B-119671, NOVEMBER 4, 1954, 34 COMP. GEN. 212

B-119671, NOVEMBER 4, 1954, 34 COMP. GEN. 212

CONTRACTS - MODIFICATION - ADDITIONAL WORK - DEFERRED CONSTRUCTION COSTS A CONTRACT FOR THE RELOCATION OF A RAILWAY INCIDENT TO A GOVERNMENT DAM AND RESERVOIR PROJECT, WHICH CONTAINS A LIMITATION UPON THE AMOUNT TO BE EXPENDED AND SPECIFICALLY PROVIDED THAT THE GOVERNMENT OBLIGATION WOULD END UPON THE COMPLETION, FINAL INSPECTION, AND APPROVAL OF THE RELOCATED LINE, MAY NOT BE AMENDED TO PROVIDE REIMBURSEMENT FOR THE COST OF RECONSTRUCTION WORK NECESSITATED BY LANDSLIDES ALONG THE NEW ROADBED AFTER THE LINE WAS PLACED IN OPERATION.

ACTING COMPTROLLER GENERAL MORROW TO THE SECRETARY OF THE ARMY, NOVEMBER 4, 1954:

IN YOUR LETTER OF APRIL 9, 1954, YOU REQUEST THE CONCURRENCE OF THE GENERAL ACCOUNTING OFFICE IN A PROPOSED AMENDMENT TO CONTRACT NO. W-34 066 -ENG-553 BETWEEN THE CORPS OF ENGINEERS AND THE ST. LOUIS' SAN FRANCISCO RAILWAY COMPANY.

THE CONTRACT WAS ENTERED INTO ON JANUARY 28, 1948, AND PROVIDED GENERALLY FOR THE RELOCATION OF RAILROAD TRACKS THEN LOCATED IN THE AREA TO BE OCCUPIED BY THE WISTER DAM AND RESERVOIR, LE FLORE COUNTY, OKLAHOMA, BY OR AT THE EXPENSE OF THE GOVERNMENT. THE BASIC CONCEPT OF THIS AND SIMILAR CONTRACTS IS STATED TO BE THE SUBSTITUTION OF SIMILAR AND EQUAL FACILITIES FOR THOSE WHICH HAVE TO BE RELOCATED BECAUSE OF FLOOD CONTROL ACTIVITIES. BECAUSE OF THE PRESENCE OF WEATHERED, HIGHLY PLASTIC CLAY SHALE AT AND ABOVE THE GRADE OF THE RELOCATED ROADBED OF THE ST. LOUIS-1SAN FRANCISCO RAILWAY, OVERLAID ON THE UPHILL SIDE OF CUTS BY A HEAVY ACCUMULATION OF TALUS, LANDSLIDES HAVE OCCURRED DURING THE TIME SINCE THE RELOCATED LINE WAS PLACED IN OPERATION, REQUIRING THE RAILWAY TO EXPEND APPROXIMATELY $20,000 IN RECONSTRUCTION. THE CONTRACT CONTAINS NO SPECIFIC BASIS FOR REIMBURSEMENT TO THE RAILWAY FOR SUCH EXPENDITURES.

IT IS STATED TO BE THE POLICY AT PRESENT TO PROVIDE SPECIFICALLY IN RELOCATION CONTRACTS FOR PAYMENT BY THE GOVERNMENT OF DEFERRED CONSTRUCTION COSTS, THAT IS, THE COST OF WORK NECESSITATED BY LANDSLIDES, SUBSIDENCE OF ROADBED, AND OTHER CHANGES IN TOPOGRAPHY ALONG WITH THE RELOCATED LINE FOR A PERIOD OF FROM THREE TO FIVE YEARS AFTER IT IS PLACED IN OPERATION. AT THE TIME THE INSTANT CONTRACT WAS EXECUTED, HOWEVER, THE THEORY OF DEFERRED CONSTRUCTION HAD NOT BEEN SUFFICIENTLY DEVELOPED, WITH THE RESULT THAT THE CONTRACT DOES NOT CONTAIN THE ARTICLE NOW GENERALLY USED. IT IS PROPOSED TO MODIFY THE ST. LOUIS-1SAN FRANCISCO RAILWAY COMPANY CONTRACT BY ADDING TO IT THE USUAL RAILWAY FOR THE COST OF RECONSTRUCTION WORK NECESSITATED BY LANDSLIDES ALONG THE NEW ROADBED. THE CONTRACT IS VIEWED AS STILL IN THE EXECUTORY STAGE SINCE THE RAILWAY HAS NOT YET CONVEYED TO THE GOVERNMENT TITLE TO ITS RIGHT-OF-WAY WITHIN THE RESERVOIR AREA, AS REQUIRED BY ARTICLE 2 (B) OF THE CONTRACT.

EXAMINATION OF THE CONTRACT DISCLOSES THAT THE WORK OF RELOCATION, REARRANGEMENT OR ALTERATION OF TRACKAGE AND APPURTENANCES WAS TO BE DONE BY THE GOVERNMENT IN ACCORDANCE WITH PLANS AND SPECIFICATIONS TO BE APPROVED IN ADVANCE BY THE RAILWAY. THE RAILWAY AGREED TO FURNISH ALL RAILS AND OTHER METAL TRACK MATERIAL, TO REMOVE RAILS, ETC., FROM THAT PART OF THE LINE TO BE RELOCATED, TO BUILD A NEW WATER STATION, TO FURNISH A WORK TRAIN AND AN INSPECTOR, AND TO PERFORM CERTAIN OTHER WORK, ALL AT THE EXPENSE OF THE GOVERNMENT. PAYMENT TO THE RAILWAY FOR SUCH SERVICES WAS PROVIDED FOR BY ARTICLE 3 OF THE CONTRACT, UNDER WHICH VARIOUS METHODS OF PAYMENT WERE PRESCRIBED FOR THE VARIOUS TYPES OF WORK AND SERVICES TO BE PERFORMED BY THE RAILWAY. ARTICLE 3 (B) PROVIDED THAT

* * * IN NO EVENT SHALL THE TOTAL AMOUNT PAID BY THE GOVERNMENT TO THE RAILWAY EXCEED THE SUM OF * * * ($122,523.00).

IT WAS FURTHER PROVIDED BY ARTICLES 11 AND 13 OF THE CONTRACT THAT

* * * AFTER COMPLETION, FINAL INSPECTION AND APPROVAL OF THE RELOCATED LINE, THE RAILWAY SHALL OPERATE AND MAINTAIN SAME WITHOUT FURTHER CLAIM UPON THE GOVERNMENT EXCEPT SUCH RECOURSE AS THE RAILWAY COMPANY MAY HAVE UNDER PUBLIC LAW NO. 526-79TH CONGRESS. ( ARTICLE 11.)

AND THAT IF THE GOVERNMENT SHOULD DETERMINE TO RESORT TO CONDEMNATION OR OTHER JUDICIAL PROCEEDINGS, THE CONTRACT

* * * SHALL BE FINAL AND CONCLUSIVE EVIDENCE OF THE PROPER AWARD TO BE MADE TO THE RAILWAY * * *. (ARTICLE 13.)

PUBLIC LAW 526, 79TH CONGRESS, IS THE FLOOD CONTROL ACT OF 1946, 60 STAT. 641, AND ITS MENTION IN ARTICLE 11 OF THE CONTRACT APPEARS TO REFER TO SECTION 9, 60 STAT. 643 THEREOF, WHICH PROVIDES AS FOLLOWS:

WHENEVER THE CHIEF OF ENGINEERS SHALL FIND THAT ANY HIGHWAY, RAILWAY, OR UTILITY HAS BEEN OR IS BEING DAMAGED OR DESTROYED BY REASON OF THE OPERATION OF ANY DAM OR RESERVOIR PROJECT UNDER THE CONTROL OF THE DEPARTMENT OF THE ARMY, HE MAY UTILIZE ANY FUNDS AVAILABLE FOR THE CONSTRUCTION, MAINTENANCE, OR OPERATION OF THE PROJECT INVOLVED FOR THE REPAIR, RELOCATION, RESTORATION, OR PROTECTION OF SUCH HIGHWAY, RAILWAY, OR UTILITY: PROVIDED, THAT THIS SECTION SHALL NOT APPLY TO HIGHWAYS, RAILWAYS, AND UTILITIES PREVIOUSLY PROVIDED FOR BY THE DEPARTMENT OF THE ARMY, UNLESS THE CHIEF OF ENGINEERS DETERMINES THAT THE ACTUAL DAMAGE HAS OR WILL EXCEED THAT FOR WHICH PROVISION HAD PREVIOUSLY BEEN MADE. (33 U.S.C. 701Q)

IT IS NOT UNDERSTOOD THAT THE DAMAGE WHICH NECESSITATED THE RECONSTRUCTION WORK NOW IN QUESTION RESULTED FROM THE OPERATION OF THE RESERVOIR PROJECT; SUCH DAMAGE APPARENTLY WAS THE RESULT OF NATURAL CONDITIONS AT THE SITE OF THE RELOCATED ROADBED. IT MAY ALSO BE NOTED THAT ON OCTOBER 20, 1949, WHICH WAS AFTER THE TIME WHEN THE NEW LINE WAS PLACED IN OPERATION, THE CONTRACT WAS MODIFIED TO CLARIFY THE INTENTION OF THE PARTIES THAT THE RAILWAY SHOULD BE PAID FOR CERTAIN ENGINEERING SERVICES PERFORMED BEFORE EXECUTION OF THE CONTRACT, AND IT WAS SPECIFICALLY PROVIDED IN THAT MODIFICATION THAT ALL OTHER TERMS AND CONDITIONS OF THE CONTRACT SHOULD REMAIN UNCHANGED.

IT IS APPARENT FROM WHICH HAS BEEN SAID ABOVE THAT THE RECONSTRUCTION WORK PERFORMED BY THE RAILWAY FOR WHICH PAYMENT NOW IS PROPOSED, IF CONSIDERED BY THE PARTIES AT ALL, WAS NOT PROVIDED FOR BY THE CONTRACT BETWEEN THEM. ARTICLE 11 OF THE CONTRACT DID PROVIDE, HOWEVER, THAT THE GOVERNMENT'S OBLIGATION TO THE RAILWAY WAS AT AN END UPON COMPLETION, FINAL INSPECTION AND APPROVAL OF THE RELOCATED LINE, AND THAT OPERATION AND MAINTENANCE BY THE RAILWAY THEREAFTER SHOULD BE WITHOUT FURTHER CLAIM UPON THE GOVERNMENT. THIS SEEMS TO BE A REASONABLE PROVISION IN VIEW OF THE GOVERNMENT'S OBLIGATION TO CONSTRUCT THE RELOCATED TRACKAGE IN ACCORDANCE WITH PLANS AND SPECIFICATIONS TO BE APPROVED BY THE RAILWAY. WHILE ARTICLE 5 OF THE CONTRACT DOES PROVIDE THAT THE WORK TO BE PERFORMED SHOULD NOT BE CONSIDERED AS BETTERMENTS, AND THAT THE RELOCATION OF THE FACILITIES SHOULD PLACE THEM AS NEARLY AS PRACTICABLE IN THE SAME CONDITION AS OF THE DATE OF THE CONTRACT, THIS GENERAL LANGUAGE APPEARS INSUFFICIENT TO OVERCOME THE SPECIFIC PROVISIONS OF ARTICLE 11, AND THE STIPULATION IN ARTICLE 3 (B) AS TO THE MAXIMUM AMOUNT PAYABLE TO THE RAILWAY UNDER THE CONTRACT.

ON THE BASIS OF THE PRESENT RECORD, I AM UNABLE TO FIND THAT ANY BASIC UNDERSTANDING EXISTED BETWEEN THE PARTIES SUFFICIENT TO JUSTIFY CORRECTION OR MODIFICATION OF THEIR CONTRACT TO PERMIT PAYMENT TO THE RAILWAY FOR THE RECONSTRUCTION EXPENSES IN QUESTION.