B-111732, FEBRUARY 24, 1956, 35 COMP. GEN. 470

B-111732, FEBRUARY 24, 1956, 35 COMP. GEN. 470

FEES - BROKERAGE - PROCUREMENT OF GOVERNMENT BUSINESS - MEASURE OF DAMAGES A CONTINGENT FEE AGREED TO BE PAID TO AN AGENT TO SECURE A GOVERNMENT CONTRACT IN VIOLATION OF THE CONTINGENT-FEE COVENANT IS CONCLUSIVELY PRESUMED TO HAVE BEEN ADDED TO THE BID AND, THEREFORE, THE MEASURE OF DAMAGES FOR BREACH OF SUCH COVENANT IS THE AMOUNT OF THE FEE.

TO JOHN P. PURCELL, FEBRUARY 24, 1956:

REFERENCE IS MADE TO THE PETITION FILED BY YOU AND MR. B. J. TALLY, ON BEHALF OF BRADLEY-MILLER AND COMPANY AND OTHERS, REQUESTING RECONSIDERATION OF OUR DECISION OF OCTOBER 26, 1953, B-111732, TO THE MICHIGAN NATIONAL BANK, SAGINAW, MICHIGAN, IN WHICH WE REFUSED TO AUTHORIZE PAYMENT OF THE SUM OF $15,628.80 TO THE BANK AS ASSIGNEE OF MONEYS DUE OR TO BECOME DUE UNDER DEPARTMENT OF THE ARMY CONTRACT NO. DA- 36-038-ORD-2393, DATED DECEMBER 12, 1950, AS AMENDED, WITH BRADLEY MILLER AND COMPANY.

THE OFFICE OF THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY, SUBMITTED HERE A VOUCHER IN THE AMOUNT OF $15,628.80, COVERING A FINAL DELIVERY OF 8,448 M3 WOOD AMMUNITION BOXES UNDER THE CONTRACT. THE QUESTION WAS PRESENTED AS TO WHAT AMOUNT SHOULD BE CONSIDERED AS BEING FOR RECOVERY BY THE GOVERNMENT ON ACCOUNT OF A BREACH OF THE CONTRACT ARTICLE, ENTITLED " COVENANT AGAINST CONTINGENT FEES.' HARRY K. TUCKER, JR., AND MR. EUGENE D. GWIZDALA, TRUSTEE IN BANKRUPTCY, THE APPROXIMATE MAXIMUM SUM OF $42,660, OR 2 PERCENT OF THE ORIGINAL CONTRACT CONSIDERATION OF $2,133,000, WOULD HAVE BEEN PAYABLE TO MR. TUCKER FOR SECURING THE CONTRACT WITH THE GOVERNMENT, BUT THAT THE AGENCY AGREEMENT WAS REPUDIATED BY THE COMPANY AFTER THE TRUSTEE IN BANKRUPTCY WAS DISCHARGED. MR. TUCKER HAD BEEN PAID THE AMOUNT OF $8,263.62 AS OF THE TIME HIS AGENCY AGREEMENT WAS REPUDIATED BY THE COMPANY AND THAT AMOUNT WAS DEDUCTED ON THE VOUCHER FOR BREACH OF THE CONTINGENT-FEE COVENANT. HOWEVER, THE DEPARTMENT SUGGESTED THE POSSIBILITY THAT THE CONTRACTOR MIGHT BE HELD LIABLE FOR THE AMOUNT OF $42,660 THEREBY LEAVING NO BALANCE TO BE PAID ON THE CLAIM FOR $15,628.80.

IN OUR DECISION OF OCTOBER 26, 1953, THE MICHIGAN NATIONAL BANK, SAGINAW, MICHIGAN, WAS ADVISED THAT, IN OUR OPINION, THE GOVERNMENT SHOULD NOT BE CONCERNED WITH WHETHER THE CONTRACTOR MAY HAVE REFUSED TO COMPLY FULLY WITH THE AGENCY AGREEMENT AND THAT THE AMOUNT PAYABLE UNDER SUCH AGREEMENT RATHER THAN THE SUM ACTUALLY PAID THEREUNDER CONSTITUTED THE PROPER MEASURE OF DAMAGES FOR THE BREACH OF THE CONTINGENT-FEE COVENANT. IN THAT CONNECTION, ATTENTION WAS INVITED TO THE FACT THAT IN THE CASE OF UNITED STATES V. PADDOCK, 178 F.2D 394, WHICH INVOLVED A SIMILAR CONTINGENT-FEE ARRANGEMENT BETWEEN A TRUSTEE IN BANKRUPTCY AND AN AGENT EMPLOYED TO SECURE A GOVERNMENT CONTRACT, THE COURT SAID:

* * * WHEN ANY SUCH CONTRACT WAS BREACHED, THE RIGHT AROSE TO LIQUIDATED DAMAGES IN THE AMOUNT OF THE CONTINGENT FEE NAMED IN THE AGREEMENT BETWEEN THE CONTRACTOR AND THE PERSON EMPLOYED TO SECURE THE GOVERNMENT CONTRACT.

SUBSEQUENTLY, IN A LETTER DATED FEBRUARY 21, 1955, ADDRESSED TO BRADLEY- MILLER AND COMPANY, C/O CONTINENTAL MACHINE AND TOOL COMPANY, FLINT, MICHIGAN, THE DEPARTMENT OF THE ARMY MADE DEMAND FOR PAYMENT OF THE SUM OF $27,031.20, REPRESENTING THE DIFFERENCE BETWEEN THE ABOVE AMOUNTS OF $42,660, THE AMOUNT DETERMINED BY THE CONTRACTING OFFICER TO BE DUE, AND $15,628.80, THE AMOUNT PREVIOUSLY WITHHELD. IN A LETTER DATED MAY 12, 1955, YOU STATED THAT AN APPEAL HAD BEEN MADE FROM THE FINDINGS OF THE CONTRACTING OFFICER TO THE SECRETARY OF THE ARMY. ON OCTOBER 12, 1955, THE DEPARTMENT REPORTED THE STATED INDEBTEDNESS OF BRADLEY-MILLER AND COMPANY TO THE CLAIMS DIVISION OF OUR OFFICE FOR COLLECTION. WE HAVE RECENTLY BEEN ADVISED THAT THE DEPARTMENT PROPOSES TO TAKE NO ACTION ON THE APPEAL IN VIEW OF OUR DECISION ON THE CLAIM FOR $15,628.80.

THE PETITION SETS FORTH THAT THE TRUSTEE, EUGENE D. GWIZDALA, SUBMITTED A BID TO THE FRANKFORD ARSENAL AT PHILADELPHIA TO MANUFACTURE 1,500,000 AMMUNITION BOXES FOR A QUOTED PRICE OF $1.422 PER BOX. ON DECEMBER 12, 1950, THE TRUSTEE RECEIVED A CONDITIONAL AWARD TO PRODUCE 150,000 BOXES; THAT THE GOVERNMENT WAS BADLY IN NEED OF FACILITIES TO PRODUCE THIS PARTICULAR AMMUNITION BOX AND TRUSTEE'S REPRESENTATIVE REQUESTED THAT HE COME TO PHILADELPHIA TO DISCUSS WITH OFFICIALS AT THE FRANKFORD ARSENAL A PRICE INCREASE AND TO CONTRACT TO PRODUCE AN ADDITIONAL 1,350,000 BOXES; THAT THE TRUSTEE DID NOT WANT TO ASSUME RESPONSIBILITY WITHOUT APPROVAL OF THE REFEREE IN BANKRUPTCY, AND FINALLY A MEETING WAS HELD AT THE FRANKFORD ARSENAL BETWEEN THE HONORABLE ARCHIE KATCHER, TRUSTEE EUGENE D. GWIZDALA, TUCKER AND FRANKFORD CONTRACTING OFFICIALS; THAT BOTH THE REFEREE AND THE TRUSTEE WERE ACTING IN GOOD FAITH AND THOUGHT THE ARRANGEMENT WITH TUCKER WAS PROPER AND LEGAL; AND THAT, IN FACT, AT THE MEETING AT FRANKFORD ARRANGEMENTS WERE MADE FOR THE GOVERNMENT TO MAKE PARTIAL PAYMENTS ON INVENTORY AND, IN LIGHT OF A LAW WHICH WAS PASSED AT THAT VERY TIME, IT WAS POINTED OUT THAT A PRICE INCREASE MIGHT BE OBTAINED IF THE COMPANY FOUND THAT ITS BID WAS TOO LOW.

THE PETITION FURTHER SETS FORTH THAT ON APRIL 13, 1951, THE TRUSTEE EFFECTED ARRANGEMENTS WITH CREDITORS AND A GROUP OF BAY CITY BUSINESSMEN (C. D. WOOD, C. F. KAUNITZ, PAUL WENDLAND AND E. V. BRANDI), ACQUIRED THE GENERAL CREDITORS' CLAIMS, ASSUMED AND PAID ALL SECURED OBLIGATIONS AND INVESTED UPWARDS OF $50,000 FOR NEW MACHINERY AND EQUIPMENT; THAT EFFORTS TO OBTAIN A PRICE INCREASE WERE OF NO AVAIL AND IN JULY 1951 THE DETROIT ORDNANCE DISTRICT THREATENED TO CANCEL THE CONTRACT; THAT AT THIS STAGE THE BANKRUPT WAS INDEBTED TO THE GOVERNMENT ON PARTIAL PAYMENTS FOR UPWARDS OF $130,000; THAT ON OCTOBER 11, 1951, A FORMAL HEARING WAS HAD BEFORE COLONEL WILLIAM BELL, JR., CHAIRMAN, ORDNANCE CONTRACT ADJUSTMENT BOARD; AND THAT AT THE CONCLUSION OF THE HEARING IT WAS INDICATED THAT IF THE BANKRUPTCY PROCEEDINGS WERE CONCLUDED, THE TRUSTEE DISCHARGED, AND PROVIDING THE COMPANY AGREED TO A REDUCTION IN THE CONTRACT TO 50 PERCENT OF THE ORIGINAL QUANTITY, A PRICE INCREASE MIGHT BE GRANTED.

IT IS STATED IN THE PETITION THAT ON OCTOBER 15, 1951, A FULL HEARING WAS HAD IN WASHINGTON BEFORE BRIGADIER GENERAL ROBERT W. BROWN, PRESIDENT, ARMY CONTRACT ADJUSTMENT BOARD, AND THAT GENERAL BROWN DETERMINED THAT--- INASMUCH AS THE COMPANY WOULD ABSORB A LOSS OF APPROXIMATELY $80,000 EVEN IF GRANTED A PRICE INCREASE, AND THE ORDNANCE CORPS HAD AN URGENT NEED FOR THE UNDELIVERED QUANTITY OF THE CONTRACT--- REDUCING THE QUANTITY FROM 1,500,000 TO 750,000 BOXES AND INCREASING THE CONTRACT UNIT PRICE TO $1.85 WOULD FACILITATE NATIONAL DEFENSE.

IT IS ALLEGED THAT THE CONTRACT WAS COMPLETED ON SCHEDULE AT NO LOSS TO THE GOVERNMENT ALTHOUGH THE COMPANY LOST UPWARDS OF $100,000 AND WAS AGAIN INSOLVENT; THAT THE MICHIGAN NATIONAL BANK IN GOOD FAITH MADE SUBSTANTIAL LOANS TO BRADLEY-MILLER AND COMPANY; THAT NO OFFICER, DIRECTOR OR STOCKHOLDER RECEIVED ANY REIMBURSEMENT AND THE NEW STOCKHOLDERS SUSTAINED PERSONAL LOSSES OF UPWARDS OF $75,000; THAT THE LARGEST UNSECURED CREDITOR WAS THOMAS S. DENNIS AND CO., INC. ($70,000); THAT MR. DENNIS ATTENDED THE HEARING BEFORE GENERAL BROWN AND HAD AGREED TO GO ALONG TO THE COMPLETION OF THE CONTRACT; THAT MR. DENNIS CALLED A CREDITORS MEETING IN NOVEMBER 1952 AND THE OFFICERS AND STOCKHOLDERS OF THE COMPANY AGREED TO STEP ASIDE AND WAIVE THEIR STOCK INTEREST IF ANY OF THE CREDITORS WOULD ASSUME THE SECURED LIABILITIES AMOUNTING TO $60,000; AND THAT, FINALLY IN DECEMBER 1952, MR. DENNIS ACQUIRED ALL STOCK AS WELL AS UNSECURED CLAIMS AND ASSUMED SECURED LIABILITIES, WHICH WERE LATER PAID IN FULL.

THEREAFTER, ACCORDING TO THE PETITION, ALL ASSETS OF BRADLEY-MILLER AND COMPANY WERE SOLD TO PAUL EGHIGIAN BY THOMAS S. DENNIS AND CO., INC., AND MR. B. J. TALLY, THE SECOND LARGEST UNSECURED CREDITOR; AND IN CONNECTION WITH THIS SALE THE PURCHASER CONTENDED THAT DENNIS AND TALLY GUARANTEED HIM AGAINST ALL CLAIMS.

FURTHER ALLEGATIONS IN THE PETITION MAY BE SUMMARIZED AS FOLLOWS: 1, THAT THE NEW STOCKHOLDERS HAD NO KNOWLEDGE OF THE CONTRACT WITH TUCKER AND HAD BEEN LED TO BELIEVE THAT THE CONTRACT, BEING A BID CONTRACT AND OBTAINED UNDER THE JURISDICTION OF THE BANKRUPTCY COURT, WAS A VALID CONTRACT; 2, THAT THE GOVERNMENT HAD FULL KNOWLEDGE OF THE TRUSTEE'S AGREEMENT WITH TUCKER WHEN THE HEARING WAS HELD BEFORE GENERAL BROWN, AND THE FORMER STOCKHOLDERS AND OFFICERS HAD FULLY ACQUAINTED THE GOVERNMENT OF THEIR LACK OF KNOWLEDGE OF SAID CONTRACT BETWEEN THE TRUSTEE AND TUCKER ON GOVERNMENT FORM NO. 119; AND 3, THAT, THROUGH THE AGREEMENT OF MR. DENNIS TO EXTEND CREDIT, THE GOVERNMENT WAS ALLOWED TO RECOVER THE SUM OF 130,000.

IT IS CONTENDED THAT CERTAIN EXHIBITS SUBMITTED WITH THE PETITION INDICATE CONCLUSIVELY THAT THE CONTRACT ENTERED INTO WITH TUCKER HAD THE APPROVAL OF THE UNITED STATES BANKRUPTCY COURT AND WAS ENTERED INTO IN GOOD FAITH; THAT THE COMPANY SHOULD NOT BE HELD TO BE INDEBTED TO THE GOVERNMENT BY VIRTUE OF A TECHNICAL VIOLATION OF THE CONTRACT; AND THAT IT SHOULD BE DETERMINED THAT THE GOVERNMENT IS INDEBTED TO BRADLEY MILLER AND COMPANY IN THE AMOUNT OF $15,628.80. AS A FURTHER REASON FOR THE GRANTING OF SUCH COMPLETE RELIEF, IT IS CONTENDED THAT NO PART OF THE SUM OF $8,263.62, PAID TO HARRY K. TUCKER, JR., CAME OUT OF THE PROCEEDS OF THE GOVERNMENT CONTRACT BUT WAS ABSORBED BY BRADLEY-MILLER AND COMPANY'S LOSSES OF UPWARDS OF $100,000 SUSTAINED BY VIRTUE OF THE COMPANY'S HAVING COMPLETED THE CONTRACT ON SCHEDULE AT NO LOSS TO THE GOVERNMENT.

IN ONE OF THE TWO ALTERNATIVE CONTENTIONS, IT IS SUGGESTED, IN EFFECT, THAT THE GOVERNMENT SHOULD MAKE PAYMENT TO BRADLEY-MILLER AND COMPANY OF THE AMOUNT OF $7,365.18 ($15,628.80 LESS $8,263.62), BASED UPON THAT PART OF MR. TUCKER'S AGREEMENT WHICH PROVIDES THAT IT SHALL BE OPERATIVE FOR A MINIMUM PERIOD OF THREE MONTHS, THAT IT MAY BE CANCELLED FOR GOOD CAUSE ON 30 DAYS' NOTICE FOLLOWING THE MINIMUM PERIOD THAT " IN THE EVENT WE EXERCISE THE SAID RIGHT TO CANCEL, NO CLAIM FOR REFUNDS SHALL BE MADE BY US AGAINST YOU NOR YOU AGAINST US FOR FURTHER PAYMENTS.' IN THE SECOND ALTERNATIVE CONTENTION, IT IS SUGGESTED THAT A BALANCE OF $4,463.80 ($15,628.80 LESS $11,165, AS DAMAGES FOR THE BREACH OF THE CONTINGENT-FEE COVENANT), SHOULD BE PAID TO BRADLEY-MILLER AND COMPANY. THE $11,165 FIGURE IS BASED UPON AN ALLEGED REDUCTION OF 50 PERCENT IN THE CONTRACT PRICE, THEREBY REDUCING MR. TUCKER'S ORIGINAL FEE TO $21,330, AND MR. TUCKER'S ALLEGED PREVIOUS AGREEMENT WITH THE REFEREE IN BANKRUPTCY TO REDUCE HIS FEE TO ONE-HALF OF THE ORIGINAL AMOUNT.

WE ARE OF THE OPINION THAT NEITHER KNOWLEDGE BY THE REFEREE IN BANKRUPTCY OF THE AGREEMENT BETWEEN MR. GWIZDALA AND MR. TUCKER NOR THE ALLEGED APPROVAL OF SUCH AGREEMENT BY THE BANKRUPTCY COURT SHOULD HAVE ANY BEARING UPON THE QUESTION WHETHER THE GOVERNMENT IS ENTITLED TO EXERCISE THE REMEDY SPECIFICALLY PROVIDED FOR IN THE CONTINGENT-FEE COVENANT. NOR, AS BETWEEN THE CORPORATION AND THE GOVERNMENT, DO WE CONSIDER IT MATERIAL WHETHER OR NOT THE NEW STOCKHOLDERS OF THE COMPANY HAD KNOWLEDGE OF THE CONTRACT WITH MR. TUCKER. ON THE OTHER HAND, IT APPEARS THAT, WHILE THE GOVERNMENT OFFICIALS MAY HAVE KNOWN THAT MR. TUCKER WAS EMPLOYED AS A SALES AGENT, THEY HAD THE RIGHT TO RELY UPON THE REPRESENTATION IN THE BID OF BRADLEY-MILLER AND COMPANY THAT IT HAD NOT ,EMPLOYED OR RETAINED A COMPANY OR PERSON (OTHER THAN A FULL-TIME EMPLOYEE) TO SOLICIT OR SECURE THIS CONTRACT.' THE GOVERNMENT WAS FORMALLY ADVISED OF MR. TUCKER'S AGREEMENT ON FORM 119, EXECUTED FEBRUARY 12, 1952, AND OUR INVESTIGATION HAS INDICATED THAT, IF THE PRESIDENT OF THE ARMY CONTRACT ADJUSTMENT BOARD HAD KNOWN IN OCTOBER 1951 OF THE QUESTIONABLE NATURE OF THIS AGREEMENT, HE WOULD NOT HAVE APPROVED THE GRANTING OF ANY PRICE RELIEF TO THE CONTRACTOR, REGARDLESS OF THE URGENT NEED FOR THE UNDELIVERED PORTIONS OF THE CONTRACT.

WE FIND IT DIFFICULT TO ACCEPT THE ARGUMENT THAT THE GOVERNMENT SAVED APPROXIMATELY $130,000 AS THE RESULT OF SUPPLEMENTAL AGREEMENT NO. 3 TO THE CONTRACT, WHICH AUTHORIZED THE PRICE INCREASE AND REDUCED THE CONTRACT QUANTITY BY 750,000 UNITS. THE CONTRACTOR WAS THEN IN DEFAULT AND THE CONTRACT COULD HAVE BEEN CANCELED WITHOUT LIABILITY TO THE GOVERNMENT, WHICH MIGHT WELL HAVE RECOVERED A PORTION OF THE $130,000 OVERPAYMENTS FROM THE BANKRUPT ESTATE OR FROM THE ASSIGNEE BANK. HOWEVER, BY GRANTING A PRICE INCREASE WHICH RESULTED IN AN ADDITIONAL ALLOWANCE OF APPROXIMATELY $131,500 FOR THE 306,269 BOXES ALREADY DELIVERED UNDER THE CONTRACT, THE GOVERNMENT RELIEVED THE CONTRACTOR FROM LIABILITY FOR THE PRIOR OVERPAYMENTS.

THERE WAS NO GUARANTEE ON THE PART OF THE GOVERNMENT THAT THE CONTRACTOR WOULD NOT SUFFER A LOSS IN FULFILLING THE CONTRACT AND THE PETITION APPEARS TO HAVE FULLY OVERLOOKED THE FACT THAT THE CONTRACT WAS ENTERED INTO PURSUANT TO THE ADVERTISING STATUTES WHICH REQUIRE FAVORABLE CONSIDERATION OF LOWEST RESPONSIBLE BIDS UNLESS READVERTISEMENT IS FOUND TO BE IN THE INTERESTS OF THE GOVERNMENT. THE RESPONSIBILITY OF THE LOW BIDDER WAS QUESTIONED IN THIS INSTANCE BUT IT WAS FINALLY DETERMINED THAT THE BIDDER HAD THE FACILITIES AND THE FINANCIAL ABILITY TO PERFORM THE CONTRACT WORK. AS OF FEBRUARY 2, 1951, THERE EXISTED A VALID AND BINDING CONTRACT FOR DELIVERY OF 1,500,000 AMMUNITION BOXES AT A PRICE OF $1.422 EACH, LATER REDUCED BY $0.01 IN CONSIDERATION OF THE GOVERNMENT'S AGREEMENT TO MAKE ADVANCE PAYMENTS FOR WORK IN PROGRESS. THE COVENANT AGAINST CONTINGENT FEES WAS AN ESSENTIAL PART OF THE CONTRACT AND WE FIND NO INDICATION THAT IT WAS THE INTENTION OF THE ARMY CONTRACT ADJUSTMENT BOARD TO WAIVE ANY CLAIM THE GOVERNMENT MIGHT HAVE FOR THE BREACH OF THE COVENANT WHEN IT APPROVED THE INCREASE IN PRICE OF FROM $1.412 TO $1.85 PER UNIT. THE ONLY QUESTION AS TO WHICH WE CAN SEE ANY GROUND FOR REASONABLE DOUBT IS WHETHER, SINCE THE AGREED FEE OF $42,660 WAS BASED UPON 2 PERCENT OF THE ORIGINAL CONTRACT CONSIDERATION OF $2,133,000, THE GOVERNMENT'S CLAIM SHOULD BE LIMITED TO A LIKE PERCENTAGE OF THE AMENDED PRICE OF $1,387,500. WITHOUT CONSIDERATION OF THE VALUE OF THE OVERRUN DELIVERY OF APPROXIMATELY 5,000 BOXES, THE AMOUNT FOR RECOVERY WOULD THUS BE $27,750.

IT IS NOTED, HOWEVER, THAT MR. TUCKER'S AGREEMENT PROVIDES AGAINST DEFAULTS IN DELIVERY, AND IT MAY BE ARGUED THAT THE ENTIRE AMOUNT OF THE ORIGINAL AGREED FEE OF $42,660 SHOULD BE RECOVERED, IN VIEW OF THE APPARENT FACT THAT, EXCEPT FOR THE CONTRACTOR'S FAILURE TO MEET THE SPECIFIED DELIVERY REQUIREMENTS, THE GOVERNMENT WOULD HAVE ACCEPTED DELIVERY OF THE TOTAL ORIGINAL CONTRACT QUANTITY OF 1,500,000 BOXES.

RESERVATION OF THE RIGHT TO CANCEL MR. TUCKER'S AGREEMENT FOR GOOD CAUSE, THE FACT THAT MR. TUCKER MAY HAVE SUBSEQUENTLY AGREED TO REDUCE HIS FEE BY 50 PERCENT IF NO PRICE INCREASE COULD BE OBTAINED, AND THE FACT THAT LOSSES IN PERFORMANCE OF THE CONTRACT MAY HAVE EXCEEDED THE FEE PAID OR PAYABLE UNDER THE AGENCY AGREEMENT CANNOT, IN OUR OPINION, BE CONSIDERED AS AFFECTING IN ANY MANNER THE AMOUNT OF LIQUIDATED DAMAGES WHICH ACCRUED TO THE GOVERNMENT AS THE RESULT OF THE BREACH OF THE CONTINGENT-FEE COVENANT IN CONTRACT NO. DA-36-038-ORD-2393. IT IS OUR VIEW THAT THE THEORY OF THE COVENANT IS THAT THE AMOUNT PROVIDED AS A FEE IS CONCLUSIVELY PRESUMED TO HAVE BEEN ADDED TO THE BID WHICH WOULD OTHERWISE HAVE BEEN MADE, AND THAT THE GOVERNMENT HAS THEREFORE BEEN OVERCHARGED IN THAT AMOUNT AND IS ENTITLED TO DEDUCT IT FROM THE CONTRACT PRICE.

IN THE CIRCUMSTANCES, YOU ARE ADVISED THAT WE WILL ACCEPT, AS IN FULL AND FINAL SETTLEMENT OF THE CLAIMS, THE DIFFERENCE BETWEEN THE SUMS OF $27,750 AND $15,628.80, OR $12,121.20. HOWEVER, UNLESS AN OFFER TO SETTLE ON SUCH BASIS IS SUBMITTED TO THE CLAIMS DIVISION OF OUR OFFICE WITHIN 30 DAYS FROM THE DATE OF THIS LETTER, ACCOMPANIED WITH A CERTIFIED CHECK FOR THE AMOUNT OF $12,121.20, MADE PAYABLE TO THE " TREASURER OF THE UNITED STATES," THE COMPLETE RECORD IN THE CASE WILL BE REFERRED TO THE DEPARTMENT OF JUSTICE FOR SUCH ACTION AS MAY THERE BE DETERMINED TO BE PROPER.