B-169380, MAY 26, 1970

B-169380: May 26, 1970

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VALIDITY OF LIQUIDATED DAMAGE STIPULATION IS UNAFFECTED BY FACT THAT NO ACTUAL DAMAGES CAN BE SHOWN TO HAVE RESULTED FROM BREACH OF PERFORMANCE REQUIREMENTS. PICKENS: REFERENCE IS MADE TO YOUR LETTER OF MARCH 20. A CAREFUL READING OF THE CONTRACTS UNDER WHICH THE ORDERS WERE ISSUED REVEALS CERTAIN SIGNIFICANT FACTORS. PROVIDED FOR AN "ACCELERATED SCHEDULE" AND BIDDERS WERE ADVISED THAT THERE WAS AN URGENT NEED FOR MOST OF THE WORK. " THE BIDDER IS WARNED THAT "THIS IS A SCHEDULED JOB AND THE CONTRACTOR MUST MAINTAIN THE SCHEDULES PROVIDED HEREIN" AND THE BIDDER IS ADVISED OF THE CONSEQUENCES OF FAILURE TO MAKE DELIVERY ACCORDING TO SCHEDULE. IT IS NOTED THAT THE SPECIFICATIONS ON WHICH BIDS WERE SUBMITTED PROVIDED FOR MULTIPLE AWARDS IN EACH OF THE SIX CATEGORIES OF PRODUCTS BEING PROCURED.

B-169380, MAY 26, 1970

CONTRACTS--DAMAGES--LIQUIDATED--ACTUAL DAMAGE EVIDENCE CONTRACTOR, IN REQUESTING REMISSION OF $25,000 OF $44,000 ASSESSED AS LIQUIDATED DAMAGES BY GOVERNMENT PRINTING OFFICE FOR LATE DELIVERIES FOR PRINTING AND BINDING, ASSERTS THAT GOVERNMENT HAS NOT SHOWN IT SUFFERED ANY DAMAGES. HOWEVER, VALIDITY OF LIQUIDATED DAMAGE STIPULATION IS UNAFFECTED BY FACT THAT NO ACTUAL DAMAGES CAN BE SHOWN TO HAVE RESULTED FROM BREACH OF PERFORMANCE REQUIREMENTS. GAO LACKS AUTHORITY TO REMIT LIQUIDATED DAMAGES SINCE PUBLIC PRINTER HAS DECLINED TO RECOMMEND REMISSION OF ANY PART AND REMISSION OF LIQUIDATED DAMAGES STATUTE (41 U.S.C. 256A) REQUIRES FAVORABLE RECOMMENDATION BY AGENCY HEAD. SEE COMP. GEN. DECS. CITED. CONTRACTS--DELIVERIES--DELAYS- CONTRACTOR'S DAMAGE LIABILITY CONTRACTOR, ASSESSED LIQUIDATED DAMAGES BY GOVERNMENT PRINTING OFFICE FOR LATE DELIVERIES, REQUESTS REMISSION OF PART, CITING FAILURE OF BINDERY TO CARRY OUT COMMITMENT. HOWEVER, CONTRACTOR HAD OPPORTUNITY BEFORE ACCEPTING EACH ORDER TO REAPPRAISE ITS ABILITY TO MEET REQUIRED SCHEDULE AND RELIANCE UPON VERBAL COMMITMENT FROM BINDERY DOES NOT APPEAR TO CONSTITUTE VALID EXCUSE FOR DELAYS. GAO HAS HELD THAT CONTRACTOR HAS RESPONSIBILITY OF MAKING NECESSARY ARRANGEMENTS FOR MEN AND MATERIAL AND TO PROTECT ITSELF WITH APPROPRIATE AGREEMENT FROM ANY POSSIBLE LIABILITY IN EVENT OF UNEXCUSABLE DELAY BY SUBCONTRACTOR. SEE COMP. GEN. DECS. CITED.

TO MR. JOHN K. PICKENS:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 20, 1970, WITH ENCLOSURES, ON BEHALF OF EAGLE PRESS CORPORATION (EAGLE PRESS), REQUESTING A REMISSION OF $25,000 OF THE TOTAL OF APPROXIMATELY $44,000 ASSESSED AS LIQUIDATED DAMAGES BY THE GOVERNMENT PRINTING OFFICE (GPO) AS A RESULT OF LATE DELIVERIES ON CERTAIN PURCHASE ORDERS FOR PRINTING AND BINDING.

A CAREFUL READING OF THE CONTRACTS UNDER WHICH THE ORDERS WERE ISSUED REVEALS CERTAIN SIGNIFICANT FACTORS. FIRST OF ALL WE NOTE THAT THE CONTRACTS, WHICH COVERED THE GOVERNMENT'S NEEDS DURING 12 MONTH PERIODS FOR THE PRINTING OF VARIOUS PAMPHLETS FOR VARIOUS GOVERNMENT AGENCIES, PROVIDED FOR AN "ACCELERATED SCHEDULE" AND BIDDERS WERE ADVISED THAT THERE WAS AN URGENT NEED FOR MOST OF THE WORK. ADDITIONALLY, ON PAGE 2 OF THE SPECIFICATIONS UNDER THE SECTION ENTITLED "SPECIAL NOTICE OF CAUTION TO BIDDERS," THE BIDDER IS WARNED THAT "THIS IS A SCHEDULED JOB AND THE CONTRACTOR MUST MAINTAIN THE SCHEDULES PROVIDED HEREIN" AND THE BIDDER IS ADVISED OF THE CONSEQUENCES OF FAILURE TO MAKE DELIVERY ACCORDING TO SCHEDULE. ALSO, IT IS NOTED THAT THE SPECIFICATIONS ON WHICH BIDS WERE SUBMITTED PROVIDED FOR MULTIPLE AWARDS IN EACH OF THE SIX CATEGORIES OF PRODUCTS BEING PROCURED, TO COVER THE POSSIBILITY THAT NO SINGLE CONTRACTOR MIGHT BE ABLE TO MEET ALL THE REQUIREMENTS. THE SPECIFICATIONS ALSO PROVIDED THAT BEFORE ANY ORDER IS PLACED THE GOVERNMENT IS OBLIGATED TO CHECK WITH THE LOW BIDDER FOR THAT CATEGORY TO DETERMINE WHETHER OR NOT THE BIDDER WILL BE ABLE TO ACCEPT THE ORDER. THE LOW BIDDER IS OBLIGATED TO ACCEPT THE ORDER EXCEPT WHEN HE IS UNABLE TO MEET THE SHIPPING SCHEDULE.

IT IS CLEAR THAT EAGLE PRESS WAS ON NOTICE THAT GPO DESIRED AND NEEDED DELIVERY ON SCHEDULE. IN LIGHT OF THESE FACTS AND THE FACT THAT GPO APPARENTLY MADE ADJUSTMENTS IN THE SCHEDULES WHERE POSSIBLE, IT WOULD APPEAR THAT EAGLE PRESS HAD THE OPPORTUNITY BEFORE ACCEPTING EACH ORDER TO REAPPRAISE ITS ABILITY TO MEET THE REQUIRED SCHEDULE, AND ITS APPARENT RELIANCE UPON A VERBAL COMMITMENT FROM THE BINDERY WHICH IT EXPECTED TO PERFORM THAT PART OF THE WORK DOES NOT APPEAR TO CONSTITUTE A VALID EXCUSE FOR THE DELAYS. WE HAVE HELD THAT WHEN A CONTRACTOR AGREES TO PERFORM A CONTRACT WITHIN AN ALLOTTED TIME, IT HAS THE RESPONSIBILITY OF MAKING ALL NECESSARY ARRANGEMENTS FOR MEN AND MATERIAL, AND TO PROTECT ITSELF WITH AN APPROPRIATE AGREEMENT FROM ANY POSSIBLE LIABILITY IN THE EVENT OF AN UNEXCUSABLE DELAY BY A SUBCONTRACTOR. B-150587, JUNE 5, 1963.

ALSO, YOU CONTEND THAT THE PROVISIONS OF THE LIQUIDATED DAMAGES CLAUSE ARE UNUSUALLY HARSH AND, IN ANY EVENT, THE GOVERNMENT HAS MADE NO SHOWING THAT IT SUFFERED ANY DAMAGES AS A RESULT OF THE DELAYS. THE LIQUIDATED DAMAGES CLAUSE PROVIDES THAT THE AMOUNT OF LIQUIDATED DAMAGES "WILL BE COMPUTED AT THE RATE OF ONE PERCENT (1%) OF THE CONTRACT PRICE OF THE QUANTITY NOT SHIPPED IN ACCORDANCE WITH SPECIFICATIONS FOR EACH WORKING DAY THE CONTRACTOR IS IN DEFAULT OF THE SHIPPING SCHEDULES)." THIS PROVISION DOES NOT APPEAR TO BE UNDULY HARSH, SINCE THE MAXIMUM AMOUNT THAT CAN BE ASSESSED, REGARDLESS OF THE SIZE OF THE ORDER, IS LIMITED TO $500 PER DAY AND IN NO EVENT, REGARDLESS OF THE LENGTH OF DELAY, MAY IT EXCEED FIFTY PERCENT (50%) OF THE ORDER. IN THIS CONNECTION SEE 36 COMP. GEN. 143, 145 (1956), WHERE WE HELD THAT THE VALIDITY OF A LIQUIDATED DAMAGE STIPULATION IN A CONTRACT IS UNAFFECTED BY THE FACT THAT NO ACTUAL DAMAGES CAN BE SHOWN TO HAVE RESULTED FROM THE BREACH OF PERFORMANCE REQUIREMENTS COVERED THEREBY, OR THE FACT THAT THE ACCRUAL OF LIQUIDATED DAMAGES IN THE PARTICULAR CASE MAY EQUAL OR EVEN EXCEED THE STIPULATED CONTRACT PRICE.

OUR AUTHORITY TO REMIT LIQUIDATED DAMAGES IS STATED IN 41 U.S.C. 256A, AS FOLLOWS:

"WHENEVER ANY CONTRACT MADE ON BEHALF OF THE GOVERNMENT BY THE HEAD OF ANY FEDERAL AGENCY, OR BY OFFICERS AUTHORIZED BY HIM SO TO DO, INCLUDES A PROVISION FOR LIQUIDATED DAMAGES FOR DELAY, THE COMPTROLLER GENERAL UPON RECOMMENDATION OF SUCH HEAD IS AUTHORIZED AND EMPOWERED TO REMIT THE WHOLE OR ANY PART OF SUCH DAMAGES AS IN HIS DISCRETION MAY BE JUST AND EQUITABLE." IT HAS CONSISTENTLY BEEN OUR VIEW THAT THE STATUTE REQUIRES A FAVORABLE RECOMMENDATION BY THE HEAD OF THE AGENCY CONCERNED AS A PREREQUISITE TO THE REMISSION OF LIQUIDATED DAMAGES. B 162340, OCTOBER 6, 1967; AND SEE B-166690, AUGUST 18, 1969; B-162643, FEBRUARY 1, 1968, INVOLVING REMISSION OF LIQUIDATED DAMAGES UNDER 10 U.S.C. 2312, A SIMILAR PROVISION APPLICABLE TO MILITARY CONTRACTS.

WE HAVE RECEIVED A REPORT FROM THE PUBLIC PRINTER, DATED APRIL 20, 1970, RECOMMENDING AGAINST REMISSION OF THE LIQUIDATED DAMAGES WHICH WERE ASSESSED.

SINCE THE PUBLIC PRINTER HAS DECLINED TO RECOMMEND REMISSION OF ANY PART OF THE LIQUIDATED DAMAGES, WE ARE WITHOUT AUTHORITY TO REMIT THE SAME.