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INC.: REFERENCE IS MADE TO YOUR LETTER OF APRIL 7. THE RECORD DISCLOSES THAT THE CONTRACT IN QUESTION CONTAINED A PROMPT- PAYMENT DISCOUNT PROVISION AND THAT DISCOUNTS WERE TAKEN ON YOUR INVOICES UNDER THE BASIC CONTRACT. THE FINAL REVISED CONTRACT PRICE WAS ESTABLISHED AT $4. 136.05 AND IT WAS SPECIFICALLY PROVIDED THAT YOU SHOULD PROMPTLY REFUND TO THE GOVERNMENT THE SUM OF $518. YOUR CHECK FOR THIS AMOUNT WAS RECEIVED JANUARY 16. YOU STATE: "WE ARE OF THE OPINION THAT AT THE TIME OF SETTLEMENT OF THE REDETERMINABLE CLAUSE OF THE BASIC CONTRACT IT WAS NOT THE INTENT NOR IS IT OUR OPINION THAT FINAL SETTLEMENT WAS MADE. TAKING INTO CONSIDERATION THE CASH DISCOUNT OF THE REFUND THAT WAS MADE BY US TO THE UNITED STATES GOVERNMENT OF $518.

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B-123931, JUN. 22, 1955

TO SWITLIK PARACHUTE COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 7, 1955, REQUESTING REVIEW OF SETTLEMENT DATED APRIL 1, 1955, WHICH DISALLOWED YOUR CLAIM FOR $5,182.11, REPRESENTING ONE PERCENT CASH DISCOUNT ON THE REFUND OF $518,211.79 UNDER DEPARTMENT OF THE AIR FORCE CONTRACT NO. AF 33 (038) 15018, DATED AUGUST 4, 1950.

THE RECORD DISCLOSES THAT THE CONTRACT IN QUESTION CONTAINED A PROMPT- PAYMENT DISCOUNT PROVISION AND THAT DISCOUNTS WERE TAKEN ON YOUR INVOICES UNDER THE BASIC CONTRACT. THE CONTRACT ALSO CONTAINED A PRICE REDETERMINATION CLAUSE AS A RESULT OF WHICH, BY SUPPLEMENTAL AGREEMENT NO. 6, DATED AUGUST 15, 1952, THE FINAL REVISED CONTRACT PRICE WAS ESTABLISHED AT $4,280,136.05 AND IT WAS SPECIFICALLY PROVIDED THAT YOU SHOULD PROMPTLY REFUND TO THE GOVERNMENT THE SUM OF $518,211.78. YOUR CHECK FOR THIS AMOUNT WAS RECEIVED JANUARY 16, 1953.

IN YOUR LETTER OF APRIL 7, 1955, YOU STATE:

"WE ARE OF THE OPINION THAT AT THE TIME OF SETTLEMENT OF THE REDETERMINABLE CLAUSE OF THE BASIC CONTRACT IT WAS NOT THE INTENT NOR IS IT OUR OPINION THAT FINAL SETTLEMENT WAS MADE, TAKING INTO CONSIDERATION THE CASH DISCOUNT OF THE REFUND THAT WAS MADE BY US TO THE UNITED STATES GOVERNMENT OF $518,211.78.

"WE ARE FURTHER OF THE OPINION THAT THE LAW DOES PROVIDE THAT IN CONDITIONS OF THIS KIND PRESENTED IN OUR CASE THE DISCOUNT THAT WAS TAKEN ON BILLINGS IN PRIOR YEARS IN RELATING TO THE REFUND OF $518,211.78 WOULD GRANT US A REFUND OF 1 PERCENT ON THE DISCOUNTS THAT WERE TAKEN ON PREVIOUS BILLINGS. OUR CLAIM AMOUNTS TO $5,182.11.'

IT APPEARS THAT THE FIRST INDICATION OF YOUR DISAGREEMENT WITH THE REDETERMINED PRICE UNDER YOUR CONTRACT AND THE AMOUNT THAT YOU AGREED TO REFUND WAS CONTAINED IN A LETTER OF MARCH 24, 1954. THUS, INSOFAR AS THE RECORD SHOWS, MORE THAN YEAR HAD ELAPSED FROM THE DATE YOU SIGNED, WITHOUT PROTEST, SUPPLEMENTAL AGREEMENT NO. 6 TO YOUR CONTRACT, BEFORE YOU INDICATED ANY DISSATISFACTION WITH THAT AGREEMENT. IT IS ADMINISTRATIVELY REPORTED THAT, IN ARRIVING AT THE ADJUSTED CONTRACT PRICE, THE CASH DISCOUNT PROVISION CONTAINED IN THE ORIGINAL CONTRACT AND OTHER FACTORS SUCH AS, EFFICIENCY, ECONOMY, INGENUITY, AND COMPLEXITY OF WORK WERE GIVEN DUE CONSIDERATION. THE GOVERNMENT COST ACCOUNTANT IN HIS REPORT STATED THAT, AT THE TIME OF THE SETTLEMENT MEETING ON JULY 24, 1952, FOLLOWING WHICH SUPPLEMENTAL AGREEMENT NO. 6 WAS DRAFTED, AGREEMENT WAS REACHED BOTH AS TO COST OF THE PROJECT AND PROFIT AT THE RATE OF TEN PERCENT. THE AMOUNT OF THE REFUND AS SET FORTH IN THE AGREEMENT WAS CONSIDERED TO REFLECT A FINAL DISPOSITION OF THE MATTER.

AS INDICATED ABOVE, MORE THAN A YEAR PASSED FROM THE TIME YOUR REFUND PAYMENT WAS MADE PURSUANT TO THE AGREEMENT, WITHOUT PROTEST, UNTIL YOU PRESENTED YOUR CLAIM. IN THE CIRCUMSTANCES, THE TRANSACTION MUST BE REGARDED AS A CLOSED ONE. SEE, IN THIS CONNECTION, POOLE ENGINEERING AND MACHINERY COMPANY V. UNITED STATES, 57 C.CLS. 232, 234; ST. LOUIS, BROWNSVILLE AND MEXICO RAILWAY COMPANY V. UNITED STATES, 268 U.S. 169; AND SOUTHERN PACIFIC COMPANY V. UNITED STATES, 268 U.S. 263.

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