B-151648, SEP. 11, 1963

B-151648: Sep 11, 1963

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000 DEPOSIT WHICH ACCOMPANIED THE BID UPON WHICH CONTRACT N62779-630 WAS AWARDED TO YOUR COMPANY. THE GOVERNMENT IS ENTITLED TO RETAIN 20 PERCENT OF THE PURCHASE PRICE AS LIQUIDATED DAMAGES. IT WAS NOT IMPROPER TO RETAIN FROM THE $3. BEFORE A REFUND OF THE ENTIRE BID DEPOSIT COULD BE MADE A LEGAL BASIS FOR RESCISSION OF THE CONTRACT WOULD HAVE TO BE ESTABLISHED. 759.98 BY OUR CLAIMS DIVISION IS SUSTAINED.

B-151648, SEP. 11, 1963

TO MR. E. J. MCCALLUM, JR.:

THE U.S. NAVY FINANCE CENTER HAS REFERRED TO US YOUR LETTER OF JULY 26, 1963, TO THE U.S. NAVY REGIONAL ACCOUNTS OFFICE EXPRESSING DISSATISFACTION WITH THE REFUND OF ONLY $240.02 FROM THE $3,000 DEPOSIT WHICH ACCOMPANIED THE BID UPON WHICH CONTRACT N62779-630 WAS AWARDED TO YOUR COMPANY.

PARAGRAPH 7, THE "DEFAULT" ARTICLE OF THE GENERAL TERMS AND CONDITIONS OF THE SALE, PROVIDED THAT UPON A BREACH BY THE PURCHASER IN FAILING TO MAKE PAYMENT FOR THE PROPERTY PURCHASED OR TO REMOVE IT, THE GOVERNMENT IS ENTITLED TO RETAIN 20 PERCENT OF THE PURCHASE PRICE AS LIQUIDATED DAMAGES. IN VIEW THEREOF, UPON REFUSAL BY YOUR COMPANY TO PERFORM THE CONTRACT, IT WAS NOT IMPROPER TO RETAIN FROM THE $3,000 BID DEPOSIT THE AMOUNT OF $2,759.98, REPRESENTING 20 PERCENT OF THE $13,799.92 PURCHASE PRICE.

THE RECORD IN THIS CASE DOES NOT INDICATE THAT SUCH CONDITIONS EXIST AS WOULD BE REGARDED BY THE COURTS AS GROUNDS FOR RESCISSION OF THE CONTRACT OF SALE. BEFORE A REFUND OF THE ENTIRE BID DEPOSIT COULD BE MADE A LEGAL BASIS FOR RESCISSION OF THE CONTRACT WOULD HAVE TO BE ESTABLISHED.

ACCORDINGLY, THE JULY 11, 1963, DISALLOWANCE OF $2,759.98 BY OUR CLAIMS DIVISION IS SUSTAINED.