B-124907, OCT. 14, 1955

B-124907, OCT. 14, 1955

TO THE NATIONAL AUTOMOTIVE FIBRES, INC.:

REFERENCE IS MADE TO A LETTER OF JULY 21, 1955, WRITTEN IN YOUR BEHALF BY CARL A. PHILLIPPS, ATTORNEY, REQUESTING REVIEW OF OUR CLAIMS DIVISION SETTLEMENT DATED DECEMBER 3, 1953, WHICH DISALLOWED YOUR CLAIM FOR $14,400.23, REPRESENTING INCREASED COMPENSATION ALLEGEDLY EARNED IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NO. DA 30-280-QM-15162 (O.I. 18911), DATED APRIL 20, 1951.

UNDER THE CONTRACT YOU AGREED TO DELIVER, F.O.B. ORIGIN, 70,000 PONCHOS TO BE MANUFACTURED FROM GOVERNMENT-FURNISHED MATERIAL IN ACCORDANCE WITH THE CONTRACT TERMS AND CONDITIONS, AT $5.38 EACH, OR FOR A TOTAL CONSIDERATION OF $376,600. THE CONTRACT UNIT ALLOWANCE PROVIDES 5 YARDS, 28 INCHES, OR 5-7/9 YARDS OF CLOTH FOR "DOUBLE NEEDLE" 45 INCH WIDTH, PLUS 10 PERCENT FOR LOSS DUE TO COATING THE MATERIAL USED IN THE MANUFACTURE OF THE ITEMS. THE ADMINISTRATIVE REPORTS DISCLOSE THAT THE GOVERNMENT FURNISHED 445,898 1/2 YARDS OF MATERIAL TO YOUR DESIGNATED COATER WHO RETURNED 970 YARDS AS UNUSABLE AND THAT THE REMAINING 444,928 1/2 YARDS WERE DELIVERED TO YOU. THE RECORD EVIDENCES NO DISPUTE IN THIS RESPECT, OR TO THE REPORTS THAT 406,582 YARDS ACTUALLY WERE USED IN THE MANUFACTURE OF THE 70,090 PONCHOS DELIVERED, LEAVING A BALANCE OF 38,346 1/2 YARDS OF UNUSED COATED MATERIAL--- THE QUANTITY RETURNED BY YOU TO THE GOVERNMENT AS REQUIRED BY THE CONTRACT. YOUR CLAIM FOR REFUND OF THE COATING COST OF THE RETURNED MATERIAL (LISTED IN YOUR CLAIM AS 38,350 1/2 YARDS) WAS DISALLOWED FOR THE REASONS STATED IN THE SETTLEMENT OF DECEMBER 3, 1953. IN THE REQUEST FOR REVIEW OF THE SETTLEMENT IT IS CONTENDED THAT THE COATING OF THE SURPLUS MATERIAL RETURNED TO THE GOVERNMENT REPRESENTS ADDITIONAL COATING SERVICES NOT COVERED BY THE WRITTEN CONTRACT AND, AS SUCH, GAVE RISE TO AN IMPLIED CONTRACT UNDER WHICH THE GOVERNMENT IS REQUIRED TO PAY FOR THE SAME AT A UNIT PRICE OF $0.37593 PER YARD, THE RATE USED IN COMPUTING YOUR ESTIMATED COST.

WITH RESPECT TO THE QUANTITY OF CLOTH THAT WAS TO BE PROCESSED YOU CONTEND THAT SINCE THE MATERIAL BELONGED TO THE GOVERNMENT IT WAS INCUMBENT UPON IT TO ESTIMATE THE AMOUNT OF MATERIAL REQUIRED TO BE COATED. ALSO, SINCE ARTICLE 30 OF THE CONTRACT DESIGNATED THE ADMINISTRATIVE OFFICIAL CHARGED WITH THE DUTY OF MAINTAINING THE NECESSARY PROPERTY RECORDS, YOU IMPLY THAT THE GOVERNMENT ASSUMED THE RESPONSIBILITY OF DETERMINING THE EXACT YARDAGE OF MATERIAL TO BE WATERPROOFED. FURTHER, YOU CONTEND THAT THROUGH THE WEEKLY PROGRESS REPORTS SUBMITTED BY YOU THE CONTRACTING OFFICE KNEW THE QUANTITY OF CLOTH BEING UTILIZED AND THEREFORE HE SHOULD HAVE BEEN IN A POSITION TO DETERMINE, PRIOR TO COMPLETION OF THE CONTRACT, THE EXACT AMOUNT OF CLOTH NEEDED TO FABRICATE THE BALANCE OF THE ITEMS TO BE FURNISHED.

AS TO YOUR FIRST CONTENTION, THE GOVERNMENT DID ESTIMATE THE QUANTITY OF CLOTH TO BE PROCESSED, SETTING FORTH THAT ESTIMATE IN THE NEGOTIATED CONTRACT WHICH YOU ACCEPTED. PURSUANT THERETO, YOU ADMIT ENTERING INTO AN ARRANGEMENT WITH YOUR PROCESSOR TO COAT 425,000 YARDS OF CLOTH, SUCH QUANTITY PRESUMABLY TO BE ADJUSTED UPWARD OR DOWNWARD DEPENDING UPON THE ULTIMATE QUANTITY NEEDED. WHILE ARTICLE 30 OF THE CONTRACT DESIGNATED AN OFFICIAL TO MAINTAIN THE PROPERTY RECORDS RELATING TO THE MATTER, SUCH FUNCTION INVOLVED ONLY AN ACCOUNTABILITY OF THE CLOTH. NOTHING IN THAT ARTICLE, OR IN ANY OTHER PROVISION OF THE CONTRACT, IMPOSED UPON THE GOVERNMENT THE DUTY TO DETERMINE THE EXACT QUANTITY OF CLOTH TO BE PROCESSED.

WITH RESPECT TO YOUR ALLEGATION THAT, THROUGH THE INFORMATION REFLECTED BY THE WEEKLY WORK REPORTS SUBMITTED BY YOU, THE CONTRACTING OFFICER KNEW AT ALL TIMES THE AMOUNT OF CLOTH BEING USED, AN EXAMINATION OF SUCH REPORTS DISCLOSES THAT THE INFORMATION CONTAINED THEREIN RELATES ONLY TO THE QUANTITY OF THE ITEMS IN THE PROCESS OF MANUFACTURE AND THE NUMBER COMPLETED TO DATE, RATHER THAN TO THE AMOUNT OF CLOTH USED, AND BEING USED, IN PRODUCTION OF THE COMPLETED ITEM.

THE BRIEF FILED IN YOUR BEHALF STATES THAT WHEN IT APPEARS THAT THE QUANTITY IN PROCESS AT THE COATER'S PLANT (COLUMBUS COATED FABRICS CORPORATION) WAS BEGINNING TO EXCEED YOUR REQUIREMENTS THE COATER QUESTIONED YOU AS TO THE ADVISABILITY OF CONTINUING THE PROCESSING. ALSO THE BRIEF STATES THAT THE CONTRACTING OFFICER WAS NOTIFIED WELL IN ADVANCE THAT THE COATING WAS APPARENTLY RUNNING IN EXCESS OF THE REQUIREMENT. SINCE THE SUBCONTRACTOR MERELY COATED THE CLOTH FORWARDED TO IT, IT IS NOT UNDERSTOOD HOW IT KNEW THAT THE QUANTITY COATED WAS BEGINNING TO EXCEED THE CONTRACT REQUIREMENTS AS IT WAS IN NO POSITION TO KNOW THE AMOUNT OF CLOTH YOU HAD USED IN THE MANUFACTURE OF ANY GIVEN NUMBER OF PONCHOS. YOU, AS THE FABRICATOR, WERE THE ONLY PARTY WITH THAT KNOWLEDGE. AND, IN THAT REGARD, THERE IS NOTHING IN THE RECORD TO SHOW THAT SUCH INFORMATION WAS EVER CONVEYED TO THE CONTRACTING OFFICER.

MUCH EMPHASIS IS PLACED ON THE CONTENTS OF LETTER OF AUGUST 22, 1951, WHEREIN THE CONTRACTING OFFICER ADVISED YOU THAT ALL OF THE GOVERNMENT- FURNISHED CLOTH SHOULD BE PROCESSED. THE FOLLOWING DAY THE SAME INFORMATION WAS FURNISHED YOUR COATER BY THAT OFFICER. THE IMPLICATION IN YOUR APPEAL IS THAT SUCH LETTER BY THE CONTRACTING OFFICER CONSTITUTED A DIRECTIVE TO COAT THE QUANTITY OF UNUSED CLOTH FOR WHICH CLAIM IS MADE. THERE IS NO BASIS FOR SUCH IMPLICATION SINCE THAT DETERMINATION WAS MADE BY THE CONTRACTING OFFICER AT A TIME WHEN ONLY APPROXIMATELY ONE-HALF OF THE TOTAL QUANTITY OF CLOTH NEEDED TO FULFILL THE CONTRACT HAD BEEN FURNISHED FOR PROCESSING. WITH NO INDICATION THEN AS TO THE CONTEMPLATED TOTAL AMOUNT OF CLOTH TO BE USED. ON THE CONTRARY, IT APPEARS FROM THE RECORD THAT THE INSTRUCTIONS CONTAINED IN THE LETTERS OF AUGUST 22, 1951, TO YOU, AND OF AUGUST 23, 1951, TO YOUR SUBCONTRACTOR--- IDENTICAL IN WORDING AND REFERENCE TO THIRD PARAGRAPH SHOWS THE INSTRUCTIONS WERE INTENDED FOR YOUR COATER--- WERE IN REPLY TO A LETTER OF MAY 25, 1951, FROM COLUMBUS COATED FABRICS CORPORATION ADVISING THE PROCUREMENT OFFICIALS THAT INSPECTION OF A RECENT SHIPMENT OF CLOTH DISCLOSED SEVERAL TYPES OF DEFECTS. DOUBT WAS EXPRESSED THEREIN AS TO THE SUITABILITY OF THAT SHIPMENT OF CLOTH FOR COATING AND INSTRUCTIONS WERE REQUESTED AS TO WHAT DISPOSITION SHOULD BE MADE OF THE DEFECTIVE CLOTH. IT WAS IN RESPONSE TO THAT REQUEST OF YOUR COATER THAT THE CONTRACTING OFFICER ISSUED INSTRUCTIONS TO COAT ALL OF THE QUESTIONABLE CLOTH, PRESUMABLY ON THE PREMISE THAT FINAL DETERMINATION AS TO WHETHER THE CLOTH WOULD BE FABRICATED INTO PONCHOS WOULD BE MADE AT YOUR PLANT.

WHILE THE QUANTITY OF CLOTH FOR WHICH COATING COSTS ARE NOW CLAIMED WAS NOT UTILIZED, IT WAS A PART OF THE QUANTITY THE PARTIES AGREED WOULD BE ALLOWED BY THE GOVERNMENT UNDER THE CONTRACT. HAD THE EXTENT OF THE SHRINKAGE BEEN AS EXPECTED, WITH THE RESULT THAT THE EXCESS QUANTITY IN QUESTION ACTUALLY WAS USED IN COMPLETION OF THE CONTRACT, IT COULD NOT BE SERIOUSLY ARGUED THAT THE GOVERNMENT WOULD BE LIABLE FOR THE COATING COSTS CLAIMED. AS STATED ABOVE, ALTHOUGH YOUR COATER WAS INSTRUCTED TO COAT THE MATERIAL FURNISHED TO IT, APPARENTLY LEAVING THE MATTER OF WHETHER THE COATED MATERIAL WAS SUITABLE FOR USE IN MANUFACTURE OF PONCHOS FOR DETERMINATION AT YOUR PLANT, THE FACT REMAINS THAT YOU WERE, OR SHOULD HAVE BEEN, NO NOTICE DURING THE COURSE OF MANUFACTURE AS TO THE YARDAGE OF CLOTH THAT WAS BEING USED. AND IF YOU WERE OF THE OPINION THAT IT WAS NOT NECESSARY TO COAT THE ENTIRE QUANTITY OF CLOTH MADE AVAILABLE FOR YOUR USE, IT WAS INCUMBENT UPON YOU TO INSTRUCT YOUR COATER ACCORDINGLY.

THE ACTION TAKEN IN THE SETTLEMENT OF DECEMBER 3, 1953, DISALLOWING YOUR CLAIM IS SUSTAINED.