B-158467, MAR. 1, 1966

B-158467: Mar 1, 1966

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO FINANCE AND ACCOUNTING OFFICER DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 25. GROUP I OF THE SUBJECT CONTRACT WAS AWARDED TO MIDCAP BEARING SERVICE AND UNDER GROUP I THE GOVERNMENT AGREED TO ORDER A MINIMUM QUANTITY VALUED AT $750.00. A MODIFICATION WAS ISSUED IN NOVEMBER 1964 CHANGING THE DELIVERY SCHEDULE AND PROVIDING FOR A CONSIDERATION OF $50.00 TO BE PAID BY THE CONTRACTOR BY MEANS OF A DEDUCTION FROM A FUTURE ORDER TO BE PLACED AGAINST THE CONTRACT. THE ONLY ORDER PLACED UNDER THE CONTRACT WAS FOR $24.76 AND THE CONTRACT EXPIRED ON OR ABOUT OCTOBER 10. THE INVOICE IN QUESTION IS FOR $675.24. THE AGGRIEVED PARTY IS ENTITLED TO DAMAGES FOR THE BREACH RATHER THAN THE FULL CONTRACT PRICE.

B-158467, MAR. 1, 1966

TO FINANCE AND ACCOUNTING OFFICER DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 25, 1966, FILE DCRT FR, REQUESTING OUR DECISION AS TO THE PROPRIETY OF PAYMENT OF INVOICE 90912, DATED NOVEMBER 16, 1965, SUBMITTED BY MIDCAP BEARING SERVICE UNDER CONTRACT NO. AF 41/608/-32219.

GROUP I OF THE SUBJECT CONTRACT WAS AWARDED TO MIDCAP BEARING SERVICE AND UNDER GROUP I THE GOVERNMENT AGREED TO ORDER A MINIMUM QUANTITY VALUED AT $750.00. A MODIFICATION WAS ISSUED IN NOVEMBER 1964 CHANGING THE DELIVERY SCHEDULE AND PROVIDING FOR A CONSIDERATION OF $50.00 TO BE PAID BY THE CONTRACTOR BY MEANS OF A DEDUCTION FROM A FUTURE ORDER TO BE PLACED AGAINST THE CONTRACT. THE ONLY ORDER PLACED UNDER THE CONTRACT WAS FOR $24.76 AND THE CONTRACT EXPIRED ON OR ABOUT OCTOBER 10, 1965. THE INVOICE IN QUESTION IS FOR $675.24, WHICH REPRESENTS THE REMAINING AMOUNT DUE UNDER THE AGREED-TO MINIMUM AFTER DEDUCTION OF THE $24.76 ORDER AND THE $50.00 DECREASE PROVIDED FOR BY THE MODIFICATION.

BY THE TERMS OF THE CONTRACT, THE GOVERNMENT AGREED TO PURCHASE A MINIMUM QUANTITY EQUAL TO $750.00 AND THE GOVERNMENT'S FAILURE TO PURCHASE THE AGREED-TO MINIMUM QUANTITY AMOUNTED TO A BREACH OF THE CONTRACT ON ITS PART. GENERALLY, WHERE ONE PARTY TO A CONTRACT HAS BREACHED THE CONTRACT, THE AGGRIEVED PARTY IS ENTITLED TO DAMAGES FOR THE BREACH RATHER THAN THE FULL CONTRACT PRICE. SEE WILLISTON ON SALES, SEC. 582. WHILE MIDCAP BEARING SERVICE IS THEREFORE ENTITLED TO DAMAGES ACTUALLY SUSTAINED AS A RESULT OF THE GOVERNMENT'S BREACH, IT IS NOT ENTITLED TO THE FULL PURCHASE PRICE AS THE GOVERNMENT NEVER RECEIVED THE REMAINDER OF THE SUPPLIES CONTRACTED FOR AND THE CONTRACTOR WAS ABLE TO RETAIN THEM FOR ITS OWN USE. FOR THIS REASON, THE INVOICE SUBMITTED BY THE CONTRACTOR MAY NOT BE PAID. SINCE THE PRESENT RECORD CONTAINS NO INFORMATION WITH REGARD TO THE DAMAGES ACTUALLY SUSTAINED BY THE CONTRACTOR, WE ARE UNABLE TO DETERMINE WHAT PAYMENT, IF ANY, SHOULD BE MADE TO IT AS COMPENSATION FOR THE GOVERNMENT'S BREACH. ACCORDINGLY, IF IT IS POSSIBLE FOR YOUR AGENCY TO LIQUIDATE THE AMOUNT OF THE ACTUAL DAMAGES SUSTAINED BY THE CONTRACTOR, ATTRIBUTABLE TO THE GOVERNMENT'S FAILURE TO PURCHASE THE MINIMUM QUANTITY AGREED TO, AND THE CONTRACTOR IS WILLING TO ACCEPT SUCH AMOUNT IN FULL AND FINAL SETTLEMENT OF ITS CLAIM, THE MATTER MAY BE RESUBMITTED HERE FOR CONSIDERATION.