B-152532, JAN. 29, 1964

B-152532, JAN. 29, 1964

TO EDWIN J. MCDERMOTT, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 19 AND 24, 1963, PRESENTING INFORMATION IN SUPPORT OF A CLAIM FOR REFUND TO THE MICHAEL A. ZIELINSKI COMPANY OF $15,000 PAID PURSUANT TO SUPPLEMENTAL AGREEMENT 1 OF OCTOBER 8, 1962, ISSUED UNDER DEFENSE SUPPLY AGENCY CONTRACT DSA-1-777-C- 62 AWARDED JUNE 14, 1962.

THE CONTRACT REQUIRED THE MANUFACTURE AND DELIVERY OF 156,830 TROUSER LINERS IN MONTHLY INCREMENTS BEGINNING ON OR BEFORE SEPTEMBER 12, 1962, AND ENDING ON OR BEFORE FEBRUARY 9, 1963, FOR THE TOTAL PRICE OF $1,143,290.70. THE TROUSER LINERS WERE TO BE MANUFACTURED FROM CLOTH FURNISHED BY THE GOVERNMENT.

IT IS ALLEGED THAT THE WOOL FRIEZE FURNISHED BY THE GOVERNMENT SHOWED THAT IT HAD BEEN MANUFACTURED IN 1952, THAT IT WAS SOILED AND DAMAGED AND HAD DIFFERENT SHADES OF COLOR IN THE SAME PIECE OF GOODS. IT IS ALLEGED ALSO THAT THE CONTRACTOR WAS DIRECTED TO CUT OUT THE BAD PARTS AND TO REPLACE THEM WITH GOOD PARTS, THAT THE GOVERNMENT AGREED TO ACCEPT GARMENTS MADE FROM MATERIAL OF DIFFERENT SHADES, AND THAT ALL OF THIS PUT THE COMPANY BEHIND IN DELIVERIES. IT IS ALLEGED FURTHER THAT THE CONTRACTING OFFICER INSISTED THAT THE CONTRACTOR ENTER INTO THE SUPPLEMENTAL AGREEMENT EXTENDING THE DELIVERY BY 90 DAYS IN CONSIDERATION OF THE PAYMENT OF $15,000. IT IS CONTENDED THAT THE CONTRACTOR WAS MISLED AND COERCED INTO EXECUTING THE SUPPLEMENTAL AGREEMENT. IN THAT CONNECTION, AN AFFIDAVIT FROM A PARTNER OF THE MICHAEL A. ZIELINSKI COMPANY STATES:

"DEPONENT SAYS THAT SUPPLEMENTAL AGREEMENT, MODIFICATION NO. 1 MODIFYING THE DELIVERY SCHEDULE UNDER CONTRACT NO. DSA-1-777-C-62 EXECUTED BY DEPONENT AS PARTNER OF MICHAEL A. ZIELINSKI COMPANY, WAS EXECUTED BY REASON OF COERCION IN THAT DEPONENT WAS INFORMED BY THE CONTRACTING OFFICER THAT IF HE DID NOT EXECUTE SAID SUPPLEMENTAL AGREEMENT, THE CONTRACTING OFFICER WOULD TERMINATE CONTRACT NO. DSA-1 777-C-62 AND REPURCHASE AT AN INCREASED CONTRACT PRICE OF $72,141.80. THE FINANCIAL CONDITION OF MICHAEL A. ZIELINSKI COMPANY WAS EXPLAINED TO AND KNOWN BY THE CONTRACTING OFFICER AT THE TIME AND IT WAS AN UNDISPUTED FACT THAT AN ASSESSMENT OF $72,141.80 AGAINST MICHAEL A. ZIELINSKI COMPANY WOULD RESULT IN A TOTAL INSOLVENCY WITH ALL OF THE ASSETS OF MICHAEL A. ZIELINSKI COMPANY AND THE PARTNERS TAKEN IN SATISFACTION OF SUCH AN ASSESSMENT.

"THE FACT THAT THE DEPONENT'S FATHER AND MOTHER WERE OF ADVANCED AGE WAS ALSO KNOWN TO THE CONTRACTING OFFICER.

"SOLELY BY REASON OF THE THREATENED TERMINATION AND REPURCHASE AT AN EXCESS COST OF $72,141.80, AND THE THREATENED INSOLVENCY OF MICHAEL A. ZIELINSKI COMPANY AND THE PARTNERS, AND THE ADVANCED AGE OF DEPONENT'S FATHER AND MOTHER, THE DEPONENT, ALFRED M. ZIELINSKI, EXECUTED SUCH SUPPLEMENTAL AGREEMENT, MODIFICATION NO. 1 AFORESAID.'

THE RECORD SHOWS THAT THE MATTER OF THE CONTRACTOR'S ENTITLEMENT FOR ADDITIONAL TIME FOR PERFORMANCE OF THE CONTRACT WAS CONSIDERED BY THE CONTRACTING OFFICER IN A DECISION OF SEPTEMBER 7, 1962, WHICH PROVIDED AS FOLLOWS:

"REFERENCE IS MADE TO YOUR LETTER DATED 29 AUGUST 1962 IN REGARD TO SHADED NYLON OXFORD.

"IN ACCORDANCE WITH ARTICLE N, PARAGRAPH B, OF DC AND TSC FORM 526-3 OF YOUR CONTRACT, YOU ARE TO ADVISE THE QUALITY CONTROL REPRESENTATIVE, OR IN HIS ABSENCE THE CONTRACTING OFFICER, IN THE EVENT YOU BELIEVED EFFECTIVE MATERIAL IS FURNISHED.

"UPON CHECKING WITH THE QUALITY CONTROL REPRESENTATIVE IN REGARD TO THE SHADED MATERIAL, HE STATED THAT THERE WAS NO COMPLAINT CONCERNING THIS CONDITION UNTIL 30 AUGUST 1962, WHEN IT WAS REPORTED TO BOTH HIM AND HIS SUPERVISOR, MR. APPELBAUM.

"THEREFORE, IT IS DETERMINED THAT YOU ARE ENTITLED TO NEITHER ADDITIONAL TIME NOR HANDLING CHARGES, AS YOU WERE INFORMED 30 AUGUST 62 TO CONTINUE CUTTING REGARDLESS OF SHADED MATERIAL.

"THIS IS THE FINAL DECISION OF THE CONTRACTING OFFICER. DECISIONS ON DISPUTED QUESTIONS OF FACT AND ON OTHER QUESTIONS THAT ARE SUBJECT TO THE PROCEDURE OF THE DISPUTES CLAUSE MAY BE APPEALED IN ACCORDANCE WITH THE PROVISIONS OF THE DISPUTES CLAUSE. IF YOU DECIDE TO MAKE SUCH AN APPEAL FROM THIS DECISION, WRITTEN NOTICE THEREOF (IN TRIPLICATE) MUST BE MAILED OR OTHERWISE FURNISHED TO THE CONTRACTING OFFICER WITHIN THIRTY DAYS FROM THE DATE YOU RECEIVE THIS DECISION. SUCH NOTICE SHOULD INDICATE THAT AN APPEAL IS INTENDED AND SHOULD REFERENCE THIS DECISION AND IDENTIFY THE CONTRACT BY NUMBER. THE ARMED SERVICES BOARD OF CONTRACT APPEALS IS THE AUTHORIZED REPRESENTATIVE OF THE SECRETARY FOR HEARING AND DETERMINING SUCH DISPUTES. THE RULES OF THE ARMED SERVICES OF CONTRACT APPEALS ARE SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION, APPENDIX A, PART 2.

"IF ANY DISPUTE RESULTING FROM THE DECISION HEREINABOVE SET FORTH INVOLVES AN AMOUNT NOT IN EXCESS OF $5,000, THERE IS AVAILABLE IN RULE 31 OF THE RULES OF THE BOARD AN OPTIONAL ACCELERATED PROCEDURE FOR DISPOSITION OF THE APPEAL BY DECISION OF A SINGLE MEMBER OF THE BOARD, EITHER ON THE RECORD OR AFTER AN INFORMAL HEARING. IN ORDER TO INVOKE SUCH ACCELERATED PROCEDURE AN APPELLANT MUST SPECIFICALLY REQUEST IN HIS COMPLAINT THAT THE APPEAL BE DECIDED PURSUANT TO THE OPTIONAL ACCELERATED PROCEDURE, AND THE HEAD OF THE PROCURING ACTIVITY CONCERNED MUST CONCUR. WHERE THE PARTIES AGREE TO PROCEED UNDER THE OPTIONAL ACCELERATED PROCEDURE AND NEITHER REQUESTS AN INFORMAL HEARING, DECISION WILL BE MADE ON THE RECORD.'

THE CONTRACTOR NEVER APPEALED THE CONTRACTING OFFICER'S DECISION IN THE MANNER PROVIDED. FAILURE TO COMPLY WITH THE DISPUTES CLAUSE,"THE ONLY AVENUE FOR RELIEF" AVAILABLE FOR THE SETTLEMENT OF DISPUTES CONCERNING QUESTIONS ARISING UNDER THE CONTRACT, IS SUFFICIENT WITHOUT ANYTHING ELSE TO PREVENT RECOVERY. UNITED STATES. V. CALLAHAN WALKER CO., 317 U.S. 56, 61. THE GOVERNMENT CANNOT BE DEPRIVED OF THE BENEFITS OF THE ADMINISTRATIVE MACHINERY IT HAS PROVIDED TO ADJUDICATE DISPUTES AND TO AVOID LARGE DAMAGE CLAIMS. UNITED STATES V. BLAIR, 321 U.S. 730, 735; UNITED STATES V. HOLPUCH CO., 328 U.S. 234, 239-240; YUHASZ V. UNITED STATES, 109 F.2D 467, 468; AND J. AND J. W. STOLTS ASSOCIATION V. UNITED STATES, 66 CT.CL. 1, 8-9.

MOREOVER, IF THE CONTRACTOR ACTUALLY WAS COERCED INTO EXECUTING THE SUPPLEMENTAL AGREEMENT, THEN IT WAS PROVIDED WITH A SECOND OPPORTUNITY FOR APPEAL AS A RESULT OF THE ISSUANCE OF THE SUPPLEMENTARY AGREEMENT. FRUHAUF SOUTHWEST GARMENT CO. V. UNITED STATES, 111 F.SUPP. 945, 953, IT WAS STATED:

"* * * IF THE PLAINTIFF ACTED UNDER DURESS IN EXECUTING THE SUPPLEMENTAL AGREEMENT THEN WHAT RESULTED WAS NO DIFFERENT THAN A UNILATERAL DECISION OF THE CONTRACTING OFFICER. WHAT WAS INCORPORATED INTO THE AGREEMENT WAS NOT A COMPROMISE, BUT WAS MERELY THE PLAINTIFF'S UNWILLING ADHERENCE TO A DECISION OF THE DEFENDANT'S AUTHORIZED AGENT.

"FROM THAT DECISION THE ONLY AVENUE OF RELIEF WAS BY AN APPEAL TO THE SECRETARY OF WAR. * * *"

RELATIVE TO THE MATTER OF COERCION, IN COMMONWEALTH ENGINEERING CO. V. UNITED STATES, 148 CT.CL. 330, 333-334, THE COURT OF CLAIMS CONSIDERED A STATEMENT ATTRIBUTED TO THE CONTRACTING OFFICER THAT, IF THE CONTRACTOR FAILED TO AGREE,"HE WOULD HAVE THE CONTRACT TERMINATED FOR CLAIMANT'S DEFAULT AND THE CONTRACT WOULD BE RELET TO ANOTHER CONTRACTOR AND CLAIMANT CHARGED WITH ANY HIGHER PRICE DEFENDANT WOULD PAY TO THE NEW CONTRACTOR, WHICH WOULD HAVE BANKRUPT (SIC) THE PLAINTIFF.' THE COURT DECIDED THAT THE STATEMENT DID NOT CONSTITUTE DURESS. THE COURT SAID FURTHER THAT "AS A MATTER OF FACT, SOMETHING MORE MUST BE PRESENT THAN THREATENED FINANCIAL DISASTER.'

IN VIEW OF THE FOREGOING, THERE IS NO SUPPORT AS A MATTER OF LAW FOR A REFUND AND THE CLAIM THEREFOR IS DISALLOWED.