A-92372, MARCH 17, 1938, 17 COMP. GEN. 744

A-92372: Mar 17, 1938

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CONTRACTS - INCREASED WAGE COSTS - GOVERNMENT COAL CONTRACT NOTICE REQUIREMENTS THE MERE REPORTING TO A GOVERNMENT OFFICER OF CHANGES IN WAGE SCALES IS NOT A COMPLIANCE WITH PROVISION IN GOVERNMENT COAL PURCHASE CONTRACT THAT THE CONTRACTOR FURNISHED TO THE CONTRACTING OFFICER WITHIN 60 DAYS FROM THE DATE OF 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. CLAIM FOR INCREASED COSTS BECAUSE OF INCREASE IN WAGES MAY NOT BE ALLOWED WHERE THE REQUIRED AUTHENTICATED COPIES WERE NOT FURNISHED WITHIN THE PERIOD SPECIFIED. 1938: THERE WAS RECEIVED YOUR LETTER OF NOVEMBER 5. REPRESENTING ALLEGED INCREASES IN THE COSTS OF PRODUCTION OF THE COAL DUE TO CHANGES IN THE WAGE SCALE RATES OF THE 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 JULY 23.

A-92372, MARCH 17, 1938, 17 COMP. GEN. 744

CONTRACTS - INCREASED WAGE COSTS - GOVERNMENT COAL CONTRACT NOTICE REQUIREMENTS THE MERE REPORTING TO A GOVERNMENT OFFICER OF CHANGES IN WAGE SCALES IS NOT A COMPLIANCE WITH PROVISION IN GOVERNMENT COAL PURCHASE CONTRACT THAT THE CONTRACTOR FURNISHED TO THE CONTRACTING OFFICER WITHIN 60 DAYS FROM THE DATE OF 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, AND CLAIM FOR INCREASED COSTS BECAUSE OF INCREASE IN WAGES MAY NOT BE ALLOWED WHERE THE REQUIRED AUTHENTICATED COPIES WERE NOT FURNISHED WITHIN THE PERIOD SPECIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO MAJOR J. W. ORCUTT, UNITED STATES ARMY, MARCH 17, 1938:

THERE WAS RECEIVED YOUR LETTER OF NOVEMBER 5, 1937, TRANSMITTED TO THIS OFFICE BY CHIEF OF FINANCE, WAR DEPARTMENT, BY A FIRST INDORSEMENT DATED FEBRUARY 3, 1938, REQUESTING DECISION AS TO THE AMOUNT WHICH PROPERLY MAY BE PAID TO THE WHITE STAR COAL CO., INC., ON VOUCHER ACCOMPANYING YOUR SUBMISSION, STATED IN FAVOR OF SAID CORPORATION IN THE SUM OF $967.25, REPRESENTING ALLEGED INCREASED COST OF PRODUCTION OF CERTAIN TONNAGE OF COAL SHIPPED FROM THE LUCERNE COAL MINE, LOCATED AT LUCERNE, INDIANA COUNTY, PA., SUBSEQUENT TO APRIL 1, 1937, FOR DELIVERY TO THE UNITED STATES ARMY, PICATINNY ARSENAL, PICATINNY, N.J., AND THE FRANKFORD ARSENAL, PHILADELPHIA, PA., UNDER WAR DEPARTMENT COAL CONTRACT NO. 626-QM- 21693, DATED AUGUST 5, 1936, AND SUPPLEMENT THERETO DATED AUGUST 20, 1936.

THE VOUCHER DISCLOSES THAT THE CLAIM IN THE AMOUNT OF $967.25 CONSISTS OF NINE SEPARATE ITEMS, REPRESENTING ALLEGED INCREASES IN THE COSTS OF PRODUCTION OF THE COAL DUE TO CHANGES IN THE WAGE SCALE RATES OF THE 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 JULY 23, 1936.

IN THE STANDARD GOVERNMENT COAL PURCHASE CONDITIONS (FORM NO. 43), A PART OF THE ORIGINAL AND AMENDED CONTRACT, PARAGRAPH 3 THEREOF--- RELATING TO "WAGE SCALES"--- WAS DELETED AND IN LIEU THEREOF THERE WAS SUBSTITUTED THE FOLLOWING PARAGRAPHS:

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 THE 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 THE NEAREST 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 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 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, PROVIDES:

7. 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 APPROPRIATION BIDDING FORM THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE THAT HAS A PREDOMINANT EFFECT OF 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 PAYROLL 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 THAT 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 OR 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.

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

CHART

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, BENDERS, TIMBERMEN,

BOTTOM CAGERS. (THIS GROUP

CLASSIFICATION MAY APPLY TO CERTAIN

DISTRICTS ONLY.)

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, S:

$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 COST OF PRODUCING COAL UNDER THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING OF BIDS.

UNDER THE CONTRACT TERMS, 38,500 NET TONS OF NUT AND SLACK BITUMINOUS COAL WERE TO BE DELIVERED TO THE WAR DEPARTMENT, F.O.B. DESTINATIONS, FROM THE LUCERNE COAL MINE, LUCERNE, PA., AT SPECIFIED PRICES TO WIT: (1) 20,000 TONS TO THE PICATINNY ARSENAL, N.J., FOR $5.07 PER TON; AND (2) 18,500 TONS TO THE FRANKFORT ARSENAL, PHILADELPHIA, PA., FOR $4.14 PER TON. HOWEVER, IN THE EVENT OF ANY SUBSEQUENT CHANGES IN THE WAGE RATES OF THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR SPECIFIED BY THE BIDDER, THE CONTRACT PROVIDED THAT THE STIPULATED TONNAGE PRICES WOULD BE ADJUSTED IN ACCORDANCE WITH ABOVE QUOTED PROVISIONS THEREOF.

UNDER SUCH SUBSTITUTED PROVISIONS 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 PRICES OF THE COAL, IT IS NOT NECESSARY TO SHOW THE INCREASED COST OF PRODUCTION OF THE COAL, INASMUCH 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 PRICES. WHEN THERE IS A CHANGE IN THE SCALE OF WAGE RATES OF THE PREDOMINANT CLASS SPECIFIED IN THE BID, THE INCREASE IN PRICES AUTHORIZED BY THE CONTRACT IS TO BE CALCULATED ONLY ON THE BASIS OF SIX-TENTHS OF THE PERCENTAGE OF THE ESTABLISHED INCREASE. THE CONTRACT PROVIDED, ALSO, THAT WHERE THE CHANGE IS AN INCREASE IN THE WAGE RATE FOR THE STATED CLASS OF MINE EMPLOYEES, THE RIGHT IS RESERVED TO THE CONTRACTING OFFICER TO DISALLOW ANY INCREASE IN THE CONTRACT TONNAGE PRICES IF, IN HIS OPINION, THE INCREASE IN THE WAGE RATE AS REPORTED BY THE CONTRACTOR WAS NOT APPROVED GENERALLY BY THE OPERATORS OF THE MINES IN THE MINING DISTRICT IN WHICH THE MINE NAMED IS LOCATED, AND THE CONTRACTING OFFICER'S DECISION IN THE MATTER 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 PROVIDES THAT 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. SEE A-91499, FEBRUARY 2, 1938.

THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES STIPULATED IN THE BID IN THIS INSTANCE IS ,MACHINE MINING.' THE MINE PRICE FOR THE COAL STATED IN THE CONTRACTOR'S BIDS WAS $1.59 PER TON, F.O.B. BILLING POINT, THE REMAINDER OF THE AMOUNTS STATED IN THE BIDS BEING THE TRANSPORTATION CHARGES FOR DELIVERY OF THE COAL TO DESTINATION POINTS.

THERE APPEARS TO HAVE BEEN CHANGES IN THE WAGE SCALES OF THE MINE EMPLOYEES AT THE LUCERNE COAL MINE, EFFECTIVE APRIL 1, 1937, OF WHICH CHANGES THE CONTRACTOR INFORMED THE COMMANDING OFFICER, PICATINNY ARSENAL, N.J., BY LETTER DATED APRIL 17, 1937. THE CONTRACTOR HAS REQUESTED AN ADJUSTMENT OF THE SPECIFIED CONTRACT PRICES UNDER THE PROVISIONS THEREOF, HEREINABOVE QUOTED, AMOUNTING TO $0.112 PER TON, ON SHIPMENTS OF COAL AFTER APRIL 1, 1937, THE EFFECTIVE DATE OF THE WAGE RATE CHANGES AT THE MINE, AGGREGATING $967.25.

THE ADMINISTRATIVE REPORTS SHOW THAT FOUR DELIVERY ORDERS COVERING THE GOVERNMENT'S COAL REQUIREMENTS UNDER THE CONTRACT TO AND INCLUDING MARCH 31, 1937, WERE ISSUED TO THE CONTRACTOR AS FOLLOWS:

CHART

ORDER NO. DATE OF ORDER COAL CALLED FOR DELIVERY DATE

TONS

50 ------------------ OCT. 6, 1936 2,500 OCTOBER 1936.

2,500 NOVEMBER 1936.

51 ------------------ NOV. 25, 1936 2,000 DECEMBER 1936.

2,000 JANUARY 1937.

52 ------------------ JAN. 29, 1937 2,000 FEBRUARY 1937.

2,000 MARCH 1937.

53 ------------------ FEB. 19, 1937 5,600 DO.

UNDER SUCH ORDERS, PRIOR TO APRIL 1, 1937, MONTHLY DELIVERIES OF THE REQUIRED COAL WERE MADE OF ONLY 12,775.65 TONS, LEAVING 5,824.35 TONS FOR SUBSEQUENT DELIVERY.

YOUR DOUBT IN THIS MATTER WOULD APPEAR TO BE WHETHER THE INCREASED TONNAGE COST SHOULD APPLY TO ALL THE COAL SHIPPED UNDER THE CONTRACT SUBSEQUENT TO APRIL 1, 1937, OR ONLY TO THE TONNAGE WHICH WAS NOT IN ARREARS IN DELIVERY ON THAT DATE. HOWEVER, FOR REASONS HEREINAFTER STATED IT IS NOT NECESSARY TO DECIDE THAT POINT AT THIS TIME.

IN INSTANT MATTER THE AMENDED GOVERNMENT COAL PURCHASE CONDITIONS, A PART OF THE CONTRACT, SPECIFICALLY PROVIDED THAT 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.' THUS, UNDER THE TERMS OF THE CONTRACT, IT WOULD APPEAR TO BE A CONDITION PRECEDENT FOR THE CONSIDERATION OF A CLAIM FOR INCREASED COMPENSATION, RESULTING FROM A CHANGE IN THE WAGE RATE FOR THE SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES--- EFFECTIVE APRIL 1, 1937, THAT AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE IN EFFECT ON JULY 23, 1936, THE DATE OF THE OPENING OF BIDS, BE FURNISHED BY THE CONTRACTOR TO THE CONTRACTING OFFICER WITHIN 60 DAYS FROM THE DATE OF THE CHANGE IN THE WAGE SCALE, OR BY JUNE 1, 1937. THIS WAS NOT DONE. THE RECORD SHOWS THAT SUCH AUTHENTICATED COPIES OF THE NEW AND OLD WAGE SCALE RATES WERE NOT FURNISHED BY THE CONTRACTOR TO THE CONTRACTING OFFICER UNTIL OCTOBER 19, 1937, WHICH WAS MORE THAN 6 1/2 MONTHS AFTER APRIL 1, 1937, THE DATE OF THE CHANGE IN THE WAGE SCALE. UPON THE SUBMITTED RECORD, THEREFORE, THE CONTRACTOR IS NOT ENTITLED TO ANY INCREASE OVER THE STIPULATED CONTRACT PRICES OF $5.07 AND $4.14 PER TON FOR THE COAL FURNISHED, WHICH AMOUNTS APPEAR TO HAVE BEEN HERETOFORE RECEIVED BY THE CONTRACTOR.

ACCORDINGLY, THERE IS NO AUTHORITY--- UPON THE PRESENT RECORD--- AND UNDER THE CONTRACT TERMS, TO PAY ANY PART OF THE CONTRACTOR'S CLAIM FOR $967.25, AS INCREASED COSTS RESULTING FROM THE CHANGE IN THE WAGE SCALE RATES OF CERTAIN MINE EMPLOYEES, EFFECTIVE APRIL 1, 1937. THE SUBMITTED PREAUDIT VOUCHER AND ATTACHED PAPERS WILL BE RETAINED IN THE FILES OF THIS OFFICE.