A-10062, DECEMBER 5, 1925, 5 COMP. GEN. 407

A-10062, DECEMBER 5, 1925, 5 COMP. GEN. 407

CONTRACTS, LIQUIDATED DAMAGES - SUBCONTRACTORS WHERE A CONTRACT FOR THE FURNISHING OF LATHES TO THE GOVERNMENT, THE ELECTRICAL EQUIPMENT FOR WHICH WAS REQUIRED TO BE PROCURED FROM CERTAIN ELECTRICAL MANUFACTURERS DESIGNATED BY THE GOVERNMENT, CONTAINED A PROVISION FOR THE DEDUCTION OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERIES OCCASIONED BY REASONS OTHER THAN THOSE SPECIFIED IN THE CONTRACT, THE CONTRACTOR IS NOT CHARGEABLE WITH LIQUIDATED DAMAGES RESULTING FROM HIS INABILITY TO SECURE THE REQUIRED ELECTRICAL EQUIPMENT ON TIME FROM THE SUBCONTRACTORS.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 5, 1925:

THE SECRETARY OF THE NAVY REQUESTED JUNE 10, 1925, REVIEW OF SETTLEMENT NO. M-11753-N, DATED JUNE 26, 1925, OF THE ACCOUNTS OF COMMANDER C. G. MAYO, WHEREIN CREDIT WAS DENIED FOR THE SUM OF $3,012.72 AS A PAYMENT MADE ON VOUCHER 2491, THIRD QUARTER, 1922, UNDER CONTRACT NO. 30562, DATED JUNE 29, 1917, TO NILES-BENNETT-POND CO. FOR LATHES WITH ELECTRICAL MOTORS, SAID SUM REPRESENTING LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY. IT IS CONTENDED THAT THE DELAYS IN DELIVERY RESULTED FROM CAUSES ENTITLING THE CONTRACTOR TO AN EXTENSION OF TIME WITH REMISSION OF LIQUIDATED DAMAGES.

THE CONTRACT FOR THE THREE LATHES REQUIRED THEM TO BE EQUIPPED WITH ELECTRICAL EQUIPMENT AS MANUFACTURED BY "EITHER THE GENERAL ELECTRIC CO., OF SCHENECTADY, N.Y., OR THE WESTINGHOUSE ELECTRIC AND MANUFACTURING CO. OF EAST PITTSBURGH, PA., " AND TO BE DELIVERED IN 380, 400, AND 420 DAYS RESPECTIVELY FROM THE DATE OF THE CONTRACT WITH A STIPULATION FOR DEDUCTION OF LIQUIDATED DAMAGES FROM THE CONTRACT PRICE OF $15,450 FOR EACH LATHE AT THE RATE OF ONE-TWENTIETH OF 1 PERCENT OF THE CONTRACT PRICE FOR EACH DAY'S DELAY; BUT WITH THE FURTHER STIPULATION THAT:

* * * NO LIQUIDATED DAMAGES SHALL BE DEDUCTED FOR SUCH PERIOD AFTER THE EXPIRATION OF THE TIME OR TIMES PRESCRIBED FOR DELIVERY OR PERFORMANCE, AS, IN THE JUDGMENT OF THE PARTY OF THE SECOND PART, SHALL EQUAL THE TIME THAT, EITHER IN THE BEGINNING OR IN THE PROSECUTION OF THE DELIVERIES OR SERVICES CONTRACTED FOR, SHALL HAVE BEEN LOST ON ACCOUNT OF ANY CAUSE FOR WHICH THE UNITED STATES IS RESPONSIBLE, OR ON ACCOUNT OF STRIKES, RIOTS, FIRE, OR OTHER DISASTER, DELAYS IN TRANSIT OR DELIVERY ON THE PART OF TRANSPORTATION COMPANIES, OR ANY OTHER CIRCUMSTANCES BEYOND THE CONTROL OF THE CONTRACTOR, BUT SUCH CIRCUMSTANCES SHALL NOT BE DEEMED TO INCLUDE DELAYS ON THE PART OF SUBCONTRACTORS IN FURNISHING MATERIALS WHEN SUCH DELAYS ARISE FROM CAUSES OTHER THAN THOSE HEREIN SPECIFIED: AND PROVIDED FURTHER, THAT THE QUESTION WHETHER DELAYS ARE DUE TO CAUSES HEREIN SPECIFIED SHALL BE DETERMINED BY SAID PARTY OF THE SECOND PART.

THE CONTRACTOR PLACED ITS ORDER WITH THE WESTINGHOUSE ELECTRIC AND MANUFACTURING CO. FOR THE ELECTRICAL EQUIPMENT REQUIRED FOR THE THREE LATHES AND THE RECORD DISCLOSES THAT THERE WAS DELAY IN DELIVERY OF ALL THE MACHINES; LIQUIDATED DAMAGES IN THE AGGREGATE SUM OF $3,012.72 WERE DEDUCTED FROM THE CONTRACT PRICE FOR THE LATHES, BUT SUBSEQUENTLY PAID TO THE CONTRACTOR BY COMMANDER MAYO UPON A FINDING OF THE ADMINISTRATIVE OFFICERS OF THE NAVY THAT THE DELAY RESULTED FROM FAILURE OF THE SUBCONTRACTOR TO FURNISH ELECTRICAL EQUIPMENT AS ORDERED AND THAT THIS DELAY WAS DUE TO PRIORITY ORDERS OF THE WAR INDUSTRIES BOARD.

THE CONTRACT REQUIRED THE LATHES TO HAVE ELECTRICAL EQUIPMENT MANUFACTURED BY EITHER OF TWO SPECIFIED ELECTRICAL EQUIPMENT MANUFACTURING CONCERNS, AND UNDER DATE OF NOVEMBER 23, 1925, THE SECRETARY OF THE NAVY REPORTED THAT:

THE RECORDS OF THE DEPARTMENT DO NOT INDICATE THAT THE CONTRACTOR MADE AN EFFORT TO OBTAIN THE ELECTRICAL EQUIPMENT COVERED BY THE CONTRACT FROM THE GENERAL ELECTRIC COMPANY.

THE CONDITIONS PREVAILING IN THE PLANT OF THE GENERAL ELECTRIC COMPANY WERE SIMILAR TO THOSE IN THE WORKS OF THE WESTINGHOUSE ELECTRIC AND MANUFACTURING COMPANY, AS THE FORMER COMPANY ALSO WAS EXTENSIVELY ENGAGED IN WORK FOR THE GOVERNMENT. THE FACILITIES OF BOTH COMPANIES WERE TAXED TO THE UTMOST CAPACITY TO FURNISH ELECTRICAL EQUIPMENT FOR DESTROYERS AND OTHER VESSELS UNDER CONSTRUCTION, IN ADDITION TO SUPPLYING OTHER ELECTRICAL EQUIPMENT SO URGENTLY NEEDED DURING THE PERIOD OF THE WAR.

THE CONTRACT HAVING SPECIFIED TWO SUBCONTRACTORS, THE OBLIGATION WAS THAT OF THE CONTRACTOR TO SECURE, IF POSSIBLE, DELIVERY FROM EITHER OF THE TWO SUBCONTRACTORS IN SUFFICIENT TIME TO ENABLE IT TO COMPLETE ITS CONTRACT WITH THE GOVERNMENT WITHIN THE CONTRACT PERIOD. IT NOW APPEARS AS A FACT THAT THE CONTRACTOR COULD NOT HAVE SECURED EARLIER DELIVERY FROM THE OTHER SUBCONTRACTOR. THE DELAYS IN DELIVERY MAY BE CONSIDERED AS COMING WITHIN THE RULE THAT CONTRACTORS ARE NOT CHARGEABLE WITH LIQUIDATED DAMAGES FOR DELAYS RESULTING FROM ACTIONS OF SUBCONTRACTORS DESIGNATED BY THE GOVERNMENT. SEE 24 COMP. DEC. 566, WITH WHICH COMPARE 26 ID. 275; ID. 328.

UPON REVIEW $3,012.72 IS CERTIFIED FOR CREDITING IN THE ACCOUNTS OF COMMANDER MAYO.