A-94221, AUGUST 4, 1938, 18 COMP. GEN. 127

A-94221: Aug 4, 1938

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THE CONTRACTOR WAS TO DO ALL THINGS AND PAY ALL COSTS OF EVERY NATURE WHATEVER NECESSARY TO EXECUTE AND COMPLETE THE ENTIRE WORK. THE NONINCLUSION IN ITS BID OF SAID AMOUNT BECAUSE "MANY JOBS HAVE BEEN LOST BY A MARGIN OF EVEN LESS. " HAVING FAILED TO RAISE ANY QUESTION IN REGARD THERETO BEFORE THE CONTRACT WAS SAFELY EXECUTED AS WOULD HAVE BEEN REQUIRED BY GOOD FAITH AND FAIR DEALING. IS AS FOLLOWS: PERMIT ME TO REFER TO YOU FOR YOUR CONSIDERATION THE CLAIM OF MAURICE L. THIS CONTRACT WAS ENTERED INTO BY THE GOVERNMENT ON JUNE 11. WAS TRANSFERRED TO THIS AUTHORITY ON NOVEMBER 1. AT THE TIME THE PROPERTY FOR THIS PROJECT WAS PURCHASED BY THE GOVERNMENT. EACH OF WHICH WAS CONNECTED TO THE CITY WATER SYSTEM.

A-94221, AUGUST 4, 1938, 18 COMP. GEN. 127

CONTRACTS - HOUSING PROJECT CONSTRUCTION - GOVERNMENT LIABILITY FOR CITY WATER SERVICE CONNECTION CHARGES WHERE UNDER A GOVERNMENT HOUSING CONSTRUCTION CONTRACT, THE CONTRACTOR WAS TO DO ALL THINGS AND PAY ALL COSTS OF EVERY NATURE WHATEVER NECESSARY TO EXECUTE AND COMPLETE THE ENTIRE WORK, INCLUDING THE DOING OF ALL THINGS REQUIRED BY THE CITY AS A CONDITION PRECEDENT TO THE OBTAINING OF THE NECESSARY CITY PERMITS FOR WATER SERVICE CONNECTIONS, ETC., AND THE CITY RULES AND REGULATIONS REQUIRED DISCONNECTING OF ALL OLD SERVICE LINES AND INSTALLATION OF NEW LINES BEYOND LOT LINES TO CITY MAINS BY CITY EMPLOYEES AND PAYMENT THEREFOR BEFORE GRANTING OF A SERVICE CONNECTION, THE DISCONNECTING OF THE OLD WATER CONNECTIONS PRIOR TO ADVERTISING FOR BIDS UNDER THE CONSTRUCTION CONTRACT UNDER AN AGREEMENT BETWEEN THE GOVERNMENT REPRESENTATIVE AND THE CITY AUTHORITIES AND THE NONINCLUSION OF SAID COST IN THE BIDS OF THE PLUMBING SUBCONTRACTOR AND GENERAL CONTRACTOR, FURNISH NO PROPER BASIS FOR THE ASSUMPTION OF SAID COST BY THE GOVERNMENT, THERE HAVING BEEN NO SUCH INTENTION AT THE TIME OF THE CITY AGREEMENT; THE CITY HAVING PLACED BOTH THE PLUMBING SUBCONTRACTOR AND GENERAL CONTRACTOR ON NOTICE THAT THE AMOUNT MUST BE PAID BY THE PLUMBING CONTRACTOR; AND THE GENERAL CONTRACTOR, ALTHOUGH ADMITTING ACTUAL NOTICE OF THE OUTSTANDING AMOUNT AND ATTENDANT CIRCUMSTANCES, AND THE NONINCLUSION IN ITS BID OF SAID AMOUNT BECAUSE "MANY JOBS HAVE BEEN LOST BY A MARGIN OF EVEN LESS," HAVING FAILED TO RAISE ANY QUESTION IN REGARD THERETO BEFORE THE CONTRACT WAS SAFELY EXECUTED AS WOULD HAVE BEEN REQUIRED BY GOOD FAITH AND FAIR DEALING.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, UNITED STATES HOUSING AUTHORITY, AUGUST 4, 1938:

YOUR LETTER OF APRIL 13, 1938, IS AS FOLLOWS:

PERMIT ME TO REFER TO YOU FOR YOUR CONSIDERATION THE CLAIM OF MAURICE L. BE IN AND MAURICE L. BE IN, INCORPORATED, IN THE AMOUNT OF FIVE THOUSAND, SEVENTY-SEVEN DOLLARS AND FORTY CENTS ($5,077.40).

THIS CLAIM ARISES OUT OF CONTRACT NO. PW 200.363, WITH MAURICE L. BE IN AND MAURICE L. BE IN, INCORPORATED, FOR THE CONSTRUCTION OF THE SUPERSTRUCTURES FOR THE BREWSTER HOUSING PROJECT, NO. H-1201, IN DETROIT, MICHIGAN. THIS CONTRACT WAS ENTERED INTO BY THE GOVERNMENT ON JUNE 11, 1937, THROUGH THE PUBLIC WORKS ADMINISTRATION, AND WAS TRANSFERRED TO THIS AUTHORITY ON NOVEMBER 1, 1937, BY EXECUTIVE ORDER NO. 7732.

AT THE TIME THE PROPERTY FOR THIS PROJECT WAS PURCHASED BY THE GOVERNMENT, THERE EXISTED ON IT SEVERAL HUNDRED BUILDINGS, EACH OF WHICH WAS CONNECTED TO THE CITY WATER SYSTEM. THE CLAIM INVOLVES THE QUESTION AS TO WHETHER, UNDER THIS CONTRACT, THE CONTRACTOR WAS REQUIRED TO PAY TO THE CITY OF DETROIT THE COSTS OF DISCONNECTING AND REMOVING THESE OLD WATER CONNECTIONS.

THE RULES AND REGULATIONS APPLYING TO PLUMBERS AND PLUMBING OF THE BOARD OF WATER COMMISSIONERS FOR THE CITY OF DETROIT PROVIDE AS FOLLOWS:

"SECTION 1. ALL APPLICATIONS FOR THE USE OF WATER THROUGH A SERVICE PIPE, ALL APPLICATIONS FOR THE INTRODUCTION OF SERVICE PIPES, AND ALL APPLICATIONS FOR METERS SHALL BE MADE AT THE OFFICE OF THE PERMIT CLERK, WATER OFFICE, 735 RANDOLPH STREET.

"SECTION 6. ON AND AFTER APRIL 15, 1924, ALL SERVICE CONNECTIONS AND SERVICE PIPES FROM THE CITY'S MAINS TO LOT LINES SHALL BE PUT IN ONLY BY PROPERLY AUTHORIZED EMPLOYEES OF THE DEPARTMENT OF WATER SUPPLY, ACTING UNDER THE DIRECTION OF THE SUPERINTENDENT OF YARDS. BEFORE RECEIVING A PERMIT FOR A SERVICE CONNECTION, THERE MUST BE PAID SUCH SUM AS THE BOARD MAY REQUIRE TO COVER THE EXPENSE OF INSTALLING SAME.

"SECTION 14. * * * IN CASES WHERE A NEW SERVICE PIPE OR PIPES IS, OR ARE, REQUIRED, THE OWNER OF SAID PREMISES MUST DISCONNECT ALL OLD SERVICE LINES AT THE STREET MAINS. PLUMBERS WILL, THEREFORE, INFORM THEMSELVES AS TO THE CONDITION IN ALL OLD PREMISES BEFORE TAKING OUT A PERMIT.'

IN CONNECTION WITH THESE REQUIREMENTS, IT IS TO BE NOTED THAT THIS WORK IS PERFORMED BY THE CITY AND THERE IS A STANDARD CHARGE OF TWENTY DOLLARS ($20), MADE BY THE CITY FOR EACH DISCONNECT.

THE ORIGINAL SPECIFICATIONS FOR THE SUPERSTRUCTURES FOR THIS JOB WERE PREPARED IN JUNE OF 1936 AND WERE ADVERTISED FOR BIDS ON JULY 31, 1936. DURING THE TIME WHEN THESE SPECIFICATIONS WERE UNDER CONSIDERATION AND BEFORE BIDDING, THERE WAS A DISCUSSION BETWEEN THE GOVERNMENT'S REPRESENTATIVE IN DETROIT AND THE DEPARTMENT OF WATER SUPPLY OF THAT CITY, IN REGARD TO THE REMOVAL OF THESE OLD LINES AND THE WATER DEPARTMENT SUGGESTED THAT AS A MATTER OF ECONOMY THAT THE CITY START REMOVAL PRIOR TO THE STARTING OF WORK BY THE GENERAL CONTRACTOR AND STATED THAT IF THIS COULD BE DONE THAT THE WATER DEPARTMENT WOULD UNDERTAKE WORK ON THE BASIS OF ITS ACTUAL COST PLUS FIFTEEN PERCENT FOR OVERHEAD AND WOULD BILL THE PLUMBING CONTRACTOR AT THE TIME AN APPLICATION WAS MADE FOR TAPPING INTO THE MAINS FOR NEW CONNECTIONS. (SEE EXHIBIT A.)

THIS WORK WAS ACTUALLY UNDERTAKEN BY THE CITY IN CONFORMITY WITH THEIR LETTER OF JULY 25 (EXHIBIT A) AND THE WORK OF REMOVING OLD TAPS WAS STARTED ON SEPTEMBER 23, 1936, AND WAS COMPLETED ON DECEMBER 4, 1936. (SEE EXHIBIT B.) IN THE MEANTIME, BIDS WERE RECEIVED ON THE ORIGINAL SPECIFICATION ON SEPTEMBER 23, 1936, AND WERE ALL REJECTED BECAUSE OF THE PRICE. AFTER CERTAIN REVISIONS IN AN ENDEAVOR TO CUT THE COST OF THIS PROJECT, BIDS WERE READVERTISED ON APRIL 24, 1937, AND AS A RESULT OF THIS ADVERTISEMENT, THE CONTRACT UNDER CONSIDERATION WAS EVENTUALLY ENTERED INTO WITH MAURICE L. BE IN AND MAURICE L. BE IN, INCORPORATED.

IN REFERENCE TO THE QUESTION UNDER CONSIDERATION, THE SPECIFICATIONS PROVIDE IN PERTINENT PARTS AS FOLLOWS:

"A. GENERAL CONDITIONS, PAGE 8, GENERAL OBLIGATIONS OF CONTRACTOR:

" "1. IT IS UNDERSTOOD THAT, EXCEPT AS OTHERWISE SPECIFICALLY STATED IN THE CONTRACT DOCUMENTS, THE CONTRACTOR SHALL PROVIDE AND PAY FOR ALL MATERIALS, LABOR, TOOLS, EQUIPMENT, WATER, LIGHT, POWER, TRANSPORTATION, SUPERINTENDENCE, TEMPORARY CONSTRUCTION OF EVERY NATURE, ALL OTHER SERVICES, FACILITIES, AND COSTS OF EVERY NATURE WHATSOEVER NECESSARY TO EXECUTE AND COMPLETE THE ENTIRE WORK TO BE DONE UNDER THE CONTRACT DOCUMENTS AND DELIVER IT COMPLETE IN EVERY RESPECT.'

"B. GENERAL CONDITIONS, PAGE 11, PERMITS, PARAGRAPH 2:

" "2. THE CONTRACTOR IS CAUTIONED, HOWEVER, THAT WHEN IT IS HIS RESPONSIBILITY TO MAKE CONNECTIONS TO CITY AND OTHER UTILITY LINES, THE FACT THAT THE GOVERNMENT DOES NOT REQUIRE THE OBTAINING OF PERMITS FOR WORK INSIDE THE GOVERNMENT'S PROPERTY LINES, DOES NOT EXCUSE THE CONTRACTOR FROM DOING ALL THINGS REQUIRED BY THE CITY OR UTILITY COMPANY CONTROLLING SAID LINES AS A CONDITION PRECEDENT TO THE GRANTING OF PERMISSION TO TIE INTO THE LINES.'

"C. CONTRACT FORM P.W.A. 51, ARTICLE 10, PERMITS AND CARE OF WORK:

" "THE CONTRACTOR SHALL, WITHOUT ADDITIONAL EXPENSE TO THE GOVERNMENT, OBTAIN ALL REQUIRED LICENSES AND PERMITS * * *"

"D. DIVISION 32, PLUMBING, PAGE 161, WATER PIPING, PARAGRAPH 6 (ADDENDUM NO. 2, PAGE 26):

" "THE CONTRACTOR SHALL PROVIDE AND/OR ARRANGE WITH THE DETROIT WATER BOARD TO PROVIDE THE REQUIRED WATER SERVICE PIPING, SHUTOFF BOXES, VALVES, METERS, AND METER INSTALLATION AS INDICATED ON THE DRAWINGS AND IN ACCORDANCE WITH THE DETROIT WATER BOARD STANDARDS, AND SHALL PAY ALL COSTS IN CONNECTION THEREWITH.'"

IT IS TO BE NOTED IN THIS CONNECTION THAT THE REQUIREMENTS OF ADDENDUM NO. 2 ON PAGE 26 WERE CHANGED APPARENTLY WITH THE THOUGHT THAT THE ADDITIONAL PHRASEOLOGY "AND SHALL PAY ALL COSTS IN CONNECTION THEREWITH" WOULD COVER THE CHARGES OF THE CITY FOR THE WORK THAT THEY HAD PERFORMED IN DISCONNECTING THESE LINES AND AMPLIFIES THE PROVISIONS CONTAINED ON PAGE 162 OF THE SPECIFICATION WHICH READ BEFORE THE CHANGE AS FOLLOWS:

"6. THE PLUMBING CONTRACTOR SHALL ARRANGE WITH THE WATER BOARD FOR ALL SERVICE CONNECTIONS, SHUT-OFF BOXES, VALVES, AND METER INSTALLATIONS.'

AFTER RECEIPT OF THE SPECIFICATIONS, KATZ AND LEWIS, THE PLUMBING SUBCONTRACTOR FOR THIS WORK, REQUESTED THE WATER BOARD FOR THEIR COSTS FOR INSTALLING THE NEW SERVICE LINES SO AS TO ENABLE THEM TO BID PROPERLY AND ON MAY 18, 1937, PRIOR TO THE OPENING OF BIDS, KATZ AND LEWIS WERE ADVISED BY THE DETROIT WATER BOARD OF PRICES FOR VARIOUS WORK TO BE PERFORMED AND ALSO TO THE EFFECT THAT "THIS DEPARTMENT REMOVED 411 OLD CONNECTIONS FORMERLY FEEDING THE PROPERTIES INVOLVED IN THE SITE. THE COST OF THIS WORK AMOUNTED TO FIVE THOUSAND SEVENTY SEVEN AND 40/100 DOLLARS, WHICH AMOUNT THE PLUMBING CONTRACTOR WILL BE REQUIRED TO PAY AT THE TIME HE SECURES THE PERMITS COVERING THE NEW SERVICE INSTALLATIONS.' (SEE EXHIBITS C, D, AND E.)

AFTER THE CONTRACT WAS AWARDED, AN APPLICATION WAS FILED WITH THE DETROIT WATER BOARD BY THE CONTRACTOR FOR TEMPORARY CONNECTIONS TO THE CITY'S WATER LINES. THE PERMIT WAS REFUSED BY THE WATER BOARD UNTIL PAYMENT OF THESE CHARGES WAS MADE.

ON THE 26TH OF JUNE 1937, THE CONTRACTOR REQUESTED THE GOVERNMENT TO CLEAR UP THIS ITEM SO THAT THEY COULD OBTAIN THEIR PERMITS. (SEE EXHIBIT F.)

SEVERAL PHONE CALLS ENSUED IN AN ENDEAVOR TO SETTLE THIS MATTER AND A TEMPORARY PERMIT WAS ISSUED TO THE CONTRACTOR IN ORDER TO PERMIT HIM TO PROCEED WITH HIS WORK PENDING A DETERMINATION AS TO WHETHER THE GOVERNMENT OR THE CONTRACTOR SHOULD PAY THESE CHARGES. (SEE EXHIBITS G, H, I, J, AND K.)

SUBSEQUENTLY THE CITY AGAIN BROUGHT THIS MATTER TO A HEAD BY REFUSING CERTAIN OTHER PERMITS FOR WATER CONNECTIONS REQUESTED AND ON JULY 9, 1937, AFTER CONSIDERING THE PROVISIONS OF THE CONTRACT DOCUMENTS AND THE CORRESPONDENCE BETWEEN THE PLUMBING SUBCONTRACTOR AND THE CITY WATER DEPARTMENT, PRIOR TO THE OPENING OF BIDS, THE CONTRACTING OFFICER WIRED THE CONTRACTOR THAT IT WAS HIS OBLIGATION TO OBTAIN THE NECESSARY PERMITS AND PAY DISCONNECT CHARGES. (SEE EXHIBIT L.)

PURSUANT TO THIS RULING, THE CONTRACTOR TENDERED TO THE CITY OF DETROIT THE SUM OF FIVE THOUSAND, SEVENTY-SEVEN DOLLARS AND FORTY CENTS ($5,077.40), ON ACCOUNT OF THIS BILL AND OBTAINED THE NECESSARY PERMITS FOR THE INSTALLATION OF THE MAINS. THE RULING OF THE CONTRACTING OFFICER WAS PROTESTED BY THE CONTRACTOR ON JULY 14. (SEE EXHIBIT M.)

SUBSEQUENT TO THIS RULING AND PROTEST, THERE FOLLOWED AN INTERCHANGE OF CORRESPONDENCE BETWEEN THE GOVERNMENT AND THE CONTRACTOR WHICH LASTED UP UNTIL SHORTLY BEFORE THE TRANSFERAL OF THIS PROJECT TO THE UNITED STATES HOUSING AUTHORITY. (SEE EXHIBITS N, O, P, AND Q.) IN ADDITION TO THIS CORRESPONDENCE, THE ESTIMATES OF THE GENERAL CONTRACTOR AND HIS PLUMBING SUBCONTRACTOR, KATZ AND LEWIS, WERE INSPECTED IN ORDER TO DETERMINE IF POSSIBLE WHETHER THIS CHARGE HAD BEEN INCLUDED IN THE BIDS SUBMITTED. (SEE EXHIBITS R AND S.)

THE REASON FOR ITS NONINCLUSION IN THE BID IS STATED BY THE GENERAL CONTRACTOR IN HIS LETTER OF AUGUST 9, 1937 (EXHIBIT P), IN WHICH HE MAKES THE FOLLOWING STATEMENT: "I DID NOT HESITATE TO TELL YOUR DEPARTMENT ON THE PHONE AND I REPEAT AGAIN, THAT I HAD COMPLETE KNOWLEDGE OF THIS BILL AND OF THE LETTER WRITTEN TO THE PLUMBING CONTRACTOR AND THAT I MADE MY DECISION TO OMIT THIS ITEM FROM MY BID, ONLY BECAUSE AND AFTER I THOROUGHLY DIGESTED THE SPECIFICATIONS AND THE WATER BOARD RULINGS.'

YOU WILL NOTE IN A LETTER OF OCTOBER 6 (EXHIBIT S), FROM THE PROJECT MANAGER IN CHICAGO, WHO EXAMINED THE BOOKS, THAT THE SUBCONTRACTOR CONSIDERED THIS ITEM BEFORE SUBMITTING HIS BID TO THE GENERAL CONTRACTOR, BUT APPARENTLY CONCLUDED THAT THE ITEM WAS NOT PROPER FOR INCLUSION IN HIS BID. (SEE EXHIBIT P.) I AM OF THE OPINION THAT, AS A MATTER OF FACT, THIS AMOUNT WAS NOT INCLUDED EITHER IN THE SUBCONTRACTOR'S PROPOSAL TO THE GENERAL CONTRACTOR OR IN THE BID OF THE GENERAL CONTRACTOR TO THE GOVERNMENT.

THE QUESTION INVOLVED IS ONE ENTIRELY OF LAW AND THE SOLE QUESTION AT ISSUE IS WHETHER THE TERMS OF THE CONTRACT ARE BROAD ENOUGH TO INCLUDE THIS CHARGE BY THE CITY.

UPON THE FACTS PRESENTED, I REQUEST YOUR DECISION AS TO WHETHER THE CONTRACTOR IS ENTITLED TO HAVE THE CONTRACT PRICE ADJUSTED TO COVER THE AMOUNT PAID BY THE CONTRACTOR TO THE CITY IN SETTLEMENT OF THE CITY'S CHARGES FOR THE DISCONNECTING OF THE OLD MAINS.

IF YOUR DECISION IS IN FAVOR OF THE CONTRACTOR, A CHANGE ORDER WILL BE ISSUED BY THE UNITED STATES HOUSING AUTHORITY ADJUSTING THE CONTRACT PRICE ACCORDINGLY.

IT WOULD APPEAR TO BE PLAIN FROM YOUR LETTER AND INCLOSURES THEREWITH THAT IT WAS NOT THE INTENT OR UNDERSTANDING OF THE PARTIES AT ANY TIME THAT THE GOVERNMENT SHOULD PAY THE CHARGES OF THE DETROIT WATER BOARD FOR DISCONNECTING THE OLD WATER CONNECTIONS TO THE PROPERTY, AS AN INDIVIDUAL ITEM, DEHORS THE CONTRACT FOR THE CONSTRUCTION OF THE NEW PROJECT AND PLUMBING WORK NECESSARY THERETO.

UNDER DATE OF JULY 25, 1936, THE PRINCIPAL CLERK, PERMIT AND METER INSTALLATION BUREAU OF THE DETROIT DEPARTMENT OF WATER SUPPLY ADDRESSED A LETTER TO W. R. CARMAN, PROJECT MANAGER, PROPOSING TO MAKE THE DISCONNECTIONS ON A COST PLUS BASIS INSTEAD OF CHARGING THE FIXED FEE OF $20 EACH, USUALLY CHARGED BY THE CITY OF DETROIT FOR SIMILAR DISCONNECTIONS, AND CALLING ATTENTION TO THE DESIRABILITY OF HAVING THE WORK DONE PRIOR TO THAT OF WIDENING AND REPAVING THE STREETS, ETC., FOR THE CONSTRUCTION OF THE NEW BUILDINGS. THE LETTER STATED:

IF THE PLUMBING CONTRACT IS NOT AWARDED IN ITS ENTIRETY TO A SINGLE CONTRACTOR, BUT DIVIDED AMONG TWO (2) OR MORE, THEN THE COST OF REMOVING THE OLD LINES COULD BE APPORTIONED AMONG THEM, BASED UPON THE NUMBER OF OLD TAPS ENTERING THE FRONTAGE ON THE STREET, OR STREETS, REQUIRED BY THE UNIT, OR UNITS, COVERED BY EACH PARTICULAR CONTRACT.

OBVIOUSLY IT WAS THE INTENT THAT IF THE PLUMBING CONTRACT WAS LET IN ITS ENTIRETY TO A SINGLE CONTRACTOR, THAT CONTRACTOR WOULD BE CHARGED BY THE CITY WITH THE ENTIRE COST OF MAKING THE DISCONNECTIONS BEFORE PERMIT WOULD BE ISSUED TO MAKE NEW CONNECTIONS, AND THE CHARGE WAS NOT TO BE MADE AGAINST THE UNITED STATES. PURSUANT TO SAID LETTER, THE WORK OF MAKING THE DISCONNECTIONS WAS BEGUN BY THE CITY ON SEPTEMBER 23 AND COMPLETED ON DECEMBER 4, 1936, THE TOTAL NUMBER OF DISCONNECTIONS BEING 411 AT AN AGGREGATE COST OF $5,077.40.

IN THE MEANTIME, BIDS WERE RECEIVED AND OPENED SEPTEMBER 23, 1936, ON THE ORIGINAL SPECIFICATIONS FOR THE PROJECT, AND ALL WERE REJECTED BECAUSE OF THE PRICES. THE SPECIFICATIONS WERE REVISED, THE PROJECT WAS READVERTISED, AND BIDS WERE OPENED ON MAY 27, 1937, RESULTING IN AWARD OF THE CONTRACT FOR THE PROJECT TO MAURICE L. BE IN AND MAURICE L. BE IN, INC.

UNDER DATE OF MAY 11, 1937, KATZ AND LEWIS PLUMBING CO. WROTE THE DETROIT WATER BOARD ADVISING THAT IT, THE COMPANY, WAS PREPARING A PLUMBING BID FOR THE PROJECT AND REQUESTING AN ESTIMATE COVERING THE WATER BOARD'S FEES IN CONNECTION WITH THE INSTALLATION OF THE WATER MAINS, ETC., REQUIRED. MAY 18, 1937, THE DETROIT WATER BOARD REPLIED, GIVING OTHER INFORMATION REQUESTED, AND STATING: THIS DEPARTMENT REMOVED FOUR HUNDRED ELEVEN (411) OLD CONNECTIONS FORMERLY FEEDING THE PROPERTIES INVOLVED IN THE SITE. THE COST OF THIS WORK AMOUNTED TO FIVE THOUSAND SEVENTY-SEVEN AND 40/100 DOLLARS ($5,077.40), WHICH AMOUNT THE PLUMBING CONTRACTOR WILL BE REQUIRED TO PAY AT THE TIME HE SECURES THE PERMITS COVERING THE NEW SERVICE INSTALLATIONS. THE KATZ AND LEWIS PLUMBING CO., WHICH WAS THE SUCCESSFUL BIDDER AS PLUMBING SUBCONTRACTOR, THUS WAS ON NOTICE PRIOR TO SUBMISSION OF ITS BID THAT THE CHARGE OF $5,077.40 WAS OUTSTANDING, AND THAT SAID CHARGE WOULD BE REQUIRED TO BE PAID TO THE CITY BY THE PLUMBING CONTRACTOR AS A CONDITION PRECEDENT TO ISSUANCE OF PERMITS COVERING THE NEW SERVICE INSTALLATIONS. THE PLUMBING SUBCONTRACTOR, OR THE PRINCIPAL CONTRACTOR, EVENTUALLY PAID THE REQUIRED AMOUNT TO THE CITY OF DETROIT. THAT THE PRINCIPAL CONTRACTOR, ALSO, WAS ON NOTICE PRIOR TO SUBMISSION OF ITS BID THAT THE PAYMENT OF THE ITEM BY THE CONTRACTOR OR THE PLUMBING CONTRACTOR WOULD BE REQUIRED AS A CONDITION PRECEDENT TO ISSUANCE OF PERMITS FOR NEW CONNECTIONS IS EVIDENT, FOR IN A LETTER OF AUGUST 9, 1937, TO THE DIRECTOR OF HOUSING, PUBLIC WORKS ADMINISTRATION, OVER THE SIGNATURE OF MAURICE L. BE IN, PRESIDENT, MAURICE L. BE IN, INC., IT IS STATED:

* * * I DID NOT HESITATE TO TELL YOUR DEPARTMENT ON THE PHONE AND I REPEAT AGAIN, THAT I HAD COMPLETE KNOWLEDGE OF THIS BILL AND OF THE LETTER WRITTEN TO THE PLUMBING CONTRACTOR AND THAT I MADE MY DECISION TO OMIT THIS ITEM FROM MY BID, ONLY BECAUSE AND AFTER I THOROUGHLY DIGESTED THE SPECIFICATIONS AND THE WATER BOARD RULINGS. YOU WILL AGREE WITH ME THAT MANY JOBS HAVE BEEN LOST BY A MARGIN OF EVEN LESS THAN THE AMOUNT INVOLVED IN THIS BILL. * * *

APPLICABLE PROVISIONS OF THE SPECIFICATIONS ARE QUOTED IN YOUR LETTER, SUPRA, AND NEED NOT BE REPEATED. SUFFICE IT TO SUMMARIZE THAT THE CONTRACTOR WAS OBLIGATED TO PROVIDE AND PAY FOR ALL SERVICES AND FACILITIES AND COSTS OF EVERY NATURE WHATSOEVER NECESSARY TO EXECUTE AND COMPLETE THE ENTIRE WORK TO BE DONE AND TO ACCOMPLISH DELIVERY COMPLETE IN EVERY RESPECT; TO DO ALL THE THINGS REQUIRED BY THE CITY AS A CONDITION PRECEDENT TO THE GRANTING OF PERMISSION TO "TIE INTO" WATER OR OTHER LINES; TO OBTAIN ALL REQUIRED LICENSES AND PERMITS WITHOUT ADDITIONAL EXPENSE TO THE GOVERNMENT, AND TO PROVIDE AND ARRANGE WITH THE DETROIT WATER BOARD TO PROVIDE THE REQUIRED WATER SERVICE PIPING, SHUT-OFF BOXES, VALVES, METERS, ETC., AND TO PAY ALL COSTS IN CONNECTION THEREWITH.

IN ADDITION TO THESE COMPREHENSIVE AND ALL-INCLUSIVE PROVISIONS OF THE SPECIFICATIONS BOTH THE CONTRACTOR AND ITS PLUMBING SUBCONTRACTOR, AS HAS BEEN SHOWN ABOVE, WERE PUT UPON ACTUAL NOTICE PRIOR TO THE SUBMISSION OF THEIR BIDS THAT THE ITEM WAS OUTSTANDING; THAT ITS PAYMENT WOULD BE REQUIRED BY THE CITY FROM THE CONTRACTOR OR THE PLUMBING CONTRACTOR AS A CONDITION PRECEDENT TO THE GRANTING OF A PERMIT TO MAKE THE NEW WATER CONNECTIONS WITH THE PROJECT. HENCE, IT WAS THEIR RESPONSIBILITY TO PROTECT THEMSELVES BY INCLUSION OF THE ITEM IN THEIR RESPECTIVE BIDS IF THEY SAW FIT OR THEY WERE AT LIBERTY, OF COURSE, TO ABSORB THE ITEM UNDER THEIR GENERAL ESTIMATES OF THEIR BID PRICES.

THE FACT--- IF IT BE A FACT--- THAT THE PRINCIPAL CONTRACTOR DID NOT INCLUDE THE AMOUNT OF THE ITEM IN ITS BID IS NOT NOW FOR CONSIDERATION NOR ARE THE MOTIVES WHICH PROMPTED ITS OMISSION, ALTHOUGH IT WOULD APPEAR THE CONTRACTOR OMITTED THE ITEM FOR FEAR ITS INCLUSION WOULD MAKE ITS BID HIGHER THAN OTHERS TO BE SUBMITTED. THE FACT REMAINS THAT THE ITEM WAS THERE AND THAT THE CONTRACTOR AND PLUMBING SUBCONTRACTOR WERE AWARE OF THAT FACT AND WERE FULLY APPRISED THAT THEY OR ONE OF THEM WOULD BE REQUIRED TO PAY IT AS A CONDITION PRECEDENT TO THE PRIVILEGE OF MAKING THE WATER CONNECTIONS REQUIRED UNDER THE CONTRACT. NOTWITHSTANDING ALL THIS, IT WAS NOT UNTIL THE CONTRACT WAS SAFELY EXECUTED THAT ANY SUGGESTION WAS MADE THAT THE ITEM WAS NOT PROPERLY FOR PAYMENT BY THE CONTRACTOR OR ITS SUBCONTRACTOR AS PART OF CONTRACT PERFORMANCE. UNDER ALL THE CIRCUMSTANCES, IF ANY QUESTION WAS TO BE RAISED, GOOD FAITH AND FAIR DEALING REQUIRED THAT IT BE RAISED AND SETTLED AT OR BEFORE THE SUBMISSION OF THE BIDS, OR THAT EXCEPTION BE TAKEN TO THE ITEM IN THE FIRST INSTANCE. THEREAFTER WAS TOO LATE. "HE WHO IS SILENT WHEN CONSCIENCE REQUIRES HIM TO SPEAK SHALL BE DEBARRED FROM SPEAKING WHEN CONSCIENCE REQUIRES HIM TO KEEP SILENT.' AS WAS SAID IN THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN ROCK ISLAND, ARKANSAS AND LOUISIANA RAILROAD V. UNITED STATES, 254 U.S. 141, "MEN MUST TURN SQUARE CORNERS WHEN DEALING WITH THE GOVERNMENT.'

IT IS APPARENT FROM THE RECORD THAT IN PAYING THE ITEM OF $5,077.40 TO THE DETROIT WATER BOARD FOR THE DISCONNECTIONS, THE CONTRACTOR DID ONLY WHAT IT WAS REQUIRED TO DO BY THE CONTRACT SPECIFICATIONS AND THAT IT IS NOT ENTITLED TO HAVE THE CONTRACT PRICE ADJUSTED TO COVER OR INCLUDE THE AMOUNT SO PAID.