A-9953, MARCH 20, 1926, 5 COMP. GEN. 741

A-9953: Mar 20, 1926

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CONTRACTS - INCREASED COSTS OCCASIONED BY DELAYS ON THE PART OF THE UNITED STATES - JURISDICTION OF THE GENERAL ACCOUNTING OFFICE THE UNITED STATES IS NOT LIABLE IN DAMAGES FOR DELAYS CAUSED A CONTRACTOR IN THE PERFORMANCE OF A CONTRACT FOR THE CONSTRUCTION OF TWO DRY-DOCK PUMPING PLANTS. WHERE THE DELAY RESULTED FROM THE FAILURE OF THE GOVERNMENT TO HAVE THE FOUNDATIONS. IS VESTED BY LAW IN THE GENERAL ACCOUNTING OFFICE. THE ADMINISTRATIVE OFFICES ARE WITHOUT JURISDICTION IN THE MATTER. WERE APPLIED TO AN INDEBTEDNESS OF SAID CORPORATION TO THE UNITED STATES WHICH AROSE BY REASON OF PAYMENT OF $6. THE CORPORATION AGREED TO DELIVER AND INSTALL WITHIN 547 CALENDAR DAYS FROM DATE A COPY OF THE CONTRACT WAS DELIVERED TO IT.

A-9953, MARCH 20, 1926, 5 COMP. GEN. 741

CONTRACTS - INCREASED COSTS OCCASIONED BY DELAYS ON THE PART OF THE UNITED STATES - JURISDICTION OF THE GENERAL ACCOUNTING OFFICE THE UNITED STATES IS NOT LIABLE IN DAMAGES FOR DELAYS CAUSED A CONTRACTOR IN THE PERFORMANCE OF A CONTRACT FOR THE CONSTRUCTION OF TWO DRY-DOCK PUMPING PLANTS, WHERE THE DELAY RESULTED FROM THE FAILURE OF THE GOVERNMENT TO HAVE THE FOUNDATIONS, ETC., READY FOR THE WORK AND AN EXTENSION OF TIME FOR COMPLETION OF THE CONTRACT HAD BEEN GRANTED THE CONTRACTOR BECAUSE OF SUCH DELAY. THE JURISDICTION TO SETTLE AND ADJUST ALL CLAIMS AGAINST THE UNITED STATES, INCLUDING CLAIMS FOR INCREASED COSTS IN CONTRACTS OCCASIONED BY DELAYS ON THE PART OF THE GOVERNMENT, IS VESTED BY LAW IN THE GENERAL ACCOUNTING OFFICE, AND THE ADMINISTRATIVE OFFICES ARE WITHOUT JURISDICTION IN THE MATTER.

DECISION BY COMPTROLLER GENERAL MCCARL, MARCH 20, 1926:

THE WORTHINGTON PUMP AND MACHINERY CORPORATION REQUESTED JUNE 3, 1925, REVIEW OF SETTLEMENTS NO. 055506-W, OF NOVEMBER 24, 1924; NO. 058009-T OF DECEMBER 14, 1924; AND NO. 080263-N, OF MAY 19, 1925, WHEREIN AMOUNTS OF $4.91, $31.50, AND $6,508.59, OR A TOTAL OF $6,545, OTHERWISE DUE, WERE APPLIED TO AN INDEBTEDNESS OF SAID CORPORATION TO THE UNITED STATES WHICH AROSE BY REASON OF PAYMENT OF $6,545, UNDER AGREEMENT OF MAY 28, 1921, SUPPLEMENTAL TO BUREAU OF YARDS AND DOCKS CONTRACT NO. 2356 OF JUNE 20, 1917, AS INCREASED COST CLAIMED BY REASON OF DELAYS CAUSED BY THE GOVERNMENT.

UNDER THE TERMS OF THE CONTRACT, THE CORPORATION AGREED TO DELIVER AND INSTALL WITHIN 547 CALENDAR DAYS FROM DATE A COPY OF THE CONTRACT WAS DELIVERED TO IT, TWO COMPLETE DRY-DOCK PUMPING PLANTS, INCLUDING THE NECESSARY ACCESSORIES; ONE TO BE INSTALLED IN THE PUMP WELL OF DRY DOCK NO. 3, AT THE PHILADELPHIA NAVY YARD, AND ONE IN THE PUMP WELL OF DRY DOCK NO. 4, AT THE NORFOLK NAVY YARD, ALL IN ACCORDANCE WITH THE SPECIFICATIONS, ETC., ATTACHED TO AND MADE A PART OF THE CONTRACT, FOR WHICH IT WAS TO BE PAID A CONSIDERATION OF $368,631. THE PRICE AS THUS AGREED UPON WAS INCREASED BY $21,633.87, DUE TO FORMAL CHANGES IN THE SPECIFICATIONS SUBSEQUENTLY AUTHORIZED BY CHANGES "A" TO "P," INCLUSIVE, MAKING A TOTAL CONSIDERATION OF $390,264.87 FOR THE JOB. THE CONTRACT PROVIDED FOR THE DEDUCTION OF LIQUIDATED DAMAGES AT THE RATE OF $100 PER CALENDAR DAY FOR DELAYS IN COMPLETION OF EACH JOB THAT WERE NOT DUE TO CERTAIN SPECIFIED CAUSES ON ACCOUNT OF WHICH THE CONTRACTOR WAS ENTITLED TO A CORRESPONDING EXTENSION OF TIME WITH REMISSION OF LIQUIDATED DAMAGES FOR THE COMPLETION OF THE WORK. DRY DOCK NO. 3, AT THE PHILADELPHIA NAVY YARD, WAS NOT READY FOR INSTALLATION OF THE PUMP WELL STRUCTURE FOR APPROXIMATELY TWO YEARS FROM THE DATE IT SHOULD HAVE BEEN READY--- THAT IS, UNTIL JULY, 1920. AN EXTENSION OF TIME WAS GRANTED FOR THE DELAY CAUSED BY THE GOVERNMENT AND UNDER THE TERMS OF THE CONTRACT THE CONTRACTOR WAS NOT CHARGEABLE WITH LIQUIDATED DAMAGES FOR SUCH DELAY. THE CONTRACTOR WAS ALSO PAID $4,952 AS THE COST OF ERECTING BUILDINGS FOR THE STORAGE OF THE PUMP MACHINERY AND $2,383.28 AS THE COST OF RECONDITIONING THE MACHINERY WHEN REMOVED FROM STORAGE. THESE ITEMS BEING PAID AS EXTRAS AND THE GOVERNMENT RETAINING THE BUILDINGS.

DURING SAID PERIOD THE SCALE OF WAGES INCREASED AND THE CONTRACTOR ALLEGES THAT BEFORE PROCEEDING IT "PROTESTED, AND REQUESTED ADDITIONAL COMPENSATION IN CONSIDERATION OF THE ADDITIONAL EXPENSE THUS PUT UPON IT" TO THE EXTENT OF THE INCREASE OF WAGES,"AN EXPENSE NOT COVERED BY THE ORIGINAL CONTRACT.' THERE IS NO EVIDENCE BEFORE THIS OFFICE THAT THE CONTRACTOR REFUSED TO PROCEED WITH THE INSTALLATION BECAUSE OF THE DELAY.

A BOARD OF OFFICERS APPOINTED PURSUANT TO PARAGRAPH 17 OF THE GENERAL PROVISIONS OF THE CONTRACT TO DETERMINE THE COST OF AUTHORIZED CHANGES,INVESTIGATED THE MATTER OF INCREASE IN WAGES, AND LONG AFTER THE WORK HAD COMMENCED ESTIMATED THAT THE EXCESS FROM JULY, 1920, TO THE COMPLETION OF WORK, OVER THE SCALE OF WAGES PREVAILING IN AUGUST, 1918, WHEN THE DRY DOCK SHOULD HAVE BEEN READY FOR INSTALLATION OF THE PUMP WAS $6,545, BUT, AS STATED BY THE COURT OF CLAIMS IN DECISION DATED MARCH 1, 1926, IN E. W. BLISS COMPANY V. UNITED STATES, NO. C 1032, PARAGRAPH 17 OF THE CONTRACT CONTEMPLATED "CHANGES IN THE COMPOSITION AND MANUFACTURE OF" THE WORK "AND DID NOT RELATE TO THE INCREASED OR EXTRA COST WHICH MIGHT BE INCURRED BY REASON OF INCREASED WAGES.' HOWEVER, THE SUPPLEMENTAL AGREEMENT OF MARCH 28, 1921, PURPORTS TO OBLIGATE THE UNITED STATES TO REIMBURSE SAME TO THE CONTRACTOR AND BRINGS FORWARD FOR DECISION THE QUESTION OF WHETHER THERE WAS ANY CONSIDERATION FOR THE AGREEMENT, AND IF NOT, WHETHER SAME IS BINDING ON THE UNITED STATES. THE QUESTIONS WILL BE CONSIDERED IN THE ORDER STATED.

THE CONTRACT PRESCRIBED THE WORK TO BE DONE, FIXING THE PRICE THEREFOR, AND PROVIDED FOR EXTENSIONS OF TIME WITH REMISSION OF LIQUIDATE DAMAGES FOR UNAVOIDABLE DELAYS WHICH WERE DEFINED IN PARAGRAPH 14 OF THE GENERAL PROVISIONS AS FOLLOWS:

UNAVOIDABLE DELAYS ARE SUCH AS RESULT FROM CAUSES WHICH ARE BEYOND THE CONTROL OF THE CONTRACTOR, SUCH AS ACTS OF PROVIDENCE, FORTUITOUS EVENTS, INEVITABLE ACCIDENTS, ABNORMAL CONDITIONS OF WEATHER OR TIDES, OR STRIKES OF SUCH SCOPE AND CHARACTER AS TO INTERFERE MATERIALLY WITH THE PROGRESS OF THE WORK. DELAYS CAUSED BY ACTS OF THE GOVERNMENT WILL BE REGARDED AS UNAVOIDABLE DELAYS. DELAYS IN SECURING DELIVERY OF MATERIALS, OR BY REJECTION OF MATERIALS ON INSPECTION, OR BY CHANGES IN MARKET CONDITIONS, OR BY NECESSARY TIME TAKEN IN SUBMITTING, CHECKING, AND CORRECTING DRAWINGS OR INSPECTING MATERIAL, OR BY SIMILAR CAUSES, WILL NOT BE REGARDED AS UNAVOIDABLE. SHOULD ANY DELAY IN THE PROGRESS OF THE WORK SEEM LIKELY TO OCCUR AT ANY TIME THE CONTRACTOR SHALL NOTIFY THE OFFICER IN CHARGE IN WRITING OF THE ANTICIPATED OR ACTUAL DELAY, IN ORDER THAT A SUITABLE RECORD OF THE SAME MAY BE MADE.

THE DECISIONS OF THIS OFFICE HAVE BEEN TO THE EFFECT THAT WHERE A CONTRACT PROVIDES THAT DELAYS CAUSED BY THE GOVERNMENT SHALL BE DEEMED TO BE UNAVOIDABLE AND PROVIDES NOTHING MORE THAN AN EXTENSION OF TIME FOR SUCH DELAYS, THE UNITED STATES IS NOT LIABLE IN DAMAGES FOR DELAYS CAUSED THE CONTRACTOR IN COMPLETION OF THE WORK AND SUCH DECISIONS WERE FULLY SUSTAINED BY THE SUPREME COURT OF THE UNITED STATES IN DECISION DATED JANUARY 25, 1926, IN H. E. CROOK COMPANY, INC. V. UNITED STATES. SAID CASE AROSE UNDER A SIMILAR NAVY CONTRACT, AND THE CONTRACTOR CLAIMED REIMBURSEMENT OF INCREASED EXPENSES CAUSED BY DELAY OF OTHER GOVERNMENT CONTRACTORS IN COMPLETION OF THE WORK. THE COURT REFERRED TO THE TERMS OF THE CONTRACT, THE WORK TO BE PERFORMED THEREUNDER, THE PRICE FIXED THEREFOR, AND SAID:

* * * IT WAS NOT TO BE EXPECTED THAT THE GOVERNMENT SHOULD BIND ITSELF TO A FIXED TIME FOR THE WORK TO COME TO AN END, AND THERE IS NOT A WORD IN THE INSTRUMENT BY WHICH IT DID SO, UNLESS AN UNDERTAKING CONTRARY TO WHAT SEEMS TO US THE IMPLICATION IS IMPLIED.

THE GOVERNMENT DID FIX THE TIME VERY STRICTLY FOR THE CONTRACTOR. IT IS CONTEMPLATED THAT THE CONTRACTOR MAY BE UNKNOWN, AND HE MUST SATISFY THE GOVERNMENT OF HIS HAVING THE CAPITAL, EXPERIENCE, AND ABILITY TO DO THE WORK. MUCH CARE IS TAKEN THEREFORE TO KEEP HIM UP TO THE MARK. LIQUIDATED DAMAGES ARE FIXED FOR HIS DELAYS. BUT THE ONLY REFERENCE TO DELAYS ON THE GOVERNMENT SIDE IS IN THE AGREEMENT THAT IF CAUSED BY ITS ACTS THEY WILL BE REGARDED AS UNAVOIDABLE, WHICH THOUGH PROBABLY INSERTED PRIMARILY FOR THE CONTRACTOR'S BENEFIT AS A GROUND FOR EXTENSION OF TIME, IS NOT WITHOUT A BEARING ON WHAT THE CONTRACT BOUND THE GOVERNMENT TO DO. DELAYS BY THE BUILDING CONTRACTORS WERE UNAVOIDABLE FROM THE POINT OF VIEW OF BOTH PARTIES TO THE CONTRACT IN SUIT. THE PLAINTIFF AGREED TO ACCEPT IN FULL SATISFACTION FOR ALL WORK DONE UNDER THE CONTRACT THE CONTRACT PRICE, REDUCED BY DAMAGES DEDUCTED FOR HIS DELAYS AND INCREASED OR REDUCED BY THE PRICE OF CHANGES, AS FIXED BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS. NOTHING MORE IS ALLOWED FOR CHANGES, AS TO WHICH THE GOVERNMENT IS MASTER. IT WOULD BE STRANGE IF IT WERE BOUND FOR MORE IN RESPECT OF MATTERS PRESUMABLY BEYOND ITS CONTROL. THE CONTRACT PRICE, IT IS SAID IN ANOTHER CLAUSE, SHALL COVER ALL EXPENSES OF EVERY NATURE CONNECTED WITH THE WORK TO BE DONE. LIABILITY WAS EXCLUDED EXPRESSLY FOR UTILITIES THAT THE GOVERNMENT PROMISED TO SUPPLY. WE ARE OF OPINION THAT THE FAILURE TO EXCLUDE THE PRESENT CLAIM WAS DUE TO THE FACT THAT THE WHOLE FRAME OF THE CONTRACT WAS UNDERSTOOD TO SHUT IT OUT, ALTHOUGH IN SOME CASES THE GOVERNMENT'S LAWYERS HAVE BEEN MORE CAREFUL. WOOD V. UNITED STATES, 258 U.S. 120. THE PLAINTIFF'S TIME WAS EXTENDED, AND IT WAS PAID THE FULL CONTRACT PRICE. IN OUR OPINION IT IS ENTITLED TO NOTHING MORE.

THE COURT OF CLAIMS IN DECISIONS DATED FEBRUARY 15, 1926, IN ERIC LANGE AND A. H. BERGSTROM, COPARTNERS, V. UNITED STATES. NOS. C-930, C-931, FOLLOWED THE DECISIONS OF THE SUPREME COURT OF THE UNITED STATES IN THE CROOK CASE, NOTWITHSTANDING ITS PRIOR DECISIONS TO THE CONTRARY. THUS IT IS ESTABLISHED IN ACCORDANCE WITH THE LONGSTANDING DECISIONS OF THIS OFFICE THAT WHERE A CONTRACT PROVIDES FOR EXTENSIONS OF TIME FOR DELAYS CAUSED BY THE GOVERNMENT, THERE IS NO LIABILITY ON THE GOVERNMENT TO PAY DAMAGES FOR SUCH DELAYS. AS THERE WAS NO LIABILITY ON THE UNITED STATES TO PAY AS DAMAGES THE INCREASED WAGES INCURRED DURING THE PERIOD OF UNAVOIDABLE DELAY FOR WHICH AN EXTENSION OF TIME WAS GRANTED, IT NECESSARILY FOLLOWS THAT THE SUPPLEMENTAL AGREEMENT FOR THE PAYMENT OF SUCH DAMAGES IS WITHOUT CONSIDERATION, AND WAS MERELY AN ATTEMPT TO ADJUST WHAT EVIDENTLY WAS REGARDED AS AN EQUITABLE CLAIM. SEE PRIES V. UNITED STATES, 58 CT.CLS. 81.

EVEN IF AFTER COMPLETION OF THE WORK UNDER THE CONTRACT THE CONTRACTOR HAD A VALID CLAIM ARISING OUT OF SAID WORK, IT WAS NOT WITHIN THE JURISDICTION OR AUTHORITY OF THE NAVY DEPARTMENT TO SETTLE AND ADJUST SUCH A CLAIM FOR THE ACT OF MARCH 3, 1817, 3 STAT. 366, CARRIED FORWARD INTO THE REVISED STATUTES AS SECTION 236 AND INTO THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24, EXPRESSLY PROVIDES THAT:

ALL CLAIMS AND DEMANDS WHATEVER BY THE GOVERNMENT OF THE UNITED STATES OR AGAINST IT, AND ALL ACCOUNTS WHATEVER IN WHICH THE GOVERNMENT OF THE UNITED STATES IS CONCERNED, EITHER AS DEBTOR OR CREDITOR SHALL BE SETTLED AND ADJUSTED IN THE GENERAL ACCOUNTING OFFICE.

ANY LIABILITY PROPERLY INCURRED UNDER A CONTRACT WITH THE UNITED STATES IS CHARGEABLE TO APPROPRIATIONS MADE BY THE CONGRESS PURSUANT TO ARTICLE I, SECTION 9, OF THE CONSTITUTION AND, AS SAID BY THE COURT OF CLAIMS IN GEDDES V. UNITED STATES, 38 CT.CLS. 428, AT PAGE 444:

THE ACCOUNTING OFFICERS ARE THE GUARDIANS OF THE APPROPRIATIONS. IT IS THEIR BUSINESS TO SEE THAT NO MONEY IS PAID OUT OF THE TREASURY UNLESS THE PAYMENT IS AUTHORIZED BY AN APPROPRIATION ACT. IT IS NOT THEIR BUSINESS TO ADJUDICATE ABSTRACT QUESTIONS OF LEGAL RIGHT BEYOND THE LEGAL RIGHT OF A PERSON TO BE PAID OUT OF A SPECIFIC APPROPRIATION. AN APPROPRIATION CONSTITUTES THE MEANS FOR DISCHARGING THE LEGAL DEBTS OF THE GOVERNMENT.

THE REQUIREMENT THAT THE ACCOUNTING OFFICERS SETTLE AND ADJUST ALL CLAIMS AGAINST THE UNITED STATES IS FOR THE PURPOSE OF MAKING EFFECTIVE SUCH CONTROL OVER APPROPRIATIONS. THE MATTER OF MAKING PAYMENTS FROM PUBLIC FUNDS IS A FISCAL FUNCTION AND BASIC LAW HAS WISELY GUARDED AGAINST THE TEMPTATION THAT MIGHT ARISE TO DISREGARD THE WILL OF THE PEOPLE AS EXPRESSED THROUGH THE CONGRESS BY DISTINCTLY SEPARATING THE PLEDGING AUTHORITY FROM THE PAYING AUTHORITY AND THE ACCOUNTING AUTHORITY.

IT IS THUS CLEAR, IN SO FAR AS GENERAL APPROPRIATIONS ARE CONCERNED AND IN THE ABSENCE OF A SPECIFIC STATUTE TO THE CONTRARY, THAT THERE CAN BE NO ADMINISTRATIVE SETTLEMENT OF A CLAIM--- WHETHER LIQUIDATED OR UNLIQUIDATED --- WHICH IS BINDING ON THE UNITED STATES. EX PRESIDENT AND NOW CHIEF JUSTICE TAFT STATED, AT PAGE 125 OF HIS BOOK ON OUR CHIEF MAGISTRATE AND HIS POWERS, WITH RESPECT TO THE DUTIES OF THE ACCOUNTING OFFICERS UNDER THE DOCKERY ACT OF JULY 31, 1894, 28 STAT. 208, AND PRIOR LAWS THAT:

CONGRESS MAY REPOSE DISCRETION IN APPOINTEES OF THE PRESIDENT, WHICH THE PRESIDENT MAY NOT HIMSELF CONTROL. THE INSTANCE I HAVE ALREADY GIVEN (PAGE 81) IS ONE OF THESE, IN WHICH THE COMPTROLLER OF THE TREASURY (NOW THE COMPTROLLER GENERAL) HAS INDEPENDENT QUASI JUDICIAL AUTHORITY TO PASS ON THE QUESTION OF WHAT WARRANTS ARE AUTHORIZED BY APPROPRIATION ACTS TO BE DRAWN BY HIM ON THE FUNDS OF THE TREASURY. THE PRESIDENT CAN APPOINT HIM * * * BUT HE MAY NOT CONTROL HIM IN HIS CONSTRUCTION OF APPROPRIATION ACTS AND HIS ASSIGNING OR WITHHOLDING HIS SIGNATURE FROM WARRANTS IN ACCORDANCE WITH THAT CONSTRUCTION.

A FORTIORI, SUBORDINATE OFFICERS OF THE UNITED STATES MAY NOT, BY INVESTIGATING CLAIMS FOR ALLEGED BREACH OF CONTRACTS AND ENTERING INTO SUPPLEMENTAL AGREEMENTS IN ATTEMPTED SETTLEMENT THEREOF, CONTROL THE CHARGING AND AVAILABILITY OF APPROPRIATIONS FOR PAYMENT OF SUCH CLAIMS, ESPECIALLY SINCE THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, MADE THE ACCOUNTING OFFICERS INDEPENDENT OF ALL EXECUTIVE DEPARTMENTS IN THE SETTLEMENTS OF CLAIMS CHARGEABLE TO GENERAL APPROPRIATIONS.

IT APPEARING THAT THE SUPPLEMENTAL AGREEMENT ATTEMPTING TO IMPOSE LIABILITY FOR INCREASE OF WAGES ON THE UNITED STATES ON ACCOUNT OF UNAVOIDABLE DELAYS CAUSED BY IT IS WITHOUT CONSIDERATION AND THAT THERE WAS NO AUTHORITY IN THE ADMINISTRATIVE OFFICES TO SETTLE SUCH CLAIMS, IT NECESSARILY FOLLOWS THAT THE PAYMENT MADE PURSUANT TO SAID AGREEMENT WAS NOT A LEGAL AND PROPER PAYMENT. THEREFORE, THE ACTION OF THIS OFFICE IN THE SETTLEMENTS MENTIONED IN THE FIRST PARAGRAPH HEREOF APPEARS CORRECT AND IS SUSTAINED.