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GAO MAY NOT CONSIDER CLAIMS ARISING UNDER A DISPUTES CLAUSE OF A FEDERAL CONTRACT IN THE ABSENCE OF FRAUD OR BAD FAITH ON THE PART OF THE CONTRACTING AGENCY SINCE THAT AGENCY'S DECISION IS FINAL AND CONCLUSIVE. YOU CLAIM THAT THE MACHINE DELIVERED TO YOUR CONCERN UNDER THE CONTRACT DID NOT HAVE AN ELECTRIC MOTOR AND BRACKET AND. DID NOT CORRESPOND WITH THE DESCRIPTION OF THE ITEM WHICH WAS SET FORTH IN THE INVITATION FOR BIDS (IFB) FOR THE SALE. DSA HAS INFORMALLY ADVISED THIS OFFICE THAT YOUR CLAIM IS PRESENTLY BEING CONSIDERED UNDER PARAGRAPH 30. THAT IN THE EVENT THE PROPERTY DELIVERED TO THE PURCHASER DOES NOT CORRESPOND WITH THE DESCRIPTION SET OUT IN THE IFB THE GOVERNMENT WILL MAKE AN ADJUSTMENT IN THE PURCHASE PRICE PAID FOR THE PROPERTY.

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B-177366, DEC 5, 1972

SURPLUS SALES CONTRACT - DISPUTES CLAUSE DECISION DENYING CONSIDERATION OF THE CLAIM OF ACE MACHINERY COMPANY, FOR ADJUSTMENT IN THE PURCHASE PRICE OF A SHEARING MACHINE UNDER A SURPLUS SALES CONTRACT WITH DSA SINCE THE MACHINE DELIVERED DID NOT CORRESPOND WITH THE IFB'S DESCRIPTION. GAO MAY NOT CONSIDER CLAIMS ARISING UNDER A DISPUTES CLAUSE OF A FEDERAL CONTRACT IN THE ABSENCE OF FRAUD OR BAD FAITH ON THE PART OF THE CONTRACTING AGENCY SINCE THAT AGENCY'S DECISION IS FINAL AND CONCLUSIVE. S & E CONTRACTORS, INC. V. UNITED STATES, 406 U.S. 1 (1972).

TO ACE MACHINERY COMPANY:

THE CORRESPONDENCE WHICH YOU FORWARDED TO CONGRESSMAN SIDNEY R. YATES, CONCERNING YOUR CLAIM FOR AN ADJUSTMENT IN THE PURCHASE PRICE OF A SHEARING MACHINE UNDER SURPLUS SALES CONTRACT NO. 23-2055-567 WITH THE DEFENSE SUPPLY AGENCY (DSA), HAS BEEN FORWARDED TO THIS OFFICE FOR CONSIDERATION. YOU CLAIM THAT THE MACHINE DELIVERED TO YOUR CONCERN UNDER THE CONTRACT DID NOT HAVE AN ELECTRIC MOTOR AND BRACKET AND, THEREFORE, DID NOT CORRESPOND WITH THE DESCRIPTION OF THE ITEM WHICH WAS SET FORTH IN THE INVITATION FOR BIDS (IFB) FOR THE SALE.

IN THIS REGARD, DSA HAS INFORMALLY ADVISED THIS OFFICE THAT YOUR CLAIM IS PRESENTLY BEING CONSIDERED UNDER PARAGRAPH 30, GUARANTEED DESCRIPTIONS, GENERAL SALE TERMS AND CONDITIONS, OF THE SUBJECT CONTRACT. THAT PARAGRAPH STATES, IN PERTINENT PART, THAT IN THE EVENT THE PROPERTY DELIVERED TO THE PURCHASER DOES NOT CORRESPOND WITH THE DESCRIPTION SET OUT IN THE IFB THE GOVERNMENT WILL MAKE AN ADJUSTMENT IN THE PURCHASE PRICE PAID FOR THE PROPERTY; THAT IN THE EVENT AN AGREEMENT CANNOT BE REACHED WITH THE PURCHASER AS TO THE AMOUNT OF THE ADJUSTMENT, THE CONTRACTING OFFICER SHALL UNILATERALLY DETERMINE THE AMOUNT OF THE ADJUSTMENT; AND THAT SUCH DETERMINATION SHALL BE IN THE FORM OF A FINDING OF FACT AND SHALL BE APPEALABLE UNDER THE DISPUTES CLAUSE OF THE CONTRACT (GENERAL SALE TERMS AND CONDITIONS NO. 19). THE CITED DISPUTES CLAUSE PROVIDES, IN EFFECT, THAT THE DETERMINATION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE UNLESS WITHIN 30 CALENDAR DAYS FROM THE DATE OF RECEIPT OF SUCH DETERMINATION THE PURCHASER MAILS OR OTHERWISE FURNISHES TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO THE DIRECTOR'S AUTHORIZED REPRESENTATIVE, THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA). THE CLAUSE FURTHER PROVIDES THAT THE DETERMINATION OF THE ASBCA SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED TO HAVE BEEN FRAUDULENT, OR CAPRICIOUS, OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

IN THIS REGARD, IT HAS BEEN THE PRACTICE OF THIS OFFICE NOT TO CONSIDER CLAIMS ARISING UNDER THE DISPUTES CLAUSE OF FEDERAL CONTRACTS IF THE REMEDIES SET FORTH IN THAT CLAUSE HAVE NOT BEEN EXHAUSTED. FURTHERMORE, THE SUPREME COURT HAS RECENTLY HELD IN S & E CONTRACTORS, INC. V. UNITED STATES, 406 U.S. 1 (1972) THAT A FEDERAL AGENCY'S SETTLEMENT OF A CLAIM UNDER THE DISPUTES CLAUSE IS BINDING ON OTHER AGENCIES OF THE GOVERNMENT; THAT THERE IS NOT ANOTHER TIER OF FEDERAL OR ADMINISTRATIVE REVIEW; AND THAT THE AGENCY'S DECISION ON A FACTUAL DISPUTE IS "FINAL AND CONCLUSIVE" SAVE FOR FRAUD OR BAD FAITH.

SINCE THE GUARANTEED DESCRIPTIONS CLAUSE OF YOUR CONTRACT MAKES THE DETERMINATION OF THE AMOUNT OF YOUR CLAIM A QUESTION OF FACT UNDER THE DISPUTES CLAUSE, IN THE ABSENCE OF FRAUD OR BAD FAITH ANY FUTURE CONSIDERATION OF YOUR CLAIM BY THIS OFFICE IN THE EVENT YOU ARE DISSATISFIED WITH DSA'S FINAL SETTLEMENT WOULD ALSO APPEAR TO BE PRECLUDED.

WE REGRET THAT WE ARE UNABLE TO BE OF MORE HELP TO YOU IN THIS MATTER.

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