B-129397, OCT. 26, 1956

B-129397, OCT. 26, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED OCTOBER 8, 1956, WITH ENCLOSURES, FROM MR. R. H. FOGLER, ASSISTANT SECRETARY OF THE NAVY (MATERIAL), REQUESTING A DECISION AS TO WHETHER THE REQUEST OF THE ROFLAN COMPANY, TOPAFIELD, MASSACHUSETTS, THAT CONTRACT NO. N102-61430, DATED OCTOBER 13, 1955, WITH THAT COMPANY BE CANCELLED, MAY BE DENIED AS RECOMMENDED BY THE CONTRACTING OFFICER.

IT APPEARS FROM THE RECORD THAT UNDER DATE OF AUGUST 4, 1955, THE SUPPLY DEPARTMENT, PORTSMOUTH NAVAL SHIPYARD, PORTSMOUTH, NEW HAMPSHIRE, ISSUED INVITATION NO. IFB-102-40-56PR REQUESTING SEALED BIDS IN DUPLICATE FOR FURNISHING, SUBJECT TO THE TERMS AND CONDITIONS OF THE INVITATION AND THE ATTACHED SCHEDULE AND GENERAL PROVISIONS, 4,800 ROTARY SWITCHES, 4 POSITION, BRASS, SUBMERSIBLE, TYPE LSR-3B4-2, IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS, THE BIDS RECEIVED TO BE OPENED SEPTEMBER 9, 1955. PURSUANT TO ITS BID, CONTRACT NO. N102-61430 WAS AWARDED UNDER DATE OF OCTOBER 13, 1955, TO THE ROFLAN COMPANY, BY THE TERMS OF WHICH THAT COMPANY AGREED TO FURNISH THE SWITCHES AT A PRICE OF $9.65 EACH OR A TOTAL PRICE OF $46,320 FOR THE ENTIRE QUANTITY, LESS A DISCOUNT OF 1 PERCENT FOR PAYMENT WITHIN 20 CALENDAR DAYS. THE GENERAL PROVISIONS INCORPORATED BY REFERENCE IN THE CONTRACT INCLUDE STANDARD FORM 32 (NOVEMBER 1949 EDITION) ENTITLED GENERAL PROVISIONS (SUPPLY CONTRACT) AS WELL AS CERTAIN OTHER PROVISIONS PRESCRIBED BY YOUR DEPARTMENT. PARAGRAPH 11 OF STANDARD FORM 32 PROVIDES THAT THE GOVERNMENT MAY, SUBJECT TO THE PROVISIONS OF PARAGRAPH (B) THEREOF, BY WRITTEN NOTICE OF DEFAULT TO THE CONTRACTOR TERMINATE THE WHOLE OR ANY PART OF THE CONTRACT IF THE CONTRACTOR RAILS TO MAKE DELIVERY OF THE SUPPLIES OR TO PERFORM THE SERVICES WITHIN THE TIME SPECIFIED OR ANY EXTENSION THEREOF, OR IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THE CONTRACT, OR SO FAILS TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THE CONTRACT IN ACCORDANCE WITH ITS TERMS, AND IN EITHER OF THESE TWO CIRCUMSTANCES DOES NOT CURE SUCH FAILURE WITHIN A PERIOD OF 10 DAYS (OR SUCH LONGER PERIOD AS THE CONTRACTING OFFICER MAY AUTHORIZE IN WRITING) AFTER RECEIPT OF NOTICE FROM THE CONTRACTING OFFICER SPECIFYING SUCH FAILURE. SUBPARAGRAPH (B) AND (E) PROVIDE AS FOLLOWS:

"/B) THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF ANY FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SUCH CAUSES INCLUDE, BUT ARE NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, UNUSUALLY SEVERE WEATHER, AND DEFAULTS OF SUBCONTRACTORS DUE TO ANY OF SUCH CAUSES UNLESS THE CONTRACTING OFFICER SHALL DETERMINE THAT THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.

"/E) IF, AFTER NOTICE OF TERMINATION OF THIS CONTRACT UNDER THE PROVISIONS OF PARAGRAPH (A) OF THIS CLAUSE, IT IS DETERMINED THAT THE FAILURE TO PERFORM THIS CONTRACT IS DUE TO CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR PURSUANT TO THE PROVISIONS OF PARAGRAPH (B) OF THIS CLAUSE, SUCH NOTICE OF DEFAULT SHALL BE DEEMED TO HAVE BEEN ISSUED PURSUANT TO THE CLAUSE OF THIS CONTRACT ENTITLED "TERMINATION FOR CONVENIENCE OF THE GOVERNMENT," AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL IN SUCH EVENT BE GOVERNED BY SUCH CLAUSE. (EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, THIS PARAGRAPH (E) APPLIES ONLY IF THIS CONTRACT IS WITH A MILITARY DEPARTMENT.)"

THE CONTRACTOR FAILED TO MAKE DELIVERY AS REQUIRED. UNDER DATE OF AUGUST 23, 1956, THE CONTRACT WAS PARTIALLY TERMINATED FOR DEFAULT AND 500 UNITS WERE PROCURED AGAINST THE CONTRACTOR'S ACCOUNT. BY LETTER DATED AUGUST 24, 1956, THE CONTRACTOR WAS REQUESTED TO SUBMIT A CHECK IN THE AMOUNT OF $1,445 AS THE EXCESS COST OF THESE UNITS.

IN A LETTER DATED SEPTEMBER 14, 1956, TO OUR OFFICE, THE CONTRACTOR REQUESTED RELIEF FROM THE OBLIGATIONS ASSUMED UNDER THE CONTRACT "WITH NO CHARGE TO EITHER PARTY.' AS A BASIS FOR THE REQUEST THE CONTRACTOR STATED THAT APPROXIMATELY ONE WEEK AFTER THE CONTRACT WAS AWARDED THE PLANT OF ITS SUPPLIER OF BRASS, THE REVERE BRASS AND COPPER COMPANY, WAS CLOSED BY A STRIKE FOR A PERIOD OF APPROXIMATELY SIX MONTHS; THAT THE CONTRACTOR'S "OTHER SOURCES OF SUPPLY, CHASE BRASS AND COPPER CO., ALSO WAS STRIKE BOUND AND AMERICAN BRASS COULD BE OF NO HELP BECAUSE OF THE CATASTROPHE OCCASIONED BY THE FLOOD IN AUGUST 1955; " AND THAT PERFORMANCE UNDER THE CONTRACT WAS NOT ONLY DELAYED FOR THE DURATION OF THE STRIKE BUT FOR SOME TIME AFTER THE STRIKE ENDED. THE CONTRACTOR ALSO CLAIMS THAT THE TWO MAJOR DIES WHICH WERE UTILIZED UNDER THE SUBJECT CONTRACT WERE BROKEN IN AUGUST 1955 AND THAT IN ADDITION TO THE STRIKE AND FLOOD DAMAGE MENTIONED ABOVE THE CONTRACTOR WAS DELAYED BY STRIKES IN THE PLANTS OF CERTAIN SUPPLIERS OF GOODS AND AS A RESULT OF THE DEVASTATING TRANSPORTATION STRIKE OF THE YEAR BEFORE ALL OF WHICH CAUSED A SERIOUS IMPAIRMENT IN THE CONTRACTOR'S PERFORMANCE PROGRAM AND MADE NECESSARY A REARRANGEMENT OF ITS ENGINEERING AND PRODUCTION SCHEDULE. OF OCTOBER 8, 1956, THAT WHILE ALL OF THE FACTS ALLEGED BY THE CONTRACTOR HAVE NOT BEEN VERIFIED, IT IS KNOWN THAT THE EMPLOYEES IN THE PLANT OF THE CHASE BRASS AND COPPER COMPANY WERE ON STRIKE AND THAT THE PRICE OF BRASS INCREASED AFTER THE CONTRACT WAS AWARDED. THE CONTRACTING OFFICER REPORTS THAT ALTHOUGH THE CONTRACTOR WILL SUFFER A SUBSTANTIAL LOSS ON THE CONTRACT THE GOVERNMENT HAS IN NO WAY CONTRIBUTED EITHER TO THE DELAY IN PERFORMANCE OR TO THE CONTRACTOR'S ANTICIPATED LOSS AND THERE IS NO QUESTION OF ERROR IN BIDDING OR DISPUTE AS TO THE MEANING OF THE CONTRACT TERMS. THE CONTRACTING OFFICER STATES ALSO THAT THE CONTRACTOR WAS ADVISED VERBALLY BY HIM THAT THERE WAS NO BASIS UNDER EXISTING PROCUREMENT REGULATIONS FOR TERMINATING THE CONTRACT WITHOUT LIABILITY.

THE VARIOUS ALLEGATIONS MADE BY THE CONTRACTOR CONCERNING THE CAUSES OF THE DELAY IN PERFORMANCE APPEAR TO INVOLVE DISPUTED QUESTIONS OF FACT WHICH UNDER THE TERMS OF THE DISPUTES CLAUSE OF THE CONTRACT ARE REQUIRED TO BE DETERMINED BY THE CONTRACTING OFFICER IN THE FIRST INSTANCE, SUBJECT TO THE RIGHT OF APPEAL AS PROVIDED IN THAT CLAUSE. ACCORDINGLY, THE MATTER IS RETURNED TO YOU FOR APPROPRIATE ADMINISTRATIVE ACTION.