B-123732, DEC. 30, 1955

B-123732, DEC. 30, 1955

TO FIRTH STIRLING, INC.:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 23, 1955, AND PRIOR WHICH DISALLOWED YOUR CLAIM FOR $10,143.78, REPRESENTING DISCOUNT ALLEGED TO HAVE BEEN ERRONEOUSLY DEDUCTED FROM PAYMENTS MADE UNDER NEGOTIATED CONTRACT NO. DA-36-061-ORD-100, DATED SEPTEMBER 19, 1951.

UNDER THE CONTRACT, AS ORIGINALLY EXECUTED, YOU AGREED TO MANUFACTURE AND DELIVER A CERTAIN QUANTITY OF 76MM SHOT FOR A TOTAL CONSIDERATION OF $3,557,345. CERTAIN ADJUSTMENTS WERE AUTHORIZED IN THE SAID PRICE AND THE QUANTITY INCREASED UNDER SEVERAL CONTRACT AMENDMENTS. UNDER ARTICLE 7 OF THE GENERAL PROVISIONS THE CONTRACT INDIVIDUAL PAYMENTS FOR PARTIAL DELIVERIES WERE AUTHORIZED UPON THE SUBMISSION OF PROPERLY CERTIFIED INVOICES OR VOUCHERS. NO PROVISION WAS MADE UNDER THE CONTRACT FOR THE ALLOWANCE OF PROMPT PAYMENT DISCOUNTS. HOWEVER, DURING THE PERIOD FROM OCTOBER 21, 1953, THROUGH FEBRUARY 27, 1954, YOU SUBMITTED A SERIES OF TEN INVOICES AGGREGATING $507,188.39, EACH CONTAINING IN THE BLOCK PROVIDED FOR DISCOUNT YOUR OFFER TO "2 PERCENT IF PAID ON OR BEFORE" IMMEDIATELY FOLLOWED BY THE RESPECTIVE FINAL DUE DATES FOR TAKING DISCOUNT. IN EACH INSTANCE THE PERCENTAGE FIGURE "2" AND THE FINAL DISCOUNT DATES WERE SPECIALLY WRITTEN IN. THE INVOICES BEAR THE CERTIFICATION AND SIGNATURE OF THE SAME ACCOUNTING REPRESENTATIVE OF YOUR FIRM. THE VOUCHERS UPON WHICH THE PARTIAL PAYMENTS WERE ACCOMPLISHED DISCLOSE THAT PAYMENTS WERE MADE WITHIN THE RESPECTIVE SPECIALLY "WRITTEN-IN" DUE DATES AND EACH REFLECT DISCOUNT DEDUCTIONS OF THE TWO PERCENT OFFERED, THE ACTUAL DEDUCTIONS BEING THE AMOUNT NOW CLAIMED.

YOU CONTENDED THAT THE OFFER OF DISCOUNT WAS MADE IN ERROR AND SINCE NO ALLOWANCE FOR DISCOUNT IS PROVIDED UNDER THE CONTRACT YOU ARE ENTITLED TO THE AMOUNT IN QUESTION. YOUR CLAIM WAS DISALLOWED PRIMARILY FOR THE REASON THAT THE MERE FACT THAT THE CONTRACT PRICE WAS SUBJECT TO REDETERMINATION AND THAT THE PARTIES MADE NO PROVISION IN THE CONTRACT FOR DEDUCTION OF ANY DISCOUNT CANNOT REMOVE THE LEGAL EFFECT OF YOUR SPECIAL OFFER, WHICH, IN THE CIRCUMSTANCES HERE INVOLVED, JUSTIFIED THE CONCLUSION BY THE PAYING OFFICER THAT THE OFFERS WERE MADE INDEPENDENTLY OF THE CONTRACT TERMS AND, AS STATED IN THE SETTLEMENT,"WERE INTENTIONAL WITH THE IDEA OF INDUCING PAYMENTS WITHIN THE INVOICE SPECIFIED TIME.' IN YOUR REQUEST FOR REVIEW, WHILE ADDING NO ADDITIONAL INFORMATION NOT HERETOFORE CONSIDERED IN THE DISPOSITION OF YOUR CLAIM, YOU CONTEND THAT "RENEGOTIATION" DOES NOT ENTER INTO THE CLAIM, STATING IN SUBSTANCE THAT A CONTRACT WITH THE TYPE OF REDETERMINATION CLAUSE, SUCH AS HERE, DOES NOT CONTAIN A CONTRACT PRICE FOR THE COMPLETED ITEMS. FURTHER, YOU CONTEND THAT NO PARTIAL PAYMENT IS SUBJECT TO CASH DISCOUNT AND IN SUPPORT THEREOF YOU SET FORTH A HYPOTHETICAL SITUATION REVEALING THE FALLACY OF SUCH NEGOTIATION SUBJECT TO DISCOUNT. HOWEVER THAT MAY BE, IT WILL BE SEEN FROM THE FOREGOING DISCUSSION THAT NO PHASE OF REDETERMINATION WAS CONSIDERED IN THE THE ACTION IS PREDICATED ON YOUR SPECIAL OFFERS MADE INDEPENDENT OF THE CONTRACT TERMS AND IN NOWISE SUGGESTS A PRICE REVISION BASED UPON ACTUAL COSTS OF PERFORMANCE.

IN REFERENCE TO THE ERROR ALLEGED IN SUBMITTING THE TEN INVOICE OFFERS OF DISCOUNT, ASIDE FROM THE FACT THAT THE PERCENTAGE RATE AND THE FINAL DUE DATE WERE SPECIALLY WRITTEN IN, IT IS NOTED THAT WITHIN THE BLOCK PROVIDED AT THE BOTTOM OF EACH INVOICE THAT THE NET AMOUNT OF EACH INVOICE IS REPEATED OPPOSITE THE PRINTED NOTATION "CASH DISCOUNT APPLICABLE TO THIS AMOUNT ONLY.' STRONGER EVIDENCE OF THE INTENTION OF THE SPECIAL OFFER OF DISCOUNT IS SHOWN BY THE FACT THAT PRIOR TO SUBMISSION OF THE SERIES OF TEN INVOICES, YOU SUBMITTED FOUR INVOICES, SIMILARLY PREPARED, WHEREON YOUR SPECIAL OFFER OF DISCOUNT OF ONE AND ONE-HALF PERCENT WAS LIKEWISE FOLLOWED BY FINAL DUE DATES SPECIALLY WRITTEN IN. THE INVOICE DATED FEBRUARY 27, 1953, WAS THE FIRST RECEIVED UNDER THE CONTRACT AND WAS SUBMITTED SOME SEVEN MONTHS PRIOR TO THE REMAINING THREE INVOICES OF THAT SERIES WHICH WERE DATED SEPTEMBER 28, 1953. HOWEVER, THE VOUCHER PAYMENTS WERE NOT PROCESSED WITHIN THE RESPECTIVE SPECIFIED DATES AND NO DISCOUNT WAS TAKEN. THE TRUE INTENTION OF SUCH VOLUNTARY OFFERS OF DISCOUNT OVER THE PROTRACTED PERIOD REASONABLY MAY BE PRESUMED AS CONSTITUTING INDEPENDENT TRANSACTIONS, PARTICULARLY IN RESPECT TO THE SERIES OF TEN INVOICES WHEREON THE PERCENTAGE RATE WAS VOLUNTARILY RAISED ONE-HALF PERCENT OVER THE PRIOR OFFER WHICH, NO DOUBT, WAS INDUCED BY THE DESIRE TO RECEIVE PROMPT PAYMENT OF THE MUCH GREATER AMOUNT OVER THAT COVERED BY THE FOUR INVOICES FOR WHICH PAYMENTS WERE DELAYED BEYOND THE FINAL DESIGNATED SPECIAL DISCOUNT DATES.

IT APPEARS THAT THE ERRORS WHICH ARE ALLEGED TO HAVE OCCURRED IN THE DISCOUNT OFFERS WERE REPEATED IN NUMEROUS INSTANCES OVER A PERIOD OF ONE YEAR FROM FEBRUARY 27, 1953, AND WERE NOT BROUGHT TO THE ATTENTION OF THE ADMINISTRATIVE AGENCY CONCERNED UNTIL THE END OF SUCH PERIOD. THE PRESUMPTION IS THAT THE GOVERNMENT EXPEDITED THE PAYMENTS IN QUESTION IN ORDER TO TAKE ADVANTAGE OF THE SPECIAL DISCOUNT VOLUNTARILY OFFERED BY YOU INDEPENDENTLY OF THE CONTRACT AND THAT IT WAS INCONVENIENCED IN A MANNER THAT IT WOULD NOT HAVE BEEN HAD SUCH PAYMENTS BEEN MADE IN THE REGULAR COURSE. CF. 25 COMP. GEN. 890.

ACCORDINGLY, THERE APPEARS NO BASIS FOR THE ALLOWANCE OF YOUR CLAIM, AND THE SETTLEMENT OF MAY 31, 1955, IS SUSTAINED.

IN REPLY TO THE FINAL QUESTION PRESENTED IN YOUR LETTER OF JUNE 6, 1955, YOU ARE ADVISED THAT THE ACTION OF OUR OFFICE ON YOUR CLAIM IS FINAL AND CONCLUSIVE ON THE EXECUTIVE BRANCH OF THE GOVERNMENT AND THE LAW MAKES NO PROVISION FOR AN APPEAL FROM OUR DECISION. SEE SECTIONS 304 AND 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24. HOWEVER, YOUR ATTENTION IS INVITED TO SECTIONS 1346 AND 1491, TITLE 28, U.S.C. 1946 EDITION, SUPP. V, PERTAINING TO SUITS AGAINST THE UNITED STATES WHICH ARE COGNIZABLE IN THE DISTRICT COURTS OF THE UNITED STATES AND IN THE COURT OF CLAIMS OF THE UNITED STATES.