B-146361, SEP. 29, 1961

B-146361, SEP. 29, 1961

TO FURNITURE ACCENTS, INCORPORATED:

REFERENCE IS MADE TO LETTER OF JUNE 28, 1961, FROM ALEXANDER BOSKOFF, ATTORNEY, REQUESTING ON YOUR BEHALF A RECONSIDERATION OF THE ACTION TAKEN BY THE CLAIMS DIVISION OF OUR OFFICE IN LETTER OF JUNE 16, 1961, TO HIM, SUSTAINING THE CHARGES RAISED BY THE VETERANS ADMINISTRATION AGAINST YOUR ACCOUNT IN THE SUM OF $2,365.72. IT IS ALLEGED, IN SUBSTANCE, THAT THE PROCUREMENT OFFICIALS INVOLVED ERRED IN DECLARING YOU IN DEFAULT BEFORE EXPIRATION OF THE DELIVERY PERIOD STIPULATED IN CONTRACT NO. V7018P-3075A, SINCE THERE WAS NO CONTRACTUAL OBLIGATION ON YOUR PART TO FURNISH A PREPRODUCTION SAMPLE OF THE CHAIR AND THAT DUE TO THE THEN CURRENT STEEL STRIKE THE SAID DELIVERY SCHEDULE SHOULD HAVE BEEN EXTENDED INSTEAD OF TERMINATING THE CONTRACT.

THE RECORD DISCLOSES THAT THE SUBJECT CONTRACT WAS EXECUTED ON SEPTEMBER 9, 1959, UNDER AN INVITATION COVERING 4,040 METAL SIDE CHAIRS. RESPONSE TO A REQUEST FOR A SAMPLE CHAIR, YOUR PRESIDENT NOTIFIED THE CONTRACTING OFFICER, BY LETTER DATED SEPTEMBER 16, 1959, IN PERTINENT PART AS FOLLOWS:

"DONINGER METAL PRODUCTS, INC., HAS DECIDED THAT THEY DO NOT WANT TO MAKE THE CHAIRS. THEY GAVE VARIOUS REASONS FOR THEIR DECISION. WE HAVE TRIED SEVERAL OTHER CONTRACTORS IN THIS AREA BUT NONE WILL ACCEPT THE ORDER AT SUCH A LATE DATE. THEY CANNOT MAKE DELIVERY ON TIME AND MEET STATED SPECIFICATIONS. THEREFORE, WE MUST INFORM YOU THAT WE CANNOT SEND SAMPLES OR DELIVER THE ORDER.'

WITH RESPECT TO YOUR ATTORNEY'S ALLEGATION THAT NO PREPRODUCTION SAMPLE WAS REQUIRED TO BE SUBMITTED FOR INSPECTION, PARAGRAPH 14 OF THE TERMS AND CONDITIONS MADE A PART OF THE CONTRACT PROVIDED THAT "THE GOVERNMENT MAY MAKE INSPECTION OF THE ITEMS PRIOR TO SHIPMENT," AND PURSUANT THERETO YOU LISTED IN YOUR BID THE NAME AND ADDRESS OF YOUR PROPOSED SUPPLIER, DONINGER METAL PRODUCTS, INCORPORATED. IN LIEU OF AN INSPECTION AT THE FACTORY THE CONTRACTING OFFICER REQUESTED A SAMPLE BE FORWARDED TO THE PROCUREMENT OFFICE. WHILE YOU WERE NOT REQUIRED TO COMPLY THEREWITH, WE DO NOT AGREE WITH THE IMPLICATION OF YOUR COUNSEL THAT THE FURNISHING OF A CHAIR FOR INSPECTION PURPOSES WAS NOT A CONTRACTUAL OBLIGATION.

HOWEVER THAT MAY BE, IT IS APPARENT FROM THE RECORD THAT THE FURNISHING OF A SAMPLE WAS IMMATERIAL, AND THAT THE SUBSEQUENT ACTION TAKEN BY THE GOVERNMENT WAS PREDICATED SOLELY UPON YOUR UNQUALIFIED STATEMENT THAT YOU COULD NOT AND WOULD NOT DELIVER THE ORDER. THE MATTER OF NOT FURNISHING A SAMPLE BECAME ACADEMIC IN THE LIGHT OF YOUR STATEMENT THAT YOUR CONTEMPLATED SUPPLIER HAD REFUSED TO PRODUCE THE EQUIPMENT; THAT NO OTHER MANUFACTURER IN THE AREA WOULD ACCEPT YOUR ORDER BECAUSE (1) OF THE SHORT DELIVERY PERIOD AND (2) THEIR INABILITY OR RELUCTANCE TO MEET THE SPECIFICATIONS--- NO MENTION THEN BEING MADE AS TO THE EFFECTS OF THE STEEL STRIKE; AND, THAT UNDER THOSE CIRCUMSTANCES YOU COULD NOT "SEND SAMPLES OR DELIVER THE ORDER.' AS A CONSEQUENCE THE CONTRACT WAS CANCELLED AND THE CHAIRS WERE PROCURED FROM ANOTHER SOURCE AT AN EXCESS COST TO THE GOVERNMENT IN THE PREVIOUSLY MENTIONED AMOUNT. THE CHARGES RAISED AGAINST YOUR ACCOUNT WERE REVIEWED BY THE VETERANS ADMINISTRATION SUPPLY CONTRACT APPEALS BOARD WHICH CONCLUDED THAT THE ACTION TAKEN BY THE CONTRACTING OFFICER WAS PROPER. THE BOARD'S OFFER OF AN OPPORTUNITY FOR YOU TO APPEAR IN ITS PROCEEDINGS WAS DECLINED.

MUCH EMPHASIS IS PLACED BY YOUR ATTORNEY UPON THE CONTENTION THAT TERMINATION OF YOUR RIGHT TO PROCEED WAS PREMATURE, AND THAT THE ATTENDANT FACTS AND CIRCUMSTANCES DID NOT WARRANT A CLAIM OF ANTICIPATORY BREACH OF THE EXECUTORY CONTRACT. THIS DEFENSE WAS NOT PRESENTED TO OR CONSIDERED BY THE BOARD. WE HAVE EXAMINED THE AUTHORITIES CITED, AND AGREE THAT THE MAJORITY RULE ADOPTED BY THE COURTS IS THAT A REFUSAL TO PERFORM MUST BE DEFINITE AND UNEQUIVOCAL. A FURTHER ASPECT OF AN ANTICIPATORY BREACH, TO BECOME ACTIONABLE, REQUIRES THE PROMISES, AS WAS DONE IN THIS CASE, TO TREAT THE NOTICE OF REFUSAL OR INABILITY TO PERFORM AS A RENUNCIATION AND TO ACT UPON IT IN THE PROTECTION OF HIS RIGHTS. THOSE CASES RELIED UPON, WHICH DENIED RELIEF TO THE PROFESSED INJURED PARTY, INVOLVE SITUATIONS WHERE THERE AROSE CERTAIN DISPUTES OR MISUNDERSTANDINGS AS TO THE CONTRACT TERMS, OR WHERE ONE OF THE PARTIES ASSUMED AN ANTICIPATORY BREACH BASED UPON FRIVOLOUS GROUNDS. HOWEVER, THOSE CASES NEVERTHELESS ADHERE TO THE DOCTRINE THAT A CLEAR MANIFESTATION OF AN INTENTION NOT TO PERFORM A CONTRACT WITHOUT CAUSE IS JUSTIFICATION FOR THE OTHER PARTY TO CONSIDER IT AS A DEFINITE REPUDIATION.

IT IS APPARENT FROM YOUR ORIGINAL EXPLANATION AS TO WHY YOU COULD NOT DELIVER THE CHAIRS THAT DEFAULT WAS UNAVOIDABLE SINCE YOUR BID WAS SUBMITTED WITHOUT A FIRM COMMITMENT FROM A RESPONSIBLE MANUFACTURER, AND THAT DONINGER'S ULTIMATE REFUSAL TO FABRICATE THE EQUIPMENT FOR YOU DID NOT PERMIT SUFFICIENT TIME FOR OTHERS IN THE INDUSTRY TO UNDERTAKE PERFORMANCE BECAUSE OF THE DELIVERY SCHEDULE AND/OR THE SPECIFICATION REQUIREMENTS. AT THE TIME OF YOUR DECLINATION TO FULFILL YOUR OBLIGATIONS YOU STATED THE REASONS GIVEN BY YOUR PROSPECTIVE SUBCONTRACTOR AS TO ITS INABILITY TO PERFORM, AND THOSE OF OTHER FIRMS FOR REFUSING TO ATTEMPT PERFORMANCE. NONE OF THOSE REASONS APPEARS TO BE ATTRIBUTABLE TO THE STEEL STRIKE. IT IS NOTED THAT THE REPLACING CONTRACTOR UNDERTOOK TO COMPLETE THE CONTRACT BY JANUARY 20, 1960, THE SAME DATE FIXED FOR FINAL DELIVERY IN YOUR CONTRACT. THAT FACT TOGETHER WITH YOUR ORIGINAL REPUDIATION CASTS CONSIDERABLE DOUBT UPON THE CONTENTION THAT A STRIKE IN THE STEEL INDUSTRY WAS, TO ANY APPRECIABLE EXTENT, A CONTRIBUTING CAUSE TO YOUR DEFAULT. ALSO, IT APPEARS SIGNIFICANT THAT NO REQUEST FOR RELIEF UNDER PARAGRAPH 11 (C) WAS MADE AT THE TIME OF YOUR NOTICE NOT TO PERFORM.

UNDER THE FACTS OF RECORD WE FEEL THAT THE CONTRACTING OFFICER WAS JUSTIFIED IN CONCLUDING THAT YOUR LETTER OF SEPTEMBER 16, 1959, WAS, AND WAS INTENDED BY YOU TO BE, A CLEAR MANIFESTATION OF YOUR INTENT TO ABANDON THE CONTRACT, CONSTITUTING AN ANTICIPATORY BREACH OF THE AGREEMENT; THAT THE REPORTED STRIKE IN THE STEEL INDUSTRY WAS NOT THE REASON FOR YOUR RENUNCIATION; AND THAT THE ACTION TAKEN WAS NOT TO ANY EXTENT INFLUENCED BY YOUR REFUSAL TO FURNISH A PREPRODUCTION SAMPLE CHAIR FOR INSPECTION. ACCORDINGLY, WE CONCUR WITH THE CONCLUSIONS OF THE SUPPLY CONTRACT APPEALS BOARD OF THE VETERANS ADMINISTRATION, AND THE ACTION TAKEN BY OUR CLAIMS DIVISION AS TO THE CHARGES RAISED AGAINST YOUR ACCOUNT WILL NOT BE DISTURBED.