B-151012, JUL. 31, 1963

B-151012: Jul 31, 1963

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TO BRODY AND BRODY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 4. THE DECISION OF THE BOARD WAS ON AN APPEAL BY THE CLAIMANT. THE REFUND WAS SOUGHT ON THE GROUND IT WAS LEGALLY IMPOSSIBLE FOR THE APPELLANT TO TENDER PAYMENT AT AN EARLIER DATE THAN HE ACTUALLY DID. ALTHOUGH BOTH OF THESE CONTENTIONS WERE REJECTED BY THE BOARD AS BEING UNTENABLE. BASED ON ITS OWN STRICT INTERPRETATION OF THE CONDITIONS OF THE CONTRACT THE BOARD FOUND THAT THE GOVERNMENT WAS WITHOUT CONTRACTUAL RIGHT TO RETAIN THE LIQUIDATED DAMAGES ASSESSED AND SUSTAINED THE APPEAL WITH RESPECT TO THE REQUESTED REFUND. THE CRITICAL PROVISIONS OF THE CONTRACT ARE FOUND IN PARAGRAPHS 4 AND 7 OF THE "GENERAL SALE TERMS AND CONDITIONS" AND ARTICLES "H" AND "K" OF THE "SPECIAL CONDITIONS OF SALE" WHICH PROVIDE IN MATERIAL PART AS FOLLOWS: "GENERAL SALE TERMS AND CONDITIONS "4.

B-151012, JUL. 31, 1963

TO BRODY AND BRODY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 4, 1963, AND SUBSEQUENT CORRESPONDENCE, IN WHICH YOU REQUEST A DETERMINATION THAT THE GOVERNMENT REFUND $985.92 TO HAROLD GREENWOOD, TRADING AS ANGLOBEL TRADING COMPANY, BRUSSELS, BELGIUM, IN ACCORDANCE WITH A DECISION BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS, ASBCA NO. 8250, DATED OCTOBER 30, 1962.

THE DECISION OF THE BOARD WAS ON AN APPEAL BY THE CLAIMANT, HAROLD GREENWOOD, FROM THE DECISION OF THE PROPERTY DISPOSAL CONTRACTING OFFICER, DEFENSE SURPLUS SALES OFFICE, FORT HOLABIRD, BALTIMORE, MARYLAND, DATED FEBRUARY 23, 1962. THIS DECISION TERMINATED CONTRACT NO. O.I. 1151, COVERING THE SALE TO ANGLOBEL OF 1,896 TRACK SHOE ASSEMBLIES FOR $4,929.60, AND ASSESSED 20 PERCENT OF THE PURCHASE PRICE AS LIQUIDATED DAMAGES WITH ADVICE THAT SUCH AMOUNT WOULD BE RETAINED FROM THE BID DEPOSIT FOR ANGLOBEL'S BREACH OF THE CONTRACT, I.E., FAILURE TO MAKE PAYMENT WITHIN 10 DAYS FROM THE MAILING OF THE AWARD OF SALE AS REQUIRED BY ARTICLE "H" OF THE SPECIAL CONDITIONS OF SALE INCORPORATED INTO THE CONTRACT.

THE APPELLANT'S COMPLAINT ASKED THAT ANGLOBEL BE REIMBURSED THE LIQUIDATED DAMAGES RETAINED IN THE AMOUNT OF $985.92 OR IN THE ALTERNATIVE THAT ANGLOBEL BE AWARDED THE CONTRACT. SINCE THE TRACK SHOE ASSEMBLIES HAD BEEN SOLD BY THE TIME OF THE HEARING ON THE APPEAL, HOWEVER, THE BOARD DETERMINED THAT ONLY THE REQUEST FOR THE REFUND REMAINED IN ISSUE. THE REFUND WAS SOUGHT ON THE GROUND IT WAS LEGALLY IMPOSSIBLE FOR THE APPELLANT TO TENDER PAYMENT AT AN EARLIER DATE THAN HE ACTUALLY DID. AS A FURTHER GROUND IT UAS URGED THAT THE RESALE OF THE TRACK SHOE ASSEMBLIES HAD PRODUCED A PROFIT RATHER THAN A LOSS TO THE GOVERNMENT. ALTHOUGH BOTH OF THESE CONTENTIONS WERE REJECTED BY THE BOARD AS BEING UNTENABLE, NEVERTHELESS THE BOARD PROCEEDED TO A CONSIDERATION OF THE CONTRACTING OFFICER'S INTERPRETATION OF THE CONTRACT PROVISIONS WHICH HAD BEEN ACCEPTED BY ANGLOBEL WITHOUT QUESTION. BASED ON ITS OWN STRICT INTERPRETATION OF THE CONDITIONS OF THE CONTRACT THE BOARD FOUND THAT THE GOVERNMENT WAS WITHOUT CONTRACTUAL RIGHT TO RETAIN THE LIQUIDATED DAMAGES ASSESSED AND SUSTAINED THE APPEAL WITH RESPECT TO THE REQUESTED REFUND.

THE CRITICAL PROVISIONS OF THE CONTRACT ARE FOUND IN PARAGRAPHS 4 AND 7 OF THE "GENERAL SALE TERMS AND CONDITIONS" AND ARTICLES "H" AND "K" OF THE "SPECIAL CONDITIONS OF SALE" WHICH PROVIDE IN MATERIAL PART AS FOLLOWS:

"GENERAL SALE TERMS AND CONDITIONS

"4. PAYMENT. THE PURCHASER AGREES TO PAY FOR PROPERTY AWARDED TO HIM IN ACCORDANCE WITH THE PRICES QUOTED IN HIS BID. PAYMENT OF THE FULL PURCHASE PRICE, SUBJECT TO ANY ADJUSTMENT PURSUANT TO CONDITION NO. 8, MUST BE MADE WITHIN THE TIME SPECIFIED FOR REMOVAL AND PRIOR TO DELIVERY OF ANY OF THE PROPERTY. * * *"

"7. DEFAULT. IF, AFTER THE AWARD, THE PURCHASER BREACHES THE CONTRACT BY FAILING TO MAKE PAYMENT AS REQUIRED BY CONDITION NO. 4, OR BY FAILING TO REMOVE THE PROPERTY AS REQUIRED BY CONDITION NO. 6, THEN THE GOVERNMENT MAY SEND THE PURCHASER A FIFTEEN-DAY WRITTEN NOTICE OF DEFAULT (CALCULATED FROM DATE OF MAILING), AND UPON PURCHASER'S FAILURE TO CURE SUCH DEFAULT WITHIN THAT PERIOD (OR SUCH FURTHER PERIOD AS THE CONTRACTING OFFICER MAY ALLOW), THE PURCHASER SHALL LOSE ALL THE RIGHT, TITLE AND INTEREST WHICH HE MIGHT OTHERWISE HAVE ACQUIRED IN AND TO THE PROPERTY AS TO WHICH A DEFAULT HAS OCCURRED. THE PURCHASER AGREES THAT IN THE EVENT HE FAILS TO PAY FOR THE PROPERTY OR REMOVE THE SAME WITHIN THE PRESCRIBED TIME, THE GOVERNMENT AT ITS ELECTION AND UPON NOTICE OF DEFAULT SHALL BE ENTITLED TO RETAIN (OR COLLECT) AS LIQUIDATED DAMAGES A SUM EQUAL TO 20 PERCENT OF THE PURCHASE PRICE OF THE ITEM (OR ITEMS) AS TO WHICH THE DEFAULT HAS OCCURRED. WHENEVER THE GOVERNMENT EXERCISES THIS ELECTION IT SHALL SPECIFICALLY APPRISE THE PURCHASER EITHER IN ITS ORIGINAL NOTICE OF DEFAULT (OR IN SEPARATE SUBSEQUENT WRITTEN NOTICE) THAT UPON THE EXPIRATION OF THE PERIOD PRESCRIBED FOR CURING THE DEFAULT THE FORMULA AMOUNT WILL BE RETAINED (OR COLLECTED BY THE GOVERNMENT AS LIQUIDATED DAMAGES. THE MAXIMUM SUM, MOREOVER, WHICH MAY BE RECOVERED BY THE GOVERNMENT AS DAMAGES FOR FAILURE OF THE PURCHASER TO REMOVE THE PROPERTY AND PAY FOR THE SAME SHALL BE SUCH FORMULA AMOUNT. IF THE PURCHASER OTHERWISE FAILS IN THE PERFORMANCE OF HIS OBLIGATIONS THEREUNDER, THE GOVERNMENT MAY EXERCISE SUCH RIGHTS AND MAY PURSUE SUCH REMEDIES AS ARE PROVIDED BY LAW OR UNDER THE CONTRACT.'

"SPECIAL CONDITIONS OF SALE

"ARTICLE H. PAYMENT: PURCHASERS WILL BE REQUIRED TO COMPLETE PAYMENT FOR PROPERTY PURCHASED WITHIN 10 DAYS FROM NOTICE OF AWARD, CALCULATED FROM THE DATE OF MAILING. ALL CERTIFIED CHECKS, CASHIER'S CHECKS, BANK DRAFTS, OR POSTAL OR EXPRESS MONEY ORDERS, MUST BE MADE PAYABLE TO THE TREASURER OF THE UNITED STATES.'

"ARTICLE K. LOADING AND REMOVAL OF PROPERTY:

"1. ITEMS 1 THRU 83 MUST BE REMOVED FROM THE HOLDING INSTALLATION WITHIN THIRTY (30) DAYS FROM DATE OF AWARD; REMOVAL TIME TO BE COMPUTED FROM THE DATE OF MAILING OR OTHERWISE FURNISHING NOTICE. * * *"

WE ARE OF THE OPINION THAT THE BOARD'S DECISION MAY NOT BE REGARDED AS A FINAL AND CONCLUSIVE DETERMINATION OF THE MATTER, AS URGED BY YOU.

THE DECISION OF THE CONTRACTING OFFICER IS ABUNDANTLY SUPPORTED BY THE RECORD WHICH SHOWS THAT THE CONTRACTING OFFICER'S DETERMINATION THAT ANGLOBEL HAD FAILED TO MAKE PAYMENT AS PROVIDED BY THE CONTRACT WAS NOT IN DISPUTE. CF. HAPPEL V. UNITED STATES, 279 F.2D 88 (8TH CIR. 1960). THE RECORD ALSO SHOWS THAT ANGLOBEL DID NOT POSSESS THE CAPABILITY TO REMOVE THE PROPERTY WITHIN 30 DAYS FROM DATE OF AWARD AS REQUIRED BY ARTICLE "K" OF THE SPECIAL CONDITIONS OF SALE.

FURTHER, THE INTERPRETATION OF THE CONDITIONS OF THE CONTRACT IS A QUESTION OF LAW ON WHICH THE BOARD'S DECISION IS NOT FINAL AND CONCLUSIVE IT BEING EXPRESSLY PROVIDED BY 41 U.S.C. 322 THAT "NO GOVERNMENT CONTRACT SHALL CONTAIN A PROVISION MAKING FINAL ON A QUESTION OF LAW THE DECISION OF ANY ADMINISTRATIVE OFFICIAL, REPRESENTATIVE, OR BOARD.' CF. KAYFIELD CONSTRUCTION CORP. V. UNITED STATES, 278 F.2D 217 (2D CIR. 1960). THE INTERPRETATION BY THE BOARD IS BASED ON A CONSTRUCTION OF THE GENERAL CONDITIONS SO AS TO EXCLUDE THE SPECIAL CONDITIONS OF THE CONTRACT. SEEMS QUITE CLEAR THAT THE PURPOSE AND INTENTION OF THE CONTRACTING PARTIES UNDER THE CONTRACT MAY BE ASCERTAINED ONLY BY A CONSIDERATION OF ALL THE TERMS AND CONDITIONS OF THE CONTRACT AS A WHOLE. SEE UNITED STATES V. STAGE COMPANY, 199 U.S. 414, 423 (1905). THE PLAIN TERMS OF ARTICLE "H" OF THE SPECIAL CONDITIONS, IN OUR OPINION, SUPERSEDED AND MODIFIED THE TERMS IN PARAGRAPH 4 OF THE GENERAL CONDITIONS OF THE CONTRACT TO THE EXTENT THEY WERE INCONSISTENT THEREWITH AND THIS REPRESENTS THE CONSTRUCTION PLACED ON THESE CONDITIONS BY THE CONTRACTING PARTIES. HENCE, THE CONTRACTING OFFICER'S DECISION BASED ON A CONSTRUCTION OF THE CONTRACT TERMS AND CONDITIONS WHICH REASONABLY CARRIES OUT THE INTENT ADOPTED BY THE CONTRACTING PARTIES SHOULD PREVAIL.

ALSO, THE RECORD DISCLOSES THAT ANGLOBEL OBTAINED THE ITEM IN QUESTION WHEN OFFERED FOR SALE FOLLOWING ITS BREACH OF THE CONTRACT AT A PRICE OF $1,083.92 LESS THAN ANGLOBEL HAD AGREED TO PAY UNDER THE TERMINATED CONTRACT. THIS MEANS THAT BY BREACHING THE CONTRACT AND RECOVERING THE BID DEPOSIT ANGLOBEL WOULD BE ABLE TO REALIZE A SUBSTANTIAL GAIN ON THE SALE ULTIMATELY CONSUMMATED, TO THE DAMAGE OF THE GOVERNMENT. IT SEEMS FUNDAMENTAL THAT A DEFAULTING CONTRACTOR MAY NOT PROFIT BY VIRTUE OF HIS OWN BREACH. MOREOVER, IN THE EVENT OF BREACH BY THE SELLER THE BURDEN IS ON THE BUYER TO PROVE DAMAGES. CF. SEWARD V. PENNSYLVANIA SALT MFG.CO., 109 A. 617 (SUPREME COURT OF PENNSYLVANIA, 1920).

FROM A CAREFUL CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES AVAILABLE TO US, WE WOULD NOT BE JUSTIFIED IN CERTIFYING ANY AMOUNT FOR PAYMENT TO ANGLOBEL FROM PUBLIC FUNDS, AND ALLOWANCES OF THE CLAIM IS THEREFORE DENIED.