B-180877, APR 18, 1974

B-180877: Apr 18, 1974

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GAO TAKES NO ACTION ON CONTRACTOR'S REQUEST FOR REMISSION OF LIQUIDATED DAMAGES SINCE CONTRACT WAS TERMINATED FOR GOVERNMENT'S CONVENIENCE AND CONTRACTOR WAS ADVISED OF THE GOVERNMENT'S WILLINGNESS TO NEGOTIATE A SETTLEMENT FOR TERMINATION CLAIM AND THERE IS NO INDICATION THAT LIQUIDATED DAMAGES WERE ASSESSED. 2. GAO DECLINES TO RULE ON CONTRACTOR'S TERMINATION CLAIM SINCE CONTRACT PROVIDES THAT SUCH CLAIMS WILL BE SUBMITTED TO CONTRACTING OFFICER FOR DECISION AND THAT IN THE EVENT OF A DISAGREEMENT THE DISPUTE WILL BE RESOLVED IN ACCORDANCE WITH DISPUTES CLAUSE OF THE CONTRACT. THE FILE TRANSMITTED IN SUPPORT OF ASTRODYNE'S REQUEST INDICATES THAT THE REFERENCED CONTRACT WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AND THAT THE GOVERNMENT'S TERMINATION CONTRACTING OFFICER HAS ADVISED OF THE GOVERNMENT'S WILLINGNESS TO NEGOTIATE A SETTLEMENT WITH THE FIRM.

B-180877, APR 18, 1974

1. GAO TAKES NO ACTION ON CONTRACTOR'S REQUEST FOR REMISSION OF LIQUIDATED DAMAGES SINCE CONTRACT WAS TERMINATED FOR GOVERNMENT'S CONVENIENCE AND CONTRACTOR WAS ADVISED OF THE GOVERNMENT'S WILLINGNESS TO NEGOTIATE A SETTLEMENT FOR TERMINATION CLAIM AND THERE IS NO INDICATION THAT LIQUIDATED DAMAGES WERE ASSESSED. 2. GAO DECLINES TO RULE ON CONTRACTOR'S TERMINATION CLAIM SINCE CONTRACT PROVIDES THAT SUCH CLAIMS WILL BE SUBMITTED TO CONTRACTING OFFICER FOR DECISION AND THAT IN THE EVENT OF A DISAGREEMENT THE DISPUTE WILL BE RESOLVED IN ACCORDANCE WITH DISPUTES CLAUSE OF THE CONTRACT.

TO ASTRODYNE, INC.:

ASTRODYNE, INCORPORATED, HAS REQUESTED REMISSION OF LIQUIDATED DAMAGES IN CONNECTION WITH CONTRACT NO. N00383-71-C-5002 WITH THE DEPARTMENT OF THE NAVY ON THE BASIS OF THE COMPTROLLER GENERAL'S STATUTORY AUTHORITY TO DO SO. THE FIRM FURTHER CONTENDS THAT IT "SHOULD BE PAID FOR BOTH THE WORK INVOLVED IN MANUFACTURE AND THE EXTRA WORK ENTAILED IN TRYING TO PRODUCE AN ITEM TO IMPOSSIBLE SPECIFICATIONS.

THE FILE TRANSMITTED IN SUPPORT OF ASTRODYNE'S REQUEST INDICATES THAT THE REFERENCED CONTRACT WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AND THAT THE GOVERNMENT'S TERMINATION CONTRACTING OFFICER HAS ADVISED OF THE GOVERNMENT'S WILLINGNESS TO NEGOTIATE A SETTLEMENT WITH THE FIRM.

A STANDARD PROVISION IN GOVERNMENT SUPPLY CONTRACTS PROVIDES FOR ASSESSMENT OF LIQUIDATED DAMAGES IN LIEU OF ACTUAL DAMAGES IN THE EVENT A BASIS EXISTS FOR TERMINATION FOR DEFAULT. SEE ARMED SERVICES PROCUREMENT REGULATION 7-105.5. HERE IT DOES NOT APPEAR THAT LIQUIDATED CHANGES HAVE BEEN ASSESSED AND THE INFORMATION SUBMITTED BY ASTRODYNE INDICATES THAT ITS CONTRACT WAS TERMINATED FOR THE GOVERNMENT'S CONVENIENCE.

AS TO ASTRODYNE'S REQUEST FOR PAYMENT OF COST INCURRED IN THE PERFORMANCE OF THE WORK TERMINATED, THE STANDARD TERMINATION FOR CONVENIENCE CLAUSE REQUIRED TO BE USED IN GOVERNMENT CONTRACTS PROVIDES FOR THE SETTLEMENT OF CLAIMS ARISING OUT OF SUCH TERMINATION ACTIONS. IT ALSO PROVIDES THAT THE CONTRACTOR MAY APPEAL AN ADVERSE DETERMINATION OF THE CONTRACTING OFFICER PURSUANT TO THE "DISPUTES" CLAUSE OF THE CONTRACT.

IT IS THE POSITION OF THIS OFFICE THAT THE ADMINISTRATIVE REMEDIES AFFORDED THE CONTRACTOR BY THE CONTRACT CLAUSES MUST BE EXHAUSTED AND THAT WE COULD NOT INTERVENE IN MATTERS FOR SETTLEMENT UNDER THE CONTRACT PROVISIONS.

ACCORDINGLY, WE ARE CLOSING OUR FILE IN THE MATTER WITHOUT FURTHER ACTION.