B-120760, NOVEMBER 18, 1954, 34 COMP. GEN. 230

B-120760: Nov 18, 1954

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CONTRACTS - LIQUIDATED DAMAGES - DELAYS - ADDITIONAL WORK WHERE THE GOVERNMENT ISSUED A CHANGE ORDER DIRECTING THE PERFORMANCE OF EXTRA WORK AT SUCH A LATE DATE IN RELATION TO THE DATE FIXED FOR COMPLETION OF THE CONTRACT AS TO MAKE IT IMPOSSIBLE FOR THE CONTRACTOR TO HAVE COMPLETED SUCH WORK WITHIN THE CONTRACT PERIOD. THE CONTRACT COMPLETION DATE IS AUTOMATICALLY EXTENDED AS A MATTER OF LAW BY THE AMOUNT OF TIME REQUIRED TO PERFORM THE EXTRA WORK. 1954: REFERENCE IS MADE TO YOUR LETTER OF JULY 14. THE CONTRACTOR WAS REQUIRED TO CONSTRUCT A 544 BED NEUROPSYCHIATRIC ADDITION TO THE VETERANS ADMINISTRATION HOSPITAL AT JEFFERSON BARRACKS. WHICH WERE DESIGNATED AS THE ADMISSIONS BUILDING.

B-120760, NOVEMBER 18, 1954, 34 COMP. GEN. 230

CONTRACTS - LIQUIDATED DAMAGES - DELAYS - ADDITIONAL WORK WHERE THE GOVERNMENT ISSUED A CHANGE ORDER DIRECTING THE PERFORMANCE OF EXTRA WORK AT SUCH A LATE DATE IN RELATION TO THE DATE FIXED FOR COMPLETION OF THE CONTRACT AS TO MAKE IT IMPOSSIBLE FOR THE CONTRACTOR TO HAVE COMPLETED SUCH WORK WITHIN THE CONTRACT PERIOD, THE CONTRACT COMPLETION DATE IS AUTOMATICALLY EXTENDED AS A MATTER OF LAW BY THE AMOUNT OF TIME REQUIRED TO PERFORM THE EXTRA WORK, AND THEREFORE, LIQUIDATED DAMAGES MAY NOT BE ASSESSED AGAINST SUCH A CONTRACTOR WHO COMPLETED THE CONTRACT AFTER THE SPECIFIED DATE, BUT WITHIN THE PERIOD REASONABLY REQUIRED TO PERFORM THE EXTRA WORK.

ACTING COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF THE ARMY, NOVEMBER 18, 1954:

REFERENCE IS MADE TO YOUR LETTER OF JULY 14, 1954, REQUESTING A DECISION AS TO WHETHER PETER KIEWIT SONS' COMPANY MAY, AS A MATTER OF LAW, BE HELD LIABLE TO THE GOVERNMENT FOR LIQUIDATED DAMAGES FOR DELAYS INCURRED IN THE PERFORMANCE OF CONTRACT NO. DA-23-065-ENG-168, DATED MARCH 31, 1950.

UNDER THE CONTRACT, THE CONTRACTOR WAS REQUIRED TO CONSTRUCT A 544 BED NEUROPSYCHIATRIC ADDITION TO THE VETERANS ADMINISTRATION HOSPITAL AT JEFFERSON BARRACKS, MISSOURI, FOR THE LUMP-SUM CONSIDERATION OF $6,173,000. THIS ADDITION INCLUDED FIVE PRINCIPAL STRUCTURES, WHICH WERE DESIGNATED AS THE ADMISSIONS BUILDING, THE INFIRM BUILDING, THE DISTURBED BUILDING, THE T.B.N.P. BUILDING, AND THE REHABILITATION BUILDING. THE WORK WAS REQUIRED TO BE COMPLETED WITHIN 500 DAYS AFTER THE DATE OF RECEIPT BY THE CONTRACTOR OF NOTICE TO PROCEED. ARTICLE 3 OF THE CONTRACT PROVIDED THAT THE CONTRACTING OFFICER MIGHT MAKE CHANGES IN THE SPECIFICATIONS FOR THE WORK AND THAT, IF SUCH CHANGES CAUSED AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THE CONTRACT OR IN THE TIME REQUIRED FOR ITS PERFORMANCE, AN EQUITABLE ADJUSTMENT WOULD BE MADE AND THE CONTRACT WOULD BE MODIFIED IN WRITING ACCORDINGLY. THE ARTICLE FURTHER PROVIDED THAT ANY CLAIM FOR ADJUSTMENT THEREUNDER WAS REQUESTED TO BE ASSERTED WITHIN 10 DAYS FROM THE DATE ANY CHANGE WAS ORDERED, BUT THAT THE CONTRACTING OFFICER, IF HE DETERMINED THE FACTS JUSTIFIED SUCH ACTION, MIGHT RECEIVE AND CONSIDER, AND WITH YOUR APPROVAL, OR THAT OF YOUR AUTHORIZED REPRESENTATIVE, ADJUST ANY SUCH CLAIM AT ANY TIME PRIOR TO THE DATE OF FINAL SETTLEMENT OF THE CONTRACT. ALSO, IT PROVIDED THAT IF THE PARTIES FAILED TO AGREE UPON THE ADJUSTMENT TO BE MADE THE DISPUTE WAS TO BE DETERMINED AS PROVIDED IN ARTICLE 15, THE " DISPUTES" CLAUSE OF THE CONTRACT, BUT THAT NOTHING WAS TO EXCUSE THE CONTRACTOR FROM PROCEEDING WITH THE PROSECUTION OF THE WORK SO CHANGED.

ARTICLE 9 PROVIDED, IN MATERIAL PART, THAT THE CONTRACTOR WOULD BE LIABLE TO THE GOVERNMENT FOR LIQUIDATED DAMAGES AT THE RATE SET FORTH IN THE SPECIFICATIONS FOR EACH DAY THAT THE CONTRACTOR WAS LATE IN COMPLETING THE WORK. HOWEVER, IT FURTHER PROVIDED THAT THE CONTRACTOR WOULD NOT BE CHARGED WITH ANY LIQUIDATED DAMAGES FOR ANY DELAYS DUE TO CAUSES WHICH HE COULD NOT REASONABLY HAVE ANTICIPATED AND CAUSES BEYOND HIS CONTROL AND WITHOUT HIS FAULT AND NEGLIGENCE, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD, OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, EITHER IN ITS SOVEREIGN OR CONTRACTUAL CAPACITY, ACTS OF ANOTHER CONTRACTOR IN THE PERFORMANCE OF A CONTRACT WITH THE GOVERNMENT, STRIKES, USUALLY SEVERE WEATHER, ETC., OR DELAYS OF SUBCONTRACTORS DUE TO SUCH CAUSES. UPON SUCH RECEIPT OF NOTICE FROM THE CONTRACTOR OF THE CAUSES OF SUCH DELAY--- WHICH WAS REQUIRED TO BE GIVEN PROMPTLY--- THE CONTRACTING OFFICER WAS TO ASCERTAIN THE FACTS AND THE EXTENT OF THE DELAY AND, IF IN HIS JUDGMENT THE FACTS SO JUSTIFIED, HE WAS TO EXTEND THE TIME FOR COMPLETING THE WORK COMMENSURATE WITH THE PERIOD OF EXCUSABLE DELAY. HIS DECISION IN THE MATTER WAS TO BE FINAL AND CONCLUSIVE ON THE PARTIES SUBJECT TO THE CONTRACTOR'S RIGHT TO APPEAL THEREFROM AS PROVIDED IN ARTICLE 15. THIS ARTICLE PROVIDED THAT ALL DISPUTES CONCERNING QUESTIONS OF FACT ARISING UNDER THE CONTRACT WERE TO BE DECIDED BY THE CONTRACTING OFFICER SUBJECT TO WRITTEN APPEAL BY THE CONTRACTOR WITHIN 30 DAYS TO THE " HEAD OF THE DEPARTMENT," OR HIS DULY AUTHORIZED REPRESENTATIVES, WHOSE DECISION WAS TO BE FINAL AND CONCLUSIVE.

NOTICE TO PROCEED WITH THE WORK WAS RECEIVED BY THE CONTRACTOR ON APRIL 12, 1950, THUS ESTABLISHING AUGUST 24, 1951, AS THE DATE FOR COMPLETION OF THE CONTRACT. THE CONTRACTOR STARTED THE WORK ON APRIL 24, 1950, BUT PROGRESS THEREAFTER WAS DELAYED AS A RESULT OF CAUSES WHICH WERE FOUND, IN PART, TO BE EXECUTABLE BY THE CONTRACTING OFFICER, AND AS A RESULT THEREOF THE CONTRACT COMPLETION DATE HAD BEEN EXTENDED TO DECEMBER 5, 1951, AS OF JANUARY 21, 1952. ON NOVEMBER 26, 1951, THE CONTRACTOR WAS FURNISHED SUPPLEMENTAL DRAWINGS AND SPECIFICATIONS FOR THE CONSTRUCTION OF A LABORATORY ON THE GROUND FLOOR AND A DENTAL CLINIC ON THE SECOND FLOOR OF THE T.B.N.P. BUILDING AND WAS REQUESTED TO SUBMIT A PROPOSAL FOR THE PERFORMANCE OF THE EXTRA WORK UNDER THE CONTRACT. IN A LETTER DATED JANUARY 16, 1952, ADDRESSED TO THE RESIDENT ENGINEER, THE CONTRACTOR PROPOSED TO PERFORM SUCH ADDITIONAL WORK FOR THE SUM OF $89,604.13, AND STATED THAT, BASED UPON COMMITMENTS WHICH IT HAD RECEIVED WITH RESPECT TO DELIVERY OF EQUIPMENT TO BE INCORPORATED IN THE CONSTRUCTION, 8-MONTHS' TIME, DATING FROM APPROVAL, OR ORDER, FOR THE WORK WOULD BE REQUIRED FOR ITS COMPLETION. BY LETTER OF JANUARY 21, 1952, THE CONTRACTOR WAS ADVISED BY THE CHIEF OF CONSTRUCTION DIVISION, ST. LOUIS DISTRICT, THAT THE PROPOSAL WAS SATISFACTORY AND THAT IT SHOULD PROCEED WITH THE WORK AS SOON AS POSSIBLE. IT WAS FURTHER ADVISED THAT THE 8-MONTHS' TIME EXTENSION REQUESTED WOULD BE GIVEN CONSIDERATION WHEN THE FORMAL CONTRACT MODIFICATION WAS PREPARED.

CHANGE ORDER NO. 39, DATED FEBRUARY 7, 1952, PROVIDING FOR THE CONSTRUCTION OF THE LABORATORY AND DENTAL CLINIC, WAS FORWARDED TO THE CONTRACTOR BY THE CONTRACTING OFFICER BY LETTER OF APRIL 1, 1952. ACKNOWLEDGING RECEIPT THEREOF BY LETTER OF APRIL 9, 1952, ADDRESSED TO THE CONTRACTING OFFICER, THE CONTRACTOR TOOK EXCEPTION TO THE FACT THAT NO EXTENSION OF TIME HAD BEEN PROVIDED THEREIN. THE CONTRACTOR STATED THAT, WITH THE SEVERE SHORTAGE OF PLUMBERS AND FITTERS THAT HAD EXISTED FOR APPROXIMATELY A YEAR, IT HAD BEEN NECESSARY TO USE AT LEAST TWO, AND SOMETIMES THREE MEN OF EACH TRADE ON THE EXTRA WORK EVERY DAY DURING THE TWO MONTHS THAT THE WORK HAD BEEN IN PROGRESS, WHEREAS THESE MEN COULD HAVE BEEN WORKING ON AND FURTHERING THE PROGRESS OF THE WORK AUTHORIZED UNDER THE ORIGINAL CONTRACT; THAT THE ADDITIONAL WORK WAS NOT A PROJECT THAT COULD BE CONSIDERED INDIVIDUALLY, BUT HAD TO BE CONSIDERED AN INTEGRAL PART OF THE PROJECT AS A WHOLE; AND THAT THE "CHANGE" HAD DELAYED THE COMPLETION OF THE ENTIRE PROJECT. ACCORDINGLY, THE CONTRACTOR REQUESTED THAT, SINCE THE AMOUNT OF DELAY IN COMPLETION OF THE ENTIRE PROJECT WHICH WOULD BE CAUSED BY THE CHANGE COULD NOT BE DETERMINED AT THAT TIME, A CLAUSE BE INSERTED IN THE CHANGE ORDER PROVIDING THAT THE ADDITIONAL TIME ALLOWABLE WOULD BE DETERMINED AT THE TIME THE WORK AUTHORIZED TO BE PERFORMED THEREUNDER WAS COMPLETED. THE CONTRACTING OFFICER REPLIED BY LETTER OF APRIL 24, 1952, STATING, IN MATERIAL PART, THAT HE BELIEVED THAT CONTRACTOR WOULD FORFEIT NO RIGHT IN EXECUTING THE CHANGE ORDER INASMUCH AS SUCH TIME EXTENSION AS MIGHT LATER BE DETERMINED TO BE WARRANTED COULD BE ALLOWED REGARDLESS OF WHETHER A SAVING CLAUSE OF THE KIND REQUESTED WAS INCORPORATED THEREIN.

IN THE REPORT ON THE MATTER FURNISHED BY THE CONTRACTING OFFICER, IT IS STATED THAT ALL OF THE WORK AUTHORIZED TO BE PERFORMED UNDER THE CONTRACT, THE COMPLETION DATE FOR WHICH WAS EXTENDED BY CHANGE ORDER NO. 55, DATED OCTOBER 20, 1952, TO DECEMBER 11, 1951, BECAUSE OF STRIKES, WAS DETERMINED TO HAVE BEEN COMPLETED ON DECEMBER 15, 1952. IT APPEARS FROM THE REPORT THAT THE WORK DESCRIBED IN CHANGE ORDER 39 WAS COMPLETED ABOUT THE SAME TIME AS THE OTHER WORK UNDER THE CONTRACT, AND THAT THE EXTRA WORK COULD NOT HAVE BEEN COMPLETED AT AN EARLIER DATE BECAUSE OF UNAVOIDABLE DELAY IN OBTAINING CERTAIN MATERIAL.

IN A LETTER DATED JANUARY 5, 1953, ADDRESSED TO THE CONTRACTING OFFICER, THE CONTRACTOR REFERRED TO THE PREVIOUS CORRESPONDENCE OF THE PARTIES REGARDING AN EXTENSION OF TIME IN CONNECTION WITH CHANGE ORDER 39, AND REQUESTED AN EXTENSION OF TIME FOR THE COMPLETION OF THE CONTRACT EQUAL TO THE NUMBER OF DAYS FROM THE DATE THE WORK UNDER THE ORDER WAS DIRECTED, UNTIL SUCH WORK WAS COMPLETED. THIS, THE CONTRACTOR NOW CONTENDS, WAS ON OR ABOUT DECEMBER 15, 1952. ALTHOUGH IT IS STATED IN THE CONTRACTING OFFICER'S REPORT THAT THE GOVERNMENT DID NOT MAINTAIN A RECORD OF THE DATE ON WHICH THE WORK DESCRIBED IN CHANGE ORDER 39 WAS COMPLETED, THE CONTRACTING OFFICER ADMITS THAT THE EVIDENCE SUBMITTED BY THE CONTRACTOR IN SUPPORT OF ITS CLAIM FOR THE TIME EXTENSION SHOWS THAT SOME OF THE MATERIAL REQUIRED THEREFORE DID NOT MOVE IN SHIPMENT (FROM ESMONT, VA.) TO THE JOB SITE UNTIL OCTOBER 29, 1952, AND PROBABLY WAS NOT DELIVERED THERE UNTIL NOVEMBER 12, 1952.

BY LETTER OF SEPTEMBER 2, 1953, THE CONTRACTING OFFICER FORWARDED CHANGE ORDER NO. 61, DATED AUGUST 12, 1953, TO THE CONTRACTOR, WHICH PROVIDED FOR AN EXTENSION OF TIME OF 30 DAYS ON ACCOUNT OF THE WORK PERFORMED UNDER CHANGE ORDER 39. THIS WAS ON THE THEORY THAT THE ORIGINAL WORK CALLED FOR BY THE CONTRACT HAD NOT BEEN DELAYED MORE THAN 30 DAYS AS A RESULT OF THE WORK REQUIRED TO BE PERFORMED UNDER THE CHANGE ORDER. SUCH AMOUNT OF DELAY WAS DETERMINED TO HAVE RESULTED FROM THE FACT THAT CERTAIN LABOR HAD TO BE DIVERTED FROM THE MAIN CONTRACT WORK TO THE WORK UNDER THE CHANGE ORDER BECAUSE OF THE EXISTING LABOR SHORTAGE.

CHANGE ORDERS NOS. 62, 63 AND 64, DATED AUGUST 12 AND SEPTEMBER 18, 1953, AND JUNE 8, 1954, GRANTED EXTENSIONS OF TIME OF 24, 21 AND 179 DAYS, RESPECTIVELY, FOR EXCUSABLE CAUSES UNRELATED TO CHANGE ORDER 39, THUS EXTENDING THE CONTRACT COMPLETION DATE OF AUGUST 21, 1952.

THE CONTRACTOR, WITHIN THE TIME REQUIRED, APPEALED TO YOU FROM THE DECISIONS OF THE CONTRACTING OFFICER WITH RESPECT TO THE TIME EXTENSIONS GRANTED BY CHANGE ORDERS NOS. 61 AND 62. BY THE LATTER CHANGE ORDER, THE CONTRACTOR WAS ALLOWED AN EXTENSION OF 24 DAYS BECAUSE OF DELAY AFFECTING THE CONTRACT WORK DUE TO ANOTHER GOVERNMENT CONTRACTOR'S DELAY IN INSTALLING DOOR FRAMES AT ELEVATOR HOISTWAY OPENINGS IN THE INFIRM, ADMISSION AND DISTURBED BUILDINGS.

THE CONTRACTOR CONTENDS THAT THE 24-DAY EXTENSION WAS TOTALLY INADEQUATE, AND THAT THE DELAY IN INSTALLATION OF THE DOOR FRAMES AT ELEVATOR HOISTWAY OPENINGS RETARDED THE PROGRESS OF THE WORK IN SO MANY INDIRECT WAYS THAT IT WOULD BE IMPOSSIBLE TO DETERMINE THE EXTENT OF ITS EFFECT ON THE CONTRACT WORK WITH ANY DEGREE OF ACCURACY. THE CONTRACTOR FURTHER CONTENDS THAT, SINCE THE DELAY INCURRED UNDER THE CONTRACT WAS ATTRIBUTABLE TO ACTS OF BOTH PARTIES, IT IS ENTITLED TO BE EXCUSED FOR ALL OF THE DELAY HERE INVOLVED. THIS, THE CONTRACTOR ARGUES, IS IN ACCORDANCE WITH THE GENERAL PROPOSITION OF LAW ENUNCIATED IN SOME OF THE DECIDED CASES THAT, WHERE BOTH PARTIES ARE FOUND TO HAVE BEEN AT FAULT IN CAUSING THE DELAY IN PERFORMANCE OF A CONTRACT, THE COURTS WILL NOT APPORTION THE FAULT FOR THE PURPOSE OF DETERMINING THE AMOUNT OF DAMAGES ASSESSABLE.

ALSO, THE CONTRACTOR CONTENDS THAT NO LIQUIDATED DAMAGES ARE ASSESSABLE AGAINST IT IN THE CASE FOR THE ADDITIONAL REASON THAT IT WAS ENTITLED TO AN EXTENSION OF TIME FOR THE PERFORMANCE OF THE WORK UNDER CHANGE ORDER 39 SUFFICIENT TO OFFSET ALL OF THE DELAY HERE IN QUESTION.

THE QUESTION OF WHETHER THE DELAY TO THE WORK CAUSED BY THE BELATED INSTALLATION OF DOOR FRAMES AT THE ELEVATOR HOISTWAYS--- FOR WHICH THE GOVERNMENT WAS RESPONSIBLE--- WAS SEGREGABLE FROM THE DELAYS CHARGEABLE TO THE CONTRACTOR UNDER THE CONTRACT, AS WELL AS THE ADEQUACY OF THE 24 DAY TIME EXTENSION GRANTED, ARE FACTUAL QUESTIONS THE DETERMINATION OF WHICH IS WITHIN THE PROVINCE OF THE CONTRACTING OFFICER AND THE SECRETARY OF THE ARMY, RESPECTIVELY. MOREOVER, THE GENERAL PROPOSITION OF LAW CONTENDED FOR BY THE CONTRACTOR THAT, WHERE BOTH PARTIES ARE FOUND TO HAVE BEEN AT FAULT IN CAUSING THE DELAY IN PERFORMANCE OF A CONTRACT, THE COURTS WILL NOT APPORTION THE FAULT, IS NOT FOR APPLICATION HERE. THE CONTRACT, BY PROVIDING THAT THE CONTRACTOR WAS TO BE GRANTED APPROPRIATE EXTENSIONS OF TIME FOR DELAYS DUE TO CERTAIN CAUSES, INCLUDING ACTS OF ANOTHER CONTRACTOR IN THE PERFORMANCE OF A CONTRACT WITH THE GOVERNMENT, INFERENTIALLY PROVIDED FOR SUCH APPORTIONMENT FOR THE PURPOSE OF DETERMINING THE AMOUNT OF LIQUIDATED DAMAGES ASSESSABLE FOR DELAY THEREUNDER. SEE ROBINSON V. UNITED STATES, 261 U.S. 496, 488.

HOWEVER, THE CONTRACTOR'S CONTENTION THAT IT WAS ENTITLED TO AN EXTENSION OF TIME FOR THE COMPLETION OF THE CONTRACT EQUAL TO THE NUMBER OF DAYS FROM THE DATE THE WORK UNDER CHANGE ORDER 39 WAS DIRECTED, UNTIL SUCH WORK WAS COMPLETED, IS CORRECT, PROVIDED--- AS THE RECORD INDICATES--- THE CONTRACTOR MAY NOT BE SAID TO HAVE DELAYED THE EXTRA WORK UNNECESSARILY. THIS IS BECAUSE THE GOVERNMENT DIRECTED THE PERFORMANCE OF THE EXTRA WORK AT SUCH A LATE DATE IN RELATION TO THE DATE FIXED FOR COMPLETION OF THE CONTRACT AS TO MAKE IT IMPOSSIBLE FOR THE CONTRACTOR TO HAVE COMPLETED SUCH WORK WITHIN THE CONTRACT PERIOD. UNDER THESE CIRCUMSTANCES, THE LEGAL PRESUMPTION IS THAT THE PARTIES INTENDED THAT THE CONTRACTOR WAS TO BE GIVEN A REASONABLE TIME WITHIN WHICH TO PERFORM THE EXTRA WORK REGARDLESS OF THE DATE FIXED FOR COMPLETION OF THE ENTIRE CONTRACT. OTHER WORDS, THE COURTS HOLD THAT THE CONTRACT COMPLETION DATE IS AUTOMATICALLY EXTENDED BY THE AMOUNT OF TIME REQUIRED TO PERFORM THE EXTRA WORK. SEE AMERICAN ENGINEERING COMPANY V. UNITED STATES, 24 F.1SUPP. 449; SUN SHIPBUILDING COMPANY V. UNITED STATES, 76 C.1CLS. 154; STANDARD STEEL CAR COMPANY V. UNITED STATES, 67 C.1CLS. 445; 152 A.L.R., PP. 1357 1359. ACCORDINGLY, IT IS MY OPINION THAT NO LEGAL BASIS EXISTS FOR THE ASSESSMENT OF LIQUIDATED DAMAGES IN THE CASE.

THE COPY OF CONTRACT NO. DA-23-065-ENG-168, FORWARDED WITH YOUR LETTER, IS RETURNED HEREWITH. THE OTHER PAPERS IN THE CASE WILL BE RETAINED AS A PART OF THE RECORD.