B-156640, MAY 20, 1965

B-156640: May 20, 1965

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TO CAHN AND CAHN: REFERENCE IS MADE TO YOUR LETTER OF APRIL 26. IT APPEARS FROM COPIES OF CORRESPONDENCE ENCLOSED WITH YOUR LETTER THAT THE INSTANT MATTER WAS THE SUBJECT OF A DECISION OF THE CONTRACTING OFFICER ON APRIL 5. IN THAT DECISION THE CONTRACTING OFFICER INFORMED THE CONTRACTOR THAT IT WAS HIS DECISION THAT THE CONTRACTOR HAD DEFAULTED IN THE PERFORMANCE OF THE CONTRACT BY FAILING. THE CONTRACT WAS BEING TERMINATED FOR DEFAULT IN ACCORDANCE WITH CLAUSE 11 ENTITLED "DEFAULT" OF THE GENERAL PROVISIONS OF THE CONTRACT. THE CONTRACTOR WAS INFORMED THAT DECISIONS ON DISPUTED QUESTIONS OF FACT SUBJECT TO THE PROCEDURE OF THE "DISPUTES" CLAUSE NUMBER 12 OF THE GENERAL PROVISIONS OF THE CONTRACT MIGHT BE APPEALED TO THE NASA BOARD OF CONTRACT APPEALS WITHIN 30 DAYS OF THE DATE THAT THE DECISION WAS RECEIVED BY THE CONTRACTOR.

B-156640, MAY 20, 1965

TO CAHN AND CAHN:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 26, 1965, WITH ENCLOSURES, PROTESTING ON BEHALF OF YOUR CLIENT, MAGNUSONICS INDUSTRIES INCORPORATED, FARMINGDALE, LONG ISLAND, NEW YORK, AGAINST THE ACTION OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), COCOA BEACH, FLORIDA, IN HAVING TERMINATED, FOR DEFAULT, THE CORPORATION'S RIGHT TO PROCEED UNDER CONTRACT NO. NAS10-1635.

IT APPEARS FROM COPIES OF CORRESPONDENCE ENCLOSED WITH YOUR LETTER THAT THE INSTANT MATTER WAS THE SUBJECT OF A DECISION OF THE CONTRACTING OFFICER ON APRIL 5, 1965. IN THAT DECISION THE CONTRACTING OFFICER INFORMED THE CONTRACTOR THAT IT WAS HIS DECISION THAT THE CONTRACTOR HAD DEFAULTED IN THE PERFORMANCE OF THE CONTRACT BY FAILING, AFTER NOTICE OF REJECTION, TO REMOVE THE REJECTED EQUIPMENT AND REPLACE OR CORRECT IT WITH ACCEPTABLE EQUIPMENT AND THAT, THEREFORE, THE CONTRACT WAS BEING TERMINATED FOR DEFAULT IN ACCORDANCE WITH CLAUSE 11 ENTITLED "DEFAULT" OF THE GENERAL PROVISIONS OF THE CONTRACT. ALSO, THE CONTRACTOR WAS INFORMED THAT DECISIONS ON DISPUTED QUESTIONS OF FACT SUBJECT TO THE PROCEDURE OF THE "DISPUTES" CLAUSE NUMBER 12 OF THE GENERAL PROVISIONS OF THE CONTRACT MIGHT BE APPEALED TO THE NASA BOARD OF CONTRACT APPEALS WITHIN 30 DAYS OF THE DATE THAT THE DECISION WAS RECEIVED BY THE CONTRACTOR. IT IS NOTED FROM THE CORRESPONDENCE SUBMITTED WITH YOUR LETTER THAT YOU HAVE APPEALED THE CONTRACTING OFFICER'S ADVERSE DECISION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS RATHER THAN TO THE NASA BOARD OF CONTRACT APPEALS, AS PROVIDED FOR IN THE DECISION AND "DISPUTES" CLAUSE OF THE CONTRACT. HAVE BEEN INFORMALLY ADVISED BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS THAT YOUR APPEAL HAS BEEN FORWARDED TO THE NASA BOARD OF CONTRACT APPEALS FOR CONSIDERATION.

THE APPEAL OF MAGNUSONICS INDUSTRIES INCORPORATED NOW PENDING BEFORE THE NASA BOARD OF CONTRACT APPEALS WAS MADE PURSUANT TO THE "DISPUTES" CLAUSE OF THE CONTRACT WHICH PROVIDES FOR THE ADMINISTRATIVE SETTLEMENT OF DISPUTES CONCERNING QUESTIONS OF FACT ARISING UNDER THE CONTRACT. THE "DISPUTES" CLAUSE STATES IN PART THAT "THE DECISION OF THE ADMINISTRATOR OR HIS DULY AUTHORIZED REPRESENTATIVE FOR THE DETERMINATION OF SUCH APPEALS SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN FRAUDULENT, OR CAPRICIOUS, OR ARBITRARY, OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.' THESE ARE THE STANDARDS OF JUDICIAL REVIEW CONCERNING ADMINISTRATIVE DECISIONS ON FACTUAL ISSUES WHICH ARE MADE FINAL AND CONCLUSIVE BY THE TERMS OF A GOVERNMENT CONTRACT. SEE THE WUNDERLICH ACT, APPROVED MAY 11, 1954, 41 U.S.C. 321.

SINCE THE ISSUES OF THE CASE HERE INVOLVED ARE ESSENTIALLY OF A FACTUAL NATURE IT WOULD NOT APPEAR PROPER FOR US TO CONSIDER THE MERITS OF THE CONTRACTOR'S COMPLAINT UNTIL AFTER DECISION BY THE NASA BOARD OF CONTRACT APPEALS. BOTH THE CONTRACTOR AND THE GOVERNMENT ARE BOUND TO FOLLOW THE PROCEDURE SET OUT IN THE CONTRACT FOR THE ADMINISTRATIVE SETTLEMENT OF DISPUTES ON QUESTIONS OF FACT ARISING OUT OF THE CONTRACT AND THE CONTRACTOR MUST, OF COURSE, EXHAUST ITS ADMINISTRATIVE REMEDIES UNDER THE "DISPUTES" CLAUSE BEFORE MAKING AN APPEAL EITHER TO OUR OFFICE OR THE COURTS. SEE, GENERALLY, B. H. DEACON CO. V. UNITED STATES, 189 F.SUPP. 146; AND HAPPEL V. UNITED STATES, 176 F.SUPP. 787, AFFIRMED 279 F.2D 88.