B-178126, MAR 27, 1973

B-178126: Mar 27, 1973

Additional Materials:

Contact:

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

 

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

CONTRACTS - FUNDS SET OFF - DISPUTES CLAUSE CONCERNING THE REQUEST OF R&D CORPORATION FOR RELEASE OF CERTAIN FUNDS OWING TO IT WHICH WERE SET OFF AGAINST A DEBT CLAIMED BY THE GOVERNMENT UNDER A CONTRACT AWARDED IT BY THE DEPARTMENT OF THE ARMY FOR VOLTAGE REGULATORS. REQUESTING THE RELEASE OF FUNDS OWING TO YOU WHICH WERE SET OFF AGAINST A DEBT CLAIMED BY THE GOVERNMENT UNDER YOUR CONTRACT NO. THAT FIVE REGULATORS WERE REJECTED AND RETURNED TO YOU. THAT THE REMAINING 181 REGULATORS WERE ACCEPTED AND PAID FOR IN MAY 1972. THAT IN JULY 1972 THE DEPARTMENT INFORMED YOU THAT IT HAD DETERMINED THAT 61 OF THE ACCEPTED UNITS WERE FOUND DEFECTIVE. THAT IN JANUARY 1973 THE CONTRACT WAS AMENDED TO ESTABLISH MARCH 30.

B-178126, MAR 27, 1973

CONTRACTS - FUNDS SET OFF - DISPUTES CLAUSE CONCERNING THE REQUEST OF R&D CORPORATION FOR RELEASE OF CERTAIN FUNDS OWING TO IT WHICH WERE SET OFF AGAINST A DEBT CLAIMED BY THE GOVERNMENT UNDER A CONTRACT AWARDED IT BY THE DEPARTMENT OF THE ARMY FOR VOLTAGE REGULATORS. SINCE THESE CIRCUMSTANCES SEEM TO RELATE PRIMARILY TO CONTRACT ADMINISTRATION, THE MATTER SHOULD BE PROCESSED IN ACCORDANCE WITH THE TERMS OF THE DISPUTES CLAUSE OF THE CONTRACT.

TO R & D CORPORATION:

WE REFER TO YOUR LETTER OF MARCH 2, 1973, REQUESTING THE RELEASE OF FUNDS OWING TO YOU WHICH WERE SET OFF AGAINST A DEBT CLAIMED BY THE GOVERNMENT UNDER YOUR CONTRACT NO. DAAH01-70-C-1101, AWARDED BY THE DEPARTMENT OF THE ARMY FOR A REQUIREMENT OF 186 VOLTAGE REGULATORS.

YOU STATE THAT YOU DELIVERED 186 REGULATORS TO THE DEPARTMENT UNDER THE CONTRACT IN APRIL 1972; THAT FIVE REGULATORS WERE REJECTED AND RETURNED TO YOU; THAT THE REMAINING 181 REGULATORS WERE ACCEPTED AND PAID FOR IN MAY 1972; THAT IN JULY 1972 THE DEPARTMENT INFORMED YOU THAT IT HAD DETERMINED THAT 61 OF THE ACCEPTED UNITS WERE FOUND DEFECTIVE; AND THAT THE DEPARTMENT SUBSEQUENTLY RETURNED THESE UNITS TO YOU FOR CORRECTION. YOU FURTHER STATE THAT BY LETTER OF DECEMBER 22, 1972, THE ACCOUNTING AND FINANCE OFFICER AT THE ATLANTA, GEORGIA, REGIONAL OFFICE OF DEFENSE CONTRACT ADMINISTRATION SERVICES (DCAS), DEFENSE SUPPLY AGENCY (DSA), ACTING IN ACCORDANCE WITH THE ADVICE OF THE ADMINISTRATIVE CONTRACTING OFFICER, DEMANDED PAYMENT OF $7,915.97 FROM YOU WITHIN 30 DAYS AS THE PRICE PAID FOR THE DEFECTIVE UNITS; THAT YOU DID NOT TENDER PAYMENT WITHIN SUCH TIME; THAT DCAS SUBSEQUENTLY SET OFF THIS DEMANDED AMOUNT AGAINST FUNDS OWING TO YOU UNDER OTHER CONTRACTS; AND THAT IN JANUARY 1973 THE CONTRACT WAS AMENDED TO ESTABLISH MARCH 30, 1973, AS THE DELIVERY DATE FOR THE CORRECTED UNITS AT A DECREASE IN THE CONTRACT PRICE FROM $30,386.40 TO $30,286.40.

YOU MAINTAIN THAT THE ADMINISTRATIVE CONTRACTING OFFICER IMPROPERLY ADVISED DCAS TO DEMAND THIS PAYMENT; THAT DCAS ALSO ACTED IMPROPERLY BY FOLLOWING THIS ADVICE; AND THAT THE FUNDS SHOULD BE IMMEDIATELY RELEASED TO YOU.

WE HAVE BEEN INFORMALLY ADVISED BY DSA THAT THE DEMAND LETTER OF DECEMBER 22, 1972, TO YOU FROM THE ACCOUNTING AND FINANCE OFFICER AT DCAS SHOULD HAVE ADVISED YOU OF YOUR RIGHT TO REQUEST POSTPONEMENT OF PAYMENT OF THE DEMANDED AMOUNT IF IMMEDIATE PAYMENT WAS NOT PRACTICABLE OR IF YOU DISPUTED THE AMOUNT. SEE ARMED SERVICES PROCUREMENT REGULATION E-608. DSA FURTHER INFORMED US THAT THE ADMINISTRATIVE CONTRACTING OFFICER FOR THE SUBJECT CONTRACT WILL SHORTLY ADVISE YOU OF YOUR REMEDIES UNDER THE CONTRACT AND YOUR RIGHT TO REQUEST DEFERMENT OF PAYMENT OF THE AMOUNT IN QUESTION.

SINCE THE CIRCUMSTANCES SEEM TO RELATE PRIMARILY TO CONTRACT ADMINISTRATION, THE MATTER SHOULD BE PROCESSED IN ACCORDANCE WITH THE TERMS OF THE DISPUTES CLAUSE OF THE CONTRACT.