B-150515, JULY 1, 1963, 43 COMP. GEN. 1

B-150515: Jul 1, 1963

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A PRIME CONTRACTOR'S DELAY IN PERFORMANCE DUE TO THE DEFAULT OF A SUBCONTRACTOR WHO EXPERIENCED LABOR DIFFICULTIES THAT WERE NOT UNFORESEEABLE AND WHO DID NOT TAKE NOR ATTEMPT TO TAKE ANY ACTION NECESSARY TO OBTAIN A SOLUTION TO THE PROBLEMS PRECLUDES A FINDING THAT THE FAILURE TO PRODUCE DUE TO LABOR DIFFICULTIES WAS THE RESULT OF CAUSES BEYOND THE CONTROL AND WITHOUT FAULT OR NEGLIGENCE SO AS TO BE EXCUSABLE UNDER THE "DEFAULT" ARTICLE OF THE CONTRACT. SINCE A DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS HOLDING THAT THE ACTION OF THE GOVERNMENT BETWEEN THE TIME A CONTRACTOR WAS DELINQUENT IN HIS DELIVERIES AND THE TIME THE DEFAULT TERMINATION WAS ISSUED DID NOT CONSTITUTE A WAIVER OF THE GOVERNMENT'S RIGHT TO TERMINATE IS BASED ON FACTS CONSIDERED BY THE BOARD AND SINCE IN LIGHT OF THE DECISION OF THE SUPREME COURT IN UNITED STATES V.

B-150515, JULY 1, 1963, 43 COMP. GEN. 1

CONTRACTS - DEFAULT - STRIKES, ETC. - EXCUSABLE. CONTRACTS - DISPUTES - CONTRACT APPEALS BOARD DECISION - REVIEW LIMITATION. CONTRACTS - TERMINATION - DELAY BY GOVERNMENT IN EXERCISING RIGHT. CONTRACTS - TERMINATION - DELAY BY GOVERNMENT IN EXERCISING RIGHT. CONTRACTS - TERMINATION - DELAY BY GOVERNMENT IN EXERCISING RIGHT. CONTRACTS - TERMINATION - DELAY BY GOVERNMENT IN EXERCISING RIGHT. A PRIME CONTRACTOR'S DELAY IN PERFORMANCE DUE TO THE DEFAULT OF A SUBCONTRACTOR WHO EXPERIENCED LABOR DIFFICULTIES THAT WERE NOT UNFORESEEABLE AND WHO DID NOT TAKE NOR ATTEMPT TO TAKE ANY ACTION NECESSARY TO OBTAIN A SOLUTION TO THE PROBLEMS PRECLUDES A FINDING THAT THE FAILURE TO PRODUCE DUE TO LABOR DIFFICULTIES WAS THE RESULT OF CAUSES BEYOND THE CONTROL AND WITHOUT FAULT OR NEGLIGENCE SO AS TO BE EXCUSABLE UNDER THE "DEFAULT" ARTICLE OF THE CONTRACT. SINCE A DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS HOLDING THAT THE ACTION OF THE GOVERNMENT BETWEEN THE TIME A CONTRACTOR WAS DELINQUENT IN HIS DELIVERIES AND THE TIME THE DEFAULT TERMINATION WAS ISSUED DID NOT CONSTITUTE A WAIVER OF THE GOVERNMENT'S RIGHT TO TERMINATE IS BASED ON FACTS CONSIDERED BY THE BOARD AND SINCE IN LIGHT OF THE DECISION OF THE SUPREME COURT IN UNITED STATES V. BIANCHI, DECIDED JUNE 3, 1963, REVIEW OF THE BOARD'S DECISION BY THE COMPTROLLER GENERAL IS REQUIRED TO BE LIMITED TO THE RECORD BEFORE THE BOARD, THE BOARD'S DECISION MAY NOT BE VIEWED AS ARBITRARY, CAPRICIOUS, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE; HOWEVER, EVIDENCE FURNISHED TO THE COMPTROLLER GENERAL BUT NOT BEFORE THE BOARD TO THE EFFECT THAT THE CONTRACTING OFFICER'S REPRESENTATIVE, AFTER THE DATE OF THE DELINQUENT DELIVERIES ON MANY OCCASIONS, URGED THE CONTRACTOR TO EXPEDITE SEVERAL SMALL SHIPMENTS HAS A MATERIAL BEARING ON THE WAIVER QUESTION. ALTHOUGH ACTION BY A CONTRACTOR BETWEEN THE DATE DELIVERIES WERE TO BE CONSIDERED DELINQUENT FOR IMMEDIATE INVOCATION OF THE DEFAULT TERMINATION PROVISION IN THE CONTRACT AND 49 DAYS LATER WHEN THE TERMINATION FOR DEFAULT WAS ISSUED, SUCH AS THE PURCHASE OF ADDITIONAL TOOLING, CONTINUED PRODUCTION AND PARTIAL DELIVERIES MAY OPERATE IF KNOWN TO THE GOVERNMENT, TO SHORTEN THE TIME WHICH WILL BE CONSIDERED A REASONABLE FORBEARANCE PERIOD FOR THE ISSUANCE OF THE TERMINATION NOTICE, SUCH ACTION MAY NOT BE CONSIDERED AS A WAIVER OF THE GOVERNMENT'S RIGHT TO TERMINATE FOR DEFAULT IN THE ABSENCE OF AFFIRMATIVE ACTION BY THE GOVERNMENT TO ENCOURAGE THE CONTRACTOR TO CONTINUE ITS EFFORT TO DELIVER. AN OFFER BY A REPRESENTATIVE OF THE CONTRACTING OFFICER TO A CONTRACTOR, WHO WAS DELINQUENT IN MEETING AN EXTENDED DELIVERY SCHEDULE BUT WHO AT THE TIME HAD NOT BEEN DECLARED IN DEFAULT, THAT THE GOVERNMENT COULD SUPPLY THE MATERIAL REQUIRED FOR TESTING MAY NOT, IN ITSELF, BE REGARDED AS ENCOURAGING THE CONTRACTOR TO BELIEVE THAT THE DEFAULT HAD BEEN WAIVED OR AS EVIDENCING ANY INTENTION BY THE GOVERNMENT TO FOREGO ITS RIGHT TO TERMINATE. THE ISSUANCE OF A TERMINATION FOR DEFAULT 49 DAYS AFTER THE DATE DELIVERIES WERE TO BE CONSIDERED DELINQUENT FOR IMMEDIATE INVOCATION OF THE DEFAULT TERMINATION PROVISIONS IN THE CONTRACT MAY NOT BE REGARDED AS UNREASONABLY DELAYED TO CONSTITUTE A WAIVER OF THE GOVERNMENT'S RIGHT TO TERMINATE SINCE THE GOVERNMENT HAS A REASONABLE FORBEARANCE PERIOD IN WHICH TO DETERMINE WHETHER TO TERMINATE FOR DEFAULT OR NOT PARTICULARLY IN CASES WHERE PROGRESS PAYMENTS HAVE BEEN MADE AND INTERNAL ADMINISTRATIVE PROCEDURES REQUIRE APPROVAL OF DEFAULT TERMINATIONS BY AUTHORITY HIGHER THAN THE CONTRACTING OFFICER. ALTHOUGH TOKEN DELIVERIES BY A CONTRACTOR WITHIN A WEEK AFTER THE DATE DELIVERIES WERE TO BE CONSIDERED DELINQUENT FOR INVOCATION OF THE DEFAULT TERMINATION PROVISIONS OF THE CONTRACT WERE MADE TOO SOON AFTER THE DEFAULT DATE TO BE CONSIDERED AS EVIDENCE THAT THE GOVERNMENT HAD ELECTED TO PERMIT PERFORMANCE RATHER THAN TO TERMINATE THE CONTRACT TWO DELIVERIES LATER THE SAME MONTH AND BEFORE ISSUANCE OF THE DEFAULT TERMINATION NOTICE MIGHT BE CONSIDERED EVIDENCE OF AN ELECTION NOT TO INVOKE THE DEFAULT PROVISIONS.

TO SEAVIEW ELECTRIC COMPANY, INC., JULY 1, 1963:

FURTHER REFERENCE IS MADE TO THE CLAIM SUBMITTED BY LETTER OF DECEMBER 20, 1962, ON BEHALF OF THE SEAVIEW ELECTRIC COMPANY, ARISING OUT OF THE TERMINATION FOR DEFAULT OF CONTRACT NO. DA 36-039-SC 84218. IT IS SEAVIEW'S POSITION THAT THE DEFAULT TERMINATION OF THIS CONTRACT, AND THE SUBSEQUENT ACTION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS IN SUSTAINING SUCH TERMINATION, WERE ARBITRARY, CAPRICIOUS, SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, AND NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

BECAUSE OF THESE ALLEGATIONS, AND IN VIEW OF THE PROVISIONS OF THE ACT OF MAY 11, 1954, 68 STAT. 81, 41 U.S.C. 321, WE OBTAINED FROM THE RECORDER OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS AND HAVE REVIEWED THE OFFICIAL RECORD BEFORE THE BOARD, INCLUDING THE TRANSCRIPT OF TESTIMONY AND THE PERTINENT EXHIBITS.

UNDER THE TERMS OF THE CONTRACT AND MODIFICATIONS THERETO THE SEAVIEW ELECTRIC COMPANY AGREED TO MANUFACTURE AND DELIVER 22,319 WIRE SPLICING KITS, IN ACCORDANCE WITH CERTAIN SPECIFICATIONS, FOR THE PRICE OF $451,736.56. THE CONTRACT CALLED FOR THE FURNISHING OF TWO PREPRODUCTION SAMPLES BY NOVEMBER 2, 1959, AND THE RECORD INDICATES THAT THESE SAMPLES WERE FURNISHED AND ACCEPTED. THE CONTRACT CONTAINED A SCHEDULE OF DELIVERIES, THE FIRST DELIVERY OF 1,000 UNITS TO BE MADE BY MARCH 29, 1960, AND THE REMAINING UNITS TO BE DELIVERED IN STIPULATED MONTHLY INSTALLMENTS OVER THE ENSUING YEAR. VARIOUS DIFFICULTIES WERE EXPERIENCED BY THE CONTRACTOR WHICH CAUSED DELAY IN THE PERFORMANCE OF THE CONTRACT WORK, AND BY MODIFICATION NO. 5, DATED APRIL 7, 1960, THE DELIVERY SCHEDULE WAS AMENDED TO CALL FOR THE FIRST 1,000 UNITS BY JULY 29, 1960. NO DELIVERIES WERE MADE BY JULY 29, 1960, AND ON AUGUST 22, 1960, THE CONTRACTING OFFICER WROTE THE CONTRACTOR THAT THE GOVERNMENT WOULD "WITHHOLD DEFAULT ACTION" UNTIL AUGUST 31, 1960, WITH THE UNDERSTANDING THAT SHIPMENT OF THE FIRST 1,000 UNITS WOULD BE COMPLETED BY THAT TIME, AND STATED THAT TERMINATION ACTION MIGHT BE INITIATED WITHOUT FURTHER NOTICE IN THE EVENT OF THE CONTRACTOR'S FAILURE TO MAKE THIS DELIVERY. FIRE OCCURRED IN THE CONTRACTOR'S PLANT ON AUGUST 30, 1960, WHICH MADE IT INOPERABLE. HOWEVER, EVEN IF THE FIRE HAD NOT OCCURRED, THE CONTRACTOR COULD NOT HAVE SHIPPED 1,000 UNITS BY AUGUST 31, 1960.

FOLLOWING THE FIRE ON AUGUST 30, 1960, THE CONTRACTOR TOOK ACTION TO SECURE OTHER FACILITIES FOR PERFORMANCE OF THE WORK. BY LETTER DATED OCTOBER 18, 1960, THE CONTRACTOR ADVISED THE GOVERNMENT THAT DELIVERY OF 1,000 UNITS COULD BE EXPECTED IN NOVEMBER 1960 AND 2,000 UNITS PER MONTH THEREAFTER TO COMPLETION. IN RESPONSE THERETO, THE CONTRACTING OFFICER UNDER DATE OF NOVEMBER 1, 1960, GAVE THE CONTRACTOR A FINDING THAT IT WAS IN A DELINQUENT STATUS 31 DAYS PRIOR TO THE FIRE, BUT THAT AN ADDITIONAL PERIOD OF THREE MONTHS WOULD BE ALLOWED TO COMPENSATE FOR THE LOSS OF TIME INCURRED AS A RESULT OF THE FIRE. THE FINDING STATED THAT NO DEFAULT ACTION WOULD BE TAKEN IF THE CONTRACTOR WOULD DELIVER 1,000 UNITS ON NOVEMBER 29, 1960, AND MAKE MONTHLY DELIVERIES OF 2,000 UNITS THEREAFTER. THE CONTRACTOR WAS FURTHER ADVISED THAT THE EXTENSION OF TIME WAS BEING GRANTED WITHOUT IN ANY WAY SURRENDERING ANY RIGHTS OF THE GOVERNMENT UNDER THE DEFAULT CLAUSE OF THE CONTRACT, AND THAT IN THE EVENT OF THE CONTRACTOR'S FAILURE TO MEET THIS DELIVERY SCHEDULE, THE CONTRACT WOULD BE SUBJECT TO IMMEDIATE TERMINATION FOR DEFAULT.

BY LETTER DATED NOVEMBER 23, 1960, THE CONTRACTOR REPORTED THAT THE DELIVERY DUE ON NOVEMBER 29, 1960, COULD NOT BE MET, SINCE ONLY 130 UNITS HAD BEEN SUBMITTED FOR INSPECTION AS OF THAT TIME. THE CONTRACTOR EXPLAINED THAT THE DELAY AROSE OUT OF THE FAILURE OF A VENDOR TO EFFECT DELIVERY OF COMPONENTS, THAT A NEW SUPPLIER HAD BEEN SECURED, AND THAT IT FELT IT COULD COMPENSATE FOR THE NOVEMBER SHORTAGE BY JANUARY 31, 1961, AND MAINTAIN THE PROMISED SCHEDULE THEREAFTER. ON JANUARY 16, 1961, THE CONTRACTING OFFICER TERMINATED THE CONTRACTOR'S RIGHT TO PROCEED FURTHER WITH PERFORMANCE OF THE CONTRACT, STATING IN PART AS FOLLOWS:

IN ACCORDANCE WITH THE RECORDS OF THIS OFFICE ONLY 420 EA WERE SHIPPED AS OF 30 DECEMBER 1960, THEREBY LEAVING A BALANCE DUE AS OF THAT DATE IN THE AMOUNT OF 2580 EA, WIRE SPLICING KIT, MK-356. THIS FAILURE TO DELIVER IN THE JUDGMENT OF THE UNDERSIGNED IS OF SUCH NATURE AS TO RENDER PERFORMANCE BY YOU IN ACCORDANCE WITH THE AFORESAID SCHEDULE IMPOSSIBLE. THE CONTRACTING OFFICER HAS EXAMINED ALL OF THE RELEVANT CIRCUMSTANCES OF THIS CASE AND HAS DETERMINED THAT YOUR DELINQUENCY UNDER THIS CONTRACT IS DUE SOLELY TO THE FAULT OF YOUR FIRM AND IS NOT IN ANYWAY EXCUSABLE.

THE CONTRACTOR'S APPEAL FROM THE CONTRACTING OFFICER'S DETERMINATION WAS DENIED BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS IN AN OPINION DATED MARCH 27, 1962, ASBCA NO. 7189. A MOTION FOR RECONSIDERATION WAS DENIED UNDER DATE OF AUGUST 30, 1962. THE APPELLANT CHALLENGED THE CONTRACTING OFFICER'S DECISION TO TERMINATE THE CONTRACT ON THE GROUNDS THAT ITS FAILURE TO DELIVER WAS EXCUSABLE UNDER THE "DEFAULT" ARTICLE OF THE CONTRACT, AND FURTHER, THAT THE CONTRACTING OFFICER HAD "WAIVED" THE DELIVERY SCHEDULE. IN DENYING THE FIRST CONTENTION THE BOARD EXPRESSED THE VIEW THAT THE DELAY OCCASIONED BY THE DEFAULT OF THE J AND P COMPANY, A SUBCONTRACTOR, WAS NOT EXCUSABLE, BECAUSE PRUDENT RESPONSIBLE MANAGEMENT OFFICERS, WHEN CONFRONTED WITH A LABOR SITUATION SUCH AS THAT WHICH EXISTED IN THE PLANT OF THE SUBCONTRACTOR, A SITUATION NOT UNFORESEEABLE IN INDUSTRY, WOULD TAKE OR ATTEMPT TO TAKE SUCH ACTION AS WAS NECESSARY TO OBTAIN AN ACCEPTABLE SOLUTION OF THE PROBLEMS, AND THAT THE FAILURE OF THE OFFICERS OF THE J AND P COMPANY TO DO SO PRECLUDED A FINDING THAT ITS FAILURE TO PRODUCE, PRINCIPALLY DUE TO ITS LABOR DIFFICULTIES, WAS THE RESULT OF CASES BEYOND ITS CONTROL AND WITHOUT ITS FAULT OR NEGLIGENCE. WE AGREE WITH THE BOARD ON THIS POINT.

RESPECTING THE APPELLANT'S CONTENTION THAT THE CONTRACTING OFFICER "WAIVED" THE DELIVERY SCHEDULE, THE BOARD HELD AS FOLLOWS:

WE REJECT AS UNTENABLE APPELLANT'S ARGUMENT THAT THE DELIVERY SCHEDULE WAS WAIVED. TERMINATION WAS EFFECTED IN THIS CASE ON 16 JANUARY 1961 FOR FAILURE TO DELIVER THE 29 NOVEMBER AND 29 DECEMBER INSTALLMENTS. EVIDENCE INDICATES AN INTENT TO WAIVE THE DEFAULT AND PERMIT CONTINUED PERFORMANCE. THE TERMINATION NOTICE WAS NOT UNREASONABLY DELAYED, CERTAINLY NOT AS TO THE 1,710 SHORTAGE WITH RESPECT TO THE DECEMBER INSTALLMENT. * * *

THE QUESTION PRESENTED IS WHETHER THE GOVERNMENT'S ACTION AND INACTION SUBSEQUENT TO NOVEMBER 29, 1960, SHOULD BE CONSIDERED AS SUPERSEDING ITS DETERMINATION OF NOVEMBER 1, 1960, THAT FAILURE TO DELIVER 1,000 UNITS BY NOVEMBER 29, 1960, AND 2,000 UNITS MONTHLY THEREAFTER WOULD BE CAUSE FOR IMMEDIATE DEFAULT TERMINATION, OR, IN OTHER WORDS, WHETHER GOVERNMENT ACTION OR INACTION SUBSEQUENT TO NOVEMBER 29, 1960, MUST BE CONSIDERED AS AN ELECTION TO PERMIT CONTINUED PERFORMANCE WHICH TOOK AWAY ITS RIGHT TO TERMINATE FOR FAILURE TO DELIVER AS DIRECTED BY THE LETTER OF NOVEMBER 1, 1960.

THERE SEEMS TO BE NO DOUBT THAT THE GOVERNMENT HAS A REASONABLE LENGTH OF TIME, USUALLY REFERRED TO AS "FORBEARANCE," AFTER A CONTRACTOR'S FAILURE TO MAKE TIMELY DELIVERY, WITHIN WHICH TO MAKE UP ITS MIND WHETHER OR NOT TO TERMINATE FOR DEFAULT. THE CONTRACTOR'S ACTIONS AFTER THE DATE DELIVERIES ARE DELINQUENT, SUCH AS THE PURCHASE OF ADDITIONAL TOOLING OR MATERIALS, CONTINUED PRODUCTION, OR PARTIAL DELIVERIES, MAY, IF KNOWN TO THE GOVERNMENT, OPERATE TO SHORTEN THE TIME WHICH WILL BE CONSIDERED A REASONABLE FORBEARANCE PERIOD, BUT IT SEEMS TO US THAT IN THE ABSENCE OF AFFIRMATIVE ACTION BY THE GOVERNMENT WHICH CAN BE CONSTRUED AS ENCOURAGEMENT TO THE CONTRACTOR TO CONTINUE ITS EFFORTS TO DELIVER, THIS CAN BE THEIR ONLY EFFECT. IN THE PRESENT CASE, THE FORBEARANCE PERIOD RAN FROM NOVEMBER 30, 1960, TO JANUARY 17, 1961, SOME 49 DAYS. SOME OF THIS TIME WAS DUE TO INTERNAL ARMY PROCEDURES, WHICH REQUIRED APPROVAL OF DEFAULT TERMINATIONS BY AUTHORITY HIGHER THAN THE CONTRACTING OFFICER IN CASES, SUCH AS THIS, WHERE THE CONTRACTOR HAD RECEIVED PROGRESS PAYMENTS.

THE FOLLOWING EVENTS TOOK PLACE BETWEEN NOVEMBER 29, 1960, AND JANUARY 17, 1961. SEAVIEW HAD BEEN FURNISHED SHIPPING INSTRUCTIONS ON OR ABOUT NOVEMBER 19, 1960, WHICH GAVE PRIORITY TO 50-ODD SMALL SHIPMENTS AGGREGATING SOME 3,000 UNITS, TO DIFFERENT CONSIGNEES. SEAVIEW OFFERED FOR INSPECTION, HAD ACCEPTED, AND SHIPPED THE FIRST FEW OF THESE AS FOLLOWS: 101 UNITS AND 29 UNITS ON NOVEMBER 30, 1960; 34 UNITS ON DECEMBER 8, 1960; 156 UNITS ON DECEMBER 20, 1960; AND 17 UNITS, 30 UNITS, AND 53 UNITS ON DECEMBER 30, 1960. SEAVIEW CONTINUED TO HAVE DIFFICULTY WITH SUPPLIERS' FAILURE TO DELIVER AN ADEQUATE QUANTITY OF COMPONENTS. ONE OF THE SUPPLIERS HE HAD SECURED DURING THE FIRST HALF OF NOVEMBER 1960 HAD ABANDONED HIS CONTRACT TO PRODUCE INDENTERS WITHIN 2 WEEKS, AND ANOTHER INDENTER SUPPLIER WAS NOT FOUND UNTIL JANUARY 10, 1961. THE CONTRACTOR'S SHOP SUPERVISOR TESTIFIED THAT SEAVIEW HAD ONLY 300 INDENTERS ON HAND IN NOVEMBER AND DECEMBER. THE CONTRACTOR HIMSELF HAD PURCHASED SOME $4,700 WORTH OF TOOLING THE MIDDLE OF NOVEMBER 1960 AND HE BOUGHT AN ADDITIONAL $3,300 WORTH OF JANUARY 12, 1961. ALSO, HE RECEIVED A FEW HUNDRED OF CERTAIN OF THE NECESSARY FINISHED COMPONENTS DURING DECEMBER AND EARLY JANUARY. SINCE THE GOVERNMENT HAD A REPRESENTATIVE REGULARLY AT THE CONTRACTOR'S PLANT, WE ASSUME THAT IT IS CHARGEABLE WITH KNOWLEDGE OF THE CONTRACTOR'S PRODUCTION EFFORTS UP TO THE TIME OF TERMINATION. THERE WAS ALSO AN EXCHANGE OF CORRESPONDENCE BETWEEN THE CONTRACTOR AND THE CONTRACTING OFFICER. ON DECEMBER 1, 1960, SEAVIEW WROTE THE CONTRACTING OFFICER STATING THAT 1,000 FEET OF SPECIAL WIRE FOR TESTING WAS REQUIRED. THE CONTRACTING OFFICER REPLIED BY LETTER OF JANUARY 4, 1961, STATING THAT IT WAS THE CONTRACTOR'S SOLE RESPONSIBILITY TO SECURE ANY WIRE NEEDED FOR ITS OWN TESTING, AND THAT THE GOVERNMENT INSPECTOR COULD GET WIRE IF NEEDED FOR GOVERNMENT TESTING. ON JANUARY 10, 1961, THE INSPECTOR WRITE THE CONTRACT ADMINISTRATOR FOR WIRE TO BE USED FOR GOVERNMENT INSPECTION.

THE ACTIONS OF THE GOVERNMENT IN ACCEPTING THE PARTIAL DELIVERIES ON NOVEMBER 30, DECEMBER 8, DECEMBER 20, AND DECEMBER 30, 1960, AND IN ADVISING THE CONTRACTOR ON JANUARY 4, 1961, THAT THE GOVERNMENT INSPECTOR COULD SECURE WIRE FOR TESTING ON REQUEST, ARE ALLEGED BY SEAVIEW TO CONSTITUTE AN ELECTION TO PERMIT CONTINUED PERFORMANCE AFTER THE DATES FOR DELIVERY DIRECTED IN THE LETTER OF NOVEMBER 1, 1960. SEAVIEW FURTHER CONTENDS THAT ITS OWN EFFORTS, KNOWN TO THE GOVERNMENT, TO IMPROVE PRODUCTION BETWEEN NOVEMBER 29, 1960, AND JANUARY 17, 1961, WHEN CONSIDERED WITH ITS LETTER OF NOVEMBER 23, 1960, OFFERING TO "COMPENSATE" FOR THE DELINQUENT NOVEMBER DELIVERY BY JANUARY 31, 1961, AND TO MAINTAIN THE PROMISED SCHEDULE THEREAFTER, REQUIRED DISAFFIRMANCE BY THE GOVERNMENT IF IT DID NOT INTEND TO PERMIT CONTINUED PERFORMANCE DESPITE THE FAILURE TO MAKE THE DELIVERY DUE ON NOVEMBER 29, 1960.

AS HEREINABOVE STATED, IT CANNOT BE DISPUTED THAT THE GOVERNMENT HAD A REASONABLE LENGTH OF TIME AFTER NOVEMBER 29, 1960, WITHIN WHICH TO MAKE UP ITS MIND WHETHER OR NOT TO TERMINATE FOR DEFAULT. THERE WOULD APPEAR TO BE NO QUESTION THAT THE DELIVERIES ACCEPTED ON NOVEMBER 30 AND DECEMBER 8, 1960, WERE TO SOON AFTER THE DEFAULT TO BE CONSIDERED EVIDENCE OF SUCH AN ELECTION. IT COULD PERHAPS BE ARGUED THAT THE DELIVERIES ACCEPTED ON DECEMBER 20 AND 30, 1960, MIGHT BE CONSIDERED EVIDENCE OF AN ELECTION NOT TO TREAT THE NOVEMBER DEFAULT AS CAUSE FOR TERMINATION. HOWEVER, THERE WERE 2,000 UNITS DUE ON DECEMBER 29, 1960, WHICH WERE NOT DELIVERED, SO THAT AS OF THAT DATE THE CONTRACTOR WAS IN DEFAULT ON TWO INSTALLMENTS. IT IS, THEREFORE, UNNECESSARY TO DECIDE WHAT THE EFFECT WOULD HAVE BEEN IF THE CONTRACTOR HAD DELIVERED 2,000 OR EVEN 1,000 UNITS ON OR BEFORE DECEMBER 29, 1960. WE DO NOT CONSIDER THE EXCHANGE OF CORRESPONDENCE CONCERNING THE TEST WIRE AS ENCOURAGING THE CONTRACTOR TO BELIEVE THAT ITS DEFAULT HAD BEEN "WAIVED" OR AS EVIDENCING ANY INTENTION BY THE GOVERNMENT TO FOREGO ITS RIGHT TO TERMINATE.

EVIDENCE HAS BEEN FURNISHED US TO THE EFFECT THAT THE CONTRACTING OFFICER'S REPRESENTATIVE URGED SEAVIEW ON MANY OCCASIONS DURING DECEMBER 1960 AND EARLY JANUARY 1961 TO EXPEDITE DELIVERY OF THE SEVERAL SMALL INITIAL SHIPMENTS WHICH WERE MADE AFTER NOVEMBER 29, 1960. WE BELIEVE THIS EVIDENCE HAS A VERY MATERIAL BEARING ON THE QUESTION WHETHER THE GOVERNMENT LED SEAVIEW TO BELIEVE ITS DEFAULT HAD BEEN "WAIVED.' HOWEVER, NONE OF THIS EVIDENCE WAS PRESENTED TO THE BOARD OF CONTRACTS APPEALS. THE LIGHT OF THE DECISION OF THE SUPREME COURT IN UNITED STATES V. CARLO BIANCHI, 37 U.S. 709, DECIDED JUNE 3, 1963, WE BELIEVE OUR REVIEW OF THE BOARD'S DECISION MUST BE LIMITED TO THE RECORD BEFORE THE BOARD. ON THE BASIS OF THAT RECORD, WE ARE UNABLE TO CONCLUDE THAT THE BOARD'S DECISION WAS ARBITRARY, CAPRICIOUS, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. SEAVIEW'S CLAIM IS THEREFORE DENIED.

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