B-127860, MAY 28, 1956

B-127860, MAY 28, 1956

TO POTTER AND RAYFIELD, INC.:

REFERENCE IS MADE TO LETTERS OF APRIL 27 AND 30, 1956, FROM YOUR ATTORNEY, MR. WALTER W. CALHOUN, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES ARISING OUT OF YOUR DEFAULT UNDER DEPARTMENT OF THE ARMY CONTRACT NO. DA-11-070-ORD-4835, DATED JUNE 27, 1951. THE INDEBTEDNESS WAS TRANSMITTED TO OUR OFFICE FOR COLLECTION PURPOSES AND DEMAND FOR PAYMENT OF THE UNLIQUIDATED BALANCE WAS MADE IN OUR CLAIMS DIVISION LETTER OF MARCH 15, 1956, TO YOU.

YOU PROTESTED THE ACTION TAKEN BY THE CONTRACTING OFFICER ON JANUARY 23, 1952, IN DECLARING YOU IN DEFAULT UNDER THE CONTRACT AND FOR HOLDING YOU LIABLE FOR THE EXCESS COST OCCASIONED BY THE GOVERNMENT IN THE PROCUREMENT OF THE DEFAULTED ITEMS IN THE OPEN MARKET, PRIMARILY FOR THE REASON THAT YOUR BID WAS SUBMITTED IN ERROR. IT APPEARS THE ALLEGED ERROR CONSISTS OF YOUR MISUNDERSTANDING WITH RESPECT TO CERTAIN GOVERNMENT EQUIPMENT FURNISHED YOU UNDER THE CONTRACT TERMS WHICH PROVED NOT ADAPTABLE TO YOUR USE. YOU CONTEND THAT THE GOVERNMENT ENGINEERS WHO INSPECTED YOUR PLANT PRIOR TO YOUR SUBMITTING THE BID IN QUESTION WERE SUPPLIED WITH DETAILED INFORMATION REGARDING YOUR PLANT FACILITIES AND OTHERWISE POSSESSED KNOWLEDGE OF THE TYPE OF TOOLS AND EQUIPMENT TO BE FURNISHED BY THE GOVERNMENT BUT THEIR FAILURE TO GIVE YOU TIMELY NOTICE THAT YOUR PLANT WAS NOT EQUIPPED TO HANDLE THE HEAVY GOVERNMENT EQUIPMENT TO BE FURNISHED RESULTED IN YOUR ERRONEOUS PREPARATION OF THE BID AND SUBSEQUENT DEFAULT OF THE AWARD CONTRACT.

IN THE TERMINATION NOTICE YOU WERE APPRISED OF YOUR RIGHT TO APPEAL THE DECISION OF THE CONTRACTING OFFICER TO THE SECRETARY OF THE ARMY UNDER ARTICLE 12 (DISPUTES CLAUSE) OF THE CONTRACT. YOU PRESENTED SUCH APPEAL, CONTENDING THAT THE CONTRACT SHOULD NOT HAVE BEEN AWARDED TO YOU SINCE THE CONTRACT BECAME IMPOSSIBLE OF PERFORMANCE FOR THE REASON THE GOVERNMENT MATERIAL UPON ARRIVAL AND INSPECTION WAS FOUND TOO HEAVY FOR THE FACILITIES USED AT YOUR PLANT. THE APPEAL WAS ASSIGNED TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS, AS DULY AUTHORIZED REPRESENTATIVE OF THE HEAD OF THE DEPARTMENT. THAT BOARD IN ITS DECISION DATED FEBRUARY 25, 1953, AFTER SETTING FORTH ITS CONSIDERATION AS TO ALL DISPUTED QUESTIONS OF FACT, DENIED THE APPEAL. THIS DENIAL WAS BASED IN PART ON THE CONCLUSION THAT YOU HAD FAILED TO ESTABLISH THAT THE CONTRACT WAS IMPOSSIBLE OF PERFORMANCE AND PARTLY ON THE DETERMINATION THAT THE CONTRACTING OFFICER DID NOT MAKE A MISTAKE IN AWARDING YOU THE CONTRACT SINCE IT APPEARED THAT YOU HAD THE ABILITY TO PERFORM AND ALSO HAD REPRESENTED THAT YOU WERE IN A POSITION TO SECURE ADDITIONAL MACHINERY TO COMPLETE THE CONTRACT.

UNDER THE ACT OF MAY 11, 1954, 68 STAT. 81, THE DECISION RENDERED BY THE BOARD IS FINAL AND CONCLUSIVE ON ALL DISPUTED QUESTIONS OF FACT "UNLESS THE SAME IS FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.' THE RECORD REFLECTS YOUR CLEAR UNDERSTANDING REGARDING THE JURISDICTION OF OUR OFFICE IN THE MATTER PRESENTED HERE. UPON REVIEW OF THE RECORD THERE HAVE BEEN FOUND NO GROUNDS FOR REJECTION OF THE BOARD'S DECISION.

NOTWITHSTANDING THE FOREGOING, YOUR ATTORNEY IN LETTER OF APRIL 27, 1956, REQUESTS FURTHER CONSIDERATION IN THE DISPUTED MATTER UNDER THE DOCTRINE OF IMPOSSIBLE PERFORMANCE MAINLY ON THE GROUND THAT THE TOOLS FURNISHED BY THE GOVERNMENT WERE UNSUITABLE FOR USE IN THE CONTRACT WORK. HE HAS CITED NUMEROUS COURT DECISIONS, TOGETHER WITH DISCUSSIONS IN WILLISTON ON CONTRACTS, FOR EXCUSING NONPERFORMANCE OF THE DEFAULTED CONTRACT UNDER THIS DOCTRINE, THE INFERENCE BEING THAT ,A LIBERAL CONSTRUCTION OF THE CONTRACT," WOULD JUSTIFY THE GRANTING OF THE REQUESTED RELIEF. HOWEVER, THE DOCTRINE DOES NOT APPEAR FOR APPLICATION HERE SINCE, AS STATED BY THE BOARD IN ITS DECISION ON YOUR APPEAL, THE CONTRACT PROVISIONS CONTAIN NO WARRANTIES OF USABILITY OR SUITABILITY OF THE TOOLS TO BE FURNISHED BY THE GOVERNMENT. THAT THE WARRANTIES ARE NOT CONTAINED IN THE CONTRACT IS A MATTER OF FACT, AS MUCH SO AS THE ESTABLISHED FACT THAT ALL MATERIAL AVAILABLE TO THE GOVERNMENT FOR THE PURPOSE INTENDED HERE WAS SUPPLIED TO YOU AND THAT MATERIAL WAS FURNISHED TO AND SUCCESSFULLY USED BY OTHER CONTRACTORS FOR THE SAME PURPOSE.

IT MAY BE, AS YOU CONTEND, THAT MORE COMPLETE KNOWLEDGE OF THE DETAILED EQUIPMENT NECESSARY TO THE FINISHED WORK AT THE TIME OF YOUR PREPARATION OF THE BID WOULD HAVE SUGGESTED YOUR TIMELY WITHDRAWAL. NEVERTHELESS, YOUR ELECTION TO PRESENT YOUR PROPOSAL ON THE INFORMATION AVAILABLE WAS YOUR OWN AND THE FACT THAT YOU MAY HAVE RELIED UPON THE JUDGMENT OF SOME OTHER PERSON OR PERSONS AS TO THE SUITABILITY OF YOUR PLANT FOR COMPLETION OF THE REQUIRED WORK IN NOWISE AFFECTS YOUR LEGAL RIGHTS AND OBLIGATIONS UNDER THE CONTRACT. THE RESPONSIBILITY FOR THE ACTUAL PREPARATION OF THE PROPOSAL WAS UPON YOU AS BIDDER AND FOR THAT REASON THE CASE OF FRAZIER- DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163, APPEARS FOR DIRECT APPLICATION. IT FOLLOWS THAT YOUR CLAIM FOR REFUND OF CERTAIN FREIGHT CHARGES PAID IN CONNECTION WITH THE GOVERNMENT-FURNISHED MATERIAL IS WITHOUT MERIT.

WITH RESPECT TO YOUR CLAIM FOR REFUND OF THE AMOUNT OF $6,567.75, REPRESENTING FUNDS OTHERWISE DUE YOU WHICH WERE APPLIED AGAINST YOUR INDEBTEDNESS, AND THE AUTHORITY OF OUR OFFICE TO MAKE THIS ADJUSTMENT, YOUR ATTENTION IS INVITED TO THE CASE OF UNITED STATES V. MUNSEY TRUST CO., 332 U.S. 234, 239-240, WHEREIN THE SUPREME COURT STATED:

"* * * THE GOVERNMENT HAS THE SAME RIGHT "WHICH BELONGS TO EVERY CREDITOR, TO APPLY THE UNAPPROPRIATED MONEYS OF HIS DEBTOR, IN HIS HANDS, IN EXTINGUISHMENT OF THE DEBTS DUE TO HIM.' GRATIOT V. UNITED STATES, 15 PET. 336, 370; MCKNIGHT V. UNITED STATES, 98 U.S. 179, 186. MORE THAN THAT, FEDERAL STATUTE GIVES JURISDICTION TO THE COURT OF CLAIMS TO HEAR AND DETERMINE "ALL SET-OFFS, COUNTERCLAIMS, CLAIMS FOR DAMAGES, WHETHER LIQUIDATED OR UNLIQUIDATED, OR OTHER DEMANDS WHATSOEVER ON THE PART OF THE GOVERNMENT OF THE UNITED STATES AGAINST ANY CLAIMANT AGAINST THE GOVERNMENT IN SAID COURT....' JUDICIAL CODE SEC. 145, 28 U.S.C. SEC. 250/2). THIS POWER GIVEN TO THE COURT OF CLAIMS TO STRIKE A BALANCE BETWEEN THE DEBITS AND CREDITS OF THE GOVERNMENT, BY LOGICAL IMPLICATION GIVES POWER TO THE COMPTROLLER GENERAL TO DO THE SAME, SUBJECT TO REVIEW BY THAT COURT. * * *"

ACCORDINGLY, ON THE BASIS OF THE FOREGOING, THE ACTION TAKEN IN THE MATTER IS SUSTAINED.