B-146626, NOV. 7, 1961

B-146626: Nov 7, 1961

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CONTAIN SUGGESTED REVISIONS OF CONTRACT CLAUSES TO THE EFFECT THAT A TERMINATION FOR DEFAULT SHOULD BE REGARDED AS A TERMINATION FOR CONVENIENCE IF IT IS DETERMINED THAT THE DEFAULT TERMINATION WAS IMPROPER. THE PURPOSE OF THE CHANGE IS TO REMEDY THE DEFICIENCY IN THE LANGUAGE WHICH RESULTED IN AN ADVERSE RULING IN KLEIN V. WHERE AN IMPROPER TERMINATION FOR DEFAULT WAS SAID TO HAVE CONSTITUTED A BREACH OF CONTRACT. WE ARE IN AGREEMENT BOTH WITH THE LANGUAGE AND INTENDED EFFECT OF THE SUGGESTED REVISIONS. OUR AUDITORS HAVE BEEN INFORMALLY ADVISED THAT EFFECTIVE SEPTEMBER 1. ARE BEING REPORTED TO GSA FOR UTILIZATION SCREENING AMONG VARIOUS FEDERAL AGENCIES PRIOR TO DISPOSAL BY THE CONTRACTORS.

B-146626, NOV. 7, 1961

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

WITH FURTHER REFERENCE TO A LETTER OF JULY 20, 1961, WITH ENCLOSURES, SIGNED BY THE ASSISTANT COMMISSIONER FOR PROCUREMENT POLICY, FEDERAL SUPPLY SERVICE, REQUESTING OUR VIEWS ON PROPOSED NEW PART 1-8 OF THE FEDERAL PROCUREMENT REGULATIONS, WE PRESENT THE FOLLOWING COMMENTS AND SUGGESTIONS TO SUPPLEMENT OUR LETTER OF OCTOBER 3, 1961.

ATTACHMENTS A, B, AND C TO THE LETTER OF JULY 20, CONTAIN SUGGESTED REVISIONS OF CONTRACT CLAUSES TO THE EFFECT THAT A TERMINATION FOR DEFAULT SHOULD BE REGARDED AS A TERMINATION FOR CONVENIENCE IF IT IS DETERMINED THAT THE DEFAULT TERMINATION WAS IMPROPER. THE PURPOSE OF THE CHANGE IS TO REMEDY THE DEFICIENCY IN THE LANGUAGE WHICH RESULTED IN AN ADVERSE RULING IN KLEIN V. UNITED STATES, 285 F.2D 778, WHERE AN IMPROPER TERMINATION FOR DEFAULT WAS SAID TO HAVE CONSTITUTED A BREACH OF CONTRACT. WE ARE IN AGREEMENT BOTH WITH THE LANGUAGE AND INTENDED EFFECT OF THE SUGGESTED REVISIONS.

OUR AUDITORS HAVE BEEN INFORMALLY ADVISED THAT EFFECTIVE SEPTEMBER 1, 1961, SERVICEABLE AND USEABLE CONTRACTORS' INVENTORIES, INCLUDING TERMINATION INVENTORY, ARE BEING REPORTED TO GSA FOR UTILIZATION SCREENING AMONG VARIOUS FEDERAL AGENCIES PRIOR TO DISPOSAL BY THE CONTRACTORS, AND THAT TITLE I REGULATIONS WILL BE REVISED TO REFLECT THESE PROCEDURES. IS ASSUMED THAT SUCH REVISED PROCEDURES WILL BE CONSISTENT WITH THE LANGUAGE OF PART 1-8 AS FINALLY ADOPTED.

OUR AUDITORS WERE ADVISED ALSO THAT STANDARD FORMS FOR USE IN CONTRACT TERMINATIONS WILL BE PRESCRIBED AT A LATER DATE. IN OUR VIEW SUCH FORMS SHOULD BE DEVELOPED AND ISSUED AS SOON AS POSSIBLE AFTER PART 1-8 IS ISSUED.

PARAGRAPH 1-8.207 (A) PERMITS EACH AGENCY TO ESTABLISH EXCEPTIONS TO THE GENERAL PROPOSITION THAT ALL SETTLEMENT PROPOSALS SUBMITTED BY A PRIME CONTRACTOR SHOULD BE REFERRED TO THE AGENCY AUDIT OFFICE FOR APPROPRIATE EXAMINATION AND RECOMMENDATION. IN OUR VIEW THE EXCEPTIONS SHOULD BE HELD TO A MINIMUM AND SHOULD BE UNIFORM WITHIN EACH AGENCY. TO EFFECTUATE THIS PURPOSE, WE RECOMMEND THE INCLUSION OF SOME LANGUAGE OR EXAMPLES AS A GUIDE TO INDICATE THE TYPES OF SITUATIONS IN WHICH EXCEPTIONS MAY PROPERLY BE ESTABLISHED.