B-147131, APR. 2, 1962

B-147131, APR. 2, 1962

TO THE STEEL IMPROVEMENT AND FORGE COMPANY:

YOUR LETTER OF MARCH 9, 1962, REQUESTS THAT WE RECONSIDER OUR DECISION OF MARCH 2, 1962, WHICH SUSTAINED OUR CLAIMS DIVISION SETTLEMENT DENYING YOUR CLAIM IN THE AMOUNT OF $21,281.35. THE INSTANT CLAIM AROSE OUT OF A PARTIAL TERMINATION FOR CONVENIENCE OF CONTRACT NO. NOBS-62075 BETWEEN THE DEPARTMENT OF THE NAVY AND THE PRIME CONTRACTOR, ROUND WOODHOUSE CHAIN AND MANUFACTURING COMPANY, FOR WHICH YOU WERE A SECOND-TIER SUBCONTRACTOR.

YOU REPEAT THE ARGUMENT MADE IN YOUR LETTER OF SEPTEMBER 1, 1961, TO THE EFFECT THAT UNDER THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE, INCLUDING THE FACT THAT THE INSPECTOR OF NAVAL MATERIAL ISSUED INSTRUCTIONS DIRECTLY TO YOUR COMPANY TO SHIP ITS TERMINATION INVENTORY TO A GOVERNMENT FACILITY, THE GOVERNMENT WAS OBLIGATED TO SETTLE DIRECTLY WITH YOU, RATHER THAN THE PRIME CONTRACTOR, FOR COSTS INCURRED BECAUSE OF THE CONTRACT TERMINATION. YOU IMPLY THAT DISTINCTION BETWEEN THE FACTS OF UNITED STATES V. GEORGIA MARBLE COMPANY, 106 F.2D 955 (1939), AND THIS CLAIM IS NOT SIGNIFICANT, AND YOU ASSERT THAT THE CASE OF MERRITT V. UNITED STATES, 58 CT.CL. 371 (1923), CITED IN OUR DECISION OF MARCH 2, 1962, IS DISTINGUISHABLE ON THE FACTS FROM THE PRESENT CLAIM.

FOR THE REASONS STATED IN OUR DECISION DATED MARCH 2, 1962, WE BELIEVE THAT UNITED STATES V. GEORGIA MARBLE COMPANY, SUPRA, IS NOT APPLICABLE TO THIS CLAIM. MOREOVER, REGARDLESS OF WHETHER MERRITT V. UNITED STATES, SUPRA, IS DISTINGUISHABLE FROM THE PRESENT CLAIM, WE BELIEVE THE FOLLOWING STATEMENTS FROM OUR DECISION ARE CONTROLLING:

"WHETHER IN A GIVEN INSTANCE AN IMPLIED CONTRACT HAS BEEN CREATED DEPENDS UPON THE APPLICABLE FACTS. THE DEALINGS BETWEEN THE SUBCONTRACTOR AND THE GOVERNMENT WITH RESPECT TO THE TERMINATION INVENTORY MIGHT BE SAID TO SUPPORT A FINDING THAT AN IMPLIED CONTRACT CAME INTO EXISTENCE. ON THE OTHER HAND, THE GOVERNMENT DID NOT EXERCISE ITS OPTION UNDER THE PRIME CONTRACT TO HAVE THE SUBCONTRACTS ASSIGNED TO IT--- WHICH WOULD HAVE BEEN CONSISTENT WITH AN INTENT TO DEAL DIRECTLY WITH THE CLAIMANT. FURTHER, THE GOVERNMENT, EVEN AFTER THE RECEIPT OF THE SUBCONTRACTOR'S TERMINATION INVENTORY, CONTINUED TO NEGOTIATE WITH THE PRIME ON THE BASIS OF A SETTLEMENT INCLUDING THE AGREED-UPON AMOUNT OF THE SUBCONTRACTOR'S CLAIM. FINALLY, WE FIND NOTHING IN THE RECORD NECESSARILY INCONSISTENT WITH AN INTENTION BY THE GOVERNMENT TO EFFECT AN OVER-ALL SETTLEMENT WITH THE PRIME CONTRACTOR.

"THE POSITION OF THE DEPARTMENT OF THE NAVY WITH RESPECT TO THE CLAIM IS THAT THE ACTIONS OF THE GOVERNMENT REPRESENTATIVES DID NOT ESTABLISH AN IMPLIED CONTRACT. AS NOTED ABOVE, IT IS OUR CONCLUSION THAT THERE IS EVIDENCE TO SUPPORT THE NAVY'S POSITION. ON THE OTHER HAND, AS INDICATED, THERE IS ALSO SUPPORT FOR YOUR POSITION. IN VIEW OF THE SUBSTANTIAL AND SIGNIFICANT QUESTION REMAINING UNRESOLVED, IT IS OUR DUTY TO RESOLVE THE DOUBT IN FAVOR OF THAT COURSE WHICH WILL RESULT IN THE CONSERVATION OF APPROPRIATED FUNDS AND TO LEAVE TO THE PROPER JUDICIAL AUTHORITY THE FINAL DETERMINATION OF THE MATTER. CHARLES V. UNITED STATES, 19 CT.CL. 316; LONGWILL V. UNITED STATES, 17 CT.CL. 288. ACCORDINGLY, THE DENIAL OF YOUR CLAIM IS SUSTAINED.'

WE HAVE RECONSIDERED THE FACTS OF THIS CASE AND THE CONCLUSION STATED ABOVE. NO NEW EVIDENCE HAS BEEN PRESENTED NOR HAVE ANY NEW ARGUMENTS BEEN RAISED. CONSEQUENTLY, WE FIND NO LEGAL BASIS TO CHANGE OUR CONCLUSION.

YOU ARGUE THAT UNDER THE PRESENT DECISION THERE IS NO CONSERVATION OF APPROPRIATED FUNDS BECAUSE PAYMENT THROUGH THE BANKRUPT PRIME CONTRACTOR AND SUBCONTRACTOR WOULD MERELY BE PAYMENT THROUGH A CONDUIT TO YOUR COMPANY. WE SUGGEST THAT PAYMENT MADE DIRECTLY TO A SECOND TIER SUBCONTRACTOR MIGHT EFFECTIVELY DEPRIVE THE GOVERNMENT OF ITS RIGHT TO SET OFF ANY CLAIMS WHICH IT MAY HAVE AGAINST THE BANKRUPT CONTRACTOR.