B-157332, FEB. 9, 1966

B-157332: Feb 9, 1966

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COUNSEL: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 10. THE CONTRACT WAS AWARDED TO THE B. ALL OF THE ASSEMBLIES HAVE BEEN DELIVERED AND B. THE ASSEMBLY CALLED FOR BY THE CONTRACT WAS MODIFIED BUT. IT WAS NEVER APPROVED BY THE CONTRACTING OFFICER. NOR WAS A CHANGE ORDER EVER ISSUED. YOU ALLEGE THAT THE CASE IS BASED UPON THE PROVISION IN THE CONTRACT PROVIDING THAT ONCE THE MERCHANDISE IS FINALLY ACCEPTED A DEFECT OR DEVIATION FROM THE SPECIFICATION CANNOT THEREAFTER BE COMPLAINED OF BY THE GOVERNMENT UNLESS A LATENT DEFECT IS INVOLVED. THE PROVISION TO WHICH YOU REFER IS CONTAINED IN SECTION 5 (D) OF THE GENERAL PROVISIONS OF THE CONTRACT AND PROVIDES AS FOLLOWS: "* * * EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT.

B-157332, FEB. 9, 1966

TO MR. HAROLD J. FAST, COUNSEL:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 10, 1965, REQUESTING RECONSIDERATION OF YOUR CLAIM FOR RELIEF FROM AN INDEBTEDNESS OF $14,908, REPRESENTING AN EQUITABLE ADJUSTMENT FOR SAVINGS WHICH RESULTED FROM A DEVIATION FROM SPECIFICATION REQUIREMENTS OF CONTRACT NO. AF 33/657/- 10560, ENTERED INTO WITH THE AERONAUTICAL SYSTEMS DIVISION, WRIGHT- PATTERSON AIR FORCE BASE, OHIO.

THE CONTRACT WAS AWARDED TO THE B. F. GOODRICH COMPANY ON MARCH 18, 1963, AND PROVIDED FOR THE MANUFACTURE OF A QUANTITY OF BRAKE, WHEEL AND ADJUSTER ASSEMBLIES, WITH SPARE PARTS AND DATA, AT A PRICE OF $230,849.50. ALL OF THE ASSEMBLIES HAVE BEEN DELIVERED AND B. F. GOODRICH HAS BEEN PAID FOR THEM.

THE RECORD INDICATES THAT SOME TIME BEFORE DECEMBER 26, 1962, THE ENGINEERING DIVISION OF HILL AIR FORCE BASE, OGDEN, UTAH, CONSIGNEE OF SOME OF THE MATERIAL, TELEPHONED B. F. GOODRICH INQUIRING AS TO THE POSSIBILITY OF MODIFYING A PART TO BE LATER CALLED FOR BY THE SUBJECT CONTRACT TO ALLOW THE REMOVAL OF THE BOLTS WITHOUT REMOVING THE HEAT SHIELD. AS A RESULT OF THIS REQUEST, THE ASSEMBLY CALLED FOR BY THE CONTRACT WAS MODIFIED BUT, ALTHOUGH HILL ENGINEERING APPROVED THE MODIFICATION, IT WAS NEVER APPROVED BY THE CONTRACTING OFFICER, AT LEAST UNTIL AFTER PERFORMANCE OF THE CONTRACT AND FINAL ACCEPTANCE BY THE GOVERNMENT, NOR WAS A CHANGE ORDER EVER ISSUED.

IN YOUR REQUEST FOR RECONSIDERATION, YOU ALLEGE THAT THE CASE IS BASED UPON THE PROVISION IN THE CONTRACT PROVIDING THAT ONCE THE MERCHANDISE IS FINALLY ACCEPTED A DEFECT OR DEVIATION FROM THE SPECIFICATION CANNOT THEREAFTER BE COMPLAINED OF BY THE GOVERNMENT UNLESS A LATENT DEFECT IS INVOLVED. THE PROVISION TO WHICH YOU REFER IS CONTAINED IN SECTION 5 (D) OF THE GENERAL PROVISIONS OF THE CONTRACT AND PROVIDES AS FOLLOWS:

"* * * EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ACCEPTANCE SHALL BE CONCLUSIVE EXCEPT AS REGARDS LATENT DEFECTS, FRAUD, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD.'

ALTHOUGH ACCEPTANCE OF THE GOODS IS FINAL IN THE ABSENCE OF A FINDING OF A LATENT DEFECT, FRAUD, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD, THERE IS NO ALLEGATION THAT THE GOVERNMENT DESIRED TO REJECT THE GOODS FOR FAILURE TO MEET THE SPECIFICATIONS OR THAT THE GOVERNMENT SEEKS A REDUCTION IN PRICE FOR SOME DEFECT IN THE GOODS ACCEPTED. HENCE, IN OUR OPINION THE APPLICATION OF THIS CLAUSE IS NOT DISPOSITIVE OF THE RIGHTS OF THE GOVERNMENT UNDER THE FACTS IN THIS CASE.

IT APPEARS THAT THE CONTRACTING OFFICER ACTED UNDER A MISTAKE OF FACT IN THAT HE WAS NOT AWARE THAT THE CONTRACTOR HAD DEVIATED FROM THE SPECIFICATIONS RESULTING IN A SAVINGS IN THE COST OF PRODUCTION UNTIL AFTER FINAL PAYMENT WAS MADE TO THE CONTRACTOR. IN THIS CASE THE CONTRACTOR DEVIATED FROM SPECIFICATIONS WITHOUT OBTAINING THE PROPER APPROVAL OF THE CONTRACTING OFFICER WHO IS AUTHORIZED UNDER ARTICLE 2 OF THE GENERAL PROVISIONS OF THE CONTRACT, ENTITLED "CHANGES," TO MAKE CHANGES WITHIN THE GENERAL SCOPE OF THE CONTRACT. NOR DID THE CONTRACTING OFFICER HAVE PRIOR KNOWLEDGE THAT A DEVIATION FROM SPECIFICATIONS HAD OCCURRED UNTIL AFTER FINAL PAYMENT AND HE DID NOT ORDER THE CHANGES ORALLY OR IN WRITING.

WE HAVE HELD THAT THE GOVERNMENT, INDEPENDENTLY OF STATUTE, HAS THE RIGHT TO RECOVER FUNDS WHICH ITS AGENTS HAVE WRONGFULLY, ERRONEOUSLY, OR ILLEGALLY PAID. THIS RIGHT EXISTS WHETHER SUCH PAYMENTS WERE MADE UNDER MISTAKE OF LAW OR FACT; WHETHER BECAUSE IN EXCESS OF AUTHORITY OR BASED UPON AN ERRONEOUS INTERPRETATION OF A CONTRACT LATER FOUND TO BE INCORRECT, OR BECAUSE OF THE RELIANCE UPON FACTS FOUND SUBSEQUENTLY NOT TO EXIST. SEE 39 COMP. GEN. 726 AND 35 COMP. GEN. 63, 70. THE COURT HAS STATED THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO WAIVE THE GOVERNMENT'S RIGHT TO A SAVINGS IN A CONTRACT. BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.CL. 584, 607.

ACCORDINGLY, UNLESS A CHECK IN THE AMOUNT OF $14,590.51 TO LIQUIDATE THE INDEBTEDNESS IS RECEIVED IN OUR OFFICE WITHIN THE NEXT 30 DAYS APPROPRIATE ACTION WILL BE TAKEN TO EFFECT COLLECTION.