B-107289, B-107290, JAN. 22, 1957

B-107289,B-107290: Jan 22, 1957

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INC.: REFERENCE IS MADE TO YOUR CLAIM IN THE AMOUNT OF $40. THE CONTRACTS WERE ENTERED INTO ON BEHALF OF THE UNITED STATES BY THE ARCHITECT OF THE CAPITOL FOR THE RECONSTRUCTION OF THE ROOFS OVER THE SENATE AND HOUSE WINGS OF THE CAPITOL AND FOR THE REMODELING OF THE SENATE AND HOUSE CHAMBERS. THE WORK WAS SCHEDULED FOR COMPLETION IN TWO STAGES OF APPROXIMATELY SIX MONTHS EACH BEGINNING JULY 1. YOUR SUBCONTRACT PRICES WERE INCREASED TO COVER AUTHORIZED CHANGES IN THE AMOUNT OF WORK TO BE PERFORMED AND TO COMPENSATE YOU FOR OVERTIME WORK PERFORMED AT THE SITE. YOU WERE PAID AN AMOUNT IN EXCESS OF $150. 436 COVERS ALLEGED INCREASED COSTS RESULTING PRIMARILY FROM THE FACT THAT THE DETAILED DRAWINGS FOR THE MILLWORK INCLUDED IN THE SECOND STAGE OF THE CONSTRUCTION WORK WERE NOT FURNISHED TO YOUR COMPANY UNTIL AFTER THE FIRST-STAGE CONSTRUCTION WORK HAD BEEN COMPLETED.

B-107289, B-107290, JAN. 22, 1957

TO KNIPP AND COMPANY, INC.:

REFERENCE IS MADE TO YOUR CLAIM IN THE AMOUNT OF $40,436 AGAINST CONSOLIDATED ENGINEERING COMPANY, INC., AS A SUBCONTRACTOR FOR THE MILLWORK REQUIRED IN CONNECTION WITH THE PERFORMANCE OF THAT COMPANY'S GOVERNMENT CONTRACTS ACBR-304 AND ACBR-306, DATED OCTOBER 28, 1948, AND MAY 12, 1949, RESPECTIVELY. THE CONTRACTS WERE ENTERED INTO ON BEHALF OF THE UNITED STATES BY THE ARCHITECT OF THE CAPITOL FOR THE RECONSTRUCTION OF THE ROOFS OVER THE SENATE AND HOUSE WINGS OF THE CAPITOL AND FOR THE REMODELING OF THE SENATE AND HOUSE CHAMBERS. THE WORK WAS SCHEDULED FOR COMPLETION IN TWO STAGES OF APPROXIMATELY SIX MONTHS EACH BEGINNING JULY 1, 1949, AND JULY 1, 1950, THE ESTIMATED DATES ON WHICH THE SENATE AND THE HOUSE WOULD ADJOURN FOR THEIR REGULAR RECESS IN 1949 AND 1950.

YOU AGREED TO PERFORM THE MILLWORK FOR BOTH CONSTRUCTION STAGES OF THE SENATE PROJECT AND FOR BOTH CONSTRUCTION STAGES OF THE HOUSE PROJECT AT THE RESPECTIVE LUMP-SUM PRICES OF $39,000 AND $76,100. YOUR SUBCONTRACT PRICES WERE INCREASED TO COVER AUTHORIZED CHANGES IN THE AMOUNT OF WORK TO BE PERFORMED AND TO COMPENSATE YOU FOR OVERTIME WORK PERFORMED AT THE SITE. YOU WERE PAID AN AMOUNT IN EXCESS OF $150,000 AND YOUR CLAIM FOR $40,436 COVERS ALLEGED INCREASED COSTS RESULTING PRIMARILY FROM THE FACT THAT THE DETAILED DRAWINGS FOR THE MILLWORK INCLUDED IN THE SECOND STAGE OF THE CONSTRUCTION WORK WERE NOT FURNISHED TO YOUR COMPANY UNTIL AFTER THE FIRST-STAGE CONSTRUCTION WORK HAD BEEN COMPLETED.

PREVIOUSLY, YOU FILED A CLAIM FOR THE AMOUNT OF $40,667.73 ON ACCOUNT OF THE ALLEGED INCREASED COSTS OF PERFORMING YOUR SUBCONTRACTS. ACCORDANCE WITH THE PROVISIONS OF ARTICLE II OF THE SUBCONTRACTS, THE PRIME CONTRACTOR PRESENTED THIS CLAIM TO THE ARCHITECT OF THE CAPITOL FOR HIS DETERMINATION AND DECISION. THE CLAIM WAS REJECTED BY THE ARCHITECT OF THE CAPITOL ON THE GROUND THAT THERE IS NO PROVISION IN THE PRIME CONTRACTS FOR THE PAYMENT OF CLAIMS FOR DAMAGES. WHEN YOUR REVISED CLAIM FOR $40,436 WAS SUBMITTED, THE ARCHITECT OF THE CAPITOL REQUESTED THE VIEWS OF OUR OFFICE AND IN A DECISION OF FEBRUARY 24, 1953, HE WAS ADVISED THAT THERE APPEARED TO BE NO PROPER BASIS FOR THE ALLOWANCE OF ANY PART OF SUCH CLAIM UNDER THE PROVISIONS OF CONTRACTS ACBR-304 AND ACBR-306.

THE FEDERAL COURTS HAVE HELD, WITH REFERENCE TO GOVERNMENT CONTRACTS CONTAINING PROVISIONS SIMILAR TO THOSE INCORPORATED IN ARTICLE XII OF YOUR SUBCONTRACTS, THAT A DELAY OF THE GOVERNMENT IN FURNISHING PARTICULAR MATERIALS TO BE USED BY THE GOVERNMENT CONTRACTOR DOES NOT CONSTITUTE A BREACH OF CONTRACT UNLESS IT CAN BE ESTABLISHED THAT THE DELAY WAS DUE TO A NEGLIGENT ACT OR LACK OF DILIGENCE CHARGEABLE TO THE GOVERNMENT. SEE UNITED STATES V. HOWARD P. FOLEY CO., INC., 329 U.S. 64; J. J. KELLY CO. V. UNITED STATES, 107 C.CLS. 594; THE KELM CORPORATION V. UNITED STATES, 119 C.CLS. 454; RAYMOND J. DAUM V. UNITED STATES, 120 C.CLS. 192; THE ARUNDEL CORPORATION V. UNITED STATES, 121 C.CLS. 741; W. E. BARLING V. UNITED STATES, 126 C.CLS. 34; FERN E. CHALENDER V. UNITED STATES, 127 C.CLS. 557; AND WILLIAM C. THOMPSON V. UNITED STATES, 130 C.CLS.

OUR EXAMINATION OF THE RECORD FAILS TO DISCLOSE ANY LACK OF DILIGENCE EITHER ON THE PART OF THE GOVERNMENT OR ON THE PART OF THE PRIME CONTRACTOR WITH RESPECT TO THE DELAY IN FURNISHING YOU THE DETAILED DRAWINGS FOR THE SECOND-STAGE CONSTRUCTION WORK. THE PRIME CONTRACTOR MADE FREQUENT REQUESTS FOR THE DRAWINGS COVERING BOTH STAGES OF THE CONSTRUCTION FOR EACH OF THE PROJECTS, ALTHOUGH THERE WAS NOTHING IN THE GOVERNMENT CONTRACTS WHICH REQUIRED THE GOVERNMENT TO FURNISH DETAILED DRAWINGS IN TIME TO PERMIT FABRICATION OF THE MATERIALS FOR BOTH THE FIRST AND SECOND STAGE CONSTRUCTION WORK AT THE SAME TIME. ALSO, IT APPEARS THAT ALL OF THE ARCHITECT'S PLANS AND ARRANGEMENTS HAD BEEN MADE ON THE THEORY THAT THE DETAILS FOR THE VARIOUS PARTS OF THE WORK WOULD BE PREPARED IN THEIR NORMAL ORDER AND DELIVERED TO THE PRIME CONTRACTOR IN TIME ONLY FOR THE EXECUTION OF THE PARTICULAR PORTION OF THE WORK TO WHICH THEY APPLIED.

WE ARE, HOWEVER, OF THE OPINION THAT THE PRIME CONTRACTOR WAS JUSTIFIED AT LEAST IN CONSIDERING THE POSSIBILITY THAT THE DETAILED DRAWINGS FOR BOTH STAGES OF CONSTRUCTION WOULD BE MADE AVAILABLE AT ABOUT THE TIME THE WORK ON THE FIRST CONSTRUCTION STAGE WAS TO BE COMMENCED. FOR THIS REASON, AND BECAUSE OF THE PRIME CONTRACTOR'S PRIMARY RESPONSIBILITY FOR OBTAINING SUBCONTRACTS ON THE BEST POSSIBLE TERMS, THE REQUEST MADE BY THE PRIME CONTRACTOR ON YOUR BEHALF FOR A REVIEW OF THE CASE HAS BEEN FAVORABLY CONSIDERED.

THE SUBCONTRACTS CONTAIN A PROVISION REQUIRING YOU TO PROCEED WITH THE MANUFACTURE AND ASSEMBLY OF THE MATERIAL REQUIRED FOR BOTH STAGES OF CONSTRUCTION, TO STORE SAME AND MAKE DELIVERY "WHEN JOB CONDITIONS ARE READY FOR THE INSTALLATION.' YOU CONTEND, AND THE PRIME CONTRACTOR HAS AGREED, THAT THIS PROVISION WAS INTENDED TO OVERCOME YOUR OBJECTION TO ENTERING INTO ANY SUBCONTRACT WHICH DID NOT PROVIDE FOR PRICE ESCALATION DEPENDING ON CHANGES IN LABOR AND MATERIAL COSTS. IN SUPPORT OF SUCH INTERPRETATION, THERE WERE SUBMITTED WITH THE REQUEST FOR REVIEW YOUR LETTERS DATED SEPTEMBER 17, 1948, AND JANUARY 18, 1949, SHOWING THAT YOUR ORIGINAL PROPOSALS WERE MADE SUBJECT TO PRICE ADJUSTMENTS TO COVER INCREASES IN THE COSTS OF LABOR AND MATERIALS.

WE REQUESTED AN ADDITIONAL REPORT IN THE MATTER FROM THE ARCHITECT OF THE CAPITOL AND IT NOW APPEARS ALSO THAT OTHER SUBCONTRACTORS WHOSE ORIGINAL PROPOSALS CONTAINED PRICE ESCALATION CLAUSES WERE GRANTED PRICE INCREASES TO A MAXIMUM OF 5 1/2 PERCENT IN ARRIVING AT FIXED PRICES IN LIEU OF ESCALATION. THE ARCHITECT OF THE CAPITOL THEREFORE RECOMMENDED THAT ANY ALLOWANCE TO YOUR COMPANY SHOULD BE LIMITED TO 5 1/2 PERCENT OF YOUR ORIGINAL SUBCONTRACT PRICE FOR THE SENATE WORK BUT WE FAIL TO PERCEIVE ANY PROPER OBJECTION TO THE GRANTING OF A SIMILAR ALLOWANCE WITH RESPECT TO YOUR INCREASED COSTS FOR LABOR AND MATERIAL IN CONNECTION WITH THE PERFORMANCE OF YOUR SUBCONTRACT FOR THE HOUSE WORK. IN OUR VIEW THEN YOUR COMPANY WOULD BE ENTITLED TO AN EQUITABLE ADJUSTMENT OF $6,330.50, OR 5 1/2 PERCENT OF YOUR ORIGINAL SUBCONTRACT PRICES AMOUNTING TO $115,100. ADJUSTMENT ON THIS BASIS WOULD BE SUBSTANTIALLY IN ACCORD WITH YOUR STATEMENT OF CLAIM THAT YOUR INCREASED COSTS FOR SHOP LABOR AND MATERIALS AMOUNTED TO $6,806 IN EXCESS OF YOUR ESTIMATES FOR THOSE ITEMS IN CONNECTION WITH THE PERFORMANCE OF ALL WORK INCLUDING ADDITIONS TO THE AMOUNT OF WORK WHICH WAS ORIGINALLY CONTEMPLATED. ALSO, SUCH AN ADJUSTMENT IN YOUR SUBCONTRACT PRICES WOULD APPEAR TO BE REASONABLY CONSISTENT WITH THE UNDERSTANDING REACHED BETWEEN YOUR COMPANY AND THE PRIME CONTRACTOR AT THE TIME OF THE EXECUTION OF YOUR SUBCONTRACTS.

THE ONLY OBLIGATION OF THE GOVERNMENT IN THIS MATTER WOULD BE TO REIMBURSE THE PRIME CONTRACTOR, CONSOLIDATED ENGINEERING COMPANY, INC., FOR AMOUNTS PROPERLY PAID BY IT FOR THE CONSTRUCTION WORK, THERE BEING NO PRIVITY OF CONTRACT BETWEEN THE UNITED STATES AND SUBCONTRACTORS OF FIRMS ENGAGED IN THE PERFORMANCE OF GOVERNMENT CONTRACTS. JOSEPH PETRIN, ET AL. V. UNITED STATES, 90 C.CLS. 670; MERRITT V. UNITED STATES, 267 U.S. 338; UNITED STATES V. BLAIR, 321 ID. 730, 737; UNITED STATES V. MUNSEY TRUST COMPANY, 332 U.S. 234, 241.

YOU ARE ADVISED, HOWEVER, THAT THIS OFFICE WOULD NOT OBJECT TO PAYMENT TO YOUR COMPANY OF $6,330.50, AND WE WILL SO ADVISE THE ARCHITECT OF THE CAPITOL PROVIDED THERE IS FORWARDED HERE YOUR AGREEMENT TO ACCEPT THAT AMOUNT AS IN FULL AND FINAL SETTLEMENT OF ALL CLAIMS AGAINST THE UNITED STATES AND THE PRIME CONTRACTOR ARISING OUT OF YOUR SUBCONTRACTS, TOGETHER WITH A LETTER FROM THE PRIME CONTRACTOR CONSENTING TO SUCH AN ARRANGEMENT.