B-151622, AUG. 21, 1963

B-151622, AUG. 21, 1963

TO MR. ALFREDO BALLADINO:

WE REFER TO YOUR LETTER OF MARCH 16, 1963, RELATIVE TO YOUR CLAIM FOR DAMAGES UNDER A CONTRACT BETWEEN YOUR FIRM AND THE DEPARTMENT OF THE ARMY, LOGISTICAL COMMAND, SETAF, TOMBOLO, LIVORNO, ITALY.

ON MARCH 8, 1960, THE DEPARTMENT OF THE ARMY ISSUED INVITATION NO. DA-EUC -91-214-S-60-6 WHICH OFFERED FOR SALE VARIOUS ITEMS OF EXCESS PROPERTY, INCLUDING ITEM 2, AN ESTIMATED 250 SHORT TONS OF HEAVY FERROUS METAL, AND ITEM 1, AN ESTIMATED 200 SHORT TONS OF LIGHT FERROUS METAL. YOU SUBMITTED A BID ON BOTH THE ESTIMATED 250 SHORT TONS OF HEAVY FERROUS METAL AND THE ESTIMATED 200 SHORT TONS OF THE LIGHT FERROUS METAL. THE UNIT PRICE IN YOUR BID FOR EACH OF THE ITEMS WAS 22,815 LIRE WHICH YOU ASSERT WAS BASED ON YOUR ESTIMATED UNIT PRICE OF 16,500 LIRE FOR THE 200 SHORT TONS OF LIGHT FERROUS SCRAP AND 28,000 LIRE FOR THE 250 SHORTTONS OF HEAVY FERROUS SCRAP. IN THE MARGIN OF YOUR BID YOU INSERTED THE QUALIFICATION "ALL OR NOTHING.' ON MAY 3, 1960, YOU WERE AWARDED CONTRACT NO. DA (S) 91-214-EUC -I FOR THESE ITEMS, WHICH UNDER THE TERMS OF THE INVITATION WAS FOR A TERM TO EXPIRE ON APRIL 30, 1961, OR WHEN THE ESTIMATED QUANTITIES WERE DELIVERED, WHICHEVER WAS EARLIER. DURING THE TERM OF THE ABOVE CONTRACT 169.84 SHORT TONS OF THE LIGHT FERROUS SCRAP METAL AND 123.4 SHORT TONS OF THE HEAVY FERROUS SCRAP METAL WERE DELIVERED TO YOU. UPON EXPIRATION OF THE TERM STATED IN THE CONTRACT, THE DEPARTMENT OF THE ARMY REFUSED TO GRANT AN EXTENSION FOR FURTHER DELIVERIES TO YOU AND THE CONTRACT WAS TERMINATED. A REFUND OF 2,435,683 LIRE WAS MADE TO YOU AS AN ADJUSTMENT FOR THE DIFFERENCE BETWEEN THE QUANTITIES DELIVERED AND THE QUANTITIES FOR WHICH YOU PAID BUT DID NOT RECEIVE.

ARTICLE I OF THE ADDITIONAL SPECIAL CONDITIONS APPLICABLE TO SALES INITALY, ENTITLED VARIATION IN QUANTITY, STATES THAT THE PURCHASER SHALL ACCEPT AND PAY FOR AT THE CONTRACT UNIT PRICE THE NUMBER OF UNITS ACTUALLY DELIVERED BY THE GOVERNMENT UP TO 25 PERCENT, MORE OR LESS, THAN THE ESTIMATED QUANTITIES LISTED IN THE INVITATION FOR BIDS. PARAGRAPH 11 OF THE GENERAL TERMS AND CONDITIONS STATES THAT WHERE LIABILITY OF THE GOVERNMENT TO THE PURCHASER HAS BEEN ESTABLISHED, THE EXTREME MEASURE OF THE GOVERNMENT'S LIABILITY SHALL NOT EXCEED REFUND OF THE PURCHASE PRICE OR SUCH PORTION THEREOF AS THE GOVERNMENT MAY HAVE RECEIVED. IN YOUR LETTER YOU SUBMIT A CLAIM FOR DAMAGES OF 1,603,500 LIRE BASED ON EVALUATION DIFFERENCES BETWEEN THE LIGHT AND HEAVY SCRAP METALS OF 1,023,500 LIRE, THE ADDITIONAL EXPENSES INCURRED DUE TO THE LARGER BURDEN OF TRANSPORTATION COSTS IN CARRYING AWAY THE LIGHT SCRAP IRON AMOUNTING TO 330,000 LIRE, AND LOSS OF INVESTMENT PROFITS OF 250,000 LIRE.

THE BASIC GROUND OF YOUR CLAIM IS THAT YOUR BID PRICE WAS COMPUTED ON YOUR ASSUMPTION THAT YOU WOULD RECEIVE 250 SHORT TONS OF HEAVY FERROUS SCRAP METAL AND 200 SHORT TONS OF LIGHT FERROUS SCRAP METAL, OR THAT YOU WOULD RECEIVE 5 TONS OF HEAVY METAL FOR EVERY 4 TONS OF LIGHT METAL WHICH WAS DELIVERED TO YOU. TO MAINTAIN THE ABOVE RELATIONSHIP, ONLY 98.72 SHORT TONS OF THE LESS VALUABLE LIGHT SCRAP SHOULD HAVE BEEN DELIVERED TO YOU TO CORRESPOND TO THE 123.4 SHORT TONS OF THE HEAVY SCRAP WHICH YOU RECEIVED. ACTUALLY, YOU RECEIVED 169.84 SHORT TONS OF THE LIGHT SCRAP, OR 71.12 TONS MORE THAN THE QUANTITY WHICH WOULD HAVE BEEN IN THE PROPER RATIO TO THE QUANTITY OF HEAVY SCRAP RECEIVED. ACCORDING TO YOUR EXPLANATION OF THE BASIS OF YOUR BID PRICE, THE DIFFERENCE BETWEEN THE UNIT PRICE WHICH YOU BID FOR THE COMBINED LOTS AND THE FIGURE AT WHICH YOU VALUED THE LIGHT METAL AMOUNTS TO 6,315 LIRE. IT THUS APPEARS THAT ADJUSTMENT OF THE PRICE FOR THE EXCESS QUANTITY OF LIGHT METAL BY REFUND TO YOU AT THAT RATE OF 449,122 LIRE (71.12 SHORT TONS TIMES 6,315 LIRE) WOULD PLACE YOU AS NEARLY AS POSSIBLE IN THE POSITION WHICH YOU HAD REASONABLE GROUNDS TO ANTICIPATE.

YOUR CLAIM FOR LOSS OF INVESTMENT PROFITS AND YOUR CLAIM FOR THE INCREASED TRANSPORTATION COSTS ARE CLEARLY UNLIQUIDATED CLAIMS FOR DAMAGES WHICH AS PRESENTED BY YOU ARE TOO SPECULATIVE AND CONJECTURAL FOR ALLOWANCE BY THIS OFFICE.

WHILE THERE WAS NOTHING ON THE FACE OF YOUR BID TO PUT THE GOVERNMENT ON NOTICE OF THE METHOD USED BY YOU IN CALCULATING YOUR BID PRICE, IT MUST BE CONCEDED THAT THE TERMS OF THE INVITATION AND CONTRACT, WHICH WERE PREPARED BY THE ARMY OFFICIALS AND ARE THEREFORE TO BE CONSTRUED IN YOUR FAVOR AS TO ANY AMBIGUOUS OR DOUBTFUL PROVISIONS, WERE SUCH AS TO GIVE YOU REASONABLE CAUSE TO EXPECT TO RECEIVE AT LEAST 75 PERCENT OF THE ESTIMATED QUANTITY OF HEAVY SCRAP AND A QUANTITY OF LIGHT SCRAP IN APPROXIMATELY THE PROPORTION REPRESENTED BY THE ESTIMATED QUANTITIES STATED. THEREFORE, UPON FULL REVIEW OF THE MATTER WE ARE DISPOSED TO AUTHORIZE PAYMENT TO YOU OF THE AMOUNT OF 449,122 LIRE, IF ACCEPTABLE AS FULL AND FINAL SETTLEMENT OF ALL CLAIMS ARISING OUT OF THE CONTRACT REFERRED TO. PLEASE ADVISE WHETHER YOU AGREE.