B-7329, DECEMBER 15, 1939, 19 COMP. GEN. 587

B-7329: Dec 15, 1939

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- OR WHETHER AN ADMINISTRATIVE SURVEY MADE PRIOR TO THE REJECTION OF THE EQUIPMENT IS SUFFICIENT GROUND FOR THE REJECTION. WHERE SUCH REJECTION IS AN ACCOMPLISHED FACT THERE IS NO AUTHORITY FOR THE PAYMENT OF ANY AMOUNT UNTIL THERE IS EITHER A MODIFICATION OF THE ADMINISTRATIVE DETERMINATION TO REJECT OR THE MATTER IS JUDICIALLY DETERMINED. 1939: I HAVE YOUR LETTER OF NOVEMBER 22. AS FOLLOWS: REFERENCE IS MADE TO CONTRACTS ALS-19346 AND ALS-19530 WITH THE WASHINGTON REFRIGERATION COMPANY. WHICH ARE ON FILE IN YOUR OFFICE. THE FOLLOWING FACTS ARE PRESENTED FOR YOUR CONSIDERATION AND DECISION AS TO THE PROCEDURE TO FOLLOW: THE CONTRACTS CITED WERE AWARDED TO THE WASHINGTON REFRIGERATION COMPANY ON JUNE 15.

B-7329, DECEMBER 15, 1939, 19 COMP. GEN. 587

CONTRACTS - PAYMENT AFTER REJECTION OF EQUIPMENT - SUFFICIENCY OF ADMINISTRATIVE FINDINGS THE GENERAL ACCOUNTING OFFICE MAY NOT UNDERTAKE TO DETERMINE, IN A DISPUTE BETWEEN A GOVERNMENT AGENCY AND A CONTRACTOR, WHETHER CERTAIN EQUIPMENT MEETS THE REQUIREMENTS OF THE SPECIFICATIONS--- THAT BEING A MATTER FOR ADMINISTRATIVE DETERMINATION--- OR WHETHER AN ADMINISTRATIVE SURVEY MADE PRIOR TO THE REJECTION OF THE EQUIPMENT IS SUFFICIENT GROUND FOR THE REJECTION, BUT WHERE SUCH REJECTION IS AN ACCOMPLISHED FACT THERE IS NO AUTHORITY FOR THE PAYMENT OF ANY AMOUNT UNTIL THERE IS EITHER A MODIFICATION OF THE ADMINISTRATIVE DETERMINATION TO REJECT OR THE MATTER IS JUDICIALLY DETERMINED, NOTWITHSTANDING THERE BE A POSTING OF BOND FOR PERFORMANCE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE DECEMBER 15, 1939:

I HAVE YOUR LETTER OF NOVEMBER 22, 1939, AS FOLLOWS:

REFERENCE IS MADE TO CONTRACTS ALS-19346 AND ALS-19530 WITH THE WASHINGTON REFRIGERATION COMPANY, WHICH ARE ON FILE IN YOUR OFFICE, AND THE FOLLOWING FACTS ARE PRESENTED FOR YOUR CONSIDERATION AND DECISION AS TO THE PROCEDURE TO FOLLOW:

THE CONTRACTS CITED WERE AWARDED TO THE WASHINGTON REFRIGERATION COMPANY ON JUNE 15, AND JUNE 29, 1939, RESPECTIVELY, AND WERE FOR FURNISHING AND INSTALLING A NUMBER OF AIR CONDITIONING UNITS IN VARIOUS OFFICES OF THE DEPARTMENT OF AGRICULTURE IN WASHINGTON, D.C. AFTER THE DELIVERY AND INSTALLATION OF THE EQUIPMENT NUMEROUS COMPLAINTS OF UNSATISFACTORY OPERATION WERE RECEIVED FROM EMPLOYEES OCCUPYING THE OFFICES CONCERNED, WHICH RESULTED IN THE MAKING OF A COMPREHENSIVE SURVEY OF ALL INSTALLATIONS BY THE DEPARTMENT'S ENGINEERS.

THE RESULT OF THIS SURVEY DISCLOSED, TO THE SATISFACTION OF THE DEPARTMENT, THAT CERTAIN OF THE UNITS INSTALLED BY THE ABOVE NAMED CONTRACTOR WERE OF INSUFFICIENT CAPACITY TO ADEQUATELY AIR CONDITION THE ROOMS TO THE DEGREE REQUIRED BY THE GUARANTEE OF THE CONTRACT; AND, THE CONTRACTOR WAS NOTIFIED TO REPLACE THE DEFECTIVE EQUIPMENT. THE DEPARTMENT ALSO WITHHELD PAYMENT FOR THOSE UNITS FOUND INADEQUATE, PENDING THE INSTALLATION OF OTHER UNITS HAVING THE REQUIRED CAPACITY. SINCE ISSUING THE NOTIFICATION, THE DEPARTMENT HAS CORRESPONDED WITH THE CONTRACTOR AND HAS HELD SEVERAL CONFERENCES WITH HIS REPRESENTATIVES, WHO HAVE TAKEN THE STAND THAT THE EQUIPMENT FURNISHED COMPLIES FULLY WITH THE SPECIFICATIONS AND THAT FULL PAYMENT OF THE ACCOUNT IS JUSTLY DUE. DETAILED REFERENCE TO THE EXCHANGE OF CORRESPONDENCE IS UNNECESSARY HERE AS ALL LETTERS, OR COPIES THEREOF, ARE ENCLOSED FOR YOUR CONSIDERATION; BUT, THE FOLLOWING BRIEF OUTLINE OF THE DEPARTMENT'S AND THE CONTRACTOR'S POSITION IN THE MATTER WILL BE HELPFUL IN ANALYZING THE FACTS PRESENTED:

TO UNDERSTAND THE DEPARTMENT'S POSITION, CONSIDERATION MUST FIRST BE GIVEN TO THE PURPOSE AND INTENT OF THE ADVERTISED SPECIFICATION; AND, IN THIS CONNECTION, YOUR ATTENTION IS INVITED TO THE FACT THAT THE ADVERTISEMENT CONSISTED OF FOUR ESSENTIAL PARTS:

1. THE GENERAL CONDITIONS.

2. THE BIDDING SCHEDULE.

3. THE SURVEY REQUIREMENTS AND SPECIFICATIONS.

4. THE " ROOM CONDITIONER SURVEY FORM.'

THE FIRST PARAGRAPH, CONSPICUOUSLY PLACED ON THE FACE OF THE STANDARD FORM 33, STATED THAT THE UNITS FURNISHED MUST BE IN ACCORDANCE WITH FEDERAL SPECIFICATIONS 100-A-361, WHERE APPLICABLE, THE DETAILED SPECIFICATIONS STATED IN THE ADVERTISEMENT, AND THE REQUIREMENTS SET FORTH IN THE ATTACHED ROOM CONDITIONER SURVEY FORMS. THE REMAINING CLAUSES SET FORTH IN THE GENERAL CONDITIONS ARE OF NO PARTICULAR IMPORTANCE AS THEY ARE THE USUAL PROVISIONS CONTAINED IN ALL GOVERNMENT ADVERTISEMENTS.

THE SPECIFICATION PROPER, HOWEVER, MERITS PARTICULAR ATTENTION AS IT MODIFIED TO SOME DEGREE THE REQUIREMENTS OF THE FEDERAL SPECIFICATIONS IN ORDER TO SECURE EQUIPMENT MEETING THE SPECIFIC NEEDS OF THE DEPARTMENT. IT WILL BE NOTED THAT PARAGRAPH D-3 THEREOF, MODIFIED THE FEDERAL SPECIFICATIONS AND READS "THE REQUIRED CAPACITY OF THE ROOM COOLER SHALL BE DEVELOPED FROM A SURVEY FOR EACH PARTICULAR INSTALLATION AND THE UNIT FURNISHED SHALL BE CAPABLE OF MAINTAINING THE EFFECTIVE TEMPERATURE PRESCRIBED IN THE SERVICE REQUIREMENTS AND ON THE ATTACHED SURVEY FORM, WHICH SHALL BE COMPLETELY FILLED OUT AND ATTACHED TO THE BID PROPOSAL.'

IT IS EXPLAINED THAT THE DEPARTMENT DESIRED TO FOLLOW THE COMMERCIAL PRACTICE AND ACCOMPLISH THIS PROCUREMENT ON THE BASIS OF PURCHASING " AIR CONDITIONING" FOR EACH ROOM, RATHER THAN SPECIFYING A DEFINITE NUMBER OF PORTABLE UNITS, EACH OF A SPECIFIED SIZE AND CAPACITY. TO EXPLAIN MORE FULLY, IT WAS THE INTENT OF THE SPECIFICATION TO HAVE THE SEVERAL BIDDERS OFFER EQUIPMENT SUITABLE FOR THE PARTICULAR REQUIREMENTS OF THE INDIVIDUAL ROOMS LISTED AND THE PURPOSE OF THE ROOM CONDITIONER SURVEY FORM WAS TO INSURE THAT THE BIDDERS ACTUALLY VISITED THE SITE AND MADE THE NECESSARY CALCULATIONS REQUIRED TO DETERMINE THE SIZE INSTALLATION NEEDED TO CONDITION THE ROOMS TO THE REQUIRED DEGREE.

UNDER THIS PROCEDURE THE DEPARTMENT HOPED TO ELIMINATE THE COSTLY TASK OF MAKING ITS OWN SURVEY, WHICH WOULD HAVE INVOLVED MANY ENGINEERING CALCULATIONS AND WOULD HAVE REQUIRED CONSIDERABLE TIME BY THE ENGINEERING STAFF. HOWEVER, IN ORDER TO PROTECT THE INTERESTS OF THE GOVERNMENT IN THE EVENT OF AN ERROR ON THE PART OF THE VARIOUS BIDDERS' ENGINEERS WHO WERE EXPECTED TO COMPUTE THE DATA FOR THE SURVEY FORMS, THE FORMS CONTAINED A GUARANTEE PROVISION AS FOLLOWS:

"DOES BIDDER GUARANTEE THAT UNIT OFFERED WILL PERFORM SATISFACTORILY UNDER THE CONDITIONS INDICATED IN THIS SURVEY AND PROVIDE THE COOLING AND CONDITIONING REQUIRED TO MAINTAIN THE TEMPERATURES WITHIN THE ROOM AS SPECIFIED UNDER A.'

THE BID OF THE WASHINGTON REFRIGERATION COMPANY, LIKE THOSE OF OTHER BIDDERS RECEIVING AWARDS, WAS ACCEPTED ON THE BASIS OF THE UNQUALIFIED GUARANTEE THAT THE EQUIPMENT OFFERED WOULD PROVIDE THE COOLING AND CONDITIONING REQUIRED TO MAINTAIN THE TEMPERATURES SPECIFIED UNDER QUESTION "A" OF THE SURVEY FORM. SUBSEQUENT TO THE COMPLETION OF THE INSTALLATIONS, AND AS THE RESULT OF THE COMPLAINTS THAT THE ROOMS WERE NOT COMFORTABLY CONDITIONED, IT WAS NECESSARY FOR THE DEPARTMENT'S ENGINEERS TO MAKE A COMPLETE SURVEY TO DETERMINE WHETHER OR NOT THE EQUIPMENT COMPLIED WITH THE SPECIFICATIONS. THE RESULTS OF THIS SURVEY INDICATE THAT THE WASHINGTON REFRIGERATION COMPANY APPARENTLY MISCALCULATED THE TOTAL COOLING LOADS REQUIRED, AND, ACCORDINGLY,INSTALLED UNITS OF TOO SMALL A SIZE. TO ILLUSTRATE THE POINT, REFERENCE TO ITEM 1, OF CONTRACT ALS-19530 WILL DISCLOSE THAT THE BIDDER CALCULATED THE TOTAL LOAD AS 5,909 BTU'S (SEE QUESTION A, PART III, OF ROOM CONDITIONER SURVEY FORM) AND FURNISHED A UNIT HAVING A TOTAL RATED CAPACITY OF 6,000 BTU'S (SEE QUESTION C, PART III, OF ROOM CONDITIONER SURVEY FORM), WHEREAS THE SURVEY BY THE DEPARTMENT REVEALED THAT THE TOTAL CALCULATED LOAD SHOULD HAVE BEEN 8,957 BTU-S. THE 6,000 BTU CAPACITY UNIT IS, THEREFORE OF INSUFFICIENT CAPACITY TO MAINTAIN THE DEGREE OF CONDITIONING STATED IN THE BIDDER'S GUARANTEE UNDER QUESTION "D" OF THE SURVEY FORM. OF THE UNITS FURNISHED UNDER THE TWO CONTRACTS THOSE LISTED UNDER THE FOLLOWING ITEM NUMBERS, LIKE THAT REFERRED TO IN THE FOREGOING ILLUSTRATION, ARE DEFICIENT IN CAPACITY:

CONTRACT ALS-19346

ITEM NOS. 1, 17, 21, 25, 28, 29, 30, 31, 32, 33

CONTRACT ALS-19530

ITEM NOS. 1, 6, 7, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 22,

23, 24, 25, 26

IN FAIRNESS TO THE CONTRACTOR, THE DEPARTMENT SUGGESTED THAT QUALIFIED ENGINEERS FROM THE FACTORY MANUFACTURING THE UNITS VISIT THE VARIOUS ROOMS AND VERIFY THE CORRECTNESS OF THEIR CALCULATIONS IN ORDER TO RECONCILE THE DIFFERENCES BETWEEN THE FIGURES SHOWN IN THE BID AND THOSE DEVELOPED BY THE DEPARTMENT'S SUBSEQUENT SURVEY. THE CONTRACTOR HAS DECLINED TO DO THIS AND CONTENDS THAT THERE IS NO EVIDENCE INDICATING THAT THE UNITS ARE NOT PERFORMING, INASMUCH AS NO ACTUAL WORKING TESTS HAVE BEEN COMPLETED. WORKING TESTS SUCH AS THE BIDDER HAS IN MIND, CANNOT, OF COURSE, BE ACCOMPLISHED UNTIL NEXT SUMMER, AND IN VIEW OF THE DEPARTMENT'S IMPLICIT CONFIDENCE IN THE RESULTS OF ITS OWN SURVEY, ARE NOT CONSIDERED NECESSARY.

THE CONTRACTOR ALSO SUGGESTED, DURING THE COURSE OF A CONFERENCE WITH THE DEPARTMENT'S REPRESENTATIVES, THAT THE GOVERNMENT PERMIT THE WASHINGTON REFRIGERATION COMPANY TO POST BOND FOR PERFORMANCE AND PAY THE ACCOUNT IN FULL, THE EQUIPMENT TO BE SUBJECT TO FINAL ACCEPTANCE AFTER TESTS WHICH MAY BE CONDUCTED NEXT SUMMER.

THE QUESTIONS SPECIFICALLY PRESENTED HERE ARE WHETHER THE DEPARTMENT MAY REQUIRE REPLACEMENT OF THE UNITS CLAIMED TO BE INADEQUATE, ON THE BASIS OF THE DETERMINATIONS MADE FROM THE DEPARTMENT'S SURVEY, OR WHETHER WORKING TESTS MUST ACTUALLY BE CONDUCTED NEXT SUMMER TO SATISFY THE CONTRACTOR THAT THE EQUIPMENT FURNISHED IS OF TOO SMALL A CAPACITY TO PROPERLY CONDITION ROOMS. IN THE EVENT THAT IT IS DECIDED THAT THE DEPARTMENT'S SURVEY IS INSUFFICIENT TO LEGALLY ESTABLISH THE FACT THAT THE EQUIPMENT FAILS TO MEET THE SPECIFICATIONS, ADVICE IS DESIRED AS TO WHETHER FULL PAYMENT SHOULD BE MADE AND THE BIDDER ALLOWED TO POST BOND FOR THE PERFORMANCE, PENDING COMPLETION OF THE TESTS.

PLEASE RETURN ALL PAPERS WITH YOUR DECISION.

WHETHER THE EQUIPMENT FURNISHED BY THE CONTRACTOR IS SUFFICIENT TO COMPLY WITH THE REQUIREMENTS OF THE SPECIFICATIONS OF THE CONTRACTS IS A MATTER FOR ADMINISTRATIVE DETERMINATION AND, IF THE MATTER SHOULD LATER BE THE SUBJECT OF JUDICIAL PROCEEDINGS, THE RESULTS OF THE ENGINEERING SURVEY DOUBTLESS WOULD BE OFFERED IN SUPPORT OF THE GOVERNMENT'S POSITION. THAT EVENT, THE RESULTS OF THE SURVEY LIKELY WOULD BE FOR CONSIDERATION WITH SUCH OTHER EVIDENTIARY MATTERS AS MIGHT BE OFFERED BY BOTH PARTIES, AND THE SURVEY MIGHT OR MIGHT NOT BE ACCEPTED AS CONTROLLING. I CANNOT, OF COURSE, UNDERTAKE TO PREDICT THE WEIGHT WHICH A COURT OR A JURY MIGHT ACCORD TO SUCH A SURVEY IN DETERMINING THE FACTUAL ISSUES NECESSARILY INVOLVED IN SUCH A PROCEEDING.

ASIDE FROM THE FACT THAT YOUR QUESTION AS TO THE LEGAL SUFFICIENCY OF THE DEPARTMENT'S SURVEY DOES NOT ADMIT OF A CATEGORICAL ANSWER, IT IS NOT ENTIRELY CLEAR WHY THE DETERMINATION AS TO THE ADEQUACY OF THE EQUIPMENT SHOULD BE PREDICATED ENTIRELY UPON THE RESULT OF SUCH SURVEY, SINCE IT APPEARS FROM THE SECOND PARAGRAPH OF YOUR ABOVE-QUOTED LETTER THAT AT LEAST SOME OF THE EQUIPMENT ALREADY HAS PROVED UNSATISFACTORY IN ACTUAL OPERATION. BUT HOWEVER THAT MAY BE, THE RECORD INDICATES THE CONTRACTOR HAS RECEIVED FORMAL NOTIFICATION THAT THE EQUIPMENT IN QUESTION IS NOT ACCEPTABLE, AND HAS BEEN REQUESTED TO REPLACE IT. WHILE IT IS REPORTED THE MATTER HAS BEEN DISCUSSED WITH THE CONTRACTOR'S REPRESENTATIVES SUBSEQUENT TO THE GIVING OF THE NOTICE OF REJECTION, AND WHILE THERE APPEARS TO BE SOME DOUBT WHETHER THE CONTRACTOR MAY NOT BE ABLE TO ESTABLISH THAT THE EQUIPMENT MEETS THE SPECIFICATIONS, THE ULTIMATE FACT FOR CONSIDERATION IS THAT THE UNITS FURNISHED UNDER THE CONTRACT ITEMS MENTIONED IN YOUR LETTER HAVE BEEN FORMALLY AND OFFICIALLY REJECTED ON THE GROUND THAT THEY DO NOT COMPLY WITH THE SPECIFICATIONS. THERE WOULD, THEREFORE, BE NO AUTHORITY FOR PAYMENT OF ANY AMOUNT IN CONNECTION WITH SUCH ITEMS UNLESS AND UNTIL THE ADMINISTRATIVE DETERMINATION TO REJECT THE EQUIPMENT SHOULD BE MODIFIED, OR THE MATTER SUBJECTED TO JUDICIAL DETERMINATION.

SPECIFICALLY, I MUST DECLINE TO ANSWER YOUR FIRST QUESTION AND, UPON THE FACTS NOW APPEARING, YOUR SECOND QUESTION IS ANSWERED IN THE NEGATIVE.