B-148831, JUN. 4, 1962

B-148831: Jun 4, 1962

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FEDERAL AVIATION AGENCY: REFERENCE IS MADE TO LETTER OF FEBRUARY 7. WHICH WAS DEDUCTED AS LIQUIDATED DAMAGES TO COVER DELAYS IN DELIVERIES IN MAKING PAYMENT TO THE CONTRACTOR FOR THE SUPPLIES FURNISHED UNDER THE CONTRACT. BASED UPON THE CONTRACTING OFFICER'S DETERMINATION THAT 60 DAYS OF THE DELAY WHICH HAD OCCURRED WAS EXCUSABLE. BY THE ACTING ADMINISTRATOR OF THE FEDERAL AVIATION AGENCY ON THE CONTRACTOR'S APPEAL FROM THE CONTRACTING OFFICER'S DETERMINATION (WHEREIN IT WAS HELD THAT THE CONTRACTOR WAS ONLY ENTITLED TO BE EXCUSED FOR 18 DAYS OF THE TOTAL DELAY). INCLUDED IN THE LAST-MENTIONED AMOUNT WAS THE SUM OF $607.68 WHICH HAD BEEN WITHHELD AS LIQUIDATED DAMAGES IN MAKING PAYMENT TO THE CONTRACTOR FOR SUPPLIES FURNISHED UNDER CONTRACT CCA 34271 BECAUSE OF DELAYS IN DELIVERY OF THOSE SUPPLIES.

B-148831, JUN. 4, 1962

ADMINISTRATOR, FEDERAL AVIATION AGENCY:

REFERENCE IS MADE TO LETTER OF FEBRUARY 7, 1962, FROM THE CENTRAL OFFICE ACCOUNTING BRANCH, ACCOUNTING DIVISION, OFFICE OF MANAGEMENT SERVICES, FEDERAL AVIATION AGENCY, TRANSMITTING TO OUR CLAIMS DIVISION THE MATTER OF THE REPORTED INDEBTEDNESS OF TRIANGLE ELECTRONIC MANUFACTURING COMPANY IN THE AMOUNT OF $4,469.25 UNDER CONTRACT NO. CCA-34308, PURSUANT TO 4 GAO MANUAL 5050.10.

THE AMOUNT INVOLVED REPRESENTS THE DIFFERENCE BETWEEN THE AMOUNT OF $1,751.04, WHICH WAS DEDUCTED AS LIQUIDATED DAMAGES TO COVER DELAYS IN DELIVERIES IN MAKING PAYMENT TO THE CONTRACTOR FOR THE SUPPLIES FURNISHED UNDER THE CONTRACT, BASED UPON THE CONTRACTING OFFICER'S DETERMINATION THAT 60 DAYS OF THE DELAY WHICH HAD OCCURRED WAS EXCUSABLE, AND THE AMOUNT OF $6,860.64, REPRESENTING LIQUIDATED DAMAGES FOR THE DELAY INVOLVED COMPUTED (AT THE CONTRACT RATE) ON THE BASIS OF THE DECISION RENDERED ON JULY 10, 1959, BY THE ACTING ADMINISTRATOR OF THE FEDERAL AVIATION AGENCY ON THE CONTRACTOR'S APPEAL FROM THE CONTRACTING OFFICER'S DETERMINATION (WHEREIN IT WAS HELD THAT THE CONTRACTOR WAS ONLY ENTITLED TO BE EXCUSED FOR 18 DAYS OF THE TOTAL DELAY), AFTER APPLYING CREDITS OTHERWISE DUE THE CONTRACTOR IN THE TOTAL AMOUNT OF $640.35, ALL AS SET FORTH IN REGISTERED LETTER OF NOVEMBER 8, 1961, FROM THE CHIEF OF THE COMMUNICATIONS CONTRACTS SECTION, AVIATION FACILITIES SERVICE, FAA, TO THE CONTRACTOR. INCLUDED IN THE LAST-MENTIONED AMOUNT WAS THE SUM OF $607.68 WHICH HAD BEEN WITHHELD AS LIQUIDATED DAMAGES IN MAKING PAYMENT TO THE CONTRACTOR FOR SUPPLIES FURNISHED UNDER CONTRACT CCA 34271 BECAUSE OF DELAYS IN DELIVERY OF THOSE SUPPLIES. IN EXPLANATION OF THIS CREDIT, IT IS STATED IN THE LETTER OF NOVEMBER 8, 1961, THAT THE CONTRACTOR APPEALED THE CONTRACTING OFFICER'S DECISION OF APRIL 7, 1959, ON THE BASIS OF WHICH THE SUM HAD BEEN WITHHELD, AND THAT ON JULY 8, 1959,"THE ADMINISTRATOR" RENDERED A DECISION IN WHICH IT WAS HELD THAT THE CONTRACTOR WAS ENTITLED TO BE EXCUSED FOR ALL OF THE DELAY WHICH HAD OCCURRED UNDER THAT CONTRACT, THUS ENTITLING THE CONTRACTOR TO REFUND OF THE AMOUNT.

UNDER DATE OF MARCH 12, 1962, OUR CLAIMS DIVISION MADE DEMAND UPON THE CONTRACTOR FOR PAYMENT OF THE AFORESAID SUM OF $4,469.25. HOWEVER, THE CONTRACTOR REPLIED BY LETTER OF MARCH 20, 1962 (WHICH REFERS TO CONTRACTS CCA-34271 AND CCA-34308) AS FOLLOWS:

"* * * WITH REFERENCE TO YOUR LETTER OF MARCH 12TH, PLEASE BE ADVISED THAT WE FIND THAT YOU OWE US A SUM OF $2,665.90 FOR THE ABOVE CONTRACTS.

"WE DID NOT APPEAL CASE CCA-34308 AND THEREFORE NO CHANGE IN THE AMOUNT OF EXTENSION SHOULD HAVE BEEN MADE. WE ALSO WOULD LIKE TO STRESS THE POINT THAT HAD THE SIXTY DAY EXTENSION NOT BEEN ALLOWED, WE WOULD NOT HAVE MANUFACTURED THE ABOVE ORDER.

"WE THEREFORE ARE LOOKING TO RECOVER THE AMOUNT OF MONEYS STILL DUE US WHICH TOTALS $2,665.90.'

OUR CLAIMS DIVISION REPLIED TO THE ABOVE LETTER BY LETTER OF APRIL 13, 1962 (COPY ENCLOSED), WHICH DETAILS THE GOVERNMENT'S CLAIM, AND AGAIN DEMANDS PAYMENT.

ON APRIL 18, 1962, WE RECEIVED FROM THE DEPARTMENT OF THE ARMY FOR SET OFF AGAINST THE AFORESAID DEBT A CHECK IN THE AMOUNT OF $1,715.17, DRAWN IN FAVOR OF THE TRIANGLE ELECTRONIC MANUFACTURING COMPANY, OR THE TREASURER OF THE UNITED STATES, COVERING PARTIAL PAYMENT TO THE CONTRACTOR FOR CERTAIN SUPPLIES FURNISHED THE ARMY SIGNAL SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, PURSUANT TO ORDER NO. 19152PP62C1C1, DATED NOVEMBER 15, 1961, CONTRACT NO. 36-039-SC-89799, AS DESCRIBED ON VOUCHER NO. 128246, APRIL 10, 1962, ACCOUNTS OF LIEUTENANT COLONEL R. C LEWIS, F.C. SYMBOL 5064. ALSO, WE RECEIVED INFORMAL ADVICE FROM THE ARMY FINANCE OFFICE ON MAY 18, 1962, THAT THE SIGNAL SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, IS WITHHOLDING FROM AMOUNTS SUFFICIENT TO LIQUIDATE THE BALANCE OF THIS INDEBTEDNESS.

IN A LETTER ADDRESSED TO US UNDER DATE OF MAY 2, 1962, THE CONTRACTOR HAS REQUESTED THAT LIQUIDATE DAMAGES "IN THE AMOUNT OF $4,123.89" ASSESSED AGAINST IT UNDER THE CONTRACT BE REMITTED, STATING THAT MR. GEORGE DREZIN, PRESIDENT OF TRIANGLE ELECTRONIC MANUFACTURING COMPANY, HAD BEEN ADVISED BY "FEDERAL AVIATION AGENCY OFFICIALS" WITH WHOM HE HAD RECENTLY CONFERRED THAT ANY SUCH REQUEST WOULD HAVE TO BE DIRECTED TO OUR OFFICE. ALSO, UNDER DATE OF MAY 14, 1962, SENATOR JACOB K. JAVITS WROTE US WITH REFERENCE TO THE MATTER AS FOLLOWS:

"BY LETTER DATED MAY 2, 1962, TRIANGLE ELECTRONIC MANUFACTURING CO., INC. OF POUGHKEEPSIE, NEW YORK, HAS REQUESTED YOU TO REMIT TO IT LIQUIDATED DAMAGES ARISING OUT OF CONTRACT CCA-34308, DATED SEPTEMBER 1958 BETWEEN TRIANGLE AND THE FEDERAL AVIATION AGENCY.

"MY OFFICE HAS REVIEWED THE COMPANY'S FILE ON THIS CONTRACT AND THE DECISION OF THE ACTING ADMINISTRATOR OF THE FAA WITH RESPECT TO IT. IN ADDITION, WE PARTICIPATED IN A CONFERENCE LAST MONTH BETWEEN THE PRESIDENT OF TRIANGLE, MR. GEORGE DREZIN, AND FAA OFFICIALS TO DISCUSS THE DETAILS OF THE CONTRACT DISPUTE WHICH RESULTED IN ASSESSMENT OF LIQUIDATED DAMAGES BY THE FAA.

"WHILE I DO NOT NOW QUESTION THE FINDING OF THE ACTING ADMINISTRATOR IN HIS JULY 10, 1959 DECISION, NOR THE APPLICATION OF LAW AND REGULATION TO THESE FINDINGS, THERE IS SUBSTANTIAL EQUITY IN THIS MATTER, SUFFICIENT, I BELIEVE, TO JUSTIFY THE RELIEF MR. DREZIN REQUESTS. SO FAR AS I CAN ASCERTAIN, TRIANGLE'S DEFAULT UNDER THE CONTRACT IS ATTRIBUTABLE TO BONA FIDE MISUNDERSTANDING AS TO CONTRACTUAL PROCEDURES, TOGETHER WITH RELIANCE ON 60-DAY EXTENSION GIVEN TRIANGLE BY THE CONTRACTING OFFICER, WHICH EXTENSION WAS NULLIFIED BY REASON OF THE SUBSEQUENT HEARING DE NOVO.

"I WOULD VERY MUCH APPRECIATE IT IF THE GENERAL ACCOUNTING OFFICE WILL GIVE EVERY POSSIBLE CONSIDERATION TO TRIANGLE'S REQUEST FOR REMITTANCE OF LIQUIDATED DAMAGES UNDER THIS CONTRACT, OR, ALTERNATIVELY,SUCH PARTIAL RELIEF AS THE EQUITIES OF THIS MATTER MAY PRESENTLY ALLOW FOR.'

UPON A LIMITED REVIEW OF THIS MATTER, WE PERCEIVE NO LEGAL BASIS FOR REMITTING ANY OF THE LIQUIDATED DAMAGES HERE IN QUESTION. RELATIVE TO THE CONTRACTOR'S CONTENTION IN ITS ABOVE-QUOTED LETTER THAT IT "DID NOT APPEAL CASE CCA-34308," IT IS STATED IN THE ACTING ADMINISTRATOR'S DECISION THAT THE 60-DAY EXTENSION OF TIME GRANTED TO THE CONTRACTOR UNDER CONTRACT CCA- 34308 BY THE CONTRACTING OFFICER'S TELEGRAM OF MARCH 27, 1959, WAS UNACCEPTABLE TO THE CONTRACTOR, WHO,"BY LETTER OF APRIL 9, 1959," APPEALED THE DECISION, ETC. IT IS NOTED THAT THE CONTRACTOR'S LETTER OF APRIL 9, 1959, WHICH WAS ADDRESSED TO THE CONTRACTS DIVISION OF FAA, AND TO THE ATTENTION OF THE ADMINISTRATOR, READS AS FOLLOWS:

"REFERRING TO OUR CLAIM FOR EXTENTION ON CONTRACT CCA 34271, PLEASE BE ADVISED THAT THE TIME EXTENTION GRANTED IS NOT SATISFACTORY NOR AGREEABLE TO US.

"ALSO, ON CONTRACT CCA 34308, WHICH IS AT THE PRESENT TIME UNDER QUESTION WE ARE ASKING FOR AN APPEAL FOR RELIEF ON THE LIQUIDATION PENALTY.

"WE WOULD APPRECIATE YOUR SETTING UP A MEETING TO DISCUSS BOTH CONTRACTS AS SOON AS POSSIBLE SO THAT WE MAY BRING IT TO A CONCLUSION.

"YOUR PROMPTNESS IN THIS MATTER WOULD BE VERY MUCH APPRECIATED.'

SINCE THE CONTRACTOR, IN THE ABOVE-QUOTED LETTER, EXPRESSED DISSATISFACTION WITH THE TIME EXTENSION WHICH HAD BEEN GRANTED UNDER CONTRACT CCA-34271, BUT INDICATED NO DISSATISFACTION WITH THE REFERRED TO TIME EXTENSION OF 60 DAYS WHICH HAD BEEN GRANTED UNDER CONTRACT CCA 34308, IT COULD BE ARGUED THAT THE LETTER DID NOT EXPRESS A DESIRE ON THE PART OF THE CONTRACTOR TO APPEAL FROM THE CONTRACTING OFFICER'S FACTUAL DETERMINATION WITH RESPECT TO THE NUMBER OF DAYS OF DELAY FOR WHICH IT WAS ENTITLED TO BE EXCUSED. HOWEVER, ANY DOUBT AS TO THE CONTRACTOR'S EXPRESSED DESIRE TO APPEAL THE CONTRACTING OFFICER'S DETERMINATION IN THE MATTER UNDER THE DISPUTES CLAUSE OF THE CONTRACT MUST BE CONSIDERED TO HAVE BEEN REMOVED BY THE CONTRACTOR'S LETTER OF APRIL 20, 1959, TO YOUR AGENCY. THIS LETTER WAS WRITTEN IN RESPONSE TO FAA'S TELEGRAM OF APRIL 15, 1959, AND REQUESTED THE CONTRACTOR TO ADVISE AS TO THE BASIS ON WHICH IT WAS APPEALING THE CONTRACTING OFFICER'S DECISIONS UNDER CONTRACTS CCA- 34271 AND CCA-34308. IN ITS LETTER OF APRIL 20, 1959, THE CONTRACTOR NOT ONLY SET FORTH IN SOME DETAIL THE BASIS FOR ITS APPEAL IN CONNECTION WITH CONTRACT CCA-34308, BUT ALSO CONTENDED THAT IT SHOULD BE ALLOWED AN ADDITIONAL 20 DAYS DELIVERY TIME THEREUNDER BY REASON OF THE CIRCUMSTANCES STATED IN ITS LETTER.

THE DECISION RENDERED BY THE ACTING ADMINISTRATOR APPEARS TO BE A WELL CONSIDERED ONE. THAT LEAVES FOR CONSIDERATION THE QUESTION WHETHER RELIEF, OR PARTIAL RELIEF, PROPERLY MAY BE EXTENDED TO THE CONTRACTOR ON AN EQUITABLE BASIS, AND IT IS APPARENTLY UPON THIS BASIS THAT REMISSION OF THE LIQUIDATED DAMAGES INVOLVED IS NOW REQUESTED. SECTION 10 (A) OF THE ACT OF SEPTEMBER 5, 1950, 64 STAT. 578, 591, PROVIDES IN THIS CONNECTION THAT UPON THE RECOMMENDATION OF THE HEAD OF ANY FEDERAL AGENCY, THE COMPTROLLER GENERAL MAY REMIT ALL, OR PART, AS HE CONSIDERS JUST AND EQUITABLE, OF ANY LIQUIDATED DAMAGES ASSESSED FOR DELAY IN PERFORMING A CONTRACT MADE BY THAT AGENCY THAT PROVIDES FOR SUCH DAMAGES.

ACCORDINGLY, THE FILE IN THE CASE, TOGETHER WITH THE CONTRACT AND VOUCHERS INVOLVED, WHICH WERE TRANSMITTED HERE WITH THE LETTER OF FEBRUARY 7, 1962, FROM THE CENTRAL OFFICE ACCOUNTING BRANCH, ACCOUNTING DIVISION, OFFICE OF MANAGEMENT SERVICES, IS RETURNED HEREWITH WITH THE REQUEST THAT YOU GIVE CONSIDERATION AS TO WHETHER YOU DESIRE TO RECOMMEND THAT ALL, OR PART, OF THE LIQUIDATED DAMAGES INVOLVED BE REMITTED ON AN EQUITABLE BASIS PURSUANT TO THE ABOVE STATUTE, AND THAT WE BE ADVISED OF YOUR FINDINGS AND RECOMMENDATION IN THE MATTER. IT IS REQUESTED THAT THE PAPERS AND DOCUMENTS TRANSMITTED HEREWITH BE RETURNED WITH YOUR REPORT.