B-121549, OCT 20, 1954

B-121549, OCT 20, 1954

PRECIS-UNAVAILABLE

WILLIAM A. SARCANDER, DEPARTMENT OF THE ARMY:

THERE HAS BEEN RECEIVED BY REFERENCE FROM THE OFFICE OF CHIEF OF FINANCE YOUR FIRST INDORSEMENT OF SEPTEMBER 9, 1954, WITH ENCLOSURES (FINKD-158), REQUESTING A DECISION WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF NATIONAL STEEL CONTAINER CORPORATION, CHICAGO, ILLINOIS, IN THE AMOUNT OF $29,406.46, REPRESENTING THE DIFFERENCE IN FREIGHT COSTS ON 48,564 STEEL DRUMS AT THE RATE OF $0.60552 PER DRUM.

UNDER THE TERMS OF CONTRACT NO. DA-11-009-QM-21884, DATED DECEMBER 9, 1952, THE CONTRACTOR AGREED TO FURNISH STEEL DRUMS, F.O.B. DESTINATION, BELLBLUFF, VIRGINIA, FROM ITS CHICAGO, ILLINOIS PLANT, AT A UNIT PRICE OF $7.08. PURSUANT TO PARAGRAPH 28 OF GENERAL PROVISIONS OF THE CONTRACT, THE CONTRACTOR REQUESTED AND RECEIVED AUTHORIZATION TO CHANGE THE PLANT LOCATION TO INLAND STEEL CONTAINER COMPANY, JERSEY CITY, NEW JERSEY. THIS CHANGE WAS REFLECTED IN CHANGE ORDER NO. 1, ISSUED MARCH 19, 1953, AND WAS ACCOMPLISHED WITH NO CHANGE IN THE COMPENSATION TO BE PAID; HOWEVER, THE CONTRACTOR HAD AGREED PRIOR THERETO, AND DID PAY, THE EXPENSES OF A GOVERNMENT INSPECTOR TO SURVEY THE PLANT OF THE SUBCONTRACTOR AT JERSEY CITY. AFTER 43,200 DRUMS HAD BEEN DELIVERED TO BELLBLUFF, THE GOVERNMENT CHANGED THE F.O.B. DESTINATION POINT TO ST. ROSE, LOUISIANA, AND UPON COMPLETION OF DELIVERIES TO ST. ROSE, SUPPLEMENTAL AGREEMENT NO. 3 WAS EXECUTED ON AUGUST 26, 1954, WHICH INCREASED THE CONTRACT PRICE BY $46,801.61, REPRESENTING THE INCREASE IN TRANSPORTATION COSTS TO THE CONTRACTOR FOR SHIPMENT FROM JERSEY CITY TO ST. ROSE RATHER THAN FROM JERSEY CITY TO BELLBLUFF. PAYMENT HAS BEEN MADE IN THE AMOUNT OF $17,395.15, WHICH AMOUNT REPRESENTS WHAT WOULD HAVE BEEN THE INCREASED TRANSPORTATION COSTS TO THE CONTRACTOR HAD ALL DELIVERIES BEEN MADE FROM CHICAGO, THUS LEAVING AN OUTSTANDING BALANCE OF $29,406.46.

YOUR DOUBT IN THE MATTER CONCERNS THE QUESTION AS TO WHETHER THE TOTAL AMOUNT SET FORTH IN SUPPLEMENTAL AGREEMENT NO. 3 SHOULD BE PAID OR WHETHER PAYMENT FOR INCREASED FREIGHT COSTS TO THE CONTRACTOR SHOULD BE LIMITED TO THE ABOVE AMOUNT OF $17,395.15.

IN THE INSTANT CASE THE CONTRACT PRICE WAS FIXED ON THE BASIS OF DELIVERY AT DESTINATION, BELLBLUFF, VIRGINIA. NO PROVISION WAS MADE IN THE CONTRACT FOR ANY CHANGE IN THE CONTRACT PRICE BECAUSE OF A CHANGE IN THE LOCATION OF THE MANUFACTURING PLANT OR POINT OF SHIPMENT BUT PROVISION WAS MADE IN PARAGRAPH 2 OF GENERAL PROVISIONS FOR AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE WHERE A CHANGE BY THE GOVERNMENT IN "PLACE OF DELIVERY" CAUSED AN INCREASE OR DECREASE IN THE COST OF PERFORMANCE. PURSUANT TO SAID PROVISION, SUPPLEMENTAL AGREEMENT NO. 3 WAS PROPERLY EXECUTED AND THE INCREASED FREIGHT COSTS TO THE CONTRACTOR OCCASIONED BY THE GOVERNMENT'S CHANGE OF DESTINATION FROM BELLBLUFF TO ST. ROSE WERE PROPERLY COMPUTED ON THE BASIS OF USING JERSEY CITY AS THE SHIPPING POINT SINCE THE CHANGE OF LOCATION OF THE MANUFACTURING PLANT WAS DULY AUTHORIZED BY THE CONTRACTING OFFICER EVEN BEFORE ANY DELIVERIES WERE MADE TO THE ORIGINAL DESTINATION POINT DESIGNATED BY THE GOVERNMENT.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH SUPPORTING PAPERS, ARE RETURNED HEREWITH AND YOU ARE ADVISED THAT PAYMENT THEREON IS AUTHORIZED, IF OTHERWISE CORRECT.