A-83175, APRIL 17, 1937, 16 COMP. GEN. 936

A-83175: Apr 17, 1937

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CONTRACTS - DAMAGES - LIQUIDATED - SET-OFF OF ABNORMALLY GOOD WEATHER DAYS IN POST CONTRACT PERIOD AGAINST UNFORESEEABLE EXCUSABLE DELAYS IN SPECIFIED CONTRACT PERIOD FINDINGS OF FACT OF A CONTRACTING OFFICER AS TO DELAYS ARE BINDING UPON ALL PARTIES CONCERNED WHERE SO STIPULATED IN THE CONTRACT. IT IS WITHIN THE PROVINCE OF THE GENERAL ACCOUNTING OFFICE. THE CONTRACTOR IS LIABLE AS A MATTER OF LAW FOR LIQUIDATED DAMAGES. THE CONTRACT WAS ON STANDARD FORM NO. 23. THE WORK WAS REQUIRED TO BE COMPLETED ON OR BEFORE NOVEMBER 15. LIQUIDATED DAMAGES WERE STIPULATED IN PARAGRAPH 3 OF THE SPECIFICATIONS AT THE RATE OF $20 PER DAY ON EACH OF THE TWO ITEMS FOR EACH AND EVERY CALENDAR DAY OF DELAY BEYOND THE TIME FIXED FOR COMPLETION.

A-83175, APRIL 17, 1937, 16 COMP. GEN. 936

CONTRACTS - DAMAGES - LIQUIDATED - SET-OFF OF ABNORMALLY GOOD WEATHER DAYS IN POST CONTRACT PERIOD AGAINST UNFORESEEABLE EXCUSABLE DELAYS IN SPECIFIED CONTRACT PERIOD FINDINGS OF FACT OF A CONTRACTING OFFICER AS TO DELAYS ARE BINDING UPON ALL PARTIES CONCERNED WHERE SO STIPULATED IN THE CONTRACT, IN THE ABSENCE OF APPEAL THEREFROM AS PROVIDED THEREIN, BUT IT IS WITHIN THE PROVINCE OF THE GENERAL ACCOUNTING OFFICE, OR THE COURTS, TO DETERMINE WHETHER UNDER THOSE FINDINGS, AND THE CONTRACT TERMS, THE CONTRACTOR IS LIABLE AS A MATTER OF LAW FOR LIQUIDATED DAMAGES, AND, IN DETERMINING THE AMOUNT OF SUCH DAMAGES CHARGEABLE TO A CONTRACTOR, DELAYS EXCUSABLE UNDER THE TERMS OF THE CONTRACT AS UNFORESEEABLE DURING THE SPECIFIED CONTRACT PERFORMANCE PERIOD MAY NOT BE REDUCED BY THE NUMBER OF ABNORMALLY GOOD WEATHER DAYS IN THE POST CONTRACT PERIOD, NOTWITHSTANDING THE CONTRACTING OFFICER'S FINDING OF FACT TO THE CONTRARY.

DECISION BY ACTING COMPTROLLER GENERAL ELLIOTT, APRIL 17, 1937:

THE LOUISIANA MATERIALS CO., INC., HAS REQUESTED A REVIEW OF SETTLEMENT NO. 0417240, DATED AUGUST 27, 1936, WHICH DISALLOWED $1,700 OF ITS CLAIM OF $2,380 FOR REMISSION OF LIQUIDATED DAMAGES ASSESSED FOR DELAY IN COMPLETING PERFORMANCE OF CONTRACT W-1092-ENG-4458, DATED JANUARY 14, 1935, FOR CONSTRUCTION OF APPROXIMATELY 1,000,000 CUBIC YARDS OF EARTHWORK IN THE WHITE RIVER LEVEE DISTRICT.

THE CONTRACT WAS ON STANDARD FORM NO. 23, STANDARD GOVERNMENT FORM OF CONSTRUCTION CONTRACT, APPROVED BY THE PRESIDENT NOVEMBER 19, 1926, AND PROVIDED THAT THE CONTRACTOR SHOULD FURNISH ALL LABOR AND MATERIAL AND PERFORM ALL WORK REQUIRED FOR THE CONSTRUCTION OF EARTHWORK IN THE WHITE RIVER LEVEE DISTRICT, REFERRED TO IN THE SPECIFICATIONS AS ITEMS NOS. R- 334 AND R-335, INVOLVING, RESPECTIVELY, 475,000 AND 525,000 CUBIC YARDS, MORE OR LESS, OF EARTHWORK, IN STRICT ACCORDANCE WITH THE SPECIFICATIONS, SCHEDULES AND DRAWINGS WHICH FORMED A PART OF THE CONTRACT, FOR THE CONSIDERATION OF $0.146 PER CUBIC YARD. THE WORK WAS REQUIRED TO BE COMPLETED ON OR BEFORE NOVEMBER 15, 1935. LIQUIDATED DAMAGES WERE STIPULATED IN PARAGRAPH 3 OF THE SPECIFICATIONS AT THE RATE OF $20 PER DAY ON EACH OF THE TWO ITEMS FOR EACH AND EVERY CALENDAR DAY OF DELAY BEYOND THE TIME FIXED FOR COMPLETION, WITH THE FURTHER STIPULATION, IN ARTICLE 9 OF THE CONTRACT, THAT:

* * * 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.

WORK ON ITEM R-334 WAS COMPLETED OCTOBER 15, 1935, OR WITHIN THE CONTRACT PERIOD, WHILE WORK ON ITEM R-335 WAS NOT COMPLETED UNTIL MARCH 13, 1936, OR AFTER A DELAY OF 119 CALENDAR DAYS, FOR WHICH DELAY THERE WERE ASSESSED AND COLLECTED LIQUIDATED DAMAGES AT THE STIPULATED CONTRACT RATE OF $20 PER DAY, AMOUNTING TO $2,380.

THE CONTRACTING OFFICER FOUND AND REPORTED AS A FACT, WITH RESPECT TO THE DELAY INVOLVED IN COMPLETION OF THE CONTRACT, THAT:

A. THE TABLE UNDER PARAGRAPH B OF EXHIBIT IV SHOWS THAT THE CONTRACTOR LOST 196.0 DAYS FROM THE BEGINNING OF THE CONTRACT PERIOD (JAN. 22, 1935) TO THE DATE SET FOR COMPLETION (NOV. 15, 1935) ON ACCOUNT OF ADVERSE WEATHER AND RIVER CONDITIONS. THIS TABLE FURTHER INDICATES THAT THE CONTRACTOR MIGHT REASONABLY HAVE EXPECTED TO LOSE 142.6 DAYS (BASED ON A TEN-YEAR AVERAGE) DURING THE SAME PERIOD; OR, IN OTHER WORDS, THE DIFFERENCE BETWEEN ACTUAL CONDITIONS AND NORMAL EXPECTANCY DURING THE NOMINAL CONTRACT PERIOD WAS 53.4 DAYS.

B. HOWEVER, THE PHYSICAL CONDITIONS AFTER THE DATE FIXED FOR COMPLETION WERE BETTER THAN NORMAL, AND IN CONSIDERING THE ENTIRE PERIOD FROM ITS BEGINNING (JAN. 22, 1935) TO THE DATE OF ACTUAL COMPLETION (MAR. 13, 1936), THE NUMBER OF ABNORMAL DAYS IN PARAGRAPH A, ABOVE, WERE REDUCED,AS IS SHOWN IN TABLE UNDER PARAGRAPH B OF EXHIBIT IV. THE CONTRACTOR ACTUALLY LOST 252.1 DAYS, WHILE A FINDING OF FACT, BASED ON A TEN-YEAR AVERAGE, INDICATES THAT HE MIGHT REASONABLY HAVE EXPECTED TO LOSE 218.1 DAYS; OR, IN OTHER WORDS, THE DIFFERENCE BETWEEN ACTUAL CONDITIONS AND NORMAL EXPECTANCY DURING THE LIFE OF THE CONTRACT WAS ONLY 34.0 DAYS.

IN EFFECTING SETTLEMENT OF THE CONTRACTOR'S CLAIM FOR REMISSION OF LIQUIDATED DAMAGES WITHHELD UNDER THE CONTRACT, THERE WAS REMITTED IN THE SETTLEMENT OF AUGUST 27, 1936, THE AMOUNT OF $680 PURSUANT TO THE ABOVE- QUOTED FINDING OF THE CONTRACTING OFFICER TO THE EFFECT THAT THE CONTRACTOR WAS DELAYED DURING THE STIPULATED CONTRACT PERFORMANCE PERIOD 196 DAYS BY REASON OF ADVERSE WEATHER AND RIVER CONDITIONS, 142.6 DAYS OF WHICH WERE FORESEEABLE, THUS RESULTING IN AN EXCUSABLE DELAY OF 53.4 DAYS OVER THE SPECIFIED CONTRACT PERIOD, BUT WHICH EXCUSABLE DELAY WAS REDUCED BY 19.4 DAYS BECAUSE OF BETTER-THAN-NORMAL WEATHER CONDITIONS ENJOYED DURING THE POST CONTRACT PERFORMANCE PERIOD. THE CONTRACTOR CONTENDS, IN SUPPORT OF ITS REQUEST FOR REVIEW OF THE ABOVE SETTLEMENT THAT ALL DELAYS INVOLVED UNDER THE CONTRACT WERE BEYOND THE "CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR" AND IT URGES IN SUPPORT THEREOF:

WE WERE NOTIFIED TO PROCEED WITH THIS WORK IN A LETTER RECEIVED FROM THE DISTRICT ENGINEER, DATED JANUARY 18TH, 1935, WHICH WAS RECEIVED IN THIS OFFICE ON JANUARY 21ST, 1935. ACCORDING TO OUR CONTRACT, WE WERE TO BEGIN WORK WITHIN 20 DAYS FROM THAT DATE, THEREFORE, OUR ACTUAL WORKING TIME ON THIS JOB DATES FROM FEBRUARY 10TH, 1935. DUE TO ADVERSE WEATHER AND HIGH WATER CONDITIONS, IT WAS IMPOSSIBLE FOR US, OR ANYONE ELSE, TO HAVE BEGUN WORK BEFORE AUGUST 5TH, 1935 (AND THEN WE COULD ONLY WORK 50 PERCENT NORMALLY DUE TO CONDITIONS CREATED BY THE EXCESSIVE LENGTH OF TIME WHICH WATER REMAINED OVER THE BORROW PITS DESIGNATED BY THE GOVERNMENT). BEGINNING THE 5TH OF AUGUST AND ENDING WITH NOVEMBER 15TH (THE CALENDAR DATE SPECIFIED IN THE CONTRACT THAT WORK HAD TO BE COMPLETED), YOU WILL FIND THAT WE ACTUALLY HAD 132 CALENDAR DAYS IN WHICH TO COMPLETE THIS WORK. HOWEVER, OUR CONTENTION IS THAT FROM FEBRUARY 10TH TO NOVEMBER 15TH THERE ARE 278 CALENDAR DAYS, AND WHEN THE DISTRICT ENGINEER AT MEMPHIS, OR ANYWHERE ELSE IN THE SOUTHLAND, STATES THAT WE SHOULD HAVE REASONABLY EXPECTED 218.1 DAYS OF THIS TIME TO BE LOST ACCOUNT OF ADVERSE CONDITIONS, LEAVING ONLY A NET OF 60 DAYS IN WHICH TO PUT UP 1,000,000 YARDS OF DIRT, WE HAVE TO BE SHOWN. NEVER, IN ALL OUR EXPERIENCE, HAVE WE ENCOUNTERED SUCH A HIGH RATIO OF LOST TIME AS 218 DAYS OUT OF 278. OF COURSE, IF THE DISTRICT ENGINEER MEANT THAT WE SHOULD HAVE REASONABLY EXPECTED 218.1 DAYS LOST BETWEEN FEBRUARY 10TH, 1935, AND MARCH 15TH, 1936, HE WOULD BE SOMEWHERE NEAR CORRECT, BUT WE CERTAINLY DID NOT EXPECT IN THE MONTH OF DECEMBER 1934, WHEN THIS WORK WAS BID IN, TO BE DRAWN INTO THE MONTHS OF DECEMBER, JANUARY, FEBRUARY, AND MARCH, 1935 AND 1936, DUE TO HIGH WATER REMAINING OVER THE DESIGNATED BORROW PITS 75 TO 90 DAYS LONGER THAN THEY HAVE HAD FOR THE PAST 50 YEARS.

THE LAW REGARDS THE SANCTITY OF CONTRACTS. IT REQUIRES THE PARTIES THERETO TO DO WHAT THEY HAVE AGREED TO DO. IF UNEXPECTED IMPEDIMENTS BE IN THE WAY, AND A LOSS MUST ENSUE, IT LEAVES THE LOSS WHERE THE CONTRACT PLACES IT. IT DOES NOT ALLOW A CONTRACT FAIRLY MADE TO BE ANNULLED, AND IT DOES NOT PERMIT TO BE INTERPOLATED WHAT THE PARTIES THEMSELVES HAVE NOT STIPULATED. DERMOTT V. JONES, 2 WALL. 1, 8.

UNDER ARTICLE 9, SUPRA, THE QUESTION WHETHER A CONTRACTOR IS CHARGEABLE WITH LIQUIDATED DAMAGES DEPENDS UPON THE TERMS OF THE CONTRACT AND THE FACTS AS FOUND BY THE CONTRACTING OFFICER, IN WHOM IS VESTED EXCLUSIVE AUTHORITY TO ASCERTAIN THE FACTS, SUBJECT ONLY TO APPEAL WITHIN 30 DAYS BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED. INSOFAR, THEREFORE, AS THE FOREGOING FINDING OF THE CONTRACTING OFFICER RELATES TO THE ESTABLISHMENT OF THE FACTS AND THE EXTENT OF THE DELAY THEREUNDER, IT IS BINDING UPON ALL PARTIES CONCERNED. PENN BRIDGE COMPANY V. UNITED STATES, 59 CT.CLS. 892, AND AUTHORITIES THEREIN CITED. HOWEVER, UPON THE ESTABLISHMENT OF SUCH FACTS AS CONTEMPLATED BY ARTICLE 9, SUPRA, IT IS STRICTLY WITHIN THE PROVINCE OF THIS OFFICE, OR THE COURTS, TO DETERMINE THE QUESTION OF LAW WHETHER, UNDER THE FACTS THUS ESTABLISHED, AND THE TERMS OF THE CONTRACT, THE CONTRACTOR IS TO BE HELD LIABLE FOR LIQUIDATED DAMAGES. SEE DAVIS ET AL., TRUSTEES, V. UNITED STATES, 82 CT.CLS. 334, 347; 6 COMP. GEN. 650; 7 ID. 505, 534; 8 ID. 13; 9 ID. 164; 10 ID. 252, 257; 13 ID. 325; AND 14 ID. 431.

PARAGRAPH A OF THE FINDING OF FACT, AS MADE BY THE CONTRACTING OFFICER, ESTABLISHES THAT DURING THE STIPULATED CONTRACT PERFORMANCE PERIOD THE CONTRACTOR LOST 196 DAYS BY REASON OF ADVERSE WEATHER AND RIVER CONDITIONS; THAT SAID CONTRACTOR REASONABLY MIGHT HAVE EXPECTED TO LOSE 142.6 DAYS, BASED UPON A 10-YEAR AVERAGE DURING THE SAME PERIOD; THAT THE EXCUSABLE DELAY, REPRESENTING THE EXCESS OF DELAY ENCOUNTERED OVER THAT WHICH WAS FORESEEABLE DURING THE STIPULATED CONTRACT PERFORMANCE PERIOD, AMOUNTED TO 53.4 DAYS. UNDER THE DECISION IN PENN BRIDGE COMPANY V. UNITED STATES, SUPRA, THIS FINDING OF FACT AS TO THE CAUSE AND THE EXTENT OF THE DELAY, AS MADE BY THE CONTRACTING OFFICER, IS CONCLUSIVE OF THE RIGHTS OF THE PARTIES.

THE FURTHER FINDING IN PARAGRAPH B, SUPRA--- UNDER WHICH NO EXCUSABLE DELAY IS FOUND--- PROPOSING TO APPLY, AS A PARTIAL OFFSET AGAINST THE PERIOD OF DELAY FOUND TO BE EXCUSABLE UNDER THE STIPULATED CONTRACT PERFORMANCE PERIOD, A CREDIT OF 19.4 DAYS, ON ACCOUNT OF HAVING ENCOUNTERED BETTER-THAN-NORMAL WEATHER CONDITIONS OVER THE POST CONTRACT PERIOD, IS CONCLUSIVE UNDER THE CONTRACT AS A FINDING OF FACT WITH RESPECT TO THE EXTENT OF EXCUSABLE DELAY, BUT INSOFAR AS IT PERTAINS TO THE PROPOSED OFFSET IT MAY NOT BE ACCEPTED. IN OTHER WORDS, THE OFFSET AS PROPOSED INVOLVES NOT A QUESTION OF FACT, BUT ONE OF LAW--- THE PROPER CONSTRUCTION OF THE CONTRACT--- A QUESTION THE DECISION OF WHICH WAS OUTSIDE THE JURISDICTION OF THE CONTRACTING OFFICER OR HEAD OF THE DEPARTMENT, IT BEING THE PROVINCE OF THIS OFFICE OR THE COURTS TO INTERPRET THE CONTRACT TERMS.

THE PROPRIETY OF MAKING THE OFFSET--- AS PROPOSED IN THE CONTRACTING OFFICER'S FINDING OF FACT--- IS PROPERLY FOR DETERMINATION, UNDER THE TERMS OF THE CONTRACT, AS A MATTER OF LAW. ARTICLE 9, SUPRA, CONTEMPLATES THAT UNFORESEEABLE DELAY SHALL BE EXCUSED UNDER CERTAIN SPECIFIED CONDITIONS. IN THIS CONNECTION, IT DOES NOT FOLLOW THAT A MERE SHOWING OF INCLEMENT WEATHER OR HIGH WATER, WHEN SUCH CONDITIONS ARE TO BE EXPECTED, IS SUFFICIENT TO ESTABLISH UNFORESEEABLE DELAY. IT IS PRESUMED THAT A REASONABLY PRUDENT CONTRACTOR IN AGREEING TO COMMENCE WORK WITHIN A CERTAIN SPECIFIED PERIOD AND TO COMPLETE IT WITHIN A CERTAIN STIPULATED PERIOD OF TIME TAKES INTO CONSIDERATION IN THE COMPUTATION OF HIS BID THE WEATHER CONDITIONS WHICH ORDINARILY PREVAIL DURING SUCH SEASON OF THE YEAR AT THE SITE OF THE WORK. 11 COMP. GEN. 442; 14 ID. 431. WHILE RESORT REASONABLY MAY BE HAD TO SUCH A PRESUMPTION, FOR THE PURPOSE OF ASCERTAINING EXCUSABLE DELAY DURING THE SPECIFIED CONTRACT PERIOD, THERE EXISTS NO BASIS EITHER IN LAW OR REASON FOR INDULGING IN SUCH A PRESUMPTION FOR ANY PERIOD BEYOND THE SPECIFIED CONTRACT COMPLETION DATE, THE ADEQUACY OF WHICH-- IN POINT OF TIME REQUIRED FOR PERFORMING THE CONTRACT--- HAS ALREADY BEEN MADE REASONABLY CERTAIN BY RESORT IN THE FIRST INSTANCE TO SUCH PRESUMPTION. THE POST CONTRACT PERIOD NECESSARILY INVOLVED DIFFERENT SEASONS OF THE YEAR WITH ENTIRELY DIFFERENT WEATHER CONDITIONS. FURTHERMORE, THE ADOPTION OF THE CONSTRUCTION OF THE CONTRACT AS PROPOSED BY THE CONTRACTING OFFICER WOULD IN THIS CASE HAVE THE EFFECT OF PARTIALLY NULLIFYING THE CONTRACT PROVISION FOR EXCUSING UNFORESEEABLE DELAY, AND IT IS READILY CONCEIVABLE THAT INSTANCES MIGHT ARISE IN WHICH ALL UNFORESEEABLE DELAY OCCURRING DURING THE SPECIFIED CONTRACT PERIOD OF PERFORMANCE MIGHT BE OFFSET BY APPLYING UNUSUALLY GOOD WEATHER CREDIT FROM THE POST CONTRACT PERIOD, A PERIOD NOT WITHIN THE CONTEMPLATION OF THE PARTIES AT THE TIME THE CONTRACT WAS ENTERED INTO.

IN VIEW OF THE EXPRESS TERMS OF THE CONTRACT AND THE OBVIOUS INTENT OF THE PARTIES THERETO, THERE EXISTS NO LEGAL BASIS FOR THE INTERPRETATION OF THE CONTRACT AS SOUGHT TO BE PLACED THEREON IN THE FINDING OF FACT BY THE CONTRACTING OFFICER. THE SETTLEMENT OF AUGUST 27, 1936, WHICH WAS BASED THEREON AUTHORIZED THE REMISSION OF DAMAGES FOR ONLY 34 OF THE 53 DAYS OF DELAY PROPERLY EXCUSABLE UNDER THE TERMS OF THE CONTRACT. ACCORDINGLY, A SUPPLEMENTAL SETTLEMENT WILL ISSUE IN DUE COURSE, ALLOWING THE CONTRACTOR THE BALANCE OF EXCUSABLE DELAY INVOLVED, AMOUNTING TO 19 DAYS AT $20 PER DAY, $380.