B-30131, MAR. 12, 1957

B-30131, MAR. 12, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO 8TH INDORSEMENT OF JUNE 26, 1942, FROM THE OFFICE OF THE CHIEF OF FINANCE (DEPARTMENT REFERENCE SPFDR 167/354216 (RAYLAINE WORSTEDS, INC.) (, TRANSMITTING FOR DIRECT SETTLEMENT THE CLAIM OF RAYLAINE WORSTEDS, INC., MANCHESTER, NEW HAMPSHIRE, IN THE AMOUNT OF $25,462 FOR PARTIAL REMISSION OF LIQUIDATED DAMAGES DEDUCTED FROM PAYMENTS MADE TO THE CLAIMANT UNDER CONTRACT NO. 2 669QM-10270, DATED DECEMBER 17, 1940.

THE CONTRACT REQUIRED RAYLAINE WORSTEDS, INC., TO FURNISH AND DELIVER TO THE PHILADELPHIA QUARTERMASTER DEPOT, PHILADELPHIA, PENNSYLVANIA, 250,000 YEARS OF WOOL CLOTH FOR A CONSIDERATION OF $653,500. DELIVERIES WERE TO BE MADE AS SPECIFIED, 25 PERCENT WITHIN 135 DAYS AFTER DATE OF RECEIPT OF NOTICE OF AWARD AND 25 PERCENT EACH 30 DAYS THEREAFTER UNTIL COMPLETION. BECAUSE OF DELAYS IN DELIVERIES, LIQUIDATED DAMAGES WERE CHARGED IN AN AGGREGATE AMOUNT OF $49,771.09, OF WHICH ONLY $25,462 HAS BEEN PROTESTED BY THE CONTRACTOR.

BY SETTLEMENT DATED SEPTEMBER 11, 1942, THIS OFFICE DISALLOWED THE CONTRACTOR'S CLAIM FOR THE SAID AMOUNT OF $25,462 AND BY DECISION DATED DECEMBER 8, 1942, THE SETTLEMENT WAS SUSTAINED BY THE COMPTROLLER GENERAL. THERE NOW HAVE BEEN RECEIVED FROM THE CONTRACTOR'S ATTORNEY LETTERS DATED JANUARY 14 AND JANUARY 22, 1957, REQUESTING RECONSIDERATION OF THE MATTER, RESCISSION OF THE REFERRED-TO SETTLEMENT AND DECISION, AND RETURN OF THE FILE TO THE SECRETARY OF THE ARMY FOR A DECISION ON THE CONTRACTOR'S APPEAL AS TO AN EXTENSION OF TIME FOR COMPLETING THE CONTRACT, FOR THE REASON, IN BRIEF, THAT THE CONTRACTOR HAD SUBSTANTIALLY COMPLIED WITH THE PROCEDURAL REQUIREMENTS OF THE CONTRACT ENTITLING IT TO SUCH DECISION BY THE HEAD OF THE DEPARTMENT.

THE LIQUIDATED DAMAGES IN QUESTION WERE ASSESSED PURSUANT TO ARTICLE 17 OF THE CONTRACT, WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"PROVIDED, FURTHER, THAT THE CONTRACTOR SHALL NOT BE CHARGED WITH LIQUIDATED DAMAGES OR ANY EXCESS COST WHEN THE DELAY IN DELIVERY IS DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD OR THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, UNUSUALLY SEVERE WEATHER, AND DELAYS OF A SUBCONTRACTOR DUE TO SUCH CAUSES UNLESS THE CONTRACTING OFFICER SHALL DETERMINE THAT THE MATERIALS OR SUPPLIES TO BE FURNISHED UNDER THE SUBCONTRACT ARE PROCURABLE IN THE OPEN MARKET, IF THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER IN WRITING OF THE CAUSE OF ANY SUCH DELAY, WITHIN 10 DAYS FROM THE BEGINNING THEREOF, OR WITHIN SUCH FURTHER PERIOD AS THE CONTRACTING OFFICER SHALL, WITH THE APPROVAL OF THE HEAD OF THE DEPARTMENT OR HIS DULY AUTHORIZED REPRESENTATIVE, PRIOR TO THE DATE OF FINAL SETTLEMENT OF THE CONTRACT, GRANT FOR THE GIVING OF SUCH NOTICE. THE CONTRACTING OFFICER SHALL THEN ASCERTAIN THE FACTS AND EXTENT OF THE DELAY AND EXTEND THE TIME FOR MAKING DELIVERY WHEN IN HIS JUDGMENT THE FINDINGS OF FACT JUSTIFY SUCH AN EXTENSION, AND HIS FINDINGS OF FACT THEREON SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO, SUBJECT ONLY TO APPEAL WITHIN 30 DAYS, BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED OR HIS DULY AUTHORIZED REPRESENTATIVE, WHOSE DECISION IN SUCH APPEALS AS TO THE FACTS OF DELAY AND THE EXTENSION OF TIME FOR MAKING DELIVERY SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO.'

BY HIS LETTER DATED OCTOBER 15, 1961, THE CONTRACTING OFFICER DENIED THE CONTRACTOR'S REQUEST FOR AN EXTENSION OF TIME OF SIX WEEKS FOR COMPLETING THE CONTRACT. IN TRANSMITTING TO THE QUARTERMASTER GENERAL THE CONTRACTOR'S APPEAL UNDER DATE OF MAY 14, 1942, THE COMMANDING GENERAL OF THE PHILADELPHIA QUARTERMASTER DEPOT STATED IN PART:

"9. IT WILL BE NOTED THAT, UNDER THE TERMS OF ARTICLE 17, A 30-DAY PERIOD IS ALLOWED THE CONTRACTOR IN WHICH TO MAKE ITS APPEAL. IN THIS CASE THE DECISION OF THE CONTRACTING OFFICER WAS DATED OCTOBER 15, 1941, AND THE "LETTER OF APPEAL" WAS DATED DECEMBER 11, 1961, OR CONSIDERABLY IN EXCESS OF THE TIME ALLOWED FOR APPEAL. IT IS THEREFORE SUBMITTED THAT, UNLESS THE TIME REQUIREMENT IS WAIVED, THE CONTRACTOR IS NOT ENTITLED TO A CONSIDERATION OF ITS APPEALS.'

IN FACT, IT NOW APPEARS--- AND HAS BEEN SO FOUND BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS--- THAT THE CONTRACTOR GAVE NOTICE OF APPEAL BY LETTER DATED NOVEMBER 13, 1941, TO THE COMMANDING GENERAL, PHILADELPHIA QUARTERMASTER DEPOT, STATING THAT SUBSTANTIATING MATERIAL WOULD BE FURNISHED WITHIN A FEW DAYS.

WITH HIS LETTER OF JANUARY 14, 1957, THE CONTRACTOR'S ATTORNEY ENCLOSED A COPY OF A DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS DATED JANUARY 31, 1955, ASBCA NO. 1842, RELATING TO THIS MATTER. THE BOARD OVERRULED THE GOVERNMENT'S MOTION TO DISMISS THE APPEAL, HOLDING IN SUBSTANCE THAT THE CONTRACTOR'S APPEAL FROM THE DECISION OF THE CONTRACTING OFFICER "WAS PROPERLY TAKEN AND TIMELY; " THAT THERE HAD BEEN SUBSTANTIAL COMPLIANCE WITH THE CONTRACT REQUIREMENT OF NOTICE TO THE CONTRACTING OFFICER AS TO THE CAUSE OF DELAY WITHIN 10 DAYS OF THE BEGINNING OF THE DELAY; THAT THE CONTRACTOR INTENDED ITS APPEAL TO BE TRANSMITTED TO THE SECRETARY OF WAR OR HIS AUTHORIZED REPRESENTATIVE INSTEAD OF TO THE COMPTROLLER GENERAL; AND THAT THE CONTRACTOR HAD NOT ABANDONED ITS APPEAL. HOWEVER, IN ITS OPINION OF MARCH 30, 1956, IN THE SAME MATTER, THE BOARD DISMISSED THE APPEAL, HOLDING THAT IT WAS WITHOUT JURISDICTION SINCE, UNDER THE CONTRACT PROVISIONS AND THE PERTINENT AUTHORIZATION OF THE SECRETARY OF WAR, THE QUARTERMASTER GENERAL WAS EMPOWERED TO DETERMINE THE APPEAL FINALLY.

ON MARCH 21, 1950, RAYLAINE WORSTEDS, INC., FILED A PETITION IN THE COURT OF CLAIMS (C.CLS.NO. 49550) SEEKING RECOVERY UNDER THE LUCAS ACT OF AUGUST 7, 1946, 60 STAT. 902, AS AMENDED, OF AN AMOUNT ESTIMATED AS $79,086.95, REPRESENTING NET LOSSES ALLEGEDLY SUSTAINED AS CONTRACTOR AND SUBCONTRACTOR IN THE PERFORMANCE OF CONTRACTS AND SUBCONTRACTS BETWEEN SEPTEMBER 16, 1940, AND AUGUST 14, 1945, INCLUDING CONTRACT NO. 2-669-QM- 10270. IT IS UNDERSTOOD INFORMALLY THAT THE COURT DISMISSED THE PETITION ON DECEMBER 5, 1956, AND THAT ON JANUARY 7, 1957, THE PLAINTIFF MOVED FOR CORRECTION OF THE FINDINGS OF FACT, WHICH MOTION IS NOW PENDING.

IN VIEW OF THE ADDITIONAL INFORMATION NOW AVAILABLE, WHICH FURNISHES A REASONABLE BASIS FOR THE CONCLUSION THAT THE CONTRACTOR'S APPEAL TO THE HEAD OF THE DEPARTMENT FROM THE CONTRACTING OFFICER'S REFUSAL TO EXTEND THE TIME FOR PERFORMANCE WAS PROPER AND TIMELY, IT APPEARS THAT OUR ACTION ON THE CLAIM WAS PREMATURE AND THAT THE CONTRACTOR IS ENTITLED TO HAVE ITS CLAIM DISPOSED OF BY THE SECRETARY OF THE ARMY OR HIS AUTHORIZED REPRESENTATIVE PURSUANT TO THE PERTINENT PROVISIONS OF THE CONTRACT. ACCORDINGLY, THE REFERRED-TO SETTLEMENT OF SEPTEMBER 11, 1942, IS HEREBY RESCINDED AND THE FILE IS RETURNED HEREWITH FOR YOUR USE IN DISPOSING OF THE MATTER.