B-158767, JUL. 29, 1966

B-158767: Jul 29, 1966

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ACTION WAS INITIATED BY THE GOVERNMENT TO BEGIN IN-PROCESS INSPECTION OF THE ITEMS AT THE IMMEL FACILITY. IT WAS ASCERTAINED THAT IMMEL HAD NOT COMMITTED ITSELF TO PERFORM AS A SUBCONTRACTOR. SINCE APPROXIMATELY 60 DAYS OF THE 150 DAYS ORIGINALLY SCHEDULED FOR PERFORMANCE HAD ELAPSED THE CONTRACTOR WAS REQUESTED TO EXPLAIN THE LACK OF A FIRM COMMITMENT WITH ITS SUBCONTRACTOR. WAS IN THE FORM OF A REQUEST FOR AN AMENDMENT TO THE CONTRACT SO AS TO PERMIT THE SUBSTITUTION OF ATELIERS DU CAOUTCHOUO MANUFACTURE D- ANVERGNE (ACMA). "BECAUSE ACMA FRANCE IS FOUND TO BE BETTER THAN IMMEL-USA IN ITS CAPACITY TO PROCESS OUR ORDER.'. STATED THAT THE CHANGE WAS DUE TO THE FACT THAT "WE THEN FOUND THAT ACMA WAS QUALIFIED BETTER THAN IMMEL TO MEET THE CONTRACT SPECIFICATIONS.'.

B-158767, JUL. 29, 1966

TO MR. LEON I. GREENBERG:

WE REFER TO YOUR LETTER OF MARCH 15, 1966, ASSERTING A CLAIM ON BEHALF OF MARUBENI-IIDA COMPANY, LTD., UNDER CONTRACT NO. DA-92-557-FEC 37531, ISSUED BY THE UNITED STATES ARMY PROCUREMENT AGENCY, YOKOHOMA, JAPAN. THE SUBJECT CONTRACT, AWARDED ON JUNE 30, 1964, PROVIDED FOR DELIVERY WITHIN 150 DAYS OF 12,566 EACH SHOE, TRACK, ASSEMBLY (TRACK T 80E1) AT $22.40 EACH FOR A TOTAL AMOUNT OF $281,254.20.

GENERAL PROVISION 24 AND GENERAL CONDITION IX REQUIRED MARUBENI TO LIST ITS SUBCONTRACTORS AND SPECIFICALLY STATED THAT ANY CHANGE THEREFROM WOULD REQUIRE THE PRIOR APPROVAL OF THE CONTRACTING OFFICER. MARUBENI PROPOSED TO USE THE FOLLOWING THREE SUBCONTRACTORS IN THE UNITED STATES: THE HORST MANUFACTURING COMPANY FOR STEEL PARTS; IMMEL ENGINEERING AND MANUFACTURING COMPANY, FOR RUBBER MOLDING AND FINAL ASSEMBLY; AND MUTUAL TRUCK PARTS COMPANY, FOR MANAGING, CONTROLLING, AND PROCESSING THE CONTRACT.

THE CONTRACT FURTHER REQUIRED MARUBENI TO ADHERE TO CERTAIN MINIMUM INSPECTION PROCEDURES SPECIFIED IN THE CONTRACT, UNDER THE SECTION ENTITLED SUPPLEMENTARY QUALITY ASSURANCE PROVISIONS (SQAPS).

FOLLOWING AWARD OF THE CONTRACT, ACTION WAS INITIATED BY THE GOVERNMENT TO BEGIN IN-PROCESS INSPECTION OF THE ITEMS AT THE IMMEL FACILITY. HOWEVER, ON AUGUST 15, 1964, IT WAS ASCERTAINED THAT IMMEL HAD NOT COMMITTED ITSELF TO PERFORM AS A SUBCONTRACTOR, AND DID NOT ANTICIPATE SUCH A COMMITMENT FOR AT LEAST ANOTHER MONTH, IF EVER. SINCE APPROXIMATELY 60 DAYS OF THE 150 DAYS ORIGINALLY SCHEDULED FOR PERFORMANCE HAD ELAPSED THE CONTRACTOR WAS REQUESTED TO EXPLAIN THE LACK OF A FIRM COMMITMENT WITH ITS SUBCONTRACTOR. MARUBENI'S REPLY DATED AUGUST 25, 1964, WAS IN THE FORM OF A REQUEST FOR AN AMENDMENT TO THE CONTRACT SO AS TO PERMIT THE SUBSTITUTION OF ATELIERS DU CAOUTCHOUO MANUFACTURE D- ANVERGNE (ACMA), OF FRANCE, AS SUBCONTRACTOR FOR METAL AND RUBBER PARTS IN LIEU OF HORST AND IMMEL. THE CONTRACTOR ALSO REQUESTED AN EXTENSION OF THE DELIVERY DATE UNTIL FEBRUARY 28, 1965. THE LETTER SPECIFIED THE "REASON FOR CHANGE" AS,"BECAUSE ACMA FRANCE IS FOUND TO BE BETTER THAN IMMEL-USA IN ITS CAPACITY TO PROCESS OUR ORDER.' IN A SUBSEQUENT LETTER DATED SEPTEMBER 29, 1964, MARUBENI, IN REFERRING TO THIS REQUEST, STATED THAT THE CHANGE WAS DUE TO THE FACT THAT "WE THEN FOUND THAT ACMA WAS QUALIFIED BETTER THAN IMMEL TO MEET THE CONTRACT SPECIFICATIONS.' MARUBENI WAS INFORMED THAT APPROVAL OF THE CHANGE WOULD BE BASED ON A POSITIVE PREAWARD SURVEY OF ACMA'S CAPABILITIES, AND THAT IT WOULD BE LIABLE FOR THE COST OF THE SURVEY, REGARDLESS OF THE OUTCOME. SEPTEMBER 9, 1964, THE ABOVE MENTIONED DELIVERY DATE EXTENSION WAS APPROVED, IN RETURN FOR WHICH MARUBENI AGREED TO PRODUCE AN ADDITIONAL QUANTITY OF 244 ITEMS AT NO CHARGE TO THE GOVERNMENT.

ON SEPTEMBER 21, 1964, A NEGATIVE SURVEY REPORT WAS RECEIVED IN REFERENCE TO ACMA, AND MARUBENI WAS IMMEDIATELY NOTIFIED OF THE CONTRACTING OFFICER'S DENIAL OF ITS REQUEST TO CHANGE SUBCONTRACTORS. THE CONTRACTOR'S REPRESENTATIVE STATED AT THAT TIME THAT, BECAUSE THE COMPANY WAS CONCERNED ABOUT ITS REPUTATION, THE CONTRACT WOULD BE PERFORMED, EVEN IF IT RESULTED IN A LARGE LOSS TO THE CONTRACTOR. SHORTLY THEREAFTER A "CURE NOTICE" WAS ISSUED WHICH REQUIRED THE CONTRACTOR, WITHIN 10 DAYS, TO PROPOSE ITS PLAN FOR PERFORMANCE OF THE CONTRACT, OR RISK A DEFAULT TERMINATION. FIVE DAYS LATER THE "NOTICE" WAS ANSWERED IN A LETTER WHICH REQUESTED APPROVAL OF THE FIRESTONE TIRE AND RUBBER COMPANY AS SUBCONTRACTOR TO FURNISH BOTH METAL AND RUBBER PARTS, WITH DELIVERY BY THE END OF MARCH, 1965.

ON OCTOBER 23, 1964, THE CONTRACTING OFFICER APPROVED THE REQUEST AND EXTENDED THE DELIVERY DATE UPON MARUBENI'S AGREEMENT TO FURNISH AN ADDITIONAL 344 ITEMS, WITHOUT CHARGE, AS CONSIDERATION. FIRESTONE PREDICATED ITS ACCEPTANCE OF THE ARRANGEMENT UPON A REVISION OF THE CONTRACT WHICH INVOLVED SUBSTITUTION OF A CERTAIN INAPPLICABLE SQAP, WITH AN APPLICABLE ENGINEERING EVALUATION REPORT (EER). THE GOVERNMENT READILY AGREED TO THIS BUT BECAUSE OF THE SHORT TIME BEFORE SCHEDULEDSHIPMENT OF THE ITEMS, AND SINCE THERE WAS NO CHANGE IN THE TECHNICAL REQUIREMENT FOR THE ITEMS, NO MODIFICATION WAS ISSUED TO THE CONTRACT.

FIRESTONE SUBSEQUENTLY PRODUCED THE REQUIRED QUANTITY OF 12,900 TRACK SHOE ASSEMBLIES AND WAS PREPARING TO SHIP THEM IN EARLY FEBRUARY, 1965, WHEN A STRIKE WAS CALLED BY STEVEDORES ON THE UNITED STATES EAST AND GULF COASTS. AS A RESULT OF THIS EXCUSABLE DELAY, THE CONTRACT WAS AGAIN MODIFIED, AT NO EXPENSE TO THE CONTRACTOR, TO EXTEND THE FINAL DELIVERY DATE THROUGH APRIL 30, 1965.

IN SUPPORT OF YOUR CLAIM YOU ALLEGE THAT THE ACTIONS OF THE CONTRACTING OFFICER IN DENYING MARUBENI'S REQUEST TO DELETE OR WAIVE CERTAIN OF THE SQAPS WAS THE CAUSE OF IMMEL'S REFUSAL TO ACT AS A SUBCONTRACTOR, WHICH, IN TURN, DIRECTLY COST THE CONTRACTOR $56,670. YOU ALSO REFER TO THE FACT THAT MARUBENI WAS ASSESSED A PENALTY FOR DELAYS IN THE AMOUNT OF $9,219.20; INCURRED TRAVELLING EXPENSES OF $18,000, IN ATTEMPTING TO SECURE A NEW SUPPLIER, AND MISCELLANEOUS EXPENSES TOTALING OVER $6,000.

HOWEVER, IT IS ADMINISTRATIVELY REPORTED THAT YOUR ABOVE-STATED ALLEGATIONS ARE TOTALLY UNSUPPORTED IN THE CORRESPONDENCE AND MEMORANDA IN THE CONTRACT FILE, AND ARE NOT IN ACCORD WITH THE ORAL STATEMENTS MADE TO THE CONTRACTING OFFICER BY REPRESENTATIVES OF THE CONTRACTOR. AS ABOVE INDICATED, OUR EXAMINATION OF THE ADMINISTRATIVE FILE ALSO DISCLOSES THAT THE ONLY REASON GIVEN BY THE CONTRACTOR FOR ITS REQUEST TO CHANGE SUBCONTRACTORS WAS THAT ACMA-FRANCE WAS BETTER QUALIFIED THAN IMMEL TO PRODUCE THE ITEMS. IT IS REPORTED THAT NEITHER IN THE PRE AWARD NEGOTIATION NOR IN THE COURSE OF THE CONTRACT ADMINISTRATION DID MARUBENI REQUEST ANY CHANGE IN THE SPECIFICATIONS IN ORDER TO MEET OBJECTIONS OR DESIRES OF IMMEL. THE CONTRACTOR ORALLY INFORMED THE CONTRACTING OFFICER THAT IMMEL HAD REFUSED TO PERFORM RUBBER MOLDING ON STEEL PARTS FURNISHED BY MUTUAL TRUCK BECAUSE THE PARTS WOULD BE SURPLUS AND NOT NEW, AS REQUIRED BY THE CONTRACT. THE CONTRACTING OFFICER DID NOT, AS YOU ALLEGE, REFUSE TO CONSIDER THE MATTER OF IMMEL'S OBJECTIONS TO TECHNICAL REQUIREMENTS BECAUSE NO OBJECTIONS WERE EVER PRESENTED TO HIM.

THE ABOVE SITUATION CREATES A DISPUTED QUESTION OF FACT, AND WHEN THERE IS SUCH A CONFLICT BETWEEN THE STATEMENT OF A CLAIMANT AND THE REPORT OF THE ADMINISTRATIVE OFFICE, IT IS A LONG-ESTABLISHED RULE OF THIS OFFICE TO ACCEPT THE LATTER, IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF. 37 COMP. GEN. 568. IN ANY EVENT WE THINK IT IS CLEAR FROM THE RECORD BEFORE US THAT THE DELAYS AND ADDITIONAL COSTS INCURRED WERE THE SOLE FAULT OF THE CONTRACTOR, AND NOT DUE TO ANY IMPROPER OR ARBITRARY ACTION OF THE ..END :