B-161619, SEP 9, 1969

B-161619: Sep 9, 1969

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A CONTRACTOR WHO IS TO BE DECLARED IN DEFAULT MUST HAVE THE DISPUTE DETERMINED UNDER THE DISPUTES CLAUSE PROCEDURE PRIOR TO ANY ACTION CAN BE TAKEN BY GAO. WE ARE UNABLE TO RENDER THE ASSISTANCE REQUESTED. WHEREUNDER YOU WERE OBLIGATED TO PERFORM THE FOLLOWING SERVICES BY OCTOBER 15. THE CONTRACTING OFFICER HAS REPORTED THAT THE ORDERED INSTALLATION WAS NEVER COMPLETED BY YOU DESPITE DEMANDS THAT THE WORK BE PERFORMED TIMELY. THAT IT IS FOR THIS REASON THAT PAYMENT UNDER THE PURCHASE ORDER HAS BEEN WITHHELD. WE ARE ALSO INFORMED THAT IT IS HIS INTENTION TO TERMINATE YOUR RIGHT TO PROCEED UNDER THE PURCHASE ORDER PURSUANT TO THE DEFAULT PROVISIONS CONTAINED IN CLAUSE 18 OF THE ADDITIONAL GENERAL PROVISIONS OF THE PURCHASE ORDER.

B-161619, SEP 9, 1969

CONTRACTS - DISPUTES - ADMINISTRATIVE REMEDY DECISION TO LAPP CO., INC. CONCERNING CLAIM AGAINST CORPS OF ENGINEERS FOR SERVICES IN INSTALLING RADIO EQUIPMENT. UNDER A PURCHASE ORDER CONTAINING A DISPUTES PROCEDURE, A CONTRACTOR WHO IS TO BE DECLARED IN DEFAULT MUST HAVE THE DISPUTE DETERMINED UNDER THE DISPUTES CLAUSE PROCEDURE PRIOR TO ANY ACTION CAN BE TAKEN BY GAO.

TO LAPP COMPANY, INC.:

WE REFER TO A COPY OF YOUR LETTER OF JUNE 23, 1969, ENCLOSING A COPY OF YOUR INVOICE NO. 11682, IN THE AMOUNT OF $1,150, REPRESENTING A CLAIM AGAINST THE CORPS OF ENGINEERS, JACKSONVILLE DISTRICT, FOR SERVICES RENDERED IN INSTALLING CERTAIN RADIO EQUIPMENT FURNISHED BY YOU UNDER CONTRACT NO. DACW-33-67-C-0154. YOU SEEK OUR ASSISTANCE IN EFFECTING PROMPT PAYMENT OF YOUR INVOICE. ON THE BASIS OF DOCUMENTED ADVICE FROM THE CORPS OF ENGINEERS, WE ARE UNABLE TO RENDER THE ASSISTANCE REQUESTED.

YOUR CLAIM FOR PAYMENT APPARENTLY ARISES UNDER PURCHASE ORDER NO. OD 69- 63 DATED SEPTEMBER 26, 1968, WHEREUNDER YOU WERE OBLIGATED TO PERFORM THE FOLLOWING SERVICES BY OCTOBER 15, 1968, FOR THE SUM OF $1,150:

"FURNISH SERVICES OF MANUFACTURER'S PERSONNEL TO CONNECT-UP; CHECK OUT; TUNE AND ADJUST THE NEW DISTRICT OFFICE SSB RADIO SET. WORK SHALL INCLUDE FURNISHING AND INSTALLING NECESSARY RELAYS FOR ANTENNA TUNER; MAKE CONNECTIONS TO GOVERNMENT LEASED TELEPHONE LINES FOR REMOTE CONTROL CONSOLE OPERATION; CONNECTION OF ANTENNA AND TUNER LEADS TO THE TRANSCEIVER, AND CONNECTION OF POWER SUPPLY TO THE TRANSCEIVER. TUNE, ADJUST AND PLACE IN FIRST-CLASS OPERATING CONDITION AS NECESSARY FOR OPTIMUM PERFORMANCE; ALL AS DIRECTED BY REPRESENTATIVE OF THE CONTRACTING OFFICER."

THE CONTRACTING OFFICER HAS REPORTED THAT THE ORDERED INSTALLATION WAS NEVER COMPLETED BY YOU DESPITE DEMANDS THAT THE WORK BE PERFORMED TIMELY, AND THAT IT IS FOR THIS REASON THAT PAYMENT UNDER THE PURCHASE ORDER HAS BEEN WITHHELD. WE ARE ALSO INFORMED THAT IT IS HIS INTENTION TO TERMINATE YOUR RIGHT TO PROCEED UNDER THE PURCHASE ORDER PURSUANT TO THE DEFAULT PROVISIONS CONTAINED IN CLAUSE 18 OF THE ADDITIONAL GENERAL PROVISIONS OF THE PURCHASE ORDER.

WE NOTE THAT UNDER CLAUSE 5 OF THE PURCHASE ORDER GENERAL PROVISIONS, ENTITLED "DISPUTES," ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE PURCHASE ORDER WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER, WHO SHALL REDUCE HIS DECISION TO WRITING AND FURNISH A COPY THEREOF TO THE CONTRACTOR; ALSO, THAT 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 APPEALS THE DECISION TO THE HEAD OF THE DEPARTMENT.

IT IS WITHIN THE PROVINCE OF THE CONTRACTING OFFICER TO DETERMINE FACTUALLY WHETHER PERFORMANCE UNDER THE PURCHASE ORDER HAS BEEN PROPERLY ACCOMPLISHED OR WHETHER FAILURE THEREOF IS EXCUSABLE UNDER THE TERMS OF THE DEFAULT CLAUSE. WHEN A DISPUTE EXISTS REGARDING THE FACTS ON WHICH DEFAULT MAY BE BASED, SUCH DISPUTE BECOMES A MATTER FOR DETERMINATION UNDER THE DISPUTES CLAUSE.

IT IS A WELL-ESTABLISHED RULE THAT WHERE, AS HERE, THE PURCHASE ORDER SETS FORTH A PROCEDURE UNDER WHICH DISPUTES OF THE NATURE HERE INVOLVED ARE TO BE DECIDED ADMINISTRATIVELY, THE ADMINISTRATIVE REMEDY SO PROVIDED MUST BE EXHAUSTED BY THE CONTRACTOR BEFORE A CLAIM DEPENDENT UPON A FACTUAL SITUATION DETERMINABLE PURSUANT TO THE PROCEDURE REQUIRED BY THE CONTRACT IS COGNIZABLE BY OUR OFFICE. SEE UNITED STATES V. JOSEPH A. HOLPUCH CO., 328 U.S. 234; UNITED STATES V. CALLAHAN WALKER CONSTRUCTION CO., 317 U.S. 56. LIKEWISE, ANY QUESTION AS TO THE ACCURACY OF THE FACTS ON WHICH THE DEFAULT MAY BE BASED MUST BE SETTLED ADMINISTRATIVELY BEFORE OUR OFFICE MAY CONSIDER THE MATTER.

ACCORDINGLY, WE MAY NOT TAKE ANY ACTION WITH RESPECT TO YOUR CLAIM FOR PAYMENT UNTIL THE PROCEDURES PRESCRIBED BY CLAUSE 5 OF THE PURCHASE ORDER HAVE BEEN EXHAUSTED BY YOU.