B-129468, AUG. 8, 1957

B-129468, AUG. 8, 1957

TO BAYSWATER CRAFTSMEN, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 10, 1957, RELATIVE TO YOUR REPORTED INDEBTEDNESS TO THE UNITED STATES IN THE SUM OF $1,818.01, REPRESENTING EXCESS COSTS OR DAMAGES RESULTING FROM YOUR DEFAULT UNDER CONTRACT NO. DA-36-039-SC-36457, DATED JUNE 13, 1952, AND THE CONSEQUENT REPURCHASE OF THE DEFAULTED ITEMS FROM ANOTHER SOURCE.

THE CIRCUMSTANCES WHICH GAVE RISE TO THE GOVERNMENT'S CLAIM AGAINST YOU ARE CLEARLY SET FORTH IN OUR PRIOR DECISIONS OF NOVEMBER 19, 1956, AND MAY 6, 1957, RELATIVE TO THIS MATTER, AND, THEREFORE, NEED NOT BE RESTATED HERE IN DETAIL. HOWEVER, IN FURTHER CLARIFICATION OF THE GOVERNMENT'S POSITION IN THIS MATTER, IT MAY BE APPROPRIATE TO EMPHASIZE CERTAIN ADDITIONAL POINTS, SUCH AS THE FACT THAT YOUR DEFAULTED CONTRACT NO. DA-36 -039-SC-36457 CLEARLY STRESSED THE URGENCY OF THE GOVERNMENT'S NEED FOR THE ITEMS OF CHESTS, AS SPECIFIED, BY APPRISING YOU THAT ,TIME * * * IS OF THE ESSENCE.' FURTHER, IT IS NOTED THAT YOU OFFERED TO DELIVER ALL OF THE 220 UNITS INVOLVED WITHIN "FOUR TO SIX MONTHS" AFTER RECEIPT OF AWARD MADE ON JUNE 13, 1952, THUS FIXING DECEMBER 13, 1952, THE FINAL COMPLETION DATE UNDER YOUR CONTRACT. ALTHOUGH THE RECORD IN THE CASE FURTHER SHOWS THAT DESPITE EFFORTS BY THE GOVERNMENT CONTRACTING OFFICIALS TO ASSIST YOU IN LOCATING A SOURCE OF SUPPLY FOR CERTAIN COMPONENTS GOING INTO THE MANUFACTURE OF THE ITEM, YOU STILL HAD NOT MADE ANY DELIVERIES UNDER YOUR DEFAULTED CONTRACT AS LATE AS OCTOBER 8, 1953, OR APPROXIMATELY TEN MONTHS AFTER THE SCHEDULED COMPLETION DATE. BECAUSE OF SUCH UNEXCUSED DELAY, THE CONTRACTING OFFICER THEREUPON EXERCISED HIS RIGHT TO TERMINATE YOUR CONTRACT UNDER AUTHORITY OF ARTICLE 11 OF THE GENERAL PROVISIONS (STANDARD FORM NO. 32). THIS ARTICLE EXPRESSLY AUTHORIZES THE GOVERNMENT TO TERMINATE THE CONTRACT IF THE CONTRACTOR FAILS TO MAKE DELIVERY OF THE SUPPLIES WITHIN THE PERFORMANCE TIME SPECIFIED, AND TO PROCURE SIMILAR ARTICLES "UPON SUCH TERMS AS THE CONTRACTING OFFICER MAY DEEM APPROPRIATE," IN WHICH EVENT "THE CONTRACTOR SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS INCURRED.'

ACTING PURSUANT TO SUCH AUTHORITY, THE RECORD SHOWS THAT BY INVITATION ISSUED DECEMBER 30, 1953, THE GOVERNMENT CONTRACTING OFFICER READVERTISED THE GOVERNMENT'S NEED FOR THESE 220 CHESTS UNDER SUBSTANTIALLY SIMILAR SPECIFICATIONS, WHICH RESULTED IN AN AWARD MADE ON MARCH 26, 1954, IN FAVOR OF THE HARPTONE MANUFACTURING CORPORATION, AT AN INCREASED COST TO THE UNITED STATES OF $1,818.01, INCLUDING THE APPLICABLE TRANSPORTATION COSTS ON THE VARIOUS COMPLETING SHIPMENTS. THE BID OF THE LOWEST BIDDER WAS REJECTED IN ACCORDANCE WITH SECTION 2 406.1 OF ARMY PROCUREMENT PROCEDURES, AS NOT BEING ONE SUBMITTED BY A RESPONSIBLE BIDDER.

UNDER THE EXPLICIT TERMS OF ARTICLE 11 OF THE CONTRACT GENERAL PROVISIONS, YOU ARE CLEARLY OBLIGATED TO REIMBURSE THE UNITED STATES FOR THE EXCESS COSTS OR DAMAGES RESULTING FROM YOUR DEFAULT. FURTHERMORE, THE LAW LONG HAS RECOGNIZED THAT A PARTY WHO FAILS TO PERFORM HIS CONTRACTUAL OBLIGATIONS IS BOUND TO PLACE THE OTHER PARTY IN AS GOOD A POSITION FINANCIALLY AS HE WOULD HAVE BEEN IN HAD PERFORMANCE BEEN ACCOMPLISHED. SEE MILLER V. ROBERTSON, 266 U.S. 243, 257. ALSO, THE LAW IS CLEAR THAT THOSE WHO ARE INDEBTED TO THE UNITED STATES MUST PAY THEIR DEBTS IN FULL, AND NO OFFICER OR AGENT OF THE GOVERNMENT HAS THE AUTHORITY TO GIVE AWAY OR REMIT A CLAIM DUE THE GOVERNMENT. SEE UNITED STATES V. AMERICAN SALES CORP., 27 F.2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED 280 U.S. 574.

CONCERNING YOUR CONTENTION THAT THE REPLACEMENT ITEMS WERE HEAVIER THAN THOSE WHICH YOU PROPOSED TO FURNISH, YOU ARE ADVISED THAT THE ORIGINAL AND THE PACKAGING SPECIFICATIONS IN BOTH THE DEFAULTED AND REPLACEMENT CONTRACTS WERE SUBSTANTIALLY THE SAME, EXCEPT THAT THE DESCRIPTION OF THE ITEM UNDER THE FIRST INVITATION FOR BIDS SHOWED A "NET" WEIGHT OF THE CHESTS AS 40 POUNDS, WHICH, OF COURSE, DID NOT INCLUDE THE WEIGHT OF PACKING FOR SHIPMENT. INSOFAR AS THE RECORD SHOWS, NO PENALTY WOULD HAVE IMPOSED UPON YOU IF THE NET WEIGHT WOULD HAVE BEEN EXCEEDED. FURTHERMORE, SINCE YOU FAILED TO MAKE ANY DELIVERIES UNDER YOUR CONTRACT, THERE ARE NO AVAILABLE MEANS OF DETERMINING WHAT THE SHIPPING WEIGHTS OF YOUR PRODUCT WOULD HAVE BEEN. HENCE, YOUR CONTENTION THAT THE GOVERNMENT ACCEPTED A HEAVIER ITEM THAN THAT SPECIFIED IN YOUR CONTRACT IS WITHOUT SUBSTANTIATION OR MERIT.

ACCORDINGLY, WE HAVE NO ALTERNATIVE BUT TO INSIST THAT YOU MAKE APPROPRIATE ARRANGEMENTS WITH OUR CLAIMS DIVISION FOR THE LIQUIDATION OF THE GOVERNMENT'S CLAIM AGAINST YOU WITHOUT FURTHER DELAY.