B-170911, JUN 1, 1972

B-170911, JUN 1, 1972

PROCUREMENT LAW - ASSESSED LIQUIDATED DAMAGES - REQUEST FOR EQUITABLE RELIEF DECISION DENYING EQUITABLE RELIEF TO THE EATON CORPORATION FROM AN ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAY IN THE PERFORMANCE OF AN ARMY CONTRACT. THE REQUEST MUST BE DENIED SINCE UNDER 10 U.S.C. 2312 A FAVORABLE RECOMMENDATION BY THE CONTRACTING AGENCY IS PREREQUISITE TO ANY REMISSION ACTION BY GAO.

TO GREENBERG, TRAYMAN, HARRIS, CANTOR, REISS AND BLASKY:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 30, 1971, AND TO A CONFERENCE HELD APRIL 3, 1972, CONCERNING THE REQUEST OF THE EATON CORPORATION FOR EQUITABLE RELIEF UNDER 10 U.S.C. 2312 FROM AN ASSESSMENT OF $24,000 AS LIQUIDATED DAMAGES FOR AN UNEXCUSED DELAY OF 96 DAYS IN PERFORMANCE OF ARMY CONTRACT NO. DACW-66-68-C-0050.

THE RECORD INDICATES THAT, UPON COMPLETION OF THE CONTRACT, THE GOVERNMENT HAD WITHHELD LIQUIDATED DAMAGES FOR 259 DAYS OF DELAY IN PERFORMANCE. THE CONTRACTOR APPEALED FROM A DECISION OF THE CONTRACTING OFFICER DENYING A REQUEST FOR AN EXTENSION OF THE CONTRACT PERFORMANCE TIME. UPON REVIEW OF THE CASE, THE DIVISION ENGINEER DETERMINED THAT THE CONTRACTOR WAS ENTITLED TO AN EXTENSION OF TIME IN THE TOTAL AMOUNT OF 163 DAYS. THE CONTRACTOR AGREED TO ACCEPT SUCH EXTENSION IN SETTLEMENT OF THE APPEAL BUT RESERVED THE RIGHT TO REQUEST THAT OUR OFFICE REMIT ALL LIQUIDATED DAMAGES ON EQUITABLE GROUNDS. IT WAS CONTENDED WITH RESPECT TO THE REMAINING 96 DAYS OF DELAY AFTER EXTENDING THE CONTRACT PERFORMANCE TIME FOR A TOTAL PERIOD OF 163 DAYS THAT (1) THE GOVERNMENT SUFFERED NO PREJUDICE OR ADDITIONAL COST AS THE RESULT OF THE 96 DAYS OF UNEXCUSED DELAY, AND (2) THAT THE MATERIALS HANDLING SYSTEM IS A NEW AND UNIQUE DESIGN WHICH RESULTED IN PROBLEMS AND UNFORESEEN DIFFICULTIES.

BY LETTER DATED MARCH 22, 1972, THE SECRETARY OF THE ARMY RECOMMENDED AGAINST REMISSION OF LIQUIDATED DAMAGES ON EQUITABLE GROUNDS PURSUANT TO 10 U.S.C. 2312, WHICH PROVIDES AS FOLLOWS:

"UPON THE RECOMMENDATION OF THE HEAD OF AN AGENCY, THE COMPTROLLER GENERAL MAY REMIT ALL OR PART, AS HE CONSIDERS JUST AND EQUITABLE, OF ANY LIQUIDATED DAMAGES ASSESSED FOR DELAY IN PERFORMING A CONTRACT, MADE BY THAT AGENCY, THAT PROVIDES FOR SUCH DAMAGES."

YOU HAVE BEEN FURNISHED COPIES OF THE ORIGINAL AND SUPPLEMENTAL ADMINISTRATIVE REPORTS OF THE DISTRICT ENGINEER AND SUCCESSOR CONTRACTING OFFICER ON THE REQUEST OF THE EATON CORPORATION. AS FAR AS CONCERNS CONSIDERATION OF THE REQUEST BY OUR OFFICE, IT HAS CONSISTENTLY BEEN OUR POSITION THAT THE CITED STATUTE CLEARLY CONTEMPLATES THAT A FAVORABLE RECOMMENDATION BY A CONTRACTING AGENCY WOULD BE A PREREQUISITE TO ANY REMISSION ACTION BY OUR OFFICE. CONSEQUENTLY, SINCE THE SECRETARY OF THE ARMY HAS RECOMMENDED THAT THE REQUEST OF THE EATON CORPORATION BE DENIED, THE REQUEST MAY NOT BE GRANTED BY OUR OFFICE. 34 COMP. GEN. 251 (1954).