A-41761, AUGUST 5, 1932, 12 COMP. GEN. 179

A-41761: Aug 5, 1932

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CONTRACTS - DELAYS BY THE GOVERNMENT - INCREASED COSTS WHILE THE COURTS HAVE ALLOWED RECOVERY IN CERTAIN CASES WHERE CONTRACTORS HAVE BEEN DAMAGED BY DELAYS DUE TO UNWARRANTED INTERFERENCES WITH THE WORK BY THE GOVERNMENT'S CONTRACTING OFFICERS OR WHERE THERE HAS BEEN A BREACH OF EXPRESS CONTRACT OBLIGATIONS ON THE PART OF THE GOVERNMENT TO DO CERTAIN WORK OR TO PROVIDE CERTAIN FACILITIES WITHIN A STIPULATED TIME. CLAIMS FOR ADDITIONAL COSTS DUE TO DELAYS UNDER SUCH CIRCUMSTANCES MAY NOT BE ALLOWED BY THE ACCOUNTING OFFICERS UNDER THE CONTRACT APPROPRIATIONS EXCEPT WHERE IT IS ESTABLISHED THAT SUCH DELAYS WERE ON ACCOUNT OF THE NEEDS OF THE GOVERNMENT AND PROXIMATELY CONTRIBUTED TO THE ACCOMPLISHMENT OF THE OBJECTS FOR WHICH THE APPROPRIATIONS WERE MADE.

A-41761, AUGUST 5, 1932, 12 COMP. GEN. 179

CONTRACTS - DELAYS BY THE GOVERNMENT - INCREASED COSTS WHILE THE COURTS HAVE ALLOWED RECOVERY IN CERTAIN CASES WHERE CONTRACTORS HAVE BEEN DAMAGED BY DELAYS DUE TO UNWARRANTED INTERFERENCES WITH THE WORK BY THE GOVERNMENT'S CONTRACTING OFFICERS OR WHERE THERE HAS BEEN A BREACH OF EXPRESS CONTRACT OBLIGATIONS ON THE PART OF THE GOVERNMENT TO DO CERTAIN WORK OR TO PROVIDE CERTAIN FACILITIES WITHIN A STIPULATED TIME, CLAIMS FOR ADDITIONAL COSTS DUE TO DELAYS UNDER SUCH CIRCUMSTANCES MAY NOT BE ALLOWED BY THE ACCOUNTING OFFICERS UNDER THE CONTRACT APPROPRIATIONS EXCEPT WHERE IT IS ESTABLISHED THAT SUCH DELAYS WERE ON ACCOUNT OF THE NEEDS OF THE GOVERNMENT AND PROXIMATELY CONTRIBUTED TO THE ACCOMPLISHMENT OF THE OBJECTS FOR WHICH THE APPROPRIATIONS WERE MADE; AND WHERE IT APPEARS FROM THE WHOLE CONTEXT OF THE CONTRACT THAT IT CONTEMPLATED POSSIBLE DELAYS OF THE CONTRACT WORK BY THE GOVERNMENT WITHOUT THE ALLOWANCE OF ADDITIONAL COMPENSATION TO THE CONTRACTOR SUCH DELAYS DO NOT CONSTITUTE A BREACH OF THE CONTRACT AND THERE IS NO LIABILITY ON THE PART OF THE GOVERNMENT TO PAY ALLEGED ADDITIONAL COSTS INCURRED BY THE CONTRACTOR BY REASON THEREOF UNLESS IT BE ESTABLISHED THAT SUCH DELAYS WERE SO UNREASONABLE AS TO BE BEYOND THE CONTEMPLATION OF THE CONTRACT.

COMPTROLLER GENERAL MCCARL TO THE M. CAIN CO. (INC.), AUGUST 5, 1932:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 16, 1932, CITING DECISION A-28145, FEBRUARY 19, 1930, IN THE CASE OF W. C. SPRATT, AS A BASIS FOR RECONSIDERATION OF DECISION OF APRIL 21, 1932, A-41761, ADVISING THE ARCHITECT OF THE CAPITOL THAT THERE IS NO LEGAL BASIS FOR ALLOWING YOU ANY AMOUNT IN EXCESS OF THE CONTRACT PRICE ON ACCOUNT OF ADDITIONAL COSTS ALLEGED TO HAVE BEEN INCURRED BY YOU IN PERFORMING CONTRACT AC-2G-23, DATED APRIL 19, 1931, FOR THE CONSTRUCTION OF CONCRETE WALKS AND STEPS IN THE ENLARGEMENT OF THE CAPITOL GROUNDS, DUE TO DELAYS BY THE DISTRICT OF COLUMBIA IN ESTABLISHING STREET GRADES, WHICH IS ALLEGED TO HAVE INTERFERED WITH THE SYSTEMATIC CONDUCT OF THE WORK, EXTENDED IT INTO COLD WEATHER, AND OTHERWISE INCREASED THE COST OF PERFORMANCE.

THE DISTINCTION BETWEEN THE TWO CASES IS CLEAR. IN THE W. C. SPRATT CASE THE GOVERNMENT WAS EXPRESSLY OBLIGATED BY THE CONTRACT TO DEMOLISH AND REMOVE ALL EXISTING BUILDINGS AND TO CLEAR THE SITE FOR THE CONTRACTOR TO CONSTRUCT A WATER DISTRIBUTION SYSTEM, INCLUDING THE DIGGING OF DITCHES TO LAY THE WATER PIPES, AT AN ARMY POST. AFTER THE WORK HAD COMMENCED IT WAS DECIDED TO KEEP TROOPS AT THE POST DURING THE SUMMER AND NOT TO REMOVE THE BUILDINGS WITH THE RESULT THAT THE CONTRACTOR HAD TO DO THE DITCHING BY HAND INSTEAD OF BY MACHINE. THIS WAS IN EFFECT A CHANGE OR MODIFICATION OF THE TERMS OF THE CONTRACT ON ACCOUNT OF THE NEEDS OF THE GOVERNMENT AND FOR ITS BENEFIT, AND THE CONTRACTOR WAS ENTITLED TO AND WAS ALLOWED HIS ADDITIONAL COSTS INCIDENT TO SUCH CHANGE. IN THE PRESENT CASE THERE WAS NO SUCH CHANGE IN THE CONTRACT REQUIREMENTS AND WHILE THE CONTRACT STRICTLY LIMITED YOUR CONTRACT TIME AND PROVIDED THAT LIQUIDATED DAMAGES SHOULD BE PAID FOR YOUR DELAYS, THERE WAS NO EXPRESS PROVISION THEREIN OBLIGATING THE GOVERNMENT TO FIX THE GRADES, ETC., SO THAT THE WORK COULD AT ALL EVENTS BE COMPLETED WITHIN SUCH CONTRACT TIME OR SO THAT IT COULD BE CARRIED ON IN THE MOST EFFICIENT AND LEAST COSTLY MANNER, BUT, ON THE CONTRARY, THE CONTRACT MERELY PROVIDED IN THIS RESPECT THAT YOU SHOULD NOT BE CHARGED WITH LIQUIDATED DAMAGES FOR DELAYS CAUSED BY ACTS OF THE GOVERNMENT. THE IMPLICATION OF THIS IS THAT THE CONTRACT CONTEMPLATED POSSIBLE DELAYS BY THE GOVERNMENT FOR WHICH NO ADDITIONAL PAYMENTS SHOULD BE MADE, PARTICULARLY WHEN SUCH CIRCUMSTANCES ARE CONSIDERED IN CONNECTION WITH (1) ARTICLE 13 OF THE CONTRACT THAT OTHER CONTRACTS MIGHT BE LET AND THAT THE CONTRACTOR SHOULD COOPERATE WITH OTHER CONTRACTORS AND CAREFULLY FIT HIS OWN WORK TO THAT PROVIDED UNDER OTHER CONTRACTS AS MIGHT BE DIRECTED BY THE CONTRACTING OFFICER; (2) PARAGRAPH 5, SECTION II, OF THE SPECIFICATIONS THAT THE WORK SHOULD BE SO SCHEDULED AS TO INSURE A MINIMUM OF INTERFERENCE WITH WORK CONTEMPLATED UNDER A SEPARATE CONTRACT TO INSTALL A SPRINKLER SYSTEM AND TO THE END THAT WATER LINES UNDER SUCH SEPARATE CONTRACT SHOULD BE LAID WHERE PRACTICABLE PRIOR TO LAYING WALKS UNDER THE PRESENT CONTRACT; (3) PARAGRAPH 4, SECTION 1 OF THE SPECIFICATIONS THAT THE CONTRACTOR SHOULD LAY OUT HIS OWN WORK FROM STAKES SET BY THE GOVERNMENT BUT THAT THE CONTRACTOR SHOULD NOT PROCEED WITH THE WORK PRIOR TO THE ESTABLISHMENT OF GRADES (BY THE DISTRICT OF COLUMBIA); AND (4) PARAGRAPH 7, SECTION 1, OF THE SPECIFICATIONS THAT "IF THE WHOLE OR PORTION OF THIS WORK IS GOVERNMENT SHALL PROPERLY COVER OVER, SECURE, AND PROTECT SUCH OF THE WORK AND MATERIALS AS MAY BE LIABLE TO SUSTAIN INJURY FROM ANY CAUSE.'

WHILE THE COURTS HAVE ALLOWED RECOVERY IN CERTAIN CASES WHERE CONTRACTORS HAVE BEEN DAMAGED BY DELAYS DUE TO UNWARRANTED INTERFERENCES WITH THE WORK BY THE GOVERNMENT'S CONTRACTING OFFICERS, OR WHERE THERE HAS BEEN A BREACH OF EXPRESS CONTRACT OBLIGATIONS ON THE PART OF THE GOVERNMENT TO DO CERTAIN WORK OR TO PROVIDE CERTAIN FACILITIES WITHIN A STIPULATED TIME, OR WHERE THE DELAYS CAUSED BY THE GOVERNMENT ARE SOUNREASONABLE AS TO BE CLEARLY WITHOUT THE CONTEMPLATION OF THE CONTRACT, THIS DOES NOT APPEAR TO BE SUCH A CASE. RATHER, THE PRESENT CASE APPEARS TO COME WITHIN THE PRINCIPLES OF H. E. CROOK COMPANY V. UNITED STATES, 270 U.S. 4, WHERE MR. JUSTICE HOLMES SAID IN GIVING THE OPINION OF THE COURT:

THE GOVERNMENT DID FIX THE TIME VERY STRICTLY FOR THE CONTRACTOR. IT IS CONTEMPLATED THAT THE CONTRACTOR MAY BE UNKNOWN, AND HE MUST SATISFY THE GOVERNMENT OF HIS HAVING THE CAPITAL, EXPERIENCE, AND ABILITY TO DO THE WORK. MUCH CARE IS TAKEN THEREFORE TO KEEP HIM UP TO THE MARK. LIQUIDATED DAMAGES ARE FIXED FOR HIS DELAYS. BUT THE ONLY REFERENCE TO DELAYS ON THE GOVERNMENT SIDE IS IN THE AGREEMENT THAT IF CAUSED BY ITS ACTS THEY WILL BE REGARDED AS UNAVOIDABLE, WHICH THOUGH PROBABLY INSERTED PRIMARILY FOR THE CONTRACTOR'S BENEFIT AS A GROUND FOR EXTENSION OF TIME, IT IS NOT WITHOUT A BEARING ON WHAT THE CONTRACT BOUND THE GOVERNMENT TO DO. DELAYS BY THE BUILDING CONTRACTORS WERE UNAVOIDABLE FROM THE POINT OF VIEW OF BOTH PARTIES TO THE CONTRACT IN SUIT. THE PLAINTIFF AGREED TO ACCEPT IN FULL SATISFACTION FOR ALL WORK DONE UNDER THE CONTRACT THE CONTRACT PRICE, REDUCED BY DAMAGES DEDUCTED FOR HIS DELAYS AND INCREASED OR REDUCED BY THE PRICE OF CHANGES, AS FIXED BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS. NOTHING MORE IS ALLOWED FOR CHANGES, AS TO WHICH THE GOVERNMENT IS MASTER. IT WOULD BE STRANGE IF IT WERE BOUND FOR MORE IN RESPECT OF MATTERS PRESUMABLY BEYOND ITS CONTROL. THE CONTRACT PRICE, IT IS SAID IN ANOTHER CLAUSE,SHALL COVER ALL EXPENSES OF EVERY NATURE CONNECTED WITH THE WORK TO BE DONE. LIABILITY WAS EXCLUDED EXPRESSLY FOR UTILITIES THAT THE GOVERNMENT PROMISED TO SUPPLY. WE ARE OF OPINION THAT THE FAILURE TO EXCLUDE THE PRESENT CLAIM WAS DUE TO THE FACT THAT THE WHOLE FRAME OF THE CONTRACT WAS UNDERSTOOD TO SHUT IT OUT, ALTHOUGH IN SOME CASES THE GOVERNMENT'S LAWYERS HAVE BEEN MORE CAREFUL. WOOD V. UNITED STATES, 258 U.S. 120. THE PLAINTIFF'S TIME WAS EXTENDED AND IT WAS PAID THE FULL CONTRACT PRICE. IN OUR OPINION IT IS ENTITLED TO NOTHING MORE.

SEE ALSO, 11 COMP. GEN., 27; LANGE AND BERGSTROM CASES, 61 CT.CLS. 666, ID., 682; CONVERSE AND COMPANY CASE, 61 CT.CLS., 672; G. AND H. HEATING COMPANY CASE, 63 CT.CLS., 164, AND PARTICULARLY, THE CARROLL ELECTRIC CO. CASE, 68 CT.CLS., 500; 69 ID. 435. FURTHERMORE, EVEN IN CASES WHERE IT IS ESTABLISHED THAT DELAYS RESULTED FROM A BREACH BY THE GOVERNMENT OF SOME CONTRACTUAL OBLIGATION, EXPRESS OR IMPLIED, IT IS SETTLED THAT CLAIMS FOR ADDITIONAL COSTS INCURRED BY REASON OF SUCH DELAYS ARE NOT PAYABLE UNDER THE CONTRACT APPROPRIATION EXCEPT WHEN SUCH DELAYS ARE BECAUSE OF THE NEEDS OF THE GOVERNMENT AND ARE ESSENTIAL TO THE ACCOMPLISHMENT OF THE OBJECTS FOR WHICH THE APPROPRIATIONS ARE MADE AND PROXIMATELY CONTRIBUTE TO SUCH OBJECTS. 7 COMP. GEN. 645; A-28022, MAY 24, 1930. IT DOES NOT APPEAR IN THE PRESENT CASE THAT ANY ADDITIONAL COSTS RESULTING FROM THE DELAY BY THE DISTRICT OF COLUMBIA IN ESTABLISHING THE STREET GRADES, OVER WHICH THE ARCHITECT OF THE CAPITOL HAD NO CONTROL, PROXIMATELY CONTRIBUTED TO THE OBJECT OF THE CONTRACT APPROPRIATION. BUT, HOWEVER THAT MAY BE, IT MUST BE HELD THAT THE CONTRACT REASONABLY CONTEMPLATED POSSIBLE DELAYS BY THE GOVERNMENT WITHOUT THE PAYMENT OF ADDITIONAL COSTS ON ACCOUNT THEREOF, AS IN THE CROOK CASE, SUPRA, AND THAT THE DELAYS HERE INVOLVED WERE NOT SO UNREASONABLE AS TO CONSTITUTE A BREACH OF THE CONTRACT. IN THIS CONNECTION AND AS BEARING ON THE REASONABLENESS OF THE DELAYS IT MAY BE POINTED OUT THAT WHEREAS IT WAS ESTIMATED WHEN THE CONTRACT WAS MADE THAT ONLY APPROXIMATELY $42,000 WORTH OF WORK WOULD BE REQUIRED, THE WORK ACTUALLY REQUIRED, INCLUDING EXTRA WORK ORDERED UNDER THE CONTRACT, AMOUNTED TO $63,529.80, OR AN INCREASE OF APPROXIMATELY 50 PERCENT, AND THAT WHEREAS THE WORK WAS NOT BEGUN UNTIL ABOUT JUNE 10, 1931, AND IS REPORTED TO HAVE BEEN SUBSTANTIALLY COMPLETED ABOUT DECEMBER INCREASED FOR EXTRA WORK WAS 164 DAYS OR APPROXIMATELY FIVE AND A HALF MONTHS, INDICATING THAT THE WORK WAS NOT UNREASONABLY DELAYED BY THE GOVERNMENT AFTER IT HAD BEGUN.

ACCORDINGLY, THE CONCLUSIONS OF THE DECISION OF APRIL 21, 1932, CONCERNING THE MATTER ARE AFFIRMED AND THE SETTLEMENT DISALLOWING YOUR CLAIM FOR REIMBURSEMENT OF THE ALLEGED ADDITIONAL COSTS MUST BE AND IS SUSTAINED.