B-145566, JUL. 3, 1961
Highlights
ALLEN: REFERENCE IS MADE TO YOUR LETTER OF JUNE 17. THE MAXIMUM AMOUNT THAT MAY BE EXPENDED FOR SUCH WORK IS $1. OUR RECORDS DISCLOSE THAT YOUR RIGHT TO PROCEED UNDER THE CONTRACT WAS TERMINATED BY THE AIR FORCE BY REASON OF DEFAULT AND THAT YOUR APPEAL IN THE MATTER IS NOW PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS. APPARENTLY HAVE BEEN OBLIGATED BY THE AIR FORCE TO FINISH THE WORK CALLED FOR BY YOUR CONTRACT YOU ASK WHETHER WE CAN HOLD THIS MONEY IN ESCROW UNTIL YOUR CLAIM IS SETTLED OR WHETHER WE CAN SUGGEST SOME WAY TO PAY YOUR CLAIM NOTWITHSTANDING THE PROVISIONS OF SECTION 505 OF PUBLIC LAW 155. - "IT IS THE OPINION OF THIS OFFICE THAT THE DEFAULTED CONTRACTOR AND/OR HIS SURETY ARE LIABLE FOR DAMAGES SUSTAINED BY THE GOVERNMENT AS A RESULT OF HIS FAILURE TO SATISFACTORILY PERFORM IN ACCORDANCE WITH HIS CONTRACT.'.
B-145566, JUL. 3, 1961
TO MR. GUY R. ALLEN:
REFERENCE IS MADE TO YOUR LETTER OF JUNE 17, 1961, REGARDING YOUR CLAIM AGAINST THE DEPARTMENT OF THE AIR FORCE ARISING UNDER CONTRACT NO. AF 17/612/-1.
THE CONTRACT COVERED THE INSTALLATION OF OUTSIDE UTILITIES AND SITE PREPARATION FOR A CAPEHART PROJECT CONSISTING OF 177 UNITS. UNDER THE PROVISIONS OF SECTION 505 OF PUBLIC LAW 155, 82D CONGRESS, 65 STAT. 365, THE MAXIMUM AMOUNT THAT MAY BE EXPENDED FOR SUCH WORK IS $1,500 PER UNIT MAKING IN THIS CASE A MAXIMUM OF $265,000 FOR THE PROJECT.
OUR RECORDS DISCLOSE THAT YOUR RIGHT TO PROCEED UNDER THE CONTRACT WAS TERMINATED BY THE AIR FORCE BY REASON OF DEFAULT AND THAT YOUR APPEAL IN THE MATTER IS NOW PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS. PRIOR TO THE TERMINATION OF YOUR CONTRACT YOU HAD BEEN PAID THE SUM OF $175,561.36 AND THUS THERE REMAINED $89,938.64 AVAILABLE FOR THE PURPOSE OF COMPLETING THE CONTRACT WORK. YOU STATE THAT THIS LAST NAMED AMOUNT APPROXIMATES THE AMOUNT OF YOUR CLAIM.
SINCE THE FUNDS OTHERWISE AVAILABLE FOR THE PAYMENT OF YOUR CLAIM, IF DETERMINED IN YOUR FAVOR, APPARENTLY HAVE BEEN OBLIGATED BY THE AIR FORCE TO FINISH THE WORK CALLED FOR BY YOUR CONTRACT YOU ASK WHETHER WE CAN HOLD THIS MONEY IN ESCROW UNTIL YOUR CLAIM IS SETTLED OR WHETHER WE CAN SUGGEST SOME WAY TO PAY YOUR CLAIM NOTWITHSTANDING THE PROVISIONS OF SECTION 505 OF PUBLIC LAW 155, 82D CONGRESS.
WE CANNOT ASSUME THAT THE AIR FORCE TERMINATED YOUR CONTRACT WITHOUT THERE BEING VALID REASONS FOR DECLARING YOU TO BE IN DEFAULT. AS A MATTER OF FACT THE COMMAND JUDGE ADVOCATE, HEADQUARTERS, AIR DEFENSE COMMAND, HAS STATED THAT--- "IT IS THE OPINION OF THIS OFFICE THAT THE DEFAULTED CONTRACTOR AND/OR HIS SURETY ARE LIABLE FOR DAMAGES SUSTAINED BY THE GOVERNMENT AS A RESULT OF HIS FAILURE TO SATISFACTORILY PERFORM IN ACCORDANCE WITH HIS CONTRACT.' THERE THUS IS NO BASIS AT THIS TIME UPON WHICH WE COULD CONCLUDE THAT THE PAYMENTS TO THE REPLACEMENT CONTRACTOR ARE ILLEGAL.
CONSEQUENTLY, AND ASSUMING THAT WE COULD DO SO, IT DOES NOT APPEAR THAT WE WOULD BE JUSTIFIED, ON THE BASIS OF THE PRESENT RECORD, TO PLACE SUCH FUNDS IN ESCROW AND TO WITHHOLD PAYMENTS TO THE REPLACEMENT CONTRACTOR PENDING A FINAL DETERMINATION OF YOUR CLAIM. IF YOUR CLAIM IS DETERMINED TO BE VALID AFTER ALL AVAILABLE FUNDS HAVE BEEN EXPENDED, IT WILL BE NECESSARY TO REQUEST AN APPROPRIATION FROM THE CONGRESS. THE ONLY OTHER ALTERNATIVE WOULD BE FOR YOU TO OBTAIN A JUDGMENT IN THE UNITED STATES COURT OF CLAIMS.