B-151935, SEP. 18, 1963

B-151935: Sep 18, 1963

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UNITED STATES INFORMATION AGENCY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 27. IT IS STATED IN YOUR LETTER THAT THE ISSUES IN DISPUTE ARE TWOFOLD: (1) THE VALIDITY OF THE TERMINATION FOR DEFAULT. IT IS THE POSITION OF ARLINGTON SALES AGENCY. (2) THAT ALTHOUGH THE TERMINATION FOR DEFAULT MAY HAVE BEEN PROPER. ARLINGTON SALES IS NOT LIABLE FOR THE EXCESS COSTS CLAIMED AS THE REPURCHASE WAS MADE PRIOR TO RECEIPT OF THE TERMINATION NOTICE. IT IS THE POSITION OF USIA. THAT (1) THE CONTRACTING OFFICER GRANTED THE ALLEGED EXTENSION SUBJECT TO A CONDITION PRECEDENT WHEREBY SATISFACTORY EVIDENCE OF ITS ABILITY TO PERFORM WAS TO BE SUBMITTED BY ARLINGTON SALES ON OR BEFORE APRIL 3. THAT SINCE ARLINGTON SALES FAILED TO COMPLY WITH THIS CONDITION THE EXTENSION DID NOT IN FACT COME INTO EXISTENCE AND THEREFORE ARLINGTON SALES WAS IN DEFAULT ON APRIL 3.

B-151935, SEP. 18, 1963

TO DIRECTOR, UNITED STATES INFORMATION AGENCY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 27, 1963, AND ITS ENCLOSURES, REQUESTING OUR VIEWS AS TO THE LEGAL RIGHTS OF THE PARTIES UPON DEFAULT TERMINATION OF CONTRACT IA-8353 AWARDED MARCH 2, 1962, TO ARLINGTON SALES AGENCY, INC., NEW YORK, NEW YORK, COVERING A QUANTITY OF PAPER TO BE DELIVERED WITHIN 30 DAYS F.A.S. VESSEL PORT OF EXPORT FOR A TOTAL PRICE OF $13,770 AND THE SUBSEQUENT REPURCHASE AT AN EXCESS COST OF $1,254.60.

IT IS STATED IN YOUR LETTER THAT THE ISSUES IN DISPUTE ARE TWOFOLD: (1) THE VALIDITY OF THE TERMINATION FOR DEFAULT; AND (2) THE VALIDITY OF USIA'S CLAIM AGAINST THE DEFAULTING CONTRACTOR FOR THE EXCESS COSTS INCURRED.

BRIEFLY STATED, IT IS THE POSITION OF ARLINGTON SALES AGENCY, INC., THAT: (1) THE CONTRACTING OFFICER EXTENDED THE CONTRACT DELIVERY DATE FROM APRIL 3, 1962, TO APRIL 16, 1962; THAT IN VIEW OF THIS EXTENSION ARLINGTON SALES PROPERLY COULD NOT BE FOUND TO BE IN DEFAULT SO AS TO WARRANT TERMINATION OF THE CONTRACT WITHOUT FIRST RECEIVING A 10-DAY NOTICE PURSUANT TO THE PROVISIONS OF THE CONTRACT WHICH THE CONTRACTING OFFICER FAILED TO GIVE; AND (2) THAT ALTHOUGH THE TERMINATION FOR DEFAULT MAY HAVE BEEN PROPER, NEVERTHELESS, ARLINGTON SALES IS NOT LIABLE FOR THE EXCESS COSTS CLAIMED AS THE REPURCHASE WAS MADE PRIOR TO RECEIPT OF THE TERMINATION NOTICE.

IT IS THE POSITION OF USIA, ON THE OTHER HAND, THAT (1) THE CONTRACTING OFFICER GRANTED THE ALLEGED EXTENSION SUBJECT TO A CONDITION PRECEDENT WHEREBY SATISFACTORY EVIDENCE OF ITS ABILITY TO PERFORM WAS TO BE SUBMITTED BY ARLINGTON SALES ON OR BEFORE APRIL 3, 1962, THE CONTRACT DELIVERY DATE; THAT SINCE ARLINGTON SALES FAILED TO COMPLY WITH THIS CONDITION THE EXTENSION DID NOT IN FACT COME INTO EXISTENCE AND THEREFORE ARLINGTON SALES WAS IN DEFAULT ON APRIL 3, 1962, WHICH WARRANTED TERMINATION OF THE CONTRACT WITHOUT ISSUANCE OF A 10-DAY NOTICE; AND (2) IF THE ALLEGED EXTENSION DID IN FACT COME INTO EXISTENCE ADEQUATE NOTICE WAS COMMUNICATED TO ARLINGTON SALES BY BOTH TELEPHONE AND TELEGRAM ON MARCH 30, 1962, 10 DAYS PRIOR TO APRIL 9, 1962, WHEN THE CONTRACTING OFFICER DISPATCHED HIS LETTER OF TERMINATION DATED APRIL 6, 1962, TO ARLINGTON SALES.

THE RECORD SUBMITTED DISCLOSES THAT THE CONTRACT WAS AWARDED TO ARLINGTON SALES AGENCY, INC., FOR FURNISHING ITEM NO. 1A, CONSISTING OF 102,000 POUNDS OF WHITE OFFSET BOOK PAPER AT $0.135 A POUND OR A TOTAL PRICE OF $13,770 FOR DELIVERY WITHIN 30 DAYS F.A.S. VESSEL PORT OF EXPORT, NEW YORK, NEW YORK, OR PHILADELPHIA, PENNSYLVANIA. THE CONTRACT INCORPORATED THE "GENERAL PROVISIONS" OF STANDARD FORM 32, 1957 EDITION; ALSO CERTAIN SUPPLEMENTAL PROVISIONS AND SPECIAL CONDITIONS RELATING TO PACKING AND MARKING AND OTHER REQUIREMENTS. PARAGRAPH 2 OF THE SPECIAL CONDITIONS RELATING TO "ORIGIN INSPECTION" PROVIDED SPACES FOR INDICATING THE PRODUCING MILL AND LOCATION WHERE INSPECTION PRIOR TO SHIPMENT WOULD BE MADE. THESE SPACES WERE NOT FILLED IN BY THE CONTRACTOR; HOWEVER, THE FILE INCLUDES A MEMORADUM OF A TELEPHONE CALL ON MARCH 6, 1962, WHEREBY MR. GILBERT OF ARLINGTON SALES AGENCY ADVISED THAT THE PRODUCING MILL WOULD BE ALLIED PAPER MILLS, KALAMAZOO, MICHIGAN. THIS INFORMATION WAS INCLUDED IN THE "NOTICE OF AWARD OF CONTRACT" STANDARD FORM 99 SHOWING THE COMPLETION DATE AS APRIL 6, 1962. IT WAS ALSO INCLUDED IN THE ADVICE DATED MARCH 7, 1962, TO THE GENERAL SERVICES ADMINISTRATION REQUESTING INSPECTION SERVICES INCLUDING SUPERVISION OF PACKING AND MARKING. THIS ADVICE STATED THAT THE CONTRACTOR WOULD CONTACT GENERAL SERVICES ADMINISTRATION TO MAKE FINAL ARRANGEMENTS, AND A COPY WAS FORWARDED TO THE CONTRACTOR BEARING A NOTE "PLEASE ADVISE THIS OFFICE DATE INSPECTION IS REQUESTED.'

AS WILL BE INDICATED BELOW, THE EVIDENCE OF RECORD REASONABLY ESTABLISHES THAT THIS ADVICE FROM ARLINGTON SALES THAT THE PRODUCING MILL WOULD BE ALLIED PAPER MILLS WAS WITHOUT BASIS, IN FACT. IT ALSO SEEMS CLEAR THAT THE FAILURE OF ARLINGTON SALES TO ACTUALLY MAKE THE INDICATED COMMITMENT WITH ALLIED PAPER MILLS WAS THE GENESIS OF THE INCIDENTS WHICH CULMINATED IN THE DEFAULT TERMINATION BY THE CONTRACTING OFFICER.

THE PROCEDURE AGREED UPON IN CASE OF DEFAULT WAS STIPULATED IN PARAGRAPH 11 OF THE "GENERAL PROVISIONS" OF THE CONTRACT, IN PERTINENT PART, AS FOLLOWS:

"11. DEFAULT

(A) THE GOVERNMENT MAY, SUBJECT TO THE PROVISIONS OF PARAGRAPH (C) 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

(II) IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THIS CONTRACT, OR SO FAILS TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THIS CONTRACT IN ACCORDANCE WITH ITS TERMS, AND IN EITHER OF THESE TWO CIRCUMSTANCES DOES NOT CURE SUCH FAILURE WITHIN A PERIOD OF 10 DAYS (OR SUCH LONGER PERIOD AS THE CONTRACTING OFFICER MAY AUTHORIZE IN WRITING) AFTER RECEIPT OF NOTICE FROM THE CONTRACTING OFFICER SPECIFYING SUCH FAILURE.

(B) IN THE EVENT THE GOVERNMENT TERMINATES THIS CONTRACT IN WHOLE OR IN PART AS PROVIDED IN PARAGRAPH (A) OF THIS CLAUSE, THE GOVERNMENT MAY PROCURE, UPON SUCH TERMS AND IN SUCH MANNER AS THE CONTRACTING OFFICER MAY DEEM APPROPRIATE, SUPPLIES OR SERVICES SIMILAR TO THOSE SO TERMINATED, AND THE CONTRACTOR SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS FOR SUCH SIMILAR SUPPLIES OR SERVICES: PROVIDED, THAT THE CONTRACTOR SHALL CONTINUE THE PERFORMANCE OF THIS CONTRACT TO THE EXTENT NOT TERMINATED UNDER THE PROVISIONS OF THIS CLAUSE.'

AS EVIDENCED BY THE CONTRACTING OFFICER'S MEMORANDUM THEREOF, ON MARCH 23, 1962, A TELEPHONE CALL WAS RECEIVED FROM MR. GILBERT OF ARLINGTON SALES REQUESTING EXTENSION OF TIME FOR DELIVERY. MR. GILBERT STATED THAT THE PAPER WAS AVAILABLE ON 2000-POUND SKIDS BUT WOULD NOT BE EXPORT PACKED FOR SEVERAL WEEKS, AND INQUIRED AS TO THE PRICES AND SOURCES OF OTHER BIDS. THE CONTRACTING OFFICER ADVISED MR. GILBERT THAT A LOWER BID HAD BEEN REJECTED BECAUSE SHIPPING WAS NOT AVAILABLE UNTIL MAY "AND THAT WE COULD NOT EXTEND DELIVERY BEYOND APRIL 15; AND THAT IF NECESSARY WE WOULD HAVE TO REPURCHASE AT EXCESS COST OF .011 LB.' MR. GILBERT STATED "THAT DELIVERY WOULD BE MADE NO LATER THAN WEEK OF APRIL 16 AND EXPRESSED APPRECIATION FOR THE ENSION.' THIS MEMORANDUM, IN OUR OPINION, MAY BE REGARDED AS EVIDENCING AN UNDERSTANDING THAT THE CONTRACT DELIVERY DATE HAD BEEN EXTENDED TO "NO LATER THAN WEEK OF APRIL 16.' THIS SEEMS REASONABLE ALTHOUGH NO FORMAL EXTENSION WAS ISSUED AND, AS DEMONSTRATED BY THE SUCCEEDING EVENTS IN THIS CASE, IT IS ESSENTIAL TO THE DETERMINATION AND PROTECTION OF THE RIGHTS OF THE CONTRACTING PARTIES THAT EXTENSIONS OF CONTRACT DELIVERY DATES DEFINITELY STIPULATE IN WRITING THE LENGTH OF THE EXTENSION IN CALENDAR DAYS AND THE SPECIFIC DATE ON WHICH DELIVERY WILL BE DUE UNDER THE EXTENSION GRANTED.

ON MARCH 30, 1962, THE CONTRACTING OFFICER RECEIVED A TELEPHONE CALL FROM MR. GORDON BROWN OF HOWARD SMITH PAPER MILLS, LTD., MONTREAL, TO INQUIRE WHETHER SHIPMENT OF THIS CONTRACT DURING THE LATTER PART OF MAY WOULD BE ACCEPTABLE. MR. BROWN STATED "THAT HE HAD RECEIVED A FIRM ORDER FROM ARLINGTON SALES AGENCY, BUT THAT HE COULD NOT MAKE SHIPMENT BEFORE MAY 15 AND WAS AWARE WE HAD REJECTED HIS OWN BID * * * BECAUSE APRIL SHIPPING WAS NOT AVAILABLE EXCEPT WITH RAIL TO NEW RK.' THE CONTRACTING OFFICER "ADVISED MR. BROWN THAT MAY SHIPMENT WAS NOT ACCEPTABLE; THAT DELIVERY WAS DUE APRIL 3; THAT I HAD GRANTED CONTRACTOR AN EXTENSION TO APRIL 15; AND THAT I WOULD GET IN TOUCH WITH CONTRACTOR PROMPTLY.'

ON THE SAME DAY, MARCH 30, 1962, THE CONTRACTING OFFICER TELEPHONED MR. GILBERT "AND AGAIN TOLD HIM THAT NO EXTENSION BEYOND WEEK OF APRIL 16 COULD BE GRANTED; THAT IF MAY 15 DELIVERY WERE ACCEPTABLE HE WOULD NOT HAVE RECEIVED CONTRACT AWARD; AND THAT UNLESS HE FURNISHED ACCEPTABLE EVIDENCE BY MONDAY APRIL 2 OF HIS ABILITY TO MAKE DELIVERY WEEK OF APRIL 16 IT WOULD BE NECESSARY TO TERMINATE AND REPURCHASE. ONE ADDITIONAL DAY GRANTED AT MR. GILBERT'S REQUEST.' THIS ADVICE WAS CONFIRMED BY THE FOLLOWING TELEGRAM DISPATCHED BY THE CONTRACTING OFFICER THE SAME DAY TO ARLINGTON SALES: "CONFIRMING CONVERSATION TODAY UNLESS SATISFACTORY EVIDENCE OF YOUR ABILITY TO MAKE DELIVERY WEEK OF APRIL 16 IS RECEIVED BY TUESDAY APRIL 3 IT WILL BE NECESSARY TO TERMINATE CONTRACT IA-8353 AND YOU WILL BE LIABLE FOR EXCESS COSTS OF REPURCHASE.'

THE CONTRACTING OFFICER'S ADVICE BY TELEPHONE AND TELEGRAM ON MARCH 30, 1962, APPARENTLY WAS INTENDED AS A NOTICE OF INTENTION TO TERMINATE FOR DEFAULT UNLESS THE STATED CONDITIONS WERE MET. FOUR DAYS WERE ALLOWED THEREUNDER (INSTEAD OF 10 DAYS PRESCRIBED IN PARAGRAPH 11 (A) (II) OF THE GENERAL PROVISIONS) WITHIN WHICH THE CONTRACTOR WOULD BE REQUIRED TO ESTABLISH HIS ABILITY TO PERFORM THE CONTRACT; THAT IS, NOT LATER THAN APRIL 3, 1962, THE DELIVERY DATE ORIGINALLY ESTABLISHED FOR THE CONTRACT. IN OTHER WORDS, BY CONDITIONS THUS IMPOSED AND NOT MENTIONED IN THE TELEPHONE CONVERSATION OF MARCH 23, 1962, MUTUALLY AGREEING TO AN EXTENSION OF THE DELIVERY DATE TO WEEK OF APRIL 16, 1962, THE DATE OF APRIL 3, 1962, WOULD BE REESTABLISHED AS THE CONTRACT DELIVERY DATE. ARE OF THE OPINION THAT SUCH UNILATERAL ACTION BY THE CONTRACTING OFFICER MAY NOT REASONABLY BE SO CONSTRUED AND THEREFORE THE CONTRACTOR'S OBLIGATION TO MAKE DELIVERY ON OR BEFORE APRIL 16, 1962, AS PROVIDED BY THE EXTENSION AGREED TO ON MARCH 23, 1962, REMAINED UNCHANGED.

ON APRIL 3, 1962, THE FOLLOWING TELEGRAM FROM ARLINGTON SALES WAS RECEIVED BY THE CONTRACTING OFFICER; "RETEL WE HAVE PAPER AVAILABLE IN PHILADELPHIA AND WILL SHIP AND PACK AS SPECIFIED FOR DELIVERY WEEK OF APRIL 16 F.A.S. PHILADELPHIA, PENNSYLVANIA, CAN SHIP TEN TONS WEEK OF APRIL 9, IF YOU WILL ACCEPT SHIPMENT PACKED ON SKIDS.' THE CONTRACTING OFFICER REPLIED BY WIRE OF THE SAME DAY AS FOLLOWS: "RETEL SHIPMENT ON SKIDS NOT ACCEPTABLE. ADVISE RETURN WIRE DATE AND LOCATION PAPER CONTRACT IA-8353 AVAILABLE FOR INSPECTION.' ON THE FOLLOWING DAY APRIL 4, 1962, THE CONTRACTING OFFICER CONTACTED MR. GILBERT OF ARLINGTON SALES BY TELEPHONE AND ADVISED HIM THAT THE "PAPER WAS URGENTLY NEEDED, OUR BEST QUOTATION WAS CONTINGENT UPON AWARD APRIL 5, AND THAT I COULD GIVE HIM ONLY UNTIL NOON APRIL 5 TO AVOID TERMINATION.' THE CONTRACTOR RESPONDED BY THE FOLLOWING WIRE RECEIVED APRIL 5, 1962; "WILL HAVE PAPER READY WEEK OF APRIL 16, ARRANGE INSPECTION AT G.B. GOLDMAN PAPER COMPANY, PHILADELPHIA, PENNSYLVANIA.' IN AN EFFORT TO VERIFY THIS ADVICE THE CONTRACTING OFFICER TELEPHONED THE GOLDMAN PAPER COMPANY AND WAS INFORMED "THAT GOLDMAN DID NOT HAVE AN ORDER FROM ARLINGTON SALES AND HAD NOT REACHED AN AGREEMENT WITH HIM ON COST OF EXPORT PACKING.' ALSO THAT "GOLDMAN DOES HAVE 70,000 POUNDS OF PAPER AVAILABLE, BUT HAS NEVER DISCUSSED ANY LARGER QUANTITY; IS NOT FAMILIAR WITH PACKING SPECIFICATIONS; AND COULD NOT MAKE DELIVERY BEFORE APRIL 25 OR 26.'

THE FOLLOWING DAY THE CONTRACTING OFFICER PREPARED HIS LETTER OF APRIL 6, 1962, DISPATCHED ON APRIL 9, 1962, WHICH ADVISED ARLINGTON SALES THAT ITS RIGHT TO PROCEED UNDER THE CONTRACT WAS BEING TERMINATED, THAT REPURCHASE WAS BEING MADE AGAINST ITS ACCOUNT AND REQUESTED A CHECK IN THE AMOUNT OF $1,254.60 TO COVER THE EXCESS COST. IN A RECENT DECISION RENDERED JANUARY 7, 1963, THE 9TH CIRCUIT COURT OF APPEALS HELD THAT WHERE THE PARTIES INTENDED TIME TO BE OF THE ESSENCE OF THE DELIVERY REQUIRED THE CONTRACT WAS PROPERLY TERMINATED WITHOUT NOTICE BY THE GOVERNMENT UNDER THE PROVISIONS OF THE "DEFAULT" CLAUSE OF THE CONTRACT WHICH WERE THE SAME AS PARAGRAPH 11 OF THE INSTANT CONTRACT. UNITED STATES V. CHICHESTER, 312 F.2D 275. HOWEVER, UNDER THE CIRCUMSTANCES OF THE INSTANT CASE IT SEEMS REASONABLY CLEAR THAT THE CONTRACTOR WAS NOT IN DEFAULT AS OF APRIL 9, 1962, WHEN THE CONTRACTOR'S NOTICE OF TERMINATION WAS ISSUED SINCE THE CONTRACT DELIVERY DATE HAD BEEN EXTENDED TO APRIL 16, 1962. IT WOULD SEEM TO FOLLOW, THEREFORE, THAT THE CONTRACTING OFFICER'S TERMINATION ACTION WAS PREMATURE AND INCONSISTENT WITH PARAGRAPH 11 (A) (I) OF THE CONTRACT PROVIDING FOR TERMINATION "IF THE CONTRACTOR FAILS TO MAKE DELIVERY * * * WITHIN THE TIME SPECIFIED HEREIN OR ANY EXTENSION THEREOF.'

ON APRIL 11, 1962, THE CONTRACTOR TELEPHONED TO REQUEST RECONSIDERATION OF THE DETERMINATION AND CONFIRMED THIS REQUEST BY LETTER DATED APRIL 11, 1962, RECEIVED BY THE CONTRACTING OFFICER THE FOLLOWING DAY. THIS LETTER INCLUDED AS AN ALTERNATIVE AN APPEAL FROM THE CONTRACTING OFFICER'S DECISION AND A REQUEST FOR A HEARING BEFORE A BOARD OF REVIEW. A FURTHER APPEAL WAS MADE IN THE CONTRACTOR'S LETTER TO YOU DATED APRIL 23, 1962, AND THE CONTRACTOR WAS ADVISED BY YOUR GENERAL COUNSEL IN HIS LETTER OF MAY 1, 1962, THAT THE MATTER HAD BEEN REFERRED TO HIM FOR CONSIDERATION. THE CONTRACTING OFFICER'S DECISION WAS SUSTAINED IN THE GENERAL COUNSEL'S LETTER OF JUNE 12, 1962, ADVISING THE CONTRACTOR IN THE PENULTIMATE PARAGRAPH, HOWEVER,"IF YOU, NONETHELESS, FEEL THAT YOU HAVE EVIDENCE WHICH CONTRAVENES OUR FINDINGS YOU MAY BE SURE IT WILL BE ACCORDED OUR THOROUGH CONSIDERATION.' AFTER FURTHER CORRESPONDENCE AN INFORMAL HEARING WAS HELD ON NOVEMBER 19, 1962. AT THIS HEARING MR. BERNARD GILBERT OF ARLINGTON SALES AGENCY AND MR. JAMES T. MCILWEE, THE CONTRACTING OFFICER, PRESENTED THEIR RESPECTIVE POSITIONS WHICH ARE SUMMARIZED IN THE MEMORANDUM TRANSMITTED WITH YOUR LETTER. IT SEEMS EVIDENT THEREFROM AND THE FURTHER INFORMATION TRANSMITTED WITH THE CONTRACTOR'S LETTER OF NOVEMBER 27, 1962, THAT THE MATTER HAS BEEN TREATED AS A CONTINUING APPEAL FOR FINAL DETERMINATION AND DECISION UNDER THE PROVISIONS OF THE STANDARD ,DISPUTES" CLAUSE SET OUT IN PARAGRAPH 12 OF THE GENERAL PROVISIONS OF THE CONTRACT.

IT SEEMS WELL ESTABLISHED THAT WHERE A PARTICULAR PERSON IS DESIGNATED IN A CONTRACT TO ACT AS AN ARBITER OF DISPUTED QUESTIONS OF FACT ARISING THEREUNDER HIS DECISIONS ARE FINAL AND CONCLUSIVE ON THE PARTIES. SEE THE AUTHORITIES COLLECTED IN THE ANNOTATIONS 54 A.L.R. 1255, 110 A.L.R. 137, AND 137 A.L.R. 530. AND IN THIS CONNECTION, THE CONGRESS HAS ESTABLISHED A GENERAL POLICY PERTAINING TO THE REVIEW OF DECISIONS BY OFFICIALS UNDER GOVERNMENT CONTRACTS AS EVIDENCED BY THE PROVISIONS OF 41 U.S.C. 321, 322, WHICH PROVIDE IN MATERIAL PART THAT "ANY SUCH DECISION SHALL BE FINAL AND CONCLUSIVE UNLESS THE SAME IS FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.' FURTHERMORE, IT HAS BEEN CONSISTENTLY HELD THAT THIS AGREED ADMINISTRATIVE REMEDY MUST BE EXHAUSTED AS A GENERAL RULE BEFORE RESORT TO THE COURTS. SEE UNITED STATES V. CALLAHAN WALKER ., 317 U.S. 56 (1942); UNITED STATES V. BLAIR, 321 U.S. 730 (1944); AND UNITED STATES V. BEUTTES, 324 U.S. 768 (1945). CF. CONTINENTAL ILLINOIS NATIONAL BANK V. UNITED STATES, 121 CT.CL. 203 (1952) AND ACORN DECORATING CORPORATION V. UNITED STATES, 146 CT.CL. 394 (1959).

THE ADMINISTRATIVE ACTION IN THIS CASE HAS GIVEN RISE TO A DISPUTE WHICH WE BELIEVE FROM A CAREFUL CONSIDERATION OF THE FOREGOING COMES WITHIN THE PURVIEW OF THE SETTLEMENT PROCEDURE PRESCRIBED BY THE CONTRACT. THAT COMPLIANCE WITH THIS PROCEDURE IS MANDATORY UPON THE CONTRACTING PARTIES-- - IN THIS CASE THE GOVERNMENT AS WELL AS THE CONTRACTOR--- SEEMS BEYOND QUESTION. SEE POLORON PRODUCTS INC. V. UNITED STATES, 126 CT.CL. 816 (1953); AUTOMATIC SCREW PRODUCTS CO. V. UNITED STATES, 145 CT.CL. 94 (1959) AND HOFFMAN V. UNITED STATES, 276 F.2D 199 (1960). AND SINCE THE CONTRACTOR HAS NOT RECEIVED A FINAL DECISION IN ACCORDANCE WITH THE CONTRACT PROCEDURE IT IS OUR VIEW THAT THIS MATTER PROPERLY MAY NOT BE DETERMINED BY OUR OFFICE. CF. 37 COMP. GEN. 568 AND 38 ID. 749.

YOU ARE ACCORDINGLY ADVISED THAT UNTIL THE ADMINISTRATIVE REMEDY AGREED UPON BY THE PARTIES HAS BEEN EXHAUSTED WE WOULD NOT BE WARRANTED IN RENDERING A DECISION ON THE MERITS OF THE ISSUES PRESENTED.