A-19475, APRIL 10, 1928, 7 COMP. GEN. 645

A-19475: Apr 10, 1928

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UNDER A GOVERNMENT CONSTRUCTION CONTRACT THE DETERMINATION OF ANY DISPUTE BETWEEN THE CONTRACTING OFFICER AND THE CONTRACTOR AS TO THE AMOUNT OF INCREASED COST BY THE OFFICER STIPULATED IN THE CONTRACT IS CONCLUSIVE ON THE CONTRACTOR. WHEREIN WAS DISALLOWED ITS CLAIM UNDER A CONSTRUCTION CONTRACT. THE CLAIM WAS DISALLOWED ON THE GROUND THAT THERE WAS NO LEGAL LIABILITY ON THE UNITED STATES FOR SUCH INCREASED COSTS. IT WAS PROVIDED THAT: * * * IF SUCH CHANGES CAUSE AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THIS CONTRACT. ANY CLAIM FOR ADJUSTMENT UNDER THIS ARTICLE MUST BE ASSERTED WITHIN TEN DAYS FROM THE DATE THE CHANGE IS ORDERED UNLESS THE CONTRACTING OFFICER SHALL FOR PROPER CAUSE EXTEND SUCH TIME.

A-19475, APRIL 10, 1928, 7 COMP. GEN. 645

CONTRACTS - INCREASED COSTS - DISPUTES UNDER A GOVERNMENT CONSTRUCTION CONTRACT PROVIDING THAT IN THE EVENT CHANGES IN "DRAWINGS, SPECIFICATIONS OR OTHER CONDITIONS" THEREOF RESULT IN AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THE CONTRACT AN "EQUITABLE ADJUSTMENT SHALL BE MADE," THE CONTRACTOR MAY BE PROPERLY PAID FOR ANY INCREASED COST RESULTING FROM ORDERS OF THE GOVERNMENT TO STOP WORK. UNDER A GOVERNMENT CONSTRUCTION CONTRACT THE DETERMINATION OF ANY DISPUTE BETWEEN THE CONTRACTING OFFICER AND THE CONTRACTOR AS TO THE AMOUNT OF INCREASED COST BY THE OFFICER STIPULATED IN THE CONTRACT IS CONCLUSIVE ON THE CONTRACTOR.

DECISION BY COMPTROLLER GENERAL MCCARL, APRIL 10, 1928:

THE REALTY AND FINANCE CORPORATION OF VIRGINIA HAS REQUESTED REVIEW OF SETTLEMENT NO. 0185462, DATED JUNE 23, 1927, WHEREIN WAS DISALLOWED ITS CLAIM UNDER A CONSTRUCTION CONTRACT, DATED JUNE 26, 1926, FOR $1,158.87, ALLEGED INCREASED COST RESULTING FROM ORDERS OF THE GOVERNMENT TO STOP WORK AT VARIOUS TIMES IN THE COURSE OF CONSTRUCTION OF AN ENGINE EXTENSION AT BUILDINGS LOCATED AT LANGLEY FIELD, VA., OF THE NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS. THE CLAIM WAS DISALLOWED ON THE GROUND THAT THERE WAS NO LEGAL LIABILITY ON THE UNITED STATES FOR SUCH INCREASED COSTS.

THE CONTRACT OF JUNE 26, 1926, REQUIRED THE ENGINE EXTENSION TO BE COMPLETED WITHIN 120 DAYS FROM THE DATE THEREOF, OR ON OR BEFORE NOVEMBER 18, 1926, WITH A STIPULATION FOR A DEDUCTION OF LIQUIDATED DAMAGES AT THE RATE OF $45.75 FOR EACH CALENDAR DAY OF DELAY, WITH THE FURTHER STIPULATION THAT SUCH DEDUCTION SHOULD NOT BE MADE FOR DELAYS- -

* * * (NOT THE RESULT OF HIS FAULT OR NEGLIGENCE) ARISING FROM CAUSES BEYOND HIS CONTROL. SUCH CAUSES SHALL BE DETERMINED BY THE SECRETARY OF THE COMMITTEE, OR AN AUTHORIZED REPRESENTATIVE THEREOF, AND SHALL INCLUDE, BUT SHALL NOT BE RESTRICTED TO, ACTS OF GOD, THE GOVERNMENT, THE PUBLIC ENEMY OR COMMON CARRIERS, FIRES, EPIDEMICS, QUARANTINE RESTRICTIONS, AND STRIKES, WHEREVER ANY OF THESE CAUSES OF DELAY OCCUR. * * *

THE CONTRACT CONTEMPLATED THAT THERE MIGHT BE CHANGES IN THE DRAWINGS, SPECIFICATIONS, OR OTHER CONDITIONS OF THE CONTRACT WITHIN THE GENERAL SCOPE THEREOF, AND IT WAS PROVIDED THAT:

* * * IF SUCH CHANGES CAUSE AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THIS CONTRACT, OR IN THE TIME REQUIRED FOR ITS PERFORMANCE, AN EQUITABLE ADJUSTMENT SHALL BE MADE AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY. NO CHANGE INVOLVING AN ESTIMATED INCREASE OR DECREASE OF MORE THAN FIVE HUNDRED DOLLARS SHALL BE ORDERED UNLESS APPROVED BY THE SECRETARY OF THE COMMITTEE OR HIS DULY AUTHORIZED REPRESENTATIVE. ANY CLAIM FOR ADJUSTMENT UNDER THIS ARTICLE MUST BE ASSERTED WITHIN TEN DAYS FROM THE DATE THE CHANGE IS ORDERED UNLESS THE CONTRACTING OFFICER SHALL FOR PROPER CAUSE EXTEND SUCH TIME, AND IF THE PARTIES CAN NOT AGREE UPON THE ADJUSTMENT THE DISPUTE SHALL BE DETERMINED AS PROVIDED IN ARTICLE 21 HEREOF. * * *

THE NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS REQUIRED THE PERFORMANCE OF CERTAIN EXTRA WORK, AND THERE APPEARS NO CONTROVERSY WITH RESPECT TO EITHER THE ADDITIONAL COMPENSATION OR EXTENSIONS OF TIME THEREFOR. LETTER DATED SEPTEMBER 4, 1926, THERE WERE CONFIRMED VERBAL ORDERS TO THE CONTRACTOR ON SEPTEMBER 2, 1926, TO STOP WORK UNTIL FURTHER NOTICE. LETTER DATED OCTOBER 25, 1926, THE CONTRACTOR WAS ORDERED TO RESUME WORK. BY LETTER DATED NOVEMBER 3, 1926, THE CONTRACTOR REQUESTED AN EXTENSION OF TIME, BECAUSE OF SAID ORDER TO STOP WORK, AND PAYMENT OF $1,158.87 AS INCREASED EXPENSES OCCASIONED THEREBY. THE CONTRACTOR WAS ALSO ORDERED TO STOP WORK ON DECEMBER 2 AND TO RESUME WORK ON DECEMBER 13, 1926, BUT THIS STOPPAGE DOES NOT APPEAR TO HAVE INCLUDED ALL OF THE WORK AND NO CLAIM IS MADE FOR ADDITIONAL COST WITH RESPECT THERETO.

THE CONTRACTOR ALLEGED THAT THE INCREASED COST OF PERFORMANCE OCCASIONED THEREBY WAS $1,158.87, BUT THE ENGINEER IN CHARGE AND THE SECRETARY OF THE COMMITTEE HAVE DETERMINED THE AMOUNT TO BE $491.45. THERE ARE THUS DIFFERENCES BETWEEN THE PARTIES AS TO THE AMOUNT OF INCREASED COST RESULTING FROM THE DELAY BECAUSE OF NEEDS OF THE UNITED STATES. IN EVENT OF DISPUTE, THE CONTRACT PROVIDES THAT SAME SHALL BE DETERMINED AS STIPULATED IN ARTICLE 21 THEREOF AS FOLLOWS:

(A) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS CONTRACT, ALL CLAIMS, DOUBTS, AND DISPUTES SHALL BE DECIDED BY THE CONTRACTING OFFICER, AND THE CONTRACTOR SHALL PROMPTLY PROCEED WITH THE WORK UNDER SUCH DECISION.

(B)THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE EXCEPT AS TO THE ELEMENT OF TIME AND THE FINANCIAL CONSIDERATION INVOLVED, AND UNLESS WITHIN TWENTY DAYS AFTER SUCH DECISION THE CONTRACTOR APPLIES IN WRITING, THROUGH THE CONTRACTING OFFICER, TO THE SECRETARY OF THE COMMITTEE FOR A REVIEW OF THE DECISION AS TO THE ELEMENT OF TIME AND THE FINANCIAL CONSIDERATION INVOLVED, THE DECISION OF THE CONTRACTING OFFICER SHALL ALSO BE FINAL AND CONCLUSIVE AS TO THE QUESTIONS INVOLVED IN THESE ELEMENTS.

THE DECISIONS MADE FINAL BY THE TERMS OF THE CONTRACT CONCERN QUESTIONS OF FACT, ONLY, AND DO NOT INVOLVE QUESTIONS OF LAW WHICH, UNDER SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24, ARE FOR CONSIDERATION BY THIS OFFICE. IT MAY BE ACCEPTED THAT THERE WERE DELAYS ON THE PART OF THE GOVERNMENT IN THE COMPLETION OF THE WORK INCREASING THE COST OF PERFORMANCE BY THE SUM OF $491.45. THE QUESTION FOR DETERMINATION IS WHETHER SUCH SUM, IN ADDITION TO THE CONTRACT PRICE, IS PROPERLY PAYABLE UNDER THE APPROPRIATION FOR THE CONTRACT WORK.

THE ACT OF MARCH 3, 1925, 43 STAT. 1206, MADE APPROPRIATIONS UNDER THE HEADING "NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS" FOR "SCIENTIFIC RESEARCH, TECHNICAL INVESTIGATIONS, AND SPECIAL REPORTS IN THE FIELD OF AERONAUTICS * * * EQUIPMENT, MAINTENANCE, AND OPERATION OF A RESEARCH LABORATORY, KNOWN AS THE LANGLEY MEMORIAL AERONAUTICAL LABORATORY," AND SECTION 3678, REVISED STATUTES, PROVIDES THAT:

ALL SUMS APPROPRIATED FOR THE VARIOUS BRANCHES OF EXPENDITURE IN THE PUBLIC SERVICE SHALL BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE RESPECTIVELY MADE, AND FOR NO OTHER.

AS ABOVE STATED, THE CONTRACT STIPULATED THAT AN EQUITABLE ADJUSTMENT WOULD BE MADE IN THE EVENT THERE WAS A CHANGE IN THE DRAWINGS, SPECIFICATIONS, OR OTHER CONDITIONS OF THE CONTRACT RESULTING IN INCREASED OR DECREASED COST OR TIME REQUIRED FOR PERFORMANCE, AND IT HAS BEEN SUGGESTED THAT AN ORDER FOR CONTRACTOR TO STOP WORK, ISSUED BY A REPRESENTATIVE OF THE GOVERNMENT, MIGHT PROPERLY BE REGARDED AS SUCH A "CHANGE" IN THE CONTRACT CONDITIONS AS TO PERMIT OF AN ADJUSTMENT OF ANY RESULTING DAMAGE SUSTAINED BY CONTRACTOR, AND IN SUCH CONNECTION IT IS POINTED OUT THAT COURTS HAVE HERETOFORE GIVEN JUDGMENTS AGAINST THE UNITED STATES, IN CERTAIN CASES, FOR THE AMOUNT OF DAMAGES ACTUALLY SUSTAINED BY A CONTRACTOR AND ESTABLISHED TO BE DUE TO ACTION ON BEHALF OF THE UNITED STATES REQUIRING SUSPENSION OF WORK, AND THAT ON REPORT OF SUCH JUDGMENTS TO THE CONGRESS, THEY HAVE BEEN APPROPRIATED FOR AND PAID.

BUT IN CONNECTION WITH ALL SUCH JUDGMENTS IT IS TO BE DISTINCTLY OBSERVED THAT THE APPROPRIATION FOR THE WORK HAS NOT BEEN CHARGED. IN SUCH CASES THE COURT IS NOT CONCERNED WITH THE QUESTION OF THE NON AVAILABILITY OF THE APPROPRIATION FOR THE WORK TO MEET SUCH DAMAGE CLAIMS. THE COURT MERELY CONCLUDES FROM THE PROOF THAT THE CLAIM IS JUST AND SHOULD BE PAID. SEE GEDDES V. UNITED STATES, 38 CT.CLS. 428, WHERE IT WAS SAID:

THE ACCOUNTING OFFICERS ARE THE GUARDIANS OF THE APPROPRIATIONS. IT IS THEIR BUSINESS TO SEE THAT NO MONEY IS PAID OUT OF THE TREASURY UNLESS THE PAYMENT IS AUTHORIZED BY AN APPROPRIATION ACT. IT IS NOT THEIR BUSINESS TO ADJUDICATE ABSTRACT QUESTIONS OF LEGAL RIGHT BEYOND THE LEGAL RIGHT OF A PERSON TO BE PAID OUT OF A SPECIFIC APPROPRIATION. AN APPROPRIATION CONSTITUTES THE MEANS FOR DISCHARGING THE LEGAL DEBTS OF THE GOVERNMENT.

THE JUDGMENT OF A COURT HAS NOTHING TO DO WITH THE MEANS--- WITH THE REMEDY FOR SATISFYING A JUDGMENT. IT IS THE BUSINESS OF COURTS TO RENDER JUDGMENTS, LEAVING TO CONGRESS AND THE EXECUTIVE OFFICERS THE DUTY OF SATISFYING THEM. * * *

AS STATED, THE JUDGMENTS OF THE COURTS, EXCEPT OF A CERTAIN LIMITED CLASS, ARE NOT PAID UNDER ADMINISTRATIVE APPROPRIATIONS BUT ARE REQUIRED BY THE ACT OF SEPTEMBER 30, 1890, 26 STAT. 537, TO BE REPORTED TO THE CONGRESS FOR A SPECIFIC APPROPRIATION BEFORE SAME MAY BE PAID AND UNDER ARTICLE I, SECTION 9, OF THE CONSTITUTION, THE CONGRESS MAY MAKE THE NECESSARY APPROPRIATION TO PAY THE SAME.

BOTH THIS OFFICE AND THE ADMINISTRATIVE OFFICER WHO WAS CHARGED WITH THE ACCOMPLISHMENT OF THE WORK MAY ONLY CONSIDER SUCH A CLAIM WITH RELATION TO THE AVAILABILITY OF THE APPROPRIATION FOR THE DOING OF THE WORK AND THUS EVERY PAYMENT UNDER THE APPROPRIATION UNDER THE TERMS OF A CONTRACT MUST PROXIMATELY MEET A NEED OF THE UNITED STATES AND CONTRIBUTE TO THE BENEFIT OF THE UNITED STATES WITH RELATION TO THE PARTICULAR WORK AND APPROPRIATION THEREFOR. CLAIMS ON ACCOUNT OF DELAYS CAUSED BY GOVERNMENT OFFICERS ARE NO EXCEPTION TO THE RULE AND THE TEST IN ALL SUCH CASES IS WHETHER THE DELAY CAUSED BY THE ADMINISTRATIVE OFFICERS IN THE PROSECUTION OF THE WORK WAS BECAUSE OF NEEDS OF THE GOVERNMENT AND ESSENTIAL TO THE ACCOMPLISHMENT OF THE OBJECT FOR WHICH THE APPROPRIATION WAS MADE AND PROXIMATELY CONTRIBUTED THERETO. THE FACTS FROM WHICH THIS MAY BE DETERMINED MUST BE DULY REPORTED AND BEFORE ANY PAYMENT THEREON IS MADE, THEY SHOULD BE MADE THE MATTER OF A SUBMISSION TO THIS OFFICE FOR EITHER ADVANCE DECISION THEREON OR STATING OF A SETTLEMENT OF THE CLAIM ARISING OUT OF THE FACTS, AS THE MATTER MAY WARRANT. IT IS TO BE UNDERSTOOD IN THIS CONNECTION THAT IN EVERY INSTANCE THERE MUST NECESSARILY APPEAR A CONTRACT THAT IN ITSELF IMPOSES A VALID OBLIGATION UPON THE GOVERNMENT IN THE USES OF THE APPROPRIATION AND THAT IN NO CASE MAY ADMINISTRATIVE ACTION INVOLVE A COST OF THE WORK TO THE GOVERNMENT IN EXCESS OF THE APPROPRIATIONS MADE THEREFOR. SEE SECTION 3679, REVISED STATUTES, AND THE ACT OF MARCH 3, 1905, 33 STAT. 1257, AS AMENDED BY THE ACT OF FEBRUARY 27, 1906, 34 STAT. 48, PROHIBITING ADMINISTRATIVE OFFICERS FROM INCURRING DEFICIENCIES IN APPROPRIATIONS.

THE ORDER TO STOP WORK IN THE INSTANT CASE WAS TO ENABLE THE GOVERNMENT TO FURTHER CHECK THE CALCULATIONS FOR THE ENGINE FOUNDATIONS FOR WHICH THE BUILDING HAD BEEN CONSTRUCTED. THE FORMS HAD BEEN BUILT AND THE CONCRETE PARTLY POURED AND AS PRECISION WAS NECESSARY IN THE INSTALLATION OF THE ENGINES, IT WAS DEEMED ADVISABLE BY THE GOVERNMENT TO CHECK UP ON ITS OWN SPECIFICATIONS FOR, UNLESS THEY WERE VERIFIED UNDER THE WORK AS IT HAD PROGRESSED, IT MIGHT BECOME NECESSARY TO TEAR OUT THE FOUNDATIONS AND REPLACE THEM. THE DELAY NECESSARY TO MAKE SUCH VERIFICATION OF THE COMPUTATIONS IN THE GOVERNMENT'S OWN SPECIFICATIONS MAY BE CONSIDERED AS MEETING A NEED OF THE UNITED STATES AND PROXIMATELY CONTRIBUTING TO THE PERFORMANCE OF THE WORK. THE FACTS AS TO THIS HAVE BEEN DULY ASCERTAINED AND INCREASED COST TO THE CONTRACTOR HAS BEEN FOUND IN ACCORDANCE WITH THE CONTRACT IN THE AMOUNT OF $491.45. THE APPROPRIATION IS ACCORDINGLY DETERMINED BY ME TO BE AVAILABLE FOR THE PAYMENT OF THIS AMOUNT TO THE CONTRACTOR IN FULL OF ALL CLAIMS.

THE NECESSARY AMOUNT BEING AVAILABLE IN THE APPROPRIATION INVOLVED, UPON REVIEW THE CONTRACTOR IS ALLOWED $491.45.