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the government is not bound by their declarations unless they had the authority to make them. Here the government is not bound by any statements, acts or declarations of persons other than the contracting officer. The United States is neither bound nor estopped by actions of its agents without the scope of their authority. Brothers, Inc. v. U. S. (DC, Ga, 1954) 127 F Supp 754.

§ 59. Cost-plus Contracts

§ 59.65. Contributions to charities.

Thomas

A contractor sought to recover for charitable contributions to the Red Cross and National War Fund, Incorporated, alleged to be reimbursable costs under its cost-plus-fixed fee contract with the government.

Held that:

- a provision of the contract that "in carrying out the work" the contractor "is authorized to do and shall do all the things necessary or convenient" to the operation of the project, pertained only to the statement of work to be done, hence this provision did not entitle the contractor to reimbursement for the charitable contributions. - the charitable contributions were not reimbursable under a provision of the contract wherein the government agreed to share a proper proportionate cost "of maintenance of welfare, pension and other employee relations plans maintained by the Contractor," inasmuch as the scope of this provision was limited to employee relation plans such as pensions, profit-sharing, stock-bonus, annuity plans, vacation payments, and plans of that nature which may be the subject of collective bargaining between the employees and the contractor, and was not intended to include charitable contributions, from which the employees would receive only incidental benefits. the provisions of the contract that "no overhead expenses of any kind" shall be "included in the cost of the work under this contract" precluded allowance of the contributions as an item of reimbursable costs, inasmuch as charitable contributions come within the definition of overhead as administrative or executive costs, incident to the management and conduct of the business. Hotpoint Inc. v. United States (1954, Ct Cl) 117 F Supp 572.

IV. PERFORMANCE AND BREACH

§ 71. In General

§ 71.35. Inspection and acceptance of goods or property purchased by government; rejection.

On 22 June 1951, a contractor supplied rolls of paper to the government under a contract containing a provision that final acceptance or rejection of the supplies shall be made as promptly as practicable after delivery, but failure to inspect and accept or reject supplies shall neither relieve the contractor of responsibility for such supplies as are not in accordance with the contract requirements nor impose liability on the government therefor. The paper was delivered on 22 June 1951, failed to meet contract requirements

when inspected on June 27, and was destroyed by flood waters in a government warehouse on 13 July, prior to the government's notice of rejection which was given on 24 August. Held: The government is not liable for the paper in view of the clear terms of the above provision of the contract. The delay which occurred between 13 July and notification of rejection on 24 August, which was attributable to salvage operations, was unavoidable and was not unreasonable. (Distinguishing Cudahy v. U. S., 75 F Supp 239, in which the delay in giving notice extended slightly more than two months following inspection, and perishable items (eggs) were involved.) MS Comp Gen B-112959, 34 Comp Gen 76. 19 August 1954.

§ 87.1. Generally.

§ 87. Delay of Government

Notice to proceed under a construction contract was given on 12 October 1945 and the completion date was fixed as 30 April 1946. Under the contract the government was to furnish certain steel. The evidence showed that notwithstanding the short period of time to perform the contract, the government did not advertise for bids on the steel until 4 September 1945. It also appeared that when no bids were received, the government readvertised for only 80,000 pounds although the estimate of the amount needed was 264,000 pounds; it made no effort to obtain more than 80,000 pounds until November 1945; it informed the contractor that more steel had been ordered when in fact it had not been; it did not authorize the use of steel that had been obtained until some time after its arrival; and it did not place orders for steel which could have been obtained under priorities. Also, the contractor could have obtained steel as an accommodation if the government had informed it of its inability to get the steel. Held: The contractor is entitled to recover the costs occasioned by delay of the government in furnishing the necessary steel since under the circumstances the government failed to act diligently and its negligence directly caused the delay. Under the circumstances there was an implied warranty upon the part of the government to provide necessary steel in order that the contractor could complete the contract in the specified time and the negligent failure to do so was a breach of this warranty. (Distinguishing U. S. v. Foley Co., 329 US 64, 91 L ed 44, 67 S Ct 154; Barling v. U. S., 11 F Supp 878, 126 Ct Cl 44; Otis Williams and Co. v. U. S., 120 Ct Cl 249. Citing Chalender v. U. S., 119 F Supp 186, 189, 127 Ct Cl 557.) Thompson v. United States (Ct Cl No. 49119), 124 F Supp 645, 5 October 1954.

§ 89. Excuse or Justification for Delay

§ 89.1. Generally.

The completion date under a building construction contract was 5 December 1951. On 26 November 1951 the contractor was given plans for additional work in connection with one of the buildings. The contractor submitted a proposed price for the additional work and stated that an additional eight months' time would be required.

The price was accepted but no provision was made for an extension of time. The contractor took exception to the failure to provide a time extension stating that a severe shortage of workmen had made it necessary to divert workmen from the work authorized under the original contract, that the additional work was not a project that could be considered individually but had to be considered as an integral part of the whole project, and that the change had delayed completion of the entire project. Subsequently the contracting officer allowed a thirty day extension of time on account of the change. An additional twenty-four days was allowed because of delay affecting the contract work due to another government contractor's delay in installing door frames at elevator hoistway openings. The contractor protested that the twenty-four day extension was inadequate, and that the delay in the installation, of the door frames retarded the progress of the work in so many indirect ways that it would be impossible to determine its effect on the contract work with any degree of accuracy. The contractor further contended that since the delay incurred under the contract was attributable to acts of both parties, it was entitled to be excused for all of the delay involved. This is in accordance with the general proposition of law that where both parties are found to have been at fault in causing the delay in performance of the contract the court will not apportion the fault for the purpose of determining the amount of damages. Held: The question of whether the delay to the work caused by the belated installation of the door frames at the elevator hoistways, for which the government was responsible, was segregable from the delays chargeable to the contractor, as well as the adequacy of the twenty-four day extension are factual questions the determination of which is within the province of the contracting officer and the Secretary of the Army. Moreover, the general proposition of law contended for by the contractor that, where both parties are found to have been at fault in causing delay the courts will not apportion the fault is not applicable since the contract, by providing that the contractor was to be granted appropriate extension of time for delays due to certain causes, including acts of another contractor, inferentially provided for such apportionment for the purpose of determining the amount of liquidated damages assessable for delay. (See Robinson v. U. S., 261 US 486, 488, 67 L ed 760, 43 S Ct 420.) However, the contractor's contention that it was entitled to an extension of time for the completion of the contract equal to the number of days from the date the work under the change was directed, until such work was completed, is correct provided the contractor did not delay the extra work unnecessarily. This is because the government directed the performance of the extra work at such a late date in relation to the date fixed for completion of the contract as to make it impossible for the contractor to have completed such work within the contract period. Under these circumstances, the legal presumption is that the parties intended that the contractor was to be given a reasonable time within which to perform the extra work regardless of the date fixed for completion of the entire contract. In other words, the contract completion date was automatically extended by

the amount of time required to perform the extra work. (See American Engineering Co. v. U. S., 24 F Supp 449; Sun Shipbuilding Co. v. U. S., 76 Ct Cl 154; Standard Steel Car Co. v. U. S., 67 Ct Cl 445; 152 ALR 1357-1359.) MS Comp Gen B-120760, 34 Comp Gen 230.

18 November 1954.

§ 103.1. Generally.

§ 103. Award and Damages

A contractor agreed to furnish the government a quantity of gauges characterized by the classification of seven items of varying degrees, all of which were delivered except items six and seven. As a result of the default, the contract was terminated. The gauges required by item seven were repurchased at a saving of $642, while the repurchase of gauges under item six was effected at an excess cost of $594. Held: The liability of the defaulting contractor for excess cost should be computed on the basis of cost to the government not as to individual items concerned, but as to the contract as a whole. Even though it is necessary to award replacement contracts to different firms, the party injured by breach of contract is entitled only to fair and just compensation commensurate with the loss sustained. (Citing 32 Comp Gen 328.) MS Comp Gen B-119994, 34 Comp Gen 41. 26 July 1954.

A contractor defaulted on his contract with the government. However, no repurchase will be made and no excess costs will be incurred. The contract, after providing for the recovery of excess costs, specifically stated that "The rights and remedies of the government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract." Held: The rule has been adopted that in the statement and settlement of claims the clause quoted will be accepted as preserving to the government the right to damages occasioned by virtue of a breach of contract in cases where no repurchase will be made, the measure of damages ordinarily to be the difference between the contract price and the market value at the time of the breach. MS Comp Gen B-122238, 34 Comp Gen 347. 26 January 1955.

$103.41. Reletting or replacement contracts.

A company engaged to furnish hinges and screws to the government defaulted on its contract and pursuant to a provision thereof the government terminated the contract and relet it to another company at a higher price. The government sought to recover the excess costs from the first contractor.

Held that:

such contractor cannot avoid liability on a claim that the second contractor was not a "manufacturer" or "regular dealer" within the meaning of the Walsh-Healey Act, 41 USC § 35, so that the relet contract was illegal. Assuming that there was a noncompliance with the Walsh-Healey Act, such act is intended to regulate governmental conduct in entering into contracts, is a self-imposed restraint, a matter of internal housekeeping, and was not intended to confer

enforceable rights on private parties contracting under its aegis. (Citing Perkins v. Lukens Steel Co., 310 US 113, 127-129, 84 L ed 1108, 60 S Ct 869; Endicott Johnson Corp. v. Perkins, 317 US 501, 507, 508, 87 L ed 424, 63 S Ct 339.)

- the fact that there was some variation in detail between the original contract and the second contract, did not relieve the original contractor from liability for excess costs. The termination provision in the original contract authorizing the government to "procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, supplies or services similar to those so terminated," not only contemplated some variation from the original contract, but vested a broad discretion in the Contracting Officer. (Distinguishing Doehler Metal Furniture Co. v. U. S., 2 Cir., 149 F2d 130, 131, 135.) In the ordinary course of reletting a contract it is not unusual that such details as the f.o.b. shipping point and the schedule of deliveries will be altered. If there is increased cost from such natural, if not unavoidable, variances, that is surely within the reasonable expectations of the contracting parties. Under such a contract, liability for the loss the promisor has caused should not be avoided except upon its showing of an abuse of the discretion it has granted and some new obligations in the relet contract going beyond the reasonable latitude accorded the promisee.

any amounts the government might recoup on the relet contract under the Renegotiation Act of 1951, 50 USC App §§ 12111223, would not be a reduction in the contract price so as to reduce the original contractor's liability for the excess costs. United States v. Warsaw Elevator Co. et al (1954, CA2nd Cir) 213 Fd 517.

VI. CANCELLATION AND TERMINATION

§ 119. In General

Section 626 of the Department of Defense Appropriation Act of 1954, PL 179, requiring that certain contracts contain provisions for termination of the contract and penalties against the contractor in the event it is found that gratuities were offered or given by such contractor in connection with the securing or performance of the contract, does not require that such provisions be included in contracts the award of which is not subject to the exercise of discretion or choice by officers or employees of the military departments. Accordingly, with respect to orders placed by the military departments under Federal Supply Schedule Contracts and area utility contracts negotiated by the General Services Administration, and which are obligatory upon the military departments, no question will be raised by the GAO as to the propriety of payments made from Defense Department appropriations because of the omission from such orders or contracts of the "gratuities" clause. However, as to orders or contracts of the military departments placed under such contracts as are made by the General Services Administration, where the use thereof is optional with those departments, the law would require the inclusion of the gratuity clause in ques

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