B-116962, FEBRUARY 1, 1954, 33 COMP. GEN. 330

B-116962, FEBRUARY 1, 1954, 33 COMP. GEN. 330

CONTRACTS - PRICE ADJUSTMENT - CEILING PRICE CHANGES CONTRACTOR WHO MADE LATE DELIVERIES OF STEEL PRODUCTS, AND WHO CLAIMED A PRICE ADJUSTMENT ON THE BASIS OF AN OFFICE OF PRICE STABILIZATION INCREASE IN THE CEILING PRICE OF STEEL, WHICH HAD NOT BEEN AUTHORIZED UNTIL AFTER THE EXPIRATION OF THE SPECIFIED DELIVERY PERIOD, MAY NOT BE REIMBURSED FOR INCREASED COSTS WHICH ACCRUED AS THE RESULT OF DELINQUENT PERFORMANCE, EVEN THOUGH THE GOVERNMENT BY ACCEPTING DELIVERY SUBSEQUENT TO THE SPECIFIED DATE WAIVED ITS RIGHT TO TERMINATION THE CONTRACT.

COMPTROLLER GENERAL WARREN TO THE EDGCOMB STEEL COMPANY, FEBRUARY 1, 1954:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 28, 1953, REQUESTING REVIEW OF SETTLEMENT DATED JULY 20, 1953, WHICH DISALLOWED YOUR CLAIM OF $874.03, REPRESENTING ADDITIONAL COSTS INCURRED IN THE PERFORMANCE OF CONTRACT NO. N50M-10473, DATED SEPTEMBER 4, 1951.

UNDER THE ABOVE-MENTIONED CONTRACT YOU AGREED TO FURNISH CERTAIN ITEMS SPECIFIED THEREIN AT A STIPULATED PRICE OF $20,109.19 WITH DELIVERY TO BE COMPLETED BY FEBRUARY 27, 1952. ATTACHED TO AND MADE A PART OF THE CONTRACT WAS A STANDARD STEEL ESCALATION CLAUSE, APPLICABLE TO ITEMS 23A AND 23B ONLY, WHICH PROVIDED, IN PERTINENT PART, AS FOLLOWS:

(B) THE CONTRACTOR MAY TO THE EXTENT PERMITTED BY LAW AT ANY TIME, OR FROM TIME TO TIME, AFTER THE DATE SET FOR OPENING OF BIDS AND DURING THE PERFORMANCE OF THE CONTRACT REQUEST IN WRITING AN UPWARD ADJUSTMENT IN ANY OF THE CONTRACT UNIT PRICES TO BE EFFECTIVE AS FROM A DATE TO BE SPECIFIED BY THE CONTRACTOR, SUBJECT TO THE FOLLOWING CONDITIONS.

(3) NO ADJUSTED UNIT PRICE SHALL BE EFFECTIVE EARLIER THAN THE EFFECTIVE DATE OF ANY INCREASE IN THE APPLICABLE ESTABLISHED PRICE AND NO INCREASE SHALL BE GRANTED UNLESS THE CONTRACTOR'S APPLICABLE ESTABLISHED PRICE HAS INCREASED SUBSEQUENT TO THE DATE SET FOR OPENING OF BIDS.

PARAGRAPH (C) OF THE ABOVE ESCALATION CLAUSE FURTHER PROVIDED THAT IN THE EVENT THE REQUESTED ADJUSTMENT IN ANY CONTRACT UNIT PRICE WAS ACCEPTABLE TO THE CONTRACTING OFFICER, HE SHOULD NOT LATER THAN 20 DAYS AFTER THE DATE OF RECEIPT BY HIM OF THE REQUEST SO NOTIFY THE CONTRACTOR, AND THE CONTRACT WOULD BE MODIFIED ACCORDINGLY, BY OFFICE OF PRICE STABILIZATION CEILING PRICE REGULATION DATED AUGUST 18, 1952, THERE WAS AN AUTHORIZED INCREASE IN PRICES EFFECTIVE WITH SHIPMENTS MADE ON AND AFTER JULY 26, 1952, AND SINCE SHIPMENT OF THE MATERIAL IN QUESTION WAS MADE ON AUGUST 4, 1952, THE AUTHORIZED INCREASED PRICES CONSTITUTE THE BASIS OF YOUR CLAIM; AND YOU CONTEND THAT SINCE THE PRICES OF MATERIALS AFFECTING THESE ITEMS WERE INCREASED PRIOR TO THEIR DELIVERY, YOU SHOULD BE PAID AT THE HIGHER PRICES IN ORDER TO ABSORB THE ADDITIONAL COST TO YOU.

THE TERMS OF THE CONTRACT IN THE INSTANT CASE WERE CLEAR AND UNAMBIGUOUS. WHILE THERE WAS A PROVISION FOR AN ADJUSTMENT IN THE UNIT PRICES TO COMPENSATE FOR ANY INCREASE IN THE ESTABLISHED PRICE OF MATERIALS, THE FACT REMAINS THAT HAD DELIVERY BEEN MADE WITHIN THE TIME SPECIFIED THE MATERIALS OBVIOUSLY WOULD NOT HAVE BEEN SUBJECT TO THE INCREASED PRICES NOW CLAIMED. IN EXPLANATION OF THE DELAY, YOU ADVISE THAT IN FEBRUARY, 1952, YOUR MILL RECEIVED WORD FROM YOUR STEEL VENDOR ADVISING THAT IT WOULD BE NECESSARY TO REMAKE THE STRIP FOR YOUR ORDER, THUS REVISING THE PROMISE OF SUCH STRIP TO YOUR MILL TO APPROXIMATELY APRIL 30, 1952--- TWO MONTHS AFTER THE CONTRACT DELIVERY DATE. SUBSEQUENTLY, YOUR MILL WAS TIED UP BY A FLASH UNANNOUNCED STRIKE LASTING UNTIL MAY 5, 1952, FOLLOWED BY A GENERAL NATIONWIDE STEEL STRIKE WHICH PREVENTED YOUR MILL FROM REOPENING UNTIL THE END OF JULY. NOTWITHSTANDING SUCH EXIGENCIES, HOWEVER, THERE IS NO RECORD OF YOUR HAVING REQUESTED AN AMENDMENT TO THE CONTRACT TO EXTEND THE DATE OF DELIVERY AND, IN THE ABSENCE OF SUCH AN EXTENSION, ALL DELIVERIES SUBSEQUENT TO FEBRUARY 27, 1952, WERE DELINQUENT UNDER THE TERMS OF THE AGREEMENT.

ON THE PRESENT RECORD, IT REASONABLY MAY NOT BE SAID THAT IT WAS CONTEMPLATED THAT THE GOVERNMENT, BY REASON OF YOUR DELINQUENCY, SHOULD BE PENALIZED BY BEING REQUIRED TO ASSUME THE BURDEN OF PRICE INCREASES BECOMING EFFECTIVE AFTER THE FINAL DELIVERY DATE FIXED IN THE CONTRACT. AFTER THAT DATE, YOU WERE IN DEFAULT. UNDER ARTICLE 11 OF THE CONTRACT CONDITIONS THE GOVERNMENT THEN HAD THE RIGHT TO TERMINATE THE CONTRACT AND PURCHASE THE SUPPLIES NOT DELIVERED THEREUNDER AGAINST YOUR ACCOUNT, OR TO EXTEND THE TIME FOR PERFORMANCE. NEITHER COURSE OF ACTION WAS FOLLOWED. HOWEVER, WHILE IT IS TRUE--- AS INTIMATED BY YOU- - THAT THE GOVERNMENT BY ACCEPTING PERFORMANCE UNDER THE CONTRACT FOLLOWING THE PRESCRIBED DELIVERY DATE WOULD BE HELD TO HAVE WAIVED WHATEVER RIGHTS IT HAD TO TERMINATE THE CONTRACT FOR WUCH CAUSES, IT DOES NOT FOLLOW THAT THE GOVERNMENT IS UNDER ANY OBLIGATION TO REIMBURSE YOUR FIRM FOR ITEMS OF EXPENSE WHICH ACCRUED AS A RESULT OF YOUR DELINQUENT PERFORMANCE. SEE FRANKFORT-1BARNETT CO. V. WILLIAM PRYM CO., 237 F.21, AND CASES CITED THEREIN.

ACCORDINGLY, SINCE THE EVIDENCE OF RECORD ESTABLISHES THAT THERE IS NO LEGAL BASIS FOR THE PAYMENT OF THE INSTANT CLAIM, THE SETTLEMENT OF JULY 20, 1953, IS SUSTAINED.