B-197641-OM, FEB 4, 1983

B-197641-OM: Feb 4, 1983

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PRECIS-UNAVAILABLE THE COMPTROLLER GENERAL: WE ARE FORWARDING THE CLAIM OF NORTH AMERICAN CORPORATION FOR $32. NORTH AMERICAN CORPORATION IS REQUESTING REIMBURSEMENT FOR RENTAL PAYMENTS FOR WORD PROCESSING EQUIPMENT LEASED TO THE DEPARTMENT OF THE ARMY. THE CONTRACTING OFFICER ALSO CHALLENGES THE DOLLAR AMOUNT FOR THE SERVICES PROVIDED AND HAS ADVISED THAT THE CORPORATION NOT BE REIMBURSED FOR THE TIME THAT THE MACHINES WERE NOT OPERABLE. WE HAVE BEEN INFORMED BY MR. THE LEGAL COUNSEL FOR NORTH AMERICAN CORPORATION THAT THEY ARE WILLING TO GO TO COURT TO OBTAIN THE ENTIRE MONTHLY RENTAL CHARGE FOR THE EQUIPMENT USED. WE ARE SUBMITTING THE CLAIM FOR INSTRUCTIONS FOR SETTLEMENT AND IN ACCORDANCE WITH B-112701.

B-197641-OM, FEB 4, 1983

PRECIS-UNAVAILABLE

THE COMPTROLLER GENERAL:

WE ARE FORWARDING THE CLAIM OF NORTH AMERICAN CORPORATION FOR $32,569.50. NORTH AMERICAN CORPORATION IS REQUESTING REIMBURSEMENT FOR RENTAL PAYMENTS FOR WORD PROCESSING EQUIPMENT LEASED TO THE DEPARTMENT OF THE ARMY, ROCK ISLAND ARSENAL, ILLINOIS, WITHOUT CONTRACTUAL COVERAGE.

THE CONTRACTING OFFICER AT ROCK ISLAND ARSENAL STATES THAT THE GOVERNMENT DID BENEFIT FROM THE USE OF THE EQUIPMENT, BUT NOT TO THE EXTENT THAT NORTH AMERICAN CORPORATION HAS CLAIMED. THE CONTRACTING OFFICER ALSO CHALLENGES THE DOLLAR AMOUNT FOR THE SERVICES PROVIDED AND HAS ADVISED THAT THE CORPORATION NOT BE REIMBURSED FOR THE TIME THAT THE MACHINES WERE NOT OPERABLE. MOREOVER, THE AMOUNT CLAIMED EXCEEDS $25,000, AND WE HAVE BEEN INFORMED BY MR. MELVIN ZAHLER, THE LEGAL COUNSEL FOR NORTH AMERICAN CORPORATION THAT THEY ARE WILLING TO GO TO COURT TO OBTAIN THE ENTIRE MONTHLY RENTAL CHARGE FOR THE EQUIPMENT USED. THEREFORE, WE ARE SUBMITTING THE CLAIM FOR INSTRUCTIONS FOR SETTLEMENT AND IN ACCORDANCE WITH B-112701, JUNE 28, 1954, AS MODIFIED BY B-189738, O.M.-SEPTEMBER 30, 1977.

INDORSEMENT

ASSOCIATE DIRECTOR, AFMD - CLAIMS GROUP

RETURNED. NORTH AMERICAN CORPORATION (NAC), THE SUCCESSOR IN INTEREST TO INFORMATION CONTROL SYSTEMS (ICS), A BANKRUPT CORPORATION, CLAIMS PAYMENT FOR MONIES DUE UNDER CONTRACT NO. DAAA08-78-F-0132 BETWEEN ICS AND THE DEPARTMENT OF THE ARMY (ARMY) FOR RENTAL OF WORD PROCESSING EQUIPMENT AT THE ROCK ISLAND ARSENAL, ILLINOIS. THE ARMY HAS AGREED TO OUR SETTLEMENT OF THE CLAIM. WE CERTIFY THE CLAIM FOR PAYMENT.

NAC SEEKS RECOVERY IN QUANTUM MERUIT FOR THE ARMY'S BENEFICIAL USE OF THE EQUIPMENT FOR THE PERIOD FROM OCTOBER 1, 1978, THROUGH JUNE 13, 1979, WHICH PERIOD IS SUBSEQUENT TO THE CONTRACT EXPIRATION DATE OF SEPTEMBER 30, 1978. THE ARMY DOES NOT DISPUTE ITS USE OF THE EQUIPMENT NOR ITS IMPLIED CONTRACTUAL RATIFICATION THEREBY, BUT HAS CONTENDED THAT "EXTRAORDINARY" EQUIPMENT MALFUNCTION SHOULD ALLOW IT TO SET OFF THE NAC CLAIM FOR THE FOLLOWING REASONS:

1. EQUIPMENT DOWNTIME 2. EMPLOYEE OVERTIME FOR REPAIRS 3. NONDELIVERY OF AN EQUIPMENT COMPONENT.

UNDER 31 U.S.C. SEC. 71 (1976), THIS OFFICE IS EMPOWERED TO SETTLE AND ADJUST ALL CLAIMS FOR AND AGAINST THE UNITED STATES. THIS RIGHT HAS LONG BEEN HELD TO INCLUDE THE SETTING OFF OF ONE DEBT AGAINST ANOTHER. MCKNIGHT V. UNITED STATES, 13 CT.CL. 292, 306 (1877), AFF'D., 98 U.S. 1979, 25 L.ED. 115; UNITED STATES V. MUNSEY TRUST CO., 67 S.CT. 1599 (1947), 332 U.S. 234, 91 L.ED. 2022.

ALTHOUGH THERE HAD BEEN AN INITIAL DISPUTE BETWEEN NAC AND THE ARMY REGARDING BOTH THE PROPRIETY OF THE SETOFFS AND THE AMOUNTS INVOLVED, FURTHER INVESTIGATION HAS RESOLVED PORTIONS OF THE DISPUTE IN FAVOR OF THE CLAIMANT.

THE ARMY DETERMINED TO BASE THE SETOFF FOR DOWNTIME ON AN AVERAGE OF 21 WORKING DAYS PER MONTH. NAC ACCEPTED THE SETOFF FOR DOWNTIME GENERALLY, BUT INSISTED THAT IT SHOULD HAVE BEEN BASED UPON A 30-DAY MONTH. WE AGREE WITH NAC'S POSITION: (1) ON GROUND THAT LEGALLY AND COMMERCIALLY, PER DIEM RATES UNDER A LEASE ARE GENERALLY CONSTRUCTED UPON AN AVERAGE CALENDAR MONTH OF 30 DAYS (SEE BALLENTINE'S LAW DICTIONARY (3RD ED. 1969)) AND (2) THAT THE ORIGINAL CONTRACT WAS PURSUANT TO FEDERAL SUPPLY SCHEDULE GS-00S- 66078 (74-I) WHICH STATED THAT DEDUCTIONS OF RENTAL CHARGES WERE TO BE MADE ON THE BASIS OF 1/30TH OF THE MONTHLY RATE FOR EACH DAY THAT THE EQUIPMENT WAS INOPERATIVE.

ALTHOUGH THE ARMY INITIALLY ALLEGED THAT A CERTAIN PIECE OF EQUIPMENT HAD NOT BEEN DELIVERED, BY LETTER OF DECEMBER 10, 1982, THE ARMY SUBMITTED A DISPOSITION FORM WHICH INDICATED THAT THE EQUIPMENT WAS DELIVERED, CONTRARY TO ITS ORIGINAL ASSERTION.

FINALLY, THE ARMY HAS SUBMITTED NO EVIDENCE WHICH WOULD INDICATE THAT EMPLOYEE OVERTIME NECESSITATED BY THE DOWNTIME FOR REPAIRS WAS COMPENSABLE UNDER THE ORIGINAL CONTRACT. FEDERAL SUPPLY SCHEDULE GS 00S-66078 (74-I) MADE NO MENTION OF ANY SETOFF FOR THAT REASON.

IN ADDITION, IN A TELEPHONE COMMUNICATION OF DECEMBER 27, THE ARMY INDICATED THAT A RECOMMENDATION FOR PAYMENT WOULD BE FORTHCOMING FROM AN APPROPRIATE PROCUREMENT OFFICER.

IT IS CLEAR FROM THE RECORD THAT THE ARMY HAD BENEFICIAL USE OF THE EQUIPMENT, AND THAT THIS USE WAS IMPLIEDLY RATIFIED BY CONTINUED OPERATION OF THE EQUIPMENT FOR NEARLY 9 MONTHS BEYOND THE EXPIRATION DATE OF THE ORIGINAL CONTRACT. SEE DAVE JARRETT CONSTRUCTION, B-197568, FEBRUARY 12, 1980, 80-1 CPD 127.

NAC'S CLAIM IS FOR THE PERIOD FROM OCTOBER 1, 1978, THROUGH JUNE 13, 1979, IN THE AMOUNT OF $36,140.70, LESS $5,356.82 FOR THE DOWNTIME SETOFF. PAYMENT FOR $30,783.88 MAY BE MADE TO NAC ON A QUANTUM MERUIT BASIS.