B-165667 December 11, 1968

B-165667 December 11, 1968

The Honorable The Attorney General

Dear Mr. Attorney General:

By letter of November 19, 1968 (JACL 1968/10300-P), the Chief, Litigation Division, Office of the Judge Advocate General, forwarded a settlement offer in the amount of $15,000 tendered by the Farmers Insurance Group in settlement of the Government's claim for damages--estimated at $26,105--to an XV-6A (FIXED) aircraft which occurred during transit by a common carrier. The claim was forwarded to our Office pursuant to section 105.1 of the Federal Claims Collection standards (General Accounting Office-- Department of Justice), 4 CFR 101-105.

The facts involved in the claim may be summarized as follows. In the course of performing a cost-reimbursement contract, The Ryan Aeronautical Company was directed to s hip a certain aircraft designated as XV-8A (FIXED) to Edwards Air Force Base. The aircraft was loaded on a tractor- trailer operated by Belyea Division of Dealers Transit, Inc., San Diego, California. The carrier obtained the aircraft was well within the limitations of 16-foot clearance on the permit. Shipment was to be made on a commercial bill of lading convertible to a Government bill of lading. Enroute to destination the carrier's driver went through an underpass that was of insufficient clearance and damage resulted to the superstructure of the aircraft. The contracting officer requested Ryan, which built the aircraft, to access the damage. Ryan estimated the cost to be $26, 105, exclusive of fee ($2,088). The damaged aircraft has never been repaired and it appears that no further action in this regard will be taken since the scope of the work under subject contract was reduced. The common carrier, Farmers Insurance Group, denied the claim.

Acceptance of the insurance carrier's compromise offer is recommended by the procurement agency and the United States Army Materiel Command as fair and reasonable. This recommendation is concurred in by the Office of the Judge Advocate General.

We understand that, in the event the claim is litigated, proof of actual damages would require the expert testimony of Ryan personnel. Under its cost-reimbursement contract Ryan is obligated "at Government expense" to furnish all reasonable assistance and cooperation in the prosecution of any suit. Ryan's insurance carrier, the Farmers Insurance Group, would have a right to offer expert testimony on its behalf as to the extent of actual damages and to cross-examine Government witnesses on the same matter. Since the amount of $26,105 represents only an estimate by Ryan of the cost it would have borne under its contract to dissemble, inspect and repair the aircraft, exclusive of any fee, and since the aircraft never will be repaired by the Government, it appears that proof of actual damages would be extremely difficult. We there fore believe that the compromise settlement of the claim meets the criteria of 4 CFR 103.3 concerning the probabilities of successful litigation. However, since neither our Office nor the Department of the Army has authority under the Federal Claims Collection Act of 1966, 31 U.S.C. 951-953, to compromise claims in excess of $20,000, the attached file and copy of letter dated November 19, 1968, with enclosure, is referred to your department for appropriate consideration. In this letter respect, we feel that the offer in the amount of $15,000 should be accepted in full and final settlement of the Government's claim against the common carrier and the Farmers Insurance Group.

Sincerely yours,

FRANK H. WEITZEL Comptroller General of the United States

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