B-163274, DEC. 20, 1968

B-163274, DEC. 20, 1968

TO ORTRONIX, INC.:

WE REFER TO YOUR UNDATED LETTER WITH TWO ENCLOSURES, WHICH WAS RECEIVED IN OUR OFFICE ON JANUARY 8, 1968, AS SUPPLEMENTED BY SUBSEQUENT CORRESPONDENCE FROM YOUR ATTORNEYS, REQUESTING REIMBURSEMENT FOR LOSSES IN THE AMOUNT OF $1,141,000 WHICH YOU STATE WERE SUSTAINED BY YOU IN THE PERFORMANCE OF DEPARTMENT OF THE ARMY CONTRACTS DA-36 039-SC-88790 (E) AND DA-36-039-SC-88793 (E), AWARDED TO YOU IN 1962 FOR THE FURNISHING OF MOBILE COMMUNICATION SHELTERS. THE AMOUNT CLAIMED IS IN ADDITION TO THE ORIGINAL CONTRACT PRICES AND TO THE FURTHER AMOUNT OF $1.6 MILLION WHICH THE ARMY CONTRACT ADJUSTMENT BOARD (ACAB) AWARDED TO YOU IN SEPTEMBER 1964 UNDER THE EXTRAORDINARY CONTRACTUAL RELIEF AUTHORITY OF PUBLIC LAW 85-804, 50 U.S.C. 1431-1435, AUTHORIZING THE MODIFICATION OR AMENDMENT OF CONTRACTS, WITHOUT REGARD TO OTHER PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT OR MODIFICATION OF CONTRACTS, WHENEVER IT IS DETERMINED BY THE PRESIDENT OR HIS DESIGNEES THAT SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE.

BY LETTER DATED FEBRUARY 18, 1964, AS SUPPLEMENTED BY LETTER DATED MARCH 12, 1964, YOU MADE APPLICATION TO THE DEPARTMENT OF THE ARMY FOR RELIEF UNDER THE STATUTE IN THE AMOUNT OF $2,639,288 FOR THE COMPLETION OF BOTH CONTRACTS ($2,008,844 FOR CONTRACT -88790 AND $630,444 FOR CONTRACT - 88793). YOU STATED THAT YOUR APPLICATION WAS BASED ON ARMED SERVICES PROCUREMENT REGULATION (ASPR) 17-204, ISSUED IN IMPLEMENTATION OF THE STATUTE AND THE RELATED EXECUTIVE ORDERS (10789 AND 11051).

IN A MEMORANDUM OF DECISION DATED MAY 12, 1964, ACAB DENIED YOUR APPLICATION AND STATED, AMONG OTHER THINGS, THAT YOUR CONTINUED PERFORMANCE WAS NOT ESSENTIAL TO THE NATIONAL DEFENSE UNDER ANY DEFENSE CONTRACT OR SUBCONTRACT WITHIN THE PURVIEW OF ASPR 17-204.4 (A); THAT YOU HAD NOT SHOWN ANY REASON WHY YOU SHOULD RECEIVE RELIEF AS A RESULT OF ANY GOVERNMENT ACTION UNDER ASPR 17-204.2 (B); THAT THERE WAS NO SHOWING OF ANY MISTAKE WHICH WOULD WARRANT APPLICATION OF ASPR 17 204.3; AND THAT YOU HAD NOT IDENTIFIED ANY CIRCUMSTANCE THAT MIGHT JUSTIFY RELIEF UNDER THE AUTHORITY PERTAINING TO FORMALIZATION OF INFORMAL COMMITMENT IN ASPR 17- 204.4.

ON JUNE 3, 1964, YOU APPLIED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR A LOAN IN THE AMOUNT OF $450,000 TO BE REPAID OVER A PERIOD OF FIVE YEARS FROM THE DATE OF THE NOTE, AND YOU LISTED AS ONE OF THE ITEMS OF COLLATERAL FOR THE LOAN MONIES DUE AND TO BECOME DUE UNDER CONTRACT - 88790. ON JULY 8, SBA NOTIFIED YOU THAT THE LOAN HAD BEEN AUTHORIZED, AND ON AUGUST 18, SBA NOTIFIED YOU THAT THE AMOUNT OF THE LOAN HAD BEEN INCREASED TO $576,557.10.

ON JULY 1, 2, AND 6, 1964, ACAB ACCORDED YOU HEARINGS IN CONNECTION WITH YOUR REQUEST FOR RECONSIDERATION OF YOUR PUBLIC LAW 85-804 RELIEF APPLICATION. AT THAT TIME, YOU STATED THAT REPROCUREMENT OF THE ITEMS REMAINING TO BE DELIVERED UNDER YOUR CONTRACTS WOULD COST THE GOVERNMENT OVER $2.3 MILLION, AND YOU SUBSEQUENTLY INDICATED A WILLINGNESS TO ACCEPT EITHER $993,000 UNDER CONTRACT -88790, WHILE RESERVING THE RIGHT TO PURSUE CURRENT CLAIMS AMOUNTING TO $561,000 AND POTENTIAL CLAIMS AMOUNTING TO $500,000, OR $2 MILLION WITH WAIVER BY YOU OF ANY AND ALL CLAIMS ARISING OUT OF THE CONTRACTS UP TO THE DATE OF THE INCREASE.

PURSUANT TO AN INVESTIGATION BY THE DEPARTMENT OF THE ARMY, WHICH INDICATED THAT REPROCUREMENT OF THE UNDELIVERED ITEMS UNDER YOUR CONTRACTS WOULD COST APPROXIMATELY $2.2 MILLION, YOU WERE AFFORDED AN OPPORTUNITY TO SUBMIT AN ADDITIONAL PROPOSAL, PROVIDED THAT YOU WOULD FURNISH A PERFORMANCE BOND, ASSURE THE GOVERNMENT THAT YOU WOULD COMPLETE CONTRACT - 88790, WAIVE TITLE TO THE INVENTORY UNDER THE PORTION OF CONTRACT -88793 WHICH HAD BEEN TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT, SUBMIT A REVISED DELIVERY SCHEDULE ACCEPTABLE TO THE CONTRACTING OFFICER, AND WAIVE ANY AND ALL EXISTING CLAIMS UNDER THE CONTRACTS IN ADDITION TO EXECUTING A GENERAL RELEASE FROM ANY AND ALL POTENTIAL CLAIMS.

THE FILE MADE AVAILABLE TO OUR OFFICE INDICATES THAT AFTER INFORMING ACAB OF DIFFICULTIES ENCOUNTERED IN ATTEMPTING TO OBTAIN A PERFORMANCE BOND, YOUR ATTORNEY PROPOSED IN A TELEPHONE CONVERSATION OF AUGUST 26 WITH THE RECORDER, ACAB, THAT YOU WOULD ACCEPT AN INCREASE IN THE PRICE OF CONTRACT -88790 IN THE AMOUNT OF $1.6 MILLION, SUBJECT TO CERTAIN CONDITIONS. LETTER DATED AUGUST 28, YOUR ATTORNEY CONFIRMED THE OFFER. THE LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"THIS IS TO CONFIRM THE OFFER MADE ON BEHALF OF OUR CLIENT, ORTRONIX, INC., AS CONVEYED TO YOU IN OUR TELEPHONE CONVERSATION OF WEDNESDAY, AUGUST 26, 1964, AND RECONFIRMED TODAY.

"IN CONSIDERATION OF AN ADJUSTMENT BY THE GOVERNMENT TO CONTRACT 19024 IN THE AMOUNT OF $1,600,000.00, AND OTHER MATTERS HEREINAFTER SET FORTH, OUR CLIENT WILL WITHDRAW ALL CLAIMS CURRENTLY PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS AND WILL EXECUTE A GENERAL RELEASE IN FAVOR OF THE GOVERNMENT OF ALL CLAIMS ARISING OUT OF OR IN CONNECTION WITH CONTRACT 19024 UP TO THE DATE OF SAID CONTRACT ADJUSTMENT. FURTHER, OUR CLIENT WILL EXECUTE A GENERAL RELEASE IN FAVOR OF THE GOVERNMENT AS TO ALL CLAIMS, INCLUDING TERMINATION CLAIMS, ARISING OUT OF, OR IN CONNECTION WITH CONTRACT 19027.

"OUR CLIENT'S OFFER IS ALSO CONTINGENT UPON THE GOVERNMENT'S DROPPING ITS REQUEST FOR A PERFORMANCE BOND AND UPON THE GOVERNMENT EXECUTING A GENERAL RELEASE TO OUR CLIENT WAIVING ANY AND ALL RIGHTS TO RECOUPMENT UNDER CONTRACT 19027 AND, WAIVING ANY AND ALL CLAIMS TO THE INVENTORY ON SAID CONTRACT.' (IT SHOULD BE NOTED THAT THE CONTRACT NUMBERS USED IN THE ABOVE LETTER ARE THE PURCHASE ORDER NUMBERS ASSOCIATED WITH THE CONTRACTS IN QUESTION AND DO NOT REFER TO ANY DIFFERENT CONTRACTS THAN THOSE PREVIOUSLY DISCUSSED.)

IN A SUPPLEMENTAL MEMORANDUM OF DECISION DATED SEPTEMBER 1, 1964, ACAB STATED THAT IT HAD REVIEWED ITS DECISION OF MAY 12, GIVING CONSIDERATION TO INFORMATION AVAILABLE IN ACAB FILES, TO TESTIMONY ADDUCED AT THE JULY HEARINGS, AND TO RESULTS OF AN INDEPENDENT ACAB INVESTIGATION, AND HAD CONCLUDED THAT THE AMOUNT OF $1.6 MILLION, WHICH YOU HAD OFFERED TO ACCEPT, WAS REASONABLE FOR THE ALLEVIATION OF YOUR DIRE FINANCIAL CONDITION AND FOR THE COMPLETION OF CONTRACT 88790, AND THAT THE GRANTING OF SUCH RELIEF WOULD FACILITATE THE NATIONAL DEFENSE. NO OPINION WAS EXPRESSED ON THE VALIDITY OF THE CLAIMS WHICH YOU HAD ALREADY MADE UNDER THE CONTRACT, BUT DOUBT WAS EXPRESSED THAT ANY ACTION BY ARMY PERSONNEL CREATED LIABILITY ON THE PART OF THE GOVERNMENT. FURTHER, ACAB CITED ARMY AUDIT AGENCY FIGURES TO THE EFFECT THAT WITHOUT RELIEF UNDER CONTRACT - 88790, WHICH WAS UNCOMPLETED AT THE TIME, YOUR TOTAL LOSS ON THE PERFORMANCE OF BOTH CONTRACTS WOULD APPROXIMATE $2.5 MILLION, AND ACAB STATED THAT TO SOME DEGREE YOUR LOSS WAS ATTRIBUTABLE TO YOUR INEFFICIENT PRODUCTION METHODS, INADEQUATE QUALITY CONTROL, LACK OF ADHERENCE TO CONTRACT SPECIFICATIONS WHEN PRODUCTION WAS COMMENCED, AND LARGELY TO THE FACT THAT YOUR BIDS ON BOTH PROCUREMENTS WERE UNDULY LOW, ALTHOUGH THE DISPARITY BETWEEN YOUR BIDS AND OTHER BIDS WAS NOT SUCH AS TO CONSTITUTE CONSTRUCTIVE NOTICE OF MISTAKE. ACAB ALSO OBSERVED THAT THE ACCEPTANCE WITHOUT CHALLENGE BY THE CONTRACTING OFFICER OF THE CERTIFICATES OF COMPETENCY WHICH SBA ISSUED TO YOU (AFTER THE CONTRACTING OFFICER HAD DETERMINED THAT YOU LACKED FINANCIAL CAPACITY FOR BOTH PROCUREMENTS AS WELL AS PRODUCTIVE CAPABILITY FOR CONTRACT 88793) WAS IN ACCORD WITH THE PROCUREMENT PROCEDURES PREVAILING AT THE TIME OF THE CONTRACT AWARDS. HOWEVER, ACAB STATED, IT COULD NOT OVERLOOK YOUR STATUS AS A SMALL COMPANY WHICH HAD NEVER PERFORMED ANY CONTRACT OF THE MAGNITUDE OF CONTRACTS - 88790 AND -88793, OR IN THE FIELD OF ENDEAVOR THERE INVOLVED. ACCORDINGLY, AND FOR VARIOUS OTHER REASONS SET FORTH IN THE DECISION, WHILE YOU WERE NOT FOUND TO BE "ESSENTIAL" TO THE NATIONAL DEFENSE WITHIN THE PURVIEW OF ASPR 17 204.2 (A), ACAB DETERMINED THAT YOUR PAST AND FUTURE OPERATION COULD BE REGARDED AS CONSTITUTING AN IMPORTANT ELEMENT IN THE MOBILIZATION BASE AND THEREFORE APPROVED RELIEF TO THE EXTENT OF $1.6 MILLION, STATING THAT SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE.

AS CONDITIONS OF THE AWARD, YOU WERE REQUIRED TO AGREE TO COMPLETE CONTRACT -88790 UNDER A REVISED DELIVERY SCHEDULE ACCEPTABLE TO THE CONTRACTING OFFICER; TO RELEASE THE GOVERNMENT FROM ANY TERMINATION CLAIM WITH RESPECT TO THE PARTIAL TERMINATION OF CONTRACT -88793; TO WITHDRAW ANY AND ALL APPEALS AND CLAIMS FILED AND PENDING UNDER BOTH CONTRACTS AS OF THE DATE OF EXECUTION OF THE PRICE ADJUSTMENT INSTRUMENT; AND TO EXECUTE A GENERAL RELEASE AS TO ANY AND ALL CLAIMS ARISING OUT OF, AND IN CONNECTION WITH, THE AWARDS AND PERFORMANCE OF BOTH CONTRACTS AS OF THE DATE OF EXECUTION OF THE PRICE ADJUSTMENT INSTRUMENT. THE GOVERNMENT, IN TURN, AGREED TO RELINQUISH AND WAIVE ITS RIGHT TO ANY CLAIM UNDER THE PARTIAL TERMINATION OF CONTRACT -88793, EXCEPT TAX CLAIMS OF ALL TYPES, BUT INCLUDING ANY CLAIM FOR ALL INVENTORIES AND WORK IN PROCESS GENERATED IN CONNECTION WITH THE TERMINATED PORTION OF THE CONTRACT, AND TO RELEASE YOU FROM PAYMENT OF ANY UNRECOUPED PROGRESS PAYMENTS MADE BY THE GOVERNMENT WITH RESPECT TO SUCH TERMINATED PORTION. THERE WAS NO REQUIREMENT FOR A PERFORMANCE BOND. FURTHER, THE DECISION SPECIFICALLY STIPULATED THAT THE PRICE INCREASE WOULD BE MADE ONLY WITH RESPECT TO THE QUANTITIES REMAINING UNDELIVERED AT THE TIME OF EXECUTION OF THE PRICE ADJUSTMENT INSTRUMENT AND WOULD BE PAID ON A PRO RATA BASIS AS DELIVERIES WERE ACCEPTED BY THE GOVERNMENT; I.E., THE UNIT PRICE WOULD BE COMPUTED BY DIVIDING THE NUMBER OF UNDELIVERED UNITS INTO THE $1.6 MILLION INCREASE.

IN A LETTER DATED SEPTEMBER 8, 1964, YOUR ATTORNEY EXPRESSED APPRECIATION TO ACAB FOR THE EQUITABLE TREATMENT GRANTED TO YOU AND FOR "THE EXCELLENT MANNER IN WHICH YOU HAVE FOLLOWED THE MANDATES OF CONGRESS IN PROTECTING THE GOVERNMENT'S INTERESTS.' THE LETTER INCLUDED THE FOLLOWING PERTINENT PARAGRAPHS:

"IF THE GENERAL RELEASE, TO BE EXECUTED BY OUR CLIENT, WERE WORDED SO AS TO ACKNOWLEDGE A TOTAL CLAIM OF OUR CLIENT, ONLY IN THE AMOUNT OF $1,600,000 UNDER THE TWO CONTRACTS IN QUESTION AS OF THE DATE OF EXECUTION OF SAID RELEASE AND PROVIDE THAT SAID RELEASE WOULD OPERATE ON AN AUTOMATIC NUNC PRO TUNC, PRO RATA BASIS AS EACH UNIT WAS ACCEPTED AND SHIPPED IN AN AMOUNT EQUIVALENT TO THE PRO RATA PAYMENT CONTEMPLATED BY THE GOVERNMENT UNDER THE ADJUSTMENT, THE RESULT WOULD COMPLETELY BE EQUITABLE TO THE CONTRACTING PARTIES AND PROTECT THEIR MUTUAL INTERESTS.

"IN THIS REGARD, NO ONE CAN ASSESS THE RECOVERABLE AMOUNT OF THESE CLAIMS CURRENTLY BEFORE ASBCA, NOR THOSE CLAIMS WHICH WERE IN PREPARATION BEFORE RECEIPT OF YOUR LETTER, BUT THROUGH THE LIMITATION OF LIABILITY ABOVE PROPOSED AND THE MANNER IN WHICH IT WOULD BE FURTHER REDUCED, THE RESULT WOULD BE A SITUATION OF EVEN LESSER CONTINGENT LIABILITY OF THE GOVERNMENT THAN THAT WHICH WILL EXIST UP UNTIL THE DAY OF THE EXECUTION OF THE CONTRACT MODIFICATION REFLECTING THE ADJUSTMENT.'

PURSUANT TO THE TERMS OF THE ACAB DECISION OF SEPTEMBER 1, A SUPPLEMENTAL AGREEMENT MODIFYING BOTH CONTRACTS WAS SIGNED BY YOUR EXECUTIVE VICE PRESIDENT AND BY THE CONTRACTING OFFICER, WHOSE SIGNATURE IS FOLLOWED BY THE DATE SEPTEMBER 21, 1964. THE AGREEMENT, WHICH INCLUDED THE RELEASES AND RESERVATIONS SET FORTH IN THE DECISION, ALSO PRESCRIBED A REVISED DELIVERY SCHEDULE FOR CONTRACT 88790 WHEREBY DELIVERIES WERE TO BE COMPLETED BY JUNE 14, 1965. A BREAKDOWN OF THE ADJUSTMENTS ALLOWED BY ACAB UNDER THE CONTRACTS SHOWED THAT UNDER CONTRACT -88793 YOU RECEIVED $1,317,080.64 FOR THE 99 UNITS COMPLETED, MADE UP OF $539,759.22 IN PROGRESS PAYMENTS IN ADDITION TO $777,321.42 REPRESENTING THE CONTRACT PRICE FOR THOSE UNITS. TERMINATION HAVING BEEN EFFECTED AS TO 114 UNITS, THE FINAL RESULT WAS THAT YOU RECEIVED FOR 99 UNITS ONLY $231,325.38 LESS THAN THE AGREED CONTRACT PRICE OF $1,548,406.02 FOR 213 UNITS. AS TO CONTRACT -88790, THE CONTRACT PRICE OF $2,378,872.40 WAS INCREASED TO $3,978,872.40, AND THE UNIT PRICE FOR 329 UNITS REMAINING TO BE DELIVERED WAS $4,863 AS OPPOSED TO THE UNIT PRICE OF $3,714 AT WHICH THE CONTRACT WAS AWARDED.

APPROXIMATELY TWO YEARS AFTER THE ABOVE AGREEMENT WAS EXECUTED, YOU REQUESTED THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA, TO RECONSIDER AN ADJUSTMENT UNDER THE STATUTE IN LINE WITH YOUR ORIGINAL APPLICATION OF MARCH 1964. THE REQUEST, WHICH WAS MADE IN A LETTER DATED OCTOBER 6, 1966, STATED THAT PRODUCTION UNDER CONTRACT -88790 HAD BEEN COMPLETED AT A COST OF APPROXIMATELY $4.8 MILLION, AN AMOUNT CLOSE TO THE ESTIMATE WHICH YOU INCLUDED IN YOUR APPLICATION OF MARCH 1964; THAT YOU HAD HAD NO CHOICE BUT TO ACCEPT THE $1.6 MILLION WHICH ACAB APPROVED ON SEPTEMBER 1, 1964; AND THAT ALLOWANCE OF SUCH AMOUNT BY ACAB WITH KNOWLEDGE THAT YOUR COMPLETION COST WOULD AMOUNT TO $2.5 MILLION CONSTITUTED A GRANT OF A KNOWN LOSS CONTRACT WITH A BUILT-IN LOSS OF $955,000 MINIMUM BASED ON FIGURES WHICH HAD BEEN COMPILED SOME SIX MONTHS EARLIER. THE ACTUAL LOSS, YOU STATED, WAS $1,270,102.90 AS OF OCTOBER 6, 1966. THE RECORD SHOWS THAT THE ABOVE REQUEST WAS CONSIDERED BY HEADQUARTERS, U.S. ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY, WHICH ALSO CONSIDERED CERTAIN COST INFORMATION THE CONTRACTING OFFICER HAD OBTAINED FROM YOU AND STATEMENTS MADE BY YOU AT A HEARING IN APRIL 1967 BEFORE THE ACTIVITY TO THE EFFECT THAT YOUR REQUEST WAS MADE PURSUANT TO ASPR 17 204.2 (A), RELATING TO FINANCIALLY TROUBLED CONTRACTORS ESSENTIAL TO NATIONAL DEFENSE, AND ASPR 17-204.2 (B), RELATING TO LOSSES SUSTAINED AS A RESULT OF GOVERNMENT ACTION ON DEFENSE CONTRACTS, AND THAT YOUR CLAIM WAS BASED ON ECONOMIC DURESS TO THE EXTENT THAT YOU HAD BEEN COERCED INTO ACCEPTING $1.6 MILLION IN LIEU OF $2.2 MILLION.

IN A MEMORANDUM OF DECISION DATED MAY 10, 1967, THE DIRECTOR, PROCUREMENT AND PRODUCTION, U.S. ARMY ELECTRONICS COMMAND, STATED THAT YOU DID NOT MEET THE ESSENTIALITY REQUIREMENT OF ASPR 17-204.2 (A) INASMUCH AS YOU HAD COMPLETED BOTH CONTRACTS; THAT KNOWLEDGEABLE GOVERNMENT OFFICIALS HAD TESTIFIED THAT YOU WERE NOT ESSENTIAL TO THE NATIONAL DEFENSE AS A CONTINUED SOURCE OF SUPPLY, OTHER SOURCES BEING READILY AVAILABLE FOR FUTURE REQUIREMENTS FOR THE SHELTERS AND, IF NECESSARY, TO COMPLETE YOUR CURRENT CONTRACTUAL REQUIREMENTS; AND THAT YOU HAD NOT STATED THAT FAILURE TO GRANT THE REQUESTED RELIEF WOULD RESULT IN ADVERSE EFFECTS ON YOUR EXISTING GOVERNMENT CONTRACTS OR SUSPENSION OF YOUR OPERATIONS.

AS TO THE FACTOR OF GOVERNMENT ACTION AS A CAUSE OF YOUR LOSS, THE DECISION STATED THAT A REVIEW OF THE ALLEGED INSTANCES THEREOF INDICATED THAT NO UNDUE DEMANDS HAD BEEN MADE UPON YOU AND THAT ONLY NORMAL ADMINISTRATIVE SURVEILLANCE HAD BEEN EXERCISED BY THE CONTRACTING OFFICER AND OTHER GOVERNMENT OFFICIALS TO OBTAIN SHELTERS MEETING THE CONTRACTUAL SPECIFICATIONS AND REQUIREMENTS.

AS TO THE CHARGE OF DURESS IN CONNECTION WITH THE $1.6 MILLION AWARD, THE DECISION NOTED THAT SUCH RELIEF HAD ALLOWED YOU TO COMPLETE THE CONTRACT AND VASTLY IMPROVE YOUR FINANCIAL POSITION, WHICH IT WAS INDICATED HAD BEEN PRECARIOUS BEFORE THE CONTRACT WAS AWARDED.

IN ADDITION TO THE FOREGOING, THE DECISION INCLUDED A SPECIFIC STATEMENT TO THE EFFECT THAT RELIEF UNDER ASPR 17-204.2 IS NOT A MATTER OF RIGHT AND IS LIMITED TO THE EXTENT NECESSARY TO PRECLUDE IMPAIRMENT OF A CONTRACTOR'S PRODUCTIVE ABILITY AND THAT COMPENSATION FOR LOSS UNDER A DEFENSE CONTRACT IS NOT THE PROPER MEASURE OF SUCH RELIEF. ACCORDINGLY, THE DIRECTOR DENIED YOUR CLAIM FOR RELIEF UNDER ASPR 17 204.2 (A) AND 17- 204.2 (B) AND FOUND THAT YOUR CHARGE OF ECONOMIC DURESS WAS UNJUSTIFIED SINCE THE RELIEF GRANTED TO YOU REPRESENTED A REASONABLE CONTRACTUAL ADJUSTMENT.

ON MAY 19, 1967, YOUR REPRESENTATIVES VISITED THE DEPUTY ASSISTANT SECRETARY OF THE ARMY WITH WHOM YOU HAD CONFERRED IN JULY 1964, AND REQUESTED FURTHER REVIEW OF THE MATTER. IN A LETTER DATED JUNE 16, 1967, WHICH INCLUDED A RESUME OF THE HISTORY OF THE SHELTER CONTRACTS, YOUR DIFFICULTIES, AND THE CIRCUMSTANCES LEADING TO THE RELIEF WHICH HAD BEEN ACCORDED TO YOU BY ACAB, THE DEPUTY ASSISTANT SECRETARY ADVISED YOU THAT HE COULD FIND NO INDICATION THAT YOU HAD BEEN FORCED TO ACCEPT A KNOWN LOSS CONTRACT AND STATED THAT IT WAS NOT THE INTENT OR PURPOSE OF THE ACAB TO MAKE YOU WHOLE FOR YOUR LOSSES, THE ACAB ACTION HAVING BEEN BASED ON THE NATIONAL INTEREST TO BE SERVED BY OBTAINING THE SHELTERS WITHIN A SHORTER TIME, AND AT LOWER COST, THAN WOULD BE OBTAINED THROUGH PROCUREMENT FROM ANOTHER SOURCE. ACCORDINGLY, YOU WERE ADVISED THAT NO BASIS EXISTED FOR A FURTHER REVIEW OF THE MATTER. THIS DECISION WAS AFFIRMED BY THE DEPUTY ASSISTANT SECRETARY IN A LETTER DATED JULY 25, 1967, TO YOU.

IN PRESENTING THE MATTER TO OUR OFFICE FOR REVIEW, YOU URGE THAT ASSUMPTION OF JURISDICTION BY OUR OFFICE IS JUSTIFIED ON THE BASIS THAT ACAB HAS ABUSED ITS AUTHORITY UNDER THE STATUTE. IN THIS CONNECTION, YOU CLAIM THAT THE STATUTE AND THE IMPLEMENTING EXECUTIVE ORDERS DO NOT CONFER ANY POWER OR AUTHORITY UPON THE DEPARTMENT OF THE ARMY AND ACAB TO DEMAND FROM APPLICANTS FOR RELIEF UNDER THE STATUTE THE WITHDRAWAL OF APPEALS AND CLAIMS OR THE EXECUTION OF GENERAL RELEASES GOVERNING SUCH ITEMS AS A CONDITION TO THE GRANTING OF RELIEF.

AS SUPPORT FOR THE ABOVE CHARGE, YOU QUOTE THE FOLLOWING LANGUAGE FROM PARAGRAPH 4, PART I, EXECUTIVE ORDER 10789, AS AMENDED: "4. * * * AMENDMENTS OR MODIFICATIONS OF CONTRACTS MAY BE WITH OR WITHOUT CONSIDERATION AND MAY BE UTILIZED TO ACCOMPLISH THE SAME THINGS AS ANY ORIGINAL CONTRACT COULD HAVE ACCOMPLISHED HEREUNDER, IRRESPECTIVE OF THE TIME OR CIRCUMSTANCES OF THE MAKING, OR THE FORM, OF THE CONTRACT AMENDED OR MODIFIED, OR OF THE AMENDING OR MODIFYING CONTRACT AND IRRESPECTIVE OF RIGHTS WHICH MAY HAVE ACCRUED UNDER THE CONTRACT OR THE AMENDMENTS OR MODIFICATIONS THEREOF.'

SUCH LANGUAGE, YOU STATE, SHOWS THAT THE EXECUTIVE ORDER CONTEMPLATES THAT PENDING CLAIMS OR CONTRACT CHANGES NEED NOT BE TAKEN INTO ACCOUNT AT THE TIME OF THE MAKING OF AN AWARD.

WITH FURTHER REFERENCE TO THE WITHDRAWAL OF YOUR ASBCA APPEAL AND THE GENERAL RELEASE WHICH YOU EXECUTED, YOU CLAIM THAT SUCH ACTIONS WERE NOT VOLUNTARY ON YOUR PART AND WERE NOT SUPPORTED BY LEGAL CONSIDERATION (THERE BEING NO BENEFIT TO YOU FROM THE ACAB ACTION, BUT INSTEAD A DETRIMENT), AND THE RELEASE WAS THEREFORE VOID AB INITIO. ENLARGING ON THIS POINT, YOU CLAIM THAT ACAB'S ACTION WAS AIMED SOLELY AT OBTAINING DELIVERY OF ALL EQUIPMENT REQUIRED UNDER CONTRACT -88790; THAT IT WAS NOT INTENDED TO, NOR DID IT, HELP IN YOUR PERFORMANCE OF ALL THE GOVERNMENT DEFENSE CONTRACTS WHICH YOU WERE PERFORMING DURING 1964 AND 1965 AS EITHER A PRIME OR A SUBCONTRACTOR; THAT IT SERVED TO INCREASE YOUR LOSSES UNDER CONTRACT -88790; AND THAT IT PLACED YOU IN AN EVEN POORER OVERALL FINANCIAL CONDITION THEREBY IMPAIRING YOUR PERFORMANCE OF ALL OTHER DEFENSE CONTRACTS, SOME OF WHICH YOU CLAIM WERE HIGHER PRIORITY.

FOR THE PROPOSITION THAT CONGRESS DID NOT INTEND THAT A CONTRACTOR WHO WAS IN DIRE FINANCIAL CONDITION AT THE TIME OF ACAB ACTION SHOULD BE KNOWINGLY INJURED, AS YOU CLAIM WAS TRUE IN YOUR CASE, YOU REFER TO LANGUAGE IN HOUSE OF REPRESENTATIVES REPORT NO. 2232, 85TH CONGRESS, 2D SESSION, ON H.R. 12894, WHICH WAS SUBSEQUENTLY ENACTED AS PUBLIC LAW 85- 804, STATING THAT THE LEGISLATION WOULD PROVIDE MEANS FOR "DEALING EXPEDITIOUSLY AND FAIRLY WITH CONTRACTORS" AND HELP ASSURE THAT VITAL MILITARY PROJECTS WILL PROCEED WITHOUT THE INTERRUPTIONS GENERATED BY MISUNDERSTANDINGS, AMBIGUITIES, AND TEMPORARY FINANCIAL DIFFICULTIES. FROM SENATE REPORT NO. 2281, 85TH CONGRESS, 2D SESSION, ON THE SAME BILL, YOU QUOTE THE FOLLOWING EXCERPT: "* * * THE AUTHORITY CONTAINED IN THIS BILL IS NOT, THEREFORE, AUTHORITY BY WHICH THE DEPARTMENTS AND AGENCIES OF GOVERNMENT MAY DISPENSE AID SOLELY FOR THE BENEFIT OF CONTRACTORS OR SUBCONTRACTORS. WHILE CONTRACTORS OR SUBCONTRACTORS MAY BE THE RECIPIENTS OF AID IN SOME INSTANCES, THE PRIMARY CONSIDERATION IS, AND MUST BE, WHETHER SUCH AID WILL FACILITATE THE NATIONAL DEFENSE.' WITH REGARD TO THIS LANGUAGE, YOU ASSERT THAT ONE DOES NOT FINANCIALLY "AID" ANOTHER PARTY WHEN ONE'S ACTIONS ARE TAKEN WITH FULL PRIOR KNOWLEDGE THAT SUCH ACTIONS WILL CAUSE EVEN GREATER FINANCIAL LOSSES AND THAT IT IS NOT "AID" WHEN SUCH ACTIONS DRIVE THE OTHER PARTY EVEN CLOSER TO BANKRUPTCY. YOU CONCLUDE, THEREFORE, THAT THE SENATE REPORT CONTEMPLATES AWARDS TO CONTRACTORS WHICH ASSIST THEM OR AID THEM IN ATTAINING THE STATUTE'S PRIMARY PURPOSE; I.E., TO FACILITATE THE NATIONAL DEFENSE.

ON THE MATTER OF FAIR TREATMENT FOR CONTRACTORS, YOU QUOTE AN EXCERPT FROM ARROBALL CORPORATION, ACAB 1032, DECEMBER 14, 1961, TO THE EFFECT THAT THE LEGISLATIVE HISTORY OF PUBLIC LAW 85-804 AND THE IMPLEMENTING REGULATIONS INDICATE THAT THE CONCEPT OF "FACILITATION OF THE NATIONAL DEFENSE" IS NOT LIMITED TO A CONSIDERATION OF THE BENEFIT TO THE GOVERNMENT FROM AN INDIVIDUAL ACTION UNDER THE STATUTE; RATHER, THE PRINCIPAL BENEFIT OF THE EXERCISE OF THE STATUTORY AUTHORITY IS THE PREVENTION OF DELAY IN THE PROCUREMENT PROGRAM, AND SUCH DELAY IS PREVENTED BY ASSURING CONTRACTORS THAT IT IS NOT NECESSARY TO CEASE PERFORMANCE AND RESORT TO LITIGATION TO PROTECT THEIR LEGAL RIGHTS OR LEGITIMATE BUSINESS INTERESTS, THAT IS, BY ENCOURAGING CONTRACTORS TO HAVE FULL CONFIDENCE THAT THEY WILL BE TREATED FAIRLY AND EQUITABLY BY THE GOVERNMENT. ACCORDINGLY, YOU DEDUCE THAT THE ACTION IN YOUR CASE COMPLETELY FRUSTRATED THIS FACET OF THE INTENT OF CONGRESS AND IGNORED THE ARROBALL HOLDING. FURTHER, YOU STATE THAT WITH THE EXCEPTION OF YOUR CASE, THE DECISIONS OF THE VARIOUS BOARDS WHICH HAVE AWARDED RELIEF UNDER PUBLIC LAW 85-804 HAVE REDUCED THE APPLICANT'S LOSSES.

IN ADDITION TO THE FOREGOING, YOU CLAIM THAT YOUR CASE IS UNIQUE TO THE EXTENT THAT ACAB IN COMPUTING THE AMOUNT OF RELIEF TO BE AWARDED TO YOU CLEARLY TOOK INTO ACCOUNT THE AMOUNT OF THE EXPECTED SBA LOAN TO YOU. THIS ACTION, YOU CLAIM, WAS ALSO AN ABUSE BY ACAB OF ITS STATUTORY POWERS. IN DECIDING AS TO THE AMOUNT WHICH WOULD BE EQUITABLE, YOU CONTEND THAT ACAB SHOULD HAVE IGNORED POTENTIAL LOANS FROM ANY SOURCE "FOR THE ACAB KNEW THAT ADDITIONAL BORROWINGS COULD ONLY INCREASE" YOUR DEBT POSITION AND MAKE EVEN MORE DIRE YOUR FINANCIAL CONDITION. THE COMBINED ACTION OF THE BOARD'S AWARD AND THE ACCELERATION BY SBA OF THE REPAYMENT PERIOD OF ITS LOAN TO YOU, YOU STATE, AMOUNTED TO THE GOVERNMENT'S GIVING RELIEF ON THE ONE HAND WHILE TAKING IT AWAY WITH THE OTHER.

WITH SPECIFIC REFERENCE TO SBA'S ACTIONS, YOU APPARENTLY FEEL THAT YOU SHOULD NOT HAVE BEEN COMPELLED TO REPAY THE LOAN FROM THE PROCEEDS OF CONTRACT -88790 FOR THE REASON THAT AT THE TIME YOU APPLIED FOR THE LOAN AND LISTED MONIES DUE UNDER THE CONTRACT AS COLLATERAL, NO AMOUNT WAS EITHER DUE OR EXPECTED UNDER THE CONTRACT. FURTHER, YOU COMPLAIN THAT AS A RESULT OF THE ACCELERATED REPAYMENT OF THE LOAN YOU REALIZED VERY LITTLE FUNDS WHICH COULD BE USED FOR OPERATING EXPENSES AS WAS YOUR INTENT AT THE TIME YOU APPLIED FOR THE LOAN. ONE OTHER COMPLAINT YOU MAKE IS THAT ACAB AND SBA WORKED IN CONCERT WITH EACH OTHER AND THAT BUT FOR THE GRANT OF RELIEF BY ACAB, THE LOAN WOULD NOT HAVE BEEN FORTHCOMING FROM SBA.

FINALLY, YOU URGE THAT OUR OFFICE COULD ASSUME JURISDICTION OVER A CLAIM BY YOU IN THE AMOUNT OF $576,000 ON THE BASIS THAT THE VALUE OF THE SHELTERS DELIVERED AFTER SEPTEMBER 1, 1964, WAS INCREASED TO THAT EXTENT BY VIRTUE OF THE INVESTMENT BY YOU OF THE SBA LOAN PROCEEDS INTO COMPLETION OF THE CONTRACT. AS AN ALTERNATIVE, YOU SUGGEST THAT WE COULD CERTIFY TO THE CONGRESS UNDER 31 U.S.C. 236 OUR RECOMMENDATION IN SUPPORT OF AN EQUITABLE ADJUSTMENT IN AN AMOUNT REPRESENTATIVE OF THE DIFFERENCE BETWEEN YOUR LOSS POSITION AS OF THE DATE OF THE ACAB AWARD AND YOUR LOSS POSITION AS OF THE DATE OF CONTRACT COMPLETION.

CONSIDERING FIRST YOUR ATTEMPT TO INVOKE OUR CLAIM SETTLEMENT JURISDICTION TO ALLOW A PRICE INCREASE IN THE AMOUNT OF $576,000 ON THE BASIS THAT SUCH AMOUNT, REPRESENTING THE PROCEEDS OF THE SBA LOAN, WAS INVESTED BY YOU INTO COMPLETION OF CONTRACT -88790, SEVERAL FACTORS BEAR MENTION. FIRST, THE AMOUNT IN QUESTION WAS REQUIRED BY THE TERMS OF THE AUTHORIZING STATUTE, THE SMALL BUSINESS ACT, AND SBA REGULATIONS TO BE REPAID BY YOU FROM YOUR OWN FUNDS. THEREFORE, APPROVAL BY OUR OFFICE OF SUCH AN INCREASE IN THE PRICE OF CONTRACT -88790, EVEN IF WE HAD AUTHORITY TO MAKE GRATUITOUS PAYMENTS, WHICH WE DO NOT, WOULD AMOUNT TO REIMBURSING YOU FROM GOVERNMENT FUNDS FOR THE PRINCIPAL AMOUNT OF THE SBA LOAN, AND CONVERTING THE LOAN INTO AN OUTRIGHT GIFT, AN ACTION WHICH WOULD BE IN DEROGATION OF THE SMALL BUSINESS ACT AND SBA REGULATIONS. SECOND, CONTRACT -88790 WAS A FIXED-PRICE CONTRACT, EVEN AFTER THE ADJUSTMENT WHICH ACAB GRANTED YOU PURSUANT TO PUBLIC LAW 85-804, AND THERE IS THEREFORE FOR APPLICATION THE WELL ESTABLISHED RULE OF LAW THAT WHERE A CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT TO BE PAID, SUCH STIPULATION IS CONCLUSIVE ON THE PARTIES AND MEASURES THE AMOUNT OF RECOVERY FOR PERFORMANCE. BRAWLEY V UNITED STATES, 96 U.S. 168; SIMPSON V UNITED STATES, 172 ID. 372. ACCORDINGLY, WE ARE WITHOUT AUTHORITY TO APPROVE SUCH A CLAIM.

IN THE ALTERNATIVE, YOU REQUEST THAT WE REFER YOUR CLAIM TO THE CONGRESS UNDER THE ACT OF APRIL 10, 1928, 31 U.S.C. 236, WHICH PROVIDES THAT CLAIMS WHICH MAY NOT BE LAWFULLY ADJUSTED BY THE USE OF AN EXISTING APPROPRIATION BUT WHICH IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAIN SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF CONSIDERATION BY THE CONGRESS MAY BE SUBMITTED TO THE CONGRESS WITH A REPORT AND RECOMMENDATION. WE HAVE HELD THAT SUCH PROVISIONS MAY BE INVOKED ONLY WHEN IT IS DETERMINED DEFINITELY THAT THE CLAIM IN QUESTION CONTAINS THE REQUISITE ELEMENTS OF LEGAL LIABILITY OR EQUITY, AND THE FACT THAT PERFORMANCE OF A CONTRACT RESULTS IN A LOSS INSTEAD OF A PROFIT IS NOT A JUSTIFIABLE EXCUSE OR EXTENUATING CIRCUMSTANCE WHICH WOULD WARRANT OUR REFERRAL OF THE MATTER TO THE CONGRESS. 9 COMP. GEN. 378; 37 ID. 688. FURTHER, THE COURTS HAVE MANY TIMES STATED THAT EQUITABLE RELIEF IS NOT AVAILABLE MERELY BECAUSE ONE OF THE PARTIES TO A CONTRACT HAS MADE A BARGAIN THAT PROVES TO BE UNPROFITABLE, ABSENT EVIDENCE OF BAD FAITH, FRAUD, OR MISREPRESENTATION BY THE OTHER PARTY. B-158239, MARCH 11, 1966, AND COURT CASES THEREIN CITED. IN THE CIRCUMSTANCES WE MUST DECLINE TO RECOMMEND CONGRESSIONAL RELIEF. THERE REMAINS FOR CONSIDERATION YOUR OBJECTIONS TO THE ACTIONS OF THE ARMY CONTRACT ADJUSTMENT BOARD IN CONNECTION WITH YOUR APPLICATIONS FOR RELIEF UNDER PUBLIC LAW 85-804, AND TO THE REJECTION OF YOUR 1966 REQUESTS FOR ADDITIONAL RELIEF BY THE ARMY ELECTRONICS COMMAND AND THE DEPUTY ASSISTANT SECRETARY OF THE ARMY.

PUBLIC LAW 85-804, APPROVED AUGUST 28, 1958, ENACTED AS PERMANENT LAW (BUT EFFECTIVE ONLY DURING THE PERIOD OF A NATIONAL EMERGENCY AND SIX MONTHS AFTER TERMINATION THEREOF) THE SUBSTANCE OF THE PROVISIONS OF TITLE II OF THE FIRST WAR POWERS ACT, 55 STAT. 838, WHICH HAD PREVIOUSLY BEEN KEPT IN FORCE BY PERIODIC EXTENSIONS OF THE TERMINATION DATE FIXED THEREIN. THE INTERPRETATION OF THOSE PROVISIONS AND OF THE IMPLEMENTING EXECUTIVE ORDERS AND ADMINISTRATIVE REGULATIONS, AND THE SCOPE AND EXTENT OF THE AUTHORITY THEREBY CREATED, HAVE, WE BELIEVE, BEEN SUFFICIENTLY SETTLED TO ENABLE US TO DISPOSE OF YOUR CONTENTIONS BY REFERENCE TO PERTINENT JUDICIAL DECISIONS.

ON THE MATTER OF REQUIRING THE WITHDRAWAL OF YOUR ASBCA APPEAL AND RELEASE OF OTHER CLAIMS UNDER THE CONTRACTS IN QUESTION, PARAGRAPH 4, PART I, EXECUTIVE ORDER 10789, AS AMENDED, PROVIDES AS FOLLOWS: "4. THE DEPARTMENT OF DEFENSE MAY BY AGREEMENT MODIFY OR AMEND OR SETTLE CLAIMS UNDER CONTRACTS HERETOFORE OR HEREAFTER MADE, * * * AND MAY ENTER INTER AGREEMENTS WITH CONTRACTORS OR OBLIGORS MODIFYING OR RELEASING ACCRUED OBLIGATIONS OF ANY SORT * * *. AMENDMENTS OR MODIFICATIONS OF CONTRACTS MAY BE WITH OR WITHOUT CONSIDERATION AND MAY BE UTILIZED TO ACCOMPLISH THE SAME THINGS AS ANY ORIGINAL CONTRACT COULD HAVE ACCOMPLISHED HEREUNDER, IRRESPECTIVE OF THE TIME OR CIRCUMSTANCES OF THE MAKING * * * AND IRRESPECTIVE OF RIGHTS WHICH MAY HAVE ACCRUED UNDER THE CONTRACT * * *.'

THIS LANGUAGE IS SUBSTANTIALLY THE SAME AS THE LANGUAGE USED IN PARAGRAPH 4, PART I, OF EXECUTIVE ORDER 9001, ISSUED IN IMPLEMENTATION OF TITLE II, FIRST WAR POWERS ACT OF 1941, AS AMENDED, SUPRA, WHICH WAS THE SUBJECT OF AN OPINION OF THE ATTORNEY GENERAL, 40 OP. A.G. 225, 233-234 (1942). THE INTERPRETATION THEREOF BY THE ATTORNEY GENERAL READS AS FOLLOWS:

"IN PARTICULAR, THE LANGUAGE OF THE ACT RESPECTING -AMENDMENTS OR MODIFICATIONS OF CONTRACTS * * * WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT, OR MODIFICATION OF CONTRACTS, - WOULD BE LARGELY MEANINGLESS IF IT DID NOT INCLUDE THE POWER TO SETTLE CLAIMS AND RELEASE OBLIGATIONS IN FAVOR OF OR AGAINST THE UNITED STATES ARISING EITHER IN CONNECTION WITH THE ORIGINAL CONTRACT OR AS A RESULT OF A MODIFICATION OR AMENDMENT THEREOF.' THIS VIEW IS EMBODIED IN ASPR 17-202.2.

SINCE THE $2.6 MILLION IN RELIEF WHICH YOU ORIGINALLY REQUESTED INCLUDED EXISTING CLAIMS TOTALLING $586,000 AND CONTEMPLATED CLAIMS AMOUNTING TO $500,000 UNDER THE DISPUTES CLAUSES OF YOUR CONTRACTS, SUCH AMOUNTS HAD TO BE CONSIDERED IN DETERMINING THE AMOUNT OF RELIEF TO BE GRANTED IN ORDER TO PRECLUDE PAYMENT TO YOU OF A GREATER AMOUNT THAN NEEDED TO ALLEVIATE YOUR FINANCIAL CONDITION TO THE EXTENT NECESSARY TO ENABLE YOU TO COMPLETE YOUR CONTRACT. SEE ASPR 17-204.1, WHICH STATES THAT THE DECISION WHETHER IN A PARTICULAR CASE THE EXERCISE OF THE STATUTORY AUTHORITY TO GRANT RELIEF WILL FACILITATE THE NATIONAL DEFENSE IS A MATTER OF SOUND JUDGMENT TO BE MADE ON THE BASIS OF ALL OF THE FACTS OF THE CASE.

IN LIGHT OF THE SPECIFIC AUTHORITY CONFERRED BY EXECUTIVE ORDER 10789, AS AMENDED, ON THE CONTRACTING AGENCY TO MAKE THE CONTRACT ADJUSTMENT WITH OR WITHOUT CONSIDERATION AND TO ENTER INTO AN AGREEMENT MODIFYING OR RELEASING ACCRUED OBLIGATIONS OF ANY SORT INCIDENT TO SUCH ACTION AND THE RELATED ASPR PROVISIONS, WE ARE UNABLE TO CONCUR WITH YOUR VIEW THAT ACAB'S ACTION IN CONDITIONING THE RELIEF GRANTED TO YOU UPON WITHDRAWAL OF YOUR ASBCA APPEAL AND CLAIMS FILED AND PENDING WITH RESPECT TO THE CONTRACTS INVOLVED, AS WELL AS THE GENERAL RELEASE IN QUESTION, WAS NOT FULLY IN COMPLIANCE WITH THE SPIRIT AND INTENT OF PUBLIC LAW 85-804. IS WELL SETTLED THAT THE REMEDIAL PROVISIONS OF THE FIRST WAR POWERS ACT (WHICH WERE, AS ABOVE POINTED OUT, SUBSTANTIALLY THE SAME AS THOSE IN PUBLIC LAW 85-804) WERE NOT ADOPTED FOR THE BENEFIT OF CONTRACTORS, OR FOR THE PURPOSE OF RELIEVING THEM FROM UNPROFITABLE CONTRACTS, BUT SOLELY FOR THE BENEFIT OF THE NATION AS A WHOLE, IN ORDER TO FACILITATE THE PROSECUTION OF THE WAR. SEE ATLANTIC CORPORATION V UNITED STATES, 125 CT. CL. 464; BOLINDERS COMPANY, INC. V UNITED STATES, 139 CT. CL. 677, CERTIORARI DENIED 355 U.S. 953. THESE PROVISIONS CONFERRED NO RIGHTS ON ANY CONTRACTOR, AND THE DETERMINATION AS TO WHETHER OR NOT AN AMENDMENT TO A CONTRACT BENEFITING THE CONTRACTOR WOULD FACILITATE THE PROSECUTION OF THE WAR, OR THE NATIONAL DEFENSE, IS COMMITTED TO THE SOLE DISCRETION OF THE PRESIDENT AND HIS DELEGATES. BOLINDERS COMPANY, INC., SUPRA; COMMONWEALTH ENGINEERING CO. V UNITED STATES, 148 CT. CL. 330, CERTIORARI DENIED 364 U.S. 820; EVANS REAMER AND MACHINE CO. V UNITED STATES, 181 CT. CL. 539, CERTIORARI DENIED 390 U.S. 982.

THE GRANT OF RELIEF TO A CONTRACTOR UNDER THE LAW HERE INVOLVED IS THUS CLEARLY A MATTER OF GRACE, TO BE ALLOWED OR DENIED AT THE DISCRETION OF THE DESIGNATED OFFICIALS, AND THE COURTS HAVE ACCORDINGLY RECOGNIZED THE RIGHT OF THOSE OFFICIALS TO MEASURE THE RELIEF GRANTED SOLELY BY THE NEEDS OF THE NATIONAL INTEREST WITHOUT REFERENCE TO THE ADEQUACY OF SUCH RELIEF TO SAVE A CONTRACTOR FROM ALL PROSPECTIVE LOSSES. SEE THEOBALD INDUSTRIES, INC. V UNITED STATES, 126 CT. CL. 517; BOLINDERS COMPANY, INC. V UNITED STATES, SUPAR; EVANS REAMER AND MACHINE CO. V UNITED STATES, SUPRA.

AS INDICATED IN THE CITED DECISIONS AND IN YOUR CASE, THE PRACTICE OF THE CONTRACT ADJUSTMENT BOARDS HAS BEEN TO ALLOW CONTRACTORS ONLY SO MUCH ADDITIONAL MONEY AS WOULD INDUCE OR ENABLE THEM TO CONTINUE OR COMPLETE PERFORMANCE OF THEIR CONTRACTS TO THE EXTENT FOUND BY THE BOARDS TO BE NEEDED FOR THE WAR OR DEFENSE EFFORT. THE COURT OF CLAIMS HAS IN THE DECISIONS CITED REJECTED ALL CONTENTIONS THAT THIS INVOLVED ANY ABUSE OF DISCRETION OR WAS ARBITRARY, CAPRICIOUS OR SO GROSSLY ERRONEOUS AS TO IMPLY BAD FAITH, AND THE SUPREME COURT HAS REFUSED TO REVIEW ANY OF THOSE DECISIONS.

IN VIEW OF THE FOREGOING, WE SEE NO BASIS ON WHICH WE COULD OBJECT TO THE ACAB CONDITIONING ITS AWARD TO YOU UPON THE RELEASE BY YOU OF ALL OTHER CLAIMS WHICH YOU HAD PRESENTED OR MIGHT PRESENT UNDER YOUR CONTRACTS, OR CONSIDERING THE SBA LOAN TO YOU IN DETERMINING THE AMOUNT OF THE AWARD. AS TO YOUR CONTENTION THAT THE RESULT OF THE AWARD AND YOUR CONTINUED PERFORMANCE OF THE CONTRACT WAS TO LEAVE YOU IN A WORSE CONDITION FINANCIALLY THAN YOU WOULD OTHERWISE HAVE BEEN, WE CANNOT ASSUME THAT THE BOARD HAD ANY BETTER INFORMATION THAN YOU AS TO THE CONSEQUENCES, AND IT CANNOT BE CHARGED WITH ANY BAD FAITH IN ACCEPTING IN SUBSTANCE THE TERMS PROPOSED BY YOUR COUNSEL, WHICH WERE IN FACT EMBODIED IN THE AWARD MADE. YOUR ACCEPTANCE OF THE AWARD WAS NOT INDUCED BY ANY DURESS OR COERCION BY THE GOVERNMENT, SINCE MERE STRESS OF BUSINESS CONDITIONS DOES NOT CONSTITUTE DURESS WHEN THE DEFENDANT WAS NOT RESPONSIBLE FOR THOSE CONDITIONS (FRUHAUF SOUTHWEST GARMENT CO. V UNITED STATES, 126 CT. CL. 51); SOMETHING MORE MUST BE PRESENT THAN THREATENED FINANCIAL DISASTER (DUPUY V UNITED STATES, 67 CT. CL. 348); AND THREATS BY THE GOVERNMENT TO TAKE ACTION WHICH IT HAS THE RIGHT TO TAKE DO NOT AMOUNT TO DURESS (BEATTY V UNITED STATES, 144 CT. CL. 203; COMMONWEALTH ENGINEERING CO. V UNITED STATES, SUPRA).

AS TO SBA'S ACTIONS REGARDING ITS LOAN, 15 U.S.C. 636 (A) (7) PROVIDES THAT ALL LOANS MADE UNDER AUTHORITY OF SUBSECTION 636 (A) SHALL BE OF SUCH SOUND VALUE OR SO SECURED AS REASONABLY TO ASSURE REPAYMENT. IMPLEMENTATION OF THE STATUTORY AUTHORITY, THE ADMINISTRATOR, SBA, HAS PROMULGATED REGULATIONS PUBLISHED AT 13 CFR 120 AND 122. UNDER 13 CFR 120.2 (C), NO FINANCIAL ASSISTANCE MAY BE EXTENDED UNLESS THERE EXISTS REASONABLE ASSURANCE THAT THE LOAN CAN AND WILL BE REPAID PURSUANT TO ITS TERMS, AND UNDER 13 CFR 122.14, RELATING TO EXTENSION OF LOANS, EXTENSIONS MAY BE GRANTED ONLY WHEN IT APPEARS THAT NO OTHER COURSE OF LIQUIDATION WILL RESULT IN A GREATER AND EARLIER RECOVERY OF THE INDEBTEDNESS. THE COLLECTION POLICY OF SBA, AS SET FORTH IN 13 CFR 122.21, IS TO INSIST UPON PROMPT PAYMENT OF DUE INSTALLMENTS, SUBJECT, HOWEVER TO NEGOTIATION OF REASONABLE TERMS. IN ANY EVENT, THE ACTIONS OF SBA WERE NOT LEGALLY IMPROPER, AND THERE IS NO BASIS ON WHICH THE ACAB CAN BE CHARGED WITH ANY DUTY TO RELIEVE YOU FROM THE ADVERSE EFFECTS THEREOF.

WITH RESPECT TO THE ARROBALL CASE, FROM WHICH YOU QUOTE LANGUAGE REGARDING ENCOURAGEMENT TO CONTRACTORS, AN EXAMINATION OF THE DECISION SHOWS THAT THE REQUEST FOR RELIEF WAS BASED ON THE ,GOVERNMENT ACTION" PROVISIONS OF ASPR 17-204.2 (B). THE DECISION, INCLUDING THE LANGUAGE WHICH YOU QUOTE, WAS CONCERNED WITH WHETHER THE GRANTING OF RELIEF WOULD BE IN ACCORD WITH THE INTENT OF THE CONGRESS AND WITH THE PROVISIONS OF THE REGULATIONS. THE EXCERPTS QUOTED IN THE DECISION FROM THE REPORTS OF THE HOUSE OF REPRESENTATIVES AND THE SENATE RELATED ONLY TO AMENDMENTS TO PROVIDE RELIEF FOR DEFENSE CONTRACTORS WHERE LOSSES HAVE RESULTED FROM INEQUITABLE ACTION OF THE GOVERNMENT TOWARD A PARTICULAR CONTRACTOR. DO NOT FIND ANY BASIS FOR APPLYING SUCH LANGUAGE TO YOUR SITUATION.

FOR THE REASONS STATED, WE SEE NO LEGAL BASIS FOR A FINDING BY OUR OFFICE THAT IN YOUR CASE THERE HAS BEEN ANY ABUSE BY THE DEPARTMENT OF THE ARMY OF THE EXTRAORDINARY CONTRACTUAL RELIEF AUTHORITY DELEGATED TO THE DEPARTMENT PURSUANT TO EXECUTIVE ORDER 10789, AND YOUR CLAIM IS THEREFORE DENIED.