DECEMBER 16, 1921, 1 COMP. GEN. 328

DECEMBER 16, 1921, 1 COMP. GEN. 328

TERMINATION OF CONTRACTS UNDER DENT ACT - INTEREST ON ADVANCE PAYMENTS A CONTRACTOR IS RELEASED FROM FURTHER PAYMENT OF INTEREST ON ADVANCE PAYMENTS MADE BY THE GOVERNMENT UNDER AUTHORITY OF THE ACT OF OCTOBER 6, 1917, 40 STAT., 383, FROM THE DATE OF APPROVAL OF AN AWARD UNDER THE DENT ACT TERMINATING AND CANCELING THE ORIGINAL CONTRACT AND ITS SUPPLEMENTS PRIOR TO FINAL COMPLETION.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 16, 1921:

CAPT. LYMAN L. SIMMS, F.D., UNITED STATES ARMY, REQUESTED NOVEMBER 1, 1921, REVIEW OF SETTLEMENT NO. 68074, DATED SEPTEMBER 19, 1921, WAR DEPARTMENT DIVISION OF THIS OFFICE, BY WHICH WAS DISALLOWED IN HIS DISBURSING ACCOUNTS VOUCHER NO. 180, AUGUST 1919, $103.50, REPRESENTING PAYMENT TO THE MILBURN WAGON CO. FOR OVER-DEDUCTION OF INTEREST IN FINAL SETTLEMENT WITH THAT COMPANY UNDER PROXY-SIGNED CONTRACT DATED DECEMBER 17, 1917.

IT APPEARS THAT BY CONTRACT DATED DECEMBER 17, 1917, BETWEEN THE MILBURN WAGON CO., OF TOLEDO, OHIO, AND CAPT. WM. J. BASS, Q.M.R.C., UNITED STATES ARMY, BY MYRON A. SMITH, SECOND LIEUTENANT, Q.M.C., N.A., REPRESENTING THE UNITED STATES, THE FIRST NAMED AGREED TO SUPPLY 1,000 ESCORT WAGONS AT $230 EACH F.O.B. CONTRACTOR'S WORKS, WITH A MODIFICATION IN PRICE BASED ON THE COST OF STEEL, DELIVERIES TO COMMENCE WITH 74 WAGONS DURING JANUARY, 1918, AND MONTHLY DELIVERIES THEREAFTER TO DECEMBER 31, 1918, TO COMPLETE THE CONTRACT.

BY A SUPPLEMENTAL CONTRACT DATED MAY 17, 1918, THE TIME FOR COMPLETION OF THE CONTRACT WAS EXTENDED TO JUNE 30, 1919; AND BY SUPPLEMENTAL AGREEMENT DATED JUNE 17, 1918, UNDER AUTHORITY OF THE ACT OF OCTOBER 6, 1917, 40 STAT., 383, THERE WAS ADVANCED TO THE CONTRACTOR BY THE GOVERNMENT $69,000 TO BE USED IN EXECUTING THE PRINCIPAL AGREEMENT OF DECEMBER 17, 1917, THE PROVISION FOR RECOUPMENT BEING AS FOLLOWS:

ARTICLE IV. THE CONTRACTOR SHALL, AS HEREINAFTER PROVIDED, ACCOUNT TO THE GOVERNMENT FOR THE AMOUNT OF SAID ADVANCE PAYMENT, WITH INTEREST ON THE OUTSTANDING BALANCES THEREOF AT THE RATE OF SEVEN PERCENT PER ANNUM FOR THE MONTH OF JUNE, 1918, AND THEREAFTER AT SUCH RATE OR RATES AS THE WAR CREDITS BOARD MAY FROM MONTH TO MONTH DETERMINE.

THIS ADVANCE SHALL BE APPLIED AND CREDITED IN PART PAYMENT FOR THE SUPPLIES TO BE FURNISHED BY THE CONTRACTOR UNDER THE PRINCIPAL AGREEMENT; AND FOR THIS PURPOSE THE CONTRACTOR AUTHORIZES THE GOVERNMENT, ACTING THROUGHT ITS PROPER DISBURSING OFFICER, TO DEDUCT THIRTY-FIVE PERCENT FROM THE GROSS FACE AMOUNT OF EACH VOUCHER FOR SUPPLIES HEREAFTER PRESENTED BY THE CONTRACTOR UNDER THE PRINCIPAL AGREEMENT, AND TO APPLY SUCH DEDUCTIONS AS CREDITS ON THE SAID VOUCHERS, UNTIL THE PRINCIPAL OF THIS ADVANCE PAYMENT IN FULL, AND THEREAFTER THE INTEREST ACCRUED ON THE OUTSTANDING BALANCES THEREOF, SHALL HAVE BEEN RECOUPED BY THE GOVERNMENT. * * *.

NO DELIVERIES OF COMPLETED WAGONS SEEM TO HAVE BEEN MADE BY THE CONTRACTOR, AS NO RECORD IS FOUND OF A PAYMENT ON ACCOUNT TO IT, NOR IS RECORD FOUND OF A RECOUPMENT OF ANY PART OF THE $69,000 ADVANCED PRIOR TO THE SETTLEMENT AGREEMENT OR AWARD TO THE CONTRACTOR FOR LOSS SUSTAINED BY THE TERMINATION OF THE PRINCIPAL AGREEMENT OF DECEMBER 17, 1917, HEREAFTER DESCRIBED.

BY AN AWARD MADE BY AUTHORITY OF THE SECRETARY OF WAR UNDER THE ACT OF MARCH 2, 1919, 40 STAT., 1272, FROM THE TERMS OF WHICH IT IS INFERRED THAT THE CONTRACT OF DECEMBER 17, 1917, WITH ITS SUPPLEMENTS, WAS TERMINATED OR CANCELED BEFORE ANY DELIVERIES THEREUNDER WERE MADE, THE MILBURN WAGON CO. WAS AWARDED THE SUM OF $168,526.69 TO "ADJUST, PAY, AND DISCHARGE UPON A FAIR AND EQUITABLE BASIS" THE AGREEMENT OF DECEMBER 17, 1917, THE AWARD FURTHER PROVIDING:

FROM THE SAID SUM OF $168,526.69 SHALL BE DEDUCTED THE PRINCIPAL SUM OF $69,000 LESS RECOUPMENTS DUE FROM THE CLAIMANT BY REASON OF ADVANCES HERETOFORE MADE BY THE UNITED STATES, PLUS INTEREST DUE ON SAID PRINCIPAL SUM UP TO THE DATE THAT THIS AWARD IS APPROVED BY THE WAR DEPARTMENT CLAIMS BOARD, AND THE CLAIMANT IS HEREBY RELEASED FROM ALL OBLIGATION TO PAY INTEREST ON SAID PRINCIPAL SUM AFTER THAT DATE.

THIS AWARD WAS ACCEPTED BY THE MILBURN WAGON CO. MAY 16, 1919, AND APPROVED BY AUTHORITY OF THE SECRETARY OF WAR ON MAY 26, 1919. BY SECOND LIEUT. A. E. GAUL, Q.M.C., VOUCHER NO. 132, JUNE 1919, ACCOUNTS, THE MILBURN WAGON CO. WAS PAID THE AMOUNT AWARDED LESS $69,000, WITH INTEREST THEREON FROM DATE OF ADVANCE, JULY 11, 1918, TO DECEMBER 31, 1918, AT SEVEN PERCENT PER ANNUM, AND FROM JANUARY 1, 1919, TO JUNE 4, 1919, DATE OF PAYMENT, AT SIX PERCENT PER ANNUM, A TOTAL FOR INTEREST OF $4,117. VOUCHER NO. 180, AUGUST, 1919, ACCOUNTS OF CAPT. LYMAN L. SIMMS, THE MILBURN WAGON CO. WAS REPAID THE INTEREST ON $69,000 FOR THE PERIOD MAY 26 TO JUNE 4, 1919, AMOUNTING TO $103.50, AND THIS IS THE ITEM DISALLOWED AND NOW UNDER CONSIDERATION.

IT HAS BEEN HELD THAT UNDER THE ACT OF OCTOBER 6, 1917, 40 STAT., 383, AUTHORIZING ADVANCES TO CONTRACTORS OF NOT EXCEEDING THIRTY PERCENTUM OF THE CONTRACT PRICE OF SUPPLIES CONTRACTED FOR, UPON SUCH TERMS AS MAY BE PRESCRIBED BY THE SECRETARY OF WAR OR THE SECRETARY OF THE NAVY, AND THE ORDERS OR REGULATIONS OF THE SECRETARY OF WAR, ISSUED PURSUANT THERETO, INTEREST WAS CHARGEABLE ON THE ADVANCE PAYMENT MADE TO THE CONTRACTOR TO THE DATE OF PAYMENT OF THE CONTRACTOR'S INVOICE, AND THAT THE CONTRACTOR WAS NOT RELIEVED OF THE INTEREST CHARGE ON DATE OF INSPECTION OR ACCEPTANCE OF THE SUPPLIES. (86 MS. COMP. DEC., 417, JULY 29, 1918, AND 1 MS. COMP. GEN., 882, SEPTEMBER 13, 1921.)

HOWEVER, THOSE DECISIONS CONSIDERED CONTRACTS IN COURSE OF PERFORMANCE AND THE DECISIONS WERE IN STRICT ACCORD WITH THE TERMS PRESCRIBED BY THE SECRETARY OF WAR UNDER THE STATUTE. THOSE DECISIONS HAVE NO APPLICATION IN THE CASE OF AN AWARD MADE BY THE SECRETARY OF WAR UNDER THE ACT OF MARCH 2, 1919, 40 STAT., 1272, IN THE NATURE OF A COMPROMISE SETTLEMENT AS FOR CANCELLATION OF THE CONTRACT. ONE OF THE CONSIDERATIONS MOVING TO THE CONTRACTOR IN THE COMPROMISE SETTLEMENT OR AWARD IS THE RELEASE FROM HIS OBLIGATION TO PAY INTEREST ON THE ADVANCE FROM THE DATE OF APPROVAL OF THE AWARD. IN THESE CIRCUMSTANCES THE DECISIONS CITED AND THE TERMS PRESCRIBED BY THE SECRETARY OF WAR UNDER THE ACT OF OCTOBER 6, 1917, HAVE NO APPLICATION.

ACCORDINGLY, UPON A REVIEW OF THE MATTER THE SETTLEMENT IS MODIFIED AND A DIFFERENCE OF $103.50 IS CERTIFIED DUE CLAIMANT.