B-162288, OCT. 13, 1967

B-162288, OCT. 13, 1967

CONTRACTS - DELIVERIES INFERIOR DECISION TO MAGNOLIA CORPORATION CONCERNING CLAIM FOR REIMBURSEMENT FOR REPLACEMENT OF A DEFECTIVE SWITCH INSTALLED AT DEPT. OF AGRICULTURE FOREST SERVICE MOBILE HOME CAMP, SCHENCK JOB CORPS. ALSO LETTER TO FOREST SERVICE CERTIFYING OFFICER. CONTRACTOR WHO WAS REQUIRED TO PAY FOR REPLACEMENT OF DEFECTIVE SWITCH BUT WHO DID NOT REQUEST RETURN OF DAMAGED SWITCH UNTIL TWO MONTHS AFTER REPLACEMENT HAD BEEN ACCOMPLISHED AND WHEN DAMAGED SWITCH COULD NOT BE LOCATED SO THAT CONTRACTOR COULD EXERCISE A WARRANTY WITH THE MANUFACTURER MUST HAVE CLAIM DENIED SINCE THERE WAS NO CONTRACTUAL OBLIGATION TO RETURN DAMAGED EQUIPMENT AND RECORD DOES NOT SHOW THAT LOSS WAS DUE TO NEGLIGENCE. HOWEVER, DEPT. IS ADVISED THAT LABOR COST FOR INSTALLATION OF REPLACEMENT MAY BE PAID BY DEPARTMENT AND DOES NOT HAVE TO BE SET OFF AGAINST CONTRACTOR.

TO MAGNOLIA CORPORATIONS:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22, 1967, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED JULY 15, 1966, WHEREIN YOUR CLAIM FOR $706.32, COVERING REIMBURSEMENT IN CONNECTION WITH A 1,000 AMPERE BREAKER DISCONNECT SWITCH INSTALLED AT THE DEPARTMENT OF AGRICULTURE, FOREST SERVICE MOBILE HOME CAMP, SCHENCK JOB CORPS CENTER, TRANSYLVANIA COUNTY, NORTH CAROLINA, WAS DISALLOWED.

YOUR CLAIM FOR $706.32 ARISES UNDER CONTRACT NO. 14-670 WHEREUNDER AN ELECTRIC DISCONNECT SWITCH WAS INSTALLED AT THE SCHENCK JOB CORPS CONSERVATION CENTER. YOUR LETTER STATES IN PERTINENT PART AS FOLLOWS: "* * * WE FEEL THAT THE BASIS FOR THE REJECTION OF THE CLAIM IN THE AMOUNT OF $706.32 IS OUT OF CONTEXT WITH THE FACTS IN THAT THE SERIES OF EVENTS COVERING THE FAILURE OF THIS PART WERE BEYOND THE CONTROL OF THE CONTRACTOR. ALSO, THAT THE WARRANTY PROVISIONS ON THE APPLIANCES AND EQUIPMENT COVERED BY THIS CONTRACT WERE NOT MET ON THE PART OF THE GOVERNMENT. TO EXERCISE A WARRANTY ON ELECTRICAL EQUIPMENT, IT IS A COMMON PRACTICE IN INDUSTRY TODAY TO RETURN THE DEFECTIVE PART TO THE SUPPLIER. THE CONTRACTOR, IN THE INTEREST OF GOOD FAITH, PAID THE BILL FOR THE REPLACEMENT PART AND THEN ON INSTRUCTIONS FROM THE CONTRACTING OFFICER BILLED THE GOVERNMENT FOR THE SUM INVOLVED. PAYMENT BY MAGNOLIA COVERING THIS EQUIPMENT IMPLIED IN NO WAY THE GOVERNMENT WAS RELIEVED OF THEIR RESPONSIBILITY TO FULFILL THEIR PORTION OF THE EQUIPMENT WARRANTY.'

YOU FURTHER STATE THAT MAGNOLIA, BEING A GREAT DISTANCE FROM THE CENTER WHEN THE SWITCH FAILURE OCCURRED, INSTRUCTED THE GOVERNMENT TO PURCHASE THIS EQUIPMENT AND RETURN THE DEFECTIVE PART TO YOUR PLANT. YOU ADVISE THAT THE DISCONNECT SWITCH WAS NOT RETURNED TO YOU AND THAT IT WAS DESTROYED OR MISPLACED.

THE FACTS AS ADMINISTRATIVELY REPORTED ARE AS FOLLOWS: ON SATURDAY, JULY 10, 1965, A DISCONNECT SWITCH LOCATED ON THE MESSING COMPLEX AT SCHENCK CAUGHT FIRE AND WAS DAMAGED TO THE EXTENT THAT IT WAS INOPERATIVE. THE SWITCH HAD BEEN IN USE FROM MAY 3 TO JULY 10, 1965. UPON LEARNING OF THE FIRE, THE CENTER TELEPHONED MR. G. W. CAPPEART OF MAGNOLIA HOMES, INC., VICKSBURG, MISSISSIPPI, AND MR. DAN CAPPEART OF MAGNOLIA HOMES, INC., SOUTH HILL, VIRGINIA, FOR ASSISTANCE IN OBTAINING A REPLACEMENT SWITCH. AT THAT TIME NO REQUEST WAS MADE BY YOU TO RETURN THE DAMAGED SWITCH TO YOUR COMPANY. BRYANT ELECTRIC COMPANY, BREVARD, NORTH CAROLINA, WHOSE ASSISTANCE WAS ALSO REQUESTED, LOCATED A SWITCH AT CHARLOTTE, NORTH CAROLINA, AND INSTALLED IT AT THE CENTER ON SUNDAY, JULY 11, 1965.

WE ARE ADVISED THAT THE FAILURE OF THE SWITCH CREATED EMERGENCY CONDITIONS REQUIRING PROMPT ADMINISTRATIVE ACTION TO RESTORE ELECTRIC SERVICE TO THE MESSING COMPLEX. BRYANT ELECTRIC COMPANY SUBMITTED ITS STATEMENT FOR $832.32 CONSISTING OF $706.32 FOR MATERIALS AND$126 FOR INSTALLATION LABOR. THIS BILL WAS SUBSEQUENTLY FORWARDED TO YOUR COMPANY FOR PAYMENT. AFTER CORRESPONDENCE WITH MR. JACK E. BRYANT OF BRYANT ELECTRIC AND MR. GENE SERMON OF THE SCHENCK JOB CORPS CENTER AND MR. C. J. WYERS, CONTRACTING OFFICER, IT WAS ESTABLISHED THAT YOUR COMPANY WOULD PAY BRYANT ELECTRIC THE SUM OF $706.32 TO COVER THE COST OF THE 1,000-AMPERE BREAKER AND NECESSARY PARTS FOR INSTALLATION. YOU STATED THAT UNDER THE TERMS OF YOUR WARRANTY WITH GENERAL ELECTRIC (GE), GE WOULD REIMBURSE YOU FOR THE COST OF THE PART UPON RETURN OF THE DEFECTIVE SWITCH. HOWEVER, YOUR WARRANTY WITH GE DID NOT COVER INSTALLATION LABOR. ACCORDINGLY, THE FOREST SERVICE PAID $126 TO COVER THE COST OF INSTALLING THE NEW SWITCH.

THE RECORD SHOWS THAT BY LETTER OF SEPTEMBER 10, 1965, TO BRYANT ELECTRIC COMPANY, YOU REQUESTED THE COMPANY TO FORWARD THE 1,000-AMPERE DISCONNECT SWITCH BOX TO YOUR COMPANY. SINCE YOU WERE ADVISED THAT BRYANT ELECTRIC DID NOT HAVE THE DAMAGED SWITCH, YOU WROTE TO THE CENTER ON SEPTEMBER 20, 1965, REQUESTING THE RETURN OF THE BREAKER. IT APPEARS THAT YOUR REQUEST WAS MADE FOR THE PURPOSE OF SEEKING RECOUPMENT UNDER THE MANUFACTURER'S WARRANTY.

THE CENTER MADE A THOROUGH SEARCH TO LOCATE THE DAMAGED BREAKER BUT IT COULD NOT BE FOUND. IN VIEW OF THE FACT THAT THE CENTER WAS UNABLE TO RETURN THE DAMAGED SWITCH TO YOU, YOU REQUESTED A REFUND OF THE $706.32 ON THE BASIS THAT THE WARRANTY IS NOT VALID UNLESS THE DEFECTIVE PART IS RECEIVED. THE CLAIM WAS DISALLOWED FOR THE REASONS STATED IN OUR SETTLEMENT OF JULY 15, 1966.

IT IS REPORTED THAT THE CENTER WAS NOT ON NOTICE AT THE TIME OF REPLACEMENT OF THE SWITCH THAT THE DAMAGED PART HAD TO BE RETURNED TO YOU. MOREOVER, YOUR COMPANY DID NOT ASK FOR THE RETURN OF THE SWITCH UNTIL ABOUT 2 MONTHS AFTER THE NEW SWITCH HAD BEEN INSTALLED. THERE WAS NO CONTRACT REQUIREMENT OR OTHER OBLIGATION ON THE PART OF THE CENTER TO RETURN THE DAMAGED SWITCH TO YOU. RATHER, IT WAS YOUR SOLE RESPONSIBILITY TO RECOVER THE SWITCH AND RETURN IT TO GE.

ON THE RECORD BEFORE US, THE LOSS OF THE SWITCH WAS NOT DUE TO ANY NEGLIGENCE ON THE PART OF THE GOVERNMENT. ACCORDINGLY, OUR SETTLEMENT OF JULY 15, 1966, DENYING YOUR CLAIM FOR $706.32 IS SUSTAINED. HOWEVER, WE ARE ADVISING THE ADMINISTRATIVE AGENCY THAT NO FURTHER ACTION SHOULD BE TAKEN TO EFFECT COLLECTION BY SET OFF OF THE $126 INCURRED FOR INSTALLING THE NEW REPLACEMENT SWITCH.