B-159185, APR. 30, 1970

B-159185: Apr 30, 1970

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IF SUCH SERVICES ARE IDENTIFIABLE AND THEIR VALUE SEGREGABLE FROM REQUIRED SERVICES. IT IS STATED THAT AFTER THE COMPLETION OF THE TEST PROGRAM IN OCTOBER 1964. VERTOL DISMANTLED AND PRESERVED THE HELICOPTER FOR LONG-TERM STORAGE AT THE CONTRACTOR'S PLANT AT MORTON WITHOUT NOTIFYING THE GOVERNMENT OFFICIALLY THAT THE TEST PROGRAM WAS COMPLETED. IT IS FURTHER STATED THAT THE CONTRACTOR TOOK SUCH ACTION IN ORDER TO AVOID THE DAILY INSPECTIONS AND MAINTENANCE REQUIRED AT NO COST TO THE GOVERNMENT UNDER THE BAILMENT CONTRACT. AN AGREEMENT FOR VERTOL TO PERFORM THE MINIMUM WORK NECESSARY TO ENABLE MILITARY PILOTS TO FLY THE HELICOPTER TO JACKSONVILLE WAS REACHED AT A MEETING BETWEEN REPRESENTATIVES OF NAVY AND VERTOL DURING THE FIRST PART OF APRIL 1965.

B-159185, APR. 30, 1970

BAILMENTS--LIABILITY OF BAILEE--RESTORATION OF GOVERNMENT PROPERTY- AIRCRAFT UNDER BAILMENT REQUIRING CONTRACTOR TO MAINTAIN AND RETURN GOVT. HELICOPTER IN SUBSTANTIALLY SAME CONDITION AS WHEN RECEIVED, COMPENSATION MAY BE AUTHORIZED ONLY FOR ANY ADDITIONAL WORK REQUIRED TO READY AIRCRAFT FOR GOVT.-DIRECTED FLIGHT TO JACKSONVILLE WHICH WOULD NOT BE REQUIRED FOR REDELIVERY UNDER BAILMENT CONTRACT AND FOR REINSTALLATION OF PARTS REMOVED AT GOVT. REQUEST, AS DISTINGUISHED FROM REMOVALS INCIDENT TO PRESERVATION OR PERFORMING TEST PROGRAMS, IF SUCH SERVICES ARE IDENTIFIABLE AND THEIR VALUE SEGREGABLE FROM REQUIRED SERVICES, SINCE, ON PRESENT RECORD, GOVT. ASSUMED NO RESPONSIBILITY FOR LONG-TERM PRESERVATION OF BAILED HELICOPTER.

TO MR. SECRETARY:

WE REFER TO LETTER DATED NOVEMBER 14, 1969, AIR-00C:JTT/SAF, FROM THE ASSOCIATE COUNSEL, NAVAL AIR SYSTEMS COMMAND, AND TO PRIOR CORRESPONDENCE WITH YOUR DEPARTMENT CONCERNING THE CLAIM OF BOEING COMPANY, VERTOL DIVISION, MORTON, PENNSYLVANIA, IN THE ORIGINAL AMOUNT OF $44,000 FOR SERVICES PERFORMED IN PREPARING A NAVY CH-46A HELICOPTER, BUREAU NUMBER 150268, FOR A FERRY FLIGHT FROM VERTOL'S PLANT AT MORTON TO JACKSONVILLE, FLORIDA.

BY CONTRACT NO. N0W 63-0531-B, DATED JUNE 25, 1963, THE HELICOPTER HAD BEEN BAILED ON A MUTUAL BENEFIT BASIS TO VERTOL FOR THE PERIOD JULY 1, 1963, THROUGH JUNE 30, 1966 (SUBJECT TO EARLIER TERMINATION BY THE GOVERNMENT) FOR USE IN PROJECTS HAVING AS A GENERAL PURPOSE THE DEVELOPMENT, FURTHERANCE, AND IMPROVEMENT OF THE DESIGN OF BAILMENT AIRCRAFT. THE PROJECT COULD INCLUDE THE INSTALLATION OF OTHER GOVERNMENT- FURNISHED PROPERTY, TESTING OF MATERIALS, EQUIPMENT, ACCESSORIES AND INSTRUMENTS; REWORKING, ALTERING, AND MODIFYING THE PROPERTY; AND THE CONDUCTING OF GROUND AND FLIGHT TESTS. THE BAILMENT CONTRACT INCLUDED PROVISIONS REQUIRING THE CONTRACTOR TO MAINTAIN THE GOVERNMENT-FURNISHED AIRCRAFT AND EQUIPMENT IN ACCORDANCE WITH GOOD COMMERCIAL PRACTICE, TO PROVIDE ADEQUATE STORAGE FOR THE PROPERTY, AND TO RETURN THE PROPERTY TO THE GOVERNMENT IN THE SAME CONDITION AS WHEN RECEIVED BY THE CONTRACTOR EXCEPT FOR NORMAL WEAR AND TEAR, PERMANENT EFFECTS OF PROJECT WORK, AND LOSS OR DAMAGE FOR WHICH THE GOVERNMENT HAD RELIEVED THE CONTRACTOR OF LIABILITY.

IN A CONTRACT ADMINISTRATOR'S REPORT OF OCTOBER 15, 1965, BY THE BUREAU OF NAVAL WEAPONS REPRESENTATIVE, MORTON, PENNSYLVANIA, IT IS STATED THAT AFTER THE COMPLETION OF THE TEST PROGRAM IN OCTOBER 1964, VERTOL DISMANTLED AND PRESERVED THE HELICOPTER FOR LONG-TERM STORAGE AT THE CONTRACTOR'S PLANT AT MORTON WITHOUT NOTIFYING THE GOVERNMENT OFFICIALLY THAT THE TEST PROGRAM WAS COMPLETED, AND WITHOUT HAVING BEEN GRANTED AUTHORITY BY THE GOVERNMENT TO PRESERVE AND STORE THE AIRCRAFT. IT IS FURTHER STATED THAT THE CONTRACTOR TOOK SUCH ACTION IN ORDER TO AVOID THE DAILY INSPECTIONS AND MAINTENANCE REQUIRED AT NO COST TO THE GOVERNMENT UNDER THE BAILMENT CONTRACT.

THE RECORD INDICATES THAT THE GOVERNMENT DECIDED TO INDUCT THE HELICOPTER INTO A MODIFICATION AND REPAIR PROGRAM AT JACKSONVILLE NOT LATER THAN JULY 1, 1965, AND AN AGREEMENT FOR VERTOL TO PERFORM THE MINIMUM WORK NECESSARY TO ENABLE MILITARY PILOTS TO FLY THE HELICOPTER TO JACKSONVILLE WAS REACHED AT A MEETING BETWEEN REPRESENTATIVES OF NAVY AND VERTOL DURING THE FIRST PART OF APRIL 1965. A NAVY OFFICIAL WITH CONTRACTING OFFICER AUTHORITY WAS NOT PRESENT AT THAT MEETING, AND VERTOL PROCEEDED TO DEPRESERVE THE HELICOPTER, REINSTALL ITS VARIOUS COMPONENTS, AND PUT IT IN A SAFE CONDITION FOR THE FERRY FLIGHT TO JACKSONVILLE WITHOUT CONTRACTUAL COVERAGE FOR THE WORK INVOLVED. INASMUCH AS THE GOVERNMENT RECEIVED BENEFITS FROM THE WORK PERFORMED BY VERTOL, THE NAVAL AIR SYSTEMS COMMAND RECOMMENDED TO THIS OFFICE BY LETTER OF MAY 12, 1966, THAT SETTLEMENT BE MADE ON A QUANTUM MERUIT BASIS IN THE AMOUNT OF $44,000, THE FULL AMOUNT CLAIMED BY VERTOL, ALTHOUGH THE CONTRACT ADMINISTRATOR'S REPORT INDICATED THAT THE COST OF DEPRESERVING THE AIRCRAFT MAY HAVE BEEN THE RESPONSIBILITY OF VERTOL UNDER THE BAILMENT CONTRACT. VERTOL'S SIGNED CLAIM AND AN APPROVED VOUCHER WERE NOT FORWARDED TO THIS OFFICE FOR DISPOSITION, AND WE HAVE REGARDED THE MATTER AS BEING IN THE NATURE OF A REQUEST FOR OUR CONCURRENCE IN AN ADMINISTRATIVE SETTLEMENT OF THE CLAIM IN A MUTUALLY AGREED AMOUNT.

IN OUR LETTER OF MAY 24, 1966, B-159185, WE REQUESTED THE VIEWS OF YOUR DEPARTMENT AS TO WHETHER VERTOL HAD A PRIOR LEGAL OBLIGATION UNDER THE BAILMENT CONTRACT TO REASSEMBLE THE AIRCRAFT AND PUT IT IN A CONDITION COMPARABLE TO THAT WHICH IT WAS IN AT THE END OF THE FLIGHT TEST PROGRAMS, AND WHETHER THE ONLY BENEFITS ACCRUING TO THE GOVERNMENT FROM THE CONTRACTOR'S WORK, AND PROPERLY FOR CONSIDERATION FOR PAYMENT ON QUANTUM MERUIT BASIS, WOULD BE THE IMPROVEMENTS (IF ANY) MADE IN THE AIRCRAFT'S PREVIOUS CONDITION TO MEET THE REQUIREMENTS OF THE FLIGHT TO JACKSONVILLE. IN A RESPONSE THERETO OF AUGUST 2, 1966, AIR: 00C HMR/1KM, YOUR ASSISTANT COMMANDER FOR CONTRACTS EXPRESSED THE VIEW THAT IN LIGHT OF SECTION 12 OF THE BAILMENT CONTRACT, VERTOL HAD AN EXISTING OBLIGATION TO REASSEMBLE THE AIRCRAFT AND OFFER IT TO THE GOVERNMENT, BUT IT WAS NOT OBLIGATED BY SECTION 12 TO READY THE AIRCRAFT FOR FLIGHT AND DELIVER TO JACKSONVILLE AT NO COST TO THE GOVERNMENT. YOUR ASSISTANT COMMANDER FOR CONTRACTS FURTHER STATED THAT THE PRESERVATION WAS INCONSISTENT WITH THE CONTRACT, AND THAT AN INVESTIGATION OF THE FACTS REVEALED THAT VERTOL CONCEDED TO ONE OF THE NAVY'S LOCAL REPRESENTATIVES THAT IT WAS REMISS IN PRESERVING THE AIRCRAFT WITHOUT FORMALLY NOTIFYING THE GOVERNMENT. IT WAS RECOMMENDED THAT $2,788 BE SUBTRACTED FROM THE CLAIM AS THE COST OF DEPRESERVATION.

BY LETTER OF AUGUST 22, 1966, WE ADVISED THE COMMANDER, NAVAL AIR SYSTEMS COMMAND, THAT THE RECORD DID NOT REFLECT THAT REASSEMBLY COSTS HAD BEEN INCLUDED IN THE AMOUNT RECOMMENDED FOR DISALLOWANCE, AND, IN CONNECTION WITH THE READYING-FOR-FLIGHT COSTS, WE POINTED OUT THAT UNDER SECTION 2 OF THE BAILMENT CONTRACT THE CONTRACTOR AGREED TO MAINTAIN THE AIRCRAFT AND ITS EQUIPMENT IN ACCORDANCE WITH GOOD COMMERCIAL PRACTICE, AND THAT SECTION 5 PROVIDED FOR RETURN OF THE AIRCRAFT TO THE GOVERNMENT IN THE SAME CONDITION AS WHEN RECEIVED BY THE CONTRACTOR, EXCEPT FOR NORMAL WEAR AND TEAR, PERMANENT EFFECTS OF PROJECT OR OTHER CONTRACT WORK, AND DAMAGE FOR WHICH THE CONTRACTOR HAD BEEN RELIEVED OF LIABILITY. WE ASKED THAT THE CLAIM BE CONSIDERED WITH THE VIEW OF ESTABLISHING A REASONABLE FIGURE FOR THOSE COSTS INCURRED IN MEETING EXTRA REQUIREMENTS FOR THE FLIGHT TO JACKSONVILLE, AND WHICH WERE OVER AND ABOVE THAT PART OF THE COSTS WHICH WOULD HAVE BEEN INVOLVED IN A RETURN OF THE AIRCRAFT TO THE GOVERNMENT IN THE CONDITION REQUIRED BY THE BAILMENT CONTRACT.

BY LETTER OF JUNE 8, 1967, AIR-00C:HMR/PLS, THE DEPUTY COUNSEL, NAVAL AIR SYSTEMS COMMAND, SUBMITTED THE FOLLOWING STATEMENT TO HELP RESOLVE OUR CONCERN THAT SOME OF THE COSTS SOUGHT TO BE RECOVERED WERE INCURRED IN WORK THAT VERTOL HAD A PRIOR RESPONSIBILITY TO PERFORM UNDER THE BAILMENT CONTRACT, AND TO EFFECT PAYMENT OF THE CLAIM:

"THE WORK PACKAGE OUTLINE LISTS THE ELEMENTS OF THE WORK WHICH VERTOL PERFORMED ON THE BAILED AIRCRAFT. THE AIRCRAFT WAS A 'WORKHORSE'; THAT IS, IT WAS STRIPPED OF STANDARD EQUIPMENT, OUTFITTED WITH VARIOUS AND SUNDRY DEVICES AND COMPONENTS, AND THEN SUBJECTED TO STRINGENT TEST PROGRAMS REQUIRED BY PRODUCTION CONTRACTS. UPON COMPLETION OF THE FINAL PROJECT TEST, PRIOR TO OBTAINING 'FLEET RELEASE APPROVAL', THE AIRCRAFT WAS IN A FAR WORSE CONDITION THAN WHEN IT WAS ORIGINALLY BAILED TO THE COMPANY. IT WAS AT THIS POINT THAT THE AIRCRAFT WAS 'PRESERVED'. CONSEQUENTLY, 'DEPRESERVATION' MERELY RETURNED THE AIRCRAFT TO THE CONDITION IT WAS IN AFTER FINAL TESTING. AND 'READYING FOR FLIGHT' REQUIRED THAT THE AIRCRAFT BE FITTED OUT AND BROUGHT UP TO A CONDITION SUITABLE FOR CROSS COUNTRY FLIGHT AS PER THE INFORMAL CONTRACTUAL AGREEMENT. THE 'READYING FOR FLIGHT' WORK IS ITEMIZED IN 2 THROUGH 17 OF THE WORK PACKAGE OUTLINE." THE DEPUTY COUNSEL OBSERVED THAT THE CROSS COUNTRY FLIGHT REQUIRED THE AIRCRAFT TO BE PUT IN A CONDITION BETTER THAN THAT WHICH WOULD HAVE BEEN ACCEPTABLE FOR RETURN OF THE AIRCRAFT TO THE GOVERNMENT UNDER THE BAILMENT CONTRACT, AND THAT VERTOL SHOULD BE COMPENSATED FOR THE SPECIALLY REQUESTED WORK.

IN OUR REPLY OF JUNE 26, 1967, WE INDICATED AGREEMENT WITH THE DEPUTY COUNSEL'S POSITION, THAT THE CONTRACTOR SHOULD BE COMPENSATED FOR THE EXTRA WORK REQUIRED FOR THE TRIP TO JACKSONVILLE. WE POINTED OUT, HOWEVER, THAT UNDER THE BAILMENT CONTRACT THE GOVERNMENT WAS ENTITLED TO HAVE THE AIRCRAFT ASSEMBLED AND RETURNED IN THE SAME CONDITION AS WHEN RECEIVED BY VERTOL, LESS WEAR AND TEAR, ETC; AND THAT THE CLAIM INCLUDED CHARGES FOR SERVICES ASSOCIATED WITH SUCH OBLIGATIONS OF VERTOL UNDER ITEMS 2 THROUGH 17 OF THE WORK PACKAGE OUTLINE FOR WHICH NO DEDUCTIONS HAD BEEN MADE FROM THE CLAIM. ITEMS 2 THROUGH 17 INCLUDED INSTALLATION OF THE ENGINES, ROTOR BLADES, AND OTHER COMPONENTS WHICH APPEARED TO HAVE BEEN REMOVED FROM THE AIRCRAFT IN CONNECTION WITH THE TEST PROGRAMS AND THE AIRCRAFT'S STORAGE. WE AGAIN REQUESTED THAT THE CLAIM BE EXAMINED WITH A VIEW TO DETERMINING THOSE ELEMENTS OF THE WORK PERFORMED, AND THEIR REASONABLE COST, WHICH WERE OVER AND ABOVE T WORK THAT WOULD HAVE BEEN REQUIRED TO RETURN THE AIRCRAFT TO THE GOVERNMENT IN ACCORDANCE WITH THE BAILMENT CONTRACT.

IN THE REFERENCED LETTER OF NOVEMBER 14, 1969, THE ASSOCIATE COUNSEL, NAVAL AIR SYSTEMS COMMAND, STATED:

"THE WORK FOR WHICH THE CONTRACTOR SEEKS COMPENSATION INCLUDES THE REINSTALLATION OF (1) COMPONENTS REMOVED AT THE DIRECTION OF THE GOVERNMENT AND (2) COMPONENTS REMOVED PURSUANT TO PRESERVATION. SUCH WORK WAS NOT REQUIRED TO BE PERFORMED BY THE CONTRACTOR UNDER THE TERMS OF THE BAILMENT CONTRACT.

"THE AIRCRAFT COULD HAVE BEEN RETURNED TO THE GOVERNMENT IN JULY, 1964, WHEN THE TEST PROGRAM FOR WHICH THE AIRCRAFT WAS BAILED WAS COMPLETED. THE AIRCRAFT AT THIS TIME WAS OPERATIONAL AND IN THE SAME CONDITION AS WHEN RECEIVED EXCEPT FOR NORMAL WEAR AND TEAR, AND THE RETURN WOULD HAVE BEEN IN ACCORDANCE WITH THE REQUIREMENTS OF THE BAILMENT AGREEMENT. THE AIRCRAFT WAS NOT RETURNED BECAUSE THE GOVERNMENT HAS (SIC) NOT MADE A DECISION AS TO ITS DISPOSITION. THIS DECISION WAS NOT MADE UNTIL THE SPRING OF THE FOLLOWING YEAR. DURING THIS PERIOD, THE GOVERNMENT DIRECTED THE CONTRACTOR TO TRANSFER VARIOUS COMPONENTS FROM THE AIRCRAFT TO OTHER AIRCRAFT BECAUSE OF THE SHORTAGE OF GOVERNMENT FURNISHED EQUIPMENT. DUE TO THESE GOVERNMENT DIRECTED REMOVALS, THE AIRCRAFT WAS RENDERED NON- OPERATIONAL SO THAT IT COULD NO LONGER BE USED BY THE CONTRACTOR TO PERFORM PROJECTS FOR THE GOVERNMENT. FURTHERMORE, NORMAL MAINTENANCE AS CONTEMPLATED UNDER THE BAILMENT AGREEMENT FOR AN OPERATIONAL AIRCRAFT WAS NO LONGER SUFFICIENT TO SAFEGUARD THE AIRCRAFT. COMMERCIAL PRACTICE AND NAVY AIRCRAFT PROCEDURES REQUIRED THAT THE AIRCRAFT BE PRESERVED. THE CONTRACTOR PROCEEDED TO PRESERVE THE AIRCRAFT WHICH ENTAILED THE REMOVAL AND STORAGE OF VARIOUS REMAINING COMPONENTS.

"UNDER THE BAILMENT AGREEMENT IN CONSIDERATION FOR THE USE OF THE AIRCRAFT, THE CONTRACTOR AGREED TO PERFORM PROJECTS WITH THE AIRCRAFT, TO MAINTAIN THE AIRCRAFT, AND TO RETURN IT IN THE SAME CONDITION AS RECEIVED EXCEPT FOR NORMAL WEAR AND TEAR, ETC. THE GOVERNMENT DIRECTED THE REMOVAL OF COMPONENTS BECAUSE OF A SHORTAGE OF GOVERNMENT-FURNISHED EQUIPMENT AND NOT PURSUANT TO A PROJECT UNDER THE BAILMENT AGREEMENT. THE REMOVAL OF THE COMPONENTS WAS NOT WITHIN THE SCOPE OF THE BAILMENT AGREEMENT. THUS, THE REINSTALLATION OF THE COMPONENTS WAS NOT WITHIN THE SCOPE OF THE BAILMENT AGREEMENT. FURTHERMORE, THE BAILMENT AGREEMENT IS FOR THE MUTUAL BENEFIT OF THE PARTIES. IN THIS CASE, THE AIRCRAFT WAS RENDERED NON- OPERATIONAL BY THE GOVERNMENT DIRECTED REMOVALS AND CEASED TO BE OF ANY BENEFIT TO THE CONTRACTOR AS HE COULD NO LONGER USE IT TO PERFORM PROJECTS.

"IT IS THEREFORE THE OPINIONS OF THIS OFFICE THAT THE TERMS OF THE BAILMENT AGREEMENT ARE INAPPLICABLE TO THE REINSTALLATION OF COMPONENTS, AND THAT THE CLAIM INSOFAR AS IT INCLUDES SUCH REINSTALLATION SHOULD BE CONSIDERED AS ONE WHERE THE CONTRACTOR PERFORMS WORK WITHOUT CONTRACTUAL AUTHORIZATION FROM WHICH THE GOVERNMENT BENEFITS." THE ABOVE REPORT PURPORTS TO ESTABLISH THAT UPON COMPLETION OF THE TEST PROGRAM IN JULY 1964 THE AIRCRAFT WAS IN THE SAME CONDITION AS WHEN RECEIVED BY VERTOL EXCEPT FOR NORMAL WEAR AND TEAR; THAT THE AIRCRAFT WAS NOT RETURNED AS THAT TIME BECAUSE THE GOVERNMENT DID NOT MAKE A DECISION AS TO ITS DISPOSITION UNTIL THE SPRING OF 1965; AND THAT DURING THE PERIOD BETWEEN PROGRAM COMPLETION AND THE DISPOSITION DECISION THE GOVERNMENT DIRECTED THE TRANSFER OF VARIOUS COMPONENTS FROM THE AIRCRAFT TO OTHER AIRCRAFT, WHICH ACTION PREVENTED VERTOL FROM MAINTAINING THE AIRCRAFT IN A NORMAL MANNER AND REQUIRED PRESERVATION OF THE AIRCRAFT WITH THE REMOVAL AND STORAGE OF THE REMAINING COMPONENTS.

DOCUMENTARY EVIDENCE CLEARLY SUPPORTING THE BASIS ADVANCED FOR PAYMENT WAS NOT FURNISHED WITH THE LETTER OF NOVEMBER 14, AND WE FEEL THAT WE COULD NOT ACT ON THE BASIS OF SUCH REPRESENTATIONS WITHOUT DISREGARDING SEEMINGLY INCONSISTENT INFORMATION CONTAINED IN PREVIOUS REPORTS AND DOCUMENTS FURNISHED BY YOUR DEPARTMENT. WE FIND NOTHING TO JUSTIFY AN ASSUMPTION THAT THE LATEST REPORT IS MORE IN CONFORMITY WITH ACTUAL CIRCUMSTANCES SURROUNDING THE PRESERVATION OF THE AIRCRAFT AND REMOVAL AND STORAGE OF ITS COMPONENTS THAN THE PRIOR INFORMATION OF RECORD WHICH WAS SUPPLIED IN MUCH CLOSER PROPINQUITY TO THE EVENTS INVOLVED. THE FOLLOWING RESUME WILL ILLUSTRATE SOME OF THE SEEMINGLY INCONSISTENCIES BETWEEN STATEMENTS OF FACT IN THE REPORT OF NOVEMBER 14 AND STATEMENTS CONTAINED IN THE OTHER REPORTS AND DOCUMENTS FURNISHED BY YOUR DEPARTMENT IN CONNECTION WITH THE SUBJECT CLAIM: 1. THE NOVEMBER 14 REPORT INDICATES THAT THE TEST PROGRAM WAS COMPLETED IN JULY 1964, WHEREAS THE CONTRACT ADMINISTRATOR'S REPORT OF OCTOBER 15, 1965, INDICATES THAT VERTOL COMPLETED THE TEST PROGRAM IN OCTOBER 1964.

2. THE NOVEMBER 14 LETTER REPORTS THAT UPON COMPLETION OF THE TEST PROGRAM THE AIRCRAFT WAS IN THE SAME CONDITION AS WHEN RECEIVED BY VERTOL EXCEPT FOR NORMAL WEAR AND TEAR, WHEREAS THE REPORT OF JUNE 8, 1967, INDICATES THAT VERTOL FIRST STRIPPED THE AIRCRAFT OF STANDARD EQUIPMENT, OUTFITTED IT WITH VARIOUS AND SUNDRY DEVICES AND COMPONENTS, AND THEN SUBJECTED THE AIRCRAFT TO STRINGENT TEST PROGRAMS, AND THAT THE AIRCRAFT WAS PRESERVED AT THE POINT OF COMPLETION OF THE FINAL PROJECT TEST.

3. THE NOVEMBER 14 LETTER STATES THAT THE AIRCRAFT WAS NOT RETURNED TO THE GOVERNMENT UPON COMPLETION OF THE TEST PROGRAMS BECAUSE THE GOVERNMENT HAD NOT MADE A DECISION AS TO ITS DISPOSITION. THE CONTRACT ADMINISTRATOR'S REPORT OF OCTOBER 15, 1965, STATES THAT THE CONTRACTOR DID NOT NOTIFY THE GOVERNMENT OFFICIALLY THAT THE TEST PROGRAM WAS COMPLETED OR REQUEST DISPOSITION INSTRUCTIONS, AND NAVY INDICATES IN THE REPORT OF AUGUST 2, 1966, THAT VERTOL HAD AN EXISTING OBLIGATION UNDER THE BAILMENT CONTRACT TO OFFER RETURN OF THE AIRCRAFT TO THE GOVERNMENT.

4. THE NOVEMBER 14 LETTER STATES THAT DURING THE PERIOD BETWEEN COMPLETION OF THE TEST PROGRAM IN JULY 1964 AND THE SPRING OF 1965 THE GOVERNMENT DIRECTED VERTOL TO TRANSFER COMPONENTS FROM THE AIRCRAFT TO OTHER AIRCRAFT, WHICH TRANSFERS RENDERED THE AIRCRAFT NONOPERATIONAL SO THAT IT COULD NO LONGER BE USED BY THE CONTRACTOR TO PERFORM PROJECTS FOR THE GOVERNMENT. IT IS FURTHER STATED THAT NORMAL MAINTENANCE WAS NO LONGER SUFFICIENT TO SAFEGUARD THE AIRCRAFT, AND THE CONTRACTOR PROCEEDED TO PRESERVE THE AIRCRAFT WHICH ENTAILED THE REMOVAL AND STORAGE OF VARIOUS REMAINING COMPONENTS. CONTRARY TO SUCH STATEMENTS, NAVY REPORTED IN ITS LETTER OF JUNE 8, 1967, THAT THE AIRCRAFT WAS PRESERVED AT THE POINT OF COMPLETION OF THE FINAL PROJECT TEST; NAVY'S LETTER OF AUGUST 2, 1966, STATES THAT AN INVESTIGATION OF THE FACTS OF THE SITUATION HAS REVEALED THAT, UPON COMPLETION OF THE VARIOUS PROJECTS IT WAS TO PERFORM WITH THE HELICOPTER IN QUESTION, VERTOL PRESERVED THE AIRCRAFT WITHOUT FORMALLY NOTIFYING THE GOVERNMENT, AND THAT VERTOL HAS CONCEDED TO ONE OF THE NAVY'S LOCAL REPRESENTATIVES THAT IT WAS REMISS IN THIS COURSE OF CONDUCT (IT WAS ADMINISTRATIVELY RECOMMENDED THEREFORE THAT THE COST OF DEPRESERVATION BE SUBTRACTED FROM THE AMOUNT CLAIMED BY VERTOL): AND THE CONTRACT ADMINISTRATOR'S REPORT OF OCTOBER 15, 1965, STATES THAT AFTER COMPLETION OF THE TEST PROGRAM IN OCTOBER 1964, THE CONTRACTOR DISMANTLED AND PRESERVED THE AIRCRAFT FOR LONG-TERM STORAGE, AND THAT THE CONTRACTOR "ARGUES THAT THIS WAS DONE IN ORDER TO AVOID DAILY INSPECTIONS AND MAINTENANCE." CONCERNING THE STATEMENT IN THE LETTER OF NOVEMBER 14 THAT THE TRANSFERS RENDERED THE AIRCRAFT NONOPERATIONAL SO THAT IT COULD NO LONGER BE USED BY THE CONTRACTOR TO PERFORM PROJECTS, IT SHOULD BE NOTED THAT IN THE SAME LETTER IT IS STATED THAT THE TEST PROGRAM FOR WHICH THE AIRCRAFT WAS BAILED HAD BEEN COMPLETED.

ON THE BASIS OF THE RECORD, WHICH WE HAVE SET OUT IN CONSIDERABLE DETAIL, AND IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE CLEARLY SUPPORTING THE BASIS ON WHICH PAYMENT IS PROPOSED IN THE LETTER OF NOVEMBER 14, WE CANNOT CONCLUDE THAT THE GOVERNMENT HAD PRIMARY RESPONSIBILITY EITHER FOR THE LONG-TERM PRESERVATION OF THE AIRCRAFT OR FOR THE REMOVAL AND REINSTALLATION OF ALL OF THOSE COMPONENTS FOR WHICH REINSTALLATION CHARGES ARE INCLUDED IN THE CLAIM.

OUR POSITION IN THIS MATTER HAS ALWAYS BEEN, AND REMAINS, FAVORABLE TO COMPENSATING VERTOL FOR THAT ADDITIONAL WORK WHICH WAS ESSENTIAL IN READYING THE AIRCRAFT FOR THE FLIGHT TO JACKSONVILLE, AND WHICH WOULD NOT HAVE BEEN REQUIRED FOR A RETURN UNDER THE BAILMENT CONTRACT. THERE WOULD ALSO APPEAR TO BE MERIT IN COMPENSATING VERTOL FOR THE REINSTALLATION OF THOSE COMPONENTS REMOVED AT THE DIRECTION OF THE GOVERNMENT FOR USE ON OTHER AIRCRAFT, AS DISTINGUISHED FROM THE REINSTALLATION OF THOSE COMPONENTS WHICH WERE REMOVED TO PERFORM TEST PROGRAMS OR IN CONNECTION WITH THE LONG-TERM PRESERVATION OF THE AIRCRAFT. PAYMENT OF ANY PART OF THE CLAIM MAY NOT BE AUTHORIZED, HOWEVER, UNTIL THE EXTRA WORK HAS BEEN IDENTIFIED AND THE REASONABLE VALUE THEREOF SEGREGATED FROM OTHER ITEMS OF WORK AND EXPENSE INVOLVED IN THE REDELIVERY TO THE GOVERNMENT.

IN THESE CIRCUMSTANCES AND CONSIDERING THE LONG PERIOD OF TIME VERTOL'S CLAIM WITH YOUR DEPARTMENT HAS BEEN PENDING, WE DO NOT BELIEVE THAT WE WOULD BE JUSTIFIED IN CONTINUING TO HOLD THE CLAIM AS AN OPEN MATTER BEFORE THIS OFFICE. WE WOULD, HOWEVER, BE GLAD TO CONSIDER THE MATTER FURTHER UPON SUBMISSION OF DOCUMENTARY EVIDENCE WHICH CLEARLY SUBSTANTIATES THE CONCLUSIONS SET OUT IN THE NOVEMBER 14 REPORT, OR UPON RECEIPT OF A MUTUALLY AGREEABLE SETTLEMENT IN WHICH THE ITEMS AGREED UPON AND INCLUDED THEREIN ARE IDENTIFIED IN SUCH A MANNER AS TO CLEARLY INDICATE THEIR ALLOWABILITY UNDER THE CRITERIA SET OUT ABOVE.