B-128071, JUL. 10, 1956

B-128071: Jul 10, 1956

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DEPARTMENT OF THE INTERIOR: REFERENCE IS MADE TO YOUR LETTER OF MAY 29. REQUESTING A DECISION AS TO WHETHER IT IS PROPER TO CERTIFY A VOUCHER FOR $7. THE PERTINENT FACTS AND CIRCUMSTANCES OF THE CASE UPON WHICH THE BOARD'S DECISION WAS RENDERED MAY BE SUMMARIZED AS FOLLOWS: THE CONTRACT SPECIFICATIONS CONTAIN A PROVISION THAT "AN UNDERGROUND PRIMARY TIE SHALL BE FURNISHED AND INSTALLED BETWEEN THE VAULT IN THE SCHOOL AND THE VAULT IN THE HOSPITAL AS INDICATED ON THE PLAN.'. AT THE PLACES WHERE THE UNDERGROUND CABLES AND APPURTENANT EQUIPMENT WERE TO BE INSTALLED. ARE RECOGNIZED BY ALL PARTIES CONCERNED AS MEANING "NOT IN CONTRACT.'. THE ELECTRIC CONNECTION BETWEEN THE SCHOOL AND THE HOSPITAL WAS NOT INSTALLED BY THE CONTRACTOR AND THE CONTRACTING OFFICER FIRST BECAME AWARE OF THIS SITUATION WHEN HE VISITED THE VIRGIN ISLANDS IN JANUARY 1955.

B-128071, JUL. 10, 1956

TO MR. CHARLES BONNEVILLE, CERTIFYING OFFICER, DEPARTMENT OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF MAY 29, 1956, REQUESTING A DECISION AS TO WHETHER IT IS PROPER TO CERTIFY A VOUCHER FOR $7,862.20 STATED IN FAVOR OF THE FLUOR CORPORATION, LTD., LOS ANGELES, CALIFORNIA, COVERING AN AMOUNT WITHHELD FROM PAYMENT UNDER CONTRACT NO. 14-04-001-58, DATED FEBRUARY 16, 1953, FOR THE CONSTRUCTION OF TWO HIGH SCHOOL BUILDINGS AT CHARLOTTE AMALIE, ST. THOMAS, AND CHRISTIANSTED, ST. CROIX (PROJECTS NOS. 53-105 AND 53-504 OF THE VIRGIN ISLANDS PUBLIC WORKS PROGRAM).

THE VOUCHER BEARS THE NOTATION: "PAYMENT REQUESTED IN ACCORDANCE WITH THE BOARD OF CONTRACT APPEALS DECISION NO. IBCA53 DATED JANUARY 23, 1956, RE: THE MATTER OF CLAIM FOR $7862.20 BY THE FLUOR CORPORATION, LTD., CONTRACTOR, IN CONNECTION WITH THE CONSTRUCTION OF A HIGH SCHOOL LOCATED AT CHISTIANSTED, ST. CROIX, VIRGIN ISLANDS.' THE PERTINENT FACTS AND CIRCUMSTANCES OF THE CASE UPON WHICH THE BOARD'S DECISION WAS RENDERED MAY BE SUMMARIZED AS FOLLOWS:

THE CONTRACT SPECIFICATIONS CONTAIN A PROVISION THAT "AN UNDERGROUND PRIMARY TIE SHALL BE FURNISHED AND INSTALLED BETWEEN THE VAULT IN THE SCHOOL AND THE VAULT IN THE HOSPITAL AS INDICATED ON THE PLAN.' DRAWINGS E-101 AND E-108, FORMING A PART OF THE PLAN FOR CONSTRUCTION OF THE CHRISTIANSTED HIGH SCHOOL, BEAR THE NOTATION "TO HOSPITAL, N.I.C.' AT THE PLACES WHERE THE UNDERGROUND CABLES AND APPURTENANT EQUIPMENT WERE TO BE INSTALLED, CONNECTING THE ELECTRIC POWER VAULT OF THE SCHOOL WITH THAT OF THE CHARLES HARWOOD MEMORIAL HOSPITAL AT CHRISTIANSTED. THE LETTERS "N.I.C.' ARE RECOGNIZED BY ALL PARTIES CONCERNED AS MEANING "NOT IN CONTRACT.'

THE ELECTRIC CONNECTION BETWEEN THE SCHOOL AND THE HOSPITAL WAS NOT INSTALLED BY THE CONTRACTOR AND THE CONTRACTING OFFICER FIRST BECAME AWARE OF THIS SITUATION WHEN HE VISITED THE VIRGIN ISLANDS IN JANUARY 1955, AT WHICH TIME THE CONTRACTOR HAD CLOSED ITS VIRGIN ISLANDS OFFICES AND REMOVED ITS RECORDS FROM THE SITE. IT WAS DECIDED TO DEAL WITH THE MATTER BY MEANS OF A CHANGE ORDER CREDITING THE GOVERNMENT WITH $6,000. THE CONTRACTOR SIGNED THE CHANGE ORDER AND ON THE SAME DATE EXECUTED ITS FINAL RELEASE TO THE GOVERNMENT, EXCEPTING ITS CLAIM FOR THAT AMOUNT, IT HAVING BEEN NOTED, IN EFFECT, THAT IT WAS DESIRED TO STUDY THE MATTER FURTHER AFTER ASSEMBLY OF THE NECESSARY RECORDS. IN ANY EVENT, THE GOVERNMENT DISCOVERED THAT THE AMOUNT OF THE CHANGE ORDER WAS IN ERROR AND IT WAS NOT APPROVED BY THE CONTRACTING OFFICER. THE CONTRACTOR THEREAFTER SUBMITTED A REVISED ESTIMATE SHOWING THE AMOUNT OF THE CREDIT TO BE $7,862.20, BUT INDICATED THAT THE ENTIRE QUESTION OF LIABILITY FOR OMISSION OF THE CABLES WAS STILL CONSIDERED TO BE IN DISPUTE.

THE GOVERNMENT PROCEEDED TO MAKE PAYMENT IN THE AMOUNT OF $196,160.83, WHICH REFLECTED A TOTAL DEDUCTION OF $7,862.20, AND THE CONTRACTOR'S CLAIM FOR THAT AMOUNT WAS DENIED BY THE CONTRACTING OFFICER IN HIS FINDINGS OF FACT AND DECISION OF AUGUST 22, 1955, FROM WHICH THE CONTRACTOR APPEALED.

IN HIS INVESTIGATION, THE CONTRACTING OFFICER WAS INFORMED BY THE DISTRICT ENGINEER (DIRECTOR, VIRGIN ISLANDS PUBLIC WORKS) THAT THE CONTRACTOR INTERPRETED THE CONTRACT AS NOT REQUIRING THE INSTALLATION OF THE UNDERGROUND CABLES AND APPURTENANT EQUIPMENT IN VIEW OF THE LETTERS N.I.C. ON DRAWINGS E-101 AND E-108. THE CONTRACTING OFFICER THEN REQUESTED THE ARCHITECT TO SUPPLY HIS INTERPRETATION OF THE SPECIFICATIONS AND WAS INFORMED THAT THE ELECTRICAL DRAFTSMEN HAD INADVERTENTLY ADDED THE LETTERS N.I.C. TO THE DRAWINGS. FURTHER, IT WAS DISCLOSED THAT IN A LETTER DATED APRIL 28, 1955, TO THE DISTRICT ENGINEER, THE CONTRACTOR STATED THAT: "WE UNDERSTAND THAT YOU (DIRECTOR, V.I.P.W.), MR. GIBEAN (INSPECTOR) AND MESSRS. DUNN, STEVENS, DEXTER AND VANQUEZ WERE ALL OF THE OPINION THAT THE N.I.C. NOTATION ON THE DRAWINGS ESTABLISHED THE FACT THAT THE SERVICE WAS TO BE OMITTED AND AGREED THAT NO CHANGE ORDER WAS INVOLVED.' RELATIVE TO SUCH APPARENT AGREEMENT IN THE MATTER, THE CONTRACTING OFFICER CONTENDED IN HIS FINDINGS OF AUGUST 22, 1955, THAT THE GOVERNMENT COULD NOT BE HELD LIABLE FOR THE CONTRACTOR'S MISTAKEN CONCEPTION OF THE CONTRACT OR ITS FAILURE TO OBTAIN THE CONTRACTING OFFICER'S INTERPRETATION EVEN THOUGH THE LOCAL REPRESENTATIVE OF THE CONTRACTING OFFICER MAY HAVE CONCURRED IN THE CONTRACTOR'S OPINION THAT NO SUCH INTERPRETATION WAS NECESSARY.

THE BOARD OF CONTRACT APPEALS FOUND THE CONTRACTOR TO BE ENTITLED TO THE REMISSION OF THE SUM OF $7,862.20 ON EITHER ONE OR TWO ALTERNATIVE GROUNDS, FIRST, THAT UNDER THE TERMS OF THE SPECIFICATIONS THE CONTRACTOR WAS NOT REQUIRED TO INSTALL THE TIE-IN; AND, SECOND, THAT THE DETERMINATION ASSUMED BY THE BOARD TO HAVE BEEN MADE BY THE DISTRICT ENGINEER WAS BINDING UPON THE GOVERNMENT.

IN ITS DECISION, THE BOARD, AFTER EMPHASIZING THE PHRASE "AS INDICATED ON THE PLAN," CONSIDERED THAT THERE WAS NO CONFLICT BETWEEN THE SPECIFICATIONS AND THE NOTATION "TO HOSPITAL, N.I.C., " PLACED DIRECTLY UPON THE PLANS OF THE FACILITY. THE BOARD STATED THAT "THE SPECIFICATIONS REFERRING TO THE TIE-IN IN THE PRESENT CASE WAS ITSELF QUALIFIED, AND THERE IS NO PROOF THAT THE NOTATION WAS PLACED UPON THE DRAWINGS PRIOR TO THE PREPARATION OF THE SPECIFICATIONS.' ALTHOUGH THE SPECIFICATIONS AND THE NOTATIONS APPEARING ON DRAWINGS E 101 AND E-108, WHEN READ TOGETHER, WERE FOUND TO BE AMBIGUOUS, THE BOARD APPLIED THE RULE THAT AN AMBIGUITY IN A CONTRACT SHOULD BE CONSTRUED MOST STRONGLY AGAINST THE PARTY WHO USED THE AMBIGUOUS LANGUAGE, AND CONCLUDED THAT THE CONTRACTOR WAS NOT REQUIRED TO INSTALL THE TIE-IN.

WE HAVE CONSIDERED THE COMMENTS MADE ON YOUR LETTER IN REGARD TO THE BOARD'S DECISION. ALL OF THESE DEAL WITH THE SECOND GROUND OF THE DECISION--- THAT IS, THE FINALITY OF THE ASSUMED OR APPARENT INTERPRETATION OF THE SPECIFICATIONS BY THE DISTRICT ENGINEER. ASSUMING THE CORRECTNESS OF YOUR ARGUMENT, THE RESULT IS MERELY THAT THE CONTRACTING OFFICER AND NOT THE DISTRICT ENGINEER HAD AUTHORITY TO INTERPRET THE CONTRACT PROVISIONS CONCERNING THE MATTER IN DISPUTE. HIS DECISION, HOWEVER, WAS SUBJECT TO APPEAL, AND ON APPEAL IT HAS BEEN REVERSED ON THE MERITS BY THE DESIGNATED REPRESENTATIVE OF THE HEAD OF THE DEPARTMENT.

THE DECISION OF THE BOARD OF CONTRACT APPEALS, THAT THE CONTRACTOR WAS NOT OBLIGATED TO CONSTRUCT THE TIE LINE MUST BE ACCEPTED AS CONCLUSIVE UNLESS DETERMINED TO BE "FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR * * * NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.' SEE PUBLIC LAW 356, APPROVED MAY 11, 1954, 68 STAT. 81. WE FIND NO PROPER BASIS FOR QUESTIONING THAT DECISION UNDER SUCH STANDARDS OF REVIEW.

ACCORDINGLY, YOU ARE ADVISED THAT THE VOUCHER FOR $7,862.20 PROPERLY MAY BE CERTIFIED FOR PAYMENT. THE VOUCHER AND THE CONTRACT PLANS SUBMITTED WITH YOUR LETTER ARE RETURNED HEREWITH.