B-152408, DEC. 17, 1963

B-152408: Dec 17, 1963

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INC.: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 24. YOUR CLAIM WAS DISALLOWED FOR FAILURE TO COMPLY WITH THE TERMS OF THE CONTRACT. YOU STATE THAT OUR POSITION WITH RESPECT TO THE "LIMITATION OF COST" CLAUSE IS UNDERSTANDABLE. THAT YOU ARE WELL AWARE OF THIS CLAUSE AND OF THE REASON FOR ITS EXISTENCE. CERTAINLY HAVE NO QUARREL WITH THE BASIC PHILOSOPHY INVOLVED. NEVERTHELESS CONTEND THAT "OUR SINS WERE PRIMARILY OF OMISSION. IT IS FURTHER STATED THAT THE GOVERNMENT FURNISHED A GASOLINE ENGINE WHICH WAS REPRESENTED AS STANDARD. THAT IT WAS. THAT YOU WERE FORCED TO SPEND MUCH TIME AND MONEY IN AN EFFORT TO ADAPT IT TO THE END PRODUCT. WHAT FURTHER RECOURSE IS AVAILABLE TO YOU. THE COST OF THE WORK WAS $17.

B-152408, DEC. 17, 1963

TO BIRDAIR STRUCTURES, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 24, 1963, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED OCTOBER 7, 1963, WHICH DISALLOWED YOUR CLAIM FOR AN ADDITIONAL PAYMENT OF $9,659.96 ALLEGED TO BE DUE UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. DA-19-129-QM-1802, DATED MAY 19, 1961.

THE SUBJECT CONTRACT REQUIRED YOU TO DESIGN, DEVELOP, FABRICATE AND DELIVER TO THE GOVERNMENT A HOSPITAL TENT WITH ACCESSORY EQUIPMENT ON A COST REIMBURSABLE BASIS, WITH A MAXIMUM COST LIMITATION (AS AMENDED) OF $22,924, INCLUDING A TOTAL FIXED FEE OF $1,699. CONTRACT ARTICLE 2 PROVIDED THE LIMITATION OF COST CLAUSE WHICH OBLIGATED YOU TO NOTIFY THE CONTRACTING OFFICER IF AT ANY TIME YOU ANTICIPATED THAT THE AMOUNT OF THE ESTIMATED COST OF PERFORMING THE CONTRACT, SET FORTH IN ARTICLE 1, WOULD BE INADEQUATE TO COMPLETE THE WORK. ARTICLE 2 (B) WARNS OF THE GOVERNMENT'S IMMUNITY FROM LIABILITY FOR THE REIMBURSEMENT OF COSTS IN EXCESS OF THAT AMOUNT.

BY OUR SETTLEMENT DATED OCTOBER 7, 1963, YOUR CLAIM WAS DISALLOWED FOR FAILURE TO COMPLY WITH THE TERMS OF THE CONTRACT. IN YOUR LETTER DATED OCTOBER 24, 1963, YOU STATE THAT OUR POSITION WITH RESPECT TO THE "LIMITATION OF COST" CLAUSE IS UNDERSTANDABLE; THAT YOU ARE WELL AWARE OF THIS CLAUSE AND OF THE REASON FOR ITS EXISTENCE, AND CERTAINLY HAVE NO QUARREL WITH THE BASIC PHILOSOPHY INVOLVED. HOWEVER, YOU STATE FURTHER THAT THE DENIAL OF YOUR CLAIM DOES NOT TAKE INTO ACCOUNT ANY OF THE GOVERNMENT'S SHORTCOMINGS IN THE TRANSACTION; THAT YOU READILY ADMIT THAT YOU MUST PROPERLY BEAR A SHARE OF THE BLAME AND THE COST, BUT NEVERTHELESS CONTEND THAT "OUR SINS WERE PRIMARILY OF OMISSION, PARTICULARLY IN RESPECT TO TIMELY COMMUNICATION.' YOU STATE THAT THE GOVERNMENT, ON THE OTHER HAND, HAD VACILLATED FOR MONTHS OVER THE DESIGN OF THE STRUCTURE, CHANGING NOT ONLY MANY DETAILS BUT THE BASIC CONCEPT AS WELL. IT IS FURTHER STATED THAT THE GOVERNMENT FURNISHED A GASOLINE ENGINE WHICH WAS REPRESENTED AS STANDARD; THAT IT WAS, IN FACT, A DEVELOPMENT ITEM, AND THAT YOU WERE FORCED TO SPEND MUCH TIME AND MONEY IN AN EFFORT TO ADAPT IT TO THE END PRODUCT. YOU REQUEST TO BE ADVISED IF THE MATTER CAN BE REOPENED IN THIS OFFICE, OR, IF NOT, WHAT FURTHER RECOURSE IS AVAILABLE TO YOU.

THE ADMINISTRATIVE REPORT RECEIVED WITH YOUR CLAIM SETS FORTH THAT, AS ORIGINALLY ESTIMATED, THE COST OF THE WORK WAS $17,268, PLUS A FIXED FEE OF $1,382, OR A TOTAL ESTIMATED CONTRACT AMOUNT OF $18,650. THE ORIGINAL CONTRACT PERIOD WAS FROM MAY 19, 1961, THROUGH JANUARY 18, 1962. MODIFICATION NO. 1, A SUPPLEMENTAL AGREEMENT, DATED AUGUST 22, 1961, MADE CERTAIN TECHNICAL CHANGES IN THE STATEMENT OF WORK WITHOUT CHANGE IN THE ESTIMATED CONTRACT AMOUNT. MODIFICATION NO. 2, DATED JANUARY 9, 1962, EXTENDED THE CONTRACT PERIOD FROM JANUARY 18, 1962, TO MAY 1, 1962, WITHOUT CHANGE IN CONTRACT AMOUNT. MODIFICATION NO. 3, A SUPPLEMENTAL AGREEMENT, DATED MARCH 12, 1962, EXTENDED THE PERIOD OF PERFORMANCE UNTIL JUNE 15, 1962, ADDED $4,274 IN ADDITIONAL FUNDS, INCLUDING AN INCREASE IN FIXED FEE OF $317, RESULTING IN A TOTAL CONTRACT AMOUNT OF $22,924, INCLUDING A TOTAL FIXED FEE OF $1,699. MODIFICATION NO. 3 ALSO MADE CERTAIN TECHNICAL CHANGES IN THE STATEMENT OF WORK. UNDER YOUR CLAIM THE REQUESTED FINAL FIGURE WOULD BE $35,526, INCLUDING A FEE OF $1,699.

THE TENT WITH ALLIED EQUIPMENT WAS DELIVERED TO QMREC, NATICK, MASSACHUSETTS, AND WAS INSPECTED AND ACCEPTED ON MAY 18, 1962. UP TO THAT DATE YOU HAD SUBMITTED BUREAU VOUCHERS 1 THROUGH 4 IN THE TOTAL AMOUNT OF $6,725.30, WHICH AMOUNT HAD BEEN PAID AS VOUCHERED. BUREAU VOUCHER NO. 5, DATED JULY 25, 1962, WAS SUBMITTED IN THE AMOUNT OF $12,421.18, 1962. SUBSEQUENTLY, BUREAU VOUCHER NO. 6, DATED SEPTEMBER 19, 1962, WAS SUBMITTED IN THE AMOUNT OF $3,777.52, AND PAYMENT IN THE AMOUNT OF $923.62 WAS MADE ON OCTOBER 18, 1962. $280.75 WAS SUSPENDED AS EXCESS COSTS, AND $2,573.15 WAS WITHHELD PURSUANT TO ARTICLE 38--- PATENT RIGHTS--- AND ARTICLE 4 (C) UNTIL ADMINISTRATIVE REQUIREMENTS OF THE CONTRACT WERE COMPLIED WITH BY YOU.

BY LETTER DATED JULY 17, 1962, AFTER DELIVERY OF THE END ITEM, YOU ADVISED THE CONTRACTING OFFICER FOR THE FIRST TIME THAT YOU HAD EXPERIENCED A SUBSTANTIAL COST OVERRUN. YOU STATED THAT THIS OVERRUN WAS LARGELY DUE TO THE FACT THAT THIS PROGRAM DRIFTED FROM ONE CONCEPT TO ANOTHER WITHOUT THE OBJECTIVE BEING CLEARLY DEFINED UNTIL NEARLY THE 11TH MONTH OF THE ESTIMATED CONTRACT PERIOD OF 14 MONTHS. YOU FURTHER ACCEPTED A FULL MEASURE OF RESPONSIBILITY FOR THIS DRIFT. THE PROJECT OFFICER HAS STATED THAT THE DRAFT WAS DUE TO THE FACT THAT YOU WERE OTHERWISE ENGAGED ON THE TELSTAR RADOME PROJECT TO THE NEGLECT OF THIS CONTRACT. FURTHER, IT IS STATED THAT AN ANALYSIS OF THE VOUCHERS SUBMITTED, AS SET FORTH ABOVE, SHOWS LITTLE OR NO (COST ACCOUNTING) EFFORT ON YOUR PART FROM THE TIME OF THE CONTRACT'S INCEPTION IN MAY 1961 UNTIL YOU SUBMITTED VOUCHER NO. 5, WHICH COVERED THE PERIOD FROM FEBRUARY 1 THROUGH APRIL 30, 1962, AND WAS NOT MADE UP BY YOU UNTIL JULY 25, 1962--- MORE THAN 2 MONTHS AFTER DELIVERY OF THE END ITEM.

IT IS WELL SETTLED THAT THE PURPOSE OF A COST LIMITATION PROVISION-- ARTICLE 2 OF THE SUBJECT CONTRACT--- IS TO AFFORD THE CONTRACTING AGENCY AN OPPORTUNITY TO DETERMINE WHETHER A PARTICULAR PROJECT WARRANTS ADDITIONAL FUNDS AND TO PROTECT THE GOVERNMENT AGAINST OBLIGATION IN EXCESS OF AVAILABLE FUNDS IF THE PROJECT DOES NOT WARRANT THEM. NOTICE TO AND APPROVAL BY THE GOVERNMENT OF ADDITIONAL COSTS ARE CONDITIONS PRECEDENT TO LIABILITY FOR REIMBURSEMENT AND, IN GOVERNMENT CONTRACTS, CONDITIONS PRECEDENT ARE RIGIDLY ENFORCED. UNITED STATES V. PLUMLEY, 226 U.S. 545; HAWKINS V. UNITED STATES, 96 U.S. 689. ACCORDING TO THE ADMINISTRATIVE REPORT IN THE MATTER, YOUR COURSE OF CONDUCT DEMONSTRATED A CLEAR LAXITY ON YOUR PART IN KEEPING ACCOUNT OF COSTS INCURRED UNDER THE CONTRACT AND IN KEEPING THE GOVERNMENT ADVISED THEREOF IN ACCORDANCE WITH THE REQUIREMENTS OF ARTICLE 2 (A) OF THE CONTRACT. WHATEVER THE FAULTS OF THE GOVERNMENT MAY HAVE BEEN, YOU HAVE NOT ESTABLISHED THAT THE GOVERNMENT KNEW OR SHOULD HAVE KNOWN OF THE IMPENDING COST, OVERRUN, OR THAT YOUR FAILURE TO ANTICIPATE AND REPORT THE OVERRUN WAS DUE TO ANY ACTION ON THE PART OF THE GOVERNMENT.

IT IS NOT A FUNCTION OF OUR OFFICE TO RESOLVE DISPUTED QUESTIONS OF FACT BUT, RATHER, TO DETERMINE WHETHER THE RECORD BEFORE US IS SUCH AS CLEARLY TO JUSTIFY PAYMENT OF GOVERNMENT FUNDS. ON THE PRESENT RECORD WE CANNOT CONCLUDE THAT PAYMENT OF ANY PART OF YOUR CLAIM SHOULD BE AUTHORIZED. MAKING SUCH A DETERMINATION WE MUST ACCEPT THE ADMINISTRATIVE STATEMENT OF THE FACTS IN THE ABSENCE OF SUBSTANTIAL EVIDENCE TO THE CONTRARY. COMP. GEN. 1105; 40 COMP. GEN. 178, 180. IN SUCH CASE IT IS THE UNDOUBTED RIGHT AND DUTY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO REJECT THE CLAIM, LEAVING THE CLAIMANT TO PROSECUTE HIS CLAIM IN A COURT OF LAW. LONGWILL V. UNITED STATES, 17 CT. CL. 288, 291; CHARLES V. UNITED STATES, 19 CT. CL. 316, 319.

WE THEREFORE CONCLUDE THAT THE ACTION TAKEN ON OCTOBER 7, 1963, IN DENYING YOUR CLAIM WAS PROPER AND MUST BE SUSTAINED.