B-123134, JUN. 22, 1955

B-123134, JUN. 22, 1955

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 1, 1955, FORWARDING A LETTER DATED JULY 20, 1954, FROM FLOREZ, INCORPORATED, TO THE CORPS OF ENGINEERS, U.S. ARMY, WASHINGTON, D.C., AND CERTAIN OTHER PAPERS RELATIVE TO CONTRACT NO. DA 36-109-ENG-4580, DATED APRIL 28, 1953. YOU REQUEST AN ADVANCE DECISION AS TO WHETHER UNDER THE FACTS HEREINAFTER SUMMARIZED THE CONTRACTOR SHOULD BE HELD TO BE IN DEFAULT OR WHETHER THE CONTRACT SHOULD BE CANCELED.

UNDER THE TERMS OF THE CONTRACT IT WAS AGREED THAT FOR AND IN CONSIDERATION OF PAYMENT OF THE LUMP SUM OF $29,396.99 FLOREZ, INCORPORATED, WOULD FURNISH THE COMMANDING GENERAL, THE ENGINEER CENTER, THE ENGINEER SCHOOL, PUBLICATIONS BRANCH, FOR BELVOIR, VIRGINIA, THE SERVICES, MATERIALS, SUPERVISION, LABOR, EQUIPMENT, FACILITIES AND TRAVEL (INCLUDING POSSIBLE FEES OR CHARGES BY THE EQUIPMENT MANUFACTURER) TO DEVELOP, WRITE AND PREPARE MANUSCRIPT AND REPRODUCIBLE ART WORK FOR THREE SPECIFIED TECHNICAL MANUALS IN ACCORDANCE WITH THE WRITER'S STYLE GUIDE FOR THE PREPARATION OF TECHNICAL MANUALS FOR CORPS OF ENGINEERS EQUIPMENT DATED MARCH 1952 AND EXHIBIT A ATTACHED THERETO. THE MANUSCRIPT AND ART WORK WERE TO COVER OPERATION, MAINTENANCE, AND REPAIR OF PRESS, LITHO OFFSET, MOTOR DRIVEN, 208 VOLT, 60 CYCLE, 3 PHASE, SINGLE COLOR, 35 BY 45 INCH SHEET SIZE, HARRIS-SEYBOLD, MODELS LSS AND LUD. THE CONTRACT STIPULATED THAT FLOREZ, INCORPORATED, WOULD BE REQUIRED TO MAKE SUCH REVISIONS AND CORRECTIONS IN THE OUTLINE, INITIAL DRAFT OF THE MANUSCRIPT, ART WORK AND FINAL MANUSCRIPT AS MAY BE NECESSARY TO PRODUCE A FINISHED MANUSCRIPT ACCEPTABLE TO THE GOVERNMENT AND THAT "THE COST OF THESE REVISIONS AND CORRECTIONS IS INCLUDED IN THE UNIT PRICE.' ALSO, IT WAS PROVIDED THAT "ADDITIONAL ENGINEERING DATA AND ILLUSTRATIONS REQUIRED BY THE REVIEWING AGENCY TO INSURE ADEQUATE COVERAGE OF THE PUBLICATIONS UNDER THE CONTRACT WILL NOT BE CONSIDERED CAUSE FOR AN INCREASE IN CONTRACT PRICE.' IT WAS AGREED THAT THE GOVERNMENT WOULD FURNISH, AT NO COST TO THE CONTRACTOR, (1) ONE PIECE OF EQUIPMENT AT A GOVERNMENT DEPOT, (2) DEPOT PERSONNEL FOR DISMANTLING, REASSEMBLING AND PREPARING THE EQUIPMENT FOR RETURN TO DEPOT STOCK, AND (3) GASKETS, SEALS, ETC., WHICH REQUIRED REPLACEMENT AS A RESULT OF THE DISMANTLING.

THE DELIVERY PROVISIONS CALLED FOR SUBMISSION OF CERTAIN INITIAL DRAFTS WITHIN 30 AND 60 DAYS AFTER THE CONTRACT DATE, AND OF FINAL MANUSCRIPTS WITHIN 30 TO 90 DAYS AFTER REVIEW AND ACCEPTANCE OF PROPOSED TEXTS AND LAYOUTS.

IN THE LETTER OF JULY 20, 1954, THE CONTRACTOR REQUESTS A DECISION BY THIS OFFICE HOLDING, IN EFFECT, THAT THE CONTRACTOR IS NOT IN DEFAULT BUT SHOULD BE RELEASED FROM FURTHER PERFORMANCE UNDER THE CONTRACT ON THE FOLLOWING GROUNDS:

"/1) SUB-PARAGRAPH (B) OF ARTICLE 11, DEFAULT, OF THE GENERAL PROVISIONS, PROVIDES THAT THE CONTRACTOR BE EXCUSED FROM SUCH LIABILITY WHERE FAILURE TO PERFORM THE CONTRACT IS DUE TO "CAUSES BEYOND THE CONTRACT AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR.'

"/2) THE CONTRACT HAS BEEN RENDERED UNENFORCEABLE BY REASON OF THE DOCTRINE OF FRUSTRATION OF THE CONTRACT.

"/3) THE CONTRACT IS UNENFORCEABLE BY REASON OF IMPOSSIBILITY OF PERFORMANCE EXISTING AT THE TIME OF THE EXECUTION OF THE CONTRACT,CONSTRUCTIVELY KNOWN TO THE GOVERNMENT.'

IN SUPPORT OF THE REQUEST FOR RELIEF THE CONTRACTOR STATES THAT, ALTHOUGH THE CONTRACT REQUIRED THAT THE CORPS OF ENGINEERS FURNISH, UPON REQUEST FROM THE CONTRACTOR, MAINTENANCE ALLOCATION CHARTS AND THAT THE CONTRACTOR OBTAIN FROM THE EQUIPMENT MANUFACTURER SUFFICIENT ASSEMBLY BLUEPRINTS TO SHOW ALL POINTS TO BE LUBRICATED, NEITHER THE CHARTS NOR THE BLUEPRINTS WERE AVAILABLE OR OBTAINABLE. IN THIS CONNECTION, THE CONTRACTOR STATES THAT, UPON RECEIPT OF NOTICE OF AWARD AND NOTICE TO PROCEED UNDER THE CONTRACT, THE CONTRACTOR SENT REPRESENTATIVES TO THE HARRIS-SEYBOLD PLANT ONLY TO FIND THAT NO ENGINEERING DRAWINGS OR BLUEPRINTS WERE IN EXISTENCE AND THAT AN INQUIRY AT FORT BELVOIR ELICITED INFORMATION THAT THE CORPS OF ENGINEERS WAS UNABLE TO FURNISH THE CHARTS. IT IS ADMITTED THAT A MAINTENANCE ALLOCATION CHART FOR ONE OF THE TWO MODELS TO BE FURNISHED WAS LOCATED AND FURNISHED THE CONTRACTOR "OVER A YEAR LATER," BUT "DUE TO DRASTIC DIFFERENCES BETWEEN THE TWO MODELS" THIS CHART WAS "USELESS WITHOUT THE OTHER.' IT IS CLAIMED BY THE CONTRACTOR THAT NEITHER THE CORPS OF ENGINEERS NOR PRIOR GOVERNMENT CONTRACTORS WERE ABLE TO OBTAIN A SET OF ENGINEERING DRAWINGS FOR EITHER OF THE TWO MODELS AND THAT "AT LEAST 90 PERCENT OF THE MATERIAL APPEARS ONLY IN THE SHOP DRAWINGS, WHICH ARE LOCKED UP IN THE MANUFACTURER'S ULTS.'

THE CONTRACTING OFFICER STATES IN HIS MEMORANDUM ENTITLED "FINDINGS OF FACT AND RECOMMENDATIONS OF THE CONTRACTING OFFICER ON REQUEST FOR RULING BY THE COMPTROLLER GENERAL ON CONTRACT NO. DA 36-109-ENG-4580, WITH FLOREZ, INCORPORATED" THAT THE BLUEPRINTS ARE AVAILABLE AT THE EQUIPMENT MANUFACTURER'S PLANT, AND THAT THE MANUFACTURER HAS AGREED,AT THE GOVERNMENT'S REQUEST, TO MAKE THEM AVAILABLE TO THE CONTRACTOR, BUT ONLY AT ITS PLANT. AS TO THE STATEMENTS RELATIVE TO THE NONAVAILABILITY OF MAINTENANCE ALLOCATION CHARTS, THE CONTRACTING OFFICER STATES THAT THE ABSENCE OF SUCH CHARTS MAKES PERFORMANCE OF THE CONTRACT MORE DIFFICULT BUT NOT IMPOSSIBLE. IT IS ADMITTED THAT A PROMISE WAS MADE IN THE STYLE GUIDE THAT THESE CHARTS COULD BE MADE AVAILABLE BY THE CORPS OF ENGINEERS BUT IT IS STATED ALSO THAT THE GOVERNMENT'S FAILURE TO FURNISH THE CHARTS COULD BE REMEDIED BY A MODIFICATION TO THE CONTRACT UNDER THE CHANGES CLAUSE WHEREIN ADDITIONAL COMPENSATION COULD BE ALLOWED TO COVER THE INCREASED COSTS NECESSITATED BY THE CHANGE IN PERFORMANCE NOT ORIGINALLY CONTEMPLATED BY THE PARTIES. A COPY OF THE STYLE GUIDE REFERRED TO AND MADE A PART OF THE CONTRACT IS NOT PRESENTLY AVAILABLE, NOR IS ONE ATTACHED TO THE CONTRACT, BUT THE CONTRACTING OFFICER STATES THAT "THE STYLE GUIDE DIRECTED THE CONTRACTOR TO REQUEST CHARTS FROM THE CONTRACTING OFFICER BUT OBVIOUSLY DOES NOT LIMIT HIM TO THEIR USE.' HE STATES FURTHER THAT "THE CHARTS ARE CITED AS THE BEST SOURCE FOR DETERMINING MAINTENANCE ALLOCATION, BUT WOULD NOT BE CONCLUSIVE IF THE CONTRACTOR SUBMITTED SATISFACTORY MAINTENANCE ALLOCATION" AND THAT ,ALTHOUGH DEFINITE TIMES WERE FIXED FOR SUBMISSIONS UNDER THE CONTRACT, THE DELAYS WERE NOT CAUSED ANY MORE BY ACTS OF THE GOVERNMENT THAN BY ACTS OF THE CONTRACTOR AND HE CANNOT BE PERMITTED TO AVAIL HIMSELF OF THE RESULT OF THE DELAY FOR WHICH HE HIMSELF WAS PRIMARILY RESPONSIBLE, PARTICULARLY IF THE GOVERNMENT DOES NOT WISH TO AVAIL ITSELF OF THIS DELAY AS AN EXCUSE TO TERMINATE FOR DEFAULT.'

THE RECORD INDICATES THAT THE NONAVAILABILITY OF INFORMATION WHICH THE CONTRACTOR CLAIMS TO HAVE EXPECTED TO OBTAIN FROM THE MANUFACTURER WAS DISCOVERED IN THE LATTER PART OF MAY 1953, AND THAT THE CONTRACTOR PROMPTLY NOTIFIED THE PROCURING AGENCY OF THE FACTS. FOLLOWING SEVERAL CONFERENCES BETWEEN REPRESENTATIVES OF THE CONTRACTOR AND OF THE CORPOS OF ENGINEERS, BOTH AT FORT BELVOIR AND AT THE PHILADELPHIA DISTRICT OFFICE, AN APPLICATION FOR RELIEF UNDER THE FIRST WAR POWERS ACT WAS SUBMITTED UNDER DATE OF JUNE 18, 1953, IN WHICH THE CONTRACTOR REQUESTED AN INCREASE OF THE CONTRACT PRICE TO $88,225.52 OR, IN THE ALTERNATIVE, A TERMINATION OF THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT. THIS APPLICATION WAS DENIED BY LETTER DATED NOVEMBER 2, 1953, FROM THE PHILADELPHIA DISTRICT OFFICE.

IN APRIL AND MAY OF 1954, THE CONTRACTOR RENEWED ITS EFFORTS TO OBTAIN FROM THE ARMY AUTHORITIES A MAINTENANCE ALLOCATION CHART FOR THE MODEL LSS PRESS. IT WAS FIRST ADVISED THAT SUCH A CHART WAS NOT AVAILABLE AT THE TIME BUT THAT THE CHART FOR MODEL LUD COULD BE USED AS A GUIDE IN SETTING UP THE TEST FOR THE MANUSCRIPT COVERING MODEL LSS. SUBSEQUENTLY, UPON THE CONTRACTOR'S INSISTENCE THAT A CHART FOR MODEL LSS WAS ESSENTIAL, A COPY OF THE LUD CHART WAS MADE, WITH THE MODEL DESIGNATION LSS SUBSTITUTED FOR LUD, UPON INSTRUCTIONS FROM THE OFFICE OF THE CHIEF OF ENGINEERS, AND FURNISHED TO THE CONTRACTOR AS A CHART FOR THE LSS MODEL. BY LETTER DATED MAY 25, 1954, THE CONTRACTOR ADVISED THAT IT HAD DETERMINED, AFTER CONSIDERABLE FIELD WORK, THAT THE CHART FORWARDED WAS APPARENTLY INCORRECT, AND AGAIN REQUESTED A CORRECT CHART. REPLY DATED JUNE 9 ADVISED THE CONTRACTOR THAT THE CHART PREVIOUSLY FURNISHED WOULD BE USED FOR THE LSS PRESS; THAT THE PARTS AS LISTED ON THE CHART MAY VARY FROM THE EXACT EQUIPMENT TO BE COVERED, BUT THE MAINTENANCE ALLOCATION FOR SIMILAR PARTS WAS IDENTICAL; THAT A SEPARATE CHART FOR MODEL LSS WOULD NOT BE PREPARED AND THE CONTRACTOR WAS TO USE THE CHART FURNISHED HIM. UNDER DATE OF JUNE 18, THE CONTRACTOR ADVISED THAT FIELD RESEARCH REVEALED THAT THERE WAS A 60 PERCENT DIFFERENCE BETWEEN THE TWO MODELS, AFFECTING FOUR MAJOR SUBASSEMBLIES, AND REQUESTED A MAINTENANCE ALLOCATION FOR PARTS OF THE LSS MODEL WHICH WERE NOT COVERED BY THE MAINTENANCE ALLOCATION CHART OF THE LUD MODEL. BY LETTER OF JUNE 23 THE CONTRACTOR WAS DIRECTED TO USE THE INFORMATION SUPPLIED, PLUS JUDGMENT, AND SUBMIT AN OUTLINE UNDER PHASE I OF THE CONTRACT. THE CONTRACTOR'S REQUEST OF JULY 20, 1954, FOR A RULING BY THIS OFFICE, FOLLOWED.

CONCERNING THE GOVERNMENT'S FAILURE TO FURNISH THE MAINTENANCE ALLOCATION CHART, THE CONTRACTING OFFICER'S STATEMENT IS THAT THERE IS AN "IMPLIED PROMISE" IN THE STYLE GUIDE TO MAKE THESE CHARTS AVAILABLE; IT IS, HOWEVER, HIS CONCLUSION THAT "THE FAILURE OF THE GOVERNMENT TO SUPPLY THE CHARTS IN THIS CASE WAS A BREACH OF A COMPARATIVELY MINOR CONDITION OF THE CONTRACT, KNOWLEDGE OF WHICH WAS NOT ESSENTIAL TO THE FORMATION OF A VALID CONTRACT; IGNORANCE OF THE FACT THAT THE SPECIFIC MAINTENANCE ALLOCATION CHARTS WERE NOT AVAILABLE WAS NOT IGNORANCE AS TO AN IMPORTANT COLLATERAL FACT.'

SINCE IT APPEARS TO BE CONCEDED THAT PERFORMANCE OF THE CONTRACT UNDER THE CONDITIONS ACTUALLY EXISTING--- I.E., WITHOUT THE CHARTS WHICH THE GOVERNMENT WAS UNDER THE OBLIGATION OF AN "IMPLIED PROMISE" TO FURNISH--- WILL BE MUCH MORE COSTLY THAN IT WOULD OTHERWISE HAVE BEEN, WE CANNOT ESCAPE THE CONCLUSION THAT THE AVAILABILITY OF SUCH CHARTS MUST HAVE BEEN A MATERIAL CONSIDERATION IN THE CONTRACTOR'S DETERMINATION OF THE PRICE PROPOSED BY IT FOR THE PERFORMANCE OF THE WORK. IF THE GOVERNMENT REPRESENTATIVES KNEW OR WERE CHARGEABLE WITH KNOWLEDGE OF THEIR INABILITY TO FURNISH THE CHARTS, THEIR FAILURE TO DISCLOSE THE FACTS WOULD BE SUFFICIENT GROUND TO AVOID THE CONTRACT; IF THEY DID NOT KNOW, BUT ASSUMED THEIR ABILITY TO FURNISH THE CHARTS WHICH THEY SUBSEQUENTLY FOUND TO BE UNAVAILABLE, THEN THE CONTRACT WAS FOUNDED UPON A MUTUAL MISTAKE AND IS SUBJECT TO RESCISSION ON THAT GROUND.

IT IS NOT A SUFFICIENT ANSWER TO SAY, AS THE CONTRACTING OFFICER DOES, THAT THE CONTRACT IS STILL POSSIBLE OF PERFORMANCE WITHOUT THE CHARTS. FROM THE WHOLE RECORD IT APPEARS THAT ITS PERFORMANCE WOULD INVOLVE, NOT MERELY MORE WORK AND EXPENSE THAN ANTICIPATED, BUT THE DOING OF WORK ENTIRELY OUTSIDE THE SCOPE OF THAT CONTEMPLATED BY THE CONTRACT, IN THAT THE CONTRACTOR WOULD APPARENTLY BE REQUIRED TO OBTAIN THROUGH ITS OWN LABORS MUCH OF THE ESSENTIAL INFORMATION, REQUIRED FOR THE PREPARATION OF THE TECHNICAL MANUALS, WHICH WAS EXPECTED TO BE MADE AVAILABLE BY THE GOVERNMENT. THIS THE CONTRACT DID NOT REQUIRE.

YOU ARE ACCORDINGLY ADVISED THAT THE CONTRACT MAY BE CANCELED AS REQUESTED BY THE CONTRACTOR, UPON ITS EXECUTION OF AN AGREEMENT TO TERMINATE BY MUTUAL CONSENT WITHOUT LIABILITY ON EITHER PARTY.