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award. After the audit, petitioners approached a number of local
lending institutions for the purpose of obtaining a line of
credit on behalf of HTC. However, on each occasion, they were
informed that such financing of a small, start-up company was not
possible.
In October 1984, petitioners obtained a personal line of
credit from Society for Savings secured by a second mortgage on
their residence. They personally guaranteed the $20,000 credit
line to HTC contingent upon the contract being awarded to HTC.
In March 1985, the Army awarded a Cost Plus Fixed Fee Contract
("the Contract") to HTC. HTC began work under the Contract on
April 1, 1985. On April 12, 1988, the Army terminated the
Contract.
Between August 1984 and September 1989, petitioners made
loans to HTC in the total amount of $187,143.86. During this
period and through March 31, 1990, HTC made principal payments on
its indebtedness to petitioners in the total amount of
$97,757.36. As of March 31, 1990, petitioners computed interest
outstanding on the unpaid loans to HTC in the amount of
$62,480.31.
HTC sought the balance of the unpaid loans and interest from
the contracting officer of the Army. The contracting officer
offered a settlement proposal for $6,107.47, the difference
between the contract amount ($248,962) and the amount HTC had
previously been paid. However, he denied their claim for
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