B-226415, APR 28, 1987, OFFICE OF GENERAL COUNSEL

B-226415, APR 28, 1987, OFFICE OF GENERAL COUNSEL

DIGEST: WHERE A PURCHASE ORDER CONTAINS A DISPUTES CLAUSE REQUIRING FACTUAL DISPUTES TO BE RESOLVED BY DECISION OF THE CONTRACTING OFFICER, A CLAIM RAISING A FACTUAL QUESTION OVER DELIVERY TERMS IS FOR THE CONTRACTING OFFICER'S RESOLUTION. IN THE ABSENCE OF A DECISION CLEARLY FINDING THE GOVERNMENT TO BE LEGALLY LIABLE FOR FREIGHT CHARGES AND RISK OF LOSS OF ITEMS NOT DELIVERED, A CLAIM FOR RECOVERY OF THE AMOUNTS DEDUCTED FROM THE SUPPLIER'S BILL FOR FREIGHT CHARGES AND MISSING ITEMS SHOULD NOT BE PAID.

M. A. PROTZ:

WE REFER TO YOUR LETTER OF FEBRUARY 25, 1987, 5741/1 NAFC-4312/26 IN WHICH YOU ASK FOR A DECISION OF THE COMPTROLLER GENERAL, UNDER 31 U.S.C. SEC. 3529, CONCERNING THE LEGALITY OF PAYING A CLAIM FOR $280.40 THAT THE DISBURSING OFFICER OF THE USS INDEPENDENCE DEDUCTED FROM THE INVOICE OF A SUPPLIER, LLADRO, S.A. THE DEDUCTION, WHICH INCLUDED THE AMOUNT BILLED FOR FREIGHT CHARGES AND THE PRICE OF ITEMS NOT RECEIVED, WAS BASED ON THE PREMISE THAT UNDER THE DELIVERY TERMS OF THE PURCHASE ORDER, "F.O.B. DESTINATION," THE SUPPLIER ASSUMED RESPONSIBILITY FOR THE FREIGHT CHARGES AND THE RISK OF LOSS. IT APPEARS THAT OTHER AGENCY OFFICIALS HAVE CONSIDERED THE CLAIM, INCLUDING THE COMMANDER OF THE VESSEL AND, APPARENTLY, THE CONTRACTING OFFICER, AND HAVE DETERMINED THAT THE CLAIMS SHOULD NOT BE PAID. WE AGREE.

LLADRO CLAIMS THE AMOUNT ON THE GROUND THAT THE GOVERNMENT ASSUMED THE FREIGHT CHARGES AND RISK OF LOSS. IN SUPPORT OF ITS CONTENTION, LLADRO REFERS TO A COPY OF THE PURCHASE ORDER WHICH TENDS TO SHOW THAT THE DELIVERY TERM, "F.O.B. DESTINATION," WAS ALTERED TO "OTHER;" AND REFERS TO ITS LETTER CONFIRMING THE ORDER WHICH CONTAINED THE NOTATION, "GOODS TRAVEL BY COUNT AND RISK OF THE BUYER." IT SEEMS TO BE THE NAVY'S POSITION THAT NO ONE WITH THE REQUISITE AUTHORITY IN THE AGENCY ALTERED THE ORIGINAL DELIVERY TERMS OR ACCEPTED THE CONTRACTOR'S LETTER OF CONFIRMATION AS A MODIFICATION OF THEM.

NEITHER PARTY DISPUTES THE LAW. THE DELIVERY TERM, "F.O.B. DESTINATION," MEANS ON BOARD THE CONVEYANCE OF THE CARRIER, FREE OF EXPENSE TO THE GOVERNMENT AT A SPECIFIED DELIVERY POINT WHERE THE CONSIGNEE'S FACILITY IS LOCATED. N. FRANK & SON, INC., B-194253, MAY 2, 1979; 48 C.F.R. SEC. 52.247-34. THUS, IF THE PURCHASE ORDER AS ORIGINALLY EXECUTED IN THIS CASE WAS IN EFFECT, THE SUPPLIER WOULD BE RESPONSIBLE FOR THE FREIGHT CHARGES AND THE SUPPLIER-- NOT THE GOVERNMENT-- WOULD HAVE HAD THE RISK OF LOSS OR DAMAGE TO THE PROPERTY WHILE IN TRANSIT. AVANTEK, INC., B-219622, AUGUST 8, 1985, 85-2 CPD 150.

CLEARLY INVOLVED HERE IS A FACTUAL QUESTION OVER THE CONTRACT'S DELIVERY TERMS. FACTUAL QUESTIONS ARISING OUT OF CONTRACTS CONTAINING A DISPUTES CLAUSE OR SUBJECT TO THE CONTRACTS DISPUTES ACT, 41 U.S.C.SEC. 601 ET SEQ., ARE FOR RESOLUTION BY THE CONTRACTING OFFICER AND THE PRESCRIBED APPEALS PROCEDURE. SEE 61 COMP.GEN. 1 (1981), 59 COMP.GEN. 746 (1980), AND 56 COMP.GEN. 340 (1977). HERE, IT APPEARS THAT THE CONTRACTING OFFICER DECIDED THE FACTUAL QUESTION IN FAVOR OF THE GOVERNMENT, THUS THE CONTRACTOR'S PROCEDURAL REMEDY WAS TO APPEAL THE DECISION TO THE SECRETARY OF THE AGENCY, AS PRESCRIBED IN THE DISPUTES CLAUSE.

WHERE A CONTRACT IS SUBJECT TO THE PROVISION THAT ANY FACTUAL DISPUTE SHALL BE SUBMITTED FOR DECISION TO THE CONTRACTING OFFICER, WE HAVE HELD THAT THERE MUST BE A WRITTEN DECISION BY THE CONTRACTING OFFICER SHOWING A CLEAR FINDING OF THE GOVERNMENT'S LEGAL LIABILITY BEFORE PAYMENT MAY BE MADE. SEE ENRIQUE GARCIA, B-206352, OCTOBER 1, 1982. IN THE ABSENCE OF SUCH A DECISION, AS HERE, THE CLAIM SHOULD NOT BE PAID.