B-140338, AUG. 11, 1959

B-140338, AUG. 11, 1959

TO HONORABLE FRANKLIN FLEETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF JULY 27, 1959, WITH ENCLOSURES, SUBMITTING FOR OUR DECISION A REQUEST MADE BY THE OCTAGON PROCESS, INC., FOR RELIEF FROM EXCESS COSTS AMOUNTING TO $775.14 ASSESSED AGAINST THAT CONCERN BY OFFICIALS OF THE DENVER OFFICE OF YOUR ADMINISTRATION BY REASON OF DEFAULT UNDER A PURCHASE ORDER (57-D-7373 1; ITEM 6846-664-7061) COVERING THE PURCHASE OF 10,000 POUNDS OF HERBICIDE.

BY THE INDICATED PURCHASE ORDER DATED JANUARY 14, 1957, THE OCTAGON PRESS, INC., AGREED TO DELIVER TO THE DENVER FEDERAL CENTER, GENERAL SERVICES ADMINISTRATION, ON OR BEFORE FEBRUARY 5, 1957, APPROXIMATELY 10,000 POUNDS OF HERBICIDE TO CONFORM TO CERTAIN STATED SPECIFICATIONS, THE SHIPMENT TO BE MADE IN 200 50-POUND COMMERCIAL-TYPE CONTAINERS. YOU REPORT THAT THERE WAS SOME DELAY IN DELIVERY IN THIS CASE BUT THAT NO ACTION WITH RESPECT TO SUCH DELAYED DELIVERY WAS TAKEN BY YOUR DENVER OFFICE EITHER PRIOR TO OR SUBSEQUENT TO THE ARRIVAL OF THE SHIPMENT AT ITS DESTINATION. IS IS YOUR VIEW THAT LATENESS IN DELIVERY DOES NOT APPEAR TO BE AN ISSUE IN THIS MATTER.

BY LETTER DATED MARCH 7, 1957, THE CONTRACTING OFFICER AT DENVER ADVISED THE CONTRACTOR OF THE TERMINATION OF THE CONTRACT FOR THE REASON THAT THE SHIPMENT WHICH HAD BEEN MADE PURSUANT TO THE PURCHASE ORDER FAILED TO CONFORM TO THE REQUIREMENTS OF THE SPECIFICATIONS. THE PRIMARY GROUND FOR THE DEFAULT ACTION WAS THAT THE PACKAGING OF THE DELIVERED HERBICIDE WAS NOT CORRECT IN THAT A LARGE PERCENTAGE OF THE SHIPPING CONTAINERS WERE NOT OF THE 50-POUND COMMERCIAL-TYPE AS REQUIRED BY THE PURCHASE ORDER. THE TERMINATION LETTER ALSO INDICATED THAT A REPURCHASE WAS THEN BEING MADE WITH EXCESS COSTS TO BE CHARGED TO THE CONTRACTOR. ON THE SAME DAY THE CONTRACTING OFFICER REQUESTED BIDS FOR THE REPURCHASE OF THE SAME QUANTITY OF HERBICIDE FROM OTHER SUPPLIERS. A NEW COMMITMENT WAS THEREUPON PLACED WITH ANOTHER SUPPLIER AT A HIGHER PRICE.

IN LETTER OF MARCH 26, 1957, SETTING FORTH ITS REASON FOR PROTESTING THE TERMINATION ACTION, THE CONTRACTOR EMPHASIZED THE FACT THAT THE TERMINATION LETTER AND THE ISSUANCE OF AN INVITATION COVERING THE REPURCHASE WERE ACCOMPLISHED SIMULTANEOUSLY SO THAT NO OPPORTUNITY WAS AFFORDED THE CONTRACTOR TO CORRECT THE DEFICIENCY. THE CONTRACTOR STATED FURTHER THAT IT COULD READILY HAVE ARRANGED FOR REPACKAGING OF THE MATERIAL AND COULD HAVE RETURNED THE SAME PROPERLY PACKAGED TO THE GOVERNMENT IN A PERIOD OF THREE TO FOUR DAYS. THERE WAS TRANSMITTED WITH YOUR LETTER A BRIEF PREPARED BY COUNSEL FOR THE CONTRACTOR WHEREIN REFERENCE WAS MADE TO CERTAIN CONTRACT PROVISIONS CONSIDERED BY HIM AS DETERMINATIVE OF THE MATTERS HERE INVOLVED. YOU EXPRESSED THE VIEW THAT THE CONTRACTOR'S CONTENTIONS ARE SUPPORTED BY THE PERTINENT FACTS AND CIRCUMSTANCES, AND YOU, THEREFORE, RECOMMENDED THAT YOU BE AUTHORIZED TO RELIEVE THE CONTRACTOR OF THE EXCESS COSTS INVOLVED IN THIS CASE.

PARAGRAPH 11 OF THE GENERAL PROVISIONS (STANDARD FORM 32, 1949 EDITION--- INCLUDED BY REFERENCE IN THE PURCHASE ORDER) PROVIDED, IN PERTINENT PART, THAT THE GOVERNMENT BY WRITTEN NOTICE OF DEFAULT TO THE CONTRACTOR COULD TERMINATE THE CONTRACT AND CHARGE HIM WITH ANY EXCESS COSTS INCURRED IN PROCURING THE SUPPLIES ELSEWHERE IN THE FOLLOWING CIRCUMSTANCES:

"/II) IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THIS CONTRACT, OR SO FAILS TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THIS CONTRACT IN ACCORDANCE WITH ITS TERMS, AND IN EITHER OF THESE TWO CIRCUMSTANCES DOES NOT CURE SUCH FAILURE WITHIN A PERIOD OF 10 DAYS (OR SUCH LONGER PERIOD AS THE CONTRACTING OFFICER MAY AUTHORIZE IN WRITING) AFTER RECEIPT OF NOTICE FROM THE CONTRACTING OFFICER SPECIFYING SUCH FAILURE.'

THE TERMS OF THE QUOTED "DEFAULT" PROVISIONS CLEARLY INDICATE THAT A CONTRACTOR WHO DELIVERS MATERIALS FOUND NOT TO CONFORM TO THE CONTRACT SPECIFICATIONS SHALL BE ENTITLED TO A 10-DAY PERIOD IN WHICH TO "CURE" ANY DEFICIENCIES BROUGHT TO HIS ATTENTION. IT APPEARS FROM THE RECORD THAT THIS REQUIREMENT WAS NOT COMPLIED WITH IN THE INSTANT CASE. THAT IS TO SAY, THE CONTRACTOR WAS NOT GIVEN AN OPPORTUNITY TO MEET THE PACKAGING SPECIFICATIONS WHICH, IT ALLEGES, IT COULD READILY HAVE ARRANGED FOR IN THREE TO FOUR DAYS.

IT IS OUR VIEW THAT UNDER THE FACTS REPORTED IN THIS CASE THERE IS NO LEGAL BASIS FOR CHARGING THE CONTRACTOR WITH THE AMOUNT OF THE EXCESS COSTS INCURRED ON REPURCHASE.

IN RESPONSE TO YOUR REQUEST, THE ENCLOSURES TO YOUR LETTER ARE RETURNED HEREWITH.