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INC.: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 24. PROTESTING THE FINDING OR DETERMINATION BY THE GOVERNMENT CONTRACTING OFFICER THAT THE DELAYS WHICH WERE RESPONSIBLE FOR THE TERMINATION OF YOUR CONTRACT NO. WERE NOT EXCUSABLE WITHIN THE MEANING OF PARAGRAPH 11 (B) OF ITS GENERAL PROVISIONS. DELIVERY OF THE SUPPLIES WAS TO HAVE BEEN ACCOMPLISHED ON OR BEFORE AUGUST 31. THE STIPULATED CONTRACT PRICE FOR THE ITEMS WAS $207.99. THE ELEMENT OF TIME WAS AN IMPORTANT FACTOR IN MAKING THE AWARD. THE BIDDERS WERE SO ADVISED IN THE INVITATION FOR BIDS. THE CONTRACTING OFFICER AGAIN ADVISED YOU THAT THE SUPPLIES WERE "REQUIRED NO LATER THAN AUGUST 31ST. WHICH ADVICE WAS SUPPLEMENTED BY YOUR TELEGRAM AND CONFIRMING LETTER OF SEPTEMBER 2.

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B-118405, NOV. 28, 1955

TO MANHATTAN LIGHTING EQUIPMENT CO., INC.:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 24, 1955, WITH ENCLOSURES, PROTESTING THE FINDING OR DETERMINATION BY THE GOVERNMENT CONTRACTING OFFICER THAT THE DELAYS WHICH WERE RESPONSIBLE FOR THE TERMINATION OF YOUR CONTRACT NO. DAI S 12-036-702-QM (P) 80411, O.I. 80-56, DATED AUGUST 12, 1955, WERE NOT EXCUSABLE WITHIN THE MEANING OF PARAGRAPH 11 (B) OF ITS GENERAL PROVISIONS.

UNDER THE TERMS OF THE CONTRACT, AS EXECUTED, DELIVERY OF THE SUPPLIES WAS TO HAVE BEEN ACCOMPLISHED ON OR BEFORE AUGUST 31, 1955. THE STIPULATED CONTRACT PRICE FOR THE ITEMS WAS $207.99, LESS 1 PERCENT DISCOUNT, MAKING A NET PRICE OF $205.91. THE ELEMENT OF TIME WAS AN IMPORTANT FACTOR IN MAKING THE AWARD, AND THE BIDDERS WERE SO ADVISED IN THE INVITATION FOR BIDS.

DUE ALLEGEDLY TO THE CLOSE PRODUCTION SCHEDULING OF THESE ITEMS, AND IN VIEW OF YOUR PROMISE OF DELIVERY BY AUGUST 31, THE CONTRACTING OFFICER IN LETTER DATED AUGUST 19, 1955, REMINDED YOU OF THE TIME FACTOR, AND REQUESTED THAT YOU ADVISE HIM OF THE PROGRESS BEING MADE AS OF AUGUST 25, AND OF ANY CONDITIONS WHICH MIGHT ADVERSELY AFFECT THE TIMELY COMPLETION OF YOUR CONTRACT. IN ANOTHER COMMUNICATION DATED AUGUST 25, 1955, THE CONTRACTING OFFICER AGAIN ADVISED YOU THAT THE SUPPLIES WERE "REQUIRED NO LATER THAN AUGUST 31ST," AND SPECIFICALLY REQUESTED THAT YOU ADVISE HIM IMMEDIATELY IN THE EVENT YOU COULD NOT DELIVER BY THAT DATE,"GIVING REASON FOR DELAY AND EXPECTED DELIVERY DATE.'

THE RECORD DISCLOSES THAT BY LETTER DATED AUGUST 29, 1955, YOU ADVISED THE CONTRACTING OFFICER OF YOUR SUPPLIER'S PROMISE OF DELIVERY OF THE ITEMS BY SEPTEMBER 9, WHICH ADVICE WAS SUPPLEMENTED BY YOUR TELEGRAM AND CONFIRMING LETTER OF SEPTEMBER 2, PROMISING SHIPMENT OF THE SUPPLIES BY SEPTEMBER 6, WITH PROBABLE DELIVERY BY YOUR SUPPLIER ON SEPTEMBER 8, 1955. UPON RECEIPT OF YOUR TELEGRAM, THE CONTRACTING OFFICER, BY TELEGRAM ALSO DATED SEPTEMBER 2, TERMINATED YOUR RIGHT TO PROCEED UNDER THE CONTRACT BY REASON OF YOUR DEFAULT. THIS COMMUNICATION WAS SUPERSEDED BY HIS CONFIRMING LETTER DATED SEPTEMBER 7, 1955, WHEREIN YOU WERE ADVISED:

"YOUR FAILURE TO PERFORM IN ACCORDANCE WITH THE CONTRACT DELIVERY SCHEDULE IS FOUND TO BE NON-EXCUSABLE WITHIN THE MEANING OF GENERAL PROVISION 11B OF THE CONTRACT FOR THE FOLLOWING EASON:

"1. SINCE THE SUPPLIES WERE AVAILABLE FROM OTHER FACTORIES' STOCK FOR IMMEDIATE SHIPMENT AND SINCE MR. DENMARK, OF MANHATTAN LIGHTING EQUIPMENT CO., INC. IN TELEPHONE CONVERSATION WITH THE CONTRACTING OFFICER ON 1 SEPTEMBER 1955, STATED THAT HIS SUPPLIER HAD ADVISED HIM ON 18 AUGUST 1955 THAT SHIPMENT WOULD NOT BE MADE UNTIL 9 SEPTEMBER 1955, THE CONTRACTING OFFICER HAS DETERMINED THAT THE SUPPLIES TO BE FURNISHED BY THE SUPPLIER TO MANHATTAN LIGHTING EQUIPMENT CO., INC. WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT MANHATTAN LIGHTING EQUIPMENT CO., INC. TO MEET THE REQUIRED DELIVERY SCHEDULE.

"THE SUPPLIES COVERED BY THIS CONTRACT ARE BEING PROCURED IN THE OPEN MARKET AGAINST YOUR ACCOUNT. YOU WILL BE HELD LIABLE FOR ANY EXCESS COSTS. THE GOVERNMENT ALSO RESERVES ALL RIGHTS AND REMEDIES PROVIDED BY LAW OR UNDER THE CONTRACT, IN ADDITION TO CHARGING EXCESS COSTS.'

IN ADDITION TO THE ABOVE, THE CONTRACTING OFFICER SPECIFICALLY NOTIFIED YOU THAT HIS FINDING IN THE MATTER WAS MADE PURSUANT TO PARAGRAPH 12 OF THE CONTRACT GENERAL PROVISIONS, ENTITLED ,DISPUTES," AND ALSO DIRECTED YOUR ATTENTION TO THE RIGHT TO APPEAL HIS DECISION WITHIN 30 DAYS TO THE HEAD OF THE DEPARTMENT. IN THE EVENT AN APPEAL WAS NOT TAKEN IN THE MANNER PRESCRIBED, THE DISPUTES CLAUSE SO OPERATED AS TO MAKE THE DECISION OF THE CONTRACTING OFFICER "FINAL AND CONCLUSIVE" AS TO ANY MATTERS IN DISPUTE.

THEREAFTER THE REQUIRED SUPPLIES, BEING READILY AVAILABLE, WERE PROCURED IN THE OPEN MARKET AT A TOTAL COST TO THE GOVERNMENT OF $252.85, OR AT A PRICE OF $46.94 IN EXCESS OF YOUR SPECIFIED CONTRACT PRICE FOR THE ITEMS. BY THE SPECIFIC TERMS OF PARAGRAPH 11 (C), GENERAL PROVISIONS OF THE CONTRACT, THESE EXCESS COSTS ARE CHARGEABLE DIRECTLY TO YOUR ACCOUNT.

THE ONLY EXCUSABLE CAUSES OF DELAY IN DELIVERY ARE THOSE FOUND TO BE "BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR," SUCH AS ACTS OF GOD, THE PUBLIC ENEMY, FIRES, FLOODS, STRIKES, QUARANTINE RESTRICTIONS, ETC., AS ENUMERATED IN ARTICLE 11 (B) OF THE SAID GENERAL PROVISIONS. HERE, THE PRIMARY CAUSE OF THE DELAY WAS YOUR FAILURE TO OBTAIN A POSITIVE COMMITMENT FROM YOUR SUPPLIER FOR THE DELIVERY OF THE REQUIRED ITEMS ON OR BEFORE THE SPECIFIED DELIVERY DATE--- AUGUST 31, 1955. THIS WAS EXCLUSIVELY YOUR RESPONSIBILITY, AND THE DELAYS HERE INVOLVED WERE IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THE RULE OF LAW GOVERNING SITUATIONS OF THIS CHARACTER--- PARTICULARLY WHERE THE TIME OF DELIVERY WAS MADE AN IMPORTANT FACTOR INMAKING THE AWARD, AND THE BIDDERS WERE ADVISED OF THAT FACT--- IS STATED IN THE CASE OF CARNEGIE STEEL COMPANY V. UNITED STATES, 240 U.S. 156, PAGE 164, AS FOLLOWS: "IT WOULD SEEM THAT THE VERY ESSENCE OF THE PROMISE OF A CONTRACT TO DELIVER ARTICLES IS ABILITY TO PROCURE OR MAKE THEM.'

FURTHERMORE, IT WILL BE NOTED THAT PARAGRAPH 12, GENERAL PROVISIONS OF THE CONTRACT, EXPRESSLY MAKES THE FINDINGS OR DETERMINATION OF THE CONTRACTING OFFICER ON DISPUTED QUESTIONS OF FACT ,FINAL AND CONCLUSIVE," UNLESS APPEALED WITHIN 30 DAYS TO THE HEAD OF THE DEPARTMENT CONCERNED, OR UNLESS SUCH DETERMINATION IS PROVED TO BE FRAUDULENT, GROSSLY ERRONEOUS OR CAPRICIOUS. SEE UNITED STATES V. CALLAHAN WALKER COMPANY, 317 U.S. 56, 61; UNITED STATES V. BLAIR, 321 ID. 730; UNITED STATES V. HOLPUCH COMPANY, 328 ID. 234. CLEARLY, THE FINDING BY THE CONTRACTING OFFICER THAT THE DELAYS HERE INVOLVED WERE "NON-EXCUSABLE," WITHIN THE MEANING OF PARAGRAPH 11 (B) OF THE PROVISIONS, AND THAT THE SUPPLIES WERE READILY AVAILABLE AND THUS PROCURABLE IN THE OPEN MARKET, CANNOT BE REGARDED AS ERRONEOUS OR ARBITRARY IN THE CIRCUMSTANCES PREVAILING. ACCORDINGLY, HIS DETERMINATION IN THE MATTER MUST BE ACCORDED FINALITY UNDER THE TERMS OF THE CONTRACT, AS DRAWN.

CONCERNING YOUR CONTENTION THAT THE CONTRACTING OFFICER DID NOT GIVE YOU THE REQUIRED 10 DAYS NOTICE PRIOR TO TERMINATION OF YOUR CONTRACT, IT WILL BE NOTED THAT THE TERMS OF ARTICLE 11 (A) OF THE CONTRACT GENERAL PROVISIONS CONTEMPLATE THREE DISTINCT CATEGORIES OF DEFAULTS. THE FIRST IS FAILURE TO MAKE DELIVERY OF THE SUPPLIES WITHIN THE TIME SPECIFIED IN THE CONTRACT. SECOND IS SUCH FAILURE TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THE CONTRACT. THIRD IS THE FAILURE TO PERFORM ANY PROVISION OF THE CONTRACT OTHER THAN THE REQUIREMENTS FOR TIME OF DELIVERY. IT IS ONLY WITH RESPECT TO THE SECOND AND THIRD CATEGORIES THAT THE CLAUSE OBLIGATES THE GOVERNMENT TO FURNISH THE CONTRACTOR WITH A NOTICE SPECIFYING THE DEFAULT AND TO AFFORD THE CONTRACTOR AN OPPORTUNITY OF AT LEAST TEN DAYS WITHIN WHICH TO CURE SUCH SPECIFIED DEFAULTS. SINCE YOUR DEFAULT RESULTED FROM FAILURE TO DELIVER THE ITEMS WITHIN THE TIME SPECIFIED THE CONTRACT DID NOT OBLIGATE THE GOVERNMENT TO GIVE YOU ANY NOTICE PRIOR TO TERMINATION.

AS TO THE CONTRACTING OFFICER'S REPORTED ATTEMPT TO EFFECTUATE A REDUCTION IN YOUR CONTRACT PRICE TO COMPENSATE FOR ANY ANTICIPATED DELAYS IN PERFORMANCE, IT LONG HAS BEEN RECOGNIZED THAT NO OFFICER OF THE GOVERNMENT HAS THE AUTHORITY TO SURRENDER GRATUITOUSLY ANY OF ITS VESTED RIGHTS WITHOUT SOME COMPENSATING BENEFIT MOVING TO THE UNITED STATES. SEE SIMPSON V. UNITED STATES, 172 U.S. 372; PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 C.CLS. 327, 335; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.CLS. 584, 607; 30 COMP. GEN. 509, 510.

ACCORDINGLY, IT MUST BE CONCLUDED THAT THE CONTRACTING OFFICER'S DETERMINATION THAT YOU ARE INDEBTED TO THE UNITED STATES FOR EXCESS COST AMOUNTING TO $46.94 BECAUSE OF YOUR DEFAULT UNDER THE CONTRACT REFERRED TO IS PROPER IN THE CIRCUMSTANCES HERE PREVAILING, AND IT IS SUGGESTED THAT YOU TAKE APPROPRIATE STEPS TO LIQUIDATE YOUR ESTABLISHED INDEBTEDNESS TO THE UNITED STATES WITHOUT FURTHER DELAY.

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