B-126991, FEB. 29, 1956

B-126991, FEB. 29, 1956

TO MR. THOMAS B. JONES, AUTHORIZED CERTIFYING OFFICER, POST OFFICE DEPARTMENT:

YOUR LETTER OF FEBRUARY 14, 1956, REQUESTS A DECISION AS TO THE PROPRIETY OF APPROVING CLAIMS OF THE LITTON COAL SALES COMPANY, CRANES NEST, VIRGINIA, FOR A PRICE INCREASE OF FORTY CENTS PER TON FOR CERTAIN COAL DESTINED TO VARIOUS POST OFFICE BUILDINGS UNDER PURCHASE ORDER NO. 6-A-33, DATED JULY 15, 1955.

THE CONTRACTOR APPEARS TO HAVE GIVEN TIMELY NOTICE AND TO HAVE OBTAINED APPROVAL OF THE PRICE INCREASE UNDER PARAGRAPH 11 (PRICE REVISION) OF THE SPECIAL PURCHASE CONDITIONS. ITS NOTICES OF AUGUST 29 AND SEPTEMBER 12, 1955, ADVISING THAT A GENERAL MINERS' WAGE INCREASE WOULD GO INTO EFFECT SEPTEMBER 1, AND THAT COAL PRICES WOULD ADVANCE FORTY CENTS PER TON ON THAT DATE, WERE APPROVED BY THE CONTRACTING OFFICER ON NOVEMBER 23, "FOR ALL COAL SCHEDULED FOR SHIPMENT ON AND AFTER SEPTEMBER 1, 1955.'

DOUBT AS TO THE CONTRACTOR'S ENTITLEMENT TO THE PRICE INCREASE IS REPORTED TO ARISE IN INSTANCES WHERE COAL SCHEDULED TO BE SHIPPED BEFORE SEPTEMBER 1 WAS NOT SHIPPED UNTIL LATER. SINCE DELIVERY WAS REQUIRED IN MANY INSTANCES PRIOR TO THE EFFECTIVE DATE OF THE PRICE INCREASE, YOU QUESTION THAT THE PRICE INCREASE WAS EARNED WHERE THE DELIVERY SCHEDULE WAS NOT MET. THE CONTRACTOR'S POSITION IS THAT INABILITY TO COMPLY WITH DELIVERY REQUIREMENTS WAS DUE MAINLY TO THE FACT THAT GOVERNMENT BILLS OF LADING WERE NOT FURNISHED PROMPTLY, ALTHOUGH A WIDESPREAD SHORTAGE OF RAILROAD CARS ALSO WAS A DEFINITE CONTRIBUTING FACTOR.

PARAGRAPH 6 (DELAYS) OF THE SPECIAL PURCHASE CONDITIONS PROVIDES THAT THE CONTRACTOR SHALL NOT BE LIABLE FOR DELAYS CAUSED BY, AMONG OTHER THINGS, ACTS OF THE GOVERNMENT AND SHORTAGES OF RAIL EQUIPMENT, BUT ONLY IF, WITHIN TEN DAYS FROM THE BEGINNING OF ANY DELAY, IT NOTIFIES THE CONTRACTING OFFICER IN WRITING AS TO THE CAUSE AND EXTENT THEREOF (SUBSECTIONS A AND B).

THE CONTRACTOR'S LETTER OF JULY 27, ADVISING THAT BILLS OF LADING ESSENTIAL FOR SHIPMENT HAD NOT BEEN RECEIVED, AND POINTING OUT THE URGENCY OF THEIR NEED, IF DELIVERY REQUIREMENTS WERE TO BE MET, DID NOT SPECIFICALLY REQUEST AN EXTENSION OF DELIVERY TIME, BUT IT CLEARLY PLACED THE GOVERNMENT ON NOTICE THAT DELAYS WERE BEING CAUSED BY ITS ACTION. EVEN REGARDLESS OF NOTICE, IT APPEARS FROM THE FACT NOTICE OF THE AWARD WAS GIVEN TO THE CONTRACTOR ON JUNE 29 THAT IT WAS ENTITLED- - AS ALLEGED IN LETTER OF OCTOBER 19--- TO ASSUME BILLS OF LADING WOULD BE FURNISHED PROMPTLY SO THAT SHIPMENTS COULD BE UNDERTAKEN DURING JULY AND, ALSO, THAT FAILURE OF THE GOVERNMENT TO FURNISH SUCH BILLS UNTIL AUGUST 3 (DATE OF RECEIPT BY CONTRACTOR) OBVIOUSLY INTERFERED WITH TIMELY PERFORMANCE.

MOREOVER, WHILE IT IS NOT SHOWN THAT A FINDING OF FACT BY THE CONTRACTING OFFICER WITH RESPECT TO THE CAUSE AND EXTENT OF DELAY CONTEMPLATED BY PARAGRAPH 6 (B) OF THE SPECIAL PURCHASE CONDITIONS IN CERTAIN SITUATIONS WAS ACCOMPLISHED, POSSIBLY DUE TO BELIEF THAT A WRITTEN NOTICE OF DELAY HAD NOT BEEN GIVEN, THE RECORD INDICATES AN ADMINISTRATIVE DETERMINATION THAT THE CONTRACTOR COMPLIED AS EXPEDITIOUSLY AS CIRCUMSTANCES WITHIN ITS CONTROL PERMITTED IN MEETING DELIVERY REQUIREMENTS AFTER RECEIVING THE BILLS OF LADING. IN THIS RESPECT, RECOMMENDED APPROVAL OF THE CLAIM BY THE DIRECTOR, DIVISION OF REAL ESTATE, AND THE DIRECTOR, DIVISION OF SUPPLIES, IS PREDICATED LARGELY UPON THE FACT THAT THE SHORTAGE OF RAILROAD CARS FOR SHIPPING COAL WAS GENERALLY WELL KNOWN TO THE POST OFFICE DEPARTMENT AND UPON FAVORABLE FACTS ASCERTAINED IN A STUDY OF THE USE MADE BY THE CONTRACTOR OF SUCH CARS AS WERE AVAILABLE TO IT.

IN VIEW OF ALL THE CIRCUMSTANCES, IT IS CONCLUDED THAT THE PRICE INCREASE MAY BE CERTIFIED FOR PAYMENT IN INSTANCES WHERE DELIVERIES WERE NOT COMPLETED UNTIL AFTER SEPTEMBER 1.