B-156765, JUL. 7, 1965

B-156765: Jul 7, 1965

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FEDERAL AVIATION AGENCY: REFERENCE IS MADE TO A LETTER DATED MAY 10. IT IS ASSUMED THAT THE REQUEST OF THE WHITTAKER CORPORATION. IS SUBMITTED PURSUANT TO THE PROVISIONS OF SECTION 10 (A) OF THE ACT OF SEPTEMBER 5. FA-957 WAS ENTERED INTO BY THE FEDERAL AVIATION AGENCY WITH THE WHITTAKER CORPORATION ON JUNE 25. MODIFICATION NO. 27 TO THE CONTRACT WAS ENTERED INTO ON SEPTEMBER 13. BY THE TERMS OF THIS MODIFICATION THERE WAS SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO ALL LIQUIDATED DAMAGES RESULTING FROM THE CONTRACTOR'S DELAY IN DELIVERY OF THE SUPPLIES SO TERMINATED. LIQUIDATED DAMAGES WERE ASSESSED AGAINST THE WHITTAKER CORPORATION AND WITHHELD BY THE FEDERAL AVIATION AGENCY IN THE TOTAL AMOUNT OF $4.

B-156765, JUL. 7, 1965

TO ADMINISTRATOR, FEDERAL AVIATION AGENCY:

REFERENCE IS MADE TO A LETTER DATED MAY 10, 1965, WITH ENCLOSURES, FROM THE ASSOCIATE ADMINISTRATOR FOR DEVELOPMENT, FEDERAL AVIATION AGENCY, RECOMMENDING FAVORABLE CONSIDERATION OF THE REQUEST OF THE WHITTAKER CORPORATION, ELECTRONICS DIVISION, NORTH HOLLYWOOD, CALIFORNIA, FOR THE REMISSION OF LIQUIDATED DAMAGES IN THE AMOUNT OF $4,368.80, ASSESSED BY THE AGENCY AGAINST THE CORPORATION UNDER CONTRACT NO. FA-957. IT IS ASSUMED THAT THE REQUEST OF THE WHITTAKER CORPORATION, SET FORTH IN ITS LETTER OF JANUARY 25, 1965, IS SUBMITTED PURSUANT TO THE PROVISIONS OF SECTION 10 (A) OF THE ACT OF SEPTEMBER 5, 1950, 41 U.S.C. 256A.

IT APPEARS THAT CONTRACT NO. FA-957 WAS ENTERED INTO BY THE FEDERAL AVIATION AGENCY WITH THE WHITTAKER CORPORATION ON JUNE 25, 1960, FOR FURNISHING CERTAIN TYPES AND QUANTITIES OF ATC RADAR BEACON GROUND STATION ANTENNA ASSEMBLIES TO THE AGENCY FOR AN ESTIMATED TOTAL AMOUNT OF $5,773,174.92. BY REASON OF DELAYS IN DELIVERY, MODIFICATION NO. 27 TO THE CONTRACT WAS ENTERED INTO ON SEPTEMBER 13, 1963, EFFECTING A TERMINATION, FROM THE ORIGINAL CONTRACT QUANTITIES SPECIFIED, OF SEVEN TYPE "A" DEFRUITERS UNDER ITEM NO. 3 AND THREE TYPE "B" DEFRUITERS UNDER ITEM NO. 4, THEREBY REDUCING THE CONTRACT PRICE BY $113,790.88. BY THE TERMS OF THIS MODIFICATION THERE WAS SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO ALL LIQUIDATED DAMAGES RESULTING FROM THE CONTRACTOR'S DELAY IN DELIVERY OF THE SUPPLIES SO TERMINATED. ACCORDINGLY, BASED ON THE TERMINATED QUANTITIES AND THE PERIODS OF DELAY INVOLVED IN THE DELIVERY OF THESE ITEMS, LIQUIDATED DAMAGES WERE ASSESSED AGAINST THE WHITTAKER CORPORATION AND WITHHELD BY THE FEDERAL AVIATION AGENCY IN THE TOTAL AMOUNT OF $4,368.80, WHICH WERE COMPUTED AT THE RATES PROVIDED IN THE CONTRACT.

IN ITS LETTER DATED JANUARY 25, 1965, THE WHITTAKER CORPORATION RELIES PRIMARILY UPON THE CONTENTION THAT THE AGENCY'S TERMINATION OF THE UNITS ABOVE REFERRED TO WOULD INDICATE THAT THE TIMELY DELIVERY OF SUCH UNITS WAS NOT AN IMPORTANT FACTOR TO THE GOVERNMENT IN THE FIRST INSTANCE AND, THEREFORE, THE GOVERNMENT SUFFERED NO DAMAGE AS THE RESULT OF THEIR LATE DELIVERY. THE CORPORATION CONTENDS THAT THE USE OF THE LIQUIDATED DAMAGES CLAUSE UNDER SUCH CIRCUMSTANCES WAS IN CONTRAVENTION OF SECTION 1-1.315-2 (A) OF THE FEDERAL PROCUREMENT REGULATIONS WHICH PROVIDES AS FOLLOWS:

"LIQUIDATED DAMAGES PROVISIONS SHOULD BE USED ONLY WHERE BOTH (1) THE TIME OF DELIVERY OR PERFORMANCE IS SUCH AN IMPORTANT FACTOR IN THE AWARD OF THE CONTRACT THAT THE GOVERNMENT MAY REASONABLY EXPECT TO SUFFER DAMAGE IF THE DELIVERY OR PERFORMANCE IS DELINQUENT, AND (2) THE EXTENT OR AMOUNT OF SUCH DAMAGE WOULD BE DIFFICULT OR IMPOSSIBLE OF ASCERTAINMENT OR PROOF.'

HOWEVER, THE ASSOCIATE ADMINISTRATOR FOR DEVELOPMENT SPECIFICALLY STATES IN HIS LETTER DATED MAY 10, 1965, THAT "AT THE TIME OF THE AWARD, THE TIME OF DELIVERY WAS CONSIDERED CRITICAL, AND IT WAS ANTICIPATED THAT THE GOVERNMENT WOULD BE DAMAGED BY LATE DELIVERY.' IN THAT CONNECTION, THE FACT THAT THE GOVERNMENT MAY ACTUALLY SUFFER NO DAMAGES DOES NOT AFFECT THE VALIDITY OF THE LIQUIDATED DAMAGES PROVISION AS THE QUESTION OF ITS VALIDITY MUST BE DETERMINED AS OF THE TIME THE AGREEMENT BETWEEN THE PARTIES WAS ENTERED INTO. UNITED STATES V. BETHLEHEM STEEL CO., 205 U.S. 105. THE CONTENTION OF THE WHITTAKER CORPORATION, THAT THE USE OF THE LIQUIDATED DAMAGE PROVISION CONTRAVENED SECTION 1-1.315-2 (A) OF THE FEDERAL PROCUREMENT REGULATIONS, IS, THEREFORE, WITHOUT MERIT.

WE HAVE CONSISTENTLY HELD THAT THE AUTHORITY CONFERRED UPON THIS OFFICE BY THE ACT OF SEPTEMBER 5, 1950, SUPRA, TO REMIT UPON ADMINISTRATIVE RECOMMENDATION, ALL OR ANY PART OF LIQUIDATED DAMAGES FOR DELAY AS "MAY BE JUST AND EQUITABLE" IS FOR APPLICATION ONLY WHERE STRONG AND PERSUASIVE EQUITIES EXIST ON BEHALF OF THE CONTRACTOR. SEE 32 COMP. GEN. 67; 34 ID. 251; 36 ID. 143. WE HAVE EXAMINED THE RECORD IN THIS CASE BUT FIND NO INFORMATION THEREIN CONCERNING THE REASONS OR CAUSES FOR THE DELAYS INVOLVED. NEITHER DO WE FIND ANYTHING OTHERWISE ESTABLISHING ANY EQUITIES IN FAVOR OF THE CONTRACTOR. IN OUR OPINION THE CONTRACTOR'S SATISFACTORY RECORD OF DELIVERIES DURING THE RECENT PAST REFERRED TO IN THE LETTER OF MAY 10, 1965, DOES NOT PROVIDE A BASIS FOR EQUITABLE REMISSION.

IN VIEW OF THE FOREGOING, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT ON THE RECORD PRESENTED THE CLAIM OF THE CONTRACTOR DOES NOT CONTAIN SUCH ELEMENTS OF EQUITY AS TO WARRANT REMISSION OF THE LIQUIDATED DAMAGES WHICH HAVE ACCRUED TO THE GOVERNMENT UNDER THE TERMS OF THE CONTRACT.