B-166501, APR. 7, 1969

B-166501: Apr 7, 1969

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INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 22. WAS TERMINATED FOR DEFAULT BECAUSE YOU FAILED TO DELIVER AN ACCEPTABLE ITEM. IN YOUR TELEGRAM YOU ALLEGE THAT THE STATED REASON FOR TERMINATION OF YOUR CONTRACT IS FACTUALLY INCORRECT. WE HAVE BEEN ADVISED INFORMALLY THAT THE CONTRACT CONTAINS A "DISPUTES" CLAUSE WHICH PROVIDES. THAT ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER. IT IS THE PROVINCE OF THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO DETERMINE FACTUALLY WHETHER ARTICLES OFFERED MEET THE CONTRACT SPECIFICATIONS. WHERE THERE IS A DISPUTE BETWEEN THE CONTRACTOR AND THE CONTRACTING OFFICER REGARDING THE FACTS ON WHICH THE DEFAULT IS BASED IT THEN BECOMES A MATTER FOR DETERMINATION UNDER THE DISPUTES CLAUSE OF THE CONTRACT.

B-166501, APR. 7, 1969

TO OKLAHOMA AEROTRONICS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 22, 1969, STATING THAT THE CONTRACTING OFFICER ADVISED YOU BY TELEGRAM RECEIVED MARCH 19, 1969, THAT YOUR CONTRACT NO. N00123-68-C-2836 ISSUED BY THE UNITED STATES NAVY PURCHASING OFFICE, LOS ANGELES, CALIFORNIA, WAS TERMINATED FOR DEFAULT BECAUSE YOU FAILED TO DELIVER AN ACCEPTABLE ITEM.

IN YOUR TELEGRAM YOU ALLEGE THAT THE STATED REASON FOR TERMINATION OF YOUR CONTRACT IS FACTUALLY INCORRECT. YOU THEREFORE REQUEST OUR OFFICE TO SUSPEND THE DEFAULT ACTION PENDING A DETERMINATION OF THE FACTS.

WE HAVE BEEN ADVISED INFORMALLY THAT THE CONTRACT CONTAINS A "DISPUTES" CLAUSE WHICH PROVIDES, IN EFFECT, THAT ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT 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 THE PROVINCE OF THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO DETERMINE FACTUALLY WHETHER ARTICLES OFFERED MEET THE CONTRACT SPECIFICATIONS. ALSO, IN ADMINISTERING THE CONTRACT THE CONTRACTING OFFICER MAY TERMINATE A CONTRACT FOR DEFAULT WHERE THE ARTICLE DELIVERED DOES NOT MEET THE SPECIFICATIONS. WHERE THERE IS A DISPUTE BETWEEN THE CONTRACTOR AND THE CONTRACTING OFFICER REGARDING THE FACTS ON WHICH THE DEFAULT IS BASED IT THEN BECOMES A MATTER FOR DETERMINATION UNDER THE DISPUTES CLAUSE OF THE CONTRACT.

IT IS A WELL-ESTABLISHED RULE THAT WHERE, AS HERE, THE CONTRACT 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 IS BASED MUST BE SETTLED ADMINISTRATIVELY BEFORE OUR OFFICE MAY CONSIDER THE MATTER. WE UNDERSTAND THAT BY LETTER DATED MARCH 21, 1969, THE CONTRACTING OFFICER ISSUED HIS DECISION AND INFORMED YOU OF YOUR RIGHT TO APPEAL TO THE HEAD OF THE DEPARTMENT UNDER THE DISPUTES CLAUSE.

ACCORDINGLY, WE CANNOT SUSPEND THE DEFAULT ACTION PENDING RESOLUTION OF THE MATTER BY THE DEPARTMENT OF THE NAVY.