A-89211, OCTOBER 28, 1937, 17 COMP. GEN. 366

A-89211: Oct 28, 1937

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THERE IS NO AUTHORITY FOR PAYMENT OF ANY AMOUNT IN EXCESS OF THE EXPRESSLY STIPULATED CONTRACT PRICE TO COVER INCREASED CONSTRUCTION COSTS DUE TO THE OPERATION OF MINIMUM WAGE SCALES OF CODES SET UP BY THE PUBLIC WORKS ADMINISTRATION AND KNOWN WHEN THE CONTRACT WAS ENTERED INTO. WERE FINANCED BY THE SALE OF BONDS TO INDIVIDUALS AND TO THE UNITED STATES PUBLIC WORKS ADMINISTRATION. IT IS STATED BY THE CLAIMANT THAT SHORTLY AFTER BEGINNING CONSTRUCTION OF THE PROJECT IT FOUND THAT THE COSTS NECESSARY TO COMPLETE THE WORK WOULD BE LARGELY IN EXCESS OF THE AMOUNT ESTIMATED WHEN THE AGREEMENT THEREFOR WAS ENTERED INTO WITH THE UNITED STATES. THE CONTRACTOR STATES THAT ORIGINALLY THE COMMON LABOR WAS PAID $0.25 PER HOUR FOR 10 HOURS PER DAY AND 6 DAYS A WEEK.

A-89211, OCTOBER 28, 1937, 17 COMP. GEN. 366

CONTRACTS - INCREASED COSTS - COMPLIANCE WITH FEDERAL WAGE STIPULATIONS FEDERAL AID FOR MUNICIPAL PROJECT WHERE A NAVY DEPARTMENT CONTRACT WITH A CITY SEWERAGE COMMISSION PROVIDED FOR PAYMENT OF A SPECIFIED SUM BY THE UNITED STATES AS ITS SHARE OF THE COST OF CONSTRUCTION OF A SEWERAGE SYSTEM TO BE AVAILABLE FOR NAVAL ACTIVITY SEWAGE DISPOSAL, THERE IS NO AUTHORITY FOR PAYMENT OF ANY AMOUNT IN EXCESS OF THE EXPRESSLY STIPULATED CONTRACT PRICE TO COVER INCREASED CONSTRUCTION COSTS DUE TO THE OPERATION OF MINIMUM WAGE SCALES OF CODES SET UP BY THE PUBLIC WORKS ADMINISTRATION AND KNOWN WHEN THE CONTRACT WAS ENTERED INTO, AND A CLAIM FOR SUCH EXCESS AMOUNT DOES NOT CONTAIN SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO AUTHORIZE OR JUSTIFY THE GENERAL ACCOUNTING OFFICE IN REPORTING THE SAME TO THE CONGRESS UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, PARTICULARLY WHERE A PUBLIC WORKS ADMINISTRATION CONTRACT BETWEEN THE SAID COMMISSION AND THE UNITED STATES FOR THE FINANCING OF A SEWERAGE AND DRAINAGE SYSTEM FOR THE CITY ALSO PROVIDES FOR A PERCENTAGE GRANT OR GIFT BASED ON THE COST OF LABOR AND MATERIALS EMPLOYED UPON THE PROJECT.

DECISION BY ACTING COMPTROLLER GENERAL ELLIOTT, OCTOBER 28, 1937:

THERE HAS BEEN PRESENTED TO THIS OFFICE FOR CONSIDERATION THE CLAIM OF THE ANNAPOLIS METROPOLITAN SEWERAGE COMMISSION, ANNAPOLIS, MD., FOR AN ADDITIONAL PAYMENT IN THE SUM OF $16,173.74, REPRESENTING A BALANCE ALLEGED TO BE DUE AS THE GOVERNMENT'S SHARE OF THE INCREASED COST OF CONSTRUCTION OF A SEWERAGE SYSTEM AT ANNAPOLIS, MD., UNDER CONTRACT NO. NOD-539, DATED MAY 3, 1934, CAUSED BY THE INCREASED CONSTRUCTION COSTS, IN EXCESS OF THE ESTIMATED AMOUNT THEREOF, RESULTING FROM THE OPERATION OF THE MINIMUM WAGE SCALES OF THE LABORERS AND OF THE MANUFACTURERS' CODES SET UP BY THE GOVERNMENT'S PUBLIC WORKS ADMINISTRATION, PURSUANT TO THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 195, ET SEQ.

UNDER THE PROVISIONS OF SAID CONTRACT OF MAY 3, 1934, THE METROPOLITAN SEWERAGE COMMISSION AGREED TO PROVIDE AND INSTALL WITHIN 3 YEARS, A SEWERAGE SYSTEM--- INCLUDING THE SEWERS, PUMPING STATIONS, MEASURING STATIONS, TREATMENT PLAN AND APPURTENANCES THERETO, OUTSIDE THE UNITED STATES NAVAL ACADEMY GROUNDS, AND THE MEASURING STATIONS WITHIN THE NAVAL ACADEMY GROUNDS, NECESSARY TO MEASURE, CONDUCT, TREAT, AND DISPOSE OF ALL THE SANITARY SEWAGE OF THE NAVAL ACADEMY AND TO MEASURE THE TOTAL SEWAGE FROM ALL SOURCES ENTERING THE SEWERAGE SYSTEM SO PROVIDED AND INSTALLED. AS CONSIDERATION FOR THIS WORK THE CONTRACT PROVIDED THAT THE UNITED STATES PAY TO SAID COMMISSION THE TOTAL SUM OF $125,000 AS ITS FULL SHARE OF THE CONSTRUCTION, ENGINEERING, AND THE RELATED OR CONTINGENT EXPENSES OF THE COMMISSION FOR THE COMPLETE INSTALLATION OF SAID SEWERAGE SYSTEM. THE UNITED STATES AGREED, ALSO, TO PROVIDE AND INSTALL AT ITS OWN EXPENSE, WITHIN 3 YEARS, THE SEWERAGE SYSTEM WITHIN THE NAVAL ACADEMY GROUNDS NECESSARY TO COLLECT AND CONDUCT TO THE CONNECTIONS WITH THE COMMISSION'S SEWERAGE SYSTEM ALL SANITARY SEWAGE ORIGINATING WITHIN THE ACADEMY GROUNDS OR ON THE STATION SHIPS WHICH MIGHT BE PERMANENTLY MOORED AT THE ACADEMY.

IT APPEARS THAT THE CONSTRUCTION OF THE SEWERAGE TREATMENT PLANT, MAINS, ETC., AND THE ADMINISTRATIVE COSTS INCIDENT THERETO, WERE FINANCED BY THE SALE OF BONDS TO INDIVIDUALS AND TO THE UNITED STATES PUBLIC WORKS ADMINISTRATION; THE CREDIT OF THE CITY OF ANNAPOLIS, AND THE COUNTY OF ANNE ARUNDEL, MD., BEING PLEDGED FOR THE REDEMPTION OF THE BONDS AT MATURITY.

IT IS STATED BY THE CLAIMANT THAT SHORTLY AFTER BEGINNING CONSTRUCTION OF THE PROJECT IT FOUND THAT THE COSTS NECESSARY TO COMPLETE THE WORK WOULD BE LARGELY IN EXCESS OF THE AMOUNT ESTIMATED WHEN THE AGREEMENT THEREFOR WAS ENTERED INTO WITH THE UNITED STATES, SUCH INCREASED COSTS BEING CAUSED BY OPERATION OF THE EMPLOYEES' MINIMUM WAGE SCALES AND THE MANUFACTURERS' CODES SET UP BY THE UNITED STATES PUBLIC WORKS ADMINISTRATION REGULATIONS. AS AN ILLUSTRATION OF THE INCREASED COSTS OF CONSTRUCTION OF THE PROJECT, THE CONTRACTOR STATES THAT ORIGINALLY THE COMMON LABOR WAS PAID $0.25 PER HOUR FOR 10 HOURS PER DAY AND 6 DAYS A WEEK, WHEREAS, THE REGULATIONS OF THE PUBLIC WORKS ADMINISTRATION REQUIRED A MINIMUM WAGE RATE FOR COMMON LABOR OF $0.45 PER HOUR, AND ONLY PERMITTED A 30-HOUR WORKING WEEK FOR EACH LABORER.

THE $16,173.74 CLAIM WAS SUBMITTED TO THE NAVY DEPARTMENT FOR CONSIDERATION AND THEN REFERRED TO THE JUDGE ADVOCATE GENERAL OF THE NAVY WHOSE DECISION THEREON WAS RENDERED ON OCTOBER 27, 1936, AS FOLLOWS:

1. WITH REFERENCE (A) THE CHIEF OF THE BUREAU OF YARDS AND DOCKS TRANSMITTED CORRESPONDENCE AND DATA RELATING TO A REQUEST OF THE ANNAPOLIS METROPOLITAN SEWERAGE COMMISSION FOR AID IN OBTAINING FUNDS FROM THE NAVY DEPARTMENT IN ADDITION TO THE $125,000.00 WHICH THE NAVY DEPARTMENT AGREED TO PAY TO THE SAID COMMISSION UNDER CONTRACT NOD-539 DATED MAY 3, 1934, AS THE NAVY'S FULL SHARE OF THE COST OF INSTALLING A SEWERAGE SYSTEM INCLUDING THE SEWERS, PUMPING STATIONS, MEASURING STATIONS, TREATMENT PLANT AND APPURTENANCES THERETO OUTSIDE THE NAVAL ACADEMY GROUNDS AND THE MEASURING STATIONS WITHIN THE NAVAL ACADEMY GROUNDS NECESSARY TO MEASURE, CONDUCT, TREAT, AND DISPOSE OF ALL OF THE SANITARY SEWAGE OF THE NAVAL ACADEMY AND TO MEASURE THE TOTAL SEWAGE FROM ALL SOURCES ENTERING THE SEWERAGE SYSTEM TO BE PROVIDED AND INSTALLED BY THE ANNAPOLIS METROPOLITAN SEWERAGE COMMISSION.

2. IT APPEARS THAT THE CONTRACT PRICE OF $125,000.00 WAS AGREED TO AS A RESULT OF A COMPROMISE BETWEEN THE NAVY DEPARTMENT'S ESTIMATE OF $105,000.00 AND THE COMMISSION'S ESTIMATE OF $140,000.00, THE COMPROMISE FIGURE BEING CONSIDERED A LIBERAL ALLOWANCE FOR THE WORK.

3. THEREAFTER THE GOVERNMENT AND THE ANNAPOLIS METROPOLITAN SEWERAGE COMMISSION ON MAY 3, 1934, ENTERED INTO A WRITTEN AGREEMENT, NOD-539. EXAMINATION OF THE AGREEMENT DISCLOSES THAT NO PROVISION IS MADE FOR ANY CHANGE IN THE AMOUNT OF COMPENSATION DUE TO INCREASED OR DECREASED COST. AND IT IS THE ACCEPTED RULE THAT WHERE A CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION, SUCH STIPULATION IS CONCLUSIVE UPON THE PARTIES, AND MEASURES THE AMOUNT OF RECOVERY FOR PERFORMANCE. FURTHERMORE A CONTRACTOR IS BOUND BY THE AGREEMENT TO WHICH HE HAS ASSENTED AND, IN THE ABSENCE OF EVIDENCE SHOWING THAT HIS ASSENT WAS INFLUENCED BY FRAUD, VIOLENCE, UNDUE INFLUENCE, OR THE LIKE, MAY NOT BE PERMITTED TO SAY THAT HE DID NOT INTEND TO AGREE TO ITS TERMS.

4. ASIDE FROM THE GENERAL RULE THAT OFFICERS ARE NOT AUTHORIZED TO MODIFY THE TERMS OF A CONTRACT BY SUPPLEMENTAL AGREEMENT IF SUCH MODIFICATION IS PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES, IT IS ELEMENTARY THAT A WRITTEN AGREEMENT THAT WOULD PROVIDE FOR THE PAYMENT OF ADDITIONAL FUNDS WOULD BE WITHOUT CONSIDERATION, A NECESSARY ELEMENT OF A CONTRACT. MOREOVER, NO PUBLIC FUNDS ARE AVAILABLE UNDER THE COGNIZANCE OF THE NAVY DEPARTMENT FROM WHICH ANY INCREASE IN THE CONTRACT PRICE COULD BE PAID.

5. IT IS INTIMATED THAT THERE WAS AN UNDERSTANDING TO THE EFFECT THAT IF IT COULD BE CONCLUSIVELY SHOWN THAT THE COST OF THE NAVY'S SHARE OF THE WORK WOULD IN FACT EXCEED $125,000.00 THEN AN APPLICATION COULD BE MADE FOR A FURTHER ALLOTMENT TO ABSORB THE EXCESS COST. IT CANNOT BE PERCEIVED HOW AND BY WHAT PRINCIPLE OF LAW SUCH AN UNDERSTANDING, ASIDE FROM THE EXPRESSED TERMS OF THE CONTRACT, CAN BE GIVEN ANY BINDING EFFECT BY THE NAVY DEPARTMENT.

6. IN VIEW OF THE FOREGOING THIS OFFICE IS OF THE OPINION THAT THERE IS NO LAWFUL BASIS FOR RELIEF IN THIS CASE. IF THE ANNAPOLIS METROPOLITAN SEWERAGE COMMISSION FEELS THAT IT HAS A MERITORIOUS CLAIM IT MAY FILE SUCH CLAIM, SETTING FORTH FULLY ALL CIRCUMSTANCES, IN THE GENERAL ACCOUNTING OFFICE UNDER THE PROVISIONS OF THE ACT OF APRIL 10, 1928 (45 STAT. 413; 31 U.S.C., SEC. 236), WHICH PROVIDES:

"WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM OR DEMAND IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS, HE SHALL SUBMIT THE SAME TO THE CONGRESS BY A SPECIAL REPORT CONTAINING THE MATERIAL FACTS AND HIS RECOMMENDATION THEREON.'

IT IS A WELL RECOGNIZED RULE OF LAW THAT WHERE THE CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION, SUCH STIPULATION IS CONCLUSIVE ON THE PARTIES AND MEASURES THE AMOUNT OF RECOVERY FOR PERFORMANCE. 13 C.J. 584; BRAWLEY V. UNITED STATES, 96 U.S. 168; INTERNATIONAL CONTRACTING CO. V. LAMONT, 155 U.S. 310; AND SIMPSON V. UNITED STATES, 172 U.S. 379. THE CONTRACT IN THIS CASE LIMITED THE AMOUNT TO BE PAID TO THE CLAIMANT AT $125,000, AND SUCH SUM HAS BEEN PAID.

THE REQUIREMENT THAT THE CONTRACTOR IN PERFORMANCE OF THE WORK SHOULD COMPLY WITH THE CODES OF FAIR COMPETITION ISSUED UNDER AUTHORITY OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 195, DOES NOT AUTHORIZE PAYMENT OF AN AMOUNT IN EXCESS OF THE CONTRACT PRICE. 14 COMP. GEN. 803. THIS REQUIREMENT WAS KNOWN WHEN THE CONTRACT OF MAY 3, 1934, WAS ENTERED INTO.

IT APPEARING THAT THE CLAIMANT HAS RECEIVED THE FULL AMOUNT DUE UNDER THE CONTRACT THERE IS NO LEGAL AUTHORITY FOR ALLOWANCE OF ANY PART OF ITS $16,173.74 CLAIM.

WITH REFERENCE TO THE SUGGESTION THAT THIS CLAIM BE REPORTED TO THE CONGRESS UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, I DO NOT FIND THAT SAID CLAIM CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS IS NECESSARY TO AUTHORIZE SUCH ACTION.

IT IS NOT TO BE OVERLOOKED IN THIS CONNECTION THAT PUBLIC WORKS ADMINISTRATION CONTRACT NO. PW-182.5 ENTERED INTO MARCH 13, 1934,BETWEEN THE ANNAPOLIS METROPOLITAN SEWERAGE COMMISSION AND THE UNITED STATES FOR THE FINANCING OF THE PROJECT OF A SEWERAGE AND DRAINAGE SYSTEM AND TREATMENT PLANT FOR THE CITY OF ANNAPOLIS CONTAINED A STIPULATION FOR A GRANT OR GIFT NOT TO EXCEED 30 PERCENTUM OF THE LABOR AND MATERIALS EMPLOYED UPON THE PROJECT AS AUTHORIZED BY SECTION 203 OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 202.