B-147171, DEC. 15, 1961

B-147171, DEC. 15, 1961

TO AMERICAN FEATHER PRODUCTS:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 31, 1961, REQUESTING REVIEW OF SETTLEMENT DATED AUGUST 15, 1961, WHICH DISALLOWED YOUR CLAIM FOR $12,330.95, REPRESENTING INTEREST OF $459.66, DIRECT EXPENSES OF $9,731.29 AND INDIRECT EXPENSES OF $2,140 ALLEGED TO HAVE BEEN INCURRED BY YOU AS A RESULT OF THE INVOCATION BY THE CONTRACTING OFFICER OF THE WARRANTY CLAUSE UNDER CONTRACT NO. DA-36-243-QM (CTM) 7081-E-60, COVERING THE FURNISHING OF A QUANTITY OF PILLOWS TO THE DEPARTMENT OF THE ARMY, MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA.

UNDER THE CONTRACT YOU AGREED TO FURNISH 107,000 PILLOWS AT A UNIT PRICE OF $1.19 EACH. THE PILLOWS WERE TO BE MADE IN ACCORDANCE WITH INTERIM QUARTERMASTER CORPS PURCHASE DESCRIPTION IP/DES S-142-9 DATED DECEMBER 16, 1959. AMONG OTHER THINGS, THE CONTRACT PROVIDED FOR MANDATORY CONTRACTOR INSPECTION WHICH REQUIRED YOU TO PERFORM OR HAVE PERFORMED ALL TESTS AND EXAMINATIONS, CERTIFY THE RESULTS AND FURNISH REPORTS TO THE GOVERNMENT. THE GOVERNMENT, HOWEVER, RETAINED THE RIGHT TO VERIFY SUCH RESULTS AND, IN ADDITION, RESERVED ALL RIGHTS AND REMEDIES AT LAW AND UNDER THE CONTRACT, INCLUDING THE WARRANTY CLAUSE.

IT APPEARS THAT DURING THE PERIOD JUNE 27 TO JULY 12, 1960, YOU DELIVERED 30,384 PILLOWS IN EIGHT PARTIAL SHIPMENTS COMPRISING LOT NOS. 1 THROUGH 4; THAT IMMEDIATELY PRIOR TO SHIPMENT THE GOVERNMENT SELECTED SAMPLES FROM EACH LOT AND FORWARDED THEM TO THE GOVERNMENT LABORATORY FOR TESTING; AND THAT THE LABORATORY REPORTED FAILURES AS TO OXYGEN NUMBER AND PERCENTAGE OF WHOLE AND CRUSHED FEATHERS. THE MOST SERIOUS OF THESE FAILURES WAS FOR OXYGEN NUMBER, REPORTED AS 52 FOR LOT NO. 1, 39 FOR LOT NOS. 2AND 3 AND 41 FOR LOT NO. 4 AS AGAINST A PERMISSIBLE MAXIMUM OF 24.

SUBSEQUENTLY, MR. SAM LERMAN OF WESTERN BY PRODUCTS COMPANY, YOUR SUPPLIER OF FEATHERS, QUESTIONED THE OXYGEN COUNT REPORTED BY THE GOVERNMENT LABORATORY AND REQUESTED PERMISSION TO OBSERVE THE TESTS AT THE GOVERNMENT LABORATORY. RETESTS ON THE FEATHERS WERE PERFORMED ON JULY 21, 1960, IN MR. LERMAN'S PRESENCE WHICH RESULTED IN OXYGEN NUMBERS OF 40 AND 45 FOR LOT NO. 1 AND 39 FOR LOT NO. 3, WHICH NUMBERS WERE IS EXCESS OF THAT PERMISSIBLE UNDER THE CONTRACT.

ON AUGUST 15, 1960, MR. LERMAN SENT THE CONTRACTING OFFICER COPIES OF TEST RESULTS SHOWING THAT THE FEATHERS HAD AN OXYGEN NUMBER OF 8.0 WHEN TESTED BY A SO-CALLED "CALIFORNIA METHOD.' AFTER DISCUSSION BETWEEN MR. LERMAN, THE CONTRACTING OFFICER AND QUARTERMASTER RESEARCH AND ENGINEERING COMMAND, IT WAS AGREED THAT THAT LATTER WOULD TEST THE FEATHERS FOR OXYGEN NUMBER IN ACCORDANCE WITH THE CALIFORNIA METHOD. THE FEATHERS WERE RETESTED BY THIS METHOD AND AGAIN FAILED FOR OXYGEN NUMBER.

AFTER THE RETEST OF THE FEATHERS, THE CONTRACTING OFFICER NOTIFIED YOU BY LETTER DATED AUGUST 17, 1960, THAT THE WARRANTY CLAUSE WAS INVOKED AS TO LOT NOS. 1 THROUGH 4 AND THAT HE WOULD DETERMINE AT A LATER DATE WHICH OF THE AVAILABLE REMEDIES WOULD BE ELECTED.

BY LETTER DATED OCTOBER 18, 1960, THE CONTRACTING OFFICER NOTIFIED YOU THAT HE ELECTED TO INVOKE OPTION NO. 2 OF THE WARRANTY CLAUSE AS TO 28,335 UNITS (RETURN OF PILLOWS FOR REPAIR OR REPLACEMENT) AND OPTION NO. 1 AS TO THE REMAINING 2,029 PILLOWS (REQUIRE AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE).

THE RECORD INDICATES THAT ON NOVEMBER 15, 1960, A REPRESENTATIVE OF YOUR FIRM AND YOUR CHEMIST VISITED THE AGENCY TO DISCUSS THE OXYGEN FAILURES OF THE FEATHERS USED IN THE PILLOWS; THAT DURING THIS VISIT TESTS PERFORMED ON LOT NOS. 4 AND 5 RESULTED IN OXYGEN NUMBERS OF 12 AND 8, WHICH WERE WELL WITHIN THE SPECIFICATION REQUIREMENTS; AND THAT AT A CONFERENCE HELD ON NOVEMBER 16, 1960, IT WAS AGREED BY YOUR REPRESENTATIVE AND THE CONTRACTING OFFICER THAT BECAUSE OF THE LATEST TEST RESULTS, SIX PILLOWS FROM EACH LOT WOULD BE TESTED IN THE PRESENCE OF YOUR CHEMIST AND THAT THE AVERAGE OXYGEN NUMBER FOR EACH LOT WOULD CONCLUSIVELY DETERMINE WHETHER THE WARRANTY CLAUSE WAS PROPERLY INVOKED AS TO THAT LOT. THE VERBAL AGREEMENT WAS FORMALIZED INTO A SUPPLEMENTAL AGREEMENT (MODIFICATION NO. 1) DATED DECEMBER 2, 1960. THE RECORD ALSO INDICATES THAT AT THE SUGGESTION OF YOUR CHEMIST, THE LABORATORY TECHNICIANS WASHED ALL EQUIPMENT IN DISTILLED WATER PRIOR TO PERFORMING THE TESTS AND USED GLASS STOPPERS IN LIEU OF THE METAL COVERS PREVIOUSLY USED WITH THE TEST JARS. THE TEST RESULTS SHOWED AVERAGE OXYGEN NUMBERS OF 6.6, 7.3, 8.0, 6.6 AND 7.3 FOR LOT NOS. 1, 2, 3, 4 AND 5, RESPECTIVELY. THE DIFFERENCE BETWEEN THE ORIGINAL TEST RESULTS AND THESE RESULTS WAS ATTRIBUTED TO THE ADOPTION OF YOUR CHEMIST'S SUGGESTIONS.

IT IS REPORTED THAT ON DECEMBER 16, 1960, YOU REQUESTED THE CONTRACTING OFFICER TO WAIVE THE FAILURES PREVIOUSLY REPORTED CONCERNING PERCENTAGE OF CRUSHED AND WHOLE FEATHERS AND RESIDUE; AND THAT ON DECEMBER 19, 1960, YOU WERE INFORMED THAT LOT NOS. 1 THROUGH 5 WERE ACCEPTABLE WITH RESPECT TO OXYGEN NUMBER AND THAT INVOCATION OF THE WARRANTY CLAUSE WAS RESCINDED. BY TELEGRAM DATED DECEMBER 28, 1960, YOU WERE ADVISED THAT LOT NOS. 1 THROUGH 5 WERE ACCEPTABLE TO THE GOVERNMENT WITH REGARD TO THE COMPOSITION OF THE FEATHERS.

BY LETTER DATED FEBRUARY 1, 1961, YOU ADVISED THE CONTRACTING OFFICE THAT BECAUSE OF INVOCATION OF THE WARRANTY CLAUSE YOU WERE OBLIGED TO OBTAIN LEGAL AND TECHNICAL ASSISTANCE WHICH, YOU STATED, RESULTED IN EXTRAORDINARY EXPENDITURE ON YOUR PART IN THE SUM OF $12,330.95, WHICH AMOUNT YOU REQUESTED TO BE REIMBURSED. IN A LETTER DATED FEBRUARY 17, 1961, THE CONTRACTING OFFICER ADVISED YOU THAT HE WAS WITHOUT AUTHORITY UNDER THE TERMS OF THE CONTRACT TO REIMBURSE YOU FOR THE CLAIMED EXPENSES. SUBSEQUENTLY, YOUR CLAIM WAS TRANSMITTED TO OUR OFFICE BY THE DEPARTMENT OF THE ARMY FOR DIRECT SETTLEMENT AND IT WAS DISALLOWED BY SETTLEMENT DATED AUGUST 15, 1961, FOR THE REASONS STATED THEREIN.

THE MAJOR PORTION OF YOUR CLAIM COVERS (1) YOUR LAWYER'S FEE OF $4,000; (2) YOUR CHEMIST'S FEE OF $4,000). (3) TRAVELING EXPENSES OF $1,404.44; AND (4) THE SUM OF $2,140 TO REIMBURSE THE COMPANY FOR THE TIME SPENT BY YOUR MR. I. BUCHMAN IN REFUTING THE GOVERNMENT'S CONTENTIONS AS TO THE OXYGEN NUMBER OF THE FEATHERS USED IN THE PILLOWS. THE OTHER PORTION OF YOUR CLAIM COVERS A FEE OF $10.35 CHARGED BY THE CALIFORNIA STATE LABORATORY, TELEPHONE AND HOTEL EXPENSES AMOUNTING TO $316.50 AND INTEREST IN THE AMOUNT OF $459.66.

IN REGARD TO YOUR CLAIM FOR INTEREST, IT IS WELL SETTLED THAT THE PAYMENT OF INTEREST BY THE UNITED STATES ON ITS UNPAID ACCOUNTS OR CLAIMS MAY NOT BE MADE EXCEPT WHERE INTEREST IS STIPULATED BY CONTRACT OR IS DIRECTED BY STATUTE. ANGARICA V. BAYARD, 127 U.S. 251; UNITED STATES V. NORTH AMERICAN TRANSPORTATION AND TRADING CO., 253 U.S. 330; SEABOARD AIR LINE RY.CO., V. UNITED STATES, 261 U.S. 299; SMYTH V. UNITED STATES, 302 U.S. 329; UNITED STATES V. HOTEL CO., 329 U.S. 585; WILLIAM C. RAMSEY, ET AL. V. UNITED STATES, 121 CT.CL. 426, CERTIORARI DENIED, 343 U.S. 977.

WITH REGARD TO THE OTHER ELEMENTS OF YOUR CLAIM YOU CONTENT THAT THE AMOUNTS ARE NOT CLAIMED AS DAMAGES BUT RATHER ARE COSTS WHICH YOU INCURRED IN ASSISTING WITH, OR INCIDENT TO, THE RETESTING OF THE FEATHERS. WE NOTE THAT THERE WAS NO AGREEMENT, EITHER EXPRESS OR IMPLIED, WHICH OBLIGATED THE GOVERNMENT TO BEAR SUCH COSTS. UNDOUBTEDLY, THERE FREQUENTLY ARISE DISPUTES UNDER CONTRACTS REGARDING THE QUESTION AS TO WHETHER MATERIALS DELIVERED CONFORM TO THE CONTRACT SPECIFICATIONS. IN THESE INSTANCES IT APPEARS THAT, IN THE ABSENCE OF ANY ARBITRARY OR CAPRICIOUS ACTION ON THE PART OF EITHER PARTY TO THE CONTRACT, EACH PARTY WOULD BEAR THE COSTS INCURRED IN SETTLING THE DISPUTE AND CHARGE THE ITEMS TO ITS OVERHEAD ACCOUNT. IN THE INSTANT CASE THE RECORD DOES NOT INDICATE THAT THE ADMINISTRATIVE PERSONNEL OF THE GOVERNMENT ACTED IN OTHER THAN GOOD FAITH. CONSEQUENTLY, ON THE BASIS OF THE PRESENT RECORD WE SEE SO LEGAL BASIS FOR ALLOWANCE OF ANY PART OF YOUR CLAIM.

IN YOUR LETTER REQUESTING REVIEW YOU CONTEND THAT THE CLAIM SHOULD BE ALLOWED ON EQUITABLE GROUNDS SINCE THE EXPENSES INCURRED BY YOU RESULTED FROM AN ERROR COMMITTED BY THE GOVERNMENT IN TESTING THE FEATHERS FOR OXYGEN NUMBER. IT MAY BE STATED THAT OUR OFFICE IS WITHOUT AUTHORITY TO DETERMINE CLAIMS BY OR AGAINST THE UNITED STATES SOLELY ON THE BASIS OF EQUITABLE OR MORAL CONSIDERATIONS. ITS JURISDICTION IS RESTRICTED TO THE CONSIDERATION AND DETERMINATION OF SUCH MATTERS IN ACCORDANCE WITH THE APPLICABLE LAW OR UNDER THE TERMS OF A VALID AGREEMENT EXECUTED PURSUANT TO LAW.