B-173176, MAR 17, 1972

B-173176: Mar 17, 1972

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IS REQUIRED TO BASE HIS DETERMINATION ON THE FACTS AS REPORTED BY THE AGENCY. 46 COMP. INCORPORATED: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 24. V797P-3388 WAS THEREAFTER NEGOTIATED WITH YOUR FIRM ON A SOLE SOURCE BASIS. WHICH WAS REACHED WITH YOUR REPRESENTATIVE. REPLACEMENT OF ALL PARTS AND MATERIALS WHICH ARE FOUND TO BE DEFECTIVE DURING THE GUARANTEE PERIOD. REPLACEMENT OF MATERIAL AND PARTS WILL BE FURNISHED TO THE GOVERNMENT AT THE POINT OF THE CONTINENTAL U.S. PORT TO BE DESIGNATED BY THE PURCHASING OFFICER IF INSTALLATION IS OUTSIDE OF THE CONTINENTAL UNITED STATES. THE LAUNDRY SYSTEM WAS INSTALLED ON FEBRUARY 1. WAS OPERATING TO THE SATISFACTION OF THE GOVERNMENT BY FEBRUARY 19.

B-173176, MAR 17, 1972

CONTRACTS - REIMBURSEMENT FOR REPAIR EXPENSES - DISPUTED ISSUES OF FACT DECISION SUSTAINING PRIOR DISALLOWANCE OF A CLAIM OF RENREW, INC., FOR LABOR, MATERIAL, AIR FARE AND AIR FREIGHT EXPENSES INCURRED INCIDENT TO THE REPAIR OF A LAUNDRY SYSTEM AT THE VETERANS ADMINISTRATION HOSPITAL, LOUISVILLE, KY. IN THE INSTANT CASE, THERE EXISTS A FACTUAL DISPUTE WITH REGARD TO THE CAUSE OF THE SYSTEM'S FAILURE AND THE EXISTENCE OF A VERBAL WARRANTY FOR 48-HOUR PARTS AND/OR SERVICE, AND ABSENT CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY, THE COMP. GEN. IS REQUIRED TO BASE HIS DETERMINATION ON THE FACTS AS REPORTED BY THE AGENCY. 46 COMP. GEN. 740, 744 (1969). ACCORDINGLY, THE PRIOR DISALLOWANCE MUST BE SUSTAINED.

TO RENREW, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 24, 1972, REQUESTING A REVIEW OF OUR SETTLEMENT CERTIFICATE DATED OCTOBER 28, 1971, DISALLOWING YOUR CLAIM IN THE AMOUNT OF $778.00 FOR LABOR, MATERIAL, AIR FARE AND AIR FREIGHT EXPENSES INCURRED INCIDENT TO THE REPAIR OF A RENREW-POENSGEN FLOWLINE LAUNDRY SYSTEM AT THE VETERANS ADMINISTRATION HOSPITAL, LOUISVILLE, KENTUCKY.

IN RESPONSE TO REQUEST FOR PROPOSALS M3-Q104-69, ISSUED JUNE 4, 1969, BY THE VETERANS ADMINISTRATION, MARKETING DIVISION FOR ADMINISTRATIVE MEDICAL SUPPLIES AND EQUIPMENT, HINES, ILLINOIS, YOU SUBMITTED AN OFFER DATED JUNE 9, 1969, AND CONTRACT NO. V797P-3388 WAS THEREAFTER NEGOTIATED WITH YOUR FIRM ON A SOLE SOURCE BASIS. AS STATED IN THE SETTLEMENT CERTIFICATE, THE VETERANS ADMINISTRATION HAS REPORTED THAT THE CONTRACT INCLUDES NOT ONLY THE WRITTEN DOCUMENTS BUT ALSO AN ESSENTIAL VERBAL AGREEMENT, WHICH WAS REACHED WITH YOUR REPRESENTATIVE, THAT PARTS AND/OR SERVICE WOULD BE FURNISHED WITHIN 48 HOURS AFTER NOTIFICATION. THE CONTRACT CONTAINS A WRITTEN GUARANTEE, AS FOLLOWS:

"GUARANTEE: THE CONTRACTOR GUARANTEES THE EQUIPMENT AGAINST DEFECTIVE MATERIAL, WORKMANSHIP AND PERFORMANCE FOR A PERIOD OF 1 YEAR, SAID GUARANTEE TO RUN FROM DATE OF ACCEPTANCE OF THE EQUIPMENT BY THE GOVERNMENT. THE CONTRACTOR AGREES TO FURNISH, WITHOUT COST TO THE GOVERNMENT, REPLACEMENT OF ALL PARTS AND MATERIALS WHICH ARE FOUND TO BE DEFECTIVE DURING THE GUARANTEE PERIOD. REPLACEMENT OF MATERIAL AND PARTS WILL BE FURNISHED TO THE GOVERNMENT AT THE POINT OF THE CONTINENTAL U.S. PORT TO BE DESIGNATED BY THE PURCHASING OFFICER IF INSTALLATION IS OUTSIDE OF THE CONTINENTAL UNITED STATES. COST OF INSTALLATION OF REPLACEMENT MATERIAL AND PARTS SHALL BE BORNE BY THE CONTRACTOR."

THE LAUNDRY SYSTEM WAS INSTALLED ON FEBRUARY 1, 1970, AND WAS OPERATING TO THE SATISFACTION OF THE GOVERNMENT BY FEBRUARY 19, 1970.

IT APPEARS THAT YOU WERE NOTIFIED ON, OR ABOUT, JUNE 20, 1970, THAT THE WASHER MOTOR HAD BURNED OUT AND YOU MADE ARRANGEMENTS TO HAVE A NEW MOTOR AND A SERVICE MAN FLOWN TO LOUISVILLE, KENTUCKY, TO GET THE WASHER BACK IN OPERATION. ON JULY 8, 1970, YOU BILLED (UNDER THE LETTERHEAD OF TEXALL SERVICE CORPORATION) THE VETERANS ADMINISTRATION HOSPITAL, LOUISVILLE, KENTUCKY, AS FOLLOWS:

ONE (1) WBS 72 MOTOR TO REPLACE

BURNED OUT UNIT $860.00

LESS 70% 602.00 $258.00

LABOR BY SERVICE MAN INCLUDING

FLIGHT TIME 280.00

AIR FLIGHT, AIR FREIGHT OF MOTOR, AND

EXPENSES OF SERVICE MAN 240.00

TOTAL $778.00

THE VETERANS ADMINISTRATION HAS REFUSED TO PAY YOUR COMPANY FOR THE AIR FREIGHT ON THE NEW MOTOR OR FOR THE CHARGES RELATING TO THE SERVICE MAN. IT IS THE AGENCY'S POSITION THAT IT WAS NECESSARY TO SHIP THE NEW MOTOR BY AIR IN ORDER TO MEET THE 48-HOUR PARTS AND/OR SERVICE WARRANTY OF THE VERBAL AGREEMENT, AND THAT THE VETERANS ADMINISTRATION DID NOT REQUEST ASSISTANCE IN CHANGING THE MOTORS AS THE AGENCY'S ENGINEERING PERSONNEL HAD REMOVED THE BURNED OUT MOTOR THE DAY IT FAILED. IN THIS CONNECTION, WE NOTE THAT SERVICE WITHIN 48 HOURS ALSO APPEARS TO BE A PART OF THE VERBAL AGREEMENT, AND THE COST OF INSTALLATION OF REPLACEMENT PARTS IS COVERED BY THE WRITTEN GUARANTEE, THE AGENCY SEES NO BASIS FOR ASSUMING ANY PART OF THE COST OF REPLACING THE DEFECTIVE EQUIPMENT.

IN YOUR LETTER OF JANUARY 24, YOU DENY THE EXISTENCE OF A VERBAL AGREEMENT FOR PARTS AND/OR SERVICE WITHIN 48 HOURS AFTER NOTIFICATION "IN THE SENSE TO WHICH YOU HAVE EXPANDED THIS PHRASE." TO SUPPORT THIS CONTENTION, YOU ADVISE THAT THIS TYPE OF WARRANTY IS IMPOSSIBLE BECAUSE YOUR PACKING FOR SHIPMENT AND CARRIER PICK-UP BY THEMSELVES USUALLY TAKE TWO DAYS. IN ADDITION, YOU CONTEND THAT YOUR AGREEMENT TO REPLACE PARTS INSTALLED AT YOUR COST MEANS REPLACEMENT IN A REASONABLE TIME AND DOES NOT MEAN SHIPPED "BY AIR" AND INSTALLED BY MECHANICS SENT BY AIR WITHIN 48 HOURS "WITHOUT EXPRESS STATEMENT TO THAT EFFECT."

THE VETERANS ADMINISTRATION'S INITIAL REPORT ON YOUR CLAIM STATED THAT A VERBAL AGREEMENT WAS MADE WITH YOUR FIRM, WHICH, IN PERTINENT PART, IS AS FOLLOWS:

"B. THAT IN THEIR AGREEMENT WITH CENTRAL OFFICE, RENREW GUARANTEED REPLACEMENT OF ANY PARTS WITHIN 48 HOURS AFTER NOTIFICATION.

"C. THAT IF AIR SERVICE IS NECESSARY TO PROVIDE SERVICE AND REPLACEMENT OF PARTS WITHIN THIS 48 HOUR PERIOD, IT IS PROPERLY AN EXPENSE OF RENREW- POENSGEN."

AT THE REQUEST OF THIS OFFICE, THE VETERANS ADMINISTRATION CONFIRMED THE REACHING OF THIS AGREEMENT DURING THE NEGOTIATION OF YOUR CONTRACT.

THE STATEMENTS YOU HAVE MADE AND THE REPORTS FURNISHED THIS OFFICE BY THE VETERANS ADMINISTRATION, RELATING TO THE EXISTENCE OF A VERBAL WARRANTY FOR 48-HOUR PARTS AND/OR SERVICE, POSES A DISPUTED QUESTION OF MATERIAL FACT. WHERE THERE ARE SUCH DISPUTED QUESTIONS OF FACT CONCERNING A CLAIM AGAINST THE GOVERNMENT, RESOLUTION OF THE DISPUTE IN FAVOR OF THE CLAIMANT CAN BE MADE ONLY UPON THE MOST CLEAR AND CONVINCING EVIDENCE, WHICH WE DO NOT FIND IN THIS CASE. IN THE ABSENCE OF SUCH EVIDENCE, WE ARE REQUIRED TO BASE OUR DETERMINATION ON THE FACTS AS REPORTED BY THE AGENCY. COMP. GEN. 740, 744 (1967); B 171341, AUGUST 13, 1971; B-154688, MAY 29, 1968; B-161173, APRIL 20, 1967.

YOU ALSO CONTEND THAT THE VETERANS ADMINISTRATION'S STATEMENT, THAT THE MOTOR DID NOT SINGLE PHASE, IS UNWARRANTED. YOU ALLEGE THAT YOUR INSPECTION OF THE MOTOR SHOWED THAT IT SINGLE PHASED. YOU SAY THIS IS USUALLY DUE TO MOISTURE COLLECTING IN THE CONDUIT LINES AT THE PLACE OF OPERATION AND, SINCE THIS IS A CIRCUMSTANCE OF LOCAL CHARACTERISTICS OVER WHICH YOU HAVE NO CONTROL, THE MOTOR WARRANTY DOES NOT EXTEND TO ITS FAILURE UNDER SUCH CIRCUMSTANCES. AS STATED IN THE SETTLEMENT CERTIFICATE, THE VETERANS ADMINISTRATION REPORTED THAT THE FAILURE WAS DUE TO THE REVERSING MECHANISM. IN ADDITION, THE AGENCY HAS REPORTED THAT IF THE MOTOR HAD SINGLE PHASED, AS CLAIMED BY YOUR COMPANY, IT WOULD HAVE KICKED OUT THE OVERLOAD RELAY, AND THAT YOUR REPRESENTATIVE TOLD THE MAINTENANCE PERSONNEL THAT THERE HAD BEEN PROBLEMS WITH THE ROTOR ON THE MOTOR. HERE, AGAIN, A DISPUTED QUESTION OF FACT IS PRESENTED WHICH WE ARE NOT EQUIPPED TO RESOLVE AND MUST BASE OUR DETERMINATION ON THE ADMINISTRATIVELY REPORTED FACTS. WE MUST CONCLUDE, THEREFORE, THAT YOU HAVE RAISED NO LEGAL IMPEDIMENT TO THE GOVERNMENT'S USE OF THE WRITTEN GUARANTEE TO DENY YOUR CLAIM FOR ANY PORTION OF THE COST OF THE REPLACEMENT MOTOR.

IN VIEW OF THE FOREGOING, THE SETTLEMENT CERTIFICATE OF OCTOBER 28, 1971, DISALLOWING ALL PARTS OF YOUR CLAIM, IS SUSTAINED.