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B-176265, AUG 4, 1972

B-176265 Aug 04, 1972
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OR WAS NEVER INSTALLED. WHEN THE LANGUAGE USED BY THE PARTIES TO A CONTRACT IS INDEFINITE OR AMBIGUOUS AS TO THE OBLIGATIONS OF THE PARTIES. THE PRACTICAL INTERPRETATION OF THE PARTIES THEMSELVES IS ENTITLED TO GREAT. GAO WILL NOT OBJECT TO THE PAYMENT. ROBINSON: REFERENCE IS MADE TO A LETTER OF JUNE 13. THE SUBJECT DELIVERY ORDER WAS ISSUED SEPTEMBER 4. THE RECORD INDICATES THAT THE REQUIREMENT FOR THE EQUIPMENT WAS BASED UPON PROJECTED NEEDS OF THE DGSC WHICH WERE NEVER FULLY REALIZED DUE TO A SUBSEQUENT SUBSTITUTION OF MICROFISCHE FOR MICROFILM ON NEW PROJECTS. THE CONTRACTOR COMPLIED WITH THE PROVISIONS OF THE CONTRACT AND DELIVERED QUANTITIES OF THE SUBJECT ITEMS WHICH WERE STORED IN THE CENTER'S WAREHOUSE PENDING INSTALLATION AND UTILIZATION.

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B-176265, AUG 4, 1972

CONTRACT - AMBIGUITY - INTERPRETATION DECISION ALLOWING PAYMENT TO STROMBERG-DATAGRAPHIX, INC., OF AN INVOICE IN THE AMOUNT OF $3,276.79, REPRESENTING RENTAL CHARGES FOR MICROFILM EQUIPMENT DELIVERED UNDER A DSA CONTRACT, WHICH EITHER SPENT EXTENDED PERIODS IN STORAGE BEFORE INSTALLATION, OR WAS NEVER INSTALLED. WHEN THE LANGUAGE USED BY THE PARTIES TO A CONTRACT IS INDEFINITE OR AMBIGUOUS AS TO THE OBLIGATIONS OF THE PARTIES, THE PRACTICAL INTERPRETATION OF THE PARTIES THEMSELVES IS ENTITLED TO GREAT, IF NOT CONTROLLING INFLUENCE. TOPLIFF V. TOPLIFF, 122 U.S. 121, 131 (1887). APPEARS THAT BOTH PARTIES CONCUR THAT A ONE-MONTH PERIOD SHOULD BE CONSIDERED NORMAL OR USUAL FOR THE INSTALLATION OF THESE UNITS. SINCE THE INVOICE MAKES ALLOWANCE FOR SUCH PERIOD, AND SINCE THE AGENCY RAISES NO OTHER BASIS FOR OBJECTION, GAO WILL NOT OBJECT TO THE PAYMENT.

TO GENERAL WALLACE H. ROBINSON:

REFERENCE IS MADE TO A LETTER OF JUNE 13, 1972, WITH ATTACHMENTS, FROM YOUR CHIEF, ACCOUNTING AND FINANCE DIVISION, OFFICE OF THE COMPTROLLER, FORWARDING THE REQUEST OF THE ACCOUNTING AND FINANCE OFFICER, DEFENSE GENERAL SUPPLY CENTER (DGSC), RICHMOND, VIRGINIA, FOR AN ADVANCE DECISION AS TO THE PROPRIETY OF THE PROPOSED PAYMENT TO STROMBERG-DATAGRAPHIX, INC., OF AN INVOICE IN THE AMOUNT OF $3,276.79 PURSUANT TO DELIVERY ORDER DSA 400-71-F-0114 UNDER CONTRACT NO. GS-OOS 83991.

THE SUBJECT DELIVERY ORDER WAS ISSUED SEPTEMBER 4, 1970, FOR THE FURNISHING OF EIGHT 1700/3500 READER-PRINTERS AND THIRTY-SEVEN 1700 INQUIRY STATIONS FOR A RENTAL PERIOD OF JULY 1, 1970, TO JUNE 30, 1971, AND FOUR MORE OF THE REFERENCED READER-PRINTERS AND SIXTEEN MORE OF THE SUBJECT INQUIRY STATIONS FOR THE RENTAL PERIOD OF AUGUST 15, 1970, TO JUNE 30, 1971.

THE RECORD INDICATES THAT THE REQUIREMENT FOR THE EQUIPMENT WAS BASED UPON PROJECTED NEEDS OF THE DGSC WHICH WERE NEVER FULLY REALIZED DUE TO A SUBSEQUENT SUBSTITUTION OF MICROFISCHE FOR MICROFILM ON NEW PROJECTS. NEVERTHELESS, THE CONTRACTOR COMPLIED WITH THE PROVISIONS OF THE CONTRACT AND DELIVERED QUANTITIES OF THE SUBJECT ITEMS WHICH WERE STORED IN THE CENTER'S WAREHOUSE PENDING INSTALLATION AND UTILIZATION. IT IS ADMITTED THAT A NUMBER OF THE ITEMS WERE NEVER PLACED IN SERVICE, AND OTHERS WERE INSTALLED ONLY AFTER A CONSIDERABLE PERIOD OF STORAGE IN THE WAREHOUSE. WHEN COGNIZANT OF THE REDUCTION IN REQUIREMENTS, THE CONTRACTING OFFICER ISSUED MODIFICATIONS IN OCTOBER 1970, AND IN JANUARY, MARCH AND APRIL OF 1971, DELETING VARIOUS QUANTITIES OF THE REFERENCED ITEMS.

THE ONLY PROVISION IN THE CONTRACT PERTAINING TO THE DATE OF COMMENCEMENT OF RENTALS STATES THAT MONTHLY RENTALS ARE TO COMMENCE ON THE NEXT WORKING DAY FOLLOWING THAT ON WHICH EACH MACHINE IS INSTALLED, READY TO OPERATE. THE CONTRACTOR'S INVOICES WERE SUBMITTED ON THE BASIS OF THIS PROVISION, EXCEPT FOR THOSE ITEMS NEVER PLACED IN SERVICE AND FOR THOSE WHICH HAD BEEN STORED FOR LONG PERIODS PRIOR TO PLACEMENT IN SERVICE. RENTAL ON THESE UNITS WAS DELETED FROM PAYMENTS MADE, EXCEPT FOR PERIODS WHILE THE LATTER WERE IN USE.

ACCORDINGLY, THE CONTRACTOR SUBMITTED THE INVOICE IN QUESTION, IN THE SUM OF $3,276.79 AS A SUMMARY INVOICE TO COVER RENTAL FOR THE UNITS WHICH WERE NEVER INSTALLED AND FOR THOSE STORED FOR LONG PERIODS PRIOR TO INSTALLATION. THE RECORD ADVISES THAT THIS SUMMARY INVOICE WAS COMPUTED TO ALLOW AT LEAST A ONE-MONTH PERIOD AFTER DELIVERY TO THE WAREHOUSE, PRIOR TO INSTALLATION, A PERIOD WHICH DGSC ADMITS IS CONSIDERED NORMAL OR USUAL FOR INSTALLATION OF THE MACHINES.

DGSC AGREES WITH THE CONTRACTOR'S CONTENTION THAT IT SHOULD RECEIVE THE RENTALS LOST DUE TO UNUSUALLY LONG DELAYS IN INSTALLING THOSE UNITS, OR THE FAILURE TO INSTALL THEM AT ALL, AND RECOMMENDS THAT THE INVOICE BE APPROVED FOR PAYMENT IN THE AMOUNT SUBMITTED.

THE PROBLEM PRESENTED WOULD THEREFORE APPEAR TO ARISE OUT OF THE FAILURE OF THE CONTRACT TO EXPRESS THE INTENTION OF THE PARTIES THAT INSTALLATION SHOULD OCCUR WITHIN A REASONABLE TIME AFTER DELIVERY, AND THAT THE CONTRACTOR WOULD BE ENTITLED TO RENTAL UPON EXPIRATION OF SUCH TIME AND FAILURE TO INSTALL.

IT HAS BEEN HELD BY THE UNITED STATES SUPREME COURT THAT WHEN THE LANGUAGE USED BY THE PARTIES TO A CONTRACT IS INDEFINITE OR AMBIGUOUS AS TO THE OBLIGATIONS OF THE PARTIES, THE PRACTICAL INTERPRETATION OF THE PARTIES THEMSELVES IS ENTITLED TO GREAT, IF NOT CONTROLLING INFLUENCE. TOPLIFF V. TOPLIFF, 122 U.S. 121, 131 (1887).

AS STATED ABOVE, THE CONTRACT IS SILENT AS TO THE PERIOD OF TIME FOLLOWING DELIVERY IN WHICH THE GOVERNMENT WAS OBLIGATED TO INSTALL THE MACHINES SO AS TO COMMENCE THE ACCRUAL OF RENTALS. IN VIEW THEREOF, AND OF THE HOLDING OF THE CITED CASE, THAT PERIOD SHOULD BE CONSTRUED ACCORDING TO THE PRACTICAL INTERPRETATION ADVANCED BY DGSC AND THE CONTRACTOR.

IT APPEARS FROM THE RECORD BEFORE US THAT BOTH PARTIES CONCUR THAT A ONE- MONTH PERIOD SHOULD BE CONSIDERED NORMAL OR USUAL FOR THE INSTALLATION OF SUCH UNITS. INASMUCH AS THE SUBJECT INVOICE INCLUDES AN ALLOWANCE FOR SUCH A PERIOD, AND YOUR AGENCY PRESENTS NO OTHER BASIS FOR OBJECTION TO PAYMENT THEREOF, THIS OFFICE WILL NOT OBJECT TO THE RECOMMENDED PAYMENT.

THE FILE TRANSMITTED WITH THE LETTER OF JUNE 13, 1972, IS RETURNED.

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