B-149889, OCT. 25, 1962

B-149889, OCT. 25, 1962

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 13, 1962, WITH ENCLOSURES, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, RECOMMENDING THE REMISSION, PURSUANT TO SECTION 10 (A) OF THE ACT OF SEPTEMBER 5, 1950, 41 U.S.C. 256A, OF THE LIQUIDATED DAMAGES ASSESSED AGAINST SELF MANUFACTURING COMPANY, INC., TWIN FALLS, IDAHO, FOR DELAY IN PERFORMING CONTRACT NO. 14- 06-D-3892, DATED MAY 3, 1961.

THE CONTRACT, AWARDED BY THE BUREAU OF RECLAMATION PURSUANT TO AN INVITATION FOR BIDS SET ASIDE FOR SMALL BUSINESS, COVERED THE FURNISHING OF TWO OIL STORAGE TANKS FOR THE BUREAU'S SPRING CREEK POWERPLANT ON THE TRINITY RIVER DIVISION, CALIFORNIA, CENTRAL VALLEY PROJECT. THE URGENCY OF DELIVERY REQUIREMENTS WAS EMPHASIZED IN THE INVITATION AND RESULTING CONTRACT WHICH PROVIDED FOR THE ASSESSMENT OF LIQUIDATED DAMAGES AT THE RATE OF $25 FOR EACH DAY OF DELAY IN SHIPMENT BEYOND THE CONTRACT COMPLETION TIME OF 180 DAYS AFTER CONTRACTOR'S RECEIPT OF NOTICE OF AWARD, MAY 3, 1961, OR BY OCTOBER 30, 1961. SHIPMENT WAS MADE ON DECEMBER 4, 1961, AND BASED ON THE CONTRACTING OFFICER'S DETERMINATION THAT NO PART OF THE DELAY WAS EXCUSABLE UNDER THE TERMS OF THE CONTRACT, LIQUIDATED DAMAGES IN THE AMOUNT OF $875 FOR THE 35 DAYS DELAY WAS ASSESSED AND DEDUCTED FROM THE CONTRACT PRICE OF $6,154.

THE CONTRACTOR, IN LETTER OF APRIL 18, 1962, TO YOUR DEPARTMENT, REQUESTING FAVORABLE CONSIDERATION OF ITS CLAIM FOR REMISSION OF LIQUIDATED DAMAGES, STATES, IN PART, AS FOLLOWS:

"* * * OUR FAILURE TO COMPLETE SHIPMENT WITHIN THE 180 DAYS SPECIFIED WAS, IN OUR OPINION, DUE TO OUR NOT BEING INFORMED UNTIL OCTOBER 18, 1961 THAT TOTAL FUNDS HAD BEEN APPROPRIATED FOR PAYMENT OF THIS CONTRACT. THE SHORT TIME REMAINING AFTER RECEIPT OF THIS INFORMATION MADE IT IMPOSSIBLE FOR US TO SECURE SHIPMENT OF NECESSARY PURCHASES ITEMS, COMPLETE FABRICATION, AND MAKE DELIVERY BY OCTOBER 30, 1961.'

THE RECOMMENDATION BY YOUR DEPARTMENT THAT LIQUIDATED DAMAGES BE REMITTED IS BASED UPON TWO CONSIDERATIONS: (1) THAT THE CONTRACTOR, A SMALL BUSINESS FIRM, MAY NOT HAVE BEEN FAMILIAR WITH THE PRACTICE RELATING TO PAYMENT FROM FUNDS TO BE MADE AVAILABLE IN THE FUTURE, AND APPARENTLY UNDERSTOOD THAT THE PERFORMANCE OBLIGATION WAS POSTPONED BY THE CONDITION RELATING TO FUTURE AVAILABILITY OF FUNDS, AND (2) THAT THE GOVERNMENT WAS NOT INCONVENIENCED OR DAMAGED BY THE DELAY IN DELIVERY OF THE TANKS.

THE INVITATION FOR BIDS, UNDER PARAGRAPH B-8 ENTITLED PAYMENTS AND FUNDS, ADVISED ALL BIDDERS THAT THE SUM OF $4,000 WAS RESERVED AT THE TIME OF ISSUANCE OF THE INVITATION AND MADE AVAILABLE FOR PAYMENT TO THE SUCCESSFUL CONTRACTOR; THAT IT WAS EXPECTED THAT THE CONGRESS WOULD MAKE ADDITIONAL APPROPRIATIONS WHICH COULD BE APPLIED TO PAYMENTS UNDER THE RESULTING CONTRACT; THAT, IF IT SHOULD BECOME APPARENT TO THE CONTRACTING OFFICER THAT AVAILABLE FUNDS WOULD BE EXHAUSTED BEFORE ADDITIONAL FUNDS WERE APPROPRIATED, THE CONTRACTING OFFICER WOULD GIVE 30 DAYS' WRITTEN NOTICE THAT PERFORMANCE MIGHT BE SUSPENDED; AND THAT, SHOULD PERFORMANCE BE SUSPENDED, ADDITIONAL TIME FOR COMPLETION EQUAL TO THE PERIOD OF SUSPENSION WOULD BE ALLOWED THE CONTRACTOR.

THE RECORD SHOWS THAT, PRIOR TO THE CONTRACTOR'S ENTITLEMENT TO ANY PART OF THE CONTRACT PRICE OF $6,154 THE CONGRESS APPROPRIATED AND YOUR DEPARTMENT ALLOCATED AND RESERVED THE ADDITIONAL FUNDS NECESSARY TO MAKE FULL PAYMENT UNDER THE CONTRACT, AND THAT, IN RESPONSE TO THE CONTRACTOR'S INQUIRY OF OCTOBER 12, 1961, IT WAS SO ADVISED BY THE CONTRACTING OFFICER'S LETTER OF OCTOBER 18, 1961. THE RECORD FURTHER SHOWS THAT, BY LETTER OF NOVEMBER 1, 1961, THE CONTRACTING OFFICER FURTHER ADVISED THE CONTRACTOR THAT, SINCE NO WORK SUSPENSION NOTICE HAD BEEN ISSUED, ITS REQUEST FOR AN EXTENSION OF TIME, BASED ON NOT BEING INFORMED UNTIL OCTOBER 18, 1961, OF THE AVAILABILITY OF FUNDS FOR PAYMENT OF THE FULL CONTRACT PRICE, WAS DENIED.

THE CONTRACT NEITHER REQUIRED NOR CONTEMPLATED THAT NOTICE WOULD BE GIVEN TO THE CONTRACTOR WHEN THE BALANCE OF THE CONTRACT PRICE WAS APPROPRIATED. ALSO, SINCE THE CIRCUMSTANCES DID NOT REQUIRE THE ISSUANCE OF A WORK SUSPENSION NOTICE AND NONE WAS ISSUED, THE CONTRACTOR WAS OBLIGATED BY THE TERMS OF THE CONTRACT TO COMPLETE THE WORK WITHIN THE TIME PRESCRIBED. IF, IN FACT, THE CONTRACTOR WAS CONCERNED WHETHER CONTRACT FUNDS WERE AVAILABLE, IT APPEARS UNREASONABLE FOR IT TO HAVE DELAYED UNTIL OCTOBER 12, 1961, OR ONLY 18 DAYS BEFORE THE REQUIRED COMPLETION DATE, BEFORE MAKING INQUIRY WITH REGARD THERETO. HOWEVER, SEPARATE AND APART THEREFROM THE EVIDENCE OF RECORD STRONGLY SUPPORTS THE CONCLUSION THAT THE DELAY IN DELIVERY WAS DUE TO THE CONTRACTOR'S FAILURE TO PROSECUTE THE WORK WITH PROPER AND REASONABLE DILIGENCE RATHER THAN TO ANY ALLEGED MISUNDERSTANDING OF THE PERFORMANCE REQUIREMENTS.

THE FILE INCLUDES A COPY OF THE GOVERNMENT INSPECTOR'S REPORT DATED OCTOBER 18, 1961, STATING, IN PERTINENT PART, THAT,"THE CONTRACTOR HAS BEEN CONTACTED MONTHLY AND HE IS WELL AWARE OF THE REQUIRED DELIVERY DATE AND THE LIQUIDATED DAMAGES; " THAT CERTAIN COMPONENT PARTS--- "DISHED HEADS"--- REQUIRED IN THE MANUFACTURE OF THE OIL STORAGE TANKS WERE NOT ORDERED BY THE CONTRACTOR UNTIL OCTOBER 9, 1961, AND, AS OF THE DATE OF THE REPORT, HAD NOT BEEN RECEIVED; AND THAT "THE REAL REASON FOR THE DELAY IS THE RUSH OF SEASONAL WORK IN THE CONTRACTOR'S PLANT. HE WOULD LIKE TO ADOPT AS AN EXCUSE THE FACT THAT THE APPROPRIATION BILL WAS LATE IN PASSING AND THAT FUNDS WERE NOT AVAILABLE.'

WE HAVE CONSISTENTLY HELD THAT THE AUTHORITY CONFERRED UPON THIS OFFICE BY THE ACT OF SEPTEMBER 5, 1950, SUPRA, TO REMIT, UPON ADMINISTRATIVE RECOMMENDATION, ALL OR ANY PART OF LIQUIDATED DAMAGES FOR DELAY AS "MAY BE JUST AND EQUITABLE" IS FOR APPLICATION ONLY WHERE STRONG AND PERSUASIVE EQUITIES EXIST ON BEHALF OF THE CONTRACTOR. SEE 32 COMP. GEN. 67; 34 ID. 251; 36 ID. 143. WE DO NOT BELIEVE THAT EQUITABLE RELIEF SHOULD BE GRANTED WHERE, AS HERE INDICATED, THROUGH THE EXERCISE OF PROPER AND REASONABLE DILIGENCE, THE CONTRACTOR COULD HAVE AVOIDED DELAY IN DELIVERY. NOR DO WE BELIEVE THAT, BECAUSE A CONTRACTOR IS A SMALL BUSINESS FIRM, PREFERENTIAL TREATMENT IS JUSTIFIED ON THAT ACCOUNT OR THAT THE APPLICATION OF ANY DIFFERENT CRITERIA IN DETERMINING ENTITLEMENT TO REMISSION OF LIQUIDATED DAMAGES SHOULD BE AUTHORIZED.

CONCERNING THE FACT THAT THE GOVERNMENT WAS NOT INCONVENIENCED OR DAMAGED BY THE DELAY IN DELIVERY OF THE TANKS, THE VALIDITY OF A LIQUIDATED DAMAGE PROVISION IS UNAFFECTED BY THE CIRCUMSTANCE THAT NO ACTUAL DAMAGE IS SHOWN TO HAVE RESULTED FROM THE FAILURE TO DELIVER WITHIN THE TIME SPECIFIED. SEE 36 COMP. GEN. 143, 145.

IN VIEW OF THE FOREGOING, WE HAVE NO ALTERNATIVE BUT TO HOLD THAT ON THE BASIS OF THE FACTS OF RECORD THE CLAIM OF THE CONTRACTOR DOES NOT CONTAIN SUCH ELEMENTS OF EQUITY AS TO WARRANT REMISSION OF THE LIQUIDATED DAMAGES WHICH HAVE ACCRUED TO THE GOVERNMENT UNDER THE EXPRESS TERMS OF THE CONTRACT.

THE ENCLOSURES FORWARDED WITH THE LETTER OF SEPTEMBER 13, 1962, ARE RETURNED AS REQUESTED.