B-124042, JULY 25, 1955, 35 COMP. GEN. 46

B-124042: Jul 25, 1955

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CONTRACTS - ARCHITECT - ENGINEER SERVICES - FEES - PERCENTAGE-BASIS COMPUTATIONS UNDER AN ENGINEERING CONTRACT FOR THE PREPARATION OF PLANS FOR A SEWERAGE SYSTEM WHICH PROVIDED THAT IN THE EVENT THE CONSTRUCTION CONTRACT WAS NOT AWARDED. 1955: REFERENCE IS MADE TO YOUR LETTER OF MAY 18. THE VOUCHER COVERS RECLAIM OF THE AMOUNT DEDUCTED FROM A PRIOR VOUCHER STATED IN THE CONTRACTOR'S FAVOR AS A RESULT OF AN ADMINISTRATIVE EXCEPTION TAKEN INCIDENT TO THE EXAMINATION OF VOUCHERS SUBMITTED BY THE CONTRACTOR ON WHICH PAYMENTS WERE CLAIMED FOR ENGINEERING SERVICES FURNISHED UNDER THE CONTRACT. UNDER THE TERMS OF PARAGRAPH 3 OF THE CONTRACT IT WAS AGREED THAT THE CONTRACTOR WOULD PREPARE COMPLETE PLANS AND SPECIFICATIONS FOR CONSTRUCTION OF THE SINGLE SEWERAGE SYSTEM TO SERVE THE ENTIRE LARCHMONT GARDENS HOUSING PROJECT.

B-124042, JULY 25, 1955, 35 COMP. GEN. 46

CONTRACTS - ARCHITECT - ENGINEER SERVICES - FEES - PERCENTAGE-BASIS COMPUTATIONS UNDER AN ENGINEERING CONTRACT FOR THE PREPARATION OF PLANS FOR A SEWERAGE SYSTEM WHICH PROVIDED THAT IN THE EVENT THE CONSTRUCTION CONTRACT WAS NOT AWARDED, THE ENGINEER'S FEE WOULD BE BASED ON A PERCENTAGE OF THE ESTIMATED CONSTRUCTION COST SPECIFIED IN THE CONTRACT, THE FEE PAYABLE ON AWARD OF A CONTRACT FOR THE CONSTRUCTION OF ONLY A PORTION OF THE SYSTEM SHOULD BE BASED ON THE ESTIMATED COST, AND NOT UPON THE COST IN A REJECTED BID FOR CONSTRUCTION OF THE ENTIRE SYSTEM.

TO LESTER H. THOMPSON, FEDERAL HOUSING ADMINISTRATION, JULY 25, 1955:

REFERENCE IS MADE TO YOUR LETTER OF MAY 18, 1955, FORWARDING BUREAU SCHEDULE NO. 3371 AND BUREAU VOUCHER NO. 41925 STATED IN FAVOR OF THE RADER ENGINEERING COMPANY IN THE AMOUNT OF $1,143.60 UNDER CONTRACT NO. HA/066/WFH-27, DATED SEPTEMBER 9, 1953, WITH THE REQUEST THAT A DECISION BE RENDERED AS TO THE PROPRIETY OF CERTIFYING THE VOUCHER FOR PAYMENT.

THE VOUCHER COVERS RECLAIM OF THE AMOUNT DEDUCTED FROM A PRIOR VOUCHER STATED IN THE CONTRACTOR'S FAVOR AS A RESULT OF AN ADMINISTRATIVE EXCEPTION TAKEN INCIDENT TO THE EXAMINATION OF VOUCHERS SUBMITTED BY THE CONTRACTOR ON WHICH PAYMENTS WERE CLAIMED FOR ENGINEERING SERVICES FURNISHED UNDER THE CONTRACT.

UNDER THE TERMS OF PARAGRAPH 3 OF THE CONTRACT IT WAS AGREED THAT THE CONTRACTOR WOULD PREPARE COMPLETE PLANS AND SPECIFICATIONS FOR CONSTRUCTION OF THE SINGLE SEWERAGE SYSTEM TO SERVE THE ENTIRE LARCHMONT GARDENS HOUSING PROJECT, DADE COUNTY, FLORIDA, INCLUDING A SEWAGE TREATMENT PLANT, MASKING (PLANT BUILDING), OUTFALL, ETC., ALL COMPLETE AND DETAILED FOR USE BY THE GOVERNMENT IN LETTING A CONTRACT BY COMPETITIVE BIDDING FOR CONSTRUCTION OF THE SEWERAGE SYSTEM AND TREATMENT PLANT AND ALL PARTS OF SAME. THE AMOUNT OF COMPENSATION TO BE PAID FOR THE SERVICES COVERED BY PARAGRAPH 3 OF THE CONTRACT AND THE BASIS FOR COMPUTING SAME ARE SET FORTH IN PARAGRAPH 6 OF THE CONTRACT AS FOLLOWS:

THE GOVERNMENT AGREES TO PAY TO THE CONTRACTOR AS COMPLETE COMPENSATION FOR ALL SERVICES COVERED BY PARAGRAPH NUMBERED 3 HEREOF AN AMOUNT EQUIVALENT TO 5.6 PERCENT OF THE CONSTRUCTION CONTRACT COST LESS THE AMOUNT PAID UNDER ITEM 5 HEREOF, PLUS THREE DOLLARS ($3.00) PER FOOT FOR ALL BORINGS MADE NOT TO EXCEED SEVEN HUNDRED AND TWENTY DOLLARS ($720.00) FOR BORINGS, PLUS SEVENTY-FIVE DOLLARS ($75.00) PER DAY FOR EACH SURVEY PARTY WHILE ACTUALLY ENGAGED IN WORK ON THE PROJECT NOT TO EXCEED THREE HUNDRED AND SEVENTY-FIVE DOLLARS ($375.00) FOR SURVEYS. THE PAYMENTS CALLED FOR UNDER THIS ITEM SHALL BE CONSIDERED EARNED AND PAYABLE AT THE TIME THE CONSTRUCTION CONTRACT IS AWARDED; PROVIDED, HOWEVER, THAT IN THE EVENT THE GOVERNMENT DOES NOT AWARD A CONTRACT FOR CONSTRUCTION THE PAYMENT CALLED FOR UNDERTHIS PARAGRAPH, BASED UPON A PERCENTAGE OF CONSTRUCTION COST, SHALL BE CONSIDERED EARNED AND PAYABLE WHEN THE COMPLETED CONSTRUCTION PLANS AND SPECIFICATIONS HAVE BEEN DELIVERED TO AND ACCEPTED BY THE GOVERNMENT AND SHALL BE BASED UPON AN ESTIMATED CONSTRUCTION COST OF ONE HUNDRED THIRTY THOUSAND DOLLARS ($130,000.00). ITALICS SUPPLIED.)

IT APPEARS THAT ON JUNE 18, 1954, THE CONTRACTING OFFICER INVITED BIDS FOR THE CONSTRUCTION OF A SEWAGE COLLECTION SYSTEM AND A SEWAGE DISPOSAL PLANT. HOWEVER, SHORTLY THEREAFTER, IT BECAME EVIDENT THAT AN ARRANGEMENT MIGHT BE WORKED OUT WITH THE CITY OF MIAMI FOR THE CONNECTION OF THAT CITY'S SEWER SYSTEM WITH THE LARCHMONT GARDENS PROJECT, WHICH WOULD ELIMINATE THE NEED FOR A TREATMENT PLANT, A MAJOR ITEM OF CONSTRUCTION. ACCORDINGLY, THE INVITATION WAS MODIFIED TO PERMIT BIDS ON TWO SEPARATE BASES; ONE, FOR CONSTRUCTION OF THE SYSTEM WITHOUT THE TREATMENT PLANT, AND, TWO, FOR CONSTRUCTION OF THE SYSTEM INCLUDING THE TREATMENT PLANT. THE LOWEST BID ON THE FIRST BASIS WAS SUBMITTED BY DEIGAARD AND PRESTON BUILDERS, INC., IN THE AMOUNT OF $48,521.35; THE LOWEST BID RECEIVED ON THE SECOND BASIS WAS SUBMITTED BY PORTER-1WAGAR-1RUSSELL, INC., IN THE AMOUNT OF $150,421.50. WHEN THE ARRANGEMENTS WITH THE CITY OF MIAMI FOR CONNECTION WITH THE CITY SEWER SYSTEM WERE SUCCESSFULLY CONCLUDED, THE CONTRACT FOR THE CONSTRUCTION WORK WAS AWARDED TO DEIGAARD AND PRESTON IN THE AMOUNT OF ITS BID.

THE RADER ENGINEERING COMPANY WAS PAID AS ITS FEE FOR ENGINEERING SERVICES THE SUM OF $7,280 (5.6 PERCENT OF $130,000). IT CLAIMS THE ADDITIONAL AMOUNT OF $1,143.60, THE DIFFERENCE BETWEEN THE SAID SUM OF $7,280 AND $8,423.60 (5.6 PERCENT OF $150,421.50, THE LOW BID FOR THE WORK INCLUSIVE OF THE TREATMENT PLANT). BADER'S POSITION IS THAT THE $130,000 ESTIMATED CONSTRUCTION COST IS APPLICABLE ONLY IF A FIGURE OF ACTUAL CONSTRUCTION COST FOR THE PROJECT WAS NOT OBTAINED, AND THAT SINCE A FIRM BID WAS RECEIVED COVERING ALL ITEMS OF CONSTRUCTION FOR WHICH ENGINEERING SERVICES WERE PERFORMED, THE AMOUNT DUE UNDER PARAGRAPH 6 SHOULD BE COMPUTED ON THE BASIS OF THAT BID, TO WIT, $150,421,50.

WE PERCEIVE NO MERIT TO THIS CONTENTION. IT NOT ONLY FINDS NO SUPPORT IN PARAGRAPH 6 OF THE CONTRACT, ABOVE-QUOTED, BUT IS CONTRARY TO THE EXPRESS TERMS THEREOF. THAT PARAGRAPH PROVIDES THAT THE FEE IS TO BE COMPUTED ON THE BASIS OF THE CONSTRUCTION CONTRACT COST. WHILE SUCH A CONTRACT WAS AWARDED, IT COVERS ONLY A SMALL PORTION OF THE WORK ORIGINALLY INTENDED TO BE PERFORMED AND FOR WHICH ENGINEERING SERVICES WERE FURNISHED. WE AGREE WITH YOUR CHIEF COUNSEL THAT, UNDER THE CIRCUMSTANCES, IT IS PROPER TO CONCLUDE THAT THE GOVERNMENT DID NOT AWARD THE CONSTRUCTION CONTRACT CONTEMPLATED BY THE PARTIES TO THE RADAR AGREEMENT. CONSEQUENTLY, THERE MUST BE APPLIED THE LAST SENTENCE OF PARAGRAPH 6, WHEREIN THE PARTIES AGREED THAT IN SUCH EVENT THE FEE WOULD BE BASED UPON SPECIFIED PERCENTAGE OF AN ESTIMATED CONSTRUCTION COST OF $130,000. THERE IS NO WARRANT FOR EMPLOYING THE BID PRICE OF $150,421.50 IN DETERMINING THE FEE TO BE PAID FOR THE OBVIOUS REASON THAT NO CONSTRUCTION CONTRACT WAS AWARDED UPON THE BASIS OF THAT BID.

ACCORDINGLY, THE VOUCHER MAY NOT BE CERTIFIED FOR PAYMENT.

THE VOUCHER AND SCHEDULE OF PAYMENT FORM AND ATTACHMENTS ARE RETURNED HEREWITH.