A-21500, FEBRUARY 29, 1928, 7 COMP. GEN. 534

A-21500: Feb 29, 1928

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CONTRACTS - LIQUIDATED DAMAGES - STANDARD GOVERNMENT CONSTRUCTION CONTRACT UNDER THE WORDING OF THE PROVISION FOR THE DEDUCTION OF LIQUIDATED DAMAGES IN THE STANDARD GOVERNMENT CONSTRUCTION CONTRACT THERE IS NO CONTRACTUAL OR LEGAL RIGHT IN CONTRACTING OR ADMINISTRATIVE OFFICERS TO GRANT EXTENSIONS OF THE CONTRACT TIME FOR DELAYS IN COMPLETING THE CONTRACT WORK. THE QUESTION WHETHER A CONTRACTOR IS ENTITLED TO AN EXTENSION OF TIME ON ACCOUNT OF DELAYS OCCURRING DURING PERFORMANCE OF WORK UNDER A STANDARD GOVERNMENT CONSTRUCTION CONTRACT. IS ONE OF LAW FOR DETERMINATION BY THE GENERAL ACCOUNTING OFFICE OR BY THE COURTS. 1928: I HAVE YOUR LETTER OF JANUARY 31. UNDER THE TERMS OF THE CONTRACT WORK WAS TO BE COMMENCED WITHIN 30 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED AND TO BE COMPLETED WITHIN 425 CALENDAR DAYS FROM DATE OF RECEIPT OF NOTICE TO PROCEED.

A-21500, FEBRUARY 29, 1928, 7 COMP. GEN. 534

CONTRACTS - LIQUIDATED DAMAGES - STANDARD GOVERNMENT CONSTRUCTION CONTRACT UNDER THE WORDING OF THE PROVISION FOR THE DEDUCTION OF LIQUIDATED DAMAGES IN THE STANDARD GOVERNMENT CONSTRUCTION CONTRACT THERE IS NO CONTRACTUAL OR LEGAL RIGHT IN CONTRACTING OR ADMINISTRATIVE OFFICERS TO GRANT EXTENSIONS OF THE CONTRACT TIME FOR DELAYS IN COMPLETING THE CONTRACT WORK, THEIR AUTHORITY EXTENDING ONLY AND BEING LIMITED TO THE FINDINGS OF FACT AS TO THE CAUSE AND EXTENT OF DELAYS ARISING DURING PERFORMANCE. THE QUESTION WHETHER A CONTRACTOR IS ENTITLED TO AN EXTENSION OF TIME ON ACCOUNT OF DELAYS OCCURRING DURING PERFORMANCE OF WORK UNDER A STANDARD GOVERNMENT CONSTRUCTION CONTRACT, UPON THE FACTS FOUND BY THE CONTRACTING OFFICER OR ADMINISTRATIVE AUTHORITIES ON APPEAL, IS ONE OF LAW FOR DETERMINATION BY THE GENERAL ACCOUNTING OFFICE OR BY THE COURTS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, FEBRUARY 29, 1928:

I HAVE YOUR LETTER OF JANUARY 31, 1928, TRANSMITTING COPY OF CONTRACT ENTERED INTO JUNE 20, 1927, BETWEEN THE ENGINEERING DEPARTMENT OF THE ARMY AND ROY R. LOVE, TRADING AS THE LOVE CONSTRUCTION AND ENGINEERING CO., FOR CONSTRUCTING THE SOUTH BREAKWATER AT MUSKEGON, MICH., AND REQUESTING MY DECISION WHETHER LIQUIDATED DAMAGES SHOULD BE DEDUCTED FOR THE PERIOD FOR WHICH AN EXTENSION OF THE CONTRACT TIME HAS BEEN GRANTED BY THE CONTRACTING OFFICER, AND APPROVED BY THE CHIEF OF ENGINEERS, FROM JUNE 13, 1929, TO SEPTEMBER 28, 1929.

UNDER THE TERMS OF THE CONTRACT WORK WAS TO BE COMMENCED WITHIN 30 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED AND TO BE COMPLETED WITHIN 425 CALENDAR DAYS FROM DATE OF RECEIPT OF NOTICE TO PROCEED. IN PARAGRAPH 3 OF THE SPECIFICATIONS IT IS PROVIDED THAT IN CASE OF FAILURE ON THE PART OF THE CONTRACTOR TO COMPLETE THE WORK WITHIN THE TIME AGREED UPON FOR ITS COMPLETION, THE CONTRACTOR SHALL PAY THE GOVERNMENT $15 PER DAY FOR EACH CALENDAR DAY'S DELAY UNTIL THE WORK IS COMPLETED OR ACCEPTED, EXCLUSIVE OF THE PERIOD FROM DECEMBER 1 TO MARCH 31, INCLUSIVE, OF EACH YEAR INCLUDED IN THE PERIOD OF COMPLETION.

IT APPEARS FROM THE RECORD THAT THE CONTRACT WAS APPROVED BY THE CHIEF OF ENGINEERS ON AUGUST 9, 1927, AND THAT NOTICE TO PROCEED WITH THE WORK WAS RECEIVED BY THE CONTRACTOR ON AUGUST 15, 1927, THUS FIXING JUNE 13, 1929, AS THE FINAL DATE FOR COMPLETION, AND THAT BETWEEN JULY 26, 1927, AND SEPTEMBER 14, 1927, THE CONTRACTOR ACTUALLY PERFORMED A CERTAIN AMOUNT OF WORK UNDER THE CONTRACT IN CONNECTION WITH THE RECEIVING, UNLOADING, AND STORING OF THREE CARLOADS OF TIMBERS AND MOORING POSTS AND LADDER RUNGS, AND THE PARKING OF FOUR CONCRETE CAISSONS, ALL OF WHICH WERE TO BE FURNISHED BY THE UNITED STATES, AND IN ADDITION THE DRIVING OF RANGE PILES FOR THE BREAKWATER, WHICH WERE SUBSEQUENTLY REMOVED, AND ERECTING A PLATFORM FOR ENGINEER INSTRUMENTS. IT ALSO APPEARS THAT WHEN NOTICE TO PROCEED WITH THE WORK WAS RECEIVED THE CONTRACTOR WAS READY AND WAITING TO DRIVE FOUNDATION PILES, BUT WAS DELAYED ON ACCOUNT OF A SHORTAGE OF MATERIALS THE UNITED STATES WAS TO SUPPLY, AND OWING TO THE LATENESS OF THE SEASON IT WAS THE UNANIMOUS JUDGMENT OF ALL UNITED STATES EMPLOYEES AT THE SCENE OF THE WORK, AND OF THE CONTRACTOR, THAT IT WOULD BE NECESSARY TO HAVE NOT LESS THAN 200 FEET OF THE BREAKWATER COMPLETED DURING THE REMAINDER OF THE SEASON TO MAKE A SAFE STRUCTURE TO GO THROUGH THE SEVERE WINTER STORMS WITHOUT FAILURE, AND ALL WERE AGREED THAT, DUE TO UNFAVORABLE WEATHER FOR WORK ON THE EAST SHORE OF LAKE MICHIGAN, IT WOULD BE PRACTICALLY IMPOSSIBLE TO COMPLETE 200 FEET OF THE BREAKWATER DURING THE REMAINDER OF THE SEASON EVEN IF ALL NECESSARY MATERIALS WERE ON HAND OR ASSURED TO BE ON HAND AS NEEDED, AND FOR THAT REASON AND OTHER LIKE REASONS STATED IN THE DISTRICT ENGINEER'S LETTER OF SEPTEMBER 13, 1927, IT WAS DECIDED TO BE IN THE BEST INTERESTS OF THE UNITED STATES TO DELAY THE BEGINNING OF THE WORK OF CONSTRUCTING THE BREAKWATER UNTIL THE SPRING OF 1928, AND ACCORDINGLY THE DISTRICT ENGINEER (THE CONTRACTING OFFICER) IN SAID LETTER EXTENDED THE CONTRACT TIME FOR COMPLETING THE WORK FOR 107 DAYS OR FOR A PERIOD EQUAL TO THE TIME FROM AUGUST 16, 1927, TO NOVEMBER 30, 1927, INCLUSIVE.

THE EXTENSION OF TIME AS GRANTED BY THE CONTRACTING OFFICER HAS BEEN APPROVED BY THE CHIEF OF ENGINEERS AND YOU NOW REQUEST MY DECISION AS TO WHETHER THERE WAS SUCH A LEGAL BASIS FOR EXTENDING THE CONTRACT TIME AS TO AUTHORIZE FULL PAYMENT FOR ANY CONTRACT WORK THAT MIGHT BE PERFORMED AFTER THE ORIGINAL DATE FIXED FOR COMPLETION AND BEFORE THE EXPIRATION OF THE TIME AS EXTENDED, WITHOUT DEDUCTION OF LIQUIDATED DAMAGES.

THE CONTRACT WAS EXECUTED ON THE STANDARD GOVERNMENT CONSTRUCTION CONTRACT (FORM 23) IN WHICH IT IS PROVIDED IN ARTICLE IX THEREOF, WITH RESPECT TO THE GROUNDS FOR EXCUSING PERFORMANCE ON ACCOUNT OF CERTAIN DELAYS, AS FOLLOWS:

* * * IF THE GOVERNMENT DOES NOT TERMINATE THE RIGHT OF THE CONTRACTOR TO PROCEED, THE CONTRACTOR SHALL CONTINUE THE WORK, IN WHICH EVENT THE ACTUAL DAMAGES FOR THE DELAY WILL BE IMPOSSIBLE TO DETERMINE AND IN LIEU THEREOF THE CONTRACTOR SHALL PAY TO THE GOVERNMENT AS FIXED, AGREED, AND LIQUIDATED DAMAGES FOR EACH CALENDAR DAY OF DELAY UNTIL THE WORK IS COMPLETED OR ACCEPTED THE AMOUNT AS SET FORTH IN THE SPECIFICATIONS OR ACCOMPANYING PAPERS AND THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE FOR THE AMOUNT THEREOF: PROVIDED, THAT THE RIGHT OF THE CONTRACTOR TO PROCEED SHALL NOT BE TERMINATED OR THE CONTRACTOR CHARGED WITH LIQUIDATED DAMAGES BECAUSE OF ANY DELAYS IN THE COMPLETION OF THE WORK DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD, OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER OR DELAYS OF SUBCONTRACTORS DUE TO SUCH CAUSES: PROVIDED FURTHER, THAT THE CONTRACTOR SHALL WITHIN TEN DAYS FROM THE BEGINNING OF ANY SUCH DELAY NOTIFY THE CONTRACTING OFFICER IN WRITING OF THE CAUSES OF DELAY, WHO SHALL ASCERTAIN THE FACTS AND THE EXTENT OF THE DELAY, AND HIS FINDINGS OF FACTS THEREON SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO, SUBJECT ONLY TO APPEAL, WITHIN THIRTY DAYS, BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION ON SUCH APPEAL AS TO THE FACTS OF DELAY SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO.

IN CONNECTION WITH THIS PROVISION OF THE STANDARD GOVERNMENT CONSTRUCTION CONTRACT IT WAS SAID IN DECISION OF APRIL 2, 1927, 6 COMP. GEN. 650, TO WHICH REFERENCE IS MADE IN THE PAPERS ACCOMPANYING YOUR SUBMISSION, THAT THE QUESTION WHETHER A CONTRACTOR SHOULD BE CHARGED WITH LIQUIDATED DAMAGES FOR DELAYS DEPENDS UPON THE TERMS OF THE CONTRACT AND THE FACTS FOUND BY THE CONTRACTING OFFICER, OR BY THE HEAD OF THE DEPARTMENT ON APPEAL THEREFROM, AND PRESENTS A QUESTION OF LAW FOR DETERMINATION IN THE FIRST INSTANCE BY THIS OFFICE, AND THAT ADMINISTRATIVE OR DISBURSING OFFICERS SHOULD NOT UNDERTAKE TO DETERMINE WHETHER LIQUIDATED DAMAGES DID OR DID NOT ACCRUE UNDER SUCH CONTRACTS, BUT IN ALL CASES INVOLVING DELAY IN COMPLETION OF THE WORK, DEDUCTION OF LIQUIDATED DAMAGES COVERING THE ENTIRE PERIOD OF DELAY, REGARDLESS OF THE CAUSE, SHOULD BE PROPOSED, AND IF THE CONTRACTOR IS UNWILLING TO ACCEPT SETTLEMENT ON THAT BASIS, FINAL PAYMENT SHOULD NOT BE MADE BY A DISBURSING OFFICER, BUT ALL PAPERS PERTAINING TO THE MATTER, INCLUDING THE FINDINGS OF FACT, SHOULD BE TRANSMITTED TO THIS OFFICE FOR SETTLEMENT AS A CLAIM.

IT IS TO BE NOTED THAT THE FORM OF CONTRACT HERE INVOLVED DOES NOT VEST IN THE CONTRACTING OFFICER OR THE ADMINISTRATIVE AUTHORITIES ANY AUTHORITY TO GRANT, FOR ANY CAUSE WHATSOEVER, AN EXTENSION OF THE CONTRACT TIME, THEIR AUTHORITY IN THE MATTER BEING LIMITED TO THE FINDING OF FACTS AS TO THE CAUSE AND EXTENT OF ANY DELAY ARISING DURING PERFORMANCE. IN OTHER WORDS, IT IS THE INTENT OF THE NEW STANDARD FORM OF GOVERNMENT CONTRACT THAT EXTENSIONS OF TIME BY REASON OF DELAYS, ARE NO LONGER TO BE GRANTED BUT THAT THE CAUSES AND EXTENT OF DELAYS ARE TO BE REPORTED, LEAVING FOR DETERMINATION IN CONNECTION WITH FINAL SETTLEMENT UNDER THE CONTRACT THE QUESTION AS TO WHETHER LIQUIDATED DAMAGES MUST BE DEDUCTED BECAUSE OF SUCH DELAYS. THEREFORE, THE RIGHT AND DUTY OF DETERMINING FROM THE FACTS FOUND, WHETHER LIQUIDATED DAMAGES ARE OR ARE NOT TO BE CHARGED BY REASON OF THE DELAY CAUSES FOUND, IS FOR THIS OFFICE AND THE COURTS, AND WITH WHICH CONTRACTING AND ADMINISTRATIVE AUTHORITIES, UNDER THE WORDING OF THE LIQUIDATED DAMAGE CLAUSE OF SUCH CONTRACTS, SHOULD BE NO LONGER CONCERNED. IN THIS CONNECTION, SEE DECISION A-21386, OF FEBRUARY 21, 1928; ALSO 6 COMP. GEN. 650.

IN THE INSTANT CASE THE ORIGINAL CONTRACT TIME FOR COMPLETING THE WORK NOT HAVING AS YET ARRIVED AND IT BEING POSSIBLE THAT THE WORK CALLED FOR UNDER THE CONTRACT WILL BE COMPLETED PRIOR TO THE EXPIRATION OF THE TIME ORIGINALLY AGREED UPON FOR COMPLETION, THERE WOULD APPEAR TO BENO OCCASION AT THIS TIME TO ADVISE YOU MORE SPECIFICALLY IN THE MATTER.