B-161411, AUG. 3, 1967

B-161411, AUG. 3, 1967

CONTRACTS - DISPUTES DECISION TO CELODYNE CORP. REVIEWING DETERMINATION OF ASBCA DENYING CLAIM FOR ADDITIONAL COSTS UNDER CONTRACT WITH NAVAL TRAINING DEVICE CENTER, PORT WASHINGTON, N.Y., FOR SUPPLYING MAD COMPENSATION TRAINER. CLAIM FOR ADDITIONAL COSTS AND RENT BY CONTRACTOR WHO DID NOT SUPPORT CLAIM NOR INDICATE THAT COSTS MIGHT HAVE BEEN OFFSET BY SAVINGS WHEN GOVT. BY SUPPLEMENTAL AGREEMENT AGREED TO HANDLE THE TESTING REQUIREMENTS WHICH WERE NOT DEFINITE IN THE CONTRACT AND THEREBY RELIEVE CONTRACTOR OF OBLIGATION FOR RETURN PACKING AND SHIPPING OF TESTING EQUIPMENT HAS PRESENTED SUCH A DOUBTFUL CLAIM THAT IT MAY NOT BE PAID AND ON THE BASIS OF THE EVIDENCE THE DECISION OF ASBCA DENYING THE CLAIM MAY NOT BE REGARDED AS NOT MEETING THE STANDARDS OF THE WUNDERLICH ACT, 41 U.S.C. 321, TO BE ACCORDED FINALITY.

TO MR. RUSSELL S. RYMER, PRESIDENT, CELODYNE CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 28, 1967, WITH ENCLOSURES, REQUESTING OUR REVIEW OF THE DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS DATED MARCH 24, 1966, CASE NO. 10840, DENYING YOUR APPEAL FROM THE CONTRACTING OFFICER'S DISALLOWANCE OF YOUR CLAIM FOR $3,335.00 AS ADDITIONAL COSTS ALLEGED TO HAVE BEEN INCURRED UNDER NAVY CONTRACT NO. N140/61339/77018B BY REASON OF ERRONEOUS ACTIONS OF THE GOVERNMENT. YOUR REQUEST IS PRESENTED ON THE BASIS THAT "THE DECISION AND SUBSEQUENT DENIAL OF MOTION FOR RECONSIDERATION CONSTITUTE AN ARBITRARY USE OF DISCRETION, CONTRARY TO THE EVIDENCE BEFORE THE BOARD.'

THE CONTRACT, DATED JUNE 17, 1964, CALLED FOR TWO MAD COMPENSATION TRAINERS, DEVICE 15G7 UNDER ITEM 1, AND FOR TWO SETS OF REPAIR PARTS UNDER ITEM 2, TO BE DELIVERED WITHIN FOUR MONTHS AFTER DATE OF CONTRACT. AS A PART OF THE ACCEPTANCE TESTS, THE TRAINERS WERE REQUIRED TO BE CONNECTED TO, AND OPERATED WITH, AN AN/ASQ-8 DETECTING SET WHICH WAS TO BE PROVIDED AS GOVERNMENT FURNISHED MATERIAL ALONG WITH A HANDBOOK, AN 16-30ASQ8-3, WHICH CONTAINED THE NECESSARY INSTRUCTIONS, PHOTOGRAPHS AND DIAGRAMS FOR INSTALLATION, OPERATION, MAINTENANCE AND REPAIR OF THE DETECTING SET. THE DETECTING SET WAS DELIVERED AT YOUR PLANT IN VALLEY STREAM, NEW YORK, IN 19 CONTAINERS. THE BOARD FOUND THAT THE CONTRACT AND SPECIFICATIONS ARE NOT DEFINITE AS TO WHICH PARTY TO THE CONTRACT HAD THE RESPONSIBILITY FOR ASSEMBLING THE SET IN ORDER THAT THE SPECIFIED ACCEPTANCE TESTING OF THE TRAINERS COULD BE PERFORMED, AND TESTIMONY AS TO PRE-BID DISCUSSIONS REGARDING SUCH RESPONSIBILITY IS CONTRADICTORY. WHILE THE CONTRACTING OFFICER'S INTENTION AND UNDERSTANDING WERE THAT THE DETECTING SET WOULD BE ASSEMBLED AND CONNECTED TO THE TRAINER BY CELODYNE, HIS FIRST INFORMATION AS TO YOUR OPPOSITE POSITION WAS RECEIVED WHEN HE CALLED YOU AROUND THE FIRST OF OCTOBER 1964 TO INQUIRE AS TO WHETHER THE CONTRACT COMPLETION DATE OF OCTOBER 17, 1964, WOULD BE MET. AT THAT TIME YOU ADVISED THE CONTRACTING OFFICER THAT YOU WOULD BE A WEEK BEYOND THE OCTOBER 17 DATE. BY LETTER OF OCTOBER 8 YOU REPORTED TO THE CONTRACTING OFFICER THAT A SURVEY OF THE GOVERNMENT FURNISHED MATERIAL SHIPPED TO YOUR FACILITY REVEALED THAT TWO OF THE INVOICED ITEMS HAD NOT BEEN RECEIVED AND THAT:

"IT WAS FURTHER LEARNED THAT THE AN/AQ8 DETECTING SET MUST BE ASSEMBLED TO PERMIT US TO CHECK THE TRAINING AIDS CALLED FOR UNDER THIS CONTRACT AT THE TIME OF INSPECTION. AS THIS IS GOVERNMENT FURNISHED EQUIPMENT, WE WILL APPRECIATE YOUR MAKING ARRANGEMENTS FOR THE ASSEMBLY OF THE EQUIPMENT AND SO ADVISING US.'

IN RESPONSE THERETO, YOU WERE ADVISED BY COMMUNICATION DATED NOVEMBER 2, 1964, FROM THE NAVAL TRAINING DEVICE CENTER, PORT WASHINGTON, NEW YORK, THE REQUISITIONING ACTIVITY, THAT IN ORDER TO EXPEDITE TESTING OF THE TRAINERS, ARRANGEMENTS WERE BEING MADE TO TRANSPORT THE TWO UNITS TO THE NAVAL AIR STATION, FLOYD BENNETT FIELD, WHERE A DETECTING SET WAS INSTALLED WITH A SIMILAR UNIT. IN ACCORDANCE THEREWITH THE INSPECTION AND ACCEPTANCE CLAUSE OF THE CONTRACT WAS MODIFIED BY SUPPLEMENTAL AGREEMENT, EFFECTIVE DECEMBER 3, 1964 (MODIFICATION NO. 1), TO PROVIDE FOR SUCH TESTING BY THE GOVERNMENT, AFTER WHICH THE UNITS WOULD BE TRANSPORTED BACK TO CELODYNE FOR PRESERVATION, PACKAGING, MARKING AND DELIVERY AS SPECIFIED IN THE CONTRACT. NO DATE WAS SPECIFIED FOR THE TESTING, HOWEVER, THE GOVERNMENT WAS REQUIRED TO GIVE THREE DAYS NOTICE BEFORE PICKING UP THE UNITS. THE AGREEMENT PROVIDED THAT AS A RESULT OF SUCH MODIFICATION THE CONTRACT PRICE REMAINED UNCHANGED.

AFTER THE TRAINERS WERE PICKED UP FOR TESTING ON DECEMBER 23, 1964, IT DEVELOPED THAT THE TESTING EQUIPMENT AT FLOYD BENNETT FIELD WAS INOPERABLE, AND THE UNITS WERE RETURNED TO YOUR PLANT ON THE SAME DAY. UNDER DATE OF JANUARY 22, 1965, THE CONTRACTING OFFICER OFFERED A SUPPLEMENTAL AGREEMENT, WHICH WOULD HAVE EXTENDED THE TIME OF DELIVERY TO FEBRUARY 22 AT NO INCREASE IN THE CONTRACT PRICE. YOU REFUSED TO AGREE, AND DEMANDED STORAGE COSTS FROM OCTOBER 17, 1964. ON FEBRUARY 22, 1965, THE CONTRACTING OFFICER ISSUED A UNILATERAL CHANGE ORDER EXTENDING THE DELIVERY TIME TO MARCH 10, 1965, AT NO INCREASE IN THE CONTRACT PRICE. THE UNITS REMAINED IN YOUR PLANT UNTIL MARCH 8, 1965, WHEN THE UNITS, PACKAGING MATERIAL AND TEST EQUIPMENT WERE PICKED UP BY PERSONNEL FROM THE NAVAL TRAINING DEVICE CENTER, THEREBY RELIEVING YOU OF THE PACKING AND SHIPPING REQUIREMENTS OF THE CONTRACT. THE GOVERNMENT'S REPORT INDICATES THAT THE ARTICLES PICKED UP OCCUPIED AN ACTUAL TOTAL SPACE OF 217 CUBIC FEET AND WEIGHED 1356 POUNDS. WHILE YOU PRESENTED YOUR INVOICE FOR THE TWO UNITS IN THE AMOUNT OF $4,350 TO THE NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, ON FEBRUARY 9, 1965, AND RECEIVED PAYMENT BY VOUCHER DATED FEBRUARY 19, 1965, THE RECORD DOES NOT INDICATE THAT YOU EVER SUPPLIED THE TWO SETS OF EQUIPMENT REPAIR PARTS CALLED FOR UNDER ITEM 2 OF THE CONTRACT AT THE ADDITIONAL CONTRACT PRICE OF $80. FURTHER, YOUR INVOICE STATED THAT THE UNITS WERE "SHIPPED TO U.S.N.T.D.C. PORT WASHINGTON, N.Y.' AND "SHIPPED VIA OUR TRUCK," ALTHOUGH THE UNITS WERE, IN FACT, THEN AT YOUR PLANT.

YOUR CLAIM REPRESENTS RENT ($2,500) FOR THE ENTIRE PLANT CONTAINING 5000 SQUARE FEET OF SPACE FOR A FIVE MONTH PERIOD RUNNING FROM OCTOBER 17, 1964, AND FOR ADMINISTRATIVE COSTS ($400) DURING THAT PERIOD PLUS 15 PERCENT PROFIT THEREON ($435). THE RENT CHARGE IS BASED UPON A LEASE CONTAINING A PROVISION UNDER WHICH THE LANDLORD AGREED TO GRANT A MORATORIUM STARTING JANUARY 1, 1964, FOR THE RENT DUE THEREUNDER, AND CONTINUING ON A MONTH TO MONTH BASIS FOR SUCH PERIOD OF TIME AS WAS REQUIRED BY THE TENANT TO START PRODUCTION OPERATIONS. THE PRESIDENT OF THE LANDLORD CORPORATION TESTIFIED IN THE HEARINGS BEFORE THE BOARD THAT SUCH PROVISION WAS WRITTEN IN THE SENSE THAT YOUR FIRM, BEING SHORT OF FUNDS, WOULD NOT BE CHARGED FOR RENT WHILE ATTEMPTING TO OBTAIN WORK. THE ADMINISTRATIVE COSTS, WHICH ARE SET FORTH AS 80 HOURS AT $5 AN HOUR, ARE NOT SUPPORTED BY DATA OR INDIVIDUAL PARTICULARS SHOWING THE COMPOSITION OF EITHER THE TIME OR RATE FACTORS.

CONCERNING THE RENTAL PORTION OF YOUR CLAIM, THE BOARD STATED THAT "SINCE IT DOES NOT APPEAR THAT ANY OF THE RENT WAS IN FACT PAID, OR THAT IT WAS DUE AND OWING, THERE IS NO BASIS FOR ANY ALLOWANCE ON THIS ACCOUNT.' REGARDING THE ADMINISTRATIVE COSTS IT SAID "THERE IS LIKEWISE NO EVIDENCE TO SUPPORT THE CLAIM FOR ADMINISTRATIVE COSTS ALLEGED TO HAVE BEEN INCURRED.' THE BOARD THEREAFTER CONCLUDED:

"ANY EQUITABLE ADJUSTMENT MUST TAKE ACCOUNT OF THE BENEFITS RECEIVED AS WELL AS OF THE ADDITIONAL COSTS INCURRED. IN THE ABSENCE OF FURTHER EVIDENCE WE CAN CONCLUDE ONLY THAT THE TWO SUBSTANTIALLY OFFSET EACH OTHER IN THIS CASE. APPELLANT IS ENTITLED TO NO FURTHER INCREASE IN PRICE.'

AS INDICATED BY THE ABOVE STATEMENTS OF THE BOARD, ITS CONCLUSION IS NOT PREMISED SOLELY UPON SPECIFIC FINDINGS REGARDING DISPUTED QUESTIONS OF FACT, BUT IS BASED TO A LARGE DEGREE UPON YOUR FAILURE TO SUPPORT YOUR CLAIM WITH ADEQUATE EVIDENCE TO ESTABLISH THAT YOU ACTUALLY PAID THE ADDITIONAL COSTS CLAIMED, OR THAT YOU INCURRED A RESPONSIBILITY FOR PAYMENT OF SUCH COSTS, OR THAT ANY ADDITIONAL COSTS YOU MAY HAVE INCURRED WERE NOT OFFSET BY SAVINGS WHICH ACCRUED TO YOU BECAUSE YOU DID NOT HAVE TO PACK AND SHIP EITHER THE ITEMS OR THE TEST EQUIPMENT. IN THIS CONNECTION IT SHOULD BE NOTED THAT OUR REVIEW MUST BE BASED UPON, AND LIMITED TO SUCH EVIDENCE AS WAS SUBMITTED TO THE BOARD. SEE UNITED STATES V. CARLO BIANCHI AND CO., 373 U.S. 709. FROM AN EXAMINATION OF THE RECORD OF THE PROCEEDINGS BEFORE THE BOARD, INCLUDING THE TESTIMONY OF WITNESSES, WE CANNOT CONCLUDE THAT THE DETERMINATIONS BY THE BOARD WERE FRAUDULENT, OR CAPRICIOUS, OR ARBITRARY, OR SO GROSSLY ERRONEOUS AS TO IMPLY BAD FAITH, OR THAT THEY WERE UNSUBSTANTIATED BY THE RECORD BEFORE THE BOARD. SEE 41 U.S.C. 321.

IN ADDITION WE BELIEVE THAT IRRESPECTIVE OF WHETHER YOU PAID RENT FOR THE PERIOD PRIOR TO THE TIME WHEN THE UNITS WERE PICKED UP BY THE GOVERNMENT FOR TESTING PURSUANT TO THE CONTRACT MODIFICATION OF DECEMBER 3, 1964, OR WHETHER RENT WAS DUE AND OWING FOR THAT PERIOD, THE ALLOWANCE OF ANY SUCH COSTS FOR THAT PERIOD IS PRECLUDED BY THE MODIFICATION PROVISION STATING THAT AS A RESULT OF THE CONTRACT MODIFICATION "THE CONTRACT PRICE REMAINS UNCHANGED.' FURTHER, WE FIND NOTHING IN THE RECORD WHICH SUPPORTS YOUR PRESENT CONTENTION THAT SALE OF THE PLANT WAS DELAYED UNTIL JULY 1965, OR THAT ANY DELAY WHICH MAY HAVE OCCURRED IN SALE OF THE PLANT WAS DUE TO ACTIONS OF THE GOVERNMENT.

IN THESE CIRCUMSTANCES WE FEEL THAT YOUR CLAIM IS OF SUCH DOUBTFUL VALIDITY THAT IT MAY NOT BE PAID BY THIS OFFICE. ACCORDINGLY, ON THE BASIS OF THE EVIDENCE OF RECORD WE MUST CONCUR IN THE BOARD'S DECISION THAT YOU ARE ENTITLED TO NO FURTHER INCREASE IN THE CONTRACT PRICE.