B-169023, MAY 4, 1970

B-169023: May 4, 1970

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VALIDITY OF GOVERNMENT'S CLAIM ASSESSMENT OF EXCESS COSTS INCURRED ON NAVY'S REPROCUREMENT UNDER CONTRACT DEFAULT CLAUSE IS PROPER NOTWITHSTANDING FIRM ALLEGED THAT ACTION OF ITS VICE PRESIDENT. IS IMPUTABLE TO CORPORATION ON THEORY OF APPARENT AUTHORITY OR ESTOPPEL IF OFFICER IS SOLE REPRESENTATIVE OF CORPORATE PRINCIPAL IN TRANSACTION INVOLVED. SUCH EXCESS COSTS WERE INCURRED INCIDENT TO TERMINATION FOR DEFAULT OF CONTRACT N251-21883A (X) AND PROCUREMENT OF THE CONTRACT ITEMS. THE CONTRACT WAS AWARDED TO RENARD ON FEBRUARY 2. WAS IN THE AMOUNT OF $29. RENARD WAS REQUESTED TO VERIFY ITS BID. BOTH HOISTS WERE INCLUDED IN ITEM NO. 1. ONE SET OF MECHANICAL DRAWINGS FOR APPROVAL (ITEM NO. 2) WAS DUE BY MARCH 4.

B-169023, MAY 4, 1970

CONTRACTS--DEFAULT--EXCESS COSTS--VALIDITY OF GOVERNMENT'S CLAIM ASSESSMENT OF EXCESS COSTS INCURRED ON NAVY'S REPROCUREMENT UNDER CONTRACT DEFAULT CLAUSE IS PROPER NOTWITHSTANDING FIRM ALLEGED THAT ACTION OF ITS VICE PRESIDENT, IN WITHHOLDING FROM FIRM NOTICE OF PERFORMANCE DEFICIENCY AND CONTRACT TERMINATION, CONSTITUTED UNFORESEEN CIRCUMSTANCE WITHIN MEANING OF DEFAULT CLAUSE SINCE EVEN WHEN CORPORATE OFFICER OR AGENT ACTS FRAUDULENTLY OR ADVERSELY TO CORPORATION, KNOWLEDGE ACQUIRED BY HIM OR NOTICE GIVEN HIM, WHETHER COMMUNICATED TO CORPORATION OR NOT, IS IMPUTABLE TO CORPORATION ON THEORY OF APPARENT AUTHORITY OR ESTOPPEL IF OFFICER IS SOLE REPRESENTATIVE OF CORPORATE PRINCIPAL IN TRANSACTION INVOLVED.

TO MR. ANTHONY T. RESSA:

WE REFER TO YOUR LETTER OF JANUARY 14, 1970, PROTESTING AGAINST THE ACTION OF THE DEPARTMENT OF THE NAVY IN HOLDING RENARD MANUFACTURING COMPANY, INC. (RENARD), LIABLE TO THE UNITED STATES FOR EXCESS COSTS IN THE AMOUNT OF $17,271.50, PLUS INTEREST AT 6 PERCENT PER ANNUM FROM OCTOBER 10, 1966. SUCH EXCESS COSTS WERE INCURRED INCIDENT TO TERMINATION FOR DEFAULT OF CONTRACT N251-21883A (X) AND PROCUREMENT OF THE CONTRACT ITEMS, TWO MONORAIL HOISTS, DRAWINGS AND MANUALS, FROM ANOTHER SOURCE.

THE CONTRACT WAS AWARDED TO RENARD ON FEBRUARY 2, 1966, AS THE LOW BIDDER UNDER INVITATION FOR BIDS (IFB) 251/293/66, ISSUED DECEMBER 1, 1965, BY THE PUGET SOUND NAVAL SHIPYARD, BREMERTON, WASHINGTON, AND DISTRIBUTED TO NINE FIRMS. RENARD'S BID, IN THE AMOUNT OF $11,500, OFFERING A PROMPT PAYMENT DISCOUNT OF 1/2 OF ONE PERCENT 20 DAYS, BORE THE SIGNATURE OF WILLIAM E. LAND OVER THE TITLE "EXECUTIVE VICE PRESIDENT." THE ONLY OTHER BID, FROM AIRCRAFT ARMAMENTS, INCORPORATED (AAI), WAS IN THE AMOUNT OF $29,288.

IN LIGHT OF THE WIDE VARIANCE IN THE BID PRICES, RENARD WAS REQUESTED TO VERIFY ITS BID. BY LETTER DATED JANUARY 20, 1966, WHICH BORE THE SIGNATURE OF W. E. LAND, RENARD CONFIRMED ITS WILLINGNESS TO ACCEPT A CONTRACT BASED ON ITS BID AS SUBMITTED. THE AWARD TO RENARD FOLLOWED.

THE DELIVERY SCHEDULE, WHICH PRESCRIBED VARIOUS DELIVERY PERIODS FOR THE PROCUREMENT ITEMS, STARTING FROM THE DATE OF THE CONTRACT, REQUIRED DELIVERY OF ONE HOIST BY JULY 2, 1966, AND THE OTHER HOIST BY SEPTEMBER 15, 1966. BOTH HOISTS WERE INCLUDED IN ITEM NO. 1. AS FOR DRAWINGS, ONE SET OF MECHANICAL DRAWINGS FOR APPROVAL (ITEM NO. 2) WAS DUE BY MARCH 4, 1966, AND TWO FINAL SETS (ITEM NO. 3) WITHIN 120 DAYS AFTER APPROVAL OF THE INITIAL SET, AND ONE SET OF ELECTRICAL DRAWINGS FOR INFORMATION (ITEM NO. 4) WAS DUE BY MARCH 19, 1966, AND TWO FINAL SETS (ITEM NO. 5) BY JULY 2, 1966. PRELIMINARY MANUALS (ITEM NO. 6) WERE DUE BY MAY 3, 1966, AND FINAL MANUALS (ITEM NO. 7) WERE DUE WITHIN 100 DAYS AFTER APPROVAL OF THE PRELIMINARY MANUALS.

THE CONTRACT DEFAULT CLAUSE, FROM STANDARD FORM 32, GENERAL PROVISIONS (SUPPLY CONTRACT), WHICH WAS INCORPORATED IN THE IFB, READS, IN PART, AS FOLLOWS:

"11. DEFAULT

"(A) THE GOVERNMENT MAY, SUBJECT TO THE PROVISIONS OF PARAGRAPH (C) BELOW, BY WRITTEN NOTICE OF DEFAULT TO THE CONTRACTOR, TERMINATE THE WHOLE OR ANY PART OF THIS CONTRACT IN ANY ONE OF THE FOLLOWING CIRCUMSTANCES:

"(I) IF THE CONTRACTOR FAILS TO MAKE DELIVERY OF THE SUPPLIES OR TO PERFORM THE SERVICES WITHIN THE TIME SPECIFIED HEREIN OR ANY EXTENSION THEREOF; OR

"(II) IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THIS CONTRACT, OR SO FAILS TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THIS CONTRACT IN ACCORDANCE WITH ITS TERMS, AND IN EITHER OF THESE TWO CIRCUMSTANCES DOES NOT CURE SUCH FAILURE WITHIN A PERIOD OF 10 DAYS (OR SUCH LONGER PERIOD AS THE CONTRACTING OFFICER MAY AUTHORIZE IN WRITING) AFTER RECEIPT OF NOTICE FROM THE CONTRACTING OFFICER SPECIFYING SUCH FAILURE.

"(B) IN THE EVENT THE GOVERNMENT TERMINATES THIS CONTRACT IN WHOLE OR IN PART AS PROVIDED IN PARAGRAPH (A) OF THIS CLAUSE, THE GOVERNMENT MAY PROCURE, UPON SUCH TERMS AND IN SUCH MANNER AS THE CONTRACTING OFFICER MAY DEEM APPROPRIATE, SUPPLIES OR SERVICES SIMILAR TO THOSE SO TERMINATED, AND THE CONTRACTOR SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS FOR SUCH SIMILAR SUPPLIES OR SERVICES: PROVIDED: THAT THE CONTRACTOR SHALL CONTINUE THE PERFORMANCE OF THIS CONTRACT TO THE EXTENT NOT TERMINATED UNDER THE PROVISIONS OF THIS CLAUSE.

"(C) EXCEPT WITH RESPECT TO DEFAULTS OF SUBCONTRACTORS, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF THE FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SUCH CAUSES MAY INCLUDE, BUT ARE NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT IN EITHER ITS SOVEREIGN OR CONTRACTUAL CAPACITY, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER; BUT IN EVERY CASE THE FAILURE TO PERFORM MUST BE BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. IF THE FAILURE TO PERFORM IS CAUSED BY THE DEFAULT OF A SUBCONTRACTOR, AND IF SUCH DEFAULT ARISES OUT OF CAUSES BEYOND THE CONTROL OF BOTH THE CONTRACTOR AND SUBCONTRACTOR, AND WITHOUT THE FAULT OR NEGLIGENCE OF EITHER OF THEM, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS FOR FAILURE TO PERFORM, UNLESS THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE SUBCONTRACTOR WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.

"(F) THE RIGHTS AND REMEDIES OF THE GOVERNMENT PROVIDED IN THIS CLAUSE SHALL NOT BE EXCLUSIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THIS CONTRACT."

UNDER DATE OF JUNE 9, 1966, THE CONTRACTING OFFICER ADDRESSED A LETTER TO RENARD ACKNOWLEDGING RECEIPT ON MAY 16 OF AN ELECTRICAL DRAWING. THE LETTER POINTED OUT SEVERAL DEFICIENCIES IN THE DRAWING WHICH THE NAVY CONSIDERED REQUIRED CORRECTIVE ACTION BY RENARD.

ON JUNE 17, 1966, ACCORDING TO NAVY RECORDS, MR. GEORGE BAILEY, A PUGET SOUND NAVAL SHIPYARD REPRESENTATIVE, VISITED RENARD'S PLANT TO DISCUSS THE CONTRACT WITH MR. LAND. ACCORDING TO MR. BAILEY'S RECOLLECTION, HE CONVERSED WITH MR. RAY RENARD, PRESIDENT OF RENARD, WHILE WAITING FOR MR. LAND BUT DID NOT DISCUSS THE CONTRACT WITH MR. RENARD. FURTHER, ALTHOUGH NO RECORD WAS MADE OF MR. BAILEY'S DISCUSSION WITH MR. LAND, MR. BAILEY STATES THAT MR. LAND INDICATED THAT RENARD WOULD NOT BE ABLE TO DELIVER THE HOISTS IN TIME TO MEET SHIP PRODUCTION SCHEDULES.

IN A LETTER DATED JUNE 17, 1966, WHICH BORE THE SIGNATURE OF WILLIAM E. LAND OVER THE TITLE OF EXECUTIVE VICE PRESIDENT AND WHICH WAS ADDRESSED TO THE CONTRACTING OFFICER, RENARD MADE THE FOLLOWING STATEMENTS:

"DUE TO LATE DELIVERIES FROM OUR SUPPLIERS OF MATERIAL AND DUE TO A SHORTAGE OF PERSONNEL IN OUR PLANT, WE REGRET THAT WE MUST INFORM YOU THAT IT IS IMPOSSIBLE AT THIS DATE TO COMPLETE THIS CONTRACT ON SCHEDULE. WILL DO OUR UTMOST TO COMPLETE THE CONTRACT IN AS EXPEDITIOUS FASHION AS POSSIBLE. IT APPEARS AT THIS TIME THAT AN ADDITIONAL SIXTY (60) DAYS BEYOND THE ORIGINAL CONTRACT SCHEDULE WILL BE REQUIRED INSOFAR AS THE FIRST HALF IS CONCERNED. THE BALANCE CAN BE DELIVERED IN ADVANCE OF SCHEDULE REQUIREMENTS."

BY LETTER DATED JUNE 24, 1966, WHICH MADE SPECIFIC REFERENCE TO THE CONTRACTING OFFICER'S LETTER OF JUNE 9 AND TO THE VISIT OF MR. BAILEY TO RENARD'S PLANT ON JUNE 17, THE CONTRACTING OFFICER ADVISED RENARD AS FOLLOWS:

"THE SUBJECT CONTRACT SPECIFIED DELIVERY OF MECHANICAL DRAWINGS FOR INFORMATION BY 2 MARCH 1966. THE INITIAL DRAWING SUBMITTED UNDER ITEM 2 WAS RECEIVED 10 MAY 1966 AND THE BALANCE RECEIVED 1 JUNE 1966. SHIPYARD REVIEW OF THE MECHANICAL DRAWINGS IS NOT COMPLETE TO DATE.

"THE TERMS OF THE SUBJECT CONTRACT SPECIFIED DELIVERY OF ELECTRICAL DRAWINGS FOR INFORMATION BY 16 MARCH 1966. PART OF THE DRAWINGS REQUIRED UNDER ITEM 4 WERE RECEIVED 17 MAY 1966. DRAWINGS TO COMPLETE THE REQUIREMENTS OF ITEM 4 HAVE NOT BEEN RECEIVED TO DATE. FURTHERMORE, CONTRACTOR WAS ADVISED BY REFERENCE (A) THAT THE DRAWING RECEIVED BY THIS ACTIVITY 17 MAY 1966 WAS UNACCEPTABLE.

"THE MATERIAL DELIVERY DATES SPECIFIED BY THE SUBJECT CONTRACT ARE ONE HOIST BY 2 JULY 1966 AND ONE BY 15 SEPTEMBER 1966. BY REFERENCE (B) IT WAS DETERMINED THAT IT WILL BE IMPOSSIBLE FOR CONTRACTOR TO MEET THE FIRST DELIVERY DATE. CONTRACTOR ADVISED MR. BAILEY VERBALLY THAT AT PRESENT THE MOST OPTIMISTIC DELIVERY DATE FOR THE FIRST HOIST IS 15 AUGUST 1966.

"THE CONTRACT IS SUBJECT TO TERMINATION FOR DEFAULT IF THE GOVERNMENT CHOOSES TO EXERCISE ITS RIGHTS UNDER CLAUSE 11 OF THE GENERAL PROVISIONS, ENTITLED 'DEFAULT.' HOWEVER, BEFORE SUCH ACTION IS TAKEN, IT IS REQUESTED THAT YOU SHOW CAUSE IN WRITING AS TO WHY THE CONTRACT OR SOME PORTION THEREOF SHOULD NOT BE TERMINATED FOR DEFAULT AND SUBMIT ALL EVIDENCE IN SUPPORT THEREOF. FAILURE TO SHOW CAUSE AND SUBMIT SUPPORTING EVIDENCE WITHIN TEN (10) DAYS WILL BE CONSIDERED AN ADMISSION OF UNEXCUSED DEFAULT AND THE GOVERNMENT WILL TERMINATE THE CONTRACT FOR DEFAULT. IN SUCH AN EVENT, THIS MATERIAL WILL BE REPURCHASED ELSEWHERE AND ANY EXCESS COSTS INCURRED THEREBY WILL BE CHARGED TO YOUR ACCOUNT." THE ABOVE LETTER WAS TRANSMITTED TO RENARD BY CERTIFIED MAIL, AND THE RECEIPT, POST OFFICE DEPARTMENT FORM 3849, WHICH IS SIGNED FOR RENARD BY G. L. BUTLER, SHOWS THAT IT WAS DELIVERED ON JULY 1, 1966.

A LETTER DATED JUNE 29, 1966, TO RENARD FROM THE CONTRACTING OFFICER, WHICH MADE REFERENCE TO THE JUNE 24 SHOW CAUSE LETTER, TO THE JUNE 17 PLANT VISIT OF MR. BAILEY, AND TO THE CONTRACTING OFFICER'S LETTER OF JUNE 9 TO RENARD, INCLUDED SUBSTANTIALLY THE SAME WORDING AS THE LETTER OF JUNE 24, WITH THE ADDITION OF A SEPARATE PARAGRAPH READING AS FOLLOWS:

"YOU ARE HEREBY NOTIFIED THAT YOU ARE IN DEFAULT ON THE SUBJECT CONTRACT INASMUCH AS YOU HAVE FAILED TO PROVIDE ACCEPTABLE DRAWINGS WITHIN THE TIME SPECIFIED AND ARE, THEREFORE, FAILING TO PROGRESS SO AS TO ENDANGER PERFORMANCE OF THE CONTRACT."

BY LETTER DATED JULY 6, 1966, WHICH BORE THE SIGNATURE OF W. E. LAND OVER THE TITLE OF EXECUTIVE VICE PRESIDENT, RENARD REFERRED TO THE CONTRACTING OFFICER'S LETTERS OF JUNE 24 AND 29, 1966, AND MADE THE FOLLOWING STATEMENTS:

"IN REGARD TO LETTER DATED 29 JUNE 1966, WE OFFER THE FOLLOWING:

"DRAWINGS WHICH WE CONSIDER ADEQUATE HAVE BEEN SUBMITTED. TO DATE APPROVAL HAS NOT BEEN GRANTED. WE OBVIOUSLY CANNOT PROCEED WITHOUT SUCH APPROVAL OR SUGGESTIONS AS TO NEEDED DESIGN IMPROVEMENT.

"IF APPROVAL IS GRANTED IMMEDIATELY WE WILL STILL BE ABLE TO DELIVER ONE (1) HOIST BY 15 AUGUST 1966 AND ONE (1) HOIST BY 15 SEPTEMBER 1966.

"IT WAS OUR UNDERSTANDING WHEN WE QUOTED THIS JOB THAT DELIVERY OF THE HOISTS WOULD BE 150 DAYS AND 225 DAYS AFTER DESIGN APPROVAL. WE ARE AWARE NOW THAT WE ERRORED IN SUCH ASSUMING. ANY FUTURE REQUIREMENTS WHICH WE MAY QUOTE ON WILL BE SO STATED IN OUR QUOTE."

UNDER DATE OF JULY 18, 1966, THE CONTRACTING OFFICER ADDRESSED A DEFAULT TERMINATION LETTER TO RENARD, REFERRING TO THE SHOW CAUSE LETTER OF JUNE 24 AND RENARD'S LETTERS OF JUNE 17 AND JULY 6, READING AS FOLLOWS:

"REFERENCE (A) NOTIFIED YOU THAT THE GOVERNMENT WAS CONSIDERING TERMINATING THE SUBJECT CONTRACT FOR DEFAULT AND REQUIRED YOU TO SHOW CAUSE IN WRITING AND SUBMIT SUPPORTING EVIDENCE WITHIN TEN DAYS AFTER RECEIPT OF NOTIFICATION, WHY THIS ACTION SHOULD NOT BE TAKEN. REFERENCE (B) FAILED TO ADVISE THIS ACTIVITY OF ANY EXCUSABLE REASON OR JUSTIFICATION FOR THE EXISTING DRAWING AND MATERIAL DELIVERY DELINQUENCIES ON THE SUBJECT CONTRACT.

"BY REFERENCE (C) YOU ADVISED THAT AN ADDITIONAL SIXTY DAYS BEYOND THE CONTRACT DELIVERY SCHEDULE WOULD BE REQUIRED TO DELIVER THE FIRST HOIST, WHICH WAS DUE 2 JULY 1966. THE STATED REASON FOR THE DELAY WAS DIFFICULTY IN OBTAINING MATERIAL AND SHORTAGE OF PERSONNEL IN YOUR PLANT. YOU FURTHER STATED IN REFERENCE (B) THAT YOU WOULD BE ABLE TO DELIVER ONE HOIST BY 15 AUGUST AND THE SECOND BY 15 SEPTEMBER 1966 IF DRAWING APPROVAL WERE GRANTED IMMEDIATELY. HOWEVER, AS INDICATED IN OUR LETTERS OF 9 JUNE 1966 AND 24 JUNE 1966 SUBMISSION OF DRAWINGS IS NOT COMPLETE AND APPROVAL, THEREFORE, CANNOT BE GRANTED. IN VIEW OF THIS, DELIVERY OF ONE HOIST BY 15 AUGUST IS CONSIDERED TO BE COMPLETELY UNREALISTIC. IN ADDITION, THE CONTRACT CLEARLY SPECIFIES DELIVERY OF THE FIRST HOIST WITHIN 150 DAYS (2 JULY 1966) AFTER DATE OF CONTRACT AND THE SECOND HOIST WITHIN 225 DAYS (15 SEPTEMBER 1966) AFTER DATE OF CONTRACT. DELIVERY DATES WERE NOT SPECIFIED TO BE CONTINGENT UPON DRAWING APPROVAL.

"IT IS HEREBY FOUND THAT YOUR COMPANY IS IN DEFAULT UNDER CONTRACT N251- 21883A (X), HAVING FAILED TO MAKE DELIVERY OF THE FIRST SHIPMENT OF MATERIAL CALLED FOR THEREUNDER IN THE TIME SPECIFIED. ON THE BASIS OF THE FOREGOING, YOUR RIGHT TO PROCEED FURTHER WITH PERFORMANCE UNDER THE SUBJECT CONTRACT IS HEREBY TERMINATED, PURSUANT TO CLAUSE 11 OF THE GENERAL PROVISIONS OF SAID CONTRACT ENTITLED 'DEFAULT', SAID TERMINATION TO BE EFFECTIVE IMMEDIATELY.

"THIS NOTICE CONSTITUTES A DECISION THAT YOU ARE IN DEFAULT AS SPECIFIED, AND THAT THE FAILURE TO PERFORM WAS NOT DUE TO CAUSES BEYOND YOUR CONTROL AND WITHOUT YOUR FAULT OR NEGLIGENCE. THIS IS THE FINAL DECISION OF THE CONTRACTING OFFICER. DECISIONS ON DISPUTED QUESTIONS OF FACT AND ON OTHER QUESTIONS THAT ARE SUBJECT TO THE PROCEDURE OF THE DISPUTES CLAUSE MAY BE APPEALED IN ACCORDANCE WITH THE PROVISIONS OF THE DISPUTES CLAUSE. IF YOU DECIDE TO MAKE SUCH AN APPEAL FROM THIS DECISION, WRITTEN NOTICE THEREOF (IN TRIPLICATE) MUST BE MAILED OR OTHERWISE FURNISHED TO THE CONTRACTING OFFICER WITHIN THIRTY DAYS FROM THE DATE YOU RECEIVE THIS DECISION. SUCH NOTICE SHOULD INDICATE THAT AN APPEAL IS INTENDED AND SHOULD REFERENCE THIS DECISION AND IDENTIFY THE CONTRACT BY NUMBER. THE ARMED SERVICES BOARD OF CONTRACT APPEALS IS THE AUTHORIZED REPRESENTATIVE OF THE SECRETARY FOR HEARING AND DETERMINING SUCH DISPUTES. THE RULES OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS ARE SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION, APPENDIX A, PART 2. "YOU ARE HEREBY ADVISED FURTHER THAT THE MATERIAL REQUIRED UNDER THE CONTRACT WILL BE PROCURED IN THE OPEN MARKET AGAINST YOUR ACCOUNT AND YOU WILL BE HELD LIABLE FOR ANY EXCESS COSTS. THE GOVERNMENT RESERVES ALL RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THE CONTRACT, IN ADDITION TO CHARGING EXCESS COSTS. YOU WILL BE ADVISED AT A LATER DATE AS TO THE AMOUNT OF SUCH EXCESS COSTS, IF ANY." THE CERTIFIED MAIL RECEIPT, WHICH WAS SIGNED FOR RENARD BY G. L. BUTLER, SHOWS THAT THE TERMINATION LETTER WAS DELIVERED TO RENARD ON JULY 20, 1966.

ON JULY 19, 1966, THE CONTRACTING OFFICER RECEIVED A LETTER DATED JULY 18 FROM RENARD, OVER THE SIGNATURE OF W. E. LAND AND THE TITLE EXECUTIVE VICE PRESIDENT, ADVISING THAT SINCE RENARD HAD FAILED TO ISSUE A WRITTEN ORDER IN MARCH 1966 TO ITS INTENDED SOURCE OF SUPPLY FOR THE HOISTS, DELIVERY OF THE HOISTS WOULD BE DELAYED FROM 20 TO 23 WEEKS. THE LETTER EXPRESSED RENARD'S APPRECIATION FOR ANY ASSISTANCE THE CONTRACTING OFFICER MIGHT GIVE IN OBTAINING EXPEDITED DELIVERY OF THE HOISTS FROM THE SUPPLIER AND CONCLUDED WITH THE STATEMENT, "IF THIS IS NOT POSSIBLE, THEN WE CAN ONLY AGREE THAT CANCELLATION OF THE CONTRACT IS PROBABLY IN ORDER." NO REPLY WAS MADE BY THE CONTRACTING OFFICER TO THIS LETTER, HOWEVER, IN VIEW OF ISSUANCE OF THE DEFAULT TERMINATION NOTICE ON JULY 18.

IN A LETTER DATED OCTOBER 10, 1966, RENARD WAS NOTIFIED BY THE CONTRACTING OFFICER THAT THE PROCUREMENT ITEMS HAD BEEN PURCHASED UNDER A REPLACEMENT CONTRACT FOR THE AMOUNT OF $28,714; THAT UNDER THE TERMS OF RENARD'S CONTRACT RENARD WAS LIABLE FOR EXCESS COSTS IN THE AMOUNT OF $17,214; AND THAT THE INDEBTEDNESS, IF NOT LIQUIDATED IN FULL WITHIN 30 DAYS FROM THE DATE OF THE LETTER, WOULD BEAR INTEREST ON THE OUTSTANDING BALANCE AT THE RATE OF 6 PERCENT PER ANNUM FROM THE DATE OF THE LETTER. THE FINAL PARAGRAPH OF THE LETTER, WHICH WAS DELIVERED TO RENARD ON OCTOBER 12, 1966, PER THE CERTIFIED MAIL RECEIPT SIGNED FOR RENARD BY G. L. BUTLER, STATED:

"THIS IS THE FINAL DECISION OF THE CONTRACTING OFFICER. DECISIONS ON DISPUTED QUESTIONS OF FACT AND ON OTHER QUESTIONS THAT ARE SUBJECT TO THE PROCEDURE OF THE DISPUTES CLAUSE MAY BE APPEALED IN ACCORDANCE WITH THE PROVISIONS OF THE DISPUTES CLAUSE. IF YOU DECIDE TO MAKE SUCH AN APPEAL FROM THIS DECISION, WRITTEN NOTICE THEREOF (IN TRIPLICATE) MUST BE MAILED OR OTHERWISE FURNISHED TO THE CONTRACTING OFFICER WITHIN THIRTY DAYS FROM THE DATE YOU RECEIVE THIS DECISION. SUCH NOTICE SHOULD INDICATE THAT AN APPEAL IS INTENDED AND SHOULD REFERENCE THIS DECISION AND IDENTIFY THE CONTRACT BY NUMBER. THE ARMED SERVICES BOARD OF CONTRACT APPEALS IS THE AUTHORIZED REPRESENTATIVE OF THE SECRETARY FOR HEARING AND DETERMINING SUCH DISPUTES. THE RULES OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS ARE SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION, APPENDIX A, PART 2."

IN A LETTER DATED MARCH 15, 1967, THE CONTRACTING OFFICER ADVISED RENARD THAT THE EXCESS COSTS INDEBTEDNESS SET FORTH IN THE OCTOBER 10, 1966, LETTER HAD BEEN COMPUTED INCORRECTLY; THAT CONSIDERING THE PROMPT PAYMENT DISCOUNT OFFERED BY RENARD, WHICH MADE RENARD'S NET CONTRACT PRICE $11,442.50, THE PRINCIPAL INDEBTEDNESS SHOULD HAVE BEEN STATED AS $17,271.50 (I.E; THE DIFFERENCE BETWEEN $11,442.50 AND THE REPLACEMENT CONTRACT PRICE OF $28,714, TO WHICH NO DISCOUNT APPLIED); AND THAT THE COMPUTATION OF INTEREST ON THE INDEBTEDNESS WAS UNCHANGED.

BY LETTER DATED MARCH 21, 1967, THE DIRECTOR OF CONTRACT FINANCING, OFFICE OF THE COMPTROLLER OF THE NAVY, MADE DEMAND ON RENARD FOR PAYMENT OF THE INDEBTEDNESS. THE LETTER STATED, AMONG OTHER THINGS, THAT NO APPEAL HAD BEEN MADE BY RENARD FROM THE CONTRACTING OFFICER'S DECISION OF JULY 13, 1966 (SUBSEQUENTLY CORRECTED TO JULY 18, 1966), THUS RENDERING THE DECISION FINAL UNDER THE DISPUTES CLAUSE OF THE CONTRACT; THAT NO REPLY HAD BEEN RECEIVED TO THE REQUESTS BY LETTERS DATED OCTOBER 10, 1966, AND MARCH 15, 1967, FOR PAYMENT OF THE INDEBTEDNESS; AND THAT FAILURE TO MAKE PAYMENT WITHIN 30 DAYS FROM MARCH 21, 1967, OR TO INDICATE WILLINGNESS TO ENTER INTO AN AGREEMENT TO MAKE PAYMENT, WOULD WARRANT PLACEMENT OF RENARD'S NAME ON THE GOVERNMENT CONSOLIDATED HOLD UP LIST FOR THE PURPOSE OF LIQUIDATING THE DEBT BY WITHHOLDING OF FUNDS WHICH MAY BECOME DUE TO RENARD FROM THE GOVERNMENT.

IN A LETTER OF APRIL 7, 1967, RENARD INFORMED THE DIRECTOR OF CONTRACT FINANCING THAT RENARD HAD NO KNOWLEDGE OF THE GOVERNMENT CLAIM AND THE TERMINATION OF THE CONTRACT UNTIL MARCH 17, 1967 (THE APPARENT DATE OF RECEIPT BY RENARD OF THE CONTRACTING OFFICER'S LETTER OF MARCH 15, 1967), AND ALSO HAD NO RECORD OF THE RECEIPT OF ANY RELATED CORRESPONDENCE DURING THE PERIOD OCTOBER 1966 THROUGH FEBRUARY 1967. RENARD FURTHER STATED THAT ITS FORMER VICE PRESIDENT, MR. LAND, HAD LEFT THE CORPORATION IN JANUARY 1967, AND RENARD HAD WRITTEN TO MR. LAND WITH A VIEW TO ASCERTAINING MR. LAND'S KNOWLEDGE OF THE MATTER. RENARD THEREFORE REQUESTED AN ADDITIONAL 30 DAYS TO INVESTIGATE THE MATTER AND CONSULT ITS LEGAL COUNSEL REGARDING FURTHER ACTION.

IN RESPONSE TO RENARD'S REQUEST, THE NAVY INFORMED RENARD BY LETTER DATED APRIL 18 THAT ACTION BY THE NAVY WOULD BE DEFERRED TO MAY 22 TO PERMIT RENARD TO COMPLETE ITS INVESTIGATION. IN ADDITION, BY LETTER OF MAY 10 THE DIRECTOR OF CONTRACT FINANCING FORWARDED TO RENARD COPIES OF THE NAVY LETTERS OF JUNE 9, 24 AND 29 AND JULY 18 AND OCTOBER 10, 1966, AND COPIES OF RENARD'S LETTERS OF JUNE 17 AND JULY 6 AND 18, 1966, TO THE NAVY, TOGETHER WITH INFORMATION CONCERNING THE CERTIFIED MAIL RECEIPTS FOR DELIVERY TO RENARD OF THE NAVY LETTERS OF JUNE 24 AND JULY 18.

THE RECORD INDICATES THAT WHILE A RENARD REPRESENTATIVE, MR. DESEROW, INFORMED THE OFFICE OF THE DIRECTOR OF CONTRACT FINANCING IN A TELEPHONE CONVERSATION OF JUNE 1, 1967, THAT RENARD WOULD PRESENT A PROPOSED DEFERRED PAYMENT PLAN AND A LIST OF EXISTING CONTRACTS FROM WHICH THE NAVY COULD WITHHOLD FUNDS TO APPLY TO THE INDEBTEDNESS, NO ACTION WAS TAKEN BY RENARD IN THIS REGARD. RENARD WAS THEREFORE NOTIFIED BY LETTER OF JUNE 22 OF THE NEED FOR SUBMISSION TO THE NAVY OF A DEFINITE PLAN OF LIQUIDATION AND WAS GIVEN UNTIL JULY 10, 1967, TO ADVISE THE NAVY ACCORDINGLY.

THE RECORD FURTHER INDICATES THAT YOUR FIRST COMMUNICATION WITH THE DIRECTOR OF CONTRACT FINANCING IN BEHALF OF RENARD WAS A LETTER DATED JUNE 22, 1967, IN WHICH YOU STATED THAT THE CONTRACTING OFFICER AT THE PUGET SOUND NAVAL SHIPYARD WAS COOPERATING WITH YOU IN YOUR EFFORTS TO RECONSTRUCT THE CONTRACT FILES, AND YOU THEREFORE REQUESTED AN ADDITIONAL 30 DAYS TO OBTAIN A COMPLETE RECORD. IN RESPONSE TO YOUR REQUEST, THE DIRECTOR, IN A LETTER OF JUNE 30, 1967, TO YOU, EXTENDED THE TIME FOR SUBMISSION OF A REPLY BY RENARD TO JULY 24, 1967.

SUBSEQUENT CORRESPONDENCE EXCHANGED BETWEEN YOU AND THE NAVY FROM JULY 13, 1967, THROUGH DECEMBER 23, 1968, AND MEMORANDA OF RECORD SHOW THAT YOU REQUESTED AND WERE FURNISHED INFORMATION CONCERNING THE REPLACEMENT CONTRACT; THAT YOU WERE ACCORDED, AT YOUR REQUEST, CONFERENCES WITH NAVY PERSONNEL AT THE PUGET SOUND NAVAL SHIPYARD AND AT WASHINGTON, D. C.; THAT YOU SUBMITTED TWO COMPROMISE OFFERS TO THE NAVY, THE FIRST FOR $1,250 AND THE SECOND FOR $2,000, BOTH OF WHICH THE NAVY DECLINED TO ACCEPT; THAT THE NAVY, IN TURN, HAD PROPOSED TO SETTLE THE GOVERNMENT'S CLAIM FOR $7,500 AT ONE TIME AND AT A LATER DATE FOR $2,500, THE SECOND PROPOSAL BEING OPEN UNTIL MARCH 15, 1969; AND THAT YOU DID NOT ACCEPT EITHER OF THE NAVY PROPOSALS, NOR DID YOU SUBMIT A DEFINITE OFFER TO COMPLETELY LIQUIDATE THE DEBT EITHER IN A LUMP SUM OR BY MEANS OF REGULAR DEFERRED PAYMENTS UNDER A PLAN PROVIDING FOR LIQUIDATION WITHIN A REASONABLE TIME.

IN ADDITION TO THE ABOVE, THE RECORD SHOWS THAT THE NAVY DEFERRED COLLECTION ACTION SEVERAL TIMES WHILE IT CONSIDERED VARIOUS ARGUMENTS WHICH YOU ADVANCED FOR THE PROPOSITION THAT RENARD SHOULD BE COMPLETELY ABSOLVED OF LIABILITY. IN THIS CONNECTION, YOU CHARGED THAT THE FAILURE OF MR. LAND TO BRING TO THE ATTENTION OF RENARD THE CORRESPONDENCE FROM THE CONTRACTING OFFICER REGARDING RENARD'S DELINQUENT PERFORMANCE AND DEFAULT CONSTITUTED AN UNFORESEEABLE CIRCUMSTANCE WITHIN THE MEANING OF THE CONTRACT DEFAULT CLAUSE; YOU ASSERTED THAT THE GOVERNMENT WAS NEGLIGENT IN NOT REVIEWING OR POLICING THE CONTRACT; AND THAT MR. LAND'S ACTIONS WERE IN VIOLATION OF 18 U.S.C. 285, WHICH RELATES TO THE TAKING OR USING OF PAPERS RELATING TO CLAIMS AGAINST THE GOVERNMENT.

THE NAVY'S POSITION, AS SET FORTH IN A LETTER DATED MARCH 19, 1968, TO YOU, AND IN LETTERS DATED MAY 1 AND 31, 1968, TO A MEMBER OF CONGRESS WHO HAD EXPRESSED INTEREST IN THE MATTER ON BEHALF OF RENARD, IS THAT THE GOVERNMENT'S CLAIM IS LEGAL. THE NAVY CLAIMS THAT SINCE MR. LAND WAS A KEY OFFICER OF RENARD, THE ACTS OF MR. LAND, HOWEVER UNFORESEEN BY THE OTHER TWO OFFICERS OF THE CORPORATION, CANNOT BE SAID TO BE "BEYOND THE CONTROL AND WITHOUT THE FAULT * * * OF THE CONTRACTOR" WITHIN THE MEANING OF THE CONTRACT DEFAULT CLAUSE. AS TO THE CHARGE OF NEGLIGENCE ON THE PART OF THE GOVERNMENT, THE NAVY ASSERTS THAT THE NOTICES TO MR. LAND WERE MADE TO A RESPONSIBLE OFFICIAL OF THE RENARD CORPORATION AND THAT THE GOVERNMENT MAY NOT BE HELD LIABLE FOR POLICING THE INTERNAL MANAGEMENT AND OPERATION OF THE CORPORATION. WITH RESPECT TO THE ALLEGED VIOLATION BY MR. LAND OF 18 U.S.C. 285, THE NAVY STATES THAT THIS CRIMINAL STATUTE, AS TO WHICH THE NAVY HAS NO EVIDENCE WHICH WOULD WARRANT SUBMISSION TO THE DEPARTMENT OF JUSTICE FOR INVESTIGATION, RELATES ONLY TO CLAIMS AGAINST THE UNITED STATES, NOT TO CLAIMS BY THE UNITED STATES, AS IS THE SITUATION HERE.

BY MARCH 15, 1969, THE NAVY HAD RECEIVED NO PAYMENT FROM RENARD; THEREFORE, IN ACCORDANCE WITH THE NOTICE GIVEN TO YOU IN YOUR TELEPHONE CONVERSATION OF JANUARY 30 WITH THE NAVY, THE DEBT WAS REFERRED TO OUR OFFICE FOR ACTION UNDER THE PROVISIONS OF THE FEDERAL CLAIMS COLLECTION ACT OF 1966, 31 U.S.C. 951-953. (SEE, ALSO, 4 C.F.R. 105.) THE NAVY'S REFERRAL LETTER DATED APRIL 21, 1969, WAS ACCOMPANIED BY RELATED PAPERS WHICH INDICATED THAT ON THE SAME DATE THE NAVY HAD INITIATED ACTION TO HAVE RENARD'S NAME PLACED ON THE HOLD UP LIST OF CONTRACTORS INDEBTED TO THE UNITED STATES FOR THE PURPOSE OF SETOFF.

IN WRITTEN COMMUNICATIONS AND TELEPHONE CONVERSATIONS WITH OUR CLAIMS DIVISION CONCERNING THE INDEBTEDNESS, YOU HAVE TENDERED COMPROMISE OFFERS OF $2,000 AND $2,500, BOTH OF WHICH HAVE BEEN REJECTED AS NOT BEING COMMENSURATE WITH THE AMOUNT OF THE DEBT AND WITH RENARD'S EARNING CAPACITY. FURTHER, AT YOUR REQUEST, THE CLAIMS DIVISION CONSIDERED THE ISSUES WHICH YOU PREVIOUSLY RAISED WITH THE NAVY IN SUPPORT OF THE PROPOSITION THAT RENARD SHOULD NOT BE HELD LIABLE FOR THE INDEBTEDNESS IN QUESTION. IN A LETTER DATED DECEMBER 17, 1969, HOWEVER, THE CLAIMS DIVISION ADVISED YOU OF ITS CONCURRENCE WITH THE NAVY'S POSITION, STATING, AMONG OTHER REASONS, THAT RENARD WAS BOUND BY THE ACTIONS OF MR. LAND, WHO WAS RENARD'S AGENT, ON THE THEORY THAT PERSONS DEALING WITH MR. LAND HAD THE RIGHT TO ASSUME THAT HIS ACTS WERE WITHIN HIS AUTHORITY; THAT THE GOVERNMENT OWED NO LEGAL DUTY TO SUPERVISE THE PERFORMANCE OF ANY GOVERNMENT CONTRACT AWARDED PURSUANT TO COMPETITIVE BIDDING; AND THAT 18 U.S.C. 285, A CRIMINAL STATUTE, IS NOT DETERMINATIVE OF THE CIVIL LIABILITY OF THE CORPORATION IN THIS MATTER. AS IN PREVIOUS CORRESPONDENCE, THE LETTER ALSO ADVISED YOU THAT OUR OFFICE IS WILLING TO CONSIDER ANY FURTHER OFFER IN COMPROMISE FROM RENARD PROVIDED IT IS REASONABLY COMMENSURATE WITH THE AMOUNT OF THE DEBT; OTHERWISE, WE EXPECT SUBMISSION OF AN ACCEPTABLE PLAN OF PAYMENT BY MONTHLY INSTALLMENTS AT A RATE WHICH WILL LIQUIDATE THE DEBT WITHIN A REASONABLE PERIOD OF TIME.

IN YOUR LETTER OF JANUARY 14, 1970, YOU TAKE EXCEPTION TO THE VIEWS OF THE CLAIMS DIVISION. YOU CHARGE THAT SINCE RENARD DID NOT HAVE NOTICE OR KNOWLEDGE OF THE ACTS OF MR. LAND RESPECTING THE PERFORMANCE AND TERMINATION OF THE CONTRACT, AS MR. LAND HAS ATTESTED IN A DEPOSITION, RENARD IS NOT BOUND BY SUCH ACTS UNDER THE APPARENT AUTHORITY OR ESTOPPEL RULE CITED BY THE CLAIMS DIVISION. FURTHER, YOU ASSERT THAT THE FINALITY OF ANY PRIOR DECISIONS BY THE NAVY HAS BEEN WAIVED BY THE REOPENING OF THE CASE AT YOUR REQUEST. YOU THEREFORE REQUEST THAT THE COMPTROLLER GENERAL CONSIDER THE MATTER DE NOVO.

UNDER 41 U.S.C. 322, NO GOVERNMENT CONTRACT MAY CONTAIN A PROVISION MAKING FINAL ON A QUESTION OF LAW THE DECISION OF ANY ADMINISTRATIVE OFFICIAL, REPRESENTATIVE, OR BOARD. SINCE THE ISSUE OF WHETHER RENARD IS CHARGEABLE WITH RECEIPT OF THE PERFORMANCE DEFICIENCY AND DEFAULT TERMINATION NOTICES WHICH WERE RECEIVED BY ITS FORMER VICE PRESIDENT IN THE COURSE OF PERFORMANCE OF THE CONTRACT IN QUESTION, AS WELL AS THE ISSUE OF WHETHER THE GOVERNMENT HAD ANY OBLIGATION TO POLICE PERFORMANCE OF THE CONTRACT, INVOLVES A QUESTION OF LAW, THE NAVY'S CONCLUSIONS THEREON ARE NOT FINAL. ACCORDINGLY, OUR OFFICE MAY PROPERLY CONSIDER SUCH MATTERS WITHOUT NEED FOR DISCUSSION OF WHETHER THE NAVY HAS WAIVED THE FINALITY OF VARIOUS DETERMINATIONS BY THE CONTRACTING OFFICER FROM WHICH RENARD FAILED TO MAKE A TIMELY APPEAL.

A CORPORATION MAY BE BOUND WHERE ITS OFFICER OR AGENT ACTS WITHOUT, OR IN EXCESS OF, HIS ACTUAL AUTHORITY IF HE ACTS WITHIN THE SCOPE OF HIS APPARENT AUTHORITY WITH WHICH THE CORPORATION HAS CLOTHED HIM. 19 CJS CORPORATIONS SEC. 996. WHEN A VICE PRESIDENT OF A CORPORATION ACTS AS THE AGENT OF THE CORPORATION AND IS SO RECOGNIZED AND TREATED OR HELD OUT TO THE WORLD, HIS ACTS WITHIN THE SCOPE OF THE AUTHORITY GIVEN TO HIM ARE AS BINDING AS THOSE OF ANY OTHER AGENT. 19 CJS CORPORATIONS SEC. 1001. YOU HAVE NOTED, THE RULE OF APPARENT AUTHORITY OR ESTOPPEL IS SUBJECT TO THE CONDITION THAT THE CORPORATION MUST BE CHARGEABLE WITH NOTICE OR KNOWLEDGE OF THE ACTS RELIED UPON TO ESTABLISH THE APPARENT AUTHORITY OR ESTOPPEL. 19 AM. JR. 2D CORPORATIONS, SEC. 1164. HOWEVER, UNDER A WELL- ESTABLISHED RULE OF THE LAW OF AGENCY, A CORPORATION IS BOUND BY THE KNOWLEDGE ACQUIRED BY, OR NOTICE GIVEN TO, ITS OFFICERS OR AGENTS WHICH IS WITHIN THE ACTUAL OR APPARENT SCOPE OF THEIR AUTHORITY OR EMPLOYMENT AND WHICH IS IN REFERENCE TO A MATTER TO WHICH THEIR AUTHORITY OR EMPLOYMENT EXTENDS. THIS RULE HAS BEEN BASED ON THE THEORY THAT IT WILL BE CONCLUSIVELY PRESUMED THAT THE AGENT WILL COMMUNICATE TO THE CORPORATION WHATEVER KNOWLEDGE OR NOTICE HE RECEIVES IN RELATION TO HIS AGENCY WHICH IS NECESSARY TO THE PROTECTION OF THE INTERESTS OF THE CORPORATION. MOREOVER, AFTER OFFICERS OR AGENTS OF A CORPORATION RECEIVE NOTICE OF FACTS WHICH IS DEEMED TO EXTEND TO THE CORPORATION, NO SUBSEQUENT CHANGE OF OFFICERS OR AGENTS REQUIRES NEW NOTICE OF THE FACTS. 19 AM. JUR. 2D, CORPORATIONS, SEC. 1263.

IN ADDITION, EVEN WHEN A CORPORATION OFFICER OR AGENT ACTS FRAUDULENTLY OR ADVERSELY TO THE CORPORATION, KNOWLEDGE ACQUIRED BY HIM WILL BE IMPUTED TO THE CORPORATION IF HE IS THE SOLE REPRESENTATIVE OF THE CORPORATE PRINCIPAL IN THE TRANSACTION. 19 AM. JUR. 2D, CORPORATIONS, SEC. 1267; 19 CJS CORPORATIONS, SEC. 1078.

WHERE A DIRECTOR OF A CORPORATION IS ACTING FOR A CORPORATION IN A PARTICULAR CASE, HIS KNOWLEDGE WILL, AS IN THE CASE OF OTHER CORPORATE OFFICERS AND AGENTS, BE IMPUTED TO THE CORPORATION. A DIRECTOR SHOULD BE REGARDED AS IN SOME MEASURE AN ORGAN OF COMMUNICATION BETWEEN THE BOARD AND THIRD PERSONS WITH RESPECT TO THE MATTERS UPON WHICH THE BOARD HAS POWER TO ACT; AND WHERE A NOTICE IS GIVEN TO HIM OFFICIALLY FOR THE PURPOSE OF BEING COMMUNICATED TO THE BOARD WITH RESPECT TO ANY SUCH MATTER, THE CORPORATION SHOULD BE HELD TO BE CHARGED WITH THE NOTICE WHETHER IT IS ACTUALLY COMMUNICATED OR NOT. 19 AM. JUR. 2D, CORPORATIONS, SEC. 1265.

THE RECORD SHOWS THAT MR. LAND SIGNED THE BID PURSUANT TO WHICH RENARD WAS AWARDED THE CONTRACT IN QUESTION, AND IT APPEARS THAT MR. LAND WAS THE ONLY OFFICER OR AGENT OF RENARD WITH WHOM NAVY REPRESENTATIVES DEALT DURING THE COURSE OF THE CONTRACT.

THE RECORD FURTHER SHOWS THAT MR. LAND SIGNED THE LETTERS ADDRESSED BY THE CORPORATION TO THE NAVY WITH RESPECT TO PERFORMANCE OF THE CONTRACT. THERE IS NO EVIDENCE THAT THE NAVY, WHOSE LETTERS WERE ALL ADDRESSED TO THE CORPORATION AND NOT TO THE ATTENTION OF MR. LAND, HAD ANY REASON TO BELIEVE THAT MR. LAND WAS NOT EMPOWERED TO ACT FOR THE CORPORATION IN CONNECTION WITH PERFORMANCE OF THE CONTRACT OR THAT THE LETTERS WOULD NOT COME TO THE ATTENTION OF THE OTHER TWO CORPORATE OFFICERS. IN THE CIRCUMSTANCES, WE MUST CONCLUDE THAT UNDER THE RULES SET FORTH ABOVE RENARD IS ESTOPPED TO DENY RESPONSIBILITY FOR THE ACTS OF MR. LAND WITH RESPECT TO THE CONTRACT; FURTHER, NOTICE OF DEFAULT TERMINATION AND KNOWLEDGE OF THE EXCESS COST ASSESSMENT DECISION, WHICH WERE RECEIVED BY ONE OF RENARD'S EMPLOYEES AND ADMITTEDLY READ BY MR. LAND, MUST BE IMPUTED TO RENARD.

AS TO THE CONTENTION THAT THE GOVERNMENT SHOULD HAVE POLICED THE CONTRACT, THERE IS NO SUCH REQUIREMENT IN THE PROCUREMENT STATUTE OR IN THE IMPLEMENTING PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) RELATING TO CONTRACT ADMINISTRATION. SEE ASPR 25 000, ET SEQ. ACCORDINGLY, ABSENT ANY AGREEMENT ON THE PART OF THE GOVERNMENT TO SUPERVISE THE PERFORMANCE OF THE CONTRACT, WE MUST CONCUR WITH THE VIEWS OF THE DEPARTMENT OF THE NAVY AND OUR CLAIMS DIVISION THAT THERE WAS NO SUCH OBLIGATION ON THE PART OF THE GOVERNMENT, AND THEREFORE NO SUPPORT FOR THE CONTENTION THAT THE GOVERNMENT WAS NEGLIGENT IN THIS RESPECT.

AS TO THE ISSUE OF POSSIBLE VIOLATION BY RENARD'S FORMER VICE PRESIDENT OF 18 U.S.C. 285, THAT PROVISION OF THE CODE IS A CRIMINAL STATUTE; ACCORDINGLY, ITS ENFORCEMENT IS PRIMARILY A FUNCTION OF THE DEPARTMENT OF JUSTICE, AND OUR OFFICE IS WITHOUT JURISDICTION TO RENDER A BINDING DECISION THEREON. IT SHOULD BE NOTED, HOWEVER, THAT THE STATUTE REFERS TO A PAPER WHICH IS TAKEN OR CARRIED AWAY WITHOUT AUTHORITY "FROM THE PLACE WHERE IT WAS FILED, DEPOSITED, OR KEPT BY AUTHORITY OF THE UNITED STATES" AND WHICH RELATES TO A CLAIM AGAINST THE UNITED STATES, A FACTOR WHICH THE NAVY HAS STRESSED. IT WOULD APPEAR, THEREFORE, THAT THE STATUTE HAS NO APPLICATION TO RECORDS, SUCH AS THE LETTERS MAILED BY THE NAVY TO RENARD, WHICH WERE NOT FILED, DEPOSITED, OR KEPT BY AUTHORITY OF THE UNITED STATES AND WHICH RELATE, NOT TO A CLAIM BY RENARD AGAINST THE UNITED STATES, BUT TO A CLAIM BY THE UNITED STATES AGAINST RENARD.

IN LINE WITH THE FOREGOING, WE SEE NO LEGAL BASIS FOR RELIEVING RENARD FROM LIABILITY FOR THE INDEBTEDNESS IN QUESTION. WE ARE THEREFORE REMANDING THE MATTER TO OUR CLAIMS DIVISION FOR FURTHER ACTION PURSUANT TO THE PROVISIONS OF THE FEDERAL CLAIMS COLLECTION ACT OF 1966, SUPRA, WITH THE REQUEST, HOWEVER, THAT RENARD'S COMPROMISE OFFER OF $3,633 IN ITS LETTER OF FEBRUARY 26, 1970, BE GIVEN PROMPT CONSIDERATION, AND THAT RELATED ADVICE TO YOU BE EXPEDITED.