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154 Ct. Cl.

Opinion of the Court

quately show the costs to the Contractor with respect to each such transaction. The Contracting Officer, or his duly authorized representative, shall, at all reasonable times, have the right to examine, or audit or otherwise satisfy himself as to the correctness of purchase orders, records, invoices, time records or other records upon which the Contractor's claims for payment are based for replacement parts, materials and services reimbursable under this TİTLÉ II. All such records shall be preserved by the Contractor for a period of three (3) years after the date of completion or termination of this contract. The Contractor agrees to maintain its books and records in a manner satisfactory to the Contracting

Officer. The obvious reason why the books and records should be open to inspection and kept in a manner satisfactory to the contracting officer is that the Government could not be expected to reimburse plaintiff until plaintiff had paid out something. Since the records were in a confused state, the Government was perfectly correct in demanding that plaintiff bring its records into a current status and maintain them in accordance with recognized practices as required by Title II-G of the contract. Consequently, any delay resulting from the inadequacy of the records was due to the fault and negligence of the plaintiff.

Plaintiff now contends that it relied upon Government Manual TM 14–1000 and that 90 days represented a reasonable time for clearance of checks for payment under reimbursement vouchers instead of the 30-day period fixed by the Army Audit Agency.

Defendant contends that TM 14–1000 was only intended for use by the Audit Agency and was not something upon which plaintiff could rely.

However, assuming that TM 14–1000 does apply, section II thereof provides:


a. It is intended that the contractor be reimbursed promptly and thus be enabled to regain his capital for use in further production. Prompt reimbursement also minimizes the need of the contractor for advances from the Government.


Opinion of the Court b. For the purpose of reimbursement, costs normally will be considered as expended when—in the case of direct charges the cash has been paid out or the bank check drawn and placed in the mail and, in the case of overhead when the amounts of the liabilities for the items included therein have been definitely established or are based on reasonably accurate accruals. When adjustments in the amounts of the liabilities are developed in subsequent periods, the refunds or additional charges involved should be prorated on the same basis as the original charges if the net amount of the effect of the contract is material. [Italics supplied.]

C. As outlined in the sections dealing with overhead, monthly progress payments may be made for overhead on a tentative basis. These progress payments should be sufficiently less than the estimated overhead applicable to the contract to provide a suitable margin of safety. They do not constitute a reimbursement of costs but are advance payments against final overhead claims which will be presented by the contractor as a basis for the settlement of overhead. Care should be taken to avoid an excessive “hold back” of overhead during the year which would unnecessarily increase the contractor's capital requirements.

d. The total current reimbursements to the prime contractor are to be controlled by the auditor to avoid exceeding the maximum total cost stated in the prime contract and amendments. If it becomes apparent to the auditor that the prime contract will so exceed, he will notify the contracting officer. In the case of a CPFF subcontract, the auditor at the subcontractor's plant will notify his contracting officer and the auditor at the prime contractor's plant in any instance in which it becomes apparent that an overrun will occur on the subcontract.

e. Contractors, engaged either solely on CPFF work or on CPFF and other work, may be reimbursed for pay rolls on a gross basis in respect to deductions for social security taxes, victory tax, and all other pay roll deductions. However, in respect to deductions for bonds, the amounts deducted must be currently deposited in a special bank account to be used only for bond purposes.

f. A period of 90 days will be allowed for clearance of checks covering reimbursed direct charges as defined in paragraph 28 and deduction will then be made for any uncleared checks. Such deduction will not, however, include amounts covering taxes and bonds previously deducted from pay roll payments.

154 Ct. Cl. Opinion of the Court In this case, plaintiff's comptroller withheld checks totaling large amounts. Thus in these circumstances plaintiff was not eligible for reimbursement even under the 90-day provision contained in section II, paragraph 13f.

Defendant very strenuously argues that in any event plaintiff cannot recover for two additional reasons: (1) If the Government is responsible for delays in payment due to plaintiff, the measure of plaintiff's damage is the sum withheld plus interest. Defendant then correctly states that the Government is not liable for interest unless called for in the contract or governing statute; (2) The damages claimed by plaintiff by reason of the "forced sale” of its automobile agency were not foreseeable at the time the parties entered the contract. However, in the light of our holding that the delays in respect to this claim were due to the fault of plaintiff, it is unnecessary to decide this point. Count three of plaintiff's petition will be dismissed.

Count four is a claim for increased costs to plaintiff by reason of the failure of the defendant to inspect facilities within a reasonable time, which had been procured and installed on behalf of the defendant, under a facilities contract, for use in rebuilding the 750 GAA engines, thereby delaying the reimbursement to plaintiff for its costs in acquiring and installing such facilities.

In respect to the above claim, the record discloses that all the necessary facilities were procured by plaintiff. Most of the facilities acquired by plaintiff for the account of defendant were acquired and installed by the end of March 1952, and were substantially all acquired by the middle of June 1952. Final inspection and acceptance of the facilities and equipment was made in February 1953.

The commissioner has found that "had inspection and acceptance of all necessary tools and facilities been made promptly, plaintiff would have been reimbursed for substantially all of its facilities cost by July 15, 1952. The carrying charges thereafter for unpaid balances at the rate of five percent per annum to the dates of payment, *** would amount to $8,025."

Plaintiff points out that rather than "carrying charges” the damages sought are for delay in inspection. Conse

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Opinion of the Court

quently, plaintiff now asks permission to amend its petition to indicate the nature of the damages sought as that for rental and plant protection expense rather than the carrying charges as heretofore alleged. We find no objection to this amendment by defendant and since no further proof is necessary or indicated, permission is granted and we will treat the petition as being so amended.

In this posture of the case, the facts show that there was considerable delay in the inspection. As a result thereof, plaintiff was required to maintain the facilities in a condition for defendant's inspection and was unable to otherwise use it during this time after the contract had been performed and each engine delivered. The record reveals that plaintiff was required to pay rent on the premises where the idle facilities were installed at the rate of $2,920 per month, or a total of $11,680 from November 1 through February 28. However, $2,020 of those costs were paid, leaving a total sum of $9,659 which plaintiff paid as rent for this period.?

We can find no reason or excuse for the Government in not promptly inspecting the facilities. The facilities were no longer needed after October 31, 1952, when the rebuilding operations were completed. The Government had from July 15 to October 31 to make inspection, and we think this period of time was not only ample but generous. Since the final inspection was delayed until February 1953, we hold that plaintiff is entitled to recover the approximate amount paid as rent in order to maintain facilities pending inspection. Plaintiff is therefore entitled to recover $8,232.94 on count four of its petition.

In conclusion, since plaintiff is not entitled to recover on counts two and three, its petition as to those counts will be dismissed. Plaintiff is entitled to recover on counts one and four in the amounts set forth above, and judgment will be entered for plaintiff in the sum of $95,820.

It is so ordered.

DURFEE, Judge; MADDEN, Judge; WHITAKER, Judge; and JONES, Chief Judge, concur.

: The commissioner has found the amount to be $8,232.94, characterized as "carrying charges." Plaintifr does not except to this figure inasmuch as it is substantially the amount claimed.



154 Ct. Cl.

Findings of Fact

The court, having considered the evidence, the report of Trial Commissioner Currell Vance, and the briefs and argument of counsel, makes findings of fact as follows:

1. The plaintiff is a corporation duly organized under the laws of the State of California, with its principal office at 1357 Vine Street, Hollywood, California.

2. The plaintiff claims for recovery in four counts against the United States, the sum of $782,167.23 for alleged misrepresentation and breach of two contracts hereinafter described. Under count one, claim is made for $101,739.16 of additional costs for extra work in the procurement of parts for the rebuilding of 750 GAA engines for M4A3 tanks, by reason of misrepresentation of the replacement parts required and procured on behalf of the defendant.

Under count two, claim is made for $92,544.18 of increased costs by reason of the refusal and neglect of the defendant's authorized agents to comply with the contract provisions, and their interference with plaintiff's efficient performance.

Under count three, claim is made for damages of $582,883.89 against the defendant for the withholding of reimbursement payments due plaintiff under its contract that required, in part, the procurement of engine parts on behalf of the defendant.

Under count four, claim is made for $5,000 of increased costs to plaintiff by reason of the failure of the defendant to inspect facilities within a reasonable time, which had been procured and installed on behalf of the defendant, under a facilities contract, for use in rebuilding the 750 GAA engines, thereby delaying the reimbursement to plaintiff for its costs in acquiring and installing such facilities.

3. On December 3, 1951, plaintiff entered into a contract No. DA-04-495-ORD–242, in the amount of $1,054,207.50, with the Los Angeles Ordnance District for the rebuilding of 750 tank engines.

This contract (sometimes referred to hereinafter as Ord242) provided that the Government would deliver to the contractor unserviceable engines f.o.b. the contractor's plant

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