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B-125483, NOV. 6, 1956

B-125483 Nov 06, 1956
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ESQ.: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 6. 278.87 WAS DUE THE UNITED STATES BY REASON OF CERTAIN CONTRACT CHANGES. ADVISED THE CONTRACTOR THAT UNLESS APPROPRIATE ARRANGEMENTS WERE MADE TO LIQUIDATE THE INDEBTEDNESS COLLECTION PROCEEDINGS WOULD BE INITIATED IN ACCORDANCE WITH ESTABLISHED PRACTICE. YOU STATE THAT THE PRECISE QUESTION FOR DETERMINATION IS WHETHER THE INTERIOR CONSTRUCTION OF THE ELEVATOR SHAFTS OF THE VARIOUS BUILDINGS COMPRISING THE HOSPITAL FACILITIES WAS REQUIRED BY THE CONTRACT TO BE OF BRICK OR OF LARGER MASONRY UNITS. THE POSITION WHICH YOU URGED BEFORE THE BOARD IS AGAIN ASSERTED. 15 WAS TERRA COTTA OR CINDER BLOCK AND NOT SOLID BRICK AS FOUND BY THE BOARD.

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B-125483, NOV. 6, 1956

TO THOMAS GALBALLY, ESQ.:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 6, 1956, AND ITS ENCLOSURES, IN WHICH YOU REQUEST ON BEHALF OF TOMPKINS-CURLETT WUNDERLICH, GENERAL CONTRACTORS FOR CONSTRUCTION OF A VETERANS HOSPITAL AT SALISBURY, NORTH CAROLINA, UNDER GOVERNMENT CONTRACT NO. V1001C-152, AND JOHN B. KELLEY, INC., THE MASONRY SUBCONTRACTOR, THAT WE RECONSIDER OUR DECISION OF MARCH 14, 1956, B-125483, 35 COMP. GEN. 512. THIS DECISION SUSTAINED A DETERMINATION BY THE ASSISTANT ADMINISTRATOR FOR CONSTRUCTION, THE DULY APPOINTED REPRESENTATIVE OF THE HEAD OF THE CONTRACTING AGENCY--- THE VETERANS ADMINISTRATION--- THAT A CREDIT IN THE AMOUNT OF $52,278.87 WAS DUE THE UNITED STATES BY REASON OF CERTAIN CONTRACT CHANGES, AND ADVISED THE CONTRACTOR THAT UNLESS APPROPRIATE ARRANGEMENTS WERE MADE TO LIQUIDATE THE INDEBTEDNESS COLLECTION PROCEEDINGS WOULD BE INITIATED IN ACCORDANCE WITH ESTABLISHED PRACTICE.

IN THE MEMORANDA ACCOMPANYING YOUR LETTER YOU REITERATE THE CONTENTIONS PRESENTED BEFORE THE CONSTRUCTION CONTRACT APPEALS BOARD AS TO THE BINDING EFFECT OF THE CHANGE ORDER IN QUESTION AND THE JURISDICTION OF THE BOARD. YOU STATE THAT THE PRECISE QUESTION FOR DETERMINATION IS WHETHER THE INTERIOR CONSTRUCTION OF THE ELEVATOR SHAFTS OF THE VARIOUS BUILDINGS COMPRISING THE HOSPITAL FACILITIES WAS REQUIRED BY THE CONTRACT TO BE OF BRICK OR OF LARGER MASONRY UNITS--- EITHER TERRA COTTA OR CINDER BLOCK AT THE OPTION OF THE CONTRACTOR. THE POSITION WHICH YOU URGED BEFORE THE BOARD IS AGAIN ASSERTED, THAT THE CONTRACT REQUIREMENT FOR MASONRY CONSTRUCTION IN BUILDINGS 1 TO 6, AND BUILDINGS 10, 11, 13, AND 15 WAS TERRA COTTA OR CINDER BLOCK AND NOT SOLID BRICK AS FOUND BY THE BOARD. THIS CONNECTION YOU STATE THAT SOME OF THE CONTRACT DRAWINGS "IT IS FRANKLY CONCEDED, ARE CONTRADICTORY.' YOU CONTEND, HOWEVER, THAT "THE GENERAL EFFECT OF ALL THE CONTRACT DRAWINGS AND THE SPECIFICATIONS SUPPORTS THE THEORY OF THE CONTRACTOR AS THE CONTRACTING OFFICER AGREED BY ISSUING CHANGE ORDER 15U.' AT THE SAME TIME, YOU ADMIT THAT IF THE CONTRACT REQUIRED BRICK AND THE CONTRACTOR WAS PERMITTED TO USE THE LARGER MASONRY UNITS, HIS COSTS WERE CONSIDERABLY REDUCED, BUT YOU STRENUOUSLY CONTEND, IN EFFECT, THAT ALTHOUGH THE EQUITABLE ADJUSTMENT DETERMINED BY THE CONTRACTING OFFICER--- AS STIPULATED IN CHANGE ORDER 15U HERE IN QUESTION--- FAILS TO REFLECT SUCH REDUCTION IN COSTS, THE GOVERNMENT IS FORECLOSED FROM CORRECTING THE OBVIOUSLY ERRONEOUS DETERMINATION.

FROM A CAREFUL REVIEW AND CONSIDERATION OF THE ENTIRE RECORD, WE ARE OF THE VIEW THAT THE FACTS AND CIRCUMSTANCES DISCLOSED BY THE AVAILABLE EVIDENCE ARE INCOMPATIBLE WITH THE LEGAL PREMISE ON WHICH YOUR ARGUMENT IS BASED AND ARE SUCH AS TO COMPEL THE CONCLUSION THAT YOUR CONTENTIONS ARE UNTENABLE.

UNDER SECTION 6 OF THE CONTRACT SPECIFICATIONS RELATING TO MASONRY CONSTRUCTION THE CONTRACTOR AGREED TO FURNISH ALL PLANT, LABOR, EQUIPMENT, APPLIANCES, AND MATERIALS NECESSARY TO THE INSTALLATION OF BRICK, BRICK VENEER, STRUCTURAL TILE AND CONCRETE BLOCK MASONRY IN STRICT ACCORDANCE WITH THE PROVISIONS OF THIS SECTION AND THE APPLICABLE DRAWINGS. DETAILED STIPULATIONS ARE INCLUDED IN THIS SECTION OF THE SPECIFICATIONS AS TO THE MATERIALS TO BE USED, THE HANDLING AND STORAGE THEREOF, THEIR ERECTION, CUTTING AND PATCHING, PAINTING AND CLEANING, BUT NOTHING THEREIN MAY BE REASONABLY CONSTRUED AS INDICATING THE TYPE OF MASONRY CONSTRUCTION FOR ANY PARTICULAR BUILDING. TO ASCERTAIN THE REQUIRED TYPE OF MASONRY CONSTRUCTION FOR EACH BUILDING THE SPECIFICATIONS REFER TO "THE APPLICABLE DRAWINGS" EXPRESSLY REFERRED TO AND INCORPORATED THEREIN.

IT HAS BEEN FOUND THAT 60 DRAWINGS WERE REQUIRED TO PORTRAY THE MASONRY CONSTRUCTION REQUIRED FOR THE ENCLOSURE WALLS OF THE STAIRWAYS AND ELEVATOR SHAFTS OF THE 10 BUILDINGS CONCERNED. SMALL SCALE FLOOR PLANS ARE CONSISTENT WITH LARGE SCALE DETAILS ON THE DRAWINGS WHICH SHOW SPECIFICALLY BY APPROPRIATE CODE DESIGNATIONS THESE CONSTRUCTION REQUIREMENTS. SOLID BRICK IS INDICATED BY THE PLANTS FOR THE WALLS SURROUNDING ALL THE STAIRWAYS AND ELEVATOR SHAFTS INVOLVED EXCEPT IN A LIMITED NUMBER OF INSTANCES WHERE STRUCTURAL GLAZE TILE IS INDICATED WITH BRICK BACKUP, AND IN SOME FEW INSTANCES, WHERE DUAL MASONRY WALLS OCCUR, HOLLOW TILE IS INDICATED. TAKEN TOGETHER, AS THEY MUST BE, THE SPECIFICATIONS AND THE PLANS SUPPLEMENT EACH OTHER AND ARE ABUNDANTLY CLEAR AS TO THE MASONRY CONSTRUCTION REQUIRED FOR EACH BUILDING. NOTHING WAS FURNISHED WITH YOUR MEMORANDA AND NOTHING HAS BEEN FOUND TO JUSTIFY YOUR CONTENTIONS TO THE CONTRARY OR THAT THE GENERAL EFFECT OF ALL THE CONTRACT DRAWINGS AND SPECIFICATIONS SUPPORTS YOUR THEORY THAT BRICK WAS NOT REQUIRED BY THE CONTRACT FOR THE WALLS INVOLVED.

BY CHANGE ORDER 15U, ISSUED UNDER ARTICLE 3 OF THE CONTRACT PROVIDING FOR CHANGES IN THE DRAWINGS AND SPECIFICATIONS, THE CONTRACTING OFFICER (1) AUTHORIZED A CHANGE IN THE MASONRY CONSTRUCTION OF THE ENCLOSURE WALLS AROUND THE STAIRWELLS AND ELEVATOR SHAFTS FROM 8 INCH BRICK TO 6 INCH STANDARD TERRA COTTA TILE OR 6 INCH CINDER BLOCKS IN ALL BUILDINGS EXCEPT BUILDING NO. 11, AND (2) DETERMINED THAT THE AMOUNT DUE UNDER THE CONTRACT BECAUSE OF THIS CHANGE SHOULD BE INCREASED IN THE SUM OF $1,116.37 AS AN EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE. IN THE INSTRUCTIONS AND CORRESPONDENCE PRECEDING THE ISSUANCE OF THIS CHANGE ORDER--- RUNNING BACK TO NOVEMBER 30, 1950--- THE CONTRACTING OFFICER CONSISTENTLY MAINTAINED THAT SOLID BRICK FOR THESE ENCLOSURE WALLS WAS REQUIRED BY THE TERMS OF THE CONTRACT, AND TWICE REQUESTED PROPOSALS FOR REDUCTION IN THE CONTRACT PRICE BY REASON OF SUBSTITUTION OF CHEAPER MATERIAL THEREFOR. MOREOVER, THE TERMS OF THE CONTRACT, THE PERTINENT CORRESPONDENCE, AND THE LANGUAGE USED IN THE CHANGE ORDER FINALIZING THE CHANGE "FROM 8 INCH BRICK TO 6 INCH STANDARD TERRA COTTA TILE OR 6 INCH CINDER BLOCKS" WOULD SEEM TO CONSTITUTE IRREFUTABLE EVIDENCE AGAINST YOUR CONTENTION THAT ISSUANCE OF THE CHANGE ORDER INDICATES THAT THE CONTRACTING OFFICER WAS IN AGREEMENT WITH YOUR THEORY. AT THE SAME TIME, THE CHANGE ORDER MANIFESTLY DID NOT REFLECT AN APPROPRIATE REDUCTION IN THE CONTRACT COSTS. THIS FACT IS EVIDENCED BY THE CONTRACTOR'S OWN ESTIMATE OF $79,814.99 SET OUT IN HIS PROPOSAL OF APRIL 17, 1951, FOR INSTALLING SOLID BRICK IN LIEU OF CINDER BLOCK BASED ON THE SUBCONTRACTOR'S PROPOSAL OF APRIL 2, 1951. IN OTHER WORDS, THE EVIDENCE OF RECORD AMPLY ESTABLISHES THAT THE CONTRACTING OFFICER'S DETERMINATION TO INCREASE THE CONTRACT PRICE WAS SO GROSSLY ERRONEOUS AS TO IMPLY BAD FAITH AND, THEREFORE, CHANGE ORDER 15U PROPERLY MAY NOT BE REGARDED AS A VALID AND BINDING MODIFICATION OF THE CONTRACT IN THIS RESPECT. CF. NEEDLES V. UNITED STATES, 101 C.CLS. 535. THIS FACT WAS RECOGNIZED BY THE CONSTRUCTION CONTRACT APPEALS BOARD WHICH WAS FULLY JUSTIFIED AND DUTY BOUND TO SEE THAT THE ERROR WAS CORRECTED ALTHOUGH IT WAS NOT DISCLOSED UNTIL THE CONTRACTOR APPEALED THE CHANGE ORDER. ABOVE INDICATED, THE BOARD'S FINDINGS CHARACTERIZED BY YOU AS GRATUITOUSLY MADE APPEAR TO US TO BE ADEQUATELY SUPPORTED BY THE EVIDENCE. CF. EVIDENCE EDISON COMPANY V. NATIONAL LABOR RELATIONS BOARD, 305 U.S. 197, 229. THE EVIDENCE LIKEWISE SUPPORTS THE CONTRACTING OFFICER'S DETERMINATION THAT A CREDIT OF $52,278.87 IS DUE THE GOVERNMENT AS AN EQUITABLE ADJUSTMENT FOR THE CHANGES SPECIFIED IN CHANGE ORDER 15U. THIS DETERMINATION, ALSO APPEALED BY THE CONTRACTOR, WAS SUSTAINED BY THE ASSISTANT ADMINISTRATOR FOR CONSTRUCTION. HENCE, BY THE TERMS OF THE CONTRACT IT BECAME FINAL AND CONCLUSIVE UPON THE CONTRACTING PARTIES. CF. WAGNER WHIRLER AND DERRICK CORPORATION V. UNITED STATES, 128 C.CLS. 382, AND RUSSELL H. WILLIAMS, ET AL. V. UNITED STATES, 130 C.CLS. 435, CERTIORARI DENIED 131 C.CLS. 818.

WITH RESPECT TO THE ADMINISTRATIVE ACTION TO RECOVER THE OVERPAYMENT RECEIVED BY THE CONTRACTORS AS A RESULT OF THE CONTRACTING OFFICER'S ERROR, IT IS WELL-ESTABLISHED THAT THE GOVERNMENT, INDEPENDENTLY OF STATUTE, MAY RECOVER FUNDS WHICH ITS AGENTS HAVE WRONGFULLY, ERRONEOUSLY, OR ILLEGALLY PAID. THIS RIGHT EXISTS WHETHER SUCH PAYMENTS ARE MADE UNDER MISTAKE OF LAW OR FACT; WHETHER BECAUSE IN EXCESS OF AUTHORITY OR BASED UPON AN ERRONEOUS INTERPRETATION OF A CONTRACT, OR BECAUSE OF THE RELIANCE UPON FACTS FOUND SUBSEQUENTLY NOT TO EXIST. CF. 35 COMP. GEN. 63, AT PAGES 70-72, AND THE AUTHORITIES THERE CITED.

ACCORDINGLY, OUR DECISION OF MARCH 14, 1956, IS AFFIRMED AND OUR CLAIMS DIVISION IS BEING DIRECTED TO PROCEED WITH THE COLLECTION OF THE AMOUNT DUE.

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