B-121805, NOVEMBER 8, 1954, 34 COMP. GEN. 219

B-121805: Nov 8, 1954

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DOES NOT GIVE THE GOVERNMENT ANY RIGHT TO OCCUPY ANY OF THE PROJECTS UNTIL ALL THE WORK IS COMPLETED AND ACCEPTED. IT WOULD BE IN THE PUBLIC INTEREST TO MODIFY THE CONTRACT TO PROVIDE A SEPARATE PRICE FOR EACH PROJECT SO AS TO PERMIT ACCEPTANCE AND OCCUPANCY AS THE PROJECTS ARE COMPLETED. 1954: I HAVE YOUR LETTER OF OCTOBER 18. THE BUREAU OF INDIAN AFFAIRS HAS A VESTED RIGHT TO USE AND OCCUPY THE BUILDINGS UTILITIES AT ANY OF THE THREE PROJECTS AS THE WORK ON EACH PROJECT IS COMPLETED BUT PRIOR TO THE WRITTEN ACCEPTANCE OF THE WORK. IF THE BUREAU DOES NOT HAVE SUCH RIGHT. YOU STATE THAT WHEN INVITATIONS FOR BIDS FOR THESE PROJECTS WERE ISSUED. IT WAS CONTEMPLATED THAT THE PRICE FOR EACH WOULD BE SET OUT SEPARATELY IN THE CONTRACT IN ORDER THAT WRITTEN ACCEPTANCE COULD BE GIVEN ON EACH PROJECT AS THE WORK WAS COMPLETED.

B-121805, NOVEMBER 8, 1954, 34 COMP. GEN. 219

PUBLIC BUILDINGS - CONSTRUCTION - ACCEPTANCE OF COMPLETED UNITS; CONTRACTS - MODIFICATION - PUBLIC INTEREST CONSIDERATIONS A LUMP-SUM CONTRACT FOR CONSTRUCTION OF BUILDINGS AT THREE INDIAN SCHOOL SITES, WHICH CONTAINS A PROVISION PLACING ON THE CONTRACTOR THE LIABILITY FOR DAMAGE OR DESTRUCTION OF THE PROPERTY PRIOR TO ACCEPTANCE, DOES NOT GIVE THE GOVERNMENT ANY RIGHT TO OCCUPY ANY OF THE PROJECTS UNTIL ALL THE WORK IS COMPLETED AND ACCEPTED, HOWEVER, IT WOULD BE IN THE PUBLIC INTEREST TO MODIFY THE CONTRACT TO PROVIDE A SEPARATE PRICE FOR EACH PROJECT SO AS TO PERMIT ACCEPTANCE AND OCCUPANCY AS THE PROJECTS ARE COMPLETED.

ACTING COMPTROLLER GENERAL MORROW TO THE SECRETARY OF THE INTERIOR, NOVEMBER 8, 1954:

I HAVE YOUR LETTER OF OCTOBER 18, 1954, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER, UNDER THE TERMS OF CONTRACT NO. 14-20-650-87 COVERING THE CONSTRUCTION OF THREE SCHOOL PROJECTS, THE BUREAU OF INDIAN AFFAIRS HAS A VESTED RIGHT TO USE AND OCCUPY THE BUILDINGS UTILITIES AT ANY OF THE THREE PROJECTS AS THE WORK ON EACH PROJECT IS COMPLETED BUT PRIOR TO THE WRITTEN ACCEPTANCE OF THE WORK, OR WHETHER, IF THE BUREAU DOES NOT HAVE SUCH RIGHT, THE CONTRACT CAN BE MODIFIED TO STATE THE PRICE FOR EACH PROJECT SEPARATELY.

UNDER THE PROVISIONS OF THE CONTRACT, GEORGE A. RUTHERFORD, INC., AGREED TO CONSTRUCT THREE PROJECTS CONSISTING OF VARIOUS TYPES OF BUILDINGS AND UTILITIES SYSTEMS TO BE USED IN CONNECTION WITH EXISTING SCHOOLS LOCATED ON THE NAVAJO INDIAN RESERVATION AT CRYSTAL, STANDING ROCK AND SHIP ROCK, ALL IN THE STATE OF NEW MEXICO, FOR THE LUMP-SUM CONSIDERATION OF $627,757.

YOU STATE THAT WHEN INVITATIONS FOR BIDS FOR THESE PROJECTS WERE ISSUED, IT WAS CONTEMPLATED THAT THE PRICE FOR EACH WOULD BE SET OUT SEPARATELY IN THE CONTRACT IN ORDER THAT WRITTEN ACCEPTANCE COULD BE GIVEN ON EACH PROJECT AS THE WORK WAS COMPLETED, THEREBY RELIEVING THE CONTRACTOR OF ALL FURTHER RESPONSIBILITY FOR THAT PARTICULAR DIVISION OF THE WORK, ALLOWING PAYMENT TO BE MADE IN FULL FOR EACH PROJECT AND THUS PERMITTING THE BUREAU IMMEDIATELY TO USE AND OCCUPY THE BUILDINGS AND UTILITIES FOR SCHOOL PURPOSES. YOU STATE FURTHER, HOWEVER, THAT BECAUSE OF THE URGENCY TO GET THE CONTRACT AWARDED AFTER BIDS WERE OPENED ON MAY 25, 1954, THE PRICE FOR EACH OF THE THREE PROJECTS WAS NOT STATED SEPARATELY, AS ORIGINALLY PLANNED, BUT ONLY THE LUMP-SUM PRICE FOR THE ENTIRE WORK WAS STIPULATED IN THE CONTRACT.

THE CONTRACTOR'S OBLIGATION IN THE MATTER OF CARE AND PROTECTION OF THE PROPERTY UNTIL THE TIME OF ITS FINAL INSPECTION AND ACCEPTANCE BY THE GOVERNMENT IS SET FORTH IN ARTICLE 11 OF THE GENERAL PROVISIONS, STANDARD FORM 23A, AND IN PARAGRAPH 32 OF THE GENERAL CONDITIONS, AS FOLLOWS:

11. PERMITS AND RESPONSIBILITY FOR WORK, ETC.

THE CONTRACTOR SHALL, WITHOUT ADDITIONAL EXPENSE TO THE GOVERNMENT, OBTAIN ALL LICENSES AND PERMITS REQUIRED FOR THE PROSECUTION OF THE WORK. HE SHALL BE RESPONSIBLE FOR ALL DAMAGES TO PERSONS OR PROPERTY THAT OCCUR AS A RESULT OF HIS FAULT OR NEGLIGENCE IN CONNECTION WITH THE PROSECUTION OF THE WORK. HE SHALL ALSO BE RESPONSIBLE FOR ALL MATERIALS DELIVERED AND WORK PERFORMED UNTIL COMPLETION AND FINAL ACCEPTANCE, EXCEPT FOR ANY COMPLETED UNIT THEREOF WHICH THERETOFORE MAY HAVE BEEN FINALLY ACCEPTED.

32. ACCEPTANCE OF COMPLETED PROJECTS: WHEN ALL WORK OR MATERIALS REQUIRED BY THE DRAWINGS AND SPECIFICATIONS FOR EACH PROJECT FOR WHICH THE AMOUNT IS STATED SEPARATELY IN THE CONTRACT HAVE BEEN PERFORMED AND FURNISHED, ACCEPTANCE OF THE WORK WILL BE GIVEN BY THE CONTRACTING OFFICER. THE ACCEPTANCE OF THE WORK WILL BE GIVEN IN WRITING AND UNTIL SUCH ACCEPTANCE THE CONTRACTOR WILL BE RESPONSIBLE FOR THE WORK COVERED BY THE CONTRACT. THE CONTRACTOR'S RESPONSIBILITY WILL CEASE, EXCEPT AS PROVIDED BY GUARANTEES, WHEN ACCEPTANCE OF THE WORK IS GIVEN.

THE FOLLOWING TERMS AND CONDITIONS OF SUBPARAGRAPHS (B), (C) AND (D) OF ARTICLE 7 OF THE GENERAL PROVISIONS OF THE CONTRACT ARE ALSO FOR CONSIDERATION IN DETERMINING THE QUESTION PRESENTED:

(B) IN MAKING SUCH PARTIAL PAYMENTS THERE SHALL BE RETAINED 10 PERCENT ON THE ESTIMATED AMOUNT UNTIL FINAL COMPLETION AND ACCEPTANCE OF ALL WORK COVERED BY THE CONTRACT: PROVIDED, HOWEVER, THAT THE CONTRACTING OFFICER, AT ANY TIME AFTER 50 PERCENT OF THE WORK HAS BEEN COMPLETED, IF HE FINDS THAT SATISFACTORY PROGRESS IS BEING MADE, MAY MAKE ANY OF THE REMAINING PARTIAL PAYMENTS IN FULL; AND PROVIDED FURTHER, THAT ON COMPLETION AND ACCEPTANCE OF EACH SEPARATE BUILDING, PUBLIC WORK, OR OTHER DIVISION OF THE CONTRACT, ON WHICH THE PRICE IS STATED SEPARATELY IN THE CONTRACT, PAYMENT MAY BE MADE IN FULL, INCLUDING RETAINED PERCENTAGE THEREON, LESS AUTHORIZED DEDUCTIONS.

(C) ALL MATERIAL AND WORK COVERED BY PARTIAL PAYMENTS MADE SHALL THEREUPON BECOME THE SOLE PROPERTY OF THE GOVERNMENT, BUT THIS PROVISION SHALL NOT BE CONSTRUED AS RELIEVING THE CONTRACTOR FROM THE SOLE RESPONSIBILITY FOR ALL MATERIALS AND WORK UPON WHICH PAYMENTS HAVE BEEN MADE OR THE RESTORATION OF ANY DAMAGED WORK, OR AS A WAIVER OF THE RIGHT OF THE GOVERNMENT TO REQUIRE THE FULFILLMENT OF ALL OF THE TERMS OF THE CONTRACT.

(D) UPON COMPLETION AND ACCEPTANCE OF ALL WORK REQUIRED HEREUNDER, THE AMOUNT DUE THE CONTRACTOR UNDER THIS CONTRACT WILL BE PAID UPON THE PRESENTATION OF A PROPERLY EXECUTED AND DULY CERTIFIED VOUCHER THEREFOR, AFTER THE CONTRACTOR SHALL HAVE FURNISHED THE GOVERNMENT WITH A RELEASE, IF REQUIRED, OF ALL CLAIMS AGAINST THE GOVERNMENT ARISING UNDER AND BY VIRTUE OF THIS CONTRACT, OTHER THAN SUCH CLAIMS, IF ANY, AS MAY BE SPECIFICALLY EXCEPTED BY THE CONTRACTOR FROM THE OPERATION OF THE RELEASE IN STATED AMOUNTS TO BE SET FORTH THEREIN. IF THE CONTRACTOR'S CLAIM TO AMOUNTS PAYABLE UNDER THE CONTRACT HAS BEEN ASSIGNED UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED (41 U.S.C. 15), A RELEASE MAY ALSO BE REQUIRED OF THE ASSIGNEE AT THE OPTION OF THE CONTRACTING OFFICER.

THE RESPONSIBILITY OF THE CONTRACTOR FOR ALL MATERIALS DELIVERED AND WORK PERFORMED UNTIL COMPLETION AND FINAL ACCEPTANCE AND FOR DELIVERING THE WORK COMPLETE AND UNDAMAGED IS NOT LIMITED BY THE TERMS OF ARTICLE 11 TO DAMAGES RESULTING FROM THE CONTRACTOR'S FAULT OR NEGLIGENCE. MITTRY, ET AL. V. UNITED STATES, 73 C.1CLS. 341. ALSO, SEE 15 COMP. GEN. 876; 16 ID. 975. NOR DO THE PARTIAL PAYMENT PROVISIONS OF ARTICLE 7 TO THE EFFECT THAT THE MATERIALS AND WORK COVERED BY PARTIAL PAYMENTS SHALL BECOME THE PROPERTY OF THE GOVERNMENT AFFECT THE "SOLE RESPONSIBILITY" OF THE CONTRACTOR TO RESTORE ANY DAMAGED WORK OR THE RIGHT OF THE GOVERNMENT TO DEMAND THAT UPON COMPLETION OF THE CONTRACT THE WORK BE DELIVERED COMPLETE AND UNDAMAGED WITHOUT ADDITIONAL EXPENSE.

CONCERNING THE OCCUPANCY OF A COMPLETED OR SUBSTANTIALLY COMPLETED BUILDING BY THE GOVERNMENT PRIOR TO THE WRITTEN ACCEPTANCE OF THE WORK AND THE EFFECT OF SUCH OCCUPANCY ON THE CONTRACTOR'S LIABILITY FOR DAMAGE TO THE PROPERTY, IT WAS HELD IN 25 COMP. GEN. 332, QUOTING THE PERTINENT PART OF THE SYLLABUS:

THE FACT THAT A CONSTRUCTION PROJECT WAS SUBSTANTIALLY COMPLETED AND OCCUPIED BY THE GOVERNMENT WHEN THE PROPERTY WAS DAMAGED PRIOR TO FINAL ACCEPTANCE MAY NOT BE CONSIDERED AS RELIEVING THE CONTRACTOR OF ITS CONTRACTUAL RESPONSIBILITY FOR "ALL MATERIALS AND WORK PERFORMED UNTIL COMPLETION AND FINAL ACCEPTANCE," OF ITS OBLIGATION TO REPAIR OR REPLACE, AT ITS OWN EXPENSE, ANY MATERIALS DAMAGED "BY ANY CAUSE OR MEANS WHATSOEVER," OR OF ITS OBLIGATION TO DELIVER THE ENTIRE STRUCTURE COMPLETE AND UNDAMAGED, SO AS TO ESTOP THE GOVERNMENT FROM DENYING THAT IT ACCEPTED THE RISKS INCIDENT TO THE CONTROL, USE OR OCCUPANCY OF THE PROPERTY. COMP. GEN. 876, DISTINGUISHED.

INASMUCH AS THE INSTANT CONTRACTOR IS REQUIRED TO ASSUME THE RISK OF DAMAGE TO OR DESTRUCTION OF THE PROPERTY IN THE EVENT SUCH DAMAGE OR DESTRUCTION SHOULD BE CAUSED BY AN ACT OF THE CONTRACTOR OR BY SOME OCCURRENCE BEYOND THE CONTROL OF EITHER PARTY PRIOR TO FINAL INSPECTION AND ACCEPTANCE BY THE GOVERNMENT, IT SEEMS CLEAR THAT UNDER THE PROVISIONS OF THE CONTRACT THE GOVERNMENT DOES NOT HAVE A VESTED RIGHT TO USE OR OCCUPY THE BUILDING AND UTILITIES AT ANY OF THE THREE SITES UNTIL ALL THE CONTRACT WORK IS COMPLETELY PERFORMED AND FINALLY ACCEPTED.

AS TO THE QUESTION OF WHETHER THE CONTRACT MAY BE AMENDED TO PROVIDE FOR A SEPARATE PRICE FOR EACH PROJECT, SO AS TO PERMIT THE ACCEPTANCE OF EACH PROJECT AS IT IS COMPLETED, THIS OFFICE HAS CONSISTENTLY HELD THAT CONTRACTING OFFICERS MAY LEGALLY MODIFY EXISTING CONTRACTS IN THE INTERESTS OF THE UNITED STATES. SEE FOR EXAMPLE 19 COMP. GEN. 662.

SINCE ON THE BASIS OF THE/FACTS PRESENTED IT WOULD BE IN THE PUBLIC INTEREST TO MODIFY THE CONTRACT, TO STATE SEPARATELY THE PRICE OF EACH PROJECT, THIS OFFICE PERCEIVES NO LEGAL OBJECTION TO SUCH ACTION.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT.