B-129484, NOV. 16, 1956

B-129484, NOV. 16, 1956

TO THE HORNER ELEVATOR COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 1, 1956, REQUESTING REVIEW OF OUR SETTLEMENT OF SEPTEMBER 6, 1956, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF DISCOUNT AMOUNTING TO $125.16, ALLEGED TO HAVE BEEN ERRONEOUSLY TAKEN IN MAKING PAYMENT TO YOU FOR FURNISHING AND INSTALLING AN ELEVATOR FOR THE UNITED STATES DEPARTMENT OF AGRICULTURE UNDER ORDER NO. 359-BRC-56 DATED AUGUST 10, 1955.

UNDER THE TERMS OF THE CONTRACT WHICH CONSISTED OF YOUR INFORMAL BID ON INVITATION NO. 11-OP-56 AND ACCEPTANCE OF THAT BID BY THE GOVERNMENT ON AUGUST 10, 1955, YOU AGREED TO FURNISH AND INSTALL ONE 2,000-POUND CAPACITY FREIGHT ELEVATOR, COMPLETE WITH ALL NECESSARY ACCESSORIES, IN ACCORDANCE WITH SPECIFICATIONS, AT GREENHOUSE NO. 2, RANGE NO. 3, LOCATED AT THE PLANT INDUSTRY STATION, BELTSVILLE, MARYLAND, FOR THE TOTAL PRICE OF $6,258, LESS A PROMPT PAYMENT DISCOUNT OF 2 PERCENT TEN DAYS OR 1 PERCENT TWENTY DAYS.

THE RECORD SHOWS THAT THE ELEVATOR WAS SET IN PLACE AND TURNED OVER TO THE GOVERNMENT IN OPERATING CONDITION ON APRIL 26, 1956, AND THAT PAYMENT OF THE CONTRACT PRICE, LESS 2 PERCENT CASH DISCOUNT AMOUNTING TO $125.16, WAS RECEIVED BY YOU ON APRIL 27, 1956. YOUR CLAIM FOR REFUND OF THE DISCOUNT WAS DISALLOWED IN OUR CLAIMS DIVISION SETTLEMENT OF SEPTEMBER 6, 1956.

YOU CONTEND THAT UNDER PARAGRAPH 7 OF THE GENERAL CONDITIONS OF THE CONTRACT PROVISION WAS MADE FOR PAYMENTS FOR PARTIAL DELIVERIES ACCEPTED BY THE GOVERNMENT AND THAT YOU SHOULD HAVE BEEN PAID AS THE MATERIAL FOR THE ELEVATOR WAS DELIVERED TO THE JOB SITE.

THE RECORD SHOWS THAT YOU DELIVERED SOME MATERIALS TO THE JOB SITE AT DIVERS TIMES FOR LATER ASSEMBLY INTO AN ELEVATOR. HOWEVER, THESE MATERIALS OR SUPPLIES WERE NOT ACCEPTED AS SUCH BY THE GOVERNMENT SINCE IT HAD CONTRACTED FOR AN ELEVATOR SET IN PLACE AND IN OPERATING CONDITION AND NOT FOR A QUANTITY OF PARTS TO BE USED IN THE CONSTRUCTION OF A FREIGHT ELEVATOR. PARAGRAPH 7 OF THE GENERAL CONDITIONS MUST BE REGARDED AS CONTEMPLATING PAYMENT FOR PARTIAL DELIVERIES OF A NUMBER OF COMPLETE UNITS FOR WHICH A UNIT PRICE HAS BEEN ESTABLISHED IN THE CONTRACT. THIS CASE IS TO BE DISTINGUISHED FROM THOSE CASES INVOLVING GOVERNMENT CONSTRUCTION CONTRACTS IN WHICH PROVISION IS GENERALLY MADE FOR PAYMENTS AS THE WORK PROGRESSES AND UPON ESTIMATES BY THE CONTRACTING OFFICER. ALSO, IN SUCH CONSTRUCTION CONTRACTS IT IS GENERALLY PROVIDED THAT ALL MATERIAL AND WORK COVERED BY PARTIAL PAYMENTS ARE THEREUPON TO BECOME THE PROPERTY OF THE GOVERNMENT. IN THIS CASE NO TITLE PASSED TO THE GOVERNMENT UNTIL THE ELEVATOR WAS SET IN PLACE, WAS IN OPERATING CONDITION AND ACCEPTED BY THE GOVERNMENT. HENCE, NO PAYMENT WAS DUE UNTIL THE ELEVATOR WAS COMPLETED AND SINCE PAYMENT WAS MADE THEREAFTER WITHIN THE DISCOUNT PERIOD THE CASH DISCOUNT WAS EARNED AND PROPERLY TAKEN.