B-123609, NOV. 17, 1955

B-123609, NOV. 17, 1955

TO LYNCHBURG HOSIERY MILLS, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 6, 1955, REQUESTING REVIEW OF SETTLEMENT DATED MAY 23, 1955, WHICH DISALLOWED YOUR CLAIM FOR $7,298.25, REPRESENTING TRANSPORTATION, REPROCESSING, AND ADMINISTRATIVE COSTS INCURRED IN REWORKING CERTAIN SOCKS REJECTED BY THE GOVERNMENT AS NOT CONFORMING WITH THE SPECIFICATIONS OF CONTRACT NO. DA-280-QM-12975, DATED MARCH 16, 1951.

THE RECORD SHOWS THAT 128,520 PAIRS OF SOCKS WERE REJECTED ON THE BASIS OF LABORATORY TESTS CONDUCTED AT THE PHILADELPHIA QUARTERMASTER LABORATORY. IT WAS SUBSEQUENTLY DETERMINED THAT DURING THE PERIOD WHEN THE ITEMS IN QUESTION WERE REJECTED, THE PHILADELPHIA QUARTERMASTER LABORATORY WAS NOT CONDUCTING PROPER TESTS FOR SHRINKAGE. IT APPEARS THAT AFTER RESHIPMENT OF THE REJECTED SOCKS TO YOUR PLANT AT YOUR OWN EXPENSE, YOUR REPROCESSED THEM, APPARENTLY ON YOUR OWN INITIATIVE. WHEN THE REPROCESSING WAS COMPLETE YOU RE OFFERED THE SOCKS AS NEW LOTS, RATHER THAN AS RESUBMITTED LOTS. YOUR CLAIM IS FOR COSTS ALLEGEDLY INCURRED BY REASON OF THE REJECTION OF THE SOCKS.

ARTICLE 5, SUBPARAGRAPH (B), OF THE CONTRACT GENERAL PROVISIONS PROVIDED, IN PERTINENT PART, THAT SUPPLIES WHICH HAVE BEEN REJECTED OR REQUIRED TO BE CORRECTED SHOULD BE REMOVED OR CORRECTED IN PLACE, AS REQUESTED BY THE CONTRACTING OFFICER, BY AND AT THE EXPENSE OF THE CONTRACTOR PROMPTLY AFTER NOTICE, AND SHOULD NOT AGAIN BE TENDERED FOR ACCEPTANCE UNLESS THE FORMER TENDER AND EITHER THE REJECTION OR REQUIREMENT OF CORRECTION WAS DISCLOSED.

THE RECORD ESTABLISHES THAT, IN LIEU OF AWAITING THE CONTRACTING OFFICER'S INSTRUCTIONS TO CORRECT THE REJECTED QUANTITIES OF SOCKS, YOU, UPON YOUR OWN INITIATIVE, IMMEDIATELY REPROCESSED THE REPORTEDLY DEFICIENT SUPPLIES, AND AGAIN TENDERED THEM FOR ACCEPTANCE WITHOUT DISCLOSING THAT FACT TO THE CONTRACTING OFFICER. THIS COURSE OF ACTION WAS CONTRARY TO THE CORRECTION PROCEDURE SPECIFICALLY OUTLINED IN THE CONTRACT. WHILE THE REJECTED SOCKS WERE EVENTUALLY ACCEPTED BY THE GOVERNMENT, AFTER REPROCESSING THAT FACT FURNISHES NO EVIDENCE THAT THE ORIGINAL REJECTION WAS IMPROPER. IN FACT, YOUR ACTION IN THE MATTER HAS PRECLUDED THE GOVERNMENT FROM ASCERTAINING WHETHER THE SOCKS ORIGINALLY OFFERED DID IN FACT MEET THE SPECIFICATIONS. FURTHERMORE, BY LETTER OF MARCH 25, 1953, THE ADMINISTRATIVE OFFICE REQUESTED THAT YOU FORWARD "ANY EVIDENCE TO ESTABLISH THE FACT THAT SAID SOCKS MET THE SPECIFICATION SHRINKAGE REQUIREMENT WHEN ORIGINALLY SUBMITTED.' THIS YOU DID NOT DO. NEITHER HAVE YOU FURNISHED ANY EVIDENCE THAT YOU DID NOT CHANGE YOUR METHOD OF PROCESSING IN THE REPROCESSING OF THE COSTS.

OUR OFFICE IS NOT INFORMED AS TO THE FACTS CONCERNING THE PAYMENT OF CLAIMS OF OTHER MILLS REFERRED TO BY YOU, BUT SUCH PAYMENTS WOULD APPEAR TO BEAR NO RELATION TO THE RIGHTS AND OBLIGATIONS UNDER THE CONTRACT UNDER WHICH YOUR CLAIM IS ASSERTED AND COULD NOT ESTABLISH A BASIS FOR PAYMENT IN THIS CASE.

IN VIEW OF THE FOREGOING AND SINCE UNDER THE TERMS OF THE CONTRACT THE REPROCESSING COSTS WOULD BE ALLOWABLE ONLY IF THE REPROCESSING HAD BEEN AUTHORIZATION OR DIRECTED BY THE CONTRACTING OFFICER AFTER IMPROPER REJECTION OF THE SOCKS, THERE APPEARS NO PROPER BASIS FOR THE PAYMENT OF