B-125173, AUG. 16, 1955

B-125173, AUG. 16, 1955

TO MORGAN STEEL PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JULY 28, 1955, REQUESTING REVIEW OF OFFICE SETTLEMENT DATED MAY 23, 1955, WHICH DISALLOWED YOUR CLAIM FOR $20,249.57, REPRESENTING THE OPERATING LOSSES ALLEGED TO HAVE BEEN SUSTAINED BY YOU IN THE PERFORMANCE OF CONTRACTS NOS. DA-20 113-ORD-11091 AND DA-20-113-ORD-11895, COVERING A QUANTITY OF ENGINE OVERHAUL STANDS FABRICATED FOR THE DEPARTMENT OF THE ARMY.

IN PRESENTING TO THE CLAIMS DIVISION OF THIS OFFICE YOUR REQUEST FOR PAYMENT OF THE ADDITIONAL AMOUNT CLAIMED, BY LETTER OF FEBRUARY 17, 1954, YOU ITEMIZED SEVEN INSTANCES OF CLERICAL OR TECHNICAL ERRORS, OR OMISSIONS IN THE COMPUTATION OF YOUR EXPECTED COSTS PRIOR TO THE PREPARATION AND SUBMISSION OF YOUR BIDS. THOSE ITEMS, WHEN APPLIED TO THE 1,485 UNITS PRODUCED, REPRESENTED A LOSS OF $14,335.24. THE BALANCE, OR $5,914.33, REPRESENTS LOSSES SUSTAINED AS THE RESULT OF THE NATIONWIDE STEEL STRIKE WHICH OCCURRED DURING THE PERFORMANCE OF YOUR CONTRACTS. IN SUPPORT OF THE ADDITIONAL AMOUNT WHICH YOU BELIEVE TO BE DUE THERE HAS BEEN FURNISHED AN AUDIT REPORT OF YOUR ACCOUNTS AND RECORDS PERTAINING TO THE INVOLVED CONTRACTS, PREPARED BY A PUBLIC ACCOUNTING FIRM, WHICH REFLECTS A GROSS LOSS OF $9,237.96. HOWEVER, YOU ALLEGE THAT TO OFFSET THE ACTUAL LOSSES INCURRED SUCH FIGURE SHOULD BE INCREASED TO THE CLAIMED AMOUNT.

THE SUBJECT CONTRACTS WERE AWARDED TO YOU, BEING THE LOWEST CORRECT BIDS RECEIVED, BY THE CONTRACTING OFFICER WITHOUT ANY KNOWLEDGE ON HIS PART OF THE ERRORS WHICH YOU NOW ALLEGE TO HAVE BEEN MADE IN THE PREPARATION OF YOUR BIDS. MOREOVER, A COMPARISON BETWEEN YOUR BID PRICES AND THOSE OF THE OTHER BIDDERS FAILS TO DISCLOSE A SUFFICIENT DIFFERENCE TO CHARGE THE PROCUREMENT OFFICIALS WITH CONSTRUCTIVE KNOWLEDGE OF THE ERROR IN YOUR BID PRICES. SINCE THE CONTRACTS WERE AWARDED IN GOOD FAITH, WITHOUT ANY ALLEGATION OF MISTAKE ON YOUR PART PRIOR TO AWARD, SUCH ACCEPTANCE OF THE BIDS CREATED BINDING AGREEMENTS WHICH FIXED THE LIABILITIES OF THE PARTIES. UNDER THOSE FACTS AND CIRCUMSTANCES OUR OFFICE IS WITHOUT LEGAL AUTHORITY TO CERTIFY FOR PAYMENT ANY AMOUNT IN EXCESS OF THE CONTRACT PRICES. BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 C.CLS. 584; ELLICOTT MACHINE CO. V. UNITED STATES, 44 C.CLS. 127; UNITED STATES V. PURCELL ENVELOPE CO. 249, U.S. 313.

WITH RESPECT TO THE BALANCE OF YOUR CLAIM FOR LOSSES ATTRIBUTABLE TO THE STEEL STRIKE, THE CONTRACTS INVOLVED MADE NO PROVISION FOR REIMBURSEMENT FOR ANY ADDITIONAL COST IN THE PERFORMANCE THEREOF DUE TO DELAYS INCURRED BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. IN THE ABSENCE OF SUCH CONTRACTUAL AUTHORITY ADDITIONAL EXPENSES RESULTING FROM DELAYS DUE TO CAUSES SUCH AS STRIKES MUST BE HELD TO BE ASSUMED BUSINESS RISKS WHICH MUST BE BORNE BY THE PARTY ON WHOM THE EXPENSES FALL. WHILE THE PERFORMANCE OF THE CONTRACTS ACCORDING TO THEIR TERMS MAY HAVE OCCASIONED A LOSS, WHICH IS REGRETTED, SUCH FACT DOES NOT ENTITLE YOU TO ADDITIONAL COMPENSATION OR RELIEF UNDER THE CONTRACTS, OR OTHERWISE. COLUMBUS RAILWAY AND POWER COMPANY V. UNITED STATES, 249 U.S. 399; CARNEGIE STEEL COMPANY V. UNITED STATES, 240 U.S. 156; INDUSTRIAL ENGINEERING COMPANY V. UNITED STATES, 92 C.CLS. 54; BLAUNER CONSTRUCTION COMPANY V. UNITED STATES, 94 C.CLS. 503. PARAGRAPH 11 OF THE GENERAL PROVISIONS MADE A PART OF THE CONTRACTS SPECIFICALLY PROVIDES THAT FAILURE OF PERFORMANCE DUE TO SUCH CAUSES WOULD NOT BE CHARGEABLE TO THE CONTRACTOR, PURSUANT TO WHICH PROVISION YOUR PERFORMANCE PERIOD WAS EXTENDED. BUT NOTHING THEREIN PROVIDED FOR AN ADJUSTMENT OF THE CONTRACT PRICES BECAUSE OF SUCH DELAY.

IN VIEW OF THE FOREGOING OUR OFFICE IS WITHOUT AUTHORITY TO APPROVE FOR PAYMENT ANY PART OF THE AMOUNT CLAIMED AND THEREFORE THE SETTLEMENT OF MAY 23, 1955, MUST BE SUSTAINED.