A-21636, MARCH 27, 1928, 7 COMP. GEN. 595

A-21636: Mar 27, 1928

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THE CONTRACTOR IS NOT ENTITLED TO AN EXTENSION IN THE CONTRACT TIME FOR DELAYS DUE TO CHANGES IN DRAWINGS MADE BY A SUBCONTRACTOR AT THE SUGGESTION OF THE ENGINEER FOR THE PURPOSE MERELY OF ASSISTING THE CONTRACTOR AND TO ENABLE THE CONTRACTOR TO REDUCE THE COST OF CERTAIN EXCAVATION WORK. IN THE ABSENCE OF STATUTORY AUTHORITY THEREFOR A PROVISION IN A CONTRACT PURPORTING TO AUTHORIZE THE ENGINEER TO WAIVE LIQUIDATED DAMAGES WHEN NO ACTUAL DAMAGES ARE CERTIFIED AS BEING CAUSED THE UNITED STATES. IS VOID AND MAY NOT BE RECOGNIZED AS AUTHORITY FOR WAIVING LIQUIDATED DAMAGES. 1928: THERE IS FOR CONSIDERATION THE CLAIM OF BERT L. UNDER THE TERMS OF THE AGREEMENT WORK WAS TO BE COMMENCED WITHIN 2 DAYS AFTER DATE OF NOTIFICATION OF APPROVAL OF THE CONTRACT BY THE SECRETARY OF THE INTERIOR.

A-21636, MARCH 27, 1928, 7 COMP. GEN. 595

CONTRACTS - LIQUIDATED DAMAGES - DELAYS CAUSED BY SUBCONTRACTORS - WAIVERS OF LIQUIDATED DAMAGES UNDER A CONTRACT PROVIDING FOR THE DEDUCTION OF LIQUIDATED DAMAGES FOR DELAYS IN COMPLETION OF THE CONTRACT WORK EXCEPT FOR DELAYS DUE TO CERTAIN SPECIFIED CAUSES, THE CONTRACTOR IS NOT ENTITLED TO AN EXTENSION IN THE CONTRACT TIME FOR DELAYS DUE TO CHANGES IN DRAWINGS MADE BY A SUBCONTRACTOR AT THE SUGGESTION OF THE ENGINEER FOR THE PURPOSE MERELY OF ASSISTING THE CONTRACTOR AND TO ENABLE THE CONTRACTOR TO REDUCE THE COST OF CERTAIN EXCAVATION WORK. IN THE ABSENCE OF STATUTORY AUTHORITY THEREFOR A PROVISION IN A CONTRACT PURPORTING TO AUTHORIZE THE ENGINEER TO WAIVE LIQUIDATED DAMAGES WHEN NO ACTUAL DAMAGES ARE CERTIFIED AS BEING CAUSED THE UNITED STATES, IS VOID AND MAY NOT BE RECOGNIZED AS AUTHORITY FOR WAIVING LIQUIDATED DAMAGES.

DECISION BY COMPTROLLER GENERAL MCCARL, MARCH 27, 1928:

THERE IS FOR CONSIDERATION THE CLAIM OF BERT L. PERRY (INC.) FOR AN UNPAID BALANCE OF $11,657.38, UNDER CONTRACT I-I-IND-490, DATED SEPTEMBER 22, 1926, WITH THE COMMISSIONER OF INDIAN AFFAIRS, COVERING THE CONSTRUCTION OF 20 MILES OF TRANSMISSION LINE FROM HAYDEN TO COOLIDGE DAM, ARIZ., AS PER PLANS AND SPECIFICATIONS ATTACHED THERETO, THE QUESTION INVOLVED IN THE MATTER BEING WHETHER FULL PAYMENT OF THE BALANCE MAY BE MADE WITHOUT DEDUCTION OF ANY LIQUIDATED DAMAGES FOR DELAY IN COMPLETING THE CONTRACT WORK.

UNDER THE TERMS OF THE AGREEMENT WORK WAS TO BE COMMENCED WITHIN 2 DAYS AFTER DATE OF NOTIFICATION OF APPROVAL OF THE CONTRACT BY THE SECRETARY OF THE INTERIOR, AND TO BE COMPLETED WITHIN 90 DAYS AFTER RECEIPT OF CONTRACT FROM THE SECRETARY OF THE INTERIOR. THE CONTRACT WAS APPROVED BY SECRETARY OF THE INTERIOR ON SEPTEMBER 27, 1926, AND AN APPROVED COPY OF THE CONTRACT WAS RECEIVED BY THE CONTRACTOR ON OCTOBER 4, 1926, THUS FIXING JANUARY 2, 1927, AS THE DATE WHEN THE WORK UNDER THE CONTRACT SHOULD HAVE BEEN COMPLETED, BUT SUCH WORK WAS NOT COMPLETED AND ACCEPTED UNTIL FEBRUARY 17, 1927, OR AFTER A DELAY OF 46 DAYS.

THE CAUSES OF DELAY FOR WHICH THE CONTRACTOR CLAIMS AN EXTENSION OF THE CONTRACT TIME ARE THAT THE STEEL SUBCONTRACTOR WAS DELAYED IN THE FABRICATION OF STEEL TOWERS THROUGH INSTRUCTIONS CLAIMED TO HAVE BEEN ISSUED BY THE ASSISTANT ENGINEER TO MAKE CHANGES IN THE FOOTINGS OF STEEL TOWERS; THAT LOSS OF TIME RESULTED BY REASON OF DELAYS ON THE PART OF A SUBCONTRACTOR FOR HAULING AND PLACING OF THE STEEL TOWERS; AND THAT DELAY WAS CAUSED BY INCLEMENT WEATHER. AS A FURTHER REASON WHY LIQUIDATED DAMAGES SHOULD NOT BE DEDUCTED IT IS CLAIMED THAT THE UNITED STATES SUSTAINED NO ACTUAL DAMAGES BY REASON OF THE DELAY IN COMPLETING THE WORK COVERED BY THE CONTRACT. OF THE DELAY CAUSES THUS SPECIFIED, 30 DAYS ARE CLAIMED TO HAVE BEEN DUE TO THE FIRST MENTIONED CAUSE AND 20 DAYS TO THE OTHER CAUSES MENTIONED.

IN ARTICLE 5 OF THE CONTRACT IT IS PROVIDED THAT TIME SHALL BE CONSIDERED OF THE ESSENCE OF THE AGREEMENT AND THAT IN CASE OF FAILURE OF THE PARTIES OF THE SECOND PART (THE CONTRACTOR) TO COMPLETE THE CONTRACT WITHIN THE TIME SPECIFIED, THE PARTIES OF THE SECOND PART AGREE TO PAY TO THE UNITED STATES AS LIQUIDATED DAMAGES THE SUM OF $100 FOR EACH AND EVERY DAY THE PARTIES OF THE SECOND PART SHALL DELAY IN THE COMPLETION OF THE CONTRACT, SAID DELAY NOT BEING THE FAULT OF THE UNITED STATES. IT IS FURTHER PROVIDED THAT:

* * * IF THE PARTIES OF THE SECOND PART SHALL BY STRIKES, EPIDEMICS, LOCAL OR STATE QUARANTINE RESTRICTIONS, OR BY ABNORMAL VIOLENCE OF THE ELEMENTS, BE ACTUALLY PREVENTED FROM COMPLETING THE WORK OR DELIVERING THE MATERIALS AT THE TIME AGREED UPON AND SUCH DELAY IS WITHOUT CONTRIBUTORY NEGLIGENCE ON HIS OR THEIR PART, SUCH ADDITIONAL TIME MAY, WITH THE PRIOR SANCTION OF THE COMMISSIONER OF INDIAN AFFAIRS AND THE SECRETARY OF THE INTERIOR, BE ALLOWED HIM OR THEM, IN WRITING, FOR SUCH COMPLETION AS, IN THE JUDGMENT OF THE PARTY OF THE FIRST PART, OR HIS SUCCESSOR, SHALL BE JUST AND REASONABLE; BUT SUCH ALLOWANCE OR EXTENSION SHALL IN NO WAY AFFECT THE RIGHTS OR OBLIGATIONS OF THE PARTIES UNDER THIS CONTRACT, BUT THE SAME SHALL SUBSIST AND BE ENFORCEABLE PRECISELY AS IF THE NEW DATE FOR SUCH COMMENCEMENT OR COMPLETION HAD BEEN THE DATE ORIGINALLY AGREED UPON.

IT IS PROVIDED IN PARAGRAPH 46 OF THE SPECIFICATIONS THAT:

* * * THE DAMAGES THAT MAY RESULT FROM ANY DELAY IN THE COMPLETION OF THE WORK BY THE TIME AGREED UPON WILL BE DIFFICULT, IT NOT IMPOSSIBLE, OF ASCERTAINMENT. IF THE WORK IS NOT COMPLETED ON OR BEFORE THE DATE FIXED FOR ITS COMPLETION BY THE TERMS OF THIS CONTRACT OR THE DATE ARRIVED AT BY THE EXTENSION OF TIME THAT MAY BE ALLOWED UNDER THE TERMS OF THIS CONTRACT, THE CONTRACTOR SHALL PAY TO THE UNITED STATES AS FIXED, AGREED, AND LIQUIDATED DAMAGES THE SUM OF ONE HUNDRED DOLLARS ($100.00) FOR EACH CALENDAR DAY'S DELAY UNTIL THE WORK IS SATISFACTORILY COMPLETED OR UNTIL SUCH TIME AS THE UNITED STATES MAY REASONABLY PROCURE THE COMPLETION OF THE WORK BY ANOTHER CONTRACTOR OR COMPLETE THE WORK ITSELF. * * *

RELATIVE TO THE 30 DAYS' DELAY CLAIMED TO HAVE BEEN CAUSED THROUGH ALLEGED INSTRUCTIONS FROM AUTHORIZED AGENTS OF THE GOVERNMENT TO MAKE CHANGES IN THE TOWER FOOTINGS, THE STEEL SUBCONTRACTOR ASSERTS THAT IT WAS ANXIOUS TO BEGIN WORK IMMEDIATELY AFTER WORD WAS RECEIVED FROM THE CONTRACTOR THAT THE CONTRACT HAD BEEN AWARDED TO IT, BUT WAS ADVISED TO DEFER ACTION, AS CHANGES WERE CONTEMPLATED; THAT THE CHANGES WERE ORDERED BY ASSISTANT ENGINEER ROSE AND INFORMATION SECURED ON OCTOBER 8, 1926, WHICH ENABLED IT TO PROCEED WITH THE DRAWINGS; THAT DETAILED DRAWINGS WERE COMPLETED BY NOVEMBER 8, 1926; AND THAT FABRICATION WAS IMMEDIATELY STARTED.

IN EXPLANATION OF THE ALLEGED CHANGES THE ACTING CHIEF ENGINEER STATED IN A REPORT ON THE MATTER THAT THE CHANGES WERE IN THE NATURE OF HELPFUL SUGGESTIONS AIMED TO ASSIST THE CONTRACTOR AND THAT IT WAS ENCUMBENT UPON THE CONTRACTOR TO INVESTIGATE THE PROPOSALS AND TO CONSIDER SAME IN THE LIGHT OF THE TIME ELEMENT INVOLVED, AND EXPRESSED THE VIEW THAT THE CONTRACTOR'S FAILURE TO DO SO WOULD NOT RELIEVE HIM IN RESPECT TO THE TIME LIMIT OF THE CONTRACT, AND THAT UNDER THE CIRCUMSTANCES IT WAS NOT BELIEVED THE LATE ARRIVAL OF THE STEEL TOWERS COULD BE ATTRIBUTED TO CHANGES IN THE REQUIREMENTS ON THE PART OF THE GOVERNMENT, IT BEING EVIDENT FROM THE CORRESPONDENCE THAT THE ENTIRE MATTER OF THE CHANGES IN THE LENGTH OF TOWER FOOTINGS WAS INFORMAL AND ENTIRELY OPTIONAL WITH THE CONTRACTOR AND DOES NOT JUSTIFY A CLAIM FOR TIME EXTENSION. THE ASSISTANT CHIEF ENGINEER ALSO STATED THAT THE CHANGES IN THE STEEL TOWER DESIGN WERE INTENDED PURELY FOR THE SAKE OF ASSISTING THE CONTRACTOR IN RESPECT TO FOOTING EXCAVATIONS AND THAT WITH STANDARD 5-FOOT EXTENSIONS, SEVERAL HUNDRED YARDS MORE EXCAVATION WOULD HAVE BEEN NECESSARY THAN WITH THE USE OF THE 2 1/2 FOOTING EXTENSIONS COVERED BY THE SUGGESTED CHANGES.

THE CONTRACTOR'S REQUEST FOR AN EXTENSION OF THE CONTRACT TIME BY REASON OF DELAYS IN DELIVERY OF THE STEEL TOWERS APPEARS TO HAVE BEEN MADE UNDER PARAGRAPHS 15 AND 41 OF THE SPECIFICATIONS. IN PARAGRAPH 15 OF THE SPECIFICATIONS IT IS PROVIDED THAT:

* * * IF THE CONTRACTOR, ON ACCOUNT OF CONDITIONS DEVELOPING DURING THE PROGRESS OF THE WORK, FINDS IT IMPRACTICABLE TO COMPLY STRICTLY WITH THESE SPECIFICATIONS AND APPLIES IN WRITING FOR A MODIFICATION OF REQUIREMENTS OR OF METHODS OF WORK, SUCH CHANGES MAY BE AUTHORIZED BY THE ENGINEER IF NOT DETRIMENTAL TO THE WORK AND IF WITHOUT ADDITIONAL COST TO THE UNITED STATES.

AND IN PARAGRAPH 41 IT IS PROVIDED THAT:

* * * FOR ANY UNAVOIDABLE DELAY IN THE COMPLETION OF THE WORK NOT THE RESULT OF THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, ARISING FROM SPECIFIC ORDERS OF THE ENGINEER TO STOP WORK, OR BY THE PERFORMANCE OF EXTRA WORK ORDERED BY THE ENGINEER, OR BY THE FAILURE OF THE UNITED STATES TO PROVIDE MATERIAL OR NECESSARY INSTRUCTIONS FOR CARRYING ON THE WORK, OR FROM CAUSES BEYOND THE CONTROL OF THE CONTRACTOR, TO BE DETERMINED BY THE ENGINEER, WHICH CAUSES SHALL INCLUDE, BUT SHALL NOT BE RESTRICTED TO, ACTS OF GOD, THE UNITED STATES, THE PUBLIC ENEMY, COMMON CARRIERS, FIRES, EPIDEMICS, QUARANTINE RESTRICTIONS, OR STRIKES, WHEREVER ANY OF THESE CAUSES OF DELAY OCCUR, THERE SHALL BE ALLOWED SUCH EXTENSION OF TIME FOR COMPLETION AS MAY BE FOUND BY THE ENGINEER TO BE EQUIVALENT TO THE DELAY OR DELAYS SO OCCASIONED; * * * THAT DELAY ON THE PART OF A SUBCONTRACTOR SHALL NOT ENTITLE THE CONTRACTOR TO AN EXTENSION OF TIME UNLESS SUCH DELAY ARISES FROM A CAUSE HEREIN SPECIFIED AND COULD NOT HAVE BEEN AVOIDED BY THE CONTRACTOR. NO DELAY SHALL BE CHARGED AGAINST THE CONTRACTOR WHERE THE ENGINEER CERTIFIES THAT SUCH DELAY HAS CAUSED NO DAMAGE TO THE UNITED STATES. THE EXTENSION OF TIME PROVIDED IN THIS PARAGRAPH MAY BE ALLOWED OR SUCH CERTIFICATION MAY BE MADE AT ANY TIME BEFORE FINAL PAYMENT, BUT NOT THEREAFTER.

FROM THE FACTS AS REPORTED IN THIS MATTER, THE DELAY IN THE FABRICATION OF THE STEEL TOWERS APPEARS TO HAVE BEEN DUE TO SUGGESTIONS MADE BY THE ENGINEER MERELY FOR THE PURPOSE OF ASSISTING THE CONTRACTOR AND WITH THE IDEA OF ENABLING THE CONTRACTOR TO REDUCE EXPENSES IN CONNECTION WITH EXCAVATING FOR THE TOWERS. THE SUGGESTED CHANGES WERE NOT DIRECTED IN WRITING TO BE MADE NOR WERE THEY SUCH CHANGES AS THE CONTRACTOR WAS OBLIGATED, UNDER THE SPECIFICATIONS, TO MAKE, BUT THE MAKING OF WHICH APPEARS TO HAVE BEEN ENTIRELY OPTIONAL WITH THE CONTRACTOR. THE STEEL SUBCONTRACTOR, NOT HAVING BEEN DIRECTED TO MAKE THE CHANGES AS A CONTRACT REQUIREMENT, AS AUTHORIZED BY PARAGRAPH 12 OF THE SPECIFICATIONS, BUT HAVING RATHER BEEN OF THE NATURE OF CHANGES IN THE METHODS OF DOING THE CONTRACT WORK AS CONTEMPLATED BY PARAGRAPH 15 OF THE SPECIFICATIONS, THE DELAY COMPLAINED OF WAS NOT A DELAY FOR WHICH THE CONTRACTOR, UNDER THE TERMS AND CONDITIONS OF THE CONTRACT AND SPECIFICATIONS, IS ENTITLED TO AN EXTENSION IN THE CONTRACT TIME, AND LIQUIDATED DAMAGES ARE, THEREFORE, PROPERLY DEDUCTIBLE BY REASON OF THE DELAY DUE TO THAT CAUSE.

AS TO THE 20 DAYS' DELAY IN COMPLETING THE CONTRACT ALLEGED TO HAVE BEEN DUE TO DELAY ON THE PART OF A SUBCONTRACTOR FOR HAULING AND PLACING OF THE STEEL TOWERS, AND TO INCLEMENT WEATHER, THE ASSISTANT CHIEF ENGINEER REPORTED THAT THERE WAS LACK OF DILIGENCE ON THE PART OF THE SUBCONTRACTOR WHO UNDERTOOK TO DO THE GREATER PART OF THE PACKING, AND THE REPORT INDICATES THAT SOME DELAY WAS CAUSED BY INCLEMENT WEATHER. HOWEVER, THERE ARE NO PROVISIONS IN THE CONTRACT OR SPECIFICATIONS UNDER WHICH THE PERFORMANCE OF THE CONTRACT WORK COULD BE EXCUSED FOR DELAY CAUSED BY SUBCONTRACTORS EXCEPT WHEN THE DELAY SO CAUSED WAS DUE TO SUCH CAUSES AS ARE SPECIFIED IN THE CONTRACT AS EXCUSING THE CONTRACTOR. THERE HAVING BEEN NO FINDINGS OF FACT MADE BY THE ADMINISTRATIVE AUTHORITIES THAT THE DELAY CAUSED BY THE SUBCONTRACTOR FOR HAULING AND PLACING OF THE STEEL TOWERS WAS DUE TO ANY CAUSE FOR WHICH THE CONTRACTOR COULD BE EXCUSED FROM PERFORMANCE OF THE CONTRACT, OR THAT THERE WERE ANY ABNORMAL WEATHER CONDITIONS PREVAILING AT THE TIME THE DELAY IS ALLEGED TO HAVE OCCURRED BY REASON OF INCLEMENT WEATHER SO AS TO BRING THE MATTER OF DELAY DUE TO THOSE CAUSES WITHIN THE CONTRACT PROVISION EXCUSING DELAY ON ACCOUNT THEREOF, THERE ARE NO LEGAL GROUNDS UPON WHICH THE CONTRACT TIME CAN BE EXTENDED BY REASON OF DELAY CAUSED BY A SUBCONTRACTOR OR BY INCLEMENT WEATHER. ACCORDINGLY, LIQUIDATED DAMAGES ARE FOR DEDUCTION DURING THE PERIOD THE CONTRACT WORK IS CLAIMED TO HAVE BEEN DELAYED BY SUCH CAUSES. 5 COMP. GEN. 595.

WITH RESPECT TO THE PROVISION IN THE SPECIFICATION PURPORTING TO AUTHORIZE THE WAIVING OF LIQUIDATED DAMAGES FOR DELAY IN COMPLETING THE CONTRACT WORK UPON THE CERTIFICATION BY THE ENGINEER THAT SUCH DELAY CAUSED NO ACTUAL DAMAGE TO THE UNITED STATES, IT HAS REPEATEDLY BEEN HELD BY THE ACCOUNTING OFFICERS AND THE COURTS THAT UNDER A LIQUIDATED DAMAGE CLAUSE IN A CONTRACT THE UNITED STATES IS NOT REQUIRED TO SHOW ACTUAL DAMAGES. 19 COMP. DEC. 278; 26 ID. 424; 2 COMP. GEN. 322; PACIFIC HARDWARE COMPANY V. THE UNITED STATES, 49 CT.CLS. 327; UNITED STATES V. BETHLEHEM STEEL COMPANY, 205 U.S. 105. AND THAT UNDER A CONTRACT PROVIDING FOR THE DEDUCTION OF LIQUIDATED DAMAGES, NO OFFICER OF THE GOVERNMENT HAS ANY AUTHORITY TO WAIVE THE VESTED RIGHTS OF THE UNITED STATES WITH RESPECT TO THE DEDUCTION OF LIQUIDATED DAMAGES UNLESS SPECIFICALLY AUTHORIZED BY LAW TO DO SO, IT ALSO HAVING BEEN HELD THAT THE FACT THAT NO DAMAGE WAS SUFFERED BY THE UNITED STATES IS NOT MATERIAL. COMP. DEC. 113; 3 COMP. GEN. 643, 696; 4 ID. 578; 5 ID. 750. IT HAS BEEN SO HELD IN CASES IN WHICH THE CONTRACT CONTAINED A PROVISION SIMILAR TO THE ONE RELIED UPON IN THIS CASE. 5 COMP. GEN. 363; ID. 750; AND DECISION OF JULY 27, 1926, A-15125.

A LIQUIDATED DAMAGE IS A PART OF THE CONSIDERATION PAID FOR BY THE GOVERNMENT UNDER THE CONTRACT AND IN THE ABSENCE OF ANY LAW AUTHORIZING THE SECRETARY OF THE INTERIOR OR ANY OFFICIALS OF THE INTERIOR DEPARTMENT TO WAIVE LIQUIDATED DAMAGES, UNDER THE DECISIONS REFERRED TO, THE PROVISION IN THE SPECIFICATIONS ATTEMPTING TO CONFER AUTHORITY ON THE ENGINEER TO WAIVE LIQUIDATED DAMAGES IF AND WHEN THE ENGINEER SHOULD CERTIFY NO ACTUAL DAMAGE HAD BEEN CAUSED THE UNITED STATES BY REASON OF THE DELAY IN COMPLETION OF THE CONTRACT WORK IS TO BE VIEWED AS PRACTICALLY PERMITTING THE LIQUIDATED DAMAGE CLAUSE TO BE ENFORCED OR NOT AT THE ADMINISTRATIVE WILL, WITH LOSS ACCORDINGLY TO THE GOVERNMENT OF PART OF THE CONSIDERATION PAID, AND IS NULL AND VOID AND MAY NOT BE RECOGNIZED FOR THE PURPOSE OF AUTHORIZING THE PAYMENT OF THE BALANCE DUE UNDER THE CONTRACT WITHOUT THE DEDUCTION OF LIQUIDATED DAMAGES FOR UNAUTHORIZED DELAY IN COMPLETION OF THE CONTRACT. PAYMENT OF THE VOUCHER SUBMITTED WILL BE MADE IN THE AMOUNT STATED, LESS A DEDUCTION OF $4,600 TO COVER LIQUIDATED DAMAGES FOR 46 DAYS' DELAY IN COMPLETING THE WORK CALLED FOR BY THE CONTRACT.