B-155614, DEC. 7, 1965

B-155614: Dec 7, 1965

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COHEN: REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 11. IT WAS DISCOVERED THAT THE ZENKER FIRM HAD RETAINED AND PAID AN AGENT FOR THE PURPOSE OF OBTAINING GOVERNMENT CONTRACTS. THE DIRECTOR INDORSED THE SUBMISSION AS FOLLOWS: "* * * DETERMINATION IS MADE THAT ACTION UNDER THE PROVISIONS OF ASPR 1- 508.2 (II) IS APPROPRIATE UNDER CIRCUMSTANCES CITED IN BASIC COMMUNICATION AND RECOMMENDS THAT ANNULMENT BE ACCOMPLISHED.'. THIS DATE WAS EXTENDED UNTIL MARCH 28. THE ANNULMENT WAS FINAL AND CONCLUSIVE. WHICH AFFIRMED THE POSITION TAKEN BY THE CONTRACTING OFFICER THAT THE ANNULMENT WAS FINAL DUE TO FAILURE TO FILE A TIMELY APPEAL. IT IS ZENKER'S CONTENTION THAT THE ACTION OF THE CONTRACTING OFFICER ANNULLING THE CONTRACT WAS WITHOUT AUTHORITY.

B-155614, DEC. 7, 1965

TO MR. HYMAN J. COHEN:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 11, 1965, REQUESTING RECONSIDERATION OF OUR DISALLOWANCE, BY SETTLEMENT CERTIFICATE DATED JANUARY 12, 1965, OF THE CLAIM OF ERICH E. H. ZENKER IN THE AMOUNT OF $18,890, REPRESENTING UNLIQUIDATED DAMAGES ALLEGEDLY DUE UNDER CONTRACT NO. DA-91-503-EUC-16542, DATED OCTOBER 26, 1959.

THE FILES INDICATE THAT THE CONTRACT CONTAINED THE STANDARD CLAUSES PERTAINING TO THE COVENANT AGAINST CONTINGENT FEES AND DISPUTES. JANUARY OR FEBRUARY, 1960, IT WAS DISCOVERED THAT THE ZENKER FIRM HAD RETAINED AND PAID AN AGENT FOR THE PURPOSE OF OBTAINING GOVERNMENT CONTRACTS, IN VIOLATION OF THE CONTINGENT FEES COVENANT. PURSUANT TO ARMY PROCUREMENT POLICY 1-508.2, THE CONTRACTING OFFICER REPORTED THIS FACT TO THE DIRECTOR OF PROCUREMENT, AS THE DULY AUTHORIZED REPRESENTATIVE OF THE HEAD OF THE PROCURING ACTIVITY. THE DIRECTOR INDORSED THE SUBMISSION AS FOLLOWS:

"* * * DETERMINATION IS MADE THAT ACTION UNDER THE PROVISIONS OF ASPR 1- 508.2 (II) IS APPROPRIATE UNDER CIRCUMSTANCES CITED IN BASIC COMMUNICATION AND RECOMMENDS THAT ANNULMENT BE ACCOMPLISHED.'

IN ACCORDANCE WITH THIS REPLY, THE CONTRACTING OFFICER ADVISED ZENKER ON FEBRUARY 19, 1960, THAT THE CONTRACT WOULD BE ANNULLED AS OF THE END OF THE DAY ON FEBRUARY 23, 1960. AT THE REQUEST OF ZENKER, THIS DATE WAS EXTENDED UNTIL MARCH 28, 1960, TO COMPLETE WORK CURRENTLY IN PROCESS, AND ON APRIL 19, 1960, THE CONTRACTING OFFICER REAFFIRMED THE ANNULMENT. JANUARY 25, 1961, THE ZENKER FIRM FILED A CLAIM FOR DAMAGES IN THE AMOUNT OF $20,143.20, REPRESENTING UNUSED MATERIALS, UNPRODUCTIVE LABOR, LEGAL COSTS, LOSS OF INTEREST AND LOSS OF PROFITS. THE CONTRACTING OFFICER ADVISED ZENKER THAT, SINCE NO APPEAL HAD BEEN TAKEN, THE ANNULMENT WAS FINAL AND CONCLUSIVE. ZENKER THEN APPEALED TO THE BOARD OF CONTRACT APPEALS, WHICH AFFIRMED THE POSITION TAKEN BY THE CONTRACTING OFFICER THAT THE ANNULMENT WAS FINAL DUE TO FAILURE TO FILE A TIMELY APPEAL. IT IS ZENKER'S CONTENTION THAT THE ACTION OF THE CONTRACTING OFFICER ANNULLING THE CONTRACT WAS WITHOUT AUTHORITY, SINCE THAT AUTHORITY WAS VESTED IN THE DIRECTOR OF PROCUREMENT.

ARMY PROCUREMENT POLICY 1-508.50 PROVIDES:

"THE HEAD OF A PROCURING ACTIVITY, OR HIS DULY AUTHORIZED REPRESENTATIVES, SHALL, IN ANY CASE FORWARDED BY A CONTRACTING OFFICER PURSUANT TO THIS PARAGRAPH, TAKE OR CAUSE TO BE TAKEN, ONE OR MORE OF THE ACTIONS SET FORTH IN ASPR 1-508.2.'

THE INDORSEMENT OF THE DIRECTOR OF PROCUREMENT WAS, IN FACT, A DIRECTION TO THE CONTRACTING OFFICER TO ANNUL THE CONTRACT, AND THE ACTION OF THE CONTRACTING OFFICER WAS MERELY AN ENFORCEMENT OF THE DIRECTOR'S ORDER. THEREFORE, THE ANNULMENT WAS EFFECTED BY THE AUTHORITY OF THE DIRECTOR OF PROCUREMENT RATHER THAN THE CONTRACTING OFFICER. UNDER THESE CIRCUMSTANCES, IT APPEARS THAT THE ANNULMENT BECAME FINAL AND CONCLUSIVE IN THE ABSENCE OF AN APPEAL.

FURTHERMORE, EVEN IF THE ANNULMENT HAD NOT BECOME FINAL AND CONCLUSIVE, THE CLAIM IS ONE FOR UNLIQUIDATED DAMAGES ARISING OUT OF AN ALLEGED BREACH OF CONTRACT. OUR OFFICE GENERALLY DECLINES TO ALLOW THIS TYPE OF CLAIM BECAUSE OF THE IMPRACTICABILITY OF REACHING AN ACCURATE DETERMINATION OF ITS MERITS WITHOUT PROVISION FOR THE TAKING OF SWORN TESTIMONY, CROSS- EXAMINATION AND THE SUBMISSION OF RELATED EVIDENCE, FOR WHICH WE LACK THE NECESSARY FACILITIES. IN SUCH CASES, THE CLAIMANTS ARE LEFT TO PURSUE IN THE COURTS SUCH REMEDIES AS MAY BE AVAILABLE. SEE LONGWILL V. UNITED STATES, 17 CT.CL. 288, 291; AND CHARLES V. UNITED STATES, 19 ID. 316, 319.