B-143088, OCT. 20, 1960

B-143088, OCT. 20, 1960

TO MURRAY STEINBERG, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 16, 1960, RELATIVE TO THE CLAIM OF SEYMOUR WALLAS AND COMPANY IN THE AMOUNT OF $25,343.06, REPRESENTING LOSSES ALLEGEDLY SUSTAINED IN THE PERFORMANCE OF CONTRACT NO. AF 36/600/-5190 FOR THE FURNISHING OF 12 ITEMS OF FLYING PRESSURE HIGH ALTITUDE COVERALLS FOR A TOTAL PRICE OF $278,628.39.

YOU POINT OUT IN YOUR LETTER THAT THE CONTRACT WAS AWARDED ON APRIL 30, 1958; THAT DELIVERY OF THE FIRST ARTICLES FOR PREPRODUCTION TESTING WAS DUE 60 DAYS FROM DATE OF AWARD OR JUNE 30, 1958, AND THAT THESE ARTICLES WERE TO BE TESTED AND THE REPORT THEREON WAS TO BE RECEIVED BY JULY 14, 1958. YOU ALLEGE THAT SINCE THE GOVERNMENT DELAYED FURNISHING PATTERN DRAWINGS UNTIL JULY 16, 1958, AND SPECIFICATION CLARIFICATION TO THE CONTRACTOR UNTIL JULY 19, 1958, THE FIRST ARTICLES WERE NOT SUBMITTED FOR APPROVAL UNTIL OCTOBER 2, 1958, AND WERE NOT APPROVED FOR ACCEPTANCE UNTIL JANUARY 8, 1959. CONCERNING THE DELAY IN APPROVAL AND ACCEPTANCE OF THE FIRST ARTICLES YOU ADVISE THAT:

"ON OCTOBER 2ND, 1958, THE FIRST SAMPLE OF THE CONTRACT WAS SUBMITTED TO THE CONTRACTING OFFICER. THIS WAS REJECTED AND RESUBMITTED ON DECEMBER 15TH. IN SUBMITTING THE SAMPLES SEYMOUR WALLAS AND COMPANY MENTIONED THAT CERTAIN ITEMS WERE NOT IN ACCORDANCE WITH THE CONTRACT BUT WANTED CLEARANCE ON THE ITEMS COVERED. DUE TO MISINTERPRETATIONS OF THIS BY THE GOVERNMENT, THESE ITEMS WERE REJECTED, SOLELY FOR THE REASON IT WAS COVERED BY THE ACCEPTION. FINALLY MY CLIENT CONVINCED THE CONTRACTING OFFICERS OF THE CORRECTNESS OF ITS POSITION AND THESE ITEMS WERE ACCEPTED ON JANUARY 8, 1959. THEREFORE, IT WAS DETERMINED THAT THE EFFECTIVE DATE OF THE CONTRACT WAS JANUARY 8, 1959. THIS MEANT A TOTAL LOSS OF PRODUCTION TIME BY MYCLIENT OF 175 DAYS.'

IN VIEW THEREOF, YOU CLAIM ON BEHALF OF THE CONTRACTOR THE AMOUNT OF $25,343.06, REPRESENTING THE LOSS AND EXPENSE INCURRED BY THE CONTRACTOR BECAUSE OF THE 175-DAY DELAY IN PRODUCTION TIME. THE CLAIM IS SUPPORTED BY AN AUDIT SCHEDULE ATTACHED TO YOUR LETTER, WHICH INDICATES THAT THE COMPUTATION OF THE CLAIM IS BASED ON SALES NOT MATERIALIZED BECAUSE OF THE 175-DAY DELAY.

AT THE OUTSET, IT MAY BE OBSERVED THAT WHILE THE CONTRACT WAS DATED APRIL 30, 1958, THE CONTRACTOR RECEIVED NOTIFICATION OF AWARD OF THE CONTRACT ON MAY 2, 1958, AS EVIDENCED BY THE SIGNATURE OF A MR. FRANK CASTAR ON AFPI FORM 29, CONTRACTUAL DOCUMENT TRANSMITTAL RECORD CARD. SINCE THE CONTRACT REQUIRED DELIVERY OF THE FIRST ARTICLES WITHIN 60 DAYS AFTER RECEIPT OF WRITTEN NOTICE OF AWARD, THE FOUR FIRST ARTICLES WERE DUE BY JULY 2, 1958. HOWEVER, SINCE THE GOVERNMENT DELAYED IN FURNISHING PATTERNS AND SPECIFICATION CLARIFICATION, THE CONTRACT WAS AMENDED BY SUPPLEMENTAL AGREEMENT NO. 2 DATED JULY 15, 1958, AT NO CHANGE IN PRICE, TO PROVIDE FOR THE SUBMISSION OF THE FIRST ARTICLES WITHIN 60 DAYS "AFTER RECEIPT OF PATTERNS.' THUS, THE FIRST ARTICLES WERE CONTRACTUALLY DUE 60 DAYS AFTER JULY 16, 1958, THE DATE THE PATTERNS WERE FURNISHED TO THE CONTRACTOR, OR, AS STATED BY THE CONTRACTING OFFICER, SEPTEMBER 16, 1958. IT IS REPORTED THAT ALL THE ARTICLES WERE NOT SUBMITTED BY THE CONTRACTOR FOR APPROVAL UNTIL OCTOBER 13, 1958, OR 27 DAYS AFTER THE PRESCRIBED DUE DATE AND THAT ALL FOUR FIRST ARTICLES WERE REJECTED AND RETURNED TO THE CONTRACTOR FOR CORRECTION. IT WAS NOT UNTIL JANUARY 8, 1959, THAT THE CONTRACTOR WAS ADVISED THAT THE ARTICLES AS SUBMITTED WERE APPROVED SUBJECT TO CERTAIN CHANGES. ALSO, UNDER THE TERMS OF THE CONTRACT, FINAL DELIVERIES WERE DUE SEPTEMBER 7, 1959, HOWEVER, SINCE THE CONTRACTOR DID NOT COMPLETE THE DELIVERIES UNTIL SEPTEMBER 29, 1959, THERE WAS AN ADDITIONAL DELAY OF 22 DAYS.

REGARDING THE DELAY DUE TO THE FAILURE OF THE GOVERNMENT TO FURNISH THE PATTERNS PROMPTLY, IT IS TO BE NOTED THAT SUPPLEMENTAL AGREEMENT NO. 2 WHICH CHANGED THE CONTRACT DELIVERY TERMS PROVIDED THAT: "THERE SHALL BE NO CHANGE IN UNIT PRICE OR TOTAL CONTRACT PRICE BY REASONS OF THE CHANGES SET FORTH ABOVE.' HENCE, IT SEEMS CLEAR THAT WHEN THE SUPPLEMENTAL AGREEMENT WAS EXECUTED THE CONTRACTING PARTIES DID NOT CONTEMPLATE ANY ALLOWANCE FOR STANDBY COSTS OR OTHERWISE. MOREOVER, NO EVIDENCE HAS BEEN SUBMITTED TO INDICATE THAT THE AGREEMENT DID NOT EXPRESS THE FINAL UNDERSTANDING OF THE PARTIES THAT NO ADDITIONAL COMPENSATION WOULD BE PAYABLE BECAUSE OF THE DELAY. ACCORDINGLY, IT APPEARS THAT ANY CLAIM FOR COMPENSATION WHICH THE CONTRACTOR MIGHT HAVE ASSERTED FOR THE DELAY OF THE GOVERNMENT IN FURNISHING THE PATTERNS WAS WAIVED BY THE CONTRACTOR WHEN IT SIGNED SUPPLEMENTAL AGREEMENT NO. 2.

WITH REGARD TO THE DELAY OCCURRING DURING THE PERIOD FROM THE DATE THE PATTERNS WERE FURNISHED TO THE CONTRACTOR TO JANUARY 8, 1959, THE CONTRACTING OFFICER REPORTS THAT SUCH DELAY WAS NOT CONTRIBUTED TO BY THE GOVERNMENT BUT WAS DUE SOLELY TO THE CONTRACTOR'S FAILURE TO FURNISH ACCEPTABLE FIRST ARTICLES AS REQUIRED BY THE TERMS OF THE CONTRACT. CONSEQUENTLY, THERE APPEARS NO LEGAL BASIS FOR ALLOWING THE CONTRACTOR ANY COMPENSATION FOR LOSSES AND EXPENSE INCURRED DURING SUCH PERIOD.

ASIDE FROM THE LEGAL PRINCIPLES INVOLVED WHICH REQUIRE DISALLOWANCE OF THE CLAIM, THE ST. LOUIS AIR PROCUREMENT DISTRICT HAS ADVISED THAT A SMALL PORTION OF THE SECOND FLOOR OF THE CONTRACTOR'S PLANT--- CONSISTING OF SEWING MACHINES--- WAS HELD OPEN WAITING COMMENCEMENT OF PRODUCTION. IS THE OPINION OF THAT OFFICE THAT EMPLOYEES OF THE CONTRACTOR WERE NOT HELD ON A STAND-BY BASIS BUT THAT DURING PERIODS OF MATERIAL SHORTAGE, PATTERN SHORTAGE, ETC., EMPLOYEES WERE LAID OFF UNTIL NEEDED. MOREOVER, AN AUDIT REVIEW OF THE SUPPORTING SCHEDULE FURNISHED WITH YOUR LETTER ESTABLISHES THAT THE CLAIM IS, IN FACT, ONE FOR LOSS OF ANTICIPATED PROFITS WHICH GENERALLY ARE NOT FOR ALLOWANCE AS DAMAGES FOR BREACH OF CONTRACT WHERE, AS HERE, THEY ARE OF SUCH A REMOTE AND SPECULATIVE CHARACTER THAT THEY CANNOT BE LEGALLY PROVED. UNITED STATES V. BEHAN, 110 U.S. 338.

IN VIEW OF THE FACTS OF RECORD WE HAVE NO ALTERNATIVE BUT TO DISALLOW THE SUBJECT CLAIM.