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GEORGE BALES: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 29. THE BASIS OF YOUR CLAIM IS THAT THE SALES CONTRACTING OFFICER MISDESCRIBED THE PROPERTY PURCHASED BY YOU. IN OUR DECISION WE HELD THAT THERE WAS NO LEGAL BASIS FOR RELIEVING YOU OF YOUR OBLIGATIONS UNDER THE CONTRACT IN QUESTION. WOULD RETAIN 20 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70 AS LIQUIDATED DAMAGES AND THAT WE WERE INSTRUCTING OUR CLAIMS DIVISION TO ALLOW THAT PORTION OF THE SUM DEPOSITED BY YOU WHICH IS IN EXCESS OF 20 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70 WHICH. YOU STATE THAT YOU HAD ADVISED THE PHILADELPHIA NAVAL SHIPYARD THAT YOUR CLAIM WAS BEING CONSIDERED BY OUR OFFICE. YOU CONTEND THAT YOUR CASE WAS PREJUDGED BY THE PHILADELPHIA NAVAL SHIPYARD PRIOR TO OUR DECISION AND THAT "LEGALLY THIS IS A WRONGDOING.'.

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B-152939, APR. 10, 1964

TO MR. GEORGE BALES:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 29, 1964, IN WHICH YOU REFER TO OUR DECISION B-152939, FEBRUARY 7, 1964, IN WHICH WE SUSTAINED, IN PART, THE ACTION OF OUR CLAIMS DIVISION IN DISALLOWING YOUR CLAIM FOR $148.40, THE AMOUNT PAID BY YOU TO THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA NAVAL SHIPYARD, PHILADELPHIA, PENNSYLVANIA, FORCERTAIN PROPERTY PURCHASED UNDER SALES CONTRACT NO. DSA-11-S-2038.

THE BASIS OF YOUR CLAIM IS THAT THE SALES CONTRACTING OFFICER MISDESCRIBED THE PROPERTY PURCHASED BY YOU. IN OUR DECISION WE HELD THAT THERE WAS NO LEGAL BASIS FOR RELIEVING YOU OF YOUR OBLIGATIONS UNDER THE CONTRACT IN QUESTION. WE STATED THAT SINCE YOU HAD NOT REMOVED THE PROPERTY IN QUESTION, THE GOVERNMENT, PURSUANT TO THE PROVISIONS OF PARAGRAPH 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT, WOULD RETAIN 20 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70 AS LIQUIDATED DAMAGES AND THAT WE WERE INSTRUCTING OUR CLAIMS DIVISION TO ALLOW THAT PORTION OF THE SUM DEPOSITED BY YOU WHICH IS IN EXCESS OF 20 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70 WHICH, IN THIS CASE, HAPPENS TO BE THE SUM OF $118.72.

YOU REQUEST ADVICE AS TO WHY YOU RECEIVED A PARTIAL REFUND OF $118.72, THE SAME AMOUNT AS AUTHORIZED BY OUR DECISION, FROM THE PHILADELPHIA NAVAL SHIPYARD ALMOST ONE MONTH PRIOR TO THE DATE OF OUR DECISION OF FEBRUARY 7, 1964. YOU STATE THAT YOU HAD ADVISED THE PHILADELPHIA NAVAL SHIPYARD THAT YOUR CLAIM WAS BEING CONSIDERED BY OUR OFFICE. YOU CONTEND THAT YOUR CASE WAS PREJUDGED BY THE PHILADELPHIA NAVAL SHIPYARD PRIOR TO OUR DECISION AND THAT "LEGALLY THIS IS A WRONGDOING.'

THE RECORD SHOWS THAT BY SETTLEMENT DATED OCTOBER 31, 1963, OUR CLAIMS DIVISION DISALLOWED YOUR CLAIM FOR REFUND OF THE SUM OF $148.40 AND THAT A COPY OF SUCH SETTLEMENT WAS SENT TO THE DEFENSE LOGISTICS SERVICES CENTER. APPARENTLY, THE CENTER NOTIFIED THE DEFENSE SURPLUS SALES OFFICE AT THE PHILADELPHIA NAVAL SHIPYARD OF THE DISALLOWANCE OF YOUR CLAIM BY OUR CLAIMS DIVISION. IT APPEARS THAT SINCE YOUR CLAIM HAD BEEN DISALLOWED AND YOU HAD FAILED TO REMOVE THE PROPERTY PURCHASED BY YOU, THE DEFENSE SURPLUS SALES OFFICE DECLARED YOU IN DEFAULT PURSUANT TO THE PROVISIONS OF PARAGRAPH 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT WHICH PROVIDES THAT UPON DEFAULT OF THE PURCHASER, THE GOVERNMENT SHALL BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES A SUM EQUAL TO 20 PERCENT OF THE PURCHASE PRICE OF THE ITEM OR ITEMS AS TO WHICH THE DEFAULT HAS OCCURRED. IT IS APPARENT THAT AT THE TIME THE DEFENSE SURPLUS SALES OFFICE REFUNDED YOU 80 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70, IT WAS UNAWARE THAT YOU INTENDED TO ASK THE COMPTROLLER GENERAL OF THE UNITED STATES TO REVIEW THE CLAIMS DIVISION SETTLEMENT. AT THE TIME WE RENDERED OUR DECISION WE WERE UNAWARE THAT THE DEFENSE SURPLUS SALES OFFICE HAD DECLARED YOU IN DEFAULT OF THE CONTRACT AND THAT IT HAD REFUNDED TO YOU 80 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70. YOU MAY BE ADVISED THAT EVEN IF WE HAD KNOWN ABOUT THE DEFAULT AND REFUND ACTION TAKEN BY THE DEFENSE SURPLUS SALES OFFICE, WE WOULD STILL HAVE TO HOLD THAT THE GOVERNMENT WAS ENTITLED TO RETAIN AS LIQUIDATED DAMAGES 20 PERCENT OF THE PURCHASE PRICE OF ITEMS 69 AND 70.

ACCORDINGLY, OUR FINDING THAT THE MISDESCRIPTION RESULTED FROM AN HONEST MISTAKE WHICH IS COMPLETELY COVERED BY THE DISCLAIMER OF WARRANTY CLAUSE IS SUSTAINED AND OUR DECISION B-152939, FEBRUARY 7, 1964, IS AFFIRMED.

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