B-143250, MAY 25, 1962

B-143250, MAY 25, 1962

TO TOWNSELLO AND CAMPBELL:

BY LETTER OF DECEMBER 15, 1961, YOU HAVE REQUESTED ON BEHALF OF THE WINDER AIRCRAFT CORPORATION OF FLORIDA AND ITS ASSIGNEE, THE SEMINOLE BANK OF TAMPA, RECONSIDERATION OF A CLAIM FOR $50,531.53 WHICH WAS DISALLOWED IN OUR DECISION B-143250, NOVEMBER 21, 1961. IN YOUR LETTER OF DECEMBER 15, 1961, YOU STATE THAT WHILE YOU AGREED WITH THE MAJOR PORTION OF THE FACTUAL STATEMENTS PRESENTED IN OUR EARLIER DECISION YOU DISAGREED WITH THE CONCLUSION REACHED AND THE ASSUMPTIONS DRAWN FROM THE FACTS.

THE CLAIM ARISES UNDER CONTRACT NO. HORD-17005, AWARDED ON MARCH 28, 1956, TO THE WINDER AIRCRAFT CORPORATION BY THE DEPARTMENT OF THE NAVY FOR THE PRODUCTION AND DELIVERY OF 55 STEEL QUADPAK MISSILE CRADLES AND 115 STEEL BOOSTER MISSILE CRADLES AT A CONTRACT PRICE OF $17,153.05. ONE OF THE MAJOR ELEMENTS OF THE CLAIM IS BASED ON THE CONTENTION THAT THE DESIGN OF THE QUADPAK CRADLES FURNISHED BY THE NAVY TO THE CONTRACTOR WAS INADEQUATE AND FAULTY. IN OUR DECISION OF NOVEMBER 21, 1961, AFTER CONSIDERING THE QUESTION AT SOME LENGTH, WE CONCLUDED THAT WE COULD NOT AGREE WITH YOUR ASSERTION THAT THE STATEMENT MADE BY THE CONTRACTING OFFICER, TO THE EFFECT THAT NO DEFECTS IN THE DRAWINGS WERE DISCLOSED BY THOROUGH INVESTIGATION, WAS OBVIOUSLY INCORRECT. YOU HAVE PRESENTED FURTHER ARGUMENT TO SUBSTANTIATE YOUR POSITION THAT THE DESIGN WAS IN FACT FAULTY. WE FIND NOTHING IN YOUR LETTER OF DECEMBER 15, WHICH WOULD CAUSE US TO CHANGE OUR EXPRESSED POSITION ON THE MATTER. HOWEVER, EVEN ASSUMING THAT THE SPECIFICATIONS WERE DEFECTIVE, THE CLAIM BECAUSE OF SUCH DEFECTS IS ONE FOR UNLIQUIDATED DAMAGES FOR BREACH OF CONTRACT (RAILROAD WATERPROOFING CORP. V. UNITED STATES, 133 CT.CL. 911), OR IT IS A MATTER FOR CONSIDERATION UNDER THE CHANGES CLAUSE OF THE CONTRACT WHICH, IN CASE OF DISAGREEMENT BETWEEN THE CONTRACTING OFFICER AND THE CONTRACTOR, SHOULD BE HANDLED AS A DISPUTE UNDER THE APPROPRIATE PROVISION OF THE CONTRACT. WELLS AND WELLS, INC. V. UNITED STATES, 164 F.SUPP. 26, AFFIRMED 269 F.2D 412. IF THE CLAIM IS ONE FOR UNLIQUIDATED DAMAGES, THEN UNDER THE FIRMLY ESTABLISHED POSITION OF OUR OFFICE IT IS OF A TYPE WHICH WE WILL NOT CONSIDER BECAUSE WE DO NOT HAVE THE FACILITIES FOR TAKING TESTIMONY, CROSS -EXAMINING WITNESSES AND WEIGHING CONFLICTING EVIDENCE, WHICH MAY BE NECESSARY IN DECIDING SUCH CLAIMS. SEE 21 COMP. DEC. 134. SEE ALSO B- 143968, JULY 25, 1961, B-91378, JULY 19, 1960; AND B-129403, MARCH 21, 1958. IF, HOWEVER, THE MATTER SHOULD BE REGARDED AS SUBJECT TO THE DISPUTES CLAUSE, THEN THE FAILURE OF THE CONTRACTOR TO EXHAUST HIS ADMINISTRATIVE REMEDY CONCLUDES THE MATTER. CALLAHAN WALKER CO. V. UNITED STATES, 317 U.S. 56, 61; UNITED STATES V. BLAIR, 321 U.S. 730; HENRY E. WILE CO. V. UNITED STATES, 169 F.SUPP. 249. THEREFORE, EVEN ASSUMING (WITHOUT CONCEDING) THE ALLEGED INADEQUACY OF THE SPECIFICATIONS, THERE IS NO BASIS UPON WHICH WE MAY GIVE FAVORABLE CONSIDERATION TO THAT PORTION OF THE CLAIM.

THE NEXT ELEMENT OF THE CLAIM UPON WHICH YOU REQUEST RECONSIDERATION IS THE ALLEGED MISTAKE IN BID. IT APPEARS TO BE YOUR POSITION THAT, SINCE THE PRICE BID BY THE CONTRACTOR WAS ONLY APPROXIMATELY 40 PERCENT OF THE NAVY'S ESTIMATED COST OF THE PROCUREMENT, THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF AN ERROR. ALTHOUGH THE CONTRACT WAS AWARDED ON MARCH 28, 1956, NO ALLEGATION OF ERROR IS INDICATED IN THE FILE PRIOR TO A LETTER OF AUGUST 28, 1956, AND NO DETAILED INFORMATION WITH RESPECT TO THE AMOUNT AND NATURE OF THE ALLEGED ERROR WAS FURNISHED TO THE DEPARTMENT OF THE NAVY UNTIL SEPTEMBER 23, 1956. FURTHER, THE CONTRACT RECORD CLEARLY INDICATES THAT AFTER BID OPENING AND PRIOR TO AWARD, ON MARCH 9, 1956, PURSUANT TO A TELEGRAPHIC REQUEST, THE CONTRACTOR VERIFIED THE ACCURACY OF THE PRICES BID. VERIFICATION OF THE PRICES WAS AGAIN FURNISHED BY THE CONTRACTOR IN A LETTER OF MARCH 13, 1956. THE RULE IS WELL ESTABLISHED WITH RESPECT TO THIS KIND OF SITUATION THAT THE RECEIPT OF A VERIFICATION OF THIS TYPE RELIEVES THE CONTRACTING OFFICER OF ANY FURTHER OBLIGATION TO MAKE INQUIRY AS TO THE CORRECTNESS OF THE BID, AND PRECLUDES ANY ASSUMPTION THAT THE CONTRACTING OFFICER ACTED IN BAD FAITH OR ATTEMPTED TO TAKE ADVANTAGE OF THE COMPANY. 27 COMP. GEN. 17. SEE ALSO 36 COMP. GEN. 27, AND 18 COMP. GEN. 29. IN VIEW OF THE VERIFICATION THERE IS NO BASIS UPON WHICH WE MAY FURTHER CONSIDER THE ALLEGATION OF ERROR, PARTICULARLY IN VIEW OF THE TIME ELAPSED AND THE AMOUNT OF ACTUAL WORK PERFORMED ON THE CONTRACT PRIOR TO ITS SUBMISSION.

THE THIRD ELEMENT OF THE CLAIM UPON WHICH YOU REQUEST CONSIDERATION INVOLVES ALLEGED INSPECTION DIFFICULTIES. IN THIS CONNECTION YOU CITE OUR DECISION OF NOVEMBER 21, 1961, TO THE EFFECT THAT THE AIR FORCE INSPECTOR WHO WAS LOCATED IN THE CONTRACTOR'S PLANT DURING THE INITIAL PERIOD OF PERFORMANCE DID NOT ACCEPT THE UNITS OFFERED FOR INSPECTION. IN SUPPORT OF YOUR POSITION THAT THE UNITS HAD IN FACT BEEN ACCEPTED, YOU CITE A MEMORANDUM OF LAW DATED JUNE 5, 1961, PREPARED BY AN ATTORNEY FOR THE BUREAU OF NAVAL WEAPONS, IN WHICH THE INSPECTOR IN QUESTION IS SAID TO HAVE STATED IN RESPONSE TO A DIRECT QUESTION THAT HE WAS GOING TO ACCEPT THE MATERIAL. YOU STATE THAT WHETHER THE WORDS OF THE AIR FORCE INSPECTOR SHOULD BE INTERPRETED ONLY AS AN INTENTION TO ACCEPT THE ITEMS OR AS AN AFFIRMATION THAT HE HAD ALREADY ACCEPTED THEM "THE FACT STILL REMAINS THAT THE CONTRACTOR'S WORK TO THAT DATE HAD SATISFIED THE INSPECTORS THEN CHARGED WITH THE RESPONSIBILITY OF INSPECTION AND A SUBSEQUENT REFUSAL BY THE INSPECTORS WHO REPLACED THE AIR FORCE INSPECTORS SHOULD NOT BE ALLOWED TO MAKE THE CONTRACTOR SUFFER.' THE CONTRACT IS NOT CLEAR AS TO THE EXACT ACT WHICH EFFECTS AN ACCEPTANCE. HOWEVER, IT APPEARS TO BE YOUR POSITION THAT AN ACCEPTANCE MAY BE MADE BY AN UNEXPRESSED INTENTION IN THE MIND OF THE INDIVIDUAL AUTHORIZED TO TAKE SUCH ACTION ON BEHALF OF THE GOVERNMENT- -- OR THAT FAILURE OF THE INSPECTOR TO VOICE ANY OBJECTION TO THE CONTRACTOR'S PROCEDURES BEFORE COMPLETION OF THE WORK OBLIGATED HIM TO ACCEPT THE END PRODUCT. IN OUR VIEW THERE CAN BE NO QUESTION THAT THE CITED STATEMENT BY THE AIR FORCE INSPECTOR CAN BE CONSTRUED ONLY AS EVIDENCING HIS INTENT TO PERFORM THE EFFECTIVE ACT OF ACCEPTANCE AT A FUTURE TIME. SO FAR AS WE UNDERSTAND THE LAW OF CONTRACTS, THE RIGHTS AND OBLIGATIONS OF PARTIES MUST BE DETERMINED NOT BY WHAT MAY HAVE EXISTED IN THEIR MINDS AT A GIVEN TIME BUT SOLELY ON THE BASIS OF REASONABLE INTERPRETATIONS OF THE OVERT ACTIONS TAKEN BY THEM, AND WE ARE AWARE OF NO GROUND FOR HOLDING THE GOVERNMENT TO BE BOUND BY THE UNEXECUTED INTENTION OF ONE OF ITS AGENTS WHOSE AUTHORITY TO ACT IN THE PREMISES WAS TERMINATED BEFORE IT HAD BEEN FINALLY EXERCISED. ACCORDINGLY WE MUST REAFFIRM OUR EARLIER POSITION THAT THE FILE CONTAINS NO BASIS FOR THE POSITION THAT THE ITEMS IN QUESTION WERE ACCEPTED BY THE INSPECTOR.

FINALLY, YOU STATE IN THE LAST PARAGRAPH OF YOUR LETTER OF DECEMBER 15, 1961, THAT YOU FEEL YOU HAD ALREADY DEMONSTRATED THAT WORK STOPPAGES BY THE NAVY INCREASED THE CONTRACTOR'S COST, FOR WHICH HE SHOULD BE COMPENSATED. YOUR POSITION WITH RESPECT TO THIS MATTER HAS ALREADY BEEN GIVEN THOROUGH CONSIDERATION IN OUR DECISION OF NOVEMBER 21, 1961, AND WE FIND AFTER A THOROUGH REVIEW NO BASIS TO WARRANT A CHANGE IN OUR STATED POSITION.

IN ACCORDANCE WITH THE FOREGOING, THE DENIAL OF YOUR CLAIM IN OUR DECISION OF NOVEMBER 21, 1961, IS HEREBY AFFIRMED.