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shebra

Damaged Property by a Contractor

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We are an Army tenant on a Navy base. A contractor for Navy was repairing a pipe, which burst, and caused damage to a keyboard in our Army-occupied building. Also the incident caused damage to an employees radio located on her desk. We have an existing support agreement where we pay Navy to provide services to our building via contract. How do we get compensated for the damaged keyboard (government), and the employee's personal radio?

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You need to talk to your Navy friends.

Regarding the contractor's duty to the Government (here, the Navy represents the Government), see the contract clause at FAR 52.236-7 or FAR 52.237-2, whichever is included in the Navy's contract.

The Navy might be able to hold the contractor responsible for the damage, but how you get the money out of the Navy, well, that's not a contracting matter -- that's where your friendship will be helpful. If you want to get your lawyers involved, the Army lawyers can ask the Justice lawyers to sue the contractor, but that likelihood is small, I think.

As for the employee's radio, well, he or she can file a small claims suit against the contractor -- but that is a private civil matter.

You know, I'm getting into areas where I'm not really competent. You need to talk to your Army lawyers. Let me end my post by reminding you of the general principles in the clauses at FAR 52.236-7 or FAR 52.237-2, suggesting that you talk to the Navy contracting officer, and saying "Good Luck!"

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Like ji20874 no expert but I remembered encountering the same type of situation in my career and recalled the below reference...not saying it is one that will apply just passing it on to assist in your research.

Military Personnel and Civilian Employees Claims Act (31 USC 3721)

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We are an Army tenant on a Navy base. A contractor for Navy was repairing a pipe, which burst, and caused damage to a keyboard in our Army-occupied building. Also the incident caused damage to an employees radio located on her desk. We have an existing support agreement where we pay Navy to provide services to our building via contract. How do we get compensated for the damaged keyboard (government), and the employee's personal radio?

shebra, if you are asking how the Army would get compensation for damage to the keyboard, it won't. Any damages that the Navy may recover from the contractor will have to be deposited into the US Treasury as miscellaneous receipts.

My latest incident with contractor reimbursement for damage was when American Airlines accidentally destroyed 'my' then 6 month old, Army laptop computer a few years ago during a TDY flight. The airline paid me personally for the replacement cost,. upon proof that I was accountable for the replacement cost of the computer. I endorsed the check over to the Agency's Finance and Accounting Officer, who had to deposit the funds into the Treasury. We weren't able to use them to purchase a replacement computer. I agree with asking your legal office for advice but I think that is what they will tell you. The Navy should pursue reimbursement anyway - remember the deficit!

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Joel - I am not going to research this but I do pose the question - "Are you sure?"

Your example is not commensurate with the example given. By a different example - If CO for Navy files a claim arising under or relating to the contract against the contractor, do not the monies from the claim if sustained go to the substance of the price/cost of the contract and not to Treasury? As such could not the Navy then utilize the monies for repalcement of damaged Government goods regardless of who owns the Government goods? Or simply demand through the claim that the contractor replace the keyboard? I do not know but this situation is much different than your laptop example.

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Carl, I should have said "I don't think so". I was "hasty." shebra should check with her lawyer. Because this is damage to government property rather than direct damage to work, failure to perform some required work or required rework, etc., I was trying to relate one of my experiences to that. Years ago, improper voltage in a newly constructed AF Barracks burned up the personal computers of numerous Airmen as well as some Air Force non-real property equipment. As I recall any reimbursements for the AF property went to the US Treasury as Miscellaeous receipts. However, this is a complex topic.

Volume II of The GAO Redbook, Chapter 6, under E. Augmentation of Appropriations, 2. Disposition of Moneys Received: Repayments and Miscellaneous Receipts. Page 6-194 begins discussion of "C. Damage to Government Property and Other Tort Liability". There are many nuances, general rules and exceptions.

"As a general proposition, amounts recovered by the government for loss or damage to government property cannot be credited to the appropriation
available to repair or replace the property, but must be deposited in the Treasury as miscellaneous receipts.B-287738, May 16, 2002 (damage to
government buildings); 64 Comp. Gen. 431 (1985) (damage to government motor vehicle); 26 Comp. Gen. 618 (1947) (recovery from insurance
company for damage to government vehicle);3 Comp. Gen. 808 (1924) (loss of Coast Guard vessel resulting from collision). 173

While the recovery may well be “related” to a prior expenditure for repair of the property, it does not constitute a refund in the form of an “adjustment” of a previous disbursement that would qualify for crediting to agency accounts.64 Comp. Gen. 431, 433 (1985)."

The next page includes some non-statutory exceptions and cautions concerning those exceptions. But I am assuming that the damage here is to government property not directly involved in the performance of the contract. shebra should check with her lawyer.

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Thanks, Joel. Also see Maritime Administration Disposition of Funds Recovered from Private Party for Damage to Government Building, GAO B-287738 (May 16, 2002), 2002 WL 1554364:

The Acting Chief Counsel of the Maritime Administration (MARAD) requests our opinion whether MARAD may properly use escrow accounts to hold funds received from private parties (or their insurers) to settle claims by the agency for damages to agency buildings and equipment caused by the private parties. While the question arises out of a claim made by MARAD against a contractor, the claim has since been settled. MARAD has asked us to address its escrow concept, nevertheless. As discussed below, we see no reason to depart from the plain meaning of the miscellaneous receipts statute, which requires that the money be deposited in the general fund of the Treasury.

* * *
Consistent with the statute, we have long held that when a contractor negligently damages government property and the contractor (or its insurance company) agrees or is compelled to make restitution by means of cash payments to the government, the amount recovered cannot be credited to the agency's appropriations, but must be deposited into the Treasury as a miscellaneous receipt.

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Maybe the original poster should avoid a money solution.

How about a new keyboard and a new radio? Both are possible under the contract clauses at FAR 52.236-7 and 52.237-2, if the Navy contracing officer will enforce the contract. I am relying on the original posting in assuming the contractor is at fault or didn't use reasonable care in its work (otherwise, there i sno reason for the original posting).

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Maybe the original poster should avoid a money solution.

How about a new keyboard and a new radio? Both are possible under the contract clauses at FAR 52.236-7 and 52.237-2, if the Navy contracing officer will enforce the contract. I am relying on the original posting in assuming the contractor is at fault or didn't use reasonable care in its work (otherwise, there i sno reason for the original posting).

ji, I think that there was some discussion of situations where the contractor agrees to replace or repair the damaged property in the Redbook on page 6-195 or so. I don't have the webpage open anymore. I'm supposed to be doing my Income Tax return today. it is already lunch time, my wife has called for a status report and I missed my Wednesday lunch date at the yacht club with the Flat Earth Society (retired, old farts and their lovely wives).

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But let's look at the plain text of the clause (FAR 52.237-2): "...the Contractor shall replace or repair the damage at no expense to the Government..."

A contractor's "...failure to use reasonable care causes damage..." to a Government keyboard results in a Contractor's "...replace or repair..." of a Government keyboard.

I don't see an appropriations augmentation issue here, but I admit not having gone to the Redbook on this matter -- I'm just looking at the FAR.

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ji20874, I think you are correct. I was referring to monetary recovery for the Army or a third person in my posts, not to contractual remedies. Sorry about that.

If this is a construction contract both 52.236-7 and 52.236-9 may be applicable for requiring the contractor to replace or repair damaged government equipment and the personal radio. We have used the clause at 52.236-9 -- Protection of Existing Vegetation, Structures, Equipment, Utilities, and Improvements require repair or replacement of private property damaged by construction contracts, although that was generally real property improvements. The clause doesn't distinguish between personal and real property.

I think that the service contract clause would cover this damage too.

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I forgot to mention that construction contractors normally have liability insurance to cover such damages. Construction contracts may include certain insurance requirements but I think that most firms will obtain liability insurance regardless due to the risks involved in construction.

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