B-156594, MAY 25, 1965

B-156594, MAY 25, 1965

TO THE HONORABLE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO THE TERMINATION CLAIM OF RIPLEY, INC., UNDER CONTRACT NO. AF 33/601/7495, WHICH WAS THE SUBJECT OF A REPORT DATED MARCH 1, 1965, AND ENCLOSURES, FROM THE AIR FORCE ACCOUNTING AND FINANCE CENTER, DENVER, COLORADO, TO OUR CLAIMS DIVISION.

THE SUBJECT CONTRACT, DATED JUNE 19, 1963, CALLED FOR THE FURNISHING OF ALL LABOR TO OVERHAUL, REPAIR, RECONDITION AND/OR OTHERWISE MAINTAIN DESIGNATED VEHICLES AT WRIGHT-PATTERSON AIR FORCE BASE, OHIO, FOR THE PERIOD COMMENCING JULY 1, 1963, AND ENDING JUNE 30, 1964. PAYMENT FOR THE REQUIRED SERVICES WAS TO BE AT A STIPULATED HOURLY RATE PER MAN FOR TIME DEVOTED TO THE WORK. THE CONTRACT WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AS OF FEBRUARY 1, 1964. RIPLEY SUBMITTED A TERMINATION SETTLEMENT PROPOSAL IN THE APPROXIMATE AMOUNT OF $10,000, BUT THE CONTRACTING OFFICER WAS OF THE OPINION THAT THE CONTRACTOR WAS ENTITLED TO ONLY $433 BY REASON OF THE TERMINATION. THEREAFTER, NEGOTIATION RESULTED IN THE EXECUTION ON AUGUST 26, 1964, OF A SUPPLEMENTAL AGREEMENT TO THE CONTRACT IN THE AMOUNT OF $433 AS SETTLEMENT OF THE TERMINATION CLAIM. LETTER DATED OCTOBER 26, 1964, THE CONTRACTOR REQUESTED PAYMENT OF AN ADDITIONAL UNSTATED AMOUNT WHICH IT ALLEGES WAS INCURRED IN PERFORMANCE OF THE CONTRACT BUT NOT INCLUDED IN THE SETTLEMENT.

ARTICLE 5 OF THE SUPPLEMENTAL AGREEMENT PROVIDES THAT THE PAYMENT OF $433, TOGETHER WITH THE SUM ALREADY PAID, CONSTITUTES PAYMENT IN FULL AND COMPLETE SETTLEMENT OF THE AMOUNT DUE UNDER THE CONTRACT AND OF ALL OTHER CLAIMS AND LIABILITIES OF THE CONTRACTOR AND GOVERNMENT UNDER THE CONTRACT, EXCEPT AS PROVIDED IN ARTICLE 6. PARAGRAPH (7) OF ARTICLE 6 PROVIDES:

"ALL RIGHTS OF THE CONTRACTOR TO REQUEST AN EQUITABLE ADJUSTMENT TO THE CONTRACT FROM THE GENERAL ACCOUNTING OFFICE, UNITED STATES GOVERNMENT, OR RIGHTS OF THE CONTRACTOR TO ANY OTHER EXTRA CONTRACTUAL RELEASE (SIC) TO WHICH THE CONTRACTOR MIGHT BE ENTITLED.'

THE RECORD APPEARS TO INDICATE THAT AT THE TIME THIS AGREEMENT WAS EXECUTED, THE CONTRACTOR WAS ADVISED THAT ALTHOUGH $433 WAS ALL THAT HE WAS ENTITLED TO AS TERMINATION COSTS HE WOULD NOT THEREBY BE PRECLUDED FROM ASSERTING AN ADDITIONAL CLAIM. IT IS ADMINISTRATIVELY RECOMMENDED THAT OUR OFFICE AUTHORIZE PAYMENT OF AN ADDITIONAL $342.50 AS AN EQUITABLE ADJUSTMENT TO THE CONTRACT. IT IS REPORTED THAT THIS AMOUNT REPRESENTS VALID COSTS INCURRED BY THE CONTRACTOR, BUT NOT ALLOWABLE UNDER A TERMINATION SETTLEMENT. IT IS NOT INDICATED WHETHER THE CONTRACTOR HAS ACQUIESCED IN PAYMENT OF THIS AMOUNT AS ALL HE IS ENTITLED TO, OR WHETHER HE WILL STILL SEEK PAYMENT OF MORE, NOR IS IT EXPLAINED WHY THE AMOUNT WAS NOT CONSIDERED ALLOWABLE UNDER THE TERMINATION ARTICLE.

PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 7-2103.16 (A) (8 -701 (A) ( THE SUBJECT CONTRACT PROVIDED IN ARTICLE 15 FOR TERMINATION OF SAID CONTRACT FOR CONVENIENCE OF THE GOVERNMENT. IT IS THEREIN PROVIDED IN PARAGRAPH (D) THAT UPON TERMINATION THE CONTRACTOR AND CONTRACTING OFFICER MAY AGREE UPON THE AMOUNT TO BE PAID THE CONTRACTOR BY REASON OF THE TERMINATION AND THAT THE CONTRACT SHALL BE AMENDED ACCORDINGLY AND THE AGREED AMOUNT PAID. PARAGRAPH (E) OF SAID CLAUSE PROVIDES THAT WHERE AGREEMENT IS NOT REACHED AS PROVIDED IN (D) THE CONTRACTING OFFICER SHALL DETERMINE AND PAY THE AMOUNT DUE THE CONTRACTOR BY REASON OF THE TERMINATION. PARAGRAPH (G) PROVIDES THAT THE CONTRACTOR MAY APPEAL FROM ANY DETERMINATION MADE BY THE CONTRACTING OFFICER UNDER PARAGRAPH (E) OF SAID CLAUSE UNDER THE "DISPUTES" CLAUSE OF THE CONTRACT. THE LATTER CLAUSE PROVIDES THAT APPEAL FROM THE CONTRACTING OFFICER'S DECISION CONCERNING A QUESTION OF FACT SHALL BE MADE TO THE SECRETARY WITHIN 30 DAYS FROM RECEIPT BY THE CONTRACTOR OF WRITTEN NOTICE OF SUCH DECISION.

SECTION VIII OF ASPR PRESCRIBES THE POLICIES AND PROCEDURES APPLICABLE TO THE TERMINATION OF CONTRACTS FOR THE CONVENIENCE OF THE GOVERNMENT. AS TO THE METHODS OF SETTLEMENT OF TERMINATED CONTRACTS, PARAGRAPH 8-203 PROVIDES THAT SETTLEMENT MAY BE EFFECTED EITHER BY NEGOTIATED AGREEMENT, DETERMINATION BY THE CONTRACTING OFFICER, OR BY A COMBINATION OF THOSE METHODS. PARAGRAPH 8-205 PROVIDES THAT TO THE EXTENT THE CONTRACTING OFFICER IS UNABLE TO NEGOTIATE A SETTLEMENT, HE SHOULD SETTLE THE CONTRACTOR'S CLAIM BY DETERMINATION. AS TO SETTLEMENT BY DETERMINATION, PARAGRAPH 8-209.7 PROVIDES THAT AFTER HAVING GIVEN THE CONTRACTOR AN OPPORTUNITY TO SUBMIT WRITTEN EVIDENCE OF HIS CLAIM, THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF THE AMOUNT DUE AND FURNISH THE CONTRACTOR A COPY OF HIS DETERMINATION BY CERTIFIED MAIL. THIS PARAGRAPH FURTHER PROVIDES THAT THE LETTER TRANSMITTING SUCH DETERMINATION SHALL ADVISE THE CONTRACTOR THAT THE DETERMINATION IS A FINAL DECISION FROM WHICH AN APPEAL MAY BE TAKEN UNDER THE DISPUTES CLAUSE.

IN THE INSTANT CASE, IT APPEARS THAT AT THE TIME THE SUPPLEMENTAL AGREEMENT WAS NEGOTIATED AND SIGNED THE CONTRACTOR HAD EVERY INTENTION OF PURSUING ITS CLAIM FOR AN AMOUNT CONSIDERABLY IN EXCESS OF THAT AGREED UPON, AND THAT ITS CLAIM WAS BASED SOLELY UPON THE TERMINATION. ALTHOUGH IT IS NOT ENTIRELY CLEAR, IT SEEMS LIKELY THAT THE CONTRACTOR'S ACCEPTANCE OF THE SETTLEMENT AGREEMENT WAS INDUCED BY THE CONTRACTING OFFICER'S REPRESENTATION THAT IT COULD SEEK AN EQUITABLE ADJUSTMENT FROM OUR OFFICE. APPARENTLY THE CONTRACTING OFFICER WAS UNDER A MISAPPREHENSION OF THE JURISDICTION OF OUR OFFICE. BE THAT AS IT MAY, OUR OFFICE IS WITHOUT JURISDICTION TO EITHER MAKE OR AUTHORIZE AN "EQUITABLE ADJUSTMENT" NOT PROVIDED FOR BY THE TERMS OF A CONTRACT, AND SINCE THE ADMINISTRATIVE RECOMMENDATION IN THIS INSTANCE DOES NOT APPEAR TO BE REFERENCED TO ANY CONTRACT PROVISION OTHER THAN THE TERMINATION CLAUSE, WE SEE NO BASIS FOR ALLOWANCE OF THE CLAIM BY OUR OFFICE. WE ARE THEREFORE RETURNING THE CLAIM FOR FURTHER CONSIDERATION BY YOUR DEPARTMENT. IN THIS CONNECTION, IT IS NOTED THAT UNDER DATE OF JUNE 25, 1964, THE CONTRACTOR'S CLAIM WAS REFERRED BY THE DEPUTY DIRECTOR OF PROCUREMENT, 2750TH AIR BASE WING, TO THE CONTRACTING OFFICER, WITH THE FOLLOWING STATEMENT:

"UPON RECEIPT OF SUBJECT CLAIM LETTER, COORDINATION WAS EFFECTED WITH THE BASE LEGAL OFFICE, EWJ AND CONTRACT ADMINISTRATION BRANCH, MCPKA, TO OBTAIN AN OPINION ON PROPER PROCEDURES. ADVICE RECEIVED WAS THAT SUBJECT CLAIM BE PROCESSED UNDER THE TERMINATION CLAUSE OF SUBJECT CONTRACT.

"PLEASE REVIEW THE CONTRACTOR'S CLAIM ATTACHED HERETO AND ADVISE THIS OFFICE OF YOUR OPINION ON FURTHER PROCEDURES * * *"

IN HIS REPLY DATED JULY 2 THE CONTRACTING OFFICER STATED HIS OPINION "THAT THE CONTRACTOR IS ONLY ENTITLED TO $433 UNDER THE TERMINATION PROCEDURE," AND STATED FURTHER,"I BELIEVE THAT THIS CLAIM COULD BE CONSIDERED A GAO CLAIM AND SHOULD BE PROCESSED BY YOUR OFFICE. I WILL APPRECIATE YOUR ADVICE AS TO THE RESULTS IN SUBMITTING THE CLAIM SO THAT I CAN EFFECT A SETTLEMENT ON THE TERMINATED PORTION.' THE FILE FURNISHED CONTAINS NO RECORD OF ANY FURTHER INSTRUCTIONS, OPINIONS, OR DIRECTIONS CONCERNING THE PROCEDURE FOLLOWED.

IN THE CIRCUMSTANCES, WE BELIEVE IT WOULD HAVE BEEN APPROPRIATE FOR THE CONTRACTING OFFICER TO HAVE DISPOSED OF THE ENTIRE CLAIM BY DETERMINATION UNDER THE TERMINATION PROCEDURE, GIVING THE CONTRACTOR THE OPPORTUNITY TO APPEAL UNDER THE DISPUTES CLAUSE. WE THEREFORE WOULD NOT OBJECT IF YOUR DEPARTMENT WERE TO REOPEN THE MATTER FOR FURTHER CONSIDERATION BY THE CONTRACTING OFFICER IN THE MANNER SET OUT ABOVE, IF SUCH ACTION BE DEEMED FEASIBLE.

THE FILE ENCLOSED WITH THE REPORT OF MARCH 1, 1965, FROM THE ACCOUNTING AND FINANCE CENTER IS ENCLOSED.