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B-210160 1 (1983-09-28)

handle is hein.gao/gaobadlja0001 and id is 1 raw text is: THE COMPTROLLER GENERAL ECISION .-. OF THE UNITEO STATES -'% ,WA8HINGTON. D. C. 20548 FILE: B210160 DATE: September 28, 1983 MATTER OF: Bureau of Prisons--Disposition of Funds Paid in Settlement of Breach of Contract Action DIGEST: Excess costs of reprocurement recovered from a breaching contractor by the Bureau of Prisons may be used to fund a replacement contract. It is illogical to hold a contractor legally responsible for excess reprocurement costs and then not permit the recovery of those costs to be used for the purpose for which they were recovered. As long as the Bureau receives only the goods and services for which it bargained under the original contract, there is no illegal augmentation of the Bureau's appropriation. Therefore these funds need not be deposited into the Treasury as miscellaneous receipts. Comptroller General decisions to the contrary are modified. The Assistant Attorney General for Administration at the Department of Justice has requested our decision on whether certain funds, which were paid by a contractor in settlement of the Govern- ment's claim for breach of contract, may be used to replace defec- tive work completed by the breaching contractor, without constitut- ing an illegal augmentation of the appropriation from which the breached contract was initially funded. For the reasons given below, we conclude that the expenditure of those funds, as contem- plated by the Department of Justice, would not constitute an illegal augmrntat ion. BACKGROUND In June 1974, the Bureau of Prisons awarded to the General Electric Company a contract (number GS 09B-C-9021 SF) in the amount of $152,850 for the design, manufacture, and installation of lami- nated polycarbonate LEXGARD security windows for the Federal Correc- tional Institution, Pleasanton, California. When General Electric allegedly breached the contract by providing defective materials, the United States initiated legal action against it. The lawsuit was settled when General Electric agreed to pay $406,111.30 into the registry of the District Court for the Northern District of California. This amount was in full satisfaction of any and all claims by the United States against General Electric arising from that contract. (We have been informally advised by the Department of Justice that the large differerce ($253,261.30) between the avi~unt awarded under the contract and the amount of the damages which Ge1 eral Electric agreed to pay is due to inflation and substantial underbidding on General Electric's part when it

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