B-122088, JAN 20, 1955

B-122088: Jan 20, 1955

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HOLLEY: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 28. THE CLAIM IS FOR EXTRA WORK PERFORMED AND THE AMOUNT IS THAT DETERMINED BY THE SECRETARY OF THE TREASURY TO BE DUE IN HIS FINDINGS AND DETERMINATION TRANSMITTED WITH LETTER OF SEPTEMBER 27. ANY CLAIM FOR ADJUSTMENT UNDER THIS ARTICLE MUST BE ASSERTED WITHIN 10 DAYS FROM THE DATE THE CHANGE IS ORDERED: PROVIDED. ALTHOUGH THE CONTRACTOR MAY NOT HAVE COMPLIED STRICTLY WITH THE TERMS OF THE CONTRACT WITH RESPECT TO CHANGES. ARE IN ACCORDANCE WITH THE RATE QUOTED BY THE CONTRACTOR IN HIS BID AS AN ALTERNATE TO ITEMS FOR REMOVAL OF A QUANTITY OF THE RIPRAP AND PLACING SAME AT MIDDLE NEEBISH NORTH ROUGE REAR LIGHT AND AT LITTLE RAPIDS CUT LIGHT NO. 81.

B-122088, JAN 20, 1955

PRECIS-UNAVAILABLE

MR. R. E. HOLLEY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 28, 1954, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER THERE MAY BE CERTIFIED FOR PAYMENT THE CLAIM OF L. A. WELLS CONSTRUCTION COMPANY, FOR THE BALANCE OF $12,428.51, STATED TO BE DUE FOR REMOVAL AND REPLACEMENT OF RIPRAP FROM WEST NEEBISH LIGHT NO. 50, UNDER CONTRACT T09CG-1886, DATED JUNE 26, 1953, AS AMENDED. THE CLAIM IS FOR EXTRA WORK PERFORMED AND THE AMOUNT IS THAT DETERMINED BY THE SECRETARY OF THE TREASURY TO BE DUE IN HIS FINDINGS AND DETERMINATION TRANSMITTED WITH LETTER OF SEPTEMBER 27, 1954, TO THE CONTRACTOR, AS A RESULT OF THE CONTRACTOR'S REJECTION OF THE CONTRACTING OFFICER'S FINDINGS SET FORTH IN CONFIRMING CHANGE ORDER D, DATED MAY 7, 1954, AND THE CONTRACTOR'S APPEAL PURSUANT TO ARTICLE 15 OF THE CONTRACT TO THE HEAD OF THE DEPARTMENT.

YOU QUESTION THE PROPRIETY OF CERTIFYING THE CLAIM FOR PAYMENT BECAUSE THE CONTRACTOR HAD PROCEEDED TO PERFORM THE EXTRA WORK APPARENTLY AT THE DIRECTION OF THE GOVERNMENT'S INSPECTOR ON THE JOB, WITHOUT FIRST OBTAINING THE CONTRACTING OFFICER'S AUTHORIZATION THEREFOR AS PROVIDED FOR UNDER THE PROVISIONS OF THE CONTRACT, AND AT PRICES IN EXCESS OF THE AMOUNT DETERMINED BY THE CONTRACTING OFFICER TO BE REASONABLE.

ARTICLE 3 OF THE CONTRACT PROVIDES:

"THE CONTRACTING OFFICER MAY AT ANY TIME, BY A WRITTEN ORDER, AND WITHOUT NOTICE TO THE SURETIES, MAKE CHANGES IN THE DRAWINGS AND/OR SPECIFICATIONS OF THIS CONTRACT AND WITHIN THE GENERAL SCOPE THEREOF. IF SUCH CHANGES CAUSE AN INCREASE OR DECREASE IN THE DUE AMOUNT UNDER THIS CONTRACT, OR IN THE TIME REQUIRED FOR ITS PERFORMANCE, AN EQUITABLE ADJUSTMENT SHALL BE MADE AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY. NO CHANGE INVOLVING AN ESTIMATED INCREASE OR DECREASE OF MORE THAN FIVE HUNDRED DOLLARS SHALL BE ORDERED UNLESS APPROVED IN WRITING BY THE HEAD OF THE DEPARTMENT OR HIS DULY AUTHORIZED REPRESENTATIVE. ANY CLAIM FOR ADJUSTMENT UNDER THIS ARTICLE MUST BE ASSERTED WITHIN 10 DAYS FROM THE DATE THE CHANGE IS ORDERED: PROVIDED, HOWEVER, THAT THE CONTRACTING OFFICER, IF HE DETERMINES THAT THE FACTS JUSTIFY SUCH ACTION, MAY RECEIVE AND CONSIDER, AND WITH THE APPROVAL OF THE HEAD OF THE DEPARTMENT OR HIS DULY AUTHORIZED REPRESENTATIVE, ADJUST ANY SUCH CLAIM ASSERTED AT ANY TIME PRIOR TO THE DATE OF FINAL SETTLEMENT OF THE CONTRACT. IF THE PARTIES FAIL TO AGREE UPON THE ADJUSTMENT TO BE MADE THE DISPUTE SHALL BE DETERMINED AS PROVIDED IN ARTICLE 15 HEREOF. BUT NOTHING PROVIDED IN THIS ARTICLE SHALL EXCUSE THE CONTRACTOR FROM PROCEEDING WITH THE PROSECUTION OF THE WORK SO CHANGED."

ARTICLE 15 OF THE CONTRACT PROVIDES:

"EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS CONTRACT, ALL DISPUTES CONCERNING QUESTIONS OF FACT ARISING UNDER THIS CONTRACT SHALL BE DECIDED BY THE CONTRACTING OFFICER SUBJECT TO WRITTEN APPEAL BY THE CONTRACTOR WITHIN 30 DAYS TO THE HEAD OF THE DEPARTMENT CONCERNED OR HIS DULY AUTHORIZED REPRESENTATIVE, WHOSE DECISION SHALL BE FINAL AND CONCLUSIVE UPON THE PARTIES THERETO. IN THE MEANTIME THE CONTRACTOR SHALL DILIGENTLY PROCEED WITH THE WORK AS DIRECTED."

ALTHOUGH THE CONTRACTOR MAY NOT HAVE COMPLIED STRICTLY WITH THE TERMS OF THE CONTRACT WITH RESPECT TO CHANGES, IT APPEARS TO BE ESTABLISHED THAT THE ADDITIONAL WORK BENEFITED THE GOVERNMENT. ALSO, IT SEEMS CLEAR THAT THE EXTRA WORK COULD, AS A PRACTICAL MATTER, BE PERFORMED ONLY BY THE CONTRACTOR IN CONNECTION WITH THE WORK REQUIRED TO BE PERFORMED UNDER THE BASIC CONTRACT. THE CONTRACTING OFFICER ACCEPTED THE ADDITIONAL WORK BUT DISAGREED AS TO THE PROPER PRICE TO BE PAID THEREFOR.

THE CHARGES FOR REMOVAL AND DUMPING OF RIPRAP AS APPROVED BY THE SECRETARY, ALTHOUGH IN EXCESS OF THE PRICES BID BY THE UNSUCCESSFUL BIDDERS, ARE IN ACCORDANCE WITH THE RATE QUOTED BY THE CONTRACTOR IN HIS BID AS AN ALTERNATE TO ITEMS FOR REMOVAL OF A QUANTITY OF THE RIPRAP AND PLACING SAME AT MIDDLE NEEBISH NORTH ROUGE REAR LIGHT AND AT LITTLE RAPIDS CUT LIGHT NO. 81. THIS ITEM WAS NOT INCLUDED IN THE AWARD OF THE BASIC CONTRACT BUT SINCE IT LATER DEVELOPED THAT IT WAS IMPRACTICABLE TO PLACE THE MATERIAL AT THE SITE ORIGINALLY CONTEMPLATED, IT WAS NECESSARY TO DESIGNATE OTHER LOCATIONS FOR ITS DISPOSAL, THUS NECESSITATING INCREASED COSTS, AND REASONABLE TIME MUST BE ALLOWED FOR PERFORMANCE OF THE REQUIRED EXTRA WORK. SEE MANUFACTURING COMPANY V. UNITED STATES, 84 U.S. 592; MCDONALD ENGINEERING COMPANY V. UNITED STATES. 88 C. CLS. 484.

IT HAS BEEN HELD THAT WHAT CONSTITUTES AN "EQUITABLE ADJUSTMENT" BECAUSE OF CHANGED CONDITIONS, AS PROVIDED FOR IN ARTICLE 3 OF THE INSTANT CONTRACT, IS A QUESTION OF FACT. UNITED STATES V. RICE, 317 U.S. 56. UNDER PUBLIC LAW 356, APPROVED MAY 11, 1954, 68 STAT. 81, THE DECISION OF THE HEAD OF A DEPARTMENT ON A QUESTION OF FACT IS FINAL AND CONCLUSIVE UNLESS THE SAME IS "FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE." SUCH A CONCLUSION IN RESPECT TO THE SECRETARY'S DECISION WOULD NOT BE JUSTIFIED ON THE PRESENT RECORD.

SINCE THE SECRETARY OF THE TREASURY IN HIS FINDINGS AND DETERMINATION UNDER THE "DISPUTES CLAUSE" HAS CONCLUDED THAT THE EQUITABLE ADJUSTMENT SET FORTH IN CHANGE ORDER C, DATED OCTOBER 8, 1954, IS REASONABLE AND EQUITABLE, HIS DECISION MAY BE ACCEPTED AS FINAL.

ACCORDINGLY, THE CLAIM, IF OTHERWISE CORRECT, MAY BE CERTIFIED FOR PAYMENT.

THE DOCUMENTS AND PAPERS TRANSMITTED WITH YOUR LETTER ARE HEREWITH RETURNED.