B-169904, AUG. 4, 1970

B-169904: Aug 4, 1970

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

SINCE DELIVERY IN ONE CASE WAS ACCOMPLISHED SOME 6 MONTHS BEFORE SPACE WAS AVAILABLE. SECRETARY: REFERENCE IS MADE TO A LETTER DATED MAY 22. WERE FOR FURNISHING. EACH OF THE CONTRACTS CONTAINED THE FOLLOWING LANGUAGE UNDER THE DELIVERY SCHEDULE: "COMPLIANCE WITH THE QUOTED DELIVERY SCHEDULE IS QUITE IMPORTANT. THE CONTRACTOR IS THEREFORE REQUESTED TO STAND BEHIND ITS COMMITMENT TO THE EXTENT OF AN ADVANCE AGREEMENT RELATIVE TO A PREDETERMINED PENALTY IN THE EVENT OF LATE DELIVERY. IS DEEMED TO BE ONE WHICH ESCALATES ON A PERIODIC BASIS. IT IS THEREFORE AGREED THAT THE PENALTY FOR LATE DELIVERY SHALL BE: % PER DAY 0-30 DAYS % PER DAY 61-90 DAYS % PER DAY 31-60 DAYS % PER DAY 90 DAYS AND OVER LIQUIDATED DAMAGES SHALL BE CHARGED THE CONTRACTOR FOR FAILURE TO MAKE COMPLETE DELIVERY WITHIN THE PERIOD SPECIFIED ABOVE.

B-169904, AUG. 4, 1970

CONTRACTS--REMISSION OF LIQUIDATED DAMAGES DECISION TO SECRETARY OF STATE AUTHORIZING REMISSION ON AN EQUITABLE BASIS OF $25,000 FROM THE AMOUNT OF $46,986.76 IN LIQUIDATED DAMAGES ASSESSED BY THE DEPT. OF STATE AGAINST ITTT, MILAN, TENNESSEE, FOR LATE DELIVERY OF (ELECTRONIC PABX) PRIVATE AUTOMATIC BRANCH EXCHANGES. ITTT, CONTRACTOR WHOSE DELIVERY OF AUTOMATIC EXCHANGES, FOR INSTALLATION IN AMERICAN EMBASSIES IN BRUSSELS, BELGIUM; BANGKOK AND ONE IN ALEXANDRIA, VA. WAREHOUSE DID NOT MEET THE CONTRACT SCHEDULE MAY BE REMITTED A PARTIAL SUM OF $25,000 FROM THE AMOUNT OF $46,986.76. SINCE DELIVERY IN ONE CASE WAS ACCOMPLISHED SOME 6 MONTHS BEFORE SPACE WAS AVAILABLE, LIQUIDATED DAMAGES AMOUNTED TO 74 PER CENT OF TOTAL CONTRACT PRICE AND CONTRACTOR AGREES TO WITHDRAW CLAIMS.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED MAY 22, 1970, WITH ENCLOSURES, FROM MR. FRANK G. MEYER, ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF STATE, CONCERNING THE REQUEST FOR REMISSION ON AN EQUITABLE BASIS OF $25,000 OUT OF A TOTAL OF $46,986.76 IN LIQUIDATED DAMAGES ASSESSED BY THE DEPARTMENT OF STATE, DIVISION OF SUPPLY AND TRANSPORTATION SERVICES, UNDER CONTRACTS NOS. SCC-31654, DATED JUNE 13, 1967, SCC-31686, DATED JUNE 30, 1967, AND SCC-31682, DATED JUNE 27, 1967, AGAINST INTERNATIONAL TELEPHONE AND TELEGRAPH TELECOMMUNICATIONS (ITTT), MILAN, TENNESSEE.

THE CONTRACTS AS EXECUTED, WERE FOR FURNISHING, WITHOUT INSTALLATION, PRIVATE AUTOMATIC BRANCH EXCHANGES, ELECTRONIC PABX (EPABX) PER SPECIFICATIONS, FOR USE AT THE AMERICAN EMBASSIES IN BRUSSELS, BELGIUM AND BANGKOK, THAILAND, PLUS A STAND-BY UNIT DELIVERED TO ALEXANDRIA, VIRGINIA. CONTRACT 31654, BRUSSELS AND CONTRACT 31686, BANGKOK PROVIDED FOR DELIVERY DATES 120 DAYS AFTER RECEIPT OF EXECUTED CONTRACT AT THE DESIGNATED PORTS OF SHIPMENT. CONTRACT 31682, ALEXANDRIA, PROVIDED FOR A DELIVERY DATE 90 DAYS AFTER RECEIPT OF EXECUTED CONTRACT AT THE CONSIGNEE'S PREMISES. EACH OF THE CONTRACTS CONTAINED THE FOLLOWING LANGUAGE UNDER THE DELIVERY SCHEDULE:

"COMPLIANCE WITH THE QUOTED DELIVERY SCHEDULE IS QUITE IMPORTANT. THE CONTRACTOR IS THEREFORE REQUESTED TO STAND BEHIND ITS COMMITMENT TO THE EXTENT OF AN ADVANCE AGREEMENT RELATIVE TO A PREDETERMINED PENALTY IN THE EVENT OF LATE DELIVERY. AN EQUITABLE PENALTY ARRANGEMENT, IN THE CURRENT INSTANCE, IS DEEMED TO BE ONE WHICH ESCALATES ON A PERIODIC BASIS, SUCH AS: 1/4% PER DAY, O-30 DAYS; 1/2% PER DAY, 31-60 DAYS; 3/4% PER DAY, 61-90 DAYS; 1% PER DAY OVER 90 DAYS. IT IS THEREFORE AGREED THAT THE PENALTY FOR LATE DELIVERY SHALL BE:

% PER DAY 0-30 DAYS % PER DAY 61-90 DAYS

% PER DAY 31-60 DAYS % PER DAY 90 DAYS

AND OVER LIQUIDATED DAMAGES SHALL BE CHARGED THE CONTRACTOR FOR FAILURE TO MAKE COMPLETE DELIVERY WITHIN THE PERIOD SPECIFIED ABOVE, OR EXTENTION THEREOF, AT THE RATES ABOVE PER DAY UNTIL DELIVERY IS COMPLETED: UNLESS SUCH DELAYS ARE EXCUSABLE AS DEFINED IN DEFAULT CLAUSE, PARAGRAPH #11 OF STANDARD FORM 32, JUNE 1964 EDITION ATTACHED HERETO AS REFERENCE."

ITTT INSERTED THE FIGURES $15 PER DAY FOR 0-30 DAYS; $25 PER DAY FOR 31- 60 DAYS; $25 PER DAY FOR 61-90 DAYS AND $25 PER DAY FOR 90 DAYS AND OVER UNDER CONTRACTS 31654 AND 31682. IN CONTRACT 31686 ITTT INSERTED THE PERCENTAGES SUGGESTED IN THE QUOTED CLAUSE. IT IS REPORTED THAT THE AGGREGATE SUM OF $46,986.76 WAS WITHHELD FROM PAYMENTS UNDER THE THREE CONTRACTS AS LIQUIDATED DAMAGES.

IT IS STATED IN THE REPORT ACCOMPANYING A SUPPLEMENTAL LETTER OF JUNE 12, 1970, THAT EVEN THOUGH THE DELIVERY DATE OF NOVEMBER 30, 1967, WAS NOT MET UNDER CONTRACT 31686 AND THE EPABX DID NOT ARRIVE UNTIL JUNE 13, 1968, AT THE AMERICAN EMBASSY IN BANGKOK, THE DELIVERY DELAY WAS NOT MATERIAL SINCE THE INTENDED SPACE WAS NOT AVAILABLE FOR INSTALLATION UNTIL EARLY IN OCTOBER 1968. IN ADDITION, THE RECORD SHOWS THAT THE DELAY IN DELIVERY OF THE EPABX UNDER CONTRACT 31654 TO BRUSSELS WAS NOT CONSIDERED MATERIAL SINCE THE EQUIPMENT COULD NOT BE UTILIZED UPON DELIVERY BECAUSE OF EXISTING TRUNK CIRCUITS. FURTHER, THE DELAY OF DELIVERY OF THE STAND-BY EPABX UNDER CONTRACT 31682, ALEXANDRIA, WAS NOT CONSIDERED MATERIAL AS THE EQUIPMENT WAS FOR WAREHOUSING FOR FUTURE USE. IT IS NOTED THAT THE CONTRACTOR HAS AGREED TO WITHDRAW ALL EXISTING CLAIMS NOW PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS, IN THE EVENT PARTIAL REMISSION OF LIQUIDATED DAMAGES IS APPROVED. IN THIS CONNECTION WE RECOGNIZE THAT THE GOVERNMENT WOULD BENEFIT THEREBY BY CONCLUDING A CONTRACT APPEAL CASE WITHOUT THE EXPENDITURE OF ADDITIONAL TIME AND EXPENSE IN THE ADMINISTRATIVE HANDLING OF CLAIMS CONSIDERED TO BE UNFOUNDED IN FACT, AND THROUGH LITIGATION AFTER EXHAUSTION OF ADMINISTRATIVE REMEDIES.

IT IS THE RECOMMENDATION OF YOUR DEPARTMENT, IN ACCORDANCE WITH 41 U.S.C. 256A AND 259, THAT PARTIAL LIQUIDATED DAMAGES IN THE SUM OF $25,000, ASSESSED IN THE AGGREGATE UNDER THE SUBJECT CONTRACTS, BE REMITTED TO THE CONTRACTOR ON AN EQUITABLE BASIS, PROVIDED THE CONTRACTOR WITHDRAWS, WITH PREJUDICE, ALL CLAIMS, PAST, PRESENT, OR FUTURE, UNDER THE THREE SUBJECT CONTRACTS.

WE HAVE REVIEWED THE ADMINISTRATIVE REPORT AND DOCUMENTS ACCOMPANYING THE LETTER OF MAY 22, 1970, AND AGREE IN SUBSTANCE WITH THE RECOMMENDATION MADE. WE HAVE CONSISTENTLY HELD THAT THE AUTHORITY CONFERRED UPON THIS OFFICE BY THE ABOVE-CITED STATUTE, TO REMIT, UPON ADMINISTRATIVE RECOMMENDATION, ALL OR ANY PART OF LIQUIDATED DAMAGES FOR DELAY AS "MAY BE JUST AND EQUITABLE" IS FOR APPLICATION ONLY WHERE STRONG AND PERSUASIVE EQUITIES EXIST ON BEHALF OF THE CONTRACTOR. SEE 32 COMP. GEN. 67 (1952); 34 ID. 251 (1954); 36 ID. 143 (1956). WE DO NOT BELIEVE THAT EQUITABLE RELIEF SHOULD BE GRANTED WHERE, AS HERE INDICATED, THE BASIS FOR EQUITABLE RELIEF UNDER CONTRACTS SCC 31654 AND SCC 31682 IS FOUNDED UPON THE FACT THAT THE GOVERNMENT WAS NOT INCONVENIENCED OR DAMAGED BY THE DELAY IN DELIVERY. THE VALIDITY OF A LIQUIDATED DAMAGE PROVISION IS UNAFFECTED BY THE CIRCUMSTANCE THAT NO ACTUAL DAMAGE IS SHOWN TO HAVE RESULTED FROM THE FAILURE TO DELIVER WITHIN THE TIME SPECIFIED. SEE 36 COMP. GEN. 143, 145 (1956).

WE DO, HOWEVER, BELIEVE THAT THE RECORD SHOWING THE DELIVERY TO THE GOVERNMENT OF THE EPABX UNDER CONTRACT 31686, SOME 6 MONTHS BEFORE COMPLETION OF SPACE FOR INSTALLATION WAS AVAILABLE, COUPLED WITH THE FACT THAT THE LIQUIDATED DAMAGES THEREUNDER AMOUNTED TO $38,387 OR APPROXIMATELY 74 PERCENT OF THE ENTIRE CONTRACT PRICE OF $51,874, IS WITHIN THE PURVIEW OF THE STATUTE.

BY VIRTUE OF THE AUTHORITY CONFERRED BY THE PROVISIONS OF 41 U.S.C. 256A, AND IN ACCORDANCE WITH THE ADMINISTRATIVELY RECOMMENDED PROPOSED AGREEMENT DATED MAY 14, 1970, ACCOMPANYING THE FILE, THE REMISSION OF PARTIAL LIQUIDATED DAMAGES AMOUNTING TO $25,000 UNDER CONTRACT SCC 31686 IS APPROVED.