B-140338, FEB. 2, 1961

B-140338, FEB. 2, 1961

DIMOND AND THORMAN:

YOUR LETTER OF DECEMBER 30, 1960, REQUESTS CONSIDERATION OF THE CLAIMS OF THE OCTAGON PROCESS, INC., FOR TRANSPORTATION COSTS INVOLVED IN SHIPPING 10,000 POUNDS OF HERBICIDE TO THE DENVER FEDERAL CENTER, GSA, AND BACK TO THE OCTAGON PLANT AFTER TERMINATION OF THE CONTRACT BASED ON PURCHASE ORDER 57-D-7373-1, ITEM 6846-664-7061.

OUR DECISION B-140338 DATED AUGUST 11, 1959, RECOGNIZED THAT ALTHOUGH THE HERBICIDE SHIPPED BY OCTAGON FAILED TO CONFORM TO SPECIFICATION REQUIREMENTS, PRIMARILY BECAUSE IT WAS NOT SHIPPED IN THE TYPE OF CONTAINERS REQUIRED BY THE CONTRACT, THE CONTRACTOR WAS ENTITLED TO A TEN DAY PERIOD IN WHICH TO ATTEMPT TO MEET THE PACKAGING SPECIFICATIONS. SINCE THE CONTRACTING OFFICER AT DENVER TERMINATED THE CONTRACT WITHOUT ALLOWING THE PERIOD OF TIME TO WHICH THE CONTRACTOR WAS ENTITLED, OUR DECISION AUTHORIZED GSA TO RELIEVE THE CONTRACTOR OF THE EXCESS COSTS INVOLVED IN PURCHASING PROPERLY PACKAGED HERBICIDE ELSEWHERE.

IN YOUR LETTER OF DECEMBER 30, 1960, YOU SUGGEST THAT THE EFFECT OF OUR DECISION WAS THAT THE CONTRACT WAS IMPROPERLY TERMINATED FOR DEFAULT AND YOU EXPRESS YOUR BELIEF THAT THE GSA THEREFORE HAD NO RIGHT TO ASSESS THE CONTRACTOR WITH THE COSTS OF SHIPPING THE MATERIAL TO DENVER AND THEN BACK TO THE OCTAGON PLANT. YOU QUOTE FROM OUR DECISION B-137827, DATED FEBRUARY 12, 1959, A STATEMENT TO THE EFFECT THAT IF A CONTRACT TERMINATION IS FOUND TO HAVE BEEN NOT JUSTIFIED, THEN THE CONTRACTOR WOULD HAVE SOME CLAIM AGAINST THE GOVERNMENT FOR THE WORK ALREADY PERFORMED.

IN ORDER TO DETERMINE THE EFFECT OF THE TERMINATION OF THE CONTRACT WITH RESPECT TO SHIPPING COSTS WE MUST FIRST CONSIDER THE DUTIES IMPOSED BY THE CONTRACT. UNDER THE PURCHASE ORDER IN QUESTION, THE CONTRACTOR WAS REQUIRED TO DELIVER THE STATED QUANTITY OF HERBICIDE PACKAGED IN A SPECIFIED MANNER. GSA REPORTED THAT THE SHIPMENT MADE PURSUANT TO THE PURCHASE ORDER FAILED TO CONFORM TO SPECIFICATION REQUIREMENTS IN SEVERAL RESPECTS AND THE PRIMARY DEFECT WAS THAT THE PACKAGING WAS NOT CORRECT.

UNDER THE CONTRACT PROVISIONS APPLICABLE TO INSPECTION, PARAGRAPH 5, GENERAL PROVISIONS, SF 32, THE GOVERNMENT RESERVED THE RIGHT TO INSPECT ALL SUPPLIES PRIOR TO ACCEPTANCE AND TO REJECT THOSE SUPPLIES WHICH WERE NOT IN CONFORMITY WITH THE REQUIREMENTS OF THE CONTRACT. IN ADDITION, PARAGRAPH 5B PROVIDED THAT SUPPLIES WHICH HAD BEEN REJECTED MUST BE REMOVED AT THE EXPENSE OF THE CONTRACTOR. THE CONTRACT CONTAINED NO PROVISION WHICH WOULD PERMIT THE GOVERNMENT TO PAY FOR SHIPPING COSTS OF SUPPLIES WHICH WERE NOT IN CONFORMITY WITH THE REQUIREMENTS OF THE CONTRACT. THE GOVERNMENT INCURRED NO LIABILITY WHEN IT EXERCISED ITS RIGHT TO INSPECT THE HERBICIDE AND REJECTED THE SHIPMENT AS IMPROPERLY PACKAGED.

THE DUTY ON THE PART OF THE CONTRACTOR TO PAY THE SHIPPING COSTS AROSE FROM THE GOVERNMENT'S REJECTION OF THE HERBICIDE AND NOT FROM THE SUBSEQUENT TERMINATION OF THE CONTRACT. WHILE THE TERMINATION MAY HAVE DEPRIVED THE CONTRACTOR OF AN OPPORTUNITY TO CORRECT THE DEFICIENCY, IT IMPOSED NO ADDITIONAL BURDEN ON THE CONTRACTOR SINCE HIS DUTY TO PAY THE SHIPPING COSTS REMAINED WHETHER THE CONTRACT WAS TERMINATED OR CONTINUED IN FORCE.

THE STATEMENT WHICH YOU QUOTE FROM OUR DECISION B-137827 OF FEBRUARY 12, 1959, HAS NO APPLICATION TO THE FACTS OF RECORD TO THE FACTS OF RECORD HERE SINCE YOUR CLAIMS ARE NOT FOR COMPENSATION FOR WORK ALREADY PERFORMED AND IN ANY EVENT, YOUR CLAIMS DID NOT ARISE FROM THE TERMINATION OF THE CONTRACT.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE ACTION OF GSA WITH RESPECT TO THE SHIPPING COSTS WAS PROPER. WE FIND NO BASIS UPON WHICH RECOVERY OF ANY OF THE SHIPPING COSTS COULD BE ALLOWED AND BOTH CLAIMS ARE HEREBY DENIED.