B-133589, SEP. 12, 1957

B-133589, SEP. 12, 1957

TO B. H. DEACON COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16, 1957, REQUESTING REVIEW OF OUR SETTLEMENT DATED MAY 1, 1957, WHICH DISALLOWED YOUR CLAIM FOR AN ADDITIONAL AMOUNT ALLEGED TO BE DUE UNDER CONTRACT NO. N155S-16438, DATED MARCH 15, 1955.

UNDER THE TERMS OF THE CONTRACT YOU AGREED TO FURNISH STIPULATED QUANTITIES OF STEEL PIPE, ALL TRANSPORTATION CHARGES PAID, TO THE DESTINATIONS NAMED IN THE CONTRACT. DELIVERIES WERE TO BE ACCOMPLISHED DURING THE MONTH OF MAY 1955. THE RECORD SHOWS THAT 5,040 FEET OF 1 1/2 INCH PIPE UNDER ITEM 2/E) AND THE 20,000 FEET OF 2 INCH PIPE UNDER ITEM 3/E) WERE NOT SHIPPED FROM THE MILL UNTIL JULY 21, 1955. MEANWHILE, ON JULY 6, 1955, THE STEEL MILLS INCREASED THEIR PRICES 8 PERCENT IN VIEW OF WHICH YOU REQUESTED THE PROCURING AGENCY TO EFFECT AN UPWARD ADJUSTMENT IN THE UNIT PRICES OF THE ITEMS INVOLVED. THIS REQUEST WAS DENIED AND YOUR CLAIM WAS FORWARDED TO OUR OFFICE WITH AN ADMINISTRATIVE DISAPPROVAL.

YOUR REQUEST FOR REVIEW IS BASED SOLELY ON YOUR CONTENTION THAT THE ESCALATION CLAUSE OF THE CONTRACT ENTITLES YOU TO AN UPWARD ADJUSTMENT OF THE CONTRACT PRICE FOR THE ITEMS SHIPPED ON JULY 21, 1955, AND YOU STATE THAT YOU CANNOT CONTROL THE OPERATING METHODS OF YOUR SUPPLIER. ALSO, YOU REFER TO THE DELAY IN SHIPMENT BUT DO NOT FURNISH ANY EVIDENCE WHICH COULD CONSTITUTE A LEGAL BASIS FOR ALLOWANCE OF AN INCREASE IN CONTRACT PRICE, SINCE THE CLAIMED INCREASE IN PRICE OF STEEL WAS NOT EFFECTIVE UNTIL AFTER THE REQUIRED DELIVERY DATE.

WHILE, UNDER THE ESCALATION PROVISIONS OF THE CONTRACT, THE CONTRACTOR MAY AT ANY TIME, OR FROM TIME TO TIME, AFTER THE DATE SET FOR OPENING OF BIDS, REQUEST IN WRITING AN UPWARD ADJUSTMENT IN ANY OF THE CONTRACT UNIT PRICES, THE GRANTING OF AN INCREASE IN PRICE IS SUBJECT, AMONG OTHERS, TO THE FOLLOWING CONDITION.

"/2) NO UNIT PRICE SHALL BE INCREASED IN ACCORDANCE WITH SUCH REQUEST EXCEPT AS TO THOSE SUPPLIES DELIVERED PURSUANT TO THE TERMS OF THIS CONTRACT AND FOR WHICH THE CONTRACTOR IS REQUIRED TO PAY TO THE MANUFACTURER AN INCREASED PRICE.'

THUS, IT IS CLEAR THAT HAVING FAILED TO FURNISH THE AFOREMENTIONED ITEMS WITHIN THE PERIOD PRESCRIBED BY THE CONTRACT, YOU ARE NOT ENTITLED TO AN UPWARD ADJUSTMENT OF THE UNIT PRICES.

THE ACCEPTANCE OF YOUR BID RESULTED IN A VALID AND BINDING CONTRACT UNDER WHICH THE GOVERNMENT ACQUIRED THE VESTED RIGHT TO DEMAND PERFORMANCE STRICTLY IN ACCORDANCE THEREWITH, AND THERE EXISTS NO AUTHORITY IN ANY OFFICER OR AGENT OF THE UNITED STATES TO WAIVE OR SURRENDER SUCH RIGHT. SEE BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 C.CLS. 584, 607, CERTIORARI DENIED 292 U.S. 645; AMERICAN SALES CORPORATION V. UNITED STATES, 27 F.2D 389, AFFIRMED 32 F.2D 141.

IT CLEARLY APPEARS THAT UNDER THE TERMS OF THE CONTRACT HERE INVOLVED THE REFUSAL OF THE CONTRACTING AGENCY TO GRANT YOU AN INCREASE IN THE UNIT PRICES OF ITEMS 2 (E) AND 3 (E) WAS PROPER. SINCE THERE IS NO LEGAL BASIS FOR THE ALLOWANCE OF YOUR CLAIM, WE HAD NO ALTERNATIVE OTHER THAN TO DISALLOW YOUR CLAIM FOR AN INCREASE IN THE CONTRACT PRICE. ACCORDINGLY, YOU ARE ADVISED THAT THE ACTION PREVIOUSLY TAKEN BY US WITH REGARD TO YOUR CLAIM MUST BE SUSTAINED.