B-188281, MAY 26, 1977
Highlights
CLAIM FOR COST OF REJECTED GOODS AND EXPENSES IN RESHIPPING IS REFERRED TO CONTRACTING AGENCY AS MATTER IS FOR PROCESSING UNDER "DISPUTES" CLAUSE OF CONTRACT. THE GOODS WERE REJECTED BY THE DEPARTMENT OF THE ARMY TWICE. BECAUSE ONE LOT WAS COMPOSED ENTIRELY OF HIND FEET IN VIOLATION OF THE CONTRACTUAL REQUIREMENT WHICH PROVIDED FOR FRONT FEET ONLY. BECAUSE THEY WERE CONTAMINATED. SECTION L 19.81(A)(1) OF THE CONTRACT PROVIDED THAT "ALL MATERIAL FURNISHED UNDER THIS CONTRACT WILL BE FREE FROM DEFECTS IN MATERIAL OR WORKMANSHIP AND WILL CONFORM WITH THE SPECIFICATIONS AND ALL OTHER REQUIREMENTS OF THIS CONTRACT.". THE CONTRACT PROVIDED THAT TRANSPORTATION CHARGES FOR RETURNED SUPPLIES AND THE CORRECTION OR REPLACEMENT OF THE SUPPLIES ARE TO BE BORNE BY THE CONTRACTOR.
B-188281, MAY 26, 1977
CLAIM FOR COST OF REJECTED GOODS AND EXPENSES IN RESHIPPING IS REFERRED TO CONTRACTING AGENCY AS MATTER IS FOR PROCESSING UNDER "DISPUTES" CLAUSE OF CONTRACT, EVEN THOUGH PREVIOUSLY CONSIDERED BY GAO CLAIMS DIVISION.
SAM MIRMAN, INC.:
BY LETTER DATED JANUARY 21, 1977, SAM MIRMAN, INC. (MIRMAN), HAS REQUESTED RECONSIDERATION OF THE SETTLEMENT CERTIFICATE ISSUED BY OUR CLAIMS DIVISION ON DECEMBER 17, 1976, WHICH DISALLOWED ITS CLAIM FOR EXPENSES INCURRED INCIDENT TO THE RESHIPMENT OF GOODS UNDER CONTRACT NO. DSA13H-75-C-PA-67 WITH THE DEFENSE SUPPLY AGENCY (DSA) (NOW THE DEFENSE LOGISTICS AGENCY).
THE CONTRACT CALLED FOR CERTAIN QUANTITIES OF PIGS FEET. THE GOODS WERE REJECTED BY THE DEPARTMENT OF THE ARMY TWICE; ONCE FOR IMPROPER LABELING OR MARKING AND A SECOND TIME FOR BEING IMPROPERLY PACKAGED IN FIBERBOARD BOXES WHICH LACKED PROTECTIVE LININGS, BECAUSE ONE LOT WAS COMPOSED ENTIRELY OF HIND FEET IN VIOLATION OF THE CONTRACTUAL REQUIREMENT WHICH PROVIDED FOR FRONT FEET ONLY, AND BECAUSE THEY WERE CONTAMINATED. MIRMAN SEEKS DAMAGES FOR THE ALLEGED WRONGFUL REJECTION OF THE LOT OF HIND PIGS FEET AND THE EXPENSES INCURRED IN RESHIPPING THE GOODS.
SECTION L 19.81(A)(1) OF THE CONTRACT PROVIDED THAT "ALL MATERIAL FURNISHED UNDER THIS CONTRACT WILL BE FREE FROM DEFECTS IN MATERIAL OR WORKMANSHIP AND WILL CONFORM WITH THE SPECIFICATIONS AND ALL OTHER REQUIREMENTS OF THIS CONTRACT." ADDITIONALLY, THE CONTRACT PROVIDED THAT TRANSPORTATION CHARGES FOR RETURNED SUPPLIES AND THE CORRECTION OR REPLACEMENT OF THE SUPPLIES ARE TO BE BORNE BY THE CONTRACTOR. FURTHER, FAILURE TO AGREE TO ANY DETERMINATION MADE UNDER SECTION L 19.81 IS A DISPUTE CONCERNING A QUESTION OF FACT WITHIN THE MEANING OF THE "DISPUTES" CLAUSE OF THE CONTRACT. SEE SECTION 1 19.81(G).
THE PROPRIETY OF THE GOVERNMENT'S REJECTION OF THE GOODS TENDERED BY MIRMAN INVOLVES A QUESTION OF FACT SINCE THE REASON FOR THE REJECTION WAS A FAILURE TO MEET THE CONTRACT SPECIFICATIONS. CRYSTAL SOAP & CHEMICAL CO. V. UNITED STATES, 103 CT.CL. 166 (1945). FURTHER, IT IS WELL ESTABLISHED THAT WHEN A CONTRACT SETS OUT A PROCEDURE UNDER WHICH DISPUTES ARE TO BE SETTLED ADMINISTRATIVELY, THE REMEDY THEREBY PROVIDED MUST BE EXHAUSTED BY THE CONTRACTOR. UNITED STATES V. JOSEPH A. HOLPUCH COMPANY, 328 U.S. 234 (1946); HYDRO FITTING MANUFACTURING CORPORATION, B-183693, MAY 8, 1975, 75-1 CPD 288. MIRMAN FAILED TO PURSUE THIS MATTER UNDER THE "DISPUTES" CLAUSE WITH THE CONTRACTING AGENCY.
IN LIGHT OF THE ABOVE, WE BELIEVE THE MATTER IS COGNIZABLE BY THE CONTRACTING OFFICER UNDER THE "DISPUTES" CLAUSE AND WAS IMPROPERLY CONSIDERED BY OUR CLAIMS DIVISION. ACCORDINGLY, WE ARE REFERRING THE MATTER TO DLA FOR PROCESSING. FURTHERMORE, FOLLOWING THE SUPREME COURT DECISION IN S&E CONTRACTORS, INCORPORATED V. UNITED STATES, 406 U.S. 1 (1972), WE NO LONGER REVIEW BOARD OF CONTRACT APPEALS DECISIONS ABSENT A SHOWING OF FRAUD OR BAD FAITH.