B-160639, JAN. 23, 1967

B-160639: Jan 23, 1967

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TO EMPIRE WIRE AND CABLE COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 29. 000 FEET WAS DUE BY SEPTEMBER 11. 000 FEET WAS DUE OCTOBER 11. 000 FEET WAS DUE NOVEMBER 11. 000 FEET WAS DUE DECEMBER 11. 000 FEET WAS DUE JANUARY 11. 000 FEET WAS DUE FEBRUARY 11. 000 FEET WAS DUE MARCH 11. WHEREIN YOU ADVISED THAT: "DUE TO COPPER STRIKES IN THE PAST 60 DAYS PLANT WAS SHORT OF COPPER. THE COPPER MINES ARE BACK AT WORK AND NOW COPPER WILL BE DELIVERED TO THE MILL.'. THIS LETTER WAS THE GOVERNMENT'S FIRST INDICATION FROM YOU THAT DELIVERY WOULD NOT BE TIMELY FULFILLED. YOU WERE ADVISED BY LETTER DATED SEPTEMBER 25. ANOTHER LETTER WAS RECEIVED FROM YOU ON NOVEMBER 18. CONFIRMING A TELEPHONE CONVERSATION AND STATING THAT "THERE HAVE BEEN PRICE INCREASES SINCE AWARDING OF THE CONTRACT.

B-160639, JAN. 23, 1967

TO EMPIRE WIRE AND CABLE COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 29, 1966, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $2,915.50, REPRESENTING EXCESS COSTS INCURRED BY THE UNITED STATES BY REASON OF YOUR DEFAULT UNDER CONTRACT NO. FA-64AC-637-2, AWARDED YOU ON JUNE 8, 1964, BY THE FEDERAL AVIATION AGENCY (FAA).

UNDER THE TERMS OF THE CONTRACT YOU AGREED TO FURNISH THE AGENCY WITH 175 THOUSAND FEET OF WIRE, NO. 2 AWG, 600 VOLT, 7 STRAND, TINNED, AT A PRICE OF $124.72 PER THOUSAND FEET. THE CONTRACT DELIVERY SCHEDULE REQUIRED YOU TO DELIVER 10,000 FEET 90 CALENDARS DAYS AFTER AWARD AND 30,000 FEET EACH 30 CALENDAR DAY PERIOD THEREAFTER UNTIL COMPLETION OF THE CONTRACT. THUS, THE INITIAL DELIVERY SHIPMENT OF 10,000 FEET WAS DUE BY SEPTEMBER 11, 1964. THE SECOND SHIPMENT OF 30,000 FEET WAS DUE OCTOBER 11, 1964; THE THIRD SHIPMENT OF 30,000 FEET WAS DUE NOVEMBER 11, 1964; THE FOURTH SHIPMENT OF 30,000 FEET WAS DUE DECEMBER 11, 1964; THE FIFTH SHIPMENT OF 30,000 FEET WAS DUE JANUARY 11, 1965; THE SIXTH SHIPMENT OF 30,000 FEET WAS DUE FEBRUARY 11, 1965; AND THE LAST SHIPMENT OF 15,000 FEET WAS DUE MARCH 11, 1965.

YOU DID NOT DELIVER, OR ATTEMPT TO DELIVER, ANY AMOUNT OF THE WIRE UNDER THE CONTRACT. AS A RESULT OF A ROUTINE ADMINISTRATIVE FOLLOW-UP FOLLOWING YOUR FAILURE TO DELIVER THE INITIAL SHIPMENT OF 10,000 FEET OF WIRE, YOU DISPATCHED AN UNDATED LETTER WHICH THE GOVERNMENT RECEIVED ON SEPTEMBER 23, 1964, WHEREIN YOU ADVISED THAT:

"DUE TO COPPER STRIKES IN THE PAST 60 DAYS PLANT WAS SHORT OF COPPER. HOWEVER, THE COPPER MINES ARE BACK AT WORK AND NOW COPPER WILL BE DELIVERED TO THE MILL.'

YOUR LETTER FURTHER ADVISED THAT COPPER PRICES HAD RISEN STEEPLY SINCE YOU ENTERED INTO THE CONTRACT, AND THAT YOU WOULD IMMEDIATELY BEGIN SHIPMENTS OF WIRE TO THE GOVERNMENT. THIS LETTER WAS THE GOVERNMENT'S FIRST INDICATION FROM YOU THAT DELIVERY WOULD NOT BE TIMELY FULFILLED. YOU WERE ADVISED BY LETTER DATED SEPTEMBER 25, 1964, THAT IF YOU MADE DELIVERY OF 40,000 FEET OF WIRE BY OCTOBER 11, 1964, THAT THIS WOULD SATISFY THE REQUIRED CONTRACT DELIVERY SCHEDULE. ANOTHER LETTER WAS RECEIVED FROM YOU ON NOVEMBER 18, 1964, CONFIRMING A TELEPHONE CONVERSATION AND STATING THAT "THERE HAVE BEEN PRICE INCREASES SINCE AWARDING OF THE CONTRACT, RESULTING FROM STRIKE.' THE LETTER ALSO INDICATED THAT COPPER WAS AVAILABLE BUT AT PREMIUM RATES. ON NOVEMBER 19, 1964, THE CONTRACTING OFFICER ADVISED YOU THAT THE DELIVERY DATES HAD NOT BEEN MET AND THAT THE FAILURE HAD TO BE CORRECTED WITHIN TEN DAYS OR A WRITTEN EXPLANATION AS TO WHY THE DELIVERY DATES HAD NOT BEEN MET FURNISHED WITHIN THE SAME PERIOD. YOUR LETTER OF NOVEMBER 25, 1964, AGAIN MENTIONED THE STRIKE SITUATION AND THE FACT THAT PRICES SHOULD RETURN TO WHERE THEY WERE BEFORE THE STRIKE BEGAN. ON DECEMBER 2, 1964, A VISIT BY A REPRESENTATIVE OF THE CONTRACTING OFFICE TO YOUR OFFICES REVEALED THAT NO PURCHASE ORDER HAD BEEN ISSUED BY YOU TO ANYONE AS OF THAT DATE FOR THE WIRE, AND THAT YOU HAD AMPLE TIME TO ISSUE A PURCHASE ORDER AND HAVE WIRE ON ORDER BEFORE THE STRIKE OCCURRED.

ACCORDINGLY, ON DECEMBER 4, 1964, THE CONTRACTING OFFICER NOTIFIED YOU BY WIRE THAT THE CONTRACT WAS IN DEFAULT, AND HE CONFIRMED THE SAME BY LETTER DATED DECEMBER 8, 1964. IN THAT ADVICE OF DEFAULT, YOU WERE ADVISED OF YOUR RIGHTS UNDER THE DISPUTES CLAUSE OF THE CONTRACT. NOTWITHSTANDING THE REQUIREMENT IN SUCH CLAUSE THAT APPEAL FROM SUCH DEFAULT DETERMINATION BE MADE WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH DEFAULT DETERMINATION, YOU FAILED TO EXERCISE YOUR APPEAL RIGHTS.

THE CONTRACT END-ITEM WAS THEREFORE PROCURED AGAINST YOUR ACCOUNT PURSUANT TO THE DEFAULT CLAUSE OF THE CONTRACT FROM THE CRESCENT WIRE AND CABLE COMPANY IN THE AMOUNT OF $24,741.50, OR $2,915.50 IN EXCESS OF THE PRICE STATED IN YOUR DEFAULTED CONTRACT.

PARAGRAPH 12 (A) OF THE GENERAL PROVISIONS OF THE CONTRACT READS AS FOLLOWS:

"12. DISPUTES

(A) EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER, WHO SHALL REDUCE HIS DECISION TO WRITING AND MAIL OR OTHERWISE FURNISH A COPY THEREOF TO THE CONTRACTOR. THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE UNLESS, WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH COPY, THE CONTRACTOR MAILS OR OTHERWISE FURNISHES TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO THE SECRETARY. THE DECISION OF THE SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVE FOR THE DETERMINATION OF SUCH APPEALS SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN FRAUDULENT, OR CAPRICIOUS, OR ARBITRARY, OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. IN CONNECTION WITH ANY APPEAL PROCEEDING UNDER THIS CLAUSE, THE CONTRACTOR SHALL BE AFFORDED AN OPPORTUNITY TO BE HEARD AND TO OFFER EVIDENCE IN SUPPORT OF ITS APPEAL. PENDING FINAL DECISION OF A DISPUTE HEREUNDER, THE CONTRACTOR SHALL PROCEED DILIGENTLY WITH THE PERFORMANCE OF THE CONTRACT AND IN ACCORDANCE WITH THE CONTRACTING OFFICER'S DECISION.'

FROM THE FOREGOING, AND SINCE YOU FAILED TO APPEAL TIMELY FROM THE DEFAULT DETERMINATION OF THE CONTRACTING OFFICER, SUCH DETERMINATION OR DECISION MUST BE REGARDED AS A FINAL AND CONCLUSIVE BAR TO YOUR REQUEST FOR RELIEF FROM THE EXCESS COSTS RESULTING FROM YOUR DEFAULT.

THE COURTS HAVE CONSISTENTLY SANCTIONED THE PROCEDURES CONTAINED IN THE STANDARD DISPUTES CLAUSE (INCLUDING THE APPEAL PROVISIONS THEREIN) AND HAVE REFUSED TO RELIEVE CONTRACTORS WHO HAVE NOT PURSUED THEIR CLAIMS IN ACCORDANCE WITH THE TERMS OF SUCH CLAUSE. SEE UNITED STATES V. JOSEPH A. HOLPUCH CO., 328 U.S. 234, WHERE THE UNITED STATES SUPREME COURT SAID AT PAGES 239-240:

"BUT ARTICLE 15 (DISPUTES) IS SOMETHING MORE THAN A DEAD LETTER TO BE REVIVED ONLY AT THE CONVENIENCE OR DISCRETION OF THE CONTRACTOR. IT IS A CLEAR, UNAMBIGUOUS PROVISION APPLICABLE AT ALL TIMES AND BINDING ON ALL PARTIES TO THE CONTRACT. NO COURT IS JUSTIFIED IN DISREGARDING ITS LETTER OR SPIRIT. ARTICLE 15 IS CONTROLLING AS TO ALL DISPUTES "CONCERNING QUESTIONS ARISING UNDER THIS CONTRACT" UNLESS OTHERWISE SPECIFIED IN THE CONTRACT. IT CREATES A MECHANISM WHEREBY ADJUSTMENTS MAY BE MADE AND ERRORS CORRECTED ON AN ADMINISTRATIVE LEVEL, THEREBY PERMITTING THE GOVERNMENT TO MITIGATE OR AVOID LARGE DAMAGE CLAIMS THAT MIGHT OTHERWISE BE CREATED. UNITED STATES V. BLAIR, 321 U.S. 730, 735. THIS MECHANISM, MOREOVER, IS EXCLUSIVE IN NATURE. SOLELY THROUGH ITS OPERATION MAY CLAIMS BE MADE AND ADJUDICATED AS TO MATTERS ARISING UNDER THE CONTRACT. * * * AND IN THE ABSENCE OF SOME CLEAR EVIDENCE THAT THE APPEAL PROCEDURE IS INADEQUATE OR UNAVAILABLE, THAT PROCEDURE MUST BE PURSUED AND EXHAUSTED BEFORE A CONTRACTOR CAN BE HEARD TO COMPLAIN IN A COURT.'

IN THE CIRCUMSTANCES, WE FIND NO LEGAL BASIS TO RELIEVE YOU OF THE EXCESS COSTS INCURRED BY REASON OF YOUR DEFAULT UNDER THE SUBJECT CONTRACT. SEE 42 COMP. GEN. 357; WILLIAM S. HAPPEL V. UNITED STATES, 176 F.SUPP. 787, AFFIRMED 279 F.2D 88. ARRANGEMENTS TO SATISFY THE INDEBTEDNESS OF $2,915.50 SHOULD BE MADE PROMPTLY WITH THIS OFFICE IN ORDER TO AVOID THE INSTITUTION OF MORE FORMAL COLLECTION PROCEDURES.