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B-147612, MAY 8, 1962

B-147612 May 08, 1962
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IT WAS REPORTED THAT PRIMARILY THROUGH THE FAILURE OF A SUBCONTRACTOR TO SUPPLY MATERIALS TO THE CONTRACTOR UNDER THE NEW EMBASSY OFFICE BUILDING CONSTRUCTION CONTRACT. THE CONSTRUCTION CONTRACTOR ON THE NEW OFFICE BUILDING WAS UNABLE TO COMPLETE ITS CONTRACT WITH THE DEPARTMENT BY THE SCHEDULED TIME OF APRIL 14. AUTELCO WAS UNABLE TO MEET ITS MARCH 28. IT WAS REQUIRED TO EMPLOY THE SERVICES OF A TECHNICIAN FOR THREE MONTHS OF ADDITIONAL WORK WHICH IT ESTIMATED GAVE RISE TO ADDITIONAL COSTS OF $1. ON THE RECORD BEFORE US WE WERE NOT PERSUADED THAT AUTELCO COULD RECOVER DELAY DAMAGES UNDER FEDERAL SUBSTANTIVE LAW. IT WAS NOT ESTABLISHED WHETHER THE CONTRACTOR COULD RECOVER ON ITS CLAIM UNDER THE LAW OF GREECE.

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B-147612, MAY 8, 1962

TO THE SECRETARY OF STATE:

THIS REFERS TO YOUR LETTER OF APRIL 16, 1962, REQUESTING A RECONSIDERATION OF OUR DECISION B-147612, DATED MARCH 22, 1962.

THE DECISION OF MARCH 22 CONCERNED A CLAIM BY AUTOMATIC ELECTRIC INTERNATIONAL, INCORPORATED (AUTELCO) A CONTRACTOR, ARISING FROM CONTRACT NO. S-23FBO-153 FOR THE INSTALLATION OF A 400-LINE PRIVATE AUTOMATIC BRANCH TELEPHONE EXCHANGE IN A NEW OFFICE BUILDING FOR THE AMERICAN EMBASSY, ATHENS, GREECE. IT WAS REPORTED THAT PRIMARILY THROUGH THE FAILURE OF A SUBCONTRACTOR TO SUPPLY MATERIALS TO THE CONTRACTOR UNDER THE NEW EMBASSY OFFICE BUILDING CONSTRUCTION CONTRACT, BUT PARTLY THROUGH A CHANGE IN THE PLANS FOR THE NEW OFFICE BUILDING ON THE PART OF THE UNITED STATES, THE CONSTRUCTION CONTRACTOR ON THE NEW OFFICE BUILDING WAS UNABLE TO COMPLETE ITS CONTRACT WITH THE DEPARTMENT BY THE SCHEDULED TIME OF APRIL 14, 1961. IT REQUESTED AND RECEIVED A 61-DAY EXTENSION. AS A RESULT OF THAT EXTENSION, AUTELCO WAS UNABLE TO MEET ITS MARCH 28, 1961, COMPLETION DATE, AND IT WAS REQUIRED TO EMPLOY THE SERVICES OF A TECHNICIAN FOR THREE MONTHS OF ADDITIONAL WORK WHICH IT ESTIMATED GAVE RISE TO ADDITIONAL COSTS OF $1,050. THIS INCLUDED A SALARY OF $300 PER MONTH FOR THE TECHNICIAN AND $50 PER MONTH FOR OVERHEAD.

ON THE RECORD BEFORE US WE WERE NOT PERSUADED THAT AUTELCO COULD RECOVER DELAY DAMAGES UNDER FEDERAL SUBSTANTIVE LAW, AND IT WAS NOT ESTABLISHED WHETHER THE CONTRACTOR COULD RECOVER ON ITS CLAIM UNDER THE LAW OF GREECE, THE COUNTRY WHERE THE CONTRACT WAS ENTERED INTO AND PERFORMED. CONCLUDED THAT THERE WAS NO BASIS PRESENTED UPON WHICH WE COULD APPROVE THE CLAIM FOR PAYMENT.

THE LETTER OF NOVEMBER 13, 1961, FROM YOUR DEPARTMENT (THE LETTER SUBMITTING THE CLAIM) STATED THAT AT A MEETING ATTENDED BY THE AUTHORIZED CONTRACTING OFFICER ON THE CONTRACT, AND REPRESENTATIVES OF THE CLAIMANT (THE RECORD INDICATES THAT THE MEETING WAS HELD IN MAY, 1961), IT WAS AGREED THAT THE DEPARTMENT SHOULD UNDERTAKE THE LIABILITY OF $1,050. THE REQUEST FOR RECONSIDERATION, YOUR DEPARTMENT SUGGESTS, AS WAS SUGGESTED IN THE ORIGINAL SUBMISSION, THAT THE AGREEMENT OF THE AUTHORIZED CONTRACTING OFFICER TO COMPENSATE AUTELCO FOR THE ADDITIONAL THREE MONTHS' SERVICE AT THE RATE SPECIFIED ($350 PER MONTH) MAY HAVE CONSTITUTED A MODIFICATION OF THE ORIGINAL CONTRACT AND IS IN ITSELF A LEGALLY BINDING PROMISE. THIS WOULD BE PREDICATED ON THE BASIS THAT AUTELCO HAD A LEGAL RIGHT TO CEASE PERFORMANCE OF ITS CONTRACT SUBSEQUENT TO MARCH 28, 1961, AND THAT THE DEPARTMENT RECEIVED VALUABLE CONSIDERATION IN EXCHANGE FOR ITS AGREEMENT. YOUR DEPARTMENT NOW REPORTS THAT EACH OF THE TWO CAUSES FOR THE FAILURE OF THE CONSTRUCTION COMPANY TO COMPLETE ITS CONTRACT WITH THE GOVERNMENT ON SCHEDULE, THAT IS, (1) THE FAILURE OF A SUBCONTRACTOR TO SUPPLY MATERIALS TO THE CONTRACTOR AS REQUIRED AND (2) A CHANGE IN THE PLANS FOR THE OFFICE BUILDING ON THE PART OF THE UNITED STATES, WAS SUFFICIENT TO PRODUCE THE DELAY. IT WAS BECAUSE THEY COEXISTED THAT IT WAS NOT POSSIBLE TO ATTRIBUTE THE DELAY TO ONE OR THE OTHER. HOWEVER, THE CHANGE IN PLANS BY THE DEPARTMENT ALONE WOULD HAVE BEEN SUFFICIENT TO PRODUCE THE DELAY.

IN OUR DECISION OF MARCH 22, 1962, WE CONCLUDED THAT FAULT BY THE GOVERNMENT FOR THE DELAY WAS NOT ESTABLISHED. IN VIEW OF THE INFORMATION NOW PRESENTED, INDICATING THAT THE GOVERNMENT MAY HAVE BEEN AT FAULT FOR THE DELAY, IT APPEARS THAT THE ACTION OF THE AUTHORIZED CONTRACTING OFFICER IN AGREEING ON BEHALF OF YOUR DEPARTMENT TO COMPENSATE THE CONTRACTOR IN RETURN FOR THE CONTRACTOR'S UNDERTAKING TO CONTINUE THE WORK BEYOND THE CONTRACT COMPLETION DATE, CONSTITUTED A VALID MODIFICATION OF THE CONTRACT. SEE B-89196, OCTOBER 10, 1949.

ACCORDINGLY, YOU ARE ADVISED THAT WE HAVE NO OBJECTION TO PAYMENT OF THE AMOUNT OF $1,050 TO AUTELCO AS A MODIFICATION TO CONTRACT NO. S 23FBO- 153.

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