B-151047, APR. 10, 1963

B-151047: Apr 10, 1963

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TO THE SECRETARY OF THE ARMY: FORWARDED HEREWITH IS A LETTER DATED DECEMBER 20. THREE OF THE FIVE ENGINES OF THE GENERATING SETS DELIVERED UNDER THE CONTRACT WERE REPAIRED BY THE CONTRACTOR ON ACCOUNT OF DAMAGES SUSTAINED BY THE ENGINES DURING THE ONE-YEAR GUARANTEE PERIOD. A DISPUTE AROSE AFTER THE REPAIR WORK WAS PERFORMED AS TO WHICH PARTY WAS RESPONSIBLE FOR THE BEARING FAILURE. THE CONTRACTOR CONTENDED THAT IMPROPER OIL HAD BEEN USED BUT THE AIR FORCE REPRESENTATIVES CONCLUDED THAT THE FAILURE WAS DUE TO A ROUGH SPOT IN THE CRANK SHAFT OF THE ENGINE AND THAT. IF IMPROPER OIL HAD BEEN USED THIS WAS NOT DUE TO FAULT ON THE PART OF THE GOVERNMENT SINCE THE TYPE OF OIL USED IN THE ENGINE WAS RECOMMENDED BY THE ENGINE MANUFACTURER TO THE AMERICAN HYDROTHERM CORPORATION.

B-151047, APR. 10, 1963

TO THE SECRETARY OF THE ARMY:

FORWARDED HEREWITH IS A LETTER DATED DECEMBER 20, 1962, WITH ENCLOSURES, FROM HEADQUARTERS, AIR FORCE ACCOUNTING AND FINANCE CENTER, DENVER, COLORADO, CONCERNING A CLAIM OF THE ENTERPRISE DIVISION OF THE GENERAL METALS CORPORATION, OAKLAND, CALIFORNIA, FOR $33,014.52, COVERING EXPENSES ALLEGEDLY INCURRED IN REPAIRING ENGINE NO. 5-59031, A COMPONENT OF ONE OF FIVE GENERATING SETS FURNISHED BY THAT FIRM IN ACCORDANCE WITH THE REQUIREMENTS OF ARMY CONTRACT NO. DA 36-109-ENG-7120, DATED APRIL 3, 1959, EXECUTED ON BEHALF OF THE GOVERNMENT BY THE DISTRICT ENGINEER, U.S. ARMY ENGINEER DISTRICT, PHILADELPHIA.

THREE OF THE FIVE ENGINES OF THE GENERATING SETS DELIVERED UNDER THE CONTRACT WERE REPAIRED BY THE CONTRACTOR ON ACCOUNT OF DAMAGES SUSTAINED BY THE ENGINES DURING THE ONE-YEAR GUARANTEE PERIOD. WITH RESPECT TO ENGINE NO. 5-59031, A DISPUTE AROSE AFTER THE REPAIR WORK WAS PERFORMED AS TO WHICH PARTY WAS RESPONSIBLE FOR THE BEARING FAILURE. THE CONTRACTOR CONTENDED THAT IMPROPER OIL HAD BEEN USED BUT THE AIR FORCE REPRESENTATIVES CONCLUDED THAT THE FAILURE WAS DUE TO A ROUGH SPOT IN THE CRANK SHAFT OF THE ENGINE AND THAT, IF IMPROPER OIL HAD BEEN USED THIS WAS NOT DUE TO FAULT ON THE PART OF THE GOVERNMENT SINCE THE TYPE OF OIL USED IN THE ENGINE WAS RECOMMENDED BY THE ENGINE MANUFACTURER TO THE AMERICAN HYDROTHERM CORPORATION, THE AIR FORCE CONTRACTOR CHARGED WITH THE RESPONSIBILITY FOR MAINTENANCE AND OPERATION OF THE PLANT WHERE THE FIVE ENGINES WERE INSTALLED. AN AIR FORCE ADMINISTRATIVE CONTRACTING OFFICER MADE FINDINGS OF FACT AND RECOMMENDED DISAPPROVAL OF THE CONTRACTOR'S CLAIM. HOWEVER, IT APPEARS THAT NO ACTION WAS TAKEN EITHER BY THE DEPARTMENT OF THE AIR FORCE OR THE DEPARTMENT OF THE ARMY WHICH WOULD HAVE AFFORDED THE CONTRACTOR AN OPPORTUNITY TO PURSUE ITS ADMINISTRATIVE REMEDIES UNDER THE PROCEDURE ESTABLISHED IN THE "DISPUTES" CLAUSE OF THE CONTRACT.

SINCE THE ISSUES OF THE CASE ARE ESSENTIALLY OF A FACTUAL NATURE IT WOULD NOT BE PROPER FOR US TO CONSIDER THE MERITS OF THE CLAIM AT THIS TIME. BOTH THE CONTRACTOR AND THE GOVERNMENT ARE BOUND TO FOLLOW THE PROCEDURE SET OUT IN THE CONTRACT FOR THE ADMINISTRATIVE SETTLEMENT OF DISPUTES ON QUESTIONS OF FACT ARISING OUT OF THE CONTRACT AND THE CONTRACTOR MUST, OF COURSE, EXHAUST ITS ADMINISTRATIVE REMEDIES UNDER THE "DISPUTES" CLAUSE BEFORE MAKING AN APPEAL EITHER TO OUR OFFICE OR THE COURTS. SEE, GENERALLY, B. H. DEACON CO. V. UNITED STATES, 189 F.SUPP. 146; AND HAPPEL V. UNITED STATES, 176 F.SUPP. 787, AFFIRMED 279 F.2D 88.

ALTHOUGH THE AIR FORCE MAY HAVE TAKEN AN ACTIVE PART IN THE ADMINISTRATION OF THE CONTRACT INSOFAR AS THE ENFORCEMENT OF THE GUARANTEE PROVISION IS CONCERNED, WE ARE ADVISED INFORMALLY BY THE AIR FORCE THAT ITS ADMINISTRATIVE CONTRACTING OFFICERS ARE NOT AUTHORIZED TO RENDER DECISIONS UNDER THE DISPUTES CLAUSES OF ARMY AND NAVY CONTRACTS. WE NOTE THAT THE CONTRACT HERE INVOLVED DOES NOT SPECIFICALLY RECOGNIZE THE RIGHT OF OFFICIALS OF ANOTHER DEPARTMENT TO ACT FOR THE CONTRACTING OFFICER IN ANY MATTER AND THAT, IN THE DELEGATION OF AUTHORITY TO THE DISTRICT ENGINEER IN SAN FRANCISCO, CALIFORNIA, AT PAGE 3 OF THE BASIC CONTRACT, THE AUTHORITY OF THE CONTRACTING OFFICER TO RENDER DECISIONS UNDER THE "DISPUTES" CLAUSE OF THE CONTRACT WAS EXPRESSLY RESERVED AND RETAINED.

IN THESE CIRCUMSTANCES IT IS OUR OPINION THAT THE CASE SHOULD BE GIVEN CONSIDERATION BY THE DISTRICT ENGINEER, U.S. ARMY ENGINEER DISTRICT, PHILADELPHIA, AS SUCCESSOR CONTRACTING OFFICER, AND THAT, IN THE ABSENCE OF REACHING AN AGREEMENT ON THE MATTER IN CONTROVERSY, THE DISTRICT ENGINEER SHOULD REDUCE HIS DECISION TO WRITING AND MAIL A COPY OF THE DECISION TO THE CONTRACTOR WITH APPROPRIATE NOTICE AS TO THE FINAL EFFECT OF SUCH DECISION IN THE ABSENCE OF A TIMELY APPEAL TO YOU AS PROVIDED FOR IN THE "DISPUTES" CLAUSE OF THE CONTRACT. A COPY OF OUR LETTER OF TODAY TO THE CONTRACTOR, SHOWING THE ACTION WHICH WE ARE TAKING ON THE CLAIM, IS ENCLOSED.