A-91499, FEBRUARY 2, 1938, 17 COMP. GEN. 621

A-91499: Feb 2, 1938

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THERE IS NO PROPER BASIS FOR ADJUSTMENT OF THE CONTRACT PRICE. PAYMENT IN EXCESS OF THE CONTRACT PRICE IS UNAUTHORIZED. 1938: THERE WAS RECEIVED YOUR LETTER OF AUGUST 4. SAID ITEM BEING BASED ON AN INCREASE IN THE WAGE-SCALE RATES OF CERTAIN MINE EMPLOYEES AT THE TIME THE COAL WAS SHIPPED OVER THE WAGE-SCALE RATES IN EFFECT AT THE TIME THE BID THEREFOR WAS OPENED ON MARCH 24. THE CONTRACT PRICE SPECIFIED HEREIN FOR THE COAL IS BASED UPON THE WAGE SCALE IN EFFECT WITH MINE EMPLOYEES ON THE DATE OF OPENING OF BIDS. APPROVED GENERALLY FOR THE MINING DISTRICT IN WHICH THE MINE HEREIN NAMED IS LOCATED. ACCORDING TO WHETHER THE WAGE RATE IS INCREASED OR DECREASED. BY AN AMOUNT WHICH IS THE PRODUCT OF THE F.O.B.

A-91499, FEBRUARY 2, 1938, 17 COMP. GEN. 621

CONTRACTS - INCREASED COSTS - WAGES - COAL CONTRACTS - BIDDER'S DESIGNATION OF SEVERAL CLASSES OF EMPLOYEES INSTEAD OF PREDOMINANT OCCUPATIONAL CLASS WHERE COAL PURCHASE SPECIFICATIONS AND CONTRACT PROVIDED FOR A PERCENTAGE CONTRACT PRICE ADJUSTMENT IN CASE OF WAGE CHANGES AFTER THE OPENING OF BIDS, BASED ON THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR RECEIVING THE SAME WAGE RATE SPECIFIED BY THE CONTRACTOR, AND CONTRACTOR'S BID NEVERTHELESS SPECIFIED THREE CLASSES OF EMPLOYEES RECEIVING DIFFERENT WAGE RATES, THERE IS NO PROPER BASIS FOR ADJUSTMENT OF THE CONTRACT PRICE, NOTWITHSTANDING WAGE RATE INCREASES IN THE THREE CLASSES SPECIFIED BY THE CONTRACTOR, AND PAYMENT IN EXCESS OF THE CONTRACT PRICE IS UNAUTHORIZED.

ACTING COMPTROLLER GENERAL ELLIOTT TO CAPTAIN ROY J. CAPERTON, UNITED STATES ARMY, FEBRUARY 2, 1938:

THERE WAS RECEIVED YOUR LETTER OF AUGUST 4, 1937, TRANSMITTED TO THIS OFFICE BY CHIEF OF FINANCE, WAR DEPARTMENT, BY A FIRST ENDORSEMENT DATED DECEMBER 22, 1937, REQUESTING DECISION AS TO THE AMOUNT WHICH PROPERLY MAY BE PAID TO THE PIKES PEAK FUEL, A CORPORATION, COLORADO SPRINGS, COLO., ON VOUCHER ACCOMPANYING YOUR SUBMISSION, STATED IN FAVOR OF SAID CORPORATION IN THE SUM OF $542.61, FOR THE 130.45 TONS OF LIGNITE COAL FURNISHED TO THREE SPECIFIED CAMPS OF THE CIVILIAN CONSERVATION CORPS UNDER COAL CONTRACT DATED MARCH 27, 1937, PURCHASE ORDER NO. 2947.

YOUR DOUBT IN THE MATTER WOULD APPEAR TO RELATE TO THE ITEM OF $20.81 CLAIMED BY THE CONTRACTOR IN EXCESS OF THE STIPULATED PRICE OF $4 PER TON FOR THE TONNAGE OF COAL FURNISHED IN APRIL 1937, SAID ITEM BEING BASED ON AN INCREASE IN THE WAGE-SCALE RATES OF CERTAIN MINE EMPLOYEES AT THE TIME THE COAL WAS SHIPPED OVER THE WAGE-SCALE RATES IN EFFECT AT THE TIME THE BID THEREFOR WAS OPENED ON MARCH 24, 1937.

IN THE INVOLVED CONTRACT, THE SPECIFICATIONS--- A PART THEREOF--- PROVIDED FOR DELETION OF PARAGRAPH 3,"WAGE SCALES" OF THE STANDARD GOVERNMENT PURCHASE CONDITIONS FOR COAL (STANDARD FORM NO. 43), RELATING TO AN ADJUSTMENT OF THE STIPULATED CONTRACT PRICE IN THE EVENT OF CHANGES IN THE COST OF PRODUCTION DUE TO SUBSEQUENT CHANGES IN THE WAGE SCALES OF THE MINE EMPLOYEES, AND IN LIEU THEREOF THAT THE FOLLOWING PROVISIONS BE SUBSTITUTED:

2. THE CONTRACT PRICE SPECIFIED HEREIN FOR THE COAL IS BASED UPON THE WAGE SCALE IN EFFECT WITH MINE EMPLOYEES ON THE DATE OF OPENING OF BIDS, AND ANY CHANGES IN THE SAID WAGE SCALE SHALL INCREASE OR DECREASE THE CONTRACT PRICE OF COAL BY THE METHOD HEREIN STATED.

3. IN EVENT OF A CHANGE IN THE WAGE RATE FOR THE HEREIN SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES, APPROVED GENERALLY FOR THE MINING DISTRICT IN WHICH THE MINE HEREIN NAMED IS LOCATED, THE CONTRACT PRICE SHALL BE INCREASED OR DECREASED ON ANY TONNAGE SHIPPED FROM THE MINE AFTER DATE OF SUCH INCREASE OR DECREASE IN THE WAGE RATE, ACCORDING TO WHETHER THE WAGE RATE IS INCREASED OR DECREASED, BY AN AMOUNT WHICH IS THE PRODUCT OF THE F.O.B. MINE PRICE TIMES 0.6, TIMES THE PERCENT CHANGE IN THE WAGE RATE EXPRESSED AS A DECIMAL (THE PERCENT INCREASE OR DECREASE IN THE WAGE RATE SHALL BE COMPUTED TO THEN EAREST TENTH PERCENT AND THE INCREASE OR DECREASE IN THE CONTRACT PRICE SHALL BE COMPUTED TO THE NEAREST TENTH OF A CENT). IF THE CHANGE IS AN INCREASE IN THE WAGE RATE FOR THE STATED CLASS OF EMPLOYEES, THE RIGHT IS RESERVED TO THE CONTRACTING OFFICER TO DISALLOW ANY INCREASE IN THE CONTRACT PRICE IF IN HIS OPINION THE INCREASE IN THE WAGE RATE AS REPORTED BY THE CONTRACTOR WAS NOT APPROVED GENERALLY BY THE OPERATORS OF MINES IN THE MINING DISTRICT IN WHICH THE MINE NAMED IS LOCATED, AND THE CONTRACTING OFFICER'S DECISION SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO SUBJECT ONLY TO APPEAL, WITHIN 60 DAYS, BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION ON SUCH APPEAL SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO. SUCH DETERMINED INCREASE OR DECREASE IN THE CONTRACT PRICE SHALL BE FINAL AND CONCLUSIVE, AND NO ADDITIONAL CLAIM BY THE CONTRACTOR WILL BE CONSIDERED COVERING ANY CHANGES IN WAGE RATES OF OTHER CLASSES OF MINE LABOR EMPLOYED ON A PER TON, OR A MONTHLY, OR A DAILY, OR AN HOURLY, OR ANY OTHER RATE BASIS, OR COVERING ANY CHANGES IN COMPENSATION INSURANCE OR IN ANY OTHER LABOR FACTOR OR FACTORS ENTERING INTO THE COST OF PRODUCING COAL AT THE MINE NAMED.

4. IN THE EVENT OF A CHANGE IN THE WAGE RATE FOR THE SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES THERE SHALL BE FURNISHED TO THE CONTRACTING OFFICER, WITHIN 60 DAYS FROM THE DATE OF THE CHANGE IN THE WAGE RATE, AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF THE OPENING OF BIDS.

5. WHEN THERE HAS BEEN NO CHANGE IN THE WAGE RATE, SUBSEQUENT TO THE DATE OF OPENING OF BIDS AND DURING THE CONTRACT PERIOD, THE CONTRACTOR SHALL SO CERTIFY ON EACH INVOICE OR VOUCHER SUBMITTED FOR PAYMENT.

THE "SPECIAL INSTRUCTIONS TO BIDDERS," A PART OF THE CONTRACT, PROVIDED:

1. THE REFERRED TO METHOD PROVIDES FOR AN ADJUSTMENT OF THE CONTRACT PRICE FOR A CHANGE IN WAGE RATES WITH MINE EMPLOYEES; IT IS BASED ON THE FOLLOWING REQUIREMENTS AND CONDITIONS:

(A) THE BIDDER MUST SPECIFY ON THE APPROPRIATE BIDDING FORM THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE THAT HAS A PREDOMINANT EFFECT ON THE COST OF PRODUCING COAL AT THE MINE NAMED BY HIM; I.E., THAT PARTICULAR OCCUPATIONAL CLASS OF EMPLOYEES RECEIVING THE SAME WAGE RATE TO WHICH ON THE PAY ROLL A PREDOMINANT AMOUNT OF MONEY IS REGULARLY PAID FOR PRODUCING COAL. THE CLASS SELECTED SHALL NOT BE FOR SUPERVISORY OR CLERICAL EMPLOYEES.

(B) THE PREDOMINANT WAGE RATE CLASS OF EMPLOYEES SO SPECIFIED MUST BE DESCRIBED IN SUCH A MANNER THAT IT MAY BE CLEARLY IDENTIFIED IN THE WAGE AGREEMENT BETWEEN THE OPERATOR OF THE MINE AND THE MINE EMPLOYEES IN EFFECT ON THE DATE OF OPENING OF BIDS.

(C) IN EVENT OF A CHANGE IN THE WAGE RATE FOR THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR SPECIFIED BY THE BIDDER, THE F.O.B. MINE PRICE IS MULTIPLIED BY A PERCENTAGE FACTOR OF 60 PERCENT, AND THE PRODUCT THEREOF IS MULTIPLIED BY PERCENT CHANGE IN THE WAGE RATE, AND THE RESULTANT OBTAINED IS THE AMOUNT THAT THE CONTRACT PRICE WILL BE INCREASED OR DECREASED ON ACCOUNT OF AN INCREASE OR DECREASE IN THE WAGE RATE.

(D) IT IS TO BE NOTED THAT THIS METHOD IS BASED ON THE F.O.B. MINE PRICE. IF THE INVITATION CALLS FOR BIDS FOR COAL ON ANY OTHER THAN THE F.O.B. MINE BASIS (THE BID PRICE INCLUDING FREIGHT RATE AND/OR COST OF TRUCKING), THE BIDDER MUST STATE ALSO IN HIS BID THE F.O.B. PRICE AT THE MINE NAMED.

2. FOLLOWING IS AN EXAMPLE OF APPLYING THE ABOVE STATED METHOD:

THE F.O.B. MINE PRICE STATED IN THE CONTRACT IS $2.00 PER TON.

THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES SPECIFIED BY THE CONTRACTOR IS--- ,DRIVERS, BRAKEMEN, SPRAGGERS, SNAPPERS, COAL DRILLERS, TRACKMEN, WIREMEN, BONDERS, TIMBERMEN, BOTTOM CAGERS.' (THIS GROUP CLASSIFICATION MAY APPLY TO CERTAIN DISTRICTS ONLY).

CHART

THE WAGE RATE IN EFFECT ON THE DATE OF OPENING OF BIDS

IS -------------------------------------------------- $0.729 PER HOUR.

THE NEW WAGE RATE IS ---------------------------------- $0.802 PER HOUR.

THE INCREASE IN WAGE RATE IS -------------------------- 10.0 PERCENT.

THE INCREASE IN THE CONTRACT PRICE, USING THE FOLLOWING INDICATED FORMULA AND BY COMPUTATION, IS: $2.00 TIMES 0.6 TIMES 0.100 EQUALS 12.0 CENTS PER TON.

THIS ADJUSTMENT IN THE CONTRACT PRICE IS A COMPENSATING ONE FOR OFFSETTING CHANGES IN THE COST PER TON OF PRODUCING COAL AT THE MINE UNDER THE NEW WAGE SCALE COVERING ALL MINE EMPLOYEES AS COMPARED TO THE COST OF PRODUCING COAL UNDER THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING OF BIDS.

UNDER THE CONTRACT TERMS THE COAL WAS TO BE DELIVERED F.O.B. DESTINATION TO THE THREE CIVILIAN CONSERVATION CORPS CAMPS, SCS CAMP 6 C, COMPANY 1846, SP CAMP 12-C, COMPANY 1847, AND F CAMP 33-C, COMPANY 1819, LOCATED 3, 5, AND 6 MILES FROM THE RAILHEAD, COLORADO SPRINGS, COLO., THE LOCATION OF THE PIKE VIEW MINE FROM WHICH THE COAL WAS OBTAINED. THE DELIVERY PRICE WAS FIXED BY THE CONTRACT AT $4 PER TON OF 2,000 POUNDS. IN THE EVENT, HOWEVER, OF ANY CHANGES IN THE WAGE RATES OF THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR SPECIFIED BY THE BIDDER--- SUBSEQUENT TO THE DATE OF OPENING THE BIDS ON MARCH 24, 1937 -- THE CONTRACT PROVIDED THAT THE STIPULATED TONNAGE PRICE WOULD BE ADJUSTED IN ACCORDANCE WITH THE ABOVE-QUOTED PROVISIONS THEREOF.

UNDER SUCH SUBSTITUTED PROVISION OF THE CONTRACT, WITH REFERENCE TO CHANGES IN THE WAGE RATES OF THE SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF LABOR AND THE PRESCRIBED METHOD OF THE ADJUSTMENT OF THE STIPULATED TONNAGE PRICE OF THE COAL, IT IS NOT NECESSARY TO SHOW THE INCREASED COST OF PRODUCTION OF THE COAL, AS THE CHANGES IN THE WAGE SCALES OF THE MINE EMPLOYEES, OTHER THAN THE SCALE OF WAGE RATES OF THE PREDOMINANT CLASS MENTIONED IN THE BID, WILL NOT REQUIRE OR AUTHORIZE ANY CHANGE IN THE STIPULATED CONTRACT TONNAGE PRICE. WHEN THERE IS A CHANGE IN THE SCALE OF WAGE RATES OF THE PREDOMINANT CLASS SPECIFIED IN THE BID, THE INCREASE IN PRICE AUTHORIZED BY THE CONTRACT IS TO BE CALCULATED ONLY ON THE BASIS OF 6/10 OF THE PERCENTAGE OF THE ESTABLISHED INCREASE. AS STATED IN THE INVITATION FOR BIDS, THE ADJUSTMENT OF PRICE AUTHORIZED UNDER THE CONTRACT IS A COMPENSATING ONE FOR OFFSETTING CHANGES IN THE COST PER TON OF PRODUCING THE COAL, AND THE INCREASES THEREIN PROVIDED FOR IS TO APPLY ON ALL TONNAGE SHIPPED FROM THE MINE AFTER DATE OF SUCH INCREASE IN THE SCALE OF WAGE RATES OF THE PREDOMINANT CLASS SPECIFIED, REGARDLESS OF THE FACT THAT ALL OR A PART OF THE TONNAGE OF A PARTICULAR CAR MAY HAVE BEEN MINED BEFORE THE INCREASED WAGE SCALE RATES BECAME EFFECTIVE. WHERE THE CHANGE IS AN INCREASE IN THE WAGE RATE FOR THE STATED CLASS OF EMPLOYEES, THE CONTRACT STIPULATES THAT THE RIGHT IS RESERVED TO THE CONTRACTING OFFICER TO DISALLOW ANY INCREASE IN THE CONTRACT TONNAGE PRICE IF--- IN HIS OPINION--- THE INCREASE IN THE WAGE RATE AS REPORTED BY THE CONTRACTOR WAS NOT APPROVED GENERALLY BY THE OPERATORS OF MINES IN THE MINING DISTRICT IN WHICH THE MINE NAMED IS LOCATED, AND THE CONTRACTING OFFICER'S DECISION IS FINAL AND CONCLUSIVE, IF NOT APPEALED WITHIN 60 DAYS BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION ON SUCH APPEAL IS FINAL AND CONCLUSIVE. ALSO, THE CONTRACT PROVIDED WHERE THERE WAS A CHANGE IN THE WAGE RATE FOR THE SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES, THE CONTRACTOR SHALL FURNISH TO THE CONTRACTING OFFICER, WITHIN 60 DAYS FROM THE DATE OF THE CHANGE IN THE WAGE RATE, AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF THE OPENING OF BIDS.

THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES STIPULATED IN THE BID IN THIS INSTANCE ARE "MACHINE AND PICK MINING" AND "MACHINE LOADING.'

HOWEVER, THERE APPEARS TO HAVE BEEN NO AUTHORITY FOR THE CONTRACTOR TO SPECIFY IN ITS BID AS THE "PREDOMINANT OCCUPATIONAL CLASS" THREE CLASSES OF MINE EMPLOYEES RECEIVING DIFFERENT WAGE RATES, BECAUSE THE INSTRUCTIONS TO BIDDERS AND THE ACCOMPANYING SPECIFICATIONS AND SCHEDULES (Q.M.C. FORM 308-A, APPROVED JULY 17, 1937) CLEARLY PROVIDED FOR SPECIFYING ONLY "THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE.'

THE INSTANT CLAIM COVERS 31.35 TONS (2,000 POUNDS) OF LIGNITE COAL DELIVERED UNDER THE CONTRACT DURING MARCH 1937, AND 99.1 TONS (2,000 POUNDS) OF LIGNITE COAL DELIVERED DURING APRIL 1937, FOR WHICH THE CONTRACTOR IS ENTITLED TO PAYMENT AT THE STIPULATED CONTRACT PRICE OF $4 PER TON, AMOUNTING TO $521.80. THE CONTRACTOR, HOWEVER, HAS CLAIMED AN ADDITIONAL 21 CENTS PER TON FOR THE 99.1 TONS OF COAL DELIVERED IN APRIL 1937, AMOUNTING TO $20.81, BECAUSE OF CHANGES IN THE WAGE-SCALE RATES OF THE THREE CLASSES OF MINE EMPLOYEES SPECIFIED IN THE BID, EFFECTIVE APRIL 1, 1937. IN SUPPORT OF ITS CLAIM FOR THE 21 CENTS PER TON INCREASED TONNAGE PRICE, THE CONTRACTOR FILED THE AFFIDAVIT OF W. D. WADE, ITS ASSISTANT TREASURER, DATED JULY 28, 1937, WHEREIN IS SET FORTH THE WAGE SCALES OF CERTAIN MINE EMPLOYEES, IN EFFECT AT THE DATE OF OPENING THE BIDS AND ON THE DATE OF DELIVERY OF THE COAL AND THE INCREASES THEREOF ALLEGED EFFECTIVE APRIL 1, 1937. AMONG THE LISTED EMPLOYEES WORKING "UNDERGROUND" AS SHOWN IN THE AFFIDAVIT ARE THOSE ENGAGED IN ,MACHINE" AND "PICK" MINING, THE WAGES OF WHICH TWO SEPARATE CLASSES WERE INCREASED IN THE SUMS OF 10 AND 8 CENTS PER TON, RESPECTIVELY, AND "MECHANICAL LOADING MACHINE" EMPLOYEES, THE WAGES OF WHICH WERE INCREASED 70 CENTS PER DAY, OR 10 CENTS PER HOUR. THE CLAIMED INCREASE OF 21 CENTS PER TON APPEARS TO BE BASED ON THE ALLEGED NEW WAGE-SCALE RATE, EFFECTIVE APRIL 1, 1937, RELATIVE TO THESE THREE CLASSES OF MINE EMPLOYEES WHICH PRESUMABLY ARE THE "MACHINE AND PICK MINING" AND ,MACHINE LOADING" EMPLOYEES MENTIONED IN THE BID.

AS THE CONTRACTOR SPECIFIED THREE CLASSES OF EMPLOYEES RECEIVING DIFFERENT WAGE RATES, INSTEAD OF ONE "PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE" THERE APPEARS NO PROPER BASIS FOR AN ADJUSTMENT OF THE CONTRACT PRICE. MOREOVER, THERE WOULD SEEM TO BE SOME DOUBT ON THE PRESENT RECORD AS TO WHETHER THE CONTRACTOR COMPLIED WITH THE REQUIREMENT OF THE CONTRACT WITH RESPECT TO FURNISHING THE CONTRACTING OFFICER, AS REQUIRED BY PARAGRAPH 4 OF THE SPECIFICATIONS, HEREINBEFORE QUOTED, WITHIN THE SPECIFIED 60-DAY PERIOD, AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING THE BIDS, IT APPEARING FROM THE CONTRACTOR'S INVOICES SHOWING THE DETAILS OF THE CHANGES IN WAGES THAT THEY WERE NOT RECEIVED IN THE ADMINISTRATIVE OFFICE UNTIL JULY 10, 1937, WHICH WAS 100 DAYS AFTER APRIL 1, 1937, THE EFFECTIVE DATE OF SUCH WAGE CHANGES. ALSO, THE COPY OF THE AGREEMENT WITH THE UNITED MINE WORKERS COVERING THE PERIOD ENDING APRIL 1, 1937, APPEARS TO HAVE BEEN TRANSMITTED BY THE CONTRACTOR TO THE CONTRACTING OFFICER WITH LETTER DATED SEPTEMBER 23, 1937, RECEIVED ON SEPTEMBER 24, 1937, WHICH WAS 176 DAYS AFTER APRIL 1, 1937, THE EFFECTIVE DATE OF THE NEW WAGE RATES. IN VIEW OF THE FACTS AND CIRCUMSTANCES DISCLOSED, AND THE TERMS OF THE CONTRACT, THE CONTRACTOR DOES NOT APPEAR-- - ON THE PRESENT RECORD--- TO BE ENTITLED TO ANY INCREASE OVER THE PRICE OF $4 PER TON STIPULATED IN THE CONTRACT FOR THE COAL FURNISHED.

ACCORDINGLY, PAYMENT ON THE VOUCHER, RETURNED HEREWITH, OF ANY AMOUNT CERTIFIED IN EXCESS OF $521.80 (130.45 TONS OF COAL AT $4 PER TON) IS NOT AUTHORIZED.