B-126354, FEB. 6, 1956

B-126354, FEB. 6, 1956

TO BAYSHORE INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 8, 1955, REQUESTING A REVIEW OF OUR SETTLEMENT DATED NOVEMBER 18, 1955, WHICH DISALLOWED YOUR CLAIM FOR REIMBURSEMENT OF $9,276, REPRESENTING CHARGES ASSESSED FOR CERTAIN RETESTING OF AMMUNITION AND COMPONENTS FURNISHED THE DEPARTMENT OF THE ARMY UNDER CONTRACTS NOS. DA-36-034-ORD-1017 (M), DA-11-173-ORD 211 AND DA -36-034-ORD-1324, DATED JUNE 19, OCTOBER 20, 1952, AND APRIL 28, 1953, RESPECTIVELY. IN ADDITION, REPRESENTATIVES OF YOUR FIRM DURING A RECENT INTERVIEW HERE PRESENTED FOR CONSIDERATION IN THE MATTER A LETTER DATED JANUARY 16, 1956, ADDRESSED TO OUR OFFICE, ENCLOSING COPY OF A LETTER DATED JULY 13, 1953, TO THE OFFICER IN CHARGE, BALTIMORE REGIONAL OFFICE, PHILADELPHIA ORDNANCE DISTRICT.

THE OBLIGATIONS OF THE PARTIES UNDER THE SUBJECT CONTRACTS FOR TESTING AND RETESTING OF MATERIALS ARE SET FORTH IN THE SETTLEMENT OF YOUR CLAIM AND NEED NOT BE REPEATED HERE. THE MATTER IN DISPUTE PRIMARILY CONCERNS THE BASIS FOR THE CHARGES ASSESSED YOU FOR VARIOUS RETESTING OF LOTS AS REQUESTED BY YOU AND IT APPEARS TO BE YOUR CONTENTION THAT THE TOTAL AMOUNT COLLECTED IS EXORBITANT AND OUT OF PROPORTION TO THE VALUE OF THE MATERIAL TESTED. YOU CONTEND THAT AN INVESTIGATION OF THE TESTING METHODS ESTABLISHES THAT THE SHELLS USED FOR THE TESTING OF THE CARTRIDGES ARE RECOVERED AND REUSED TIME AND AGAIN FOR PRIMER TESTS AND THEREFORE YOU BELIEVE THAT YOUR ESTIMATED COST IN AN AMOUNT NOT EXCEEDING ONE-TENTH OF THE CHARGES ACTUALLY ASSESSED WOULD APPEAR FAIR AND REASONABLE AND MORE IN LINE WITH THE VALUE OF THE MATERIAL TESTED.

THE ADMINISTRATIVE REPORT AND THE ACCOMPANYING STATEMENT OF ACCOUNT DISCLOSE THAT THE CHARGES UNDER CONTRACT NO. DA-36-034-ORD-1017 (M) COVERING GRENADE FUSES WERE COMPUTED ON THE BASIS OF WHAT WAS CONSIDERED THE FAIR AND REASONABLE COST, OR AT THE RATE OF 16 CENTS PER EACH RETEST OR REWORK; UNDER CONTRACT NO. DA-11-173-ORD-211 COVERING AN IGNITION CARTRIDGE M5A1 FOR THE 60 M/M MORTAR SHELL, YOU WERE CHARGED $6.10 FOR RETESTING SUCH CARTRIDGE; AND UNDER CONTRACT NO. DA-36-034-ORD-1324 COVERING AN IGNITION CARTRIDGE M8 FOR THE 81 M/M MORTAR YOU WERE CHARGED $7.80 FOR RETESTING EACH CARTRIDGE. YOU PARTICULARLY DISPUTED THE LATTER CHARGE, THE TOTAL OF WHICH COMPRISES THE GREATER PORTION OF YOUR CLAIM. ALSO, THE REPORT CONTAINS THE FOLLOWING BREAKDOWN AS TO THE COSTS OF RETESTING UNDER CONTRACT NO. DA 36-ORD-1324:

TABLE

LABOR AND MATERIAL INCLUDING OVERHEAD $3.46

COMPONENTS 4.26

WEAPON .08

TOTAL $7.80

IT IS FURTHER REPORTED THAT THE CHARGE FOR COMPONENTS, OR $4.26, REPRESENTS ONE-HALF THE COST OF THE SHELL. THE SHELL IS REUSED ONLY FOR PRIMER TESTS, AND NEVER FOR OTHER CARTRIDGE TESTS, AND WHEN SO USED IS RECOVERED AND COSTS EXPENDED THEREON TO MAKE THE SHELL USABLE FOR THE PRIMER TESTS. IT IS STATED THAT THE COST OF RECOVERY IS ONE HALF THE ORIGINAL SHELL CASE COST. IN RESPECT TO THE CONTENTION THAT THE COST OF RETESTING IS OUT OF PROPORTION TO THE INDIVIDUAL MATERIAL COSTS, IT APPEARS THAT THERE HAS BEEN OVERLOOKED THE FACT THAT IN THE EVENT FURTHER SAMPLES WERE NOT SUBMITTED FOR RETESTING YOU WOULD HAVE SUFFERED THE ENTIRE LOSS OF THE PARTICULAR LOT UNDER EACH CONTRACT COMPUTED ON THE BASIS OF THE RESPECTIVE CONTRACT QUANTITIES TIMES THE SPECIFIED UNIT PRICE. FURTHERMORE, IN CASES SUCH AS HERE WHERE DISPUTED QUESTIONS OF FACT ARE PRESENTED, IT IS THE ESTABLISHED POLICY OF OUR OFFICE TO ACCEPT AS CORRECT THE STATEMENT OF FACTS FURNISHED BY THE ADMINISTRATIVE OFFICERS. SEE 20 COMP. GEN. 573, 578, AND CASES CITED THEREIN.

IN THE LETTERS PRESENTED HERE DURING THE RECENT CONFERENCE WITH YOUR REPRESENTATIVES, REFERENCE IS MADE TO THE RETEST REQUESTED BY YOU FOR LOT B11-1-49 TO CONTRACT NO. DA-11-173-ORD-211. IN THAT CONNECTION, IT IS INDICATED THAT SINCE YOU WERE REQUESTED TO SEND EXTRA CARTRIDGES FOR TESTING LOTS B11-1-50, B11-1-51 AND B11-1-52 BECAUSE OF THE REPORTED FAULTY OPERATION OF THE CHRONOGRAPHS USED IN THE TESTING, THE RETESTING OF LOT B11-1-49 WAS NECESSITATED BY THE FAULTY OPERATION OF THE TESTING APPARATUS RATHER THAN FROM A FAILURE OF THE CARTRIDGES TO MEET CERTAIN VELOCITY REQUIREMENTS, AND THEREFORE, THE COST OF SUCH RETESTING SHOULD BE BORNE BY THE GOVERNMENT. INSOFAR AS THE RECORDS OF OUR OFFICE SHOW, IT DOES NOT APPEAR THAT THE AMOUNT OF $9,276 HERE IN CONTROVERSY INCLUDED AN ITEM OF CHARGES FOR RETESTING LOT B11-1-49, TO WHICH YOU REFER IN YOUR LETTER OF JULY 13, 1953. ALSO, YOU HAVE NOT FURNISHED ANY EVIDENCE AS TO WHAT CHARGES, IF ANY, WERE MADE FOR RETESTING THIS LOT AND WHEN YOU PAID FOR THIS CHARGE OR THAT THE AMOUNT THEREFOR WAS COLLECTED BY SETOFF.

ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD, THE SETTLEMENT OF NOVEMBER 18, 1955, IS SUSTAINED.