B-159068, JUN. 1, 1966

B-159068: Jun 1, 1966

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO LETTER DATED APRIL 28. IT IS REPORTED THAT ON OCTOBER 30. DSA-44-S-9303 WAS AWARDED TO DAVID J. DSA-44-S-9304 WAS AWARDED TO HARWOOD ENTERPRISES FOR 10 ITEMS HAVING A TOTAL PURCHASE PRICE OF $1. THE PURCHASED PROPERTY WAS TO BE PAID FOR AND REMOVED BY NOVEMBER 30. WAS REMOVED FROM GOVERNMENT CUSTODY. EACH CONTRACT WAS TERMINATED BECAUSE THE BALANCE OF THE PROPERTY WAS NOT REMOVED BY THE PURCHASER AND $302 OF THE PURCHASE PRICE WAS RETAINED BY THE GOVERNMENT UNDER EACH CONTRACT AS LIQUIDATED DAMAGES PURSUANT TO THE DEFAULT CLAUSE. THAT HE SHOULD HAVE BEEN CONTINUALLY HOSPITALIZED FROM THAT POINT FORWARD. OUR OFFICE WILL NOT EXERCISE THE AUTHORITY CONFERRED UPON IT BY THE CITED STATUTE IN CASES WHERE AN ADEQUATE LEGAL REMEDY.

B-159068, JUN. 1, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO LETTER DATED APRIL 28, 1966, WITH ENCLOSURES, FROM THE COUNSEL, HEADQUARTERS, DEFENSE SUPPLY AGENCY, REQUESTING A DECISION AS TO WHETHER THE LIQUIDATED DAMAGES ASSESSED AGAINST MR. DAVID J. HOROWITZ AND HARWOOD ENTERPRISES, BECAUSE OF THEIR FAILURE TO REMOVE PROPERTY PURCHASED BY THEM UNDER SALES CONTRACTS NOS. DSA-44-S 9303 AND DSA-44-S- 9304, RESPECTIVELY, MAY BE REMITTED.

IT IS REPORTED THAT ON OCTOBER 30, 1964, MR. HOROWITZ ATTENDED A SPOT BID SALE CONDUCTED BY THE DEFENSE SURPLUS SALES OFFICE AT OAKLAND, CALIFORNIA; THAT MR. HOROWITZ REGISTERED IN HIS OWN NAME AND THAT ALSO HE REGISTERED AS D. HARWOOD AND/OR D. HOROWITZ, AGENT FOR D. HARWOOD AND/OR HARWOOD ENTERPRISES; AND THAT AS A RESULT OF HIS PARTICIPATION IN THE SALE, CONTRACT NO. DSA-44-S-9303 WAS AWARDED TO DAVID J. HOROWITZ FOR SIX ITEMS HAVING A TOTAL PURCHASE PRICE OF $1,528.50, AND CONTRACT NO. DSA-44-S-9304 WAS AWARDED TO HARWOOD ENTERPRISES FOR 10 ITEMS HAVING A TOTAL PURCHASE PRICE OF $1,510. UNDER THE TERMS OF EACH CONTRACT, THE PURCHASED PROPERTY WAS TO BE PAID FOR AND REMOVED BY NOVEMBER 30, 1964. THE RECORD INDICATES THAT THE SALES OFFICE RECEIVED FULL PAYMENT OF THE PURCHASE PRICE ON EACH CONTRACT ON NOVEMBER 30, 1964; HOWEVER, ONLY ONE ITEM, 25 WOOD TACKLE BLOCKS HAVING A PURCHASE PRICE OF $18.50 UNDER THE HOROWITZ CONTRACT, WAS REMOVED FROM GOVERNMENT CUSTODY. THEREAFTER, EACH CONTRACT WAS TERMINATED BECAUSE THE BALANCE OF THE PROPERTY WAS NOT REMOVED BY THE PURCHASER AND $302 OF THE PURCHASE PRICE WAS RETAINED BY THE GOVERNMENT UNDER EACH CONTRACT AS LIQUIDATED DAMAGES PURSUANT TO THE DEFAULT CLAUSE, PARAGRAPH 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT.

BY LETTER DATED JANUARY 13, 1965, MR. ROBERT W. PLATH, ATTORNEY AT LAW, REQUESTED ON BEHALF OF MR. DAVID J. HOROWITZ, THAT THE DEFAULTS BE SET ASIDE AND THAT THE AMOUNTS RETAINED BY THE GOVERNMENT AS LIQUIDATED DAMAGES BE REFUNDED TO MR. HOROWITZ. IN SUPPORT OF HIS REQUEST FOR REMISSION, MR. PLATH ALLEGES THAT MR. HOROWITZ'S FAILURE TO REMOVE THE PROPERTY, AS SET FORTH IN ARTICLE G OF THE SPECIAL CONDITIONS OF EACH CONTRACT,"* * * AROSE OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE PURCHASER.' MR. PLATH STATED THAT IN THE CASE OF MR. HOROWITZ, THERE EXISTS AN "ACT OF GOD" SITUATION IN THAT MR. HOROWITZ BECAME COMPLETELY INCOMPETENT TO HANDLE HIS OWN AFFAIRS AS OF NOVEMBER 11, 1964, AND THAT HE SHOULD HAVE BEEN CONTINUALLY HOSPITALIZED FROM THAT POINT FORWARD.

IN HIS LETTER OF APRIL 28, 1966, YOUR COUNSEL RECOMMENDS AS JUST AND EQUITABLE THAT ALL LIQUIDATED DAMAGES ASSESSED AGAINST MR. HOROWITZ AND HARWOOD ENTERPRISES BE REMITTED PURSUANT TO THE PROVISIONS OF 41 U.S.C. 256A.

HOWEVER, OUR OFFICE WILL NOT EXERCISE THE AUTHORITY CONFERRED UPON IT BY THE CITED STATUTE IN CASES WHERE AN ADEQUATE LEGAL REMEDY, AS HERE, IS AVAILABLE TO THE CONTRACTOR.

IT APPEARS THAT HARWOOD ENTERPRISES AND DAVID J. HOROWITZ ARE ONE AND THE SAME ENTITY, NAMELY, DAVID J. HOROWITZ, AND THAT HARWOOD ENTERPRISES WAS A FIGMENT OF THE IMAGINATION OF MR. HOROWITZ. THE RECORD INDICATES THAT MR. HOROWITZ SUBMITTED THE TWO BIDS ON OCTOBER 30, 1964, FOR THE SURPLUS PROPERTY AND THAT HE PAID FOR THE PROPERTY ON NOVEMBER 30, 1964. IN AN AFFIDAVIT DATED AUGUST 3, 1965, MR. HOROWITZ STATES THAT ON DECEMBER 2, 1964, HE WAS PICKED UP BY MEMBERS OF THE POLICE DEPARTMENT OF SAN FRANCISCO, CALIFORNIA, AND THAT HE WAS THEN TAKEN TO THE SAN FRANCISCO HOSPITAL FOR OBSERVATION AND THAT THEREAFTER HE WAS CERTIFIED OVER TO THE NAPA STATE HOSPITAL, IMOLA, CALIFORNIA, ON DECEMBER 7, 1964. A LETTER DATED SEPTEMBER 27, 1965, FROM THE HOSPITAL, ADVISED THAT MR. HOROWITZ WAS A PATIENT AT THE HOSPITAL FROM NOVEMBER 11, 1964, UNTIL NOVEMBER 23, 1964, AND AGAIN FROM DECEMBER 7, 1964, THROUGH MARCH 10, 1965, WHEN HE WAS RELEASED ON HOME LEAVE. THE HOSPITAL ALSO STATED THAT AT THE TIME OF HIS ORIGINAL ADMISSION INTO THE HOSPITAL AS A PATIENT, MR. HOROWITZ WAS DISORIENTED, AGITATED AND SUBJECT TO PARANOID DELUSIONS. THE HOSPITAL FURTHER ADVISED THAT WHEN MR. HOROWITZ CAME TO THE HOSPITAL ON NOVEMBER 11, 1964, HE WAS NOT MENTALLY COMPETENT TO ENGAGE IN BUSINESS BECAUSE OF HIS PSYCHOSIS AND THAT IN VIEW OF THE FACT THAT MR. HOROWITZ HAS ADMITTED TO THE TAKING OF AN "LSD" DRUG PRIOR TO HIS ADMISSION, THERE WAS A STRONG POSSIBILITY THAT HE WAS UNDER THE INFLUENCE OF THIS DRUG ON OCTOBER 30, 1964, THE DATE HE SUBMITTED THE TWO BIDS IN QUESTION.

IN VIEW OF THE FOREGOING, WHICH SHOWS, AMONG OTHER THINGS, THE SHORT PERIOD OF TIME THAT ELAPSED BETWEEN THE DATE OF MR. HOROWITZ'S BIDS AND THE TIME HE WAS CONSIDERED TO BE MENTALLY INCOMPETENT, THE PROBABILITY THAT HE WAS WITHOUT THE NECESSARY MENTAL CAPACITY AT THE TIME THE BIDS WERE MADE APPEARS TO BE SO STRONG THAT THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO THE CANCELLATION OF THE CONTRACTS IN THIS PARTICULAR CASE. SEE B-125595, OCTOBER 17, 1955.

IT IS REPORTED THAT THERE WAS NO LOSS ON RESALE OF THE PROPERTY WHICH MR. HOROWITZ PURCHASED UNDER THE TWO CONTRACTS IN QUESTION.

ACCORDINGLY, THE AMOUNT RETAINED BY YOUR AGENCY AS LIQUIDATED DAMAGES UNDER THE SAID CONTRACTS MAY BE REFUNDED TO MR. HOROWITZ.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING SAID REFUND.