B-152255, JAN. 21, 1964

B-152255: Jan 21, 1964

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WHILE THE APPEAR WAS PENDING. IT WAS AGREED BETWEEN THE CONTRACTOR AND OFFICIALS OF THE DEPARTMENT OF THE NAVY THAT THE CONTRACTOR WAS ENTITLED TO THE NET AMOUNT OF $245. THIS AGREEMENT WAS EXECUTED ON MARCH 28. YOU ASK WHETHER PAYMENT ON THIS CLAIM IS NOW TIME BANNED. WE RECOGNIZE THAT WHERE A CLAIM IS BY STATUE NOT PAYABLE UNTIL THE VALIDITY THEREOF IS DETERMINED BY A DESIGNATED AGENCY OF THE GOVERNMENT. THE CLAIM DOES NOT ACCRUE UNTIL THE ADMINISTRATIVE DETERMINATION IS MADE. IT IS WELL SETTLED THAT A CONTRACTOR UNDER A GOVERNMENT CONTRACT MUST EXHAUST HIS ADMINISTRATIVE REMEDY. BEFORE THE COURTS OR THIS OFFICE WILL CONSIDER THE MERITS OF HIS CLAIM. HAS INDICATED THAT ITS STATUTE WOULD BE TOLLED DURING THE PERIOD THAT A MANDATORY ADMINISTRATIVE REMEDY WAS BEING PURSUED BY THE CLAIMANT.

B-152255, JAN. 21, 1964

TO M. S. BODMER, DIRECTOR, ACCOUNTS RECORD AND CLAIMS DIVISION, U.S. NAVY REGIONAL FINANCE OFFICE:

WE REFER TO YOUR LETTER OF MAY 20, 1963, WITH ENCLOSURES (REFERENCE; FR- 10 (ACC-BI) 7240 (T) CL.VOU. 184970) REQUESTING OUR DECISION RELATIVE TO THE CLAIM OF TODD SHIPYARDS CORPORATION UNDER CONTRACTS NOS. NOBS-10001, NOBS-10002, NOS-75854 AND NOS-75907 FOR RETURN OF INVENTORY OVERAGE REFUNDS MADE TO THE GOVERNMENT ON OCTOBER 19, 1944, SEPTEMBER 6, 1945 AND JULY 3, 1946.

BRIEFLY, ON MARCH 27, 1961, THE CONTRACTING OFFICER OF THE BUREAU OF SHIPS DENIED TODD SHIPYARD'S CLAIM FOR REFUND OF THE INVENTORY OVERAGE PAYMENTS, IN THE TOTAL AMOUNT OF $768,194.25. TODD APPEALED THE CONTRACTING OFFICER'S DECISION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA NO. 7315). WHILE THE APPEAR WAS PENDING, IT WAS AGREED BETWEEN THE CONTRACTOR AND OFFICIALS OF THE DEPARTMENT OF THE NAVY THAT THE CONTRACTOR WAS ENTITLED TO THE NET AMOUNT OF $245,316.14, AS FULL PAYMENT OF THE CONTRACTOR'S CLAIM. THIS AGREEMENT WAS EXECUTED ON MARCH 28, 1963.

YOU ASK WHETHER PAYMENT ON THIS CLAIM IS NOW TIME BANNED.

THE ACT OF OCTOBER 9, 1940, 54 STAT. 1061 (31 U.S.C. 71A), PROVIDES THAT EVERY CLAIM COGNIZABLE BY THE GENERAL ACCOUNTING OFFICE "SHALL BE FOREVER BARRED UNLESS SUCH CLAIM * * * SHALL BE RECEIVED IN SAID OFFICE WITHIN TEN FULL YEARS AFTER THE DATE SUCH CLAIM FIRST ACCRUED.' IN APPLYING THE ACT, WE RECOGNIZE THAT WHERE A CLAIM IS BY STATUE NOT PAYABLE UNTIL THE VALIDITY THEREOF IS DETERMINED BY A DESIGNATED AGENCY OF THE GOVERNMENT, THE CLAIM DOES NOT ACCRUE UNTIL THE ADMINISTRATIVE DETERMINATION IS MADE. SEE 34 COMP. GEN. 604, 607.

IT IS WELL SETTLED THAT A CONTRACTOR UNDER A GOVERNMENT CONTRACT MUST EXHAUST HIS ADMINISTRATIVE REMEDY, BEFORE THE COURTS OR THIS OFFICE WILL CONSIDER THE MERITS OF HIS CLAIM. SEE B-147489, DECEMBER 13, 1961, AND THE CASES CITED.

THE COURT OF CLAIMS, IN SPEAKING OF ITS STATUTE OF LIMITATIONS (28 U.S.C. 2501), HAS INDICATED THAT ITS STATUTE WOULD BE TOLLED DURING THE PERIOD THAT A MANDATORY ADMINISTRATIVE REMEDY WAS BEING PURSUED BY THE CLAIMANT. SEE, FOR EXAMPLE, COSMOPOLITAN MANUFACTURING CO. V. UNITED STATES, 297 F.2D 546, 547; CUIFFO, V. UNITED STATES, 137 F.SUPP. 944, 948.

IN LINE WITH THE CITED AUTHORITIES, WE CONCLUDE THAT A CLAIM COVERED BY THE GOVERNMENT'S CONTRACT DISPUTES PROCEDURE DOES NOT ACCRUE WITHIN THE MEANING OF OUR BARRING ACT UNTIL THE ADMINISTRATIVE REMEDY HAS BEEN EXHAUSTED--- IN OTHER WORDS, UNTIL THERE EXITS A MATURED CLAIM UPON WHICH A SETTLEMENT MAY BE STATED ON THE MERITS. SEE B-149266, DECEMBER 31, 1963, 43 COMP. GEN. - . ACCORDINGLY, WE HAVE NO OBJECTION TO PAYMENT OF THE CONTRACTOR'S CLAIM IN ACCORDANCE WITH THE AGREEMENT, IF THE PAYMENT IS OTHERWISE CORRECT.