORDER NO. 12625-0 DATED FEBRUARY 25, 1960, ON ACCOUNT OF THE LATE DELIVERY OF CERTAIN EQUIPMENT TO THE NATIONAL BUREAU OF STANDARDS UNDER SUCH PURCHASE ORDER. YOU CONTEND, IN EFFECT, THAT THE DELAY WAS EXCUSABLE.

THE PURCHASE ORDER REQUIRED YOU TO MAKE DELIVERY WITHIN 60 DAYS AFTER RECEIPT OF THE ORDER, OR APRIL 29, 1960. HOWEVER, THE RECORD SHOWS THAT FINAL DELIVERY AND ACCEPTANCE OCCURRED ON JULY 21, 1960, OR 83 DAYS BEYOND THE FINAL DELIVERY DATE. THE PURCHASE ORDER PROVIDED FOR THE ASSESSMENT OF LIQUIDATED DAMAGES AT THE RATE OF $20 PER DAY FOR EACH CALENDAR DAY OF DELAY IN EXCESS OF THE TIME SPECIFIED FOR DELIVERY. BY LETTER DATED APRIL 19, 1960, THE CONTRACTING OFFICER ADVISED YOU THAT YOUR PROPOSAL TO DELAY DELIVERY BECAUSE OF DEALY IN RECEIVING PARTS FROM YOUR SUPPLIER WOULD NOT BE EXCUSED AND THAT LIQUIDATED DAMAGES WOULD BE ASSESSED SINCE THE DELAY WAS NOT WITHOUT YOUR FAULT OR NEGLIGENCE. SUBSEQUENTLY, ON MAY 17, 1960, THE CONTRACTING OFFICER NOTIFIED YOU THAT THE ALLEGED CAUSE OF DELAY OF YOUR SUPPLIER WAS NOT ACCEPTABLE AND THAT LIQUIDATED DAMAGES WOULD CONTINUE TO ACCRUE UNTIL FINAL DELIVERY. ON JULY 14, 1960, YOU WERE GIVEN TEN CALENDAR DAYS FROM THE DATE OF RECEIPT OF THE LETTER TO DELIVER ACCEPTABLE EQUIPMENT OR THE PURCHASE ORDER WOULD BE TERMINATED, IN WHOLE OR IN PART. AS HERETOFORE STATED, FINAL DELIVERY AND ACCEPTANCE WAS ACCOMPLISHED ON JULY 21, 1960.

THERE IS NO QUESTION BUT THAT THE MATTER HERE INVOLVED CONSTITUTED A DISPUTE WHICH AROSE UNDER THE PURCHASE ORDER.

ARTICLE 12 OF THE PURCHASE ORDER, ENTITLED "DISPUTES" PROVIDED IN PERTINENT PART:

"/A) EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER, WHO SHALL REDUCE HIS DECISION TO WRITING AND MAIL OR OTHERWISE FURNISH A COPY THEREOF TO THE CONTRACTOR. THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE UNLESS, WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH COPY, THE CONTRACTOR MAILS OR OTHERWISE FURNISHES TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO THE SECRETARY. * * *"

IN LETTER OF APRIL 19, 1960, THE PROCUREMENT OFFICER ADVISED YOU AS FOLLOWS:

"YOUR APRIL 15, 1960 LETTER INFORMS US THAT YOU PROPOSE TO DELAY DELIVERY UNTIL MAY 30, 1960. THE PURPOSE OF THIS LETTER IS TO APPRISE YOU OF THE POSSIBLE CONSEQUENCES TO SYSTRON INCIDENT TO SUCH A DELAY.

"SINCE YOU SIGNED THE CONTRACT, YOU KNOW THAT IT CONTAINS A LIQUIDATED DAMAGES CLAUSE--- $20.00 A DAY FOR EVERY DAY AFTER APRIL 29, 1960.

"THE REASONS GIVEN IN YOUR LETTER, I.E., "DUE TO PARTS DELAY FROM OUR SUPPLIER . . ., " ARE NOT SUFFICIENT TO EXCUSE THE DELAY AND THEREBY QUALIFY A TIME EXTENSION. NORMAL BUSINESS PRACTICE, IN THE MANUFACTURE OF ONES STANDARD EQUIPMENT, REQUIRES THE STOCKING OF COMPONENTS ESSENTIAL TO THE MANUFACTURE. A NORMAL INVENTORY LEVEL IS CONSEQUENTLY PRESUMED. ACCORDINGLY, ANY SHORTAGES IN PARTS CANNOT BE CONSIDERED TO HAVE OCCURRED WITHOUT THE FAULT OR NEGLIGENCE OF THE MANUFACTURER (CONTRACTOR). ADVISED, THEREFORE, THAT IF DELIVERY IS NOT MADE BY OR ON APRIL 29, 1960, LIQUIDATED DAMAGES WILL BE ASSESSED AT THE RATE STIPULATED. IN ADDITION THERETO, AND IF THE DELAY BECOMES UNREASONABLE (MAY 30, 1960 IS UNREASONABLE), THE CONTRACT MAY BE CANCELLED BY REASON OF YOUR DEFAULT THEREUNDER. IN WHICH CASE WE WILL AVAIL OURSELVES OF THE REMEDIES PRESCRIBED IN THE ,DEFAULT" CLAUSE OF THE CONTRACT.'

THE CITED LETTER CONSTITUTED A DECISION OF THE CONTRACTING OFFICER RELATING TO A DISPUTE UNDER THE PURCHASE ORDER AS CONTEMPLATED BY ARTICLE 12. THERE IS NO INDICATION IN THE RECORD, AND YOU HAVE NOT SO ALLEGED, THAT YOU APPEALED FROM SUCH DECISION WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THE DECISION. SINCE YOU FAILED TO EXHAUST THE ADMINISTRATIVE REMEDY AFFORDED YOU UNDER THE TERMS OF THE PURCHASE ORDER, BY APPEALING TO THE HEAD OF THE AGENCY, YOU ARE NOT PRECLUDED FROM QUESTIONING THE CORRECTNESS OF THAT DECISION. UNITED STATES V. CALLAHAN WALKER CO., 317 U.S. 56, 61; UNITED STATES V. BLAIR, 321 U.S. 730, 735; UNITED STATES V. HOLPUCH CO., 328 U.S. 234, 39-240; YUHASZ V. UNITED STATES, 109 F.2D 467, 468; AND J. AND J. W. STOLTS ASSOCIATION V. UNITED STATES, 66 CT.CL. 1, 8- 9.

WE, THEREFORE, FIND NO LEGAL BASIS TO SUPPORT YOUR CLAIM AND OUR SETTLEMENT OF SEPTEMBER 26, 1960, IS SUSTAINED.