A-13246, MARCH 26, 1926, 5 COMP. GEN. 767

A-13246: Mar 26, 1926

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DEFAULT - WAIVER OF LIQUIDATED DAMAGES UNDER A CONTRACT FOR THE CONSTRUCTION OF A PORTION OF A ROAD FOR THE NATIONAL PARK SERVICE WHICH CONTAINED A PROVISION THAT IF AT ANY TIME THE GOVERNMENT ENGINEER OR DIRECTOR OF THE NATIONAL PARK SERVICE FEELS THAT SATISFACTORY PROGRESS IS NOT BEING MADE TOWARD COMPLETION OF THE WORK AND SHALL IN WRITING DIRECT THE CONTRACTOR TO INCREASE HIS FORCE OR EQUIPMENT AND THE CONTRACTOR FAILS TO FULLY COMPLY WITH SUCH INSTRUCTIONS. THEN THE DIRECTOR SHALL HAVE THE PRIVILEGE OF SECURING SUCH ADDITIONAL EMPLOYEES OR EQUIPMENT AS ARE NECESSARY TO COMPLETE THE WORK ON TIME AND CHARGE THE COST THEREOF TO THE CONTRACTOR. WHERE IT APPEARS THAT UNDER A CONTRACT PROVIDING FOR THE DEDUCTION OF LIQUIDATED DAMAGES THE CAUSES OF THE DELAY WERE SUCH AS WOULD.

A-13246, MARCH 26, 1926, 5 COMP. GEN. 767

CONTRACTS, DEFAULT - WAIVER OF LIQUIDATED DAMAGES UNDER A CONTRACT FOR THE CONSTRUCTION OF A PORTION OF A ROAD FOR THE NATIONAL PARK SERVICE WHICH CONTAINED A PROVISION THAT IF AT ANY TIME THE GOVERNMENT ENGINEER OR DIRECTOR OF THE NATIONAL PARK SERVICE FEELS THAT SATISFACTORY PROGRESS IS NOT BEING MADE TOWARD COMPLETION OF THE WORK AND SHALL IN WRITING DIRECT THE CONTRACTOR TO INCREASE HIS FORCE OR EQUIPMENT AND THE CONTRACTOR FAILS TO FULLY COMPLY WITH SUCH INSTRUCTIONS, THEN THE DIRECTOR SHALL HAVE THE PRIVILEGE OF SECURING SUCH ADDITIONAL EMPLOYEES OR EQUIPMENT AS ARE NECESSARY TO COMPLETE THE WORK ON TIME AND CHARGE THE COST THEREOF TO THE CONTRACTOR, THE EXPENSE INCURRED BY THE UNITED STATES IN COMPLETING SAID WORK UPON DEFAULT OF THE CONTRACTOR MAY BE DEDUCTED FROM ANY AMOUNTS DUE THE CONTRACTOR. WHERE IT APPEARS THAT UNDER A CONTRACT PROVIDING FOR THE DEDUCTION OF LIQUIDATED DAMAGES THE CAUSES OF THE DELAY WERE SUCH AS WOULD, UNDER THE TERMS OF THE CONTRACT, HAVE ENTITLED THE CONTRACTOR TO AN EXTENSION OF TIME FOR COMPLETION OF THE WORK, THE ACTION OF THE ADMINISTRATIVE OFFICE IN ATTEMPTING TO WAIVE THE RIGHT OF THE UNITED STATES TO COLLECTION THEREOF DID NOT AFFECT OR PREJUDICE ANY RIGHT OF THE GOVERNMENT, FOR THE REASON THAT THE DELAYS BEING EXCUSABLE LIQUIDATED DAMAGES NEVER ACCRUED TO THE UNITED STATES.

DECISION BY COMPTROLLER GENERAL MCCARL, MARCH 26, 1926:

STEVENS BROS., CONTRACTORS, CLAIM THE SUM OF $12,670.54 AS BALANCE DUE IT UNDER ITS CONTRACT WITH THE INTERIOR DEPARTMENT, DATED AUGUST 13, 1924, WITHOUT PREJUDICE TO ITS FURTHER CLAIM FOR $5,786.59 DEDUCTED ON FINAL VOUCHER TO COVER EXPENDITURES MADE BY THE GOVERNMENT IN COMPLETING THE CONTRACT.

BY THE TERMS OF SAID CONTRACT, STEVENS BROS. AGREED TO CONSTRUCT A CERTAIN PORTION OF A ROAD (MOUNT CANNON SECTION) IN THE GLACIER NATIONAL PARK, MONT., IN ACCORDANCE WITH CERTAIN DRAWINGS AND SPECIFICATIONS MADE A PART OF THE CONTRACT, PAYMENT THEREFOR TO BE MADE IN ACCORDANCE WITH UNIT PRICES SHOWN IN THE SCHEDULE OF WORK NO. 1 ATTACHED TO THE CONTRACT. THE CONTRACTORS WERE REQUIRED TO PERFORM WORK TO THE EXTENT OF $45,518.02, OF WHICH SUM IT APPEARS $27,060.89 HAS BEEN PAID, LEAVING A DIFFERENCE OF $18,457.13.

IT APPEARS THAT IN TENDERING THE FINAL PAYMENT OF THE AMOUNT DUE UNDER THE CONTRACT, THE SECRETARY OF THE INTERIOR DEDUCTED THE SUM OF $5,786.59 FROM THE AMOUNT OF $18,457.13 ON ACCOUNT OF EXPENSES INCURRED BY THE NATIONAL PARK SERVICE IN COMPLETING WORK UNDER THE CONTRACT BECAUSE OF THE FAILURE OF THE CONTRACTOR TO PROGRESS SATISFACTORILY THEREWITH,LEAVING A BALANCE DUE UNDER THE CONTRACT OF $12,670.54. THE CONTRACTOR REFUSED TO ACCEPT THE AMOUNT AS FINAL PAYMENT BUT SIGNED THE VOUCHER AND RETURNED IT FOR PAYMENT WITH THE FOLLOWING RESERVATION: "THIS PAYMENT ACCEPTED ONLY AS PAYMENT ON ACCOUNT AND NOT AS FINAL PAYMENT," THEREBY PROTESTING THE DEDUCTION OF $5,786.59 EXPENDED BY THE NATIONAL PARK SERVICE. THE CONTRACT SPECIFICALLY PROVIDED:

23. COMMENCEMENT, PROSECUTION, AND COMPLETION OF THE WORK.--- THE CONTRACTOR WILL BE REQUIRED TO COMMENCE WORK WITHIN 30 DAYS AFTER THE APPROVAL OF THE CONTRACT AND BOND, AND TO PROSECUTE THE WORK WITH FAITHFULNESS AND ENERGY AT ALL TIMES, WHEN WEATHER OR WATER CONDITIONS WILL PERMIT, AND TO KEEP AT WORK A SUFFICIENTLY LARGE FORCE OF EMPLOYEES AND THE NECESSARY EQUIPMENT TO ENABLE HIM, IN THE OPINION OF THE ENGINEER, TO COMPLETE THE WORK WITHIN THE PRESCRIBED TIME, DUE CONSIDERATION BEING GIVEN TO THE PROBABLE INCLEMENCY OF THE WEATHER, TEMPERATURE, AND FLOOD CONDITIONS. IF AT ANY TIME THE ENGINEER OR DIRECTOR FEELS THAT SATISFACTORY PROGRESS IS NOT BEING MADE TO MEET THESE CONDITIONS AND SHALL IN WRITING DIRECT THE CONTRACTOR TO INCREASE THE FORCE OR EQUIPMENT, OR BOTH, AND THE CONTRACTOR FAILS TO FULLY COMPLY WITH SUCH INSTRUCTIONS, THEN THE DIRECTOR SHALL HAVE THE PRIVILEGE OF SECURING SUCH ADDITIONAL EMPLOYEES OR EQUIPMENT OR BOTH, IN ANY MANNER OR PLACE AS HE SHALL SEE FIT, AND CHARGE THE COST THEREOF AGAINST THE CONTRACTOR.

IT APPEARS THAT THE WORK WAS NOT PROGRESSING SATISFACTORILY, AND ON JULY 3, 1925, THE CHIEF CIVIL ENGINEER ADVISED THE CONTRACTOR AS FOLLOWS:

I FIND, ON MY INSPECTION OF YOUR WORK TO-DAY, THAT YOU HAVE NOT COMPLIED WITH MY TELEGRAPHIC INSTRUCTIONS OF ABOUT A MONTH AGO TO INCREASE YOUR FORCE TO THE EXTENT WHICH WOULD INSURE THE COMPLETION OF YOUR CONTRACT, WHICH YOU HAVE WITH THIS SERVICE, FOR THE CONSTRUCTION OF THE ROAD (MT. CANNON SECTION) IN GLACIER NATIONAL PARK IN THE TIME LIMIT.

AFTER A REVIEW OF THE WORK AND THE NUMBER OF MEN YOU NOW HAVE WORKING I AM SURE THAT IT WILL REQUIRE A WORKING FORCE OF AT LEAST SEVENTY MEN, WELL EQUIPPED, TO COMPLETE THE ROAD BETWEEN STATION 677 AND STATION 578 BY JULY 31ST AND THAT IT WILL REQUIRE AT LEAST A DOZEN TEAMS AND SOME 30 TO 40 MEN TO COMPLETE THE WORK FROM STATION 578 TO THE END OF YOUR CONTRACT. YOU ARE, ACCORDINGLY, DIRECTED TO IMMEDIATELY INCREASE YOUR FORCE TO THIS NUMBER OF MEN AND TO MAINTAIN THE FORCE TO THAT SIZE UNTIL SUCH WORK AS THEY ARE BEING ENGAGED UPON IS FINISHED. IF THIS IS NOT DONE, THEN I SHALL, UNDER THE AUTHORITY OF THE DIRECTOR OF THIS SERVICE, ORDER THAT MEN BE EMPLOYED AND EQUIPPED WITH TOOLS AND PUT ON SUCH PART OF THE WORK THAT IS BEHIND IN PROGRESS TO INSURE THE COMPLETION OF THE WORK BY JULY 31ST, AS PROVIDED IN PARAGRAPH 23 OF YOUR SPECIFICATIONS AND CONTRACT. IT IS ABSOLUTELY NECESSARY THAT THE WORK BE FINISHED SO THAT THE CONTRACTOR FOR THE LOGAN PASS SECTION OF THE TRANSMOUNTAIN ROAD CAN MOVE HIS EQUIPMENT IN ON AUGUST 1ST. PLEASE GOVERN YOURSELVES ACCORDINGLY.

ON OR ABOUT JULY 20, 1925, THE DIRECTOR OF THE NATIONAL PARK SERVICE ADVISED THE CONTRACTOR THAT:

RETEL TWENTY-SEVENTH I PERSONALLY INSPECTED WORK UNDER YOUR CONTRACT TWO WEEKS AGO AND PROGRESS NOT SATISFACTORY. ROAD MUST BE OPENED AUGUST FIRST. I STAND SQUARELY BEHIND ACTING CHIEF CIVIL ENGINEER BURRELL'S ORDERS TO ENGINEER HILL TO PLACE FORTY MEN ON CONTRACT YOUR EXPENSE HIS DIRECTION TO COMPLETE WORK. BURRELL NOW ACTING IN PLACE OF GOODWIN. NEED FOR HIM MAKE PERSONAL INSPECTION. ALL RECORDS SHOW EXTREME LACK PROPER PROGRESS AND NONCOMPLIANCE ENGINEER'S WRITTEN ORDERS.

IN VIEW OF THE FACTS OF RECORD, THERE IS NO DOUBT THAT THE EXPENSE INCURRED BY THE NATIONAL PARK SERVICE IN CONNECTION WITH THE WORK PERFORMED BY IT BY REASON OF THE CONTRACTOR'S FAILURE TO MAKE SATISFACTORY PROGRESS IS IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT AND IS A PROPER CHARGE AGAINST THE CONTRACTOR AND MUST BE DEDUCTED FROM ANY AMOUNT DUE BY THE UNITED STATES TO THE SAID CONTRACTOR.

THERE IS ALSO FOR CONSIDERATION THE QUESTION AS TO WHETHER OR NOT LIQUIDATED DAMAGES SHOULD BE DEDUCTED FOR DELAY IN COMPLETION OF THE WORK. UNDER THE TERMS OF THE CONTRACT, WORK WAS TO BEGIN 30 DAYS AFTER NOTICE OF APPROVAL OF THE CONTRACT AND TO BE COMPLETED ON OR BEFORE JULY 30, 1925. IN EVENT OF THE FAILURE OF THE CONTRACTOR TO COMPLETE THE WORK IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, IT WAS AGREED THAT THE CONTRACTOR SHOULD PAY TO THE UNITED STATES AS LIQUIDATED DAMAGES $20 PER DAY FOR EACH AND EVERY SECULAR DAY'S DELAY. IT WAS ALSO AGREED THAT THE COLLECTION OF LIQUIDATED DAMAGES COULD BE WAIVED IN WHOLE OR IN PART IN THE DISCRETION OF THE SECRETARY OF THE INTERIOR. THE CONTRACT FURTHER PROVIDES:

ARTICLE 3. IT IS AGREED THAT NO CLAIM SHALL ACCRUE OR CHARGE BE MADE AGAINST THE UNITED STATES FOUNDED UPON ANY LOSS OR DAMAGE ARISING OUT OF THE NATURE OF THE WORK TO BE PERFORMED, OR FROM ANY UNFORESEEN OR UNUSUAL DIFFICULTY THAT MAY BE ENCOUNTERED IN THE PROSECUTION OF THE SAME; IF, HOWEVER, THE CONTRACTOR SHALL BY FORCE OR VIOLENCE OF THE ELEMENTS, OR BY OTHER CIRCUMSTANCES BEYOND CONTRACTOR'S CONTROL AND BY NO FAULT OF CONTRACTOR OR CONTRACTOR'S AGENTS, BE PREVENTED FROM COMPLETING THE WORK WITHIN THE TIME SPECIFIED IN THIS CONTRACT, SUCH ADDITIONAL TIME MAY BE ALLOWED IN WRITING AS IN THE JUDGMENT OF THE PARTY OF THE FIRST PART MAY BE JUST AND REASONABLE, AND SUCH ALLOWANCE AND EXTENSION SHALL IN NO MANNER AFFECT THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, BUT THE SAME SHALL SUBSIST, TAKE EFFECT, AND BE ENFORCEABLE PRECISELY AS IF THE NEW DATE FOR SUCH COMMENCEMENT OR COMPLETION HAD BEEN THE DATE ORIGINALLY AGREED UPON. IN THE EVENT IT IS DEEMED EXPEDIENT TO EXTEND THE TIME FOR THE COMPLETION OF THE WORK HEREIN PROVIDED FOR LATER THAN THE DATE HEREIN FIXED, IT IS UNDERSTOOD AND AGREED THAT THE SURETY OR SURETIES ON THE BOND REQUIRED TO BE FURNISHED FOR THE FAITHFUL PERFORMANCE OF THIS AGREEMENT WAIVES ANY LEGAL OR EQUITABLE RIGHT TO A RELEASE FROM FURTHER LIABILITY AND ANY NOTICE OF SUCH EXTENSION.

THERE WERE DELAYS IN COMPLETION OF THE WORK AND BY A LETTER DATED DECEMBER 15, 1925, SUBSEQUENT TO THE COMPLETION THEREOF, THE CONTRACTOR REQUESTED AN EXTENSION OF CONTRACT TIME FROM JULY 31 TO OCTOBER 10, 1925, URGING THAT IT HAD BEEN DELAYED FOR THE FOLLOWING REASONS:

WE REQUEST AN EXTENSION OF TIME FOR COMPLETING THE MT. CANNON SECTION OF THE TRANSMOUNTAIN HIGHWAY IN GLACIER NATIONAL PARK, MONTANA, FROM JULY 31ST TO OCT. 10TH, 1925, FOR THE FOLLOWING REASONS:

THAT AN IMMENSE AND UNEXPECTED SNOW AND ICE SLIDE OF APPROXIMATELY 100 FEET IN DEPTH FILLED THE MCDONALD CREEK VALLEY AND COVERED THE RIGHT OF WAY IN THE SPRING OF 1925 SO THAT AN EARLY START WAS IMPOSSIBLE.

THAT WHEN WORKING AT MAXIMUM CAPACITY, ALL CREWS WERE CALLED UPON TO FIGHT FOREST FIRES IN THE VICINITY OF LAKE MCDONALD IN GLACIER NATIONAL PARK FOR SOME LITTLE TIME AND THAT BUT FEW MEN RETURNED TO CAMP TO WORK AFTER BEING RELIEVED FROM FIRE SERVICE.

THAT THE GRAVEL SURFACING WAS THE ONLY WORK THAT HUNG OVER UNTIL OCTOBER 10TH AND THAT THIS WOULD HAVE BEEN COMPLETED LONG BEFORE IF A DEFINITE DECISION HAD BEEN MADE AS TO WHETHER THE ROAD WOULD OR WOULD NOT BE GRAVELLED.

THAT THE ROAD WAS OPEN TO TRAVEL ON AUGUST 1ST, 1925, IN ACCORDANCE WITH YOUR PREDECESSOR'S WRITTEN INSTRUCTIONS.

THERE ARE OTHER REASONS BUT WE ANTICIPATE THAT THOSE GIVEN WILL BE SUFFICIENT FOR THE NONASSESSMENT OF PENALTY.

ON DECEMBER 24, 1925, THE SECRETARY OF THE INTERIOR APPROVED THE EXTENSION OF TIME AS REQUESTED BY THE CONTRACTOR AND UNDERTOOK TO EXPRESSLY WAIVE THE RIGHT OF THE UNITED STATES TO COLLECT LIQUIDATED DAMAGES AS PROVIDED FOR IN THE CONTRACT.

IT HAS OFTEN BEEN HELD THAT WHERE A CONTRACT PROVIDES FOR AN EXTENSION OF TIME DUE TO CERTAIN SPECIFIED CAUSES, AS IN THE INSTANT MATTER, THERE IS NO AUTHORITY IN THE CONTRACTING OFFICER OR ANY OTHER ADMINISTRATIVE OFFICER TO GRANT ADDITIONAL TIME FOR OTHER CAUSES NOT NAMED IN THE CONTRACT. 25 COMP. DEC. 970; 3 COMP. GEN. 406; ID. 643. IT IS ALSO ESTABLISHED THAT WHEN LIQUIDATED DAMAGES HAVE ACCRUED TO THE GOVERNMENT UNDER A CONTRACT, THERE IS NO POWER OR AUTHORITY IN ANY ADMINISTRATIVE OFFICER OF THE GOVERNMENT TO WAIVE SUCH DAMAGES. HOWEVER, IT APPEARS THAT THE CAUSES OF THE DELAY URGED BY THE CONTRACTOR ARE SUCH AS WOULD UNDER THE TERMS OF THE CONTRACT ENTITLE IT TO AN EXTENSION OF CONTRACT TIME FOR COMPLETION OF THE WORK WITHOUT DEDUCTION OF LIQUIDATED DAMAGES. THEREFORE, THE SECRETARY OF THE INTERIOR BY APPROVING THE EXTENSION OF TIME FROM JULY 31 TO OCTOBER 10, 1925, SIMPLY FOUND THAT THE DELAYS FOR THAT PERIOD WERE DUE TO CIRCUMSTANCES ON ACCOUNT OF WHICH THE CONTRACTORS WERE ENTITLED TO REMISSION OF LIQUIDATED DAMAGES. IN VIEW OF THE FACT THAT THE DELAYS ARE EXCUSABLE UNDER THE CONTRACT, LIQUIDATED DAMAGES NEVER ACCRUED TO THE UNITED STATES; HENCE THE ACTION OF THE SECRETARY OF THE INTERIOR IN UNDERTAKING TO WAIVE THE DEDUCTION OF DAMAGES AFTER THE CONTRACT DATE FOR COMPLETION HAD EXPIRED, DID NOT IN ANY RESPECT PREJUDICE ANY RIGHT OF THE GOVERNMENT. 4 COMP. GEN. 135.

THE ALLOWANCE IN THE SUM OF $12,670.54 IS THEREFORE AUTHORIZED, AND SETTLEMENT ACCORDINGLY.