B-145774, JUN. 12, 1961

B-145774, JUN. 12, 1961

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

REFERENCE IS MADE TO YOUR LETTER DATED MAY 1, 1961, WITH ENCLOSURE, FILE APA:TBJ:RM, REQUESTING OUR DECISION AS TO WHETHER THE CLAIM OF LUDLOW TEXTILE PRODUCTS, A DIVISION OF LUDLOW CORPORATION, FOR REFUND OF DISCOUNTS TAKEN BY THE POST OFFICE DEPARTMENT IN CONNECTION WITH CERTAIN PURCHASE ORDERS FOR THE PROCUREMENT OF JUTE TWINE PROPERLY MAY BE CERTIFIED FOR PAYMENT IN VIEW OF THE CIRCUMSTANCES REPORTED.

YOU REPORT THAT IN MAKING PAYMENTS UNDER PURCHASE ORDER NO. 6-1-10073, WHICH WAS ISSUED ON JUNE 27, 1960, BY THE POST OFFICE DEPARTMENT TO LUDLOW TEXTILE PRODUCTS UNDER A CONTRACT OF THE SAME DATE FOR 1,500,000 POUNDS OF JUTE TWINE AT $0.2755 A POUND--- TOTAL AMOUNT $413,250--- CERTAIN DEDUCTIONS FOR A TIME DISCOUNT WERE TAKEN. YOU ADVISE THAT LUDLOW TEXTILE PRODUCTS REQUESTS REFUND OF SOME OF THE DISCOUNTS TAKEN UNDER PURCHASE ORDER NO. 6-1-10073, AS WELL AS FOR SOME DISCOUNTS TAKEN UNDER A PRIOR CONTRACT, BUT THAT SINCE BOTH OF THE CONTRACTS ARE SIMILAR AND THE CIRCUMSTANCES ARE THE SAME YOU FORWARDED ONLY THE FILE ON THE CONTRACT UNDER WHICH PURCHASE ORDER NO. 6-1-10073 WAS ISSUED FOR OUR CONSIDERATION. THE DEDUCTIONS UNDER THIS CONTRACT INVOLVED INVOICE NO. 27 OF LUDLOW TEXTILE PRODUCTS WHICH WAS RECEIVED BY THE POST OFFICE DEPARTMENT, BUREAU OF FINANCE,ON SEPTEMBER 23, 1960. THE FACTORY INSPECTION REPORT RELATING TO THE INVOICE WAS RECEIVED ON SEPTEMBER 26, 1960, THE NATIONAL BUREAU OF STANDARDS REPORT RECEIVED ON OCTOBER 26, 1960, AND PAYMENT WAS MADE BY CHECK ON OCTOBER 28, 1960. IN ADDITION, INVOICE NO. 5, WHICH ALSO WAS INVOLVED UNDER THIS CONTRACT, AND THE FACTORY INSPECTION REPORT WERE RECEIVED BY THE BUREAU OF FINANCE ON FEBRUARY 6, 1961, AND THE NATIONAL BUREAU OF STANDARDS REPORT RECEIVED ON MARCH 8, 1961. PAYMENT OF THIS INVOICE WAS MADE BY CHECK ON MARCH 22, 1961. IN EFFECT, IT IS THE POSITION OF LUDLOW TEXTILE PRODUCTS THAT PAYMENT WAS NOT MADE WITHIN THE 30-DAY DISCOUNT PERIOD AND, THEREFORE, WAS NOT PROPERLY EARNED. IN THE COMPANY'S LETTER OF MARCH 31, 1961, IT REFERS TO A TOTAL AMOUNT OF $2,067.63 AS REPRESENTING UNEARNED DISCOUNTS THAT HAVE BEEN DEDUCTED, WHICH UNDOUBTEDLY INCLUDES DISCOUNTS UNDER BOTH CONTRACTS.

APPLICABLE PROVISIONS OF THE BID OF LUDLOW TEXTILE PRODUCTS, WHICH WERE ACCEPTED AND INCORPORATED IN THE CONTRACT, SET FORTH DISCOUNT TERMS AT THE RATE OF 2 PERCENT, 30 CALENDAR DAYS. IN ADDITION, THERE WAS INCLUDED, AS A NECESSARY ADJUNCT TO THE INSPECTION PROVISIONS OF THE CONTRACT, A PROVISION COVERING "METHODS OF TESTING" WHICH PROVIDES, IN PERTINENT PART, THAT:

" * * * THE DIFFERENCE BETWEEN THE WEIGHT OF THE SAMPLES AT THE FACTORY AND THEIR WEIGHT AFTER BEING KEPT IN THE ROOM FOR A PERIOD OF AT LEAST 48 HOURS, WHETHER GIVING A RESULT GREATER OR LESS, WILL BE THE PERCENTAGE BASIS UPON WHICH THE DEPARTMENT WILL PAY FOR THE ENTIRE SHIPMENT. * * *"

THUS, IT IS OBVIOUS FROM THE EXPRESS TERMS OF THE "METHODS OF TESTING" PROVISION THAT THE PAYMENTS UNDER THE CONTRACT ALSO WERE TO BE SUBJECT TO THE RESULTS OF SUCH TESTING SINCE THAT PROVISION EXPRESSLY REFERRED TO CERTAIN DIFFERENCES IN WEIGHT FORMING THE BASIS OF SUCH PAYMENTS. THIS BEING THE CASE, THE DATES OF RECEIPT OF THE NATIONAL BUREAU OF STANDARDS REPORTS, APPARENTLY SHOWING THE RESULTS OF SUCH TESTS, ARE EQUALLY FOR CONSIDERATION ALONG WITH OTHER FACTORS SET FORTH IN PARAGRAPH 7 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS IN COMPUTING THE ALLOWABLE DISCOUNT PERIOD.

ACCORDINGLY, SINCE PAYMENT OF INVOICE NO. 27 WAS MADE WITHIN TWO DAYS AFTER RECEIPT, BY THE BUREAU OF FINANCE, OF THE NATIONAL BUREAU OF STANDARDS REPORT AND PAYMENT OF INVOICE NO. 5 WAS MADE WITHIN 14 DAYS AFTER THE RECEIPT OF SUCH A REPORT PERTAINING TO THAT INVOICE; ALSO, SINCE THE RECORD FAILS TO SHOW THAT ANY UNREASONABLE PERIOD OF TIME HAD ELAPSED BETWEEN THE DATE OF RECEIPT OF THE INVOICE FROM LUDLOW TEXTILE PRODUCTS AND THE DATE OF RECEIPT OF THE REPORTS FROM THE NATIONAL BUREAU OF STANDARDS, IT MUST BE CONCLUDED THAT THE DISCOUNTS WERE PROPERLY EARNED AND, THEREFORE, THE CLAIMS MAY NOT BE CERTIFIED FOR PAYMENT.