B-136897, B-139976 February 8, 1961

B-136897,B-139976: Feb 8, 1961

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Ohio Gentlemen: This is to advise you that by letters dated today we have reported your claim to the Congress for consideration under the act of April 10. A copy of our report is enclosed for your information. No further action in the matter will be taken by our office unless and until the Congress enacts legislation pursuant to our recommendation. We have the honor to transmit our reports and recommendations to the Congress concerning the claim of the U.S. An identical report is being transmitted to the President of the Senate. We have the honor to transmit our reports and recommendations to the Congress concerning the claim of the U.S. An identical report is being transmitted to the Speaker of the House of Representatives.

B-136897, B-139976 February 8, 1961

U.S. Display Corporation 2619 Colerain Avenue Cincinnati 14, Ohio

Gentlemen:

This is to advise you that by letters dated today we have reported your claim to the Congress for consideration under the act of April 10, 1928, 31 U.S.C. 236. A copy of our report is enclosed for your information. No further action in the matter will be taken by our office unless and until the Congress enacts legislation pursuant to our recommendation.

Very truly yours,

JOSEPH CAMPBELL Comptroller General of the United States

Enclosure

Honorable Sam Rayburn Speaker of the House of Representatives

Dear Mr. Speaker:

Pursuant to the act of April 10, 1928, 45 Stat. 413; 31 U.S.C. 236, we have the honor to transmit our reports and recommendations to the Congress concerning the claim of the U.S. Display Corporation against the United States, with the request that you present the same to the House of Representatives.

An identical report is being transmitted to the President of the Senate.

Sincerely yours,

JOSEPH CAMPBELL Comptroller General of the United States

Enclosure

Honorable Lyndon B. Johnson President of the Senate

Dear Mr. President:

Pursuant to the act of April 10, 1928, 45 Stat. 413; 31 U.S.C. 236, we have the honor to transmit our reports and recommendations to the Congress concerning the claim of the U.S. Display Corporation against the United States, with the request that you present the same to the United States Senate.

An identical report is being transmitted to the Speaker of the House of Representatives.

Sincerely yours,

JOSEPH CAMPBELL Comptroller General of the United States

Enclosure

The Honorable The Secretary of the Army

Dear Mr. Secretary:

With reference to a report dated July 18, 1960, from the Chief, Contracts Branch, Procurement Division, Office of the Deputy Chief of Staff for Logistics, you are advised that by our report of today, the claim of the U.S. Display Corporation for damages arising out of the performance of contract No. DA-30-280-52-QM-27563 dated May 23, 1952, is being transmitted to the Congress as an equitable claim with the recommendation that an appropriation be made for its payment in the sum not to exceed $50,000.

No further action in the matter will be taken by our office unless and until the Congress enacts legislation pursuant to our recommendation.

Sincerely yours,

JOSEPH CAMPBELL Comptroller General of the United States

Enclosures

Honorable William E. Hess Gwyune Building 6th and Main Streets Cincinnati, Ohio

Dear Mr. Hess:

In view of your interest on the claim of the U.S. Display Corporation for additional compensation under contract No. DA-30-280-52-QM-27563, there is enclosed a copy of our report of today to the Congress submitting the claim for consideration under the act of April 10, 1928, 31 U.S.C. 236.

Sincerely yours,

JOSEPH CAMPBELL Comptroller General of the United States

Enclosure

The Congress:

Pursuant to the act of April 10, 1928, 45 Stat. 413, 31 U.S.C. 236, we have the honor to make the following report and recommendation on a claim of the U.S. Display Corporation, 2619 Colerain Avenue, Cincinnati 14, Ohio, for $50,000, representing damages arising out of the performance of contract No DA-30-280-52-QM-27563 dated May 23, 1952, with the Department of the Army, covering the fabrication of 446,000 sleeping bag cases from Government-furnished materials for a total price of $354,570.

The contract required delivery of the completed bag covers f.o.b. Cincinnati, Ohio, under a schedule calling for the delivery of 60,000 units each month during September 1952 through January 1953 and 73,000 units during the months of February and March 1953.

Subsequent to the initial shipment of Government-furnished material, the contractor discovered on or about September 4, 1952, that drawing No. CP- 384A, referred to in the contract, contained several erroneous dimensions. As a result, the contractor produced only about 9,000 units in September 1952 instead of the 60,000 units required by the contract. The final corrected dimensions of drawing No. CP-384a were approved by the procurement agency on October 3, 1952, and the contractor was notified on that date of the correct, approved dimensions. Thereafter, by modification No. 2 to the contract dated April 8, 1953, the delivery schedule was revised to extend the delivery period 29 days without any change in the contract price.

A claim relating to the erroneous Government drawing, together with another matter not relevant here, was the subject of an appeal to the Armed Services Board of Contract Appeals. By ASBCA decision No. 2850 dated July 23, 1956, the contractor's claim was denied, the Board holding, in pertinent part, that:

"The evidence discloses that the referenced C-P drawing was in appellant's possession for the first time only a day or two prior to 4 September 1952 at which time the errors in the drawing were discovered and the Government notified concerning the same. The Board accepts as correct the statement as made by the contracting officer when he issued Change Order No. 2. It is therefore found that definite information relative to what dimensional figures for the drawing had been approved by the Government, was not furnished to appellant until 3 October 1952. It thus follows that the Government delayed in furnishing proper drawings to appellant for a period of 30 days. And it cannot justifiably be said that the possibility of such error or any part of this delay was contemplated by appellant upon entering into the contract.

* * * * *

"The form in which appellant has presented its evidence is too comprehensive in nature and not sufficiently detailed to enable the Board to determine either that appellant's operations were actually retarded as result of the above delay on the Government's part, or, if so, to what extent such was the case. Appellant's claim under Schedule II in the amount of $213,916.57 was for total costs incurred by appellant during the months of September 1952 through January 1953. As in the instance of Schedule I, the auditor of the Army Audit Agency checked the submitted data against appellant's books for accuracy and, with respect to this part of appellant's claim, accepted total costs in the amount of $136,304 for this 5-month period, with $24,510 being referred for further consideration. At the hearing, still contending for total costs incurred throughout this period, appellant revised its claim to the total sum of $152.891. But it is not understood by and it has not been made plain to the Board, how, or to what extent, if any, appellant's October and subsequent operations could have been or were materially affected by the erroneous drawing which had already been corrected. From the evidence, the Board is left in considerable doubt that the complained of error and delay was in anywise responsible for appellant's low production even during September."

* * * * *

"The Board fully recognizes the possibility that appellant may have suffered decreased production coupled with additional cost as a result of the Government's act in question. But equitable adjustment should not and cannot be based on mere conjecture. For lack of evidence from which determination can be made as to reasonable amount of cost possibly involved, the Board is unable to do otherwise than agree with the decision of the successor contracting officer and hold with respect to this part of the appellant's claim that equitable adjustment of price cannot be granted under the contract."

While the contractor had also filed a claim with the Board for losses due to interference in and disruption of plant operations by a Government inspector, the Board in its decision stated that it was inclined to concur in the finding of the contracting officer that he (the contracting officer) was without jurisdiction to pass upon the claim for inspection interference.

Thereafter, a claim was filed with the General Accounting Office and by decision dated November 18, 1959, the claim was disallowed on the basis that the contractor "neither established that damages resulted from the error in drawings nor, even if damages were incurred, any reasonable basis upon which damages could be computed."

As a result of a resubmission of the claim by the contractor to the Department of the Army, that Department advised us by letter of July 18, 1960, that "the additional evidence furnished by the contractor, when considered with all the other evidence, shows that the Government's failure * * * to furnish proper drawings and the practices of its inspectors may well have caused the contractor to incur additional costs and prevented him from producing as efficiently as contemplated." The Department, however, recognized that the contractor's losses could not be calculated with mathematical preciseness and that any exact ascertainment of the losses attributable to the Government would be difficult, if not impossible.

In view of the decision of the Armed Services Board of Contract Appeals and since the contractor was unable to establish by a preponderance of evidence that extent to which it was damaged, we were required to conclude that no legal basis existed for authorizing payment of the claim. We did, however advise the contractor in disallowing its claim on December 22, 1960, that:

"* * * it appears that you were delayed at least one month because of errors in drawings and that some monetary loss was thereby incurred. Also, the record before us indicates that some inspection interference probably did disrupt your performance schedule. In addition, we recognize that the circumstances on which your claim is based make it difficult for you to establish by a preponderance of evidence the extent to which you have been damaged. With these considerations in mind, we believe that your claim contains such elements of equity as to warrant consideration by the Congress under the Act of April 10, 1928, 31 U.S.C. 236. * * * "

We have analyzed the financial data presented by both the contractor and the Department of the Army applicable to the claim and have determined that the amount of $50,000 represents a reasonable estimate, although, admittedly not subject to definitive proof, of the damages suffered by the contractor by reason of the Government's actions.

In view of all the circumstances, the claim, in our judgement, appears to contain such elements of equity as to be deserving of the consideration of the Congress. A statement has been received from the contractor that it will accept the amount of $50,000 in full and final settlement of any and all claims arising out of contract No. DA-30-280-52-QM-27563 should an appropriation be made for payment of that amount.

If the Congress should agree with our recommendation in this matter, it is suggested that an enactment of a statute in substantially the following form will accomplish the desired purpose:

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Comptroller General of the United States be, and he hereby is authorized and directed to settle and adjust the claim of the U.S. Display Corporation on account of damages sustained in the performance of contract No. DA-30-280-52-QM-27563 dated May 23, 1952, with the Department of the Army, and to allow in full and final settlement of the claim the sum of not to exceed $50,000. There is hereby appropriated the sum of $50,000 for payment of such claim.

JOSEPH CAMPBELL Comptroller General of the United States

Jan 14, 2021

Jan 13, 2021

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