B-160326, JAN. 30, 1967

B-160326, JAN. 30, 1967

TO RAY PHELPS COMPANY, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTERS DATED OCTOBER 20, 1966, REQUESTING A RELEASE WITHOUT LIABILITY ON THE PART OF YOUR COMPANY FROM THE TERMS AND CONDITIONS OF ARMY CONTRACT NO. DA-30-075-CIVENG-66 30, DATED FEBRUARY 4, 1966, UNDER WHICH THE COMPANY AGREED TO REMOVE A WRECKED SCOW,"CLEARY 70," FROM THE UPPER NEW YORK BAY, NEW YORK HARBOR, NEW YORK. THE SCOW HAD BEEN ABANDONED BY ITS OWNER AFTER SINKING ON OCTOBER 19, 1965, WHILE UNDER TOW AND PRESUMABLY AFTER HAVING BEEN UNLOADED.

THE CONTRACT WAS AWARDED PURSUANT TO AN INVITATION FOR BIDS ISSUED BY THE NEW YORK DISTRICT, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, AND YOUR BASIC LETTER OF OCTOBER 20, 1966, FIRST REFERS TO THE AMENDED SECTION TP-2 OF THE TECHNICAL PROVISIONS OF THE INVITATION FOR BIDS. THE AMENDED SECTION TP-2 INCLUDES THE STATEMENTS THAT THE DECK OF THE WRECKED SCOW "IS COVERED WITH DIRT AND ONE MAN STONE WHICH REMAINED AFTER MOST OF THE LOAD WAS REMOVED PRIOR TO SINKING; " AND THAT "THE EXACT QUANTITY OF THIS REMAINING MATERIAL IS UNKNOWN.' THAT SECTION FURTHER STATES THAT THE DESCRIPTION AND DIMENSION OF THE WRECK "ARE BELIEVED TO BE RELIABLE, BUT THE UNITED STATES DOES NOT GUARANTEE THEIR ACCURACY; " AND THAT "BIDDERS ARE EXPECTED TO VISIT THE SITE OF THE WORK AND ASCERTAIN FOR THEMSELVES THE DIFFICULTIES ATTENDING ITS REMOVAL.'

YOU INDICATED THAT YOU MADE AN INSPECTION OF THE WORK SITE PRIOR TO BIDDING ON YOUR COMPANY'S BEHALF AND THAT THIS INSPECTION INCLUDED PERSONALLY DIVING ON THE WRECK AND MAKING AS CAREFUL AND CONSCIENTIOUS AN EXAMINATION AS POSSIBLE. THE INSPECTION ALLEGEDLY SHOWED THAT THE DECK WAS COVERED WITH DIRT, STONE AND DEBRIS, AND SOME WOODEN PILING AND BRICK. IT WAS IMPOSSIBLE TO INSPECT THE INTERIOR OF THE SCOW AND IT WAS THEREFORE NECESSARY TO SEEK OTHER VERIFICATION OF THE STATEMENT IN THE TECHNICAL PROVISIONS OF THE INVITATION FOR BIDS THAT "MOST OF THE LOAD WAS REMOVED PRIOR TO SINKING.' YOU DISCUSSED THE QUESTION WITH THE TUG BOAT CAPTAIN AND OTHER PERSONS WHO HAD WORKED WITH THE SCOW BEFORE THE TRIP ON WHICH THE SCOW SANK IN THE BAY, AND THEY CONFIRMED THE INFORMATION THAT THE SCOW WAS VIRTUALLY EMPTY. THE TUG BOAT CAPTAIN ALSO INDICATED THAT THE OWNER OF THE SCOW HAD MADE A SIMILAR STATEMENT TO HIM.

HOWEVER, DURING OPERATIONS FOR REMOVAL OF THE SCOW, YOU ALLEGEDLY DISCOVERED THAT THERE WERE LARGE HOLES IN THE DECKCOVERED BY PLYWOOD PATCHES AND, UPON REMOVAL OF THE PATCHES, YOU FOUND THAT THE SCOW HAD A GREAT AMOUNT OF ROCKS, DIRT, SAND AND DEBRIS UNDER THE DECK. YOU WERE UNSUCCESSFUL IN ACCOMPLISHING THE REMOVAL OF THE SCOW AND IT IS YOUR CONTENTION THAT, IF THE TRUE FACTS WERE KNOWN, YOU WOULD NOT HAVE SUBMITTED A BID ON BEHALF OF YOUR COMPANY.

IN FURTHER SUPPORT OF THE REQUEST FOR RELEASE FROM LIABILITY UNDER THE CONTRACT, YOUR BASIC LETTER OF OCTOBER 20, 1966, SETS FORTH THAT, PRIOR TO AND DURING ATTEMPTS TO REMOVE THE SCOW, YOU SUFFERED CERTAIN ILLNESSES AND NO WORK HAD BEEN PERFORMED FROM ABOUT SEPTEMBER 1, 1966, PRIMARILY BECAUSE YOUR HEALTH HAD DETERIORATED TO THE EXTENT THAT YOU COULD NO LONGER DIVE ON THE WRECK OR PERFORM OTHER STRENUOUS WORK. THE LETTER ALSO SETS FORTH THAT VARIOUS DIFFICULTIES WERE EXPERIENCED IN ATTEMPTS TO REMOVE THE SCOW. IT IS INDICATED THAT THE WORK WAS DELAYED BY REFUSAL OF AN EQUIPMENT RENTAL CONCERN TO RENT A PIECE OF EQUIPMENT WITH OPERATOR BECAUSE OF THE HAZARDOUS NATURE OF THE JOB; THAT THE WEIGHT OF THE WRECK APPARENTLY CAUSED FAILURES IN ATTEMPTS AT REMOVAL; THAT CERTAIN EQUIPMENT WAS LOST DURING REMOVAL OPERATIONS; THAT UNITED STATES COAST GUARD PERSONNEL FAILED TO MOOR PROPERLY A LAUNCH BELONGING TO YOUR COMPANY AFTER HAVING USED SAME DURING ONE OF THE PERIODS OF YOUR ILLNESS; THAT AN ACCIDENT OCCURRED AT THE WORK SITE WHICH WAS CAUSED BY THE PASSAGE OF A PRIVATELY OWNED TUG IMMEDIATELY AFTER AN ARMY VESSEL HAD PASSED NEAR THE SITE; THAT THERE WAS AN UNREASONABLE DELAY IN THE DELIVERY OF A PARCEL POST PACKAGE WHICH CONTAINED A REPLACEMENT PART FOR A BROKEN PIECE OF MACHINERY; AND THAT ADDITIONAL DELAYS WERE CAUSED BY THE ACCIDENTAL DEATH OF A KEY EMPLOYEE OF YOUR COMPANY, THE DESTRUCTION OF ONE OF YOUR BARGES BY VANDALS, AND STORMS WHICH OCCURRED ON SEPTEMBER 1, 1966, AND SEPTEMBER 21, 1966.

IN ADDITION, IT IS STATED IN THE LETTER THAT YOUR NEW ASSISTANT REFUSED TO RETURN TO WORK UNDER ANY CONDITIONS AFTER YOUR COMPANY WAS ORDERED BY AN INSPECTOR OF THE ARMY CORPS ENGINEERS TO DROP ALL SLINGS OVERBOARD, STOP ALL WORK ON THE WRECK REMOVAL, CLEAR THE SITE AND LEAVE THE AREA BECAUSE A VESSEL OF THE ENGINEER CORPS, THE "BALANCE," WAS TAKING SOUNDINGS IN THE AREA.

THE CONTRACT PROVIDED FOR PAYMENT BY THE GOVERNMENT OF THE SUM OF $6,100 FOR REMOVAL OF THE WRECKED SCOW AND THE PERFORMANCE OF OTHER INCIDENTAL WORK. IT WAS AGREED THAT THE CONTRACT WAS TO BE COMPLETED WITHIN 35 DAYS AFTER RECEIPT FROM THE GOVERNMENT OF A NOTICE TO PROCEED AND THAT LIQUIDATED DAMAGES AT THE RATE OF $35 FOR EACH DAY OF DELAY IN COMPLETING THE JOB WOULD BE ASSESSED. ARTICLE 5 OF THE CONTRACT CONTAINS CERTAIN TERMINATION FOR DEFAULT PROVISIONS UNDER WHICH, IN THE EVENT OF DEFAULT WITHOUT EXCUSABLE CAUSES OF SPECIFIED TYPES, YOUR COMPANY COULD HAVE BEEN HELD LIABLE FOR LIQUIDATED DAMAGES, TOGETHER WITH EXCESS COSTS OCCASIONED THE GOVERNMENT IN COMPLETING THE CONTRACT WORK AFTER TERMINATION OF YOUR RIGHT TO PROCEED WITH CONTRACT PERFORMANCE.

THE OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY, HAS RECOMMENDED THAT YOUR COMPANY'S REQUEST FOR RELEASE FROM LIABILITY UNDER THE CONTRACT BE DENIED. THAT RECOMMENDATION WAS BASED UPON THE STATEMENT OF FACTS PREPARED BY THE CONTRACTING OFFICER CONCERNING THE ALLEGATIONS MADE IN YOUR BASIC LETTER OF OCTOBER 20, 1966.

THE CONTRACTING OFFICER'S STATEMENT OF FACTS SETS FORTH THAT THE NOTICE TO PROCEED WAS RECEIVED BY YOUR COMPANY ON MARCH 29, 1966, THUS REQUIRING COMPLETION OF THE CONTRACT WORK NOT LATER THAN MAY 3, 1966; THAT THE COMPANY COMMENCED OPERATIONS IN THE EARLY PART OF APRIL 1966; THAT ON MAY 18, 1966, THE COMPANY WAS REMINDED THAT LIQUIDATED DAMAGES WERE ACCRUING BY REASON OF ITS FAILURE TO COMPLETE THE WORK BY MAY 3, 1966; THAT OPERATIONS WERE THEREAFTER RESUMED AND CONTINUED SPORADICALLY UNTIL AUGUST 31, 1966; AND THAT, AS OF SUCH DATE, THE COMPANY HAD FAILED TO REMOVE THE WRECK AND NO FURTHER WORK UNDER THE CONTRACT WAS PERFORMED AFTER AUGUST 31, 1966. ON SEPTEMBER 16, 1966, A LETTER WAS SENT TO THE AETNA INSURANCE COMPANY, THE SURETY ON THE CONTRACT PERFORMANCE BOND, WITH REFERENCE TO THE COMPANY'S FAILURE TO COMPLETE THE CONTRACT; AND A MEETING WAS HELD AT THE NEW YORK CORPS OF ENGINEERS DISTRICT OFFICE ON OCTOBER 7, 1966, WHICH WAS ATTENDED BY YOUR AND A REPRESENTATIVE OF THE SURETY COMPANY.

NO AGREEMENT WAS THEN REACHED FOR COMPLETION OF THE CONTRACT WORK AND BY REGISTERED LETTER DATED OCTOBER 10, 1966, YOUR COMPANY WAS NOTIFIED THAT, UNLESS THE WORK WAS RESUMED BY OCTOBER 17, 1966, AND COMPLETED BY OCTOBER 27, 1966, THE GOVERNMENT WOULD CONSIDER SUCH FAILURE A BREACH OF THE CONTRACT AND ANOTHER CONTRACTOR WOULD THEN BE ENGAGED TO COMPLETE THE WORK. THAT NOTICE WAS RETURNED TO THE DISTRICT UNDELIVERED. ON OCTOBER 26, 1966, THE DISTRICT SENT A REGISTERED LETTER TO YOUR COMPANY, INDICATING THAT THE WORK WOULD BE ACCOMPLISHED BY ANOTHER CONTRACTOR AND STATING THAT THE LETTER CONSTITUTED A FINAL DECISION OF THE CONTRACTING OFFICER UNDER THE DISPUTES CLAUSE OF THE CONTRACT; ALSO, THAT YOUR COMPANY HAD A RIGHT TO APPEAL FROM SAID DECISION WITHIN 30 DAYS TO THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS. THAT LETTER WAS ALSO RETURNED TO THE DISTRICT UNCLAIMED. A COPY OF THE LETTER HAD BEEN SENT TO THE SURETY ON THE CONTRACT PERFORMANCE BOND BUT THE DISTRICT WAS ADVISED BY THE SURETY IN A LETTER DATED NOVEMBER 9, 1966, THAT IT DECLINED TO MAKE ANY ARRANGEMENTS FOR COMPLETION OF THE WORK UNDER THE CONTRACT. THE SURETY INDICATED THAT IT WAS CONCERNED PRIMARILY WITH THE FACT THAT THE CORPS OF ENGINEERS HAD GIVEN NO ASSURANCE THAT LIQUIDATED DAMAGES FOR DELAYS IN PERFORMANCE WOULD BE WAIVED.

THE CONTRACTING OFFICER CONSIDERED THAT YOUR RECURRING ILLNESS AND OTHER CIRCUMSTANCES AS ALLEGED IN YOUR BASIC LETTER OF OCTOBER 20, 1966, TO OUR OFFICE, DO NOT CONSTITUTE A SUFFICIENT BASIS FOR EXCUSING PERFORMANCE OF THE CONTRACT OR FOR REMISSION OF THE FULL AMOUNT OF THE LIQUIDATED DAMAGES WHICH ACCRUED SINCE MAY 3, 1966, THE ESTABLISHED CONTRACT COMPLETION DATE.

THE CONTRACTING OFFICER IS OF THE OPINION, AND WE AGREE, THAT THE CONTRACT IS NOT ONE FOR THE PERFORMANCE OF PERSONAL SERVICES OR SUCH THAT IT COULD HAVE BEEN AVOIDED ON THE BASIS OF THE ILLNESS OF AN EMPLOYEE OR OFFICER OF YOUR COMPANY. WE ALSO BELIEVE THAT THE CONTRACTING OFFICER CORRECTLY CONCLUDED THAT THE CONTRACT WAS BINDING ON YOUR COMPANY WHEN EXECUTED AND THAT IT IS LEGALLY ENFORCEABLE TO THE EXTENT PROVIDED IN THE CONTRACT, REGARDLESS OF THE APPARENT DISCOVERY OF A CONSIDERABLE AMOUNT OF MATERIAL BELOW THE DECK OF THE WRECKED SCOW DURING THE ATTEMPTS MADE TO REMOVE THE SCOW FROM THE UPPER NEW YORK BAY. IT IS WELL SETTLED THAT THE DESCRIPTION OF WORK TO BE PERFORMED UNDER A PROPOSED CONTRACT MAY PROPERLY INCLUDE INFORMATION BELIEVED TO BE RELIABLE BUT NOT GUARANTEED, AND THAT THE RESULTING CONTRACT IS LEGALLY ENFORCEABLE IN THE ABSENCE OF A SHOWING THAT THE PARTY FURNISHING THE DESCRIPTION KNEW OR SHOULD HAVE KNOWN THAT THE DESCRIPTION WAS ERRONEOUS IN A MATERIAL RESPECT. SEE 16 COMP. GEN. 616; THE COURT CASES CITED IN THAT DECISION OF OUR OFFICE; AND WALLA WALLA PORT DISTRICT V. PALMBERG, 280 F.2D 237.

ALTHOUGH THE REQUEST THAT YOUR COMPANY BE RELEASED FROM LIABILITY IN THE MATTER IS BASED TO A LARGE EXTENT ON ELEMENTS OF HARDSHIP, WE ARE REQUIRED TO REJECT ANY SUCH BASIS FOR GRANTING RELIEF SINCE IT IS A WELL- ESTABLISHED RULE THAT, WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT, AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO MODIFY EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE CONTRACT RIGHTS WHICH HAVE VESTED IN THE GOVERNMENT. UNITED STATES V. AMERICAN SALES CORP., 27 F.2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED, 280 U.S. 574; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.CL. 584. VALID CONTRACTS WITH THE UNITED STATES ARE TO BE PERFORMED AND ENFORCED AS WRITTEN AND THE FACT THAT UNFORESEEN DIFFICULTIES ARE ENCOUNTERED BY THE CONTRACTOR WHICH RENDER PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASION A PECUNIARY LOSS, WILL NEITHER EXCUSE THE CONTRACTOR FOR A FAILURE TO PERFORM NOR ENTITLE HIM TO ADDITIONAL COMPENSATION. SIMPSON V. UNITED STATES, 172 U.S. 372; DAY V. UNITED STATES, 245 U.S. 159.

WE HAVE NOT REACHED ANY CONCLUSION WITH REFERENCE TO THE QUESTION WHETHER THE FACTS OF THE CASE WOULD WARRANT A DETERMINATION THAT THE DELAYS IN PERFORMANCE WERE EXCUSABLE WITHIN THE MEANING OF THAT PART OF ARTICLE 5 OF THE CONTRACT WHICH PROVIDES THAT THE CONTRACTOR'S RIGHT TO PROCEED SHALL NOT BE TERMINATED NOR THE CONTRACTOR CHARGED WITH RESULTING DAMAGE IF DETERMINED BY THE CONTRACTING OFFICER THAT THE DELAY IN COMPLETION OF THE WORK WAS DUE TO CAUSES OTHER THAN NORMAL WEATHER BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING BUT NOT RESTRICTED TO, ACTS OF GOD, ACTS OF THE GOVERNMENT, ACTS OF ANOTHER GOVERNMENT CONTRACTOR, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, FREIGHT EMBARGOES, UNUSUALLY SEVERE WEATHER, OR DELAYS OF SUBCONTRACTORS OR SUPPLIERS ARISING FROM SUCH CAUSES. WE HAVE NOT CONSIDERED SUCH QUESTION IN VIEW OF THE FACT THAT THE CONTRACTING OFFICER'S FINAL DECISION IN THE MATTER IS SUBJECT TO AN APPEAL UNDER THE DISPUTES CLAUSE OF THE CONTRACT, WITHIN 30 DAYS, TO THE HEAD OF THE AGENCY INVOLVED, AND BECAUSE IT IS WELL SETTLED THAT A CONTRACTOR MUST EXHAUST HIS ADMINISTRATIVE REMEDIES UNDER THE DISPUTES CLAUSE OF A GOVERNMENT CONTRACT BEFORE THERE IS AN APPEAL EITHER TO OUR OFFICE OR THE COURTS.

AS THE MATTER NOW STANDS, WE WOULD BE REQUIRED TO ACCEPT THE CONCLUSION ALREADY REACHED BY THE CONTRACTING OFFICER IF WE CONSIDERED THAT YOUR COMPANY HAS FORFEITED ITS RIGHT TO PRESENT AN APPEAL TO THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS. YOUR LETTERS TO OUR OFFICE DO NOT MEET THE APPEAL REQUIREMENTS OF THE CONTRACT. SEE OLSEN V. UNITED STATES, 122 CT.CL. 106. HOWEVER, THE RECORD BEFORE US DOES NOT SHOW THAT A DEMAND HAS BEEN MADE FOR PAYMENT OF THE AMOUNT WHICH THE CONTRACTING OFFICER BELIEVES TO BE DUE THE GOVERNMENT AS THE RESULT OF THE ALLEGED BREACH OF CONTRACT, AND WE DO NOT WISH TO TAKE ANY ACTION AT THIS TIME WHICH MIGHT BE REGARDED BY THE DEPARTMENT OF THE ARMY AS FORECLOSING FURTHER ADMINISTRATIVE CONSIDERATION OF THE CASE UNDER THE DISPUTE CLAUSE OF THE CONTRACT.

ACCORDINGLY, WE MUST DENY THE REQUEST FOR RELEASE FROM LIABILITY UNDER THE CONTRACT ON THE PRESENT RECORD. IF YOU BELIEVE THAT AN ADJUSTMENT SHOULD BE MADE UNDER THE TERMS OF THE CONTRACT, AND IF YOU WISH TO MAKE AN APPEAL, IT APPEARS THAT IT WOULD BE NECESSARY FOR YOUR COMPANY TO PRESENT AN APPEAL TO THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS AT THE EARLIEST PRACTICABLE DATE AND CERTAINLY NOT LATER THAN 30 DAYS AFTER RECEIPT FROM THE CONTRACTING OFFICER OF A DEMAND FOR PAYMENT OF THE AMOUNT DETERMINED BY HIM TO BE DUE THE GOVERNMENT FROM YOUR COMPANY. WE EXPRESS NO OPINION, HOWEVER, ON THE QUESTION WHETHER OR NOT ANY SUCH APPEAL WOULD OR SHOULD BE DENIED BY THE BOARD ON THE GROUND THAT IT WAS NOT TIMELY PRESENTED.