B-91378, JUL. 19, 1960

B-91378: Jul 19, 1960

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ATTORNEYS: WE HAVE YOUR LETTER OF MAY 10. WHICH IS DESCRIBED AS A SUPPLEMENT TO THE CLAIM OF GRENNAN IN THE AMOUNT OF $3. 000 REPRESENTING DAMAGES ALLEGED TO HAVE BEEN SUSTAINED BY THE PREDECESSOR CORPORATION AS A RESULT OF THE GOVERNMENT'S BREACH OF ITS OBLIGATIONS UNDER CONTRACT NO. UNDER THE TERMS OF THE CONTRACT THE GOVERNMENT WAS TO PROVIDE TO THE CLAIMANT'S PREDECESSOR A QUANTITY OF PARACHUTE SILK IN EXCHANGE FOR CARTRIDGE BAG CLOTH. 1946 (THE EVIDENCE AS TO THE DATE IS CONTRADICTORY). IT IS ALLEGED. 000 IS BASED ON THIS ACTION BY THE WAR ASSETS ADMINISTRATION AND THE DELAY OF THE GOVERNMENT IN DELIVERING THE CLOTH. THE CONTRACT WAS ULTIMATELY TERMINATED FOR DEFAULT AND THE PROCUREMENT RELET.

B-91378, JUL. 19, 1960

TO HAHN, HESSEN, MARGOLIS AND RYAN, ATTORNEYS:

WE HAVE YOUR LETTER OF MAY 10, 1960, SUBMITTING ON BEHALF OF THE GRENNAN FABRICS CORPORATION, SUCCESSOR TO GRANT AND SHENDALL MERCANTILE CORPORATION, A DOCUMENT DATED APRIL 30, 1960, WHICH IS DESCRIBED AS A SUPPLEMENT TO THE CLAIM OF GRENNAN IN THE AMOUNT OF $3,000,000 REPRESENTING DAMAGES ALLEGED TO HAVE BEEN SUSTAINED BY THE PREDECESSOR CORPORATION AS A RESULT OF THE GOVERNMENT'S BREACH OF ITS OBLIGATIONS UNDER CONTRACT NO. W-28-017-ORD-1163, DATED APRIL 2, 1946.

UNDER THE TERMS OF THE CONTRACT THE GOVERNMENT WAS TO PROVIDE TO THE CLAIMANT'S PREDECESSOR A QUANTITY OF PARACHUTE SILK IN EXCHANGE FOR CARTRIDGE BAG CLOTH. PRIOR TO THE DELIVERY OF THE SILK BY THE GOVERNMENT, SOMEWHERE BETWEEN MAY 15 AND MAY 30, 1946 (THE EVIDENCE AS TO THE DATE IS CONTRADICTORY), THE MARKET PRICE OF THE SILK DROPPED MATERIALLY. APPROXIMATELY FIVE DAYS AFTER DELIVERY, IT IS ALLEGED, THE WAR ASSETS ADMINISTRATION OFFERED FOR PUBLIC SALE SUBSTANTIAL ADDITIONAL QUANTITIES OF PARACHUTE SILK AT A LOW PRICE THUS FURTHER DEPRESSING THE MARKET. THE CLAIM FOR $3,000,000 IS BASED ON THIS ACTION BY THE WAR ASSETS ADMINISTRATION AND THE DELAY OF THE GOVERNMENT IN DELIVERING THE CLOTH.

THE CLAIMANT FAILED TO PROVIDE THE CARTRIDGE BAG CLOTH AS REQUIRED; THE CONTRACT WAS ULTIMATELY TERMINATED FOR DEFAULT AND THE PROCUREMENT RELET. IN ADDITION TO THE $2,000,000 OBTAINED FROM THE SURETIES ON THE PERFORMANCE BOND, THE GOVERNMENT CLAIMS EXCESS COSTS PLUS FINES, PENALTIES, AND FORFEITURES OF $284,563.98. THE GOVERNMENT'S CLAIM, ORIGINALLY ASSERTED BY THE CONTRACTING OFFICER, WAS SUSTAINED BY THE WAR DEPARTMENT BOARD OF CONTRACT APPEALS IN A DECISION OF JULY 17, 1947, AND WAS FURTHER ASSERTED IN A CERTIFICATE OF SETTLEMENT ISSUED BY OUR OFFICE ON AUGUST 11, 1949. SUIT HAS NOW BEEN INSTITUTED BY THE UNITED STATES AGAINST GRENNAN ON THE AMOUNT CLAIMED BY THE GOVERNMENT. YOU HAVE SOUGHT TO ASSERT AS A CREDIT IN THE LITIGATION THE AFORESAID CLAIM OF $3,000,000 AND NOW REQUEST ACTION BY OUR OFFICE THEREON, PRESUMABLY UNDER 28 U.S.C. 2406.

THE CLAIM SUBMITTED BY YOU IS AN UNLIQUIDATED ONE FOR DAMAGES ARISING OUT OF AN ALLEGED BREACH OF CONTRACT. AS SUCH, WE DO NOT CONSIDER IT NECESSARY TO CONSIDER IN DETAIL THE MERITS OF SUCH CLAIM. SUFFICE IT TO SAY THAT THE CLAIM IS OF A TYPE WHICH THE ACCOUNTING OFFICERS OF THE GOVERNMENT GENERALLY MUST DECLINE TO CONSIDER ON ITS MERITS BECAUSE OF THE IMPRACTICABILITY OF DECIDING SUCH A CLAIM WITHOUT TAKING TESTIMONY, CROSS- EXAMINING WITNESSES, AND WEIGHING CONFLICTING EVIDENCE, AND OUR LACK OF FACILITIES FOR SUCH PROCEEDINGS. SEE 21 COMP. DEC. 134, AND B-122386, NOVEMBER 30, 1955. FOR THAT REASON, THE CLAIM OF THE GRENNAN CORPORATION MUST BE DENIED.