B-122386, NOV. 30, 1955

B-122386, NOV. 30, 1955

TO MR. CHESTER R. CLARKE, TRUSTEE:

FURTHER REFERENCE IS MADE TO YOUR CLAIM FOR EXPENSES INCURRED IN CONNECTION WITH CONTRACT NO. DA-92-320-FEC-11 BETWEEN CHESTER CLARKE AND COMPANY, LIMITED, AND THE DEPARTMENT OF THE ARMY.

A REPORT HAS BEEN RECEIVED FROM THE ARMY AUDIT AGENCY OF ITS AUDIT OF THE COMPANY'S RECORDS, A COPY OF WHICH IS UNDERSTOOD TO HAVE BEEN FURNISHED TO YOUR COUNSEL. AS DETERMINED BY THE AUDIT, THE PROBABLE COSTS AND EXPENSES OF THE COMPANY PROPERLY CHARGEABLE TO THE CONTRACT (LESS PROGRESS PAYMENTS MADE), AMOUNT TO $411,697.20. IT APPEARS, HOWEVER, THAT THERE ARE CREDITS IN FAVOR OF THE GOVERNMENT AGAINST THE COMPANY IN THE AGGREGATE AMOUNT OF $193,578.02, AS ITEMIZED ON PAGE 5 OF THE ARMY AUDIT AGENCY REPORT.

THE RECORD BEFORE US SHOWS THAT THE CONTRACT IN QUESTION WAS TERMINATED BY THE CONTRACTING OFFICER UNDER THE PROVISIONS OF ARTICLE 9, UPON HIS DETERMINATION OF DEFAULT BY THE CONTRACTOR IN THAT IT HAD FAILED TO PROSECUTE THE WORK WITH SUCH DILIGENCE AS WOULD INSURE ITS COMPLETION WITHIN THE TIME PROVIDED. UPON APPEAL BY THE CONTRACTOR TO THE COMMANDER IN CHIEF, FAR EAST, AS PROVIDED BY THE CONTRACT, THE FAR EAST BOARD OF CONTRACT APPEALS, AS HIS DESIGNATED REPRESENTATIVE, FOUND THAT THE CONTRACTOR WAS NOT IN DEFAULT AS OF THE DATE OF TERMINATION, AND THAT THE TERMINATION FOR DEFAULT THEREFORE COULD NOT BE SUSTAINED. IT FURTHER HELD, HOWEVER, THAT IT COULD NOT AWARD, OR DIRECT AN AWARD, OF FAIR COMPENSATION AS THOUGH THE CONTRACT HAD BEEN TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT, SINCE THE CONTRACT ITSELF CONTAINED NO PROVISION AUTHORIZING SUCH ACTION. APPARENTLY THE BOARD WAS OF THE OPINION THAT THE CONTRACTOR'S ONLY AVAILABLE REMEDY WAS BY WAY OF DAMAGES FOR BREACH OF CONTRACT, WHICH NEITHER A CONTRACTING OFFICER NOR A BOARD OF CONTRACT APPEALS HAS JURISDICTION TO AWARD. YOUR CLAIM (AS TRUSTEE FOR THE CREDITORS AND STOCKHOLDERS OF THE CONTRACTOR CORPORATION, DULY APPOINTED BY THE TREASURER OF THE TERRITORY OF HAWAII UPON DISSOLUTION OF THE CORPORATION) WAS ACCORDINGLY TRANSMITTED BY THE DEPARTMENT OF THE ARMY TO OUR OFFICE FOR DIRECT SETTLEMENT.

IF IT BE CONSIDERED STRICTLY AS A CLAIM FOR BREACH OF CONTRACT, THE CLAIM IS ONE OF A CLASS WHICH THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE GENERALLY DECLINED TO SETTLE--- NOT, IT HAS BEEN SAID, BECAUSE OF LACK OF JURISDICTION, BUT BECAUSE THE NATURE OF THESE CLAIMS IS SUCH THAT IT IS GENERALLY IMPRACTICABLE TO REACH AN ACCURATE DETERMINATION AS TO THE MERITS AND THE QUANTUM OF DAMAGES WITHOUT THE TAKING OF TESTIMONY, CROSS- EXAMINATION OF WITNESSES, AND WEIGHING OF CONFLICTING EVIDENCE. SEE 19 COMP. DEC. 409; 4 COMP. GEN. 404. THE ORGANIZATION OF OUR OFFICE IS SUCH THAT WE HAVE NO FACILITIES FOR CONDUCTING SUCH PROCEEDINGS, AND IT HAS BEEN OUR INVARIABLE PRACTICE TO SETTLE AND ADJUST ONLY SUCH CLAIMS AS MAY BE PROPERLY DISPOSED OF UPON FACTS ESTABLISHED BY WRITTEN RECORDS, ACCEPTING, IN CASE OF CONFLICT, THE FACTS AS REPORTED BY ADMINISTRATIVE OFFICERS OF THE GOVERNMENT ACTING WITHIN THE RANGE OF THEIR AUTHORITY, UNLESS SHOWN BY CONVINCING EVIDENCE TO BE ERRONEOUS.

A FURTHER LIMITATION ON OUR ABILITY TO ADJUST CLAIMS OF THIS CHARACTER IS THAT IMPOSED BY THE ESTABLISHED PRINCIPLE THAT FUNDS APPROPRIATED BY THE CONGRESS FOR THE CARRYING OUT OF AN AUTHORIZED WORK OR PROJECT ARE NOT AVAILABLE FOR THE PAYMENT OF DAMAGES FOR BREACH BY THE GOVERNMENT OF A CONTRACT FOR THE PERFORMANCE OF THAT WORK. DISTRICT OF COLUMBIA V. BAILEY, 171 U.S. 161.

FOR THESE REASONS, WE ARE CONSTRAINED TO CONCLUDE THAT, IF IT IS YOUR DESIRE TO SEEK A RECOVERY OF SUCH DAMAGES AS YOU MAY BE ABLE TO ESTABLISH FOR A BREACH OF CONTRACT BY THE GOVERNMENT, WE MUST DISALLOW YOUR CLAIM AND LEAVE IT FOR DETERMINATION BY A PROPER COURT.

WE HAVE, HOWEVER, RECOGNIZED A DISTINCTION BETWEEN CLAIMS FOR DAMAGES FOR BREACH OF CONTRACT BY THE GOVERNMENT AND CLAIMS FOR COMPENSATION FOR WORK PERFORMED UNDER A CONTRACT WHICH HAS BEEN TERMINATED BY MUTUAL CONSENT OR WITH THE ACQUIESCENCE OF THE CONTRACTOR. 18 COMP. GEN. 826; 29 COMP. GEN. 36.

IN THE CIRCUMSTANCES IN THIS CASE, IF YOU ARE AGREEABLE TO CONSIDERING IT IN THE LATTER CLASS AND ACCEPTING THE ACTUAL EXPENSES INCURRED IN THE PERFORMANCE OF THE CONTRACT AS IN FULL AND FINAL SETTLEMENT OF ALL RIGHTS THEREUNDER, WE WILL AUTHORIZE STATEMENT OF A SETTLEMENT IN YOUR FAVOR ON THAT BASIS FOR THE AMOUNT APPROVED BY THE ARMY AUDIT AGENCY, LESS THE GOVERNMENT CREDITS REFERRED TO. ..END :