B-150917, AUG. 13, 1963

B-150917: Aug 13, 1963

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ESQUIRE: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 5. THERE WAS ALSO DISALLOWED IN THE SETTLEMENT THE CONTRACTOR'S CLAIM FOR THE SUM $13. " THE LETTER CONTAINED THE FOLLOWING PARAGRAPH: "THERE IS NO INDICATION THAT DELAY IS DUE TO MATERIAL OR COMPONENT SHORTAGES BUT IF SUCH IS THE CASE IT IS REQUESTED THIS OFFICE BE NOTIFIED BY LETTER IMMEDIATELY. THE DATE ORDER WAS PLACED AND THE DATE DELIVERY WAS PROMISED. TOOLS AND OTHER FACTORS NECESSARY FOR PRODUCTION WERE IN THE CONTRACTOR'S PLANT. IT WAS STATED FURTHER THAT THE DELAY WAS BROUGHT ABOUT BY THE FACT THE CONTRACTOR'S SUPPLIER OF "SPECIAL TOOLS" WAS LATE IN DELIVERY. THERE IS NO INDICATION THAT THE CONTRACT DELIVERY DATE WAS SPECIFICALLY EXTENDED BEYOND DECEMBER 5.

B-150917, AUG. 13, 1963

TO HERBERT BASS, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 5, 1963, AND SUBSEQUENT CORRESPONDENCE REQUESTING RECONSIDERATION OF SETTLEMENT DATED MARCH 5, 1957, BY WHICH OUR CLAIM DIVISION DISALLOWED THE CLAIM OF THE INLAND EQUIPMENT COMPANY, NASHVILLE 2, TENNESSEE, FOR A REFUND OF SUMS AGGREGATING $7,314, PLUS INTEREST, OTHERWISE PAYABLE TO THE CLAIMANT BUT SETOFF AGAINST AN INDEBTEDNESS TO THE UNITED STATES ARISING OUT OF THE CLAIMANT'S DEFAULT UNDER CONTRACT NO. DA-30-144-ORD 2315, DATED OCTOBER 5, 1951. THERE WAS ALSO DISALLOWED IN THE SETTLEMENT THE CONTRACTOR'S CLAIM FOR THE SUM $13,719.25, PLUS INTEREST, REPRESENTING TERMINATION COSTS ALLEGED TO BE DUE UNDER THE INDICATED CONTRACT.

UNDER THE TERMS OF THE CONTRACT NO. -2315 THE INLAND EQUIPMENT COMPANY AGREED TO FURNISH THE DEPARTMENT OF THE ARMY, F.O.B., THE CONTRACTOR'S PLANT AT NASHVILLE, TENNESSEE, A TOTAL OF 10,100 FIRING PIN ASSEMBLIES AT A UNIT PRICE OF $1.10, FOR A TOTAL CONTRACT PRICE OF $11,100, LESS A DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN TEN DAYS. THE CONTRACT CALLED FOR COMPLETE DELIVERY ON OR BEFORE DECEMBER 5, 1951.

BY A LETTER DATED DECEMBER 19, 1951, THE CINCINNATI ORDNANCE DISTRICT ADVISED THE INLAND EQUIPMENT COMPANY THAT DELIVERY UNDER THE CONTRACT BECAME DELINQUENT ON DECEMBER 5, 1951, AND AFTER REQUESTING THE CONTRACTOR TO ADVISE CONCERNING THE "DELAYING FACTORS," THE LETTER CONTAINED THE FOLLOWING PARAGRAPH:

"THERE IS NO INDICATION THAT DELAY IS DUE TO MATERIAL OR COMPONENT SHORTAGES BUT IF SUCH IS THE CASE IT IS REQUESTED THIS OFFICE BE NOTIFIED BY LETTER IMMEDIATELY. PLEASE CITE THE NAME, ADDRESS AND PHONE NUMBER OF YOUR SUPPLIER, YOUR PURCHASE ORDER NUMBERS, THE MATERIAL ORDERED, THE DATE ORDER WAS PLACED AND THE DATE DELIVERY WAS PROMISED. ALSO STATE THE EXTENT AND RESULT OF YOUR EFFORTS TO OBTAIN THE SHORTAGES FROM OTHER SOURCES.'

IN A REPLY LETTER DATED DECEMBER 26, 1951, THE CONTRACTOR STATED THAT ALL MATERIALS, TOOLS AND OTHER FACTORS NECESSARY FOR PRODUCTION WERE IN THE CONTRACTOR'S PLANT, ETC. IT WAS STATED FURTHER THAT THE DELAY WAS BROUGHT ABOUT BY THE FACT THE CONTRACTOR'S SUPPLIER OF "SPECIAL TOOLS" WAS LATE IN DELIVERY.

THERE IS NO INDICATION THAT THE CONTRACT DELIVERY DATE WAS SPECIFICALLY EXTENDED BEYOND DECEMBER 5, 1951, HOWEVER THE RECORDS BEFORE THE OFFICE INDICATE THAT THE CONTRACTOR WAS ENCOURAGED AFTER DECEMBER 1951, TO CONTINUE ITS EFFORTS TO EFFECT DELIVERY OF ACCEPTABLE ITEMS. SEE, FOR EXAMPLE, CONTRACT CHANGE NOTIFICATION NO. C-2 DATED JUNE 2, 1952, WHICH AUTHORIZED CHANGES IN THE PACKAGING INSTRUCTIONS BUT SPECIFICALLY ADVISED THE CONTRACTOR THAT NO INCREASE IN THE CONTRACT PRICE OR ANY CHANGE IN THE DELIVERY SCHEDULE WAS AUTHORIZED BY REASON OF SUCH CHANGES. CONTRACT CHANGE NOTIFICATION NO. C-2 APPEARS TO HAVE BEEN EXECUTED IN THE HOPE THAT THE CONTRACTOR'S EFFORTS TO OBTAIN ACCEPTABLE ITEMS UNDER A SUBCONTRACT, WHICH WAS AWARDED TO VAN ENGINEERING COMPANY ON JANUARY 31, 1952, WOULD BE SUCCESSFUL. HOWEVER, THE RECORDS SUBMITTED TO THIS OFFICE BY THE CONTRACTOR IN SUPPORT OF ITS ORIGINAL CLAIM INDICATE THAT ON AUGUST 19, 1952, THE CONTRACTOR ADVISED THE CINCINNATI ORDNANCE DISTRICT IT HAD CANCELLED THE SUBCONTRACT WITH VAN ENGINEERING COMPANY FOLLOWING RECEIPT OF 958 PINS WHICH WERE TOTALLY UNACCEPTABLE AND 550 PINS NEEDING CORRECTIONS WHICH THE CONTRACTOR ITSELF INTENDED TO ACCOMPLISH.

NO ACCEPTABLE ITEMS WERE DELIVERED TO THE CONTRACTING AGENCY UNTIL DECEMBER 31, 1952, ON WHICH DATE 900 FIRING PIN ASSEMBLIES WERE ACCEPTED BY THE AGENCY AND SHIPPED BY THE CONTRACTOR. THERE IS NO RECORD PRESENTLY BEFORE THIS OFFICE TO INDICATE WHETHER THESE ITEMS WERE PRODUCED BY OR FOR THE CONTRACTOR, AND NO RECORD THAT THEY DID NOT CONSTITUTE THE TOTAL SUPPLY OF ACCEPTABLE ASSEMBLIES AVAILABLE TO THE CONTRACTOR FOR DELIVERY UNDER THE CONTRACT.

BY LETTER DATED JANUARY 12, 1953, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR THAT THE CONTRACT WAS TERMINATED BECAUSE OF THE CONTRACTOR'S FAILURE TO DELIVER IN ACCORDANCE WITH THE CONTRACT REQUIREMENTS.

THE BASIS FOR REQUESTING RECONSIDERATION OF THE SETTLEMENT ACTION TAKEN IN THIS CASE WAS SET FORTH AT LENGTH IN YOUR LETTER OF JANUARY 5, 1963. BASICALLY, YOU TAKE THE POSITION THAT ACCEPTANCE BY THE GOVERNMENT OF A QUANTITY OF 900 FIRING PINS ON DECEMBER 31, 1952, OPERATED AS A WAIVER OF THE STATED DELIVERY DATE; THAT THE CONTRACTOR WAS ENTITLED TO A REASONABLE TIME SUBSEQUENT TO DECEMBER 31, 1952, IN WHICH TO COMPLETE DELIVERIES UNDER THE CONTRACT; AND THAT THE ACTION OF THE CONTRACTING OFFICER IN TERMINATING THE CONTRACT ON JANUARY 12, 1953, WAS THEREFORE ARBITRARY, CAPRICIOUS, AND INVALID.

IT IS YOUR FURTHER CONTENTION THAT CERTAIN CORRESPONDENCE WHICH THE CONTRACTOR FORWARDED TO THE CONTRACTING OFFICER SUBSEQUENT TO JANUARY 12, 1953, SHOULD HAVE BEEN "CONSTRUED" (CONSIDERED) BY THE CONTRACTING OFFICER AS AN APPEAL UNDER THE DISPUTES CLAUSE OF THE CONTRACT. IN ADDITION TO REQUESTING RECONSIDERATION OF YOUR CLIENT'S CLAIM YOU REQUESTED THE RIGHT TO SUBMIT A DETAILED TERMINATION CLAIM UNDER A TERMINATION WHICH, YOU STATE, SHOULD BE CONSTRUED AS ONE FOR THE CONVENIENCE OF THE GOVERNMENT.

WITH RESPECT TO YOUR CONTENTION THAT THE CONTRACTOR MADE A TIMELY APPEAL FROM THE CONTRACTING OFFICER'S DETERMINATION TO TERMINATE THE CONTRACT, THE NOTICE OF TERMINATION DATED JANUARY 12, 1953, READ, IN PERTINENT PART AS FOLLOWS:

"1. YOU ARE HEREBY NOTIFIED THAT CONTRACT NO. DA 30-144-ORD-2315 IS HEREBY TERMINATED IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 11 OF THE GENERAL PROVISIONS OF STANDARD FORM 32 OF THE SUBJECT CONTRACT. SUCH TERMINATION SHALL BE EFFECTIVE IMMEDIATELY UPON YOUR RECEIPT OF THIS NOTICE.

"2. ACCORDINGLY, YOUR RIGHT TO PROCEED FURTHER WITH PERFORMANCE UNDER SAID CONTRACT IS TERMINATED.

"3. THIS TERMINATION NOTICE IS THE RESULT OF YOUR FAILURE TO DELIVER THE ITEM CALLED FOR IN SAID CONTRACT, DELIVERY OF WHICH WAS TO HAVE BEEN COMPLETED ON OR BEFORE 5 DECEMBER 1951. SUBJECT CONTRACT WAS PROPERLY EXECUTED BY OFFICERS OF YOUR COMPANY AND ENTERED INTO AS OF 5 OCTOBER 1951.

"4. THE ITEM CALLED FOR IN SUBJECT CONTRACT WILL BE PROCURED IN THE OPEN MARKET AGAINST YOUR ACCOUNT AND YOU WILL BE HELD LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 11 OF THE GENERAL PROVISIONS OF STANDARD FORM 32 OF THE SUBJECT CONTRACT.

"5. THE GOVERNMENT HEREBY RESERVES ALL RIGHTS AND REMEDIES PROVIDED BY LAW AND UNDER CONTRACT NO. DA 30-144-ORD-2315, IN ADDITION TO CHARGING TO YOU THE EXCESS COSTS OF PROCURING SIMILAR SUPPLIES.

"6. THIS NOTICE CONSTITUTES A FINDING OF FACT PURSUANT TO PARAGRAPH 12 OF THE GENERAL PROVISIONS OF STANDARD FORM 32 OF THE SUBJECT CONTRACT, FROM WHICH FINDING YOU HAVE THE RIGHT TO APPEAL IN THE MANNER SPECIFIED THEREIN.

"7. BY REASON OF THIS NOTICE OF TERMINATION THE TOTAL CONTRACT PRICE IS HEREBY REDUCED BY $11,110.00 FROM $11,110.00 TO $0.00. SAID AMOUNT SHALL BE CREDITED TO THE FOLLOWING ALLOTMENT NOS.:

5713400 163-412 P411-08 S33-008 (AP) $5,610.00

5713400 163-4120 P411-08 S33-008 (AP) $5,500.00"

UNDER DATE OF JANUARY 26, 1953, THE CONTRACTOR ADVISED THE CINCINNATI ORDNANCE DISTRICT AS FOLLOWS:

"IN ACCORDANCE WITH YOUR LETTER, IMMEDIATELY UPON RECEIPT OF SAME, WE DISCONTINUED WORK ON SAID CONTRACT, AND HAVE SO NOTIFIED ALL SUB CONTRACTORS.

"PLEASE BE ADVISED THAT IT IS THE OPINION OF THE CONTRACTOR THAT THERE IS NO LIABILITY UNDER THE PROVISIONS OF PARAGRAPH 11 OF THE GENERAL PROVISIONS OF STANDARD FORM NO. 32 OF THE SUBJECT CONTRACT. IN THE EVENT THE CONTRACTING OFFICER DEEMS IT ADVISABLE TO PROCEED AS DESCRIBED IN YOUR PARAGRAPH 5, THIS CONTRACTOR WILL NOT HONOR ANY CHARGES UNLESS THEY HAVE FIRST BEEN APPROVED BY THE CONTRACTOR.

"WE DIRECT YOUR ATTENTION TO PARAGRAPH 7, OF YOUR LETTER WHEREIN WE HEREWITH ADVISE THAT IN THE EVENT THE CONTRACT IS REDUCED FROM $11,110.00 TO $0.00, THIS PROCEDURE WILL BE IN ERROR.'

UNDER DATE OF APRIL 15, 1953, THE CONTRACTING OFFICER ISSUED MODIFICATION NO. 2 TO THE CONTRACT, WHICH READ AS FOLLOWS:

"1. REFERENCE IS MADE TO MODIFICATION NO. 1 TO SUBJECT CONTRACT, TERMINATING SAID CONTRACT FOR DEFAULT PURSUANT TO THE PROVISIONS OF PARAGRAPH 11 OF THE GENERAL PROVISIONS OF STANDARD FORM 32 THEREOF.

"2. PURSUANT TO THE PROVISIONS OF SUBPARAGRAPH (D) OF SAID PARAGRAPH 11, CONTRACTOR WAS DIRECTED TO SHIP 900 COMPLETED FIRING PINS.

"3. BY REASON OF SAID DIRECTION TO SHIP, THE TOTAL CONTRACT PRICE ISHEREBY INCREASED BY $990.00, FROM $0.00 TO $990.00. SAID AMOUNT SHALL BE CHARGEABLE TO THE FOLLOWING ALLOTMENT:

SPO NO. WVT 53-230 5713400 163-4120 P411-08 S33-008 (AP)"

MODIFICATION NO. 2 WAS ACCEPTED BY THE CONTRACTOR ON MAY 1, 1953, BUT SUCH ACCEPTANCE WAS SUBJECT TO THE CONTRACTOR'S LETTER OF THE SAME DATE TO THE CINCINNATI ORDNANCE DISTRICT, WHICH READ AS FOLLOWS:

"WE ATTACH HERETO SIGNED COPIES OF MODIFICATION NO. 2, ACCEPTED SUBJECT TO THIS LETTER.

"OUR REASON FOR THIS PROCEDURE IS THE FACT THAT IN OUR OPINION WE ARE NOT IN DEFAULT OF PARAGRAPH 11 OF THE GENERAL PROVISIONS OF STANDARD FORM 32, AS OUTLINED IN OUR LETTER OF JANUARY 26, 1953 ADDRESSED TO CINCINNATI ORDNANCE DISTRICT, ATTENTION MR. G. BUNYAN.

"IT OCCURRED TO US THAT BY SIGNING THIS MODIFICATION IN THE MANNER IT IS DRAWN WITHOUT TAKING EXCEPTION TO PARAGRAPH 1, WE WOULD IN EFFECT, BE IN AGREEMENT THAT WE WERE IN DEFAULT.

"WE SINCERELY TRUST THAT THIS MANNER OF HANDLING THIS MATTER WILL MEET WITH YOUR APPROVAL.'

UNDER DATE OF MAY 22, 1953, THE CONTRACTING OFFICER REQUESTED THE CONTRACTOR TO REMIT $7314.00 REPRESENTING EXCESS REPROCUREMENT COSTS, AND UNDER DATE OF MAY 27, 1953, THE CONTRACTOR DECLINED SUCH REQUEST AND SPECIFICALLY DENIED IT WAS IN DEFAULT UNDER PARAGRAPH 11 OF THE GENERAL PROVISION OF THE CONTRACT.

SUBPARAGRAPHS 11 (A) (I) AND 11 (D) OF THE GENERAL PROVISIONS OF THE CONTRACT, ON WHICH THE NOTICE OF TERMINATION WAS BASED, PROVIDE AS FOLLOWS:

"11. DEFAULT

(A) THE GOVERNMENT MAY, SUBJECT TO THE PROVISIONS OF PARAGRAPH (B) BELOW, BY WRITTEN NOTICE OF DEFAULT TO THE CONTRACTOR TERMINATE THE WHOLE OR ANY PART OF THIS CONTRACT IN ANY ONE OF THE FOLLOWING CIRCUMSTANCES:

(I)IF THE CONTRACTOR FAILS TO MAKE DELIVERY OF THE SUPPLIES OR TO PERFORM THE SERVICES WITHIN THE TIME SPECIFIED HEREIN OR ANY EXTENSION THEREOF; OR

(D) IF THIS CONTRACT IS TERMINATED AS PROVIDED IN PARAGRAPH (A) OF THIS CLAUSE, THE GOVERNMENT, IN ADDITION TO ANY OTHER RIGHTS PROVIDED IN THIS CLAUSE, MAY REQUIRE THE CONTRACTOR TO TRANSFER TITLE AND DELIVER TO THE GOVERNMENT, IN THE MANNER AND TO THE EXTENT DIRECTED BY THE CONTRACTING OFFICER, (I) ANY COMPLETED SUPPLIES, AND (II) SUCH PARTIALLY COMPLETED SUPPLIES AND MATERIALS, PARTS, TOOLS, DIES, JIGS, FIXTURES, PLANS, DRAWINGS, INFORMATION, AND CONTRACT RIGHTS (HEREINAFTER CALLED "MANUFACTURING MATERIALS)" AS THE CONTRACTOR HAS SPECIFICALLY PRODUCED OR SPECIFICALLY ACQUIRED FOR THE PERFORMANCE OF SUCH PART OF THIS CONTRACT AS HAS BEEN TERMINATED; AND THE CONTRACTOR SHALL, UPON DIRECTION OF THE CONTRACTING OFFICER, PROTECT AND PRESERVE PROPERTY IN POSSESSION OF THE CONTRACTOR IN WHICH THE GOVERNMENT HAS AN INTEREST. THE GOVERNMENT SHALL PAY TO THE CONTRACTOR THE CONTRACT PRICE FOR COMPLETED SUPPLIES DELIVERED TO AND ACCEPTED BY THE GOVERNMENT, AND THE AMOUNT AGREED UPON BY THE CONTRACTOR AND THE CONTRACTING OFFICER FOR MANUFACTURING MATERIALS DELIVERED TO AND ACCEPTED BY THE GOVERNMENT AND FOR THE PROTECTION AND PRESERVATION OF PROPERTY. FAILURE TO AGREE SHALL BE A DISPUTE CONCERNING A QUESTION OF FACT WITHIN THE MEANING OF THE CLAUSE OF THIS CONTRACT ENTITLED "DISPUTES.'"

PARAGRAPH 12 OF THE GENERAL PROVISIONS OF THE CONTRACT, TO WHICH REFERENCE IS MADE IN PARAGRAPH 6 OF THE NOTICE OF TERMINATION, READS AS FOLLOWS:

"12. DISPUTES

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. WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH COPY, THE CONTRACTOR MAY APPEAL BY MAILING OR OTHERWISE FURNISHING TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO THE SECRETARY, AND THE DECISION OF THE SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVE FOR THE HEARING OF SUCH APPEALS SHALL BE FINAL AND CONCLUSIVE: PROVIDED, THAT IF NO SUCH APPEAL IS TAKEN, THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE. IN CONNECTION WITH ANY APPEAL PROCEEDING UNDER THIS CLAUSE, THE CONTRACTOR SHALL BE AFFORDED AN OPPORTUNITY TO BE HEARD AND TO OFFER EVIDENCE IN SUPPORT OF ITS APPEAL. PENDING FINAL DECISION OF A DISPUTE HEREUNDER, THE CONTRACTOR SHALL PROCEED DILIGENTLY WITH THE PERFORMANCE OF THE CONTRACT AND IN ACCORDANCE WITH THE CONTRACTING OFFICER'S DECISION.' FROM THE FOREGOING IT IS CLEAR THAT THE RIGHT OF APPEAL FROM THE NOTICE OF TERMINATION WHICH WAS GRANTED TO THE CONTRACTOR UNDER THE PROVISIONS OF THE CONTRACT WAS THE RIGHT TO ADDRESS A WRITTEN APPEAL TO THE SECRETARY OF THE ARMY WITHIN 30 DAYS FROM THE DATE ON WHICH THE NOTICE OF TERMINATION WAS RECEIVED BY THE CONTRACTOR. WHILE THE DATE ON WHICH THE CONTRACTOR RECEIVED THE NOTICE OF TERMINATION DOES NOT APPEAR TO BE A MATTER OF RECORD IN THIS OFFICE, THERE IS NOTHING TO INDICATE THAT IT WAS NOT RECEIVED IN THE USUAL COURSE OF THE MAILS ON OR ABOUT JANUARY 15, 1953. SINCE THE ONLY CORRESPONDENCE FROM THE CONTRACTOR WITHIN 30 DAYS FROM THAT DATE IS THE CONTRACTOR'S LETTER DATED JANUARY 26, 1953, IT WOULD APPEAR THAT THE QUESTION WHETHER THE CONTRACTOR SUBMITTED A PROPER APPEAL MUST BE DETERMINED SOLELY ON THE BASIS OF WHETHER THE LETTER DATED JANUARY 26, 1953, WAS, IN FACT, A PROPER APPEAL UNDER PARAGRAPH 12 OF THE GENERAL PROVISIONS OF THE CONTRACT.

IT IS APPARENT, OF COURSE, THAT THE LETTER OF JANUARY 26, IS NOT ADDRESSED TO THE SECRETARY OF THE ARMY OR MAILED TO THE CONTRACTING OFFICER, AS REQUIRED BY PARAGRAPH 12 OF THE GENERAL PROVISIONS. WHILE SUCH DEFECT MIGHT BE CONSIDERED MINOR IF THE BODY OF THE LETTER HAD SPECIFICALLY STATED OR OTHERWISE CLEARLY INDICATED, THAT THE LETTER WAS INTENDED AS AN APPEAL UNDER THE PROVISIONS OF PARAGRAPH 12, IT IS OUR OPINION THAT THE LETTER OF JANUARY 26 ONLY ADVISED THE CINCINNATI ORDNANCE DISTRICT OF THE CONTRACTOR'S OPINION THAT IT WAS NOT LEGALLY OBLIGATED TO PAY ALL EXCESS REPROCUREMENT COSTS WHICH THE GOVERNMENT MIGHT INCUR, AND OF THE CONTRACTOR'S INTENTION NOT TO PAY SUCH EXCESS COSTS UNLESS THEY WERE FIRST APPROVED BY THE CONTRACTOR. THERE IS NO INDICATION, EITHER EXPRESSED OR IMPLIED, IN THAT PORTION OF THE JANUARY 26 LETTER OR IN THE PORTION WHICH POINTS OUT THAT A REDUCTION OF THE CONTRACT PRICE TO $0.00 WOULD BE ERRONEOUS, THAT THE CONTRACTOR WAS ASKING OR EXPECTING TO RECEIVE A HEARING BEFORE THE SECRETARY OF THE ARMY (OR HIS AUTHORIZED REPRESENTATIVE) ON THE MERITS OF THE OPINIONS EXPRESSED IN THE LETTER OF JANUARY 26, AS PRESCRIBED IN PARAGRAPH 12 OF THE GENERAL PROVISIONS OF THE CONTRACT.

UNDER THE CIRCUMSTANCES WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING AGENCY WAS OBLIGATED OR REQUIRED TO CONSIDER THE LETTER OF JANUARY 26 AS AN APPEAL FROM THE NOTICE OF TERMINATION. IT WOULD THEREFORE APPEAR THAT THERE IS NO VALID BASIS ON WHICH THIS OFFICE WOULD BE JUSTIFIED IN DIRECTING THE CONTRACTING AGENCY TO NOW TREAT THAT LETTER, OR ANY SUBSEQUENT CORRESPONDENCE FROM THE CONTRACTOR, AS AN APPEAL FROM THE NOTICE OF TERMINATION.

UNDER THE PROVISIONS OF PARAGRAPH 12 OF THE GENERAL PROVISIONS OF THE CONTRACT, THE FINDINGS OF FACT AS SET OUT IN THE NOTICE OF TERMINATION BECAME CONCLUSIVE UPON FAILURE OF THE CONTRACTOR TO APPEAL FROM SUCH FINDINGS WITHIN 30 DAYS. WHILE SUCH FINDINGS ARE REVIEWABLE IF FRAUD IS ALLEGED AND PROVED, THEY ARE NOT REVIEWABLE ON A CHARGE THAT THEY ARE ARBITRARY OR CAPRICIOUS. MOORMAN V. UNITED STATES, 338 U.S. 457; WUNDERLICH V. UNITED STATES, 342 U.S. 98. WE DO NOT UNDERSTAND YOUR CLAIM TO ALLEGE FRAUD IN THE TERMINATION OF THE INSTANT CONTRACT, AND FRAUD CERTAINLY IS NOT PROVEN BY THE RECORD BEFORE THIS OFFICE. UNDER THE CIRCUMSTANCES, AND BEARING IN MIND THAT MORE THAN TEN YEARS HAVE ELAPSED SINCE THE NOTICE OF TERMINATION WAS ISSUED, THIS OFFICE WILL NOT UNDERTAKE TO REVIEW THE CORRECTNESS OF THE FACTS AS SET OUT IN THE NOTICE OF TERMINATION, OR EXPRESS AN OPINION ON WHETHER OTHER FACTORS WOULD PROPERLY HAVE BEEN FOR CONSIDERATION IN DETERMINING THE LEGALITY OF THE TERMINATION ACTION. THESE ARE MATTERS WHICH PROPERLY SHOULD HAVE BEEN MADE A PART OF THE RECORD DURING HEARINGS BEFORE THE SECRETARY OF THE ARMY UNDER PARAGRAPH 12 OF THE GENERAL PROVISIONS OF THE CONTRACT. HAVING FAILED TO INVOKE THESE PROVISIONS AND TO INSIST UPON SUCH HEARING UNDER THE TERMS OF THE CONTRACT, THIS OFFICE WILL NOT, AT THIS LATE DATE, ATTEMPT TO RECONSTRUCT THE RECORD WHICH WOULD HAVE RESULTED FROM SUCH HEARINGS, OR CONSTITUTE ITSELF A SUBSTITUTE BODY FOR THE HEARING OF THE CONTRACTOR'S APPEAL.

WE FIND NO MATERIAL EVIDENCE IN YOUR LETTER OF JANUARY 5, 1963, AND THE EXHIBITS TRANSMITTED THEREWITH, WHICH WERE NOT AVAILABLE TO, AND CONSIDERED BY, THIS OFFICE IN OUR DETERMINATION OF MARCH 5, 1957, THAT THE CLAIM OF INLAND EQUIPMENT COMPANY MUST BE DISALLOWED. IN VIEW THEREOF, AND OF OUR CONCLUSIONS AS SET OUT ABOVE, THE DISALLOWANCE OF MARCH 5, 1957, IS HEREBY AFFIRMED.