B-155198, OCT. 8, 1965

B-155198: Oct 8, 1965

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TO ATLANTIC COAST LINE RAILROAD COMPANY: REFERENCE IS MADE TO THE REQUEST IN YOUR LETTER OF APRIL 16. YOU ALSO URGE THAT IF THE CLAIM CANNOT BE AMENDED ON THE FOREGOING BASIS THAT FURTHER CONSIDERATION SHOULD BE GIVEN TO THE ITEM OF PROFIT AND UNDETERMINABLE DAMAGES IN THE ESTIMATED COST OF REPAIRING THE DAMAGES WHICH WERE SUSTAINED DURING SHIPMENT. THE RECORD HERE SHOWS THAT THE DAMAGES OCCURRED WHILE THE SHIPMENT WAS BEING TRANSPORTED TO THE HAYS AIRCRAFT CORPORATION FOR OVERHAULING AND CERTIFICATION FOR AIRWORTHINESS FOR WHICH IT WAS TO BE PAID $25. BECAUSE OF THE NATURE OF THE DAMAGES AND THE POSSIBILITY THAT ADDITIONAL DAMAGES WOULD BE DISCOVERED AFTER DISASSEMBLY WHICH WERE NOT INCLUDED IN THE ESTIMATED DAMAGES.

B-155198, OCT. 8, 1965

TO ATLANTIC COAST LINE RAILROAD COMPANY:

REFERENCE IS MADE TO THE REQUEST IN YOUR LETTER OF APRIL 16, 1965, YOUR CLAIM NO. 1-83614, FOR REVIEW OF THE AMOUNT CLAIMED BY THE GOVERNMENT FOR THE DAMAGES SUSTAINED TO ONE HELICOPTER WHILE IN TRANSPORTATION FROM POMONA, NEW JERSEY, TO DOTHAN, ALABAMA, UNDER BILL OF LADING A-3854737 DATED JULY 22, 1960.

IN URGING A REDUCTION IN THE AMOUNT CLAIMED, $4,804 LESS $890.34 WITHHELD, NET $3,913.66, YOU EXPRESS THE VIEW THAT THE AIRCRAFT HAD VALUE ONLY FOR SALVAGE AT THE TIME OF SHIPMENT AND THAT THE ONLY ACTUAL LOSS TO THE GOVERNMENT SEEMS TO BE THE TERMINATION COSTS $181.95 PAID TO THE HAYS AIRCRAFT CORPORATION PLUS THE FREIGHT CHARGES OF $890.34 PAID FOR MOVEMENT OF THE HELICOPTER. IN SUPPORT OF YOUR CONTENTION YOU INVITE ATTENTION TO THE NONFLYING CONDITION OF THE HELICOPTER AT THE TIME OF SHIPMENT, TO THE TRANSFER OF THE AIRCRAFT BETWEEN THE GOVERNMENT AGENCIES ON A NON- REIMBURSABLE BASIS AND TO THE ELECTION OF THE GOVERNMENT NOT TO REPAIR THE HELICOPTER. YOU ALSO URGE THAT IF THE CLAIM CANNOT BE AMENDED ON THE FOREGOING BASIS THAT FURTHER CONSIDERATION SHOULD BE GIVEN TO THE ITEM OF PROFIT AND UNDETERMINABLE DAMAGES IN THE ESTIMATED COST OF REPAIRING THE DAMAGES WHICH WERE SUSTAINED DURING SHIPMENT.

THE RECORD HERE SHOWS THAT THE DAMAGES OCCURRED WHILE THE SHIPMENT WAS BEING TRANSPORTED TO THE HAYS AIRCRAFT CORPORATION FOR OVERHAULING AND CERTIFICATION FOR AIRWORTHINESS FOR WHICH IT WAS TO BE PAID $25,000. UPON ARRIVAL OF THE SHIPMENT IN DAMAGED CONDITION, THE HAYS AIRCRAFT CORPORATION SURVEYED THE HELICOPTER WHILE STILL ON THE CAR AND BASED ON THE DAMAGES VISIBLE TO INSPECTION ESTIMATED THAT 1,005 MAN HOURS--AT $3.80 PER HOUR--AND $985 IN MATERIAL WOULD BE REQUIRED TO REPAIR THE DAMAGES SUSTAINED IN SHIPMENT. BECAUSE OF THE NATURE OF THE DAMAGES AND THE POSSIBILITY THAT ADDITIONAL DAMAGES WOULD BE DISCOVERED AFTER DISASSEMBLY WHICH WERE NOT INCLUDED IN THE ESTIMATED DAMAGES, THE HAYS AIRCRAFT CORPORATION WAS REQUESTED TO FURNISH A REVISED ESTIMATE. THE REVISED ESTIMATE OF $24,856.61 WHICH WAS FURNISHED BY THE HAYS AIRCRAFT CORPORATION WAS PREMISED ON THE COST OF REPAIRING OR REPLACING ALL PARTS WHICH MIGHT HAVE BEEN DAMAGED. SINCE THE RECORD SHOWED THAT THE AIRCRAFT WAS NEITHER DISASSEMBLED NOR REPAIRED, THE GOVERNMENT'S CLAIM LATER WAS REDUCED TO THE $4,804 ESTIMATED COST OF REPAIRING THE IN SHIPMENT DAMAGES WHICH HAD BEEN DEFINITELY ESTABLISHED.

EVEN IF IT BE CONCEDED THAT THIS AIRCRAFT AT THE TIME OF SHIPMENT HAD A VALUE LESS THAN THE ACQUISITION COST OF $200,456, IT SEEMS OBVIOUS THAT THE AIRCRAFT IN ITS USED CONDITION HAD A CONSIDERABLE VALUE TO WARRANT THE CONTEMPLATED EXPENDITURE OF THE CONTRACT PRICE OF $25,000 FOR OVERHAULING AND PLACING THE HELICOPTER IN AN AIRWORTHY CONDITION. THE FACT THAT THE REPAIRS WERE NEVER MADE DOES NOT DEPRIVE THE GOVERNMENT OF THE RIGHT TO RECOVER DAMAGES. TINNEY V. WILLIAMS, 144 S.W. 2D 344. THE FEDERAL STATUTES PROVIDE FOR RECOVERY OF THE FULL ACTUAL LOSS WHICH IS THE MONEY EQUIVALENT OF THE PROPERTY LOST OR DAMAGED. ATLANTIC COAST LINE RY. CO. V. ROE, 118 SO. 155. KOTTEMAN FURNITURE CO. V. MCLELLAN, 2 SO. 2D 485. MONETARY DAMAGES MAY BE BASED ON THE ESTIMATED COST FOR EFFECTING REPAIRS. UNITED ELECTRICAL R AND M WORKERS V. OLIVER CORP., 205 F.2D 376, 387-389. IF A COST-PLUS ARRANGEMENT IS USED FOR COMPUTING THE COST OF REPAIRS, SUCH AS USED IN THE ESTIMATED COST OF REPAIRS FURNISHED BY THE HAYS AIRCRAFT CORPORATION, IT IS NOT UNUSUAL OR UNREASONABLE TO PROVIDE FOR PAYMENT TO THE CONTRACTOR OF 10 TO 15 PERCENT IN ADDITION TO THE LABOR AND MATERIAL COSTS FOR OVERHEAD EXPENSE. LYTHE, CAMPBELL AND CO. V. SOMMERS, FILTER AND TODD CO; 120 A. 409. THE PERCENTAGE PAYMENT IS IN LIEU OF OVERHEAD, WHICH INCLUDES THE CONTRACTOR'S PROFIT, AND CONSTITUTES A PART OF THE DAMAGES EVEN IF THE REPAIRS ARE NEVER MADE. UNITED STATES V. DELAWARE BAY AND RIVER PILOTS ASS-N., 10 F.SUPP. 43, 45.

THE RECORD SHOWS THAT THE GOVERNMENT'S CLAIM FOR THE DAMAGES TO THE HELICOPTER IS BASED ON THE COST OF REPAIRING THE DAMAGES IN SHIPMENT WHICH WERE VISIBLE WITHOUT DISASSEMBLY OF THE HELICOPTER. THE ESTIMATED COSTS COVER ONLY THE REPAIRS AND EXAMINATIONS WHICH BECAME NECESSARY AS THE RESULT OF THE MISHAP, AND THERE IS NO INDICATION THAT HAYS AIRCRAFT CORPORATION INCLUDED IN ITS ESTIMATE OF THE DAMAGES ANY ITEMS OF WORK CONTEMPLATED IN THE OVERHAULING CONTRACT. IN ESTIMATING THE COST OF REPAIRS THE CONTRACTOR WAS PERMITTED TO INCLUDE THE SMALL ITEM OF PROFIT IN LIEU OF OVERHEAD IN ADDITION TO THE COST OF LABOR AND MATERIALS. THIS ESTIMATED COST OF REPAIRS THEN BECAME THE MEASURE OF THE DAMAGES SUSTAINED, AND ESTABLISHED THE MONETARY AMOUNT PAYABLE TO THE GOVERNMENT WHETHER OR NOT REPAIRS WERE MADE.

ACCORDINGLY, THE CLAIM FOR $4,804 DUE THE GOVERNMENT IS PROPER AND YOUR CHECK IN THAT AMOUNT, LESS $890.34 WITHHELD, NET $3,913.66, SHOULD BE FORWARDED TO OUR OFFICE WITHIN THE NEXT 30 DAYS. OTHERWISE, THE AMOUNT OF $3,913.66 WILL BE WITHHELD FROM OTHER AMOUNTS WHICH BECOME PAYABLE TO YOUR COMPANY.