B-164412, SEP. 23, 1968

B-164412: Sep 23, 1968

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HAMILTON AND SCRIPPS: REFERENCE IS MADE TO YOUR LETTERS DATED MAY 20. EACH OF THE CONTRACTS WAS SUPPORTED BY PERFORMANCE AND PAYMENT BONDS WITH PACIFIC EMPLOYERS INSURANCE COMPANY. WAS DATED DECEMBER 20. ACTUAL WORK UNDER THE CONTRACT WAS COMPLETED AND ACCEPTED ON JULY 25. 779.48 WAS WITHHELD AND FINAL SETTLEMENT HAS NOT BEEN MADE. N62473-67-C-0118 WAS AWARDED TO ANDERSON BY THE DEPARTMENT OF THE NAVY ON FEBRUARY 21. THE CONTRACTOR WAS REQUESTED TO SUBMIT AN ESTIMATE FOR DELETION OF CERTAIN WORK. THE LETTERS WERE SENT VIA REGISTERED MAIL. WERE RETURNED BY THE POST OFFICE WITH THE NOTICE THAT THEY WERE UNABLE TO LOCATE THE ADDRESSEE. 920 WAS ISSUED ON DECEMBER 11. IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO DELETE THE FEW ITEMS OF WORK THAT REMAINED AND TO CLOSE OUT THE CONTRACT.

B-164412, SEP. 23, 1968

TO LUCE, FORWARD, HAMILTON AND SCRIPPS:

REFERENCE IS MADE TO YOUR LETTERS DATED MAY 20, 1968, AND JUNE 21, 1968, WITH ENCLOSURES, IN BEHALF OF THE PACIFIC EMPLOYERS INSURANCE COMPANY, CLAIMING THE BALANCE DUE W. R. ANDERSON ON GOVERNMENT CONTRACTS NO. V6009C -619, VETERANS ADMINISTRATION, LOS ANGELES, CALIFORNIA; NO. N62473-67-C- 0118, NAVAL AIR STATION, NORTH ISLAND, SAN DIEGO, CALIFORNIA; AND NO. N62473-67-C-0144, NAVAL AMPHIBIOUS BASE, CORONADO, CALIFORNIA.

EACH OF THE CONTRACTS WAS SUPPORTED BY PERFORMANCE AND PAYMENT BONDS WITH PACIFIC EMPLOYERS INSURANCE COMPANY, AS SURETY. CONTRACT NO. V6009C-619, BETWEEN W. R. ANDERSON AND THE VETERANS ADMINISTRATION, WAS DATED DECEMBER 20, 1966. ACTUAL WORK UNDER THE CONTRACT WAS COMPLETED AND ACCEPTED ON JULY 25, 1967, BUT DUE TO FAILURE OF THE CONTRACTOR TO SUBMIT FINAL PAYROLLS, PAYMENT IN THE AMOUNT OF $3,779.48 WAS WITHHELD AND FINAL SETTLEMENT HAS NOT BEEN MADE. DURING THE PERIOD JUNE 13, 1967, THROUGH SEPTEMBER 14, 1967, A SUPPLIER AND TWO SUBCONTRACTORS OF ANDERSON ON THIS CONTRACT ADVISED THE CONTRACTING OFFICER THAT THEY HAD NOT BEEN PAID FOR MATERIAL SUPPLIED AND WORK PERFORMED UNDER THIS CONTRACT. BY LETTERS DATED JANUARY 31, 1968, AND FEBRUARY 14, 1968, THE ATTORNEYS FOR THE SURETIES SUBMITTED TO THE CONTRACTING OFFICER DOCUMENTS EVIDENCING SETTLEMENT OF THE SUPPLIER'S AND SUBCONTRACTORS' CLAIMS, AND MAKING DEMAND FOR PAYMENT TO IT OF THE WITHHELD CONTRACT BALANCE.

CONTRACT NO. N62473-67-C-0118 WAS AWARDED TO ANDERSON BY THE DEPARTMENT OF THE NAVY ON FEBRUARY 21, 1967. IN OCTOBER 1967, THE CONTRACTOR WAS REQUESTED TO SUBMIT AN ESTIMATE FOR DELETION OF CERTAIN WORK. THE CONTRACTOR DID NOT RESPOND TO THE CORRESPONDENCE REQUESTING THIS DELETION. THE LETTERS WERE SENT VIA REGISTERED MAIL, BUT WERE RETURNED BY THE POST OFFICE WITH THE NOTICE THAT THEY WERE UNABLE TO LOCATE THE ADDRESSEE. THEREFORE, A UNILATERAL CHANGE ORDER, REDUCING THE CONTRACT PRICE, IN THE AMOUNT OF $1,920 WAS ISSUED ON DECEMBER 11, 1967. DECEMBER 1967, THE CONTRACTOR HAD CEASED ALL WORK ON THE SITE. SINCE A MAJOR PORTION OF THE WORK REQUIRED UNDER THE CONTRACT HAD BEEN COMPLETED BEFORE THE CONTRACTOR STOPPED WORK, IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO DELETE THE FEW ITEMS OF WORK THAT REMAINED AND TO CLOSE OUT THE CONTRACT. THE CONTRACTOR WAS REQUESTED TO SUBMIT COST ESTIMATES COVERING THIS REDUCTION IN CONTRACT SCOPE. IN ADDITION, THE CONTRACTOR HAD PERFORMED CERTAIN ADDITIONS NOT COVERED BY THE BASIC CONTRACT; THIS WORK BEING ACCOMPLISHED PURSUANT TO DIRECTIONS ISSUED TO HIM SHORTLY AFTER AWARD. IT WAS DETERMINED THAT THE CONTRACT PRICE SHOULD BE REDUCED FOR THE WORK DELETED AND INCREASED TO COVER THE ADDITIONAL WORK, RESULTING IN A TOTAL DEDUCTIVE CHANGE ORDER IN THE AMOUNT OF $6,361. A CHANGE ORDER IN THIS AMOUNT WAS ISSUED BY THE GOVERNMENT ON JANUARY 18, 1968, AND WAS SIGNED BY THE CONTRACTOR AND RETURNED WITH A FINAL INVOICE AND RELEASE ON JUNE 17, 1968. IT IS REPORTED THAT THE GOVERNMENT HOLDS A BALANCE OF $12,284.52 UNDER THIS CONTRACT, NO. N62473- 67-C-0118.

THE OTHER CONTRACT, N62473-67-C-0144, WAS AWARDED TO ANDERSON AS A RESULT OF NORMAL COMPETITIVE ADVERTISING PROCEDURES. ALL WORK WAS COMPLETED ON THIS CONTRACT. THE CONTRACTOR SUBMITTED A FINAL RELEASE DATED SEPTEMBER 12, 1967, AND FINAL PAYMENT WAS MADE ON SEPTEMBER 26, 1967. IT IS REPORTED THAT ONE SUBCONTRACTOR MAY NOT HAVE BEEN PAID AMOUNTS DUE UNDER ITS SUBCONTRACT.

WITH YOUR LETTER OF MAY 20, 1968, THERE IS ATTACHED A TABULATION OF LOSS, COST AND EXPENSE ALLEGEDLY INCURRED UPON THE SURETYSHIP OBLIGATION OF PACIFIC EMPLOYERS INSURANCE COMPANY ON THE ABOVE-CITED CONTRACTS, TOTALLING $16,549.42. IT ALSO SETS FORTH THE UNSUCCESSFUL EFFORTS MADE TO CONTACT THE CONTRACTOR, AND THE MYSTERY SURROUNDING HIS IDENTITY. THE LETTER CITES THE CASE OF THE HOME INDEMNITY COMPANY V THE UNITED STATES, CT. CL. 29-66, DECIDED MAY 12, 1967, AS AUTHORITY FOR PAYMENT TO IT OF ALL RETENTIONS HELD BY THE GOVERNMENT IN CONNECTION WITH NAVY CONTRACT N62473- 67-C-0118, AND VETERANS ADMINISTRATION CONTRACT NO. V6009C-619. FURTHER IS STATED THAT UPON AUTHORIZATION OF PAYMENT TO IT, THE SURETY WILL EXECUTE THE OUTSTANDING DEDUCTIVE CHANGE ORDER TO THE NAVY CONTRACT CITED ABOVE AND SUCH OTHER FINAL RELEASE DOCUMENTATION AS MAY BE DEEMED NECESSARY OR DESIRABLE BY THE GOVERNMENT.

WE ARE NOT ADVISED WHETHER THE CONTRACTOR IS INDEBTED TO THE INTERNAL REVENUE SERVICE FOR FAILURE TO PAY TAXES, OR IS OTHERWISE INDEBTED TO THE UNITED STATES. ANY INDEBTEDNESS DUE THE UNITED STATES HAS FIRST PRIORITY AGAINST THE AMOUNTS HELD AND MUST BE SET-OFF. SEE UNITED STATES V MUNSEY TRUST COMPANY, 332 U.S. 234 AND 40 COMP. GEN. 85.

WE HAVE NO OBJECTION TO THE PAYMENT OF ANY BALANCE REMAINING AFTER SETTING OFF AMOUNTS THAT MAY BE DUE THE GOVERNMENT. HOWEVER, THE GOVERNMENT IS ENTITLED TO OBTAIN A GOOD ACQUITTANCE FOR THE FINAL PAYMENTS UNDER THE CONTRACTS. HENCE WE ARE ADVISING THE ADMINISTRATIVE OFFICES CONCERNED THAT CHECKS FOR THE AMOUNTS DUE SHOULD BE MADE OUT TO THE ORDER OF THE CONTRACTOR AND SHOULD BE SENT TO THE CONTRACTOR IN CARE OF THE ATTORNEYS FOR THE SURETY. SEE MURPHY, ET AL. V UNITED STATES, 164, CT. CL. 332.