B-129562, MAY 23, 1957

B-129562: May 23, 1957

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TO MERRITT-CHAPMAN AND SCOTT CORPORATION: REFERENCE IS MADE TO A LETTER DATED OCTOBER 19. THE OVERPAYMENT WAS DESCRIBED AS CONSISTING OF AN ERRONEOUS PAYMENT MADE FOR 17. IT WAS REPORTED THAT THE PROJECT WAS COMPLETED IN OCTOBER 1950. EXCEPT FOR A RADIO SYSTEM WHICH WAS FULLY COMPLETED ON JANUARY 5. THAT THE CLAIM WAS DENIED BY THE CONTRACTING OFFICER AND APPEALED TO THE CORPS OF ENGINEERS CLAIMS AND APPEALS BOARD. UNDER WHICH YOU WERE PAID AT UNIT PRICE FOR EXCAVATION OF ROCK IN UTILITY TRENCHES. WAS IN ERROR. DECISION NO. 388 WAS SUSTAINED BY THE BOARD'S DECISION NO. 1077. WE WERE REQUESTED BY YOUR ATTORNEYS TO WITHHOLD ACTION WITH SUSPECT TO THE REPORTED INDEBTEDNESS PENDING A DECISION OF THE COURT OF CLAIMS ON YOUR CLAIM AGAINST THE GOVERNMENT.

B-129562, MAY 23, 1957

TO MERRITT-CHAPMAN AND SCOTT CORPORATION:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 19, 1956, FROM YOUR ATTORNEYS, RELATIVE TO A DEMAND MADE UPON YOUR COMPANY BY OUR CLAIMS DIVISION FOR PAYMENT OF THE AMOUNT OF $158,377, REPORTED BY THE DEPARTMENT OF THE ARMY AS HAVING BEEN OVERPAID UNDER YOUR CONTRACT NO. W-30-075-ENG- 3081, DATED JANUARY 28, 1947, COVERING THE CONSTRUCTION OF A MAJOR PORTION OF THE FRANKLIN DELANO ROOSEVELT HOSPITAL NEAR PEEKSKILL, NEW YORK.

THE OVERPAYMENT WAS DESCRIBED AS CONSISTING OF AN ERRONEOUS PAYMENT MADE FOR 17,593, CUBIC YARDS OF ROCK EXCAVATION IN UTILITY TRENCHES AT THE RATE OF $9 PER CUBIC YARD. IT WAS REPORTED THAT THE PROJECT WAS COMPLETED IN OCTOBER 1950, EXCEPT FOR A RADIO SYSTEM WHICH WAS FULLY COMPLETED ON JANUARY 5, 1951; THAT, DURING THE COURSE OF CONSTRUCTION, YOU SUBMITTED A CLAIM FOR APPROXIMATELY $3 MILLION ALLEGING A CHANGED CONDITION UNDER ARTICLE 4 OF THE CONTRACT; THAT THE CLAIM WAS DENIED BY THE CONTRACTING OFFICER AND APPEALED TO THE CORPS OF ENGINEERS CLAIMS AND APPEALS BOARD; THAT THE BOARD DENIED THE APPEAL BY DECISION NO. 388, DATED OCTOBER 21, 1954; AND THAT THE DECISION OF THE BOARD CONTAINS A SPECIFIC DETERMINATION THAT THE INTERPRETATION OF THE CONTRACT PROVISIONS, UNDER WHICH YOU WERE PAID AT UNIT PRICE FOR EXCAVATION OF ROCK IN UTILITY TRENCHES, WAS IN ERROR.

DECISION NO. 388 WAS SUSTAINED BY THE BOARD'S DECISION NO. 1077, DATED OCTOBER 10, 1956, AND WE WERE REQUESTED BY YOUR ATTORNEYS TO WITHHOLD ACTION WITH SUSPECT TO THE REPORTED INDEBTEDNESS PENDING A DECISION OF THE COURT OF CLAIMS ON YOUR CLAIM AGAINST THE GOVERNMENT. HOWEVER, IN THE LETTER DATED OCTOBER 19, 1956, YOUR ATTORNEYS REQUESTED US TO DECIDE THE QUESTION AS TO WHETHER OR NOT THERE HAD BEEN AN OVERPAYMENT UNDER THE CONTRACT. IT WAS CONTENDED THAT THE CORPS OF ENGINEERS CLAIMS AND APPEALS BOARD, IN HOLDING THAT UTILITY ROCK EXCAVATION WAS INCLUDED IN THE LUMP- SUM CONTRACT PRICE, FAILED TO TAKE INTO CONSIDERATION VITAL LANGUAGE USED IN CERTAIN OF THE CONTRACT PROVISIONS. WE REQUESTED ADDITIONAL INFORMATION FROM THE CHIEF OF ENGINEERS AND THERE HAS RECENTLY BEEN RECEIVED A REPORT ON THE VARIOUS CONTENTIONS MADE BY YOUR ATTORNEYS. THE MEANTIME, ON JANUARY 22, 1957, THERE WAS FILED ON YOUR BEHALF A PETITION IN THE COURT OF CLAIMS IN WHICH RECOVERY OF THE AMOUNT OF $3,500,000 IS SOUGHT AS ADDITIONAL COMPENSATION FOR THE WORK PERFORMED UNDER CONTRACT NO. W-30-075-ENG 3081.

SO FAR AS THE REPORTED OVERPAYMENT OF $158,337 IS CONCERNED, THE CONTRACT WAS AWARDED ON THE BASIS OF A LUMP-SUM PRICE OF $17,500,000, BUT CERTAIN UNIT PRICES WERE ESTABLISHED TO "PROVIDE FOR PAYMENT AND/OR CREDIT FOR ADDITIONAL OR DECEASED CONCRETE, EARTH FOUNDATION AND ROCK EXCAVATION WHERE ACTUAL SITE ELEVATIONS VARY IN EXCESS OF ALLOWABLE TOLERANCES FROM THE ELEVATIONS SHOWN ON THE DRAWINGS.' IN THE CASE OF ROCK EXCAVATIONS, THE ALLOWABLE TOLERANCE GENERALLY APPLICABLE WAS ONE FOOT ABOVE OR BELOW THE ELEVATIONS SHOWN ON THE DRAWINGS AND THERE WERE ESTABLISHED THE RESPECTIVE UNIT PRICES OF $9 AND $5.50 PER CUBIC YARD FOR ADDITIONS AND DEDUCTIONS FROM THE LUMP SUM CONTRACT PRICE. HOWEVER, SUCH TOLERANCE WAS NOT MADE APPLICABLE WITH RESPECT TO THE INCLUSION IN THE LUMP-SUM CONTRACT PRICE OF AN ESTIMATED QUANTITY OF 45,000 CUBIC UARDS OF ROUGH GRADING ROCK EXCAVATION. ON THAT ITEM, THE LUMP-SUM CONTRACT PRICE WAS TO BE ADJUSTED SOLELY ON THE BASIS OF THE DIFFERENCE BETWEEN THE ESTIMATED QUANTITY OF 45,000 CUBIC YARDS AND THE ACTUAL QUANTITY OF ROCK REMOVED.

SPECIFICALLY, IN REGARD TO THE MEASUREMENT AND PAYMENT FOR ROCK EXCAVATION, PARAGRAPHS SC-42A AND SC-42B OF THE CONTRACT SPECIFICATIONS PROVIDE AS FOLLOWS:

"SC-42 - MEASUREMENT AND PAYMENT FOR ROCK EXCAVATION:

"A. BUILDINGS AND UTILITY TRENCHES: THE LUMP SUM CONTRACT PRICE FOR ANY BUILDING OR ANY UTILITY TRENCH SHALL INCLUDE ANY AND ALL EARTH AND ROCK EXCAVATION NECESSARY FOR THEIR CONSTRUCTION, BASED UPON THE BORING DATA PROVIDED AND THE ELEVATIONS REQUIRED. ELEVATIONS OF EARTH SURFACE AND TOP OF ROCK ARE INDICATED AT VARIOUS POINTS ON THE PLANS. ELEVATIONS OF ROCK AT INTERMEDIATE POINTS BETWEEN BORING POINTS SHALL BE DETERMINED BY STRAIGHT LINE INTERPOLATION BETWEEN 2 ELESCET POINTS. ADDITIONAL PAYMENT FOR ROCK EXCAVATION WILL BE MADE, AT CONTRACT UNIT PRICE, ONLY WHEN IT IS FOUND THAT THE EXISTING ELEVATION AT THE TOP OF ROCK IS HIGHER BY MORE THAN ONE FOOT THAN THE ELEVATION INDICATED ON THE DRAWINGS. WHEN IT IS FOUND THAT THE EXISTING ELEVATION AT THE TOP OF ROCK IS LOWER BY MORE THAN ONE FOOT THAN THE ELEVATION SHOWN ON THE DRAWINGS, CREDIT WILL BE TAKEN AT THE CONTRACT UNIT PRICE FOR THE ROCK EXCAVATION ELIMINATED. IN ALL CASES WERE SUCH DIFFERENCES IN ROCK ELEVATION ARE FOUND, IT SHALL BE THE RESPONSIBILITY OF THE CONTRACTOR TO ADVISE THE CONTRACTING OFFICER BEFORE ANY ROCK IS REMOVED, IN ORDER THAT MEASUREMENT OF THE ADDITIONAL OR DECREASED ROCK EXCAVATION CAN BE VERIFIED.

"B. ROUGH GRADING: ALL ROUGH GRADING ROCK EXCAVATION TO BE PERFORMED UNDER BID ITEM NO. 48 OF SCHEDULE I, OR BID ITEM NOL 150 OR SCHEDULE VI SHALL BE BASED UPON AN ESTIMATED QUANTITY OF 45,000 CUBIC YARDS OF ROCK, AND SHALL BE INCLUDED ON THIS BASIS IN THE LUMP SUM BID FOR EITHER ITEM. ADDITIONAL ROCK EXCAVATION, IN EXCESS OF THIS 45,000 CUBIC YARDS WILL BE PAID FOR AT THE CONTRACT UNIT PRICE FOR ADDITIONAL ROCK EXCAVATION (ITEM 369 OF SCHEDULE IIII). IN THE EVENT THAT THE ACTUAL QUANTITY OF ROCK REMOVED IS LESS THAN 45,000 CUBIC YARDS, CREDIT WILL BE TAKEN BY THE GOVERNMENT FOR THE DIFFERENCE BETWEEN THE ACTUAL QUANTITY REMOVED AND THE 45,000 CUBIC YARDS ESTIMATED, AT THE UNIT PRICE FOR DECEASED ROCK EXCAVATION (ITEM 370 OF SCHEDULE IIII). ALL QUANTITIES WILL BE DETERMINED BY AVERAGE AND AREA CROSS-SECTION. THE TOLERANCE INDICATED IN SCHEDULE XIII IS NOT APPLICABLE TO THE COMPUTATIONS FOR ITEMS NO. 48 OR NO. 150.'

IT IS CONTENDED BY YOUR ATTORNEYS THAT THE UTILITY TRENCHES MENTIONED IN PARAGRAPH SC-42A ARE THE UTILITY TRENCHES CONSTRUCTED WITHIN THE BUILDING LINES. EMPHASIS IS PLACED UPON THE DESCRIPTIONS OF BID ITEM NO. 48 OF SCHEDULE I AND BID ITEM NO. 150 OF SCHEDULE VI WHICH CALL FOR ,ROUGH GRADING INCLUDING EXCAVATION AND BACK FILL OF ANY NATURE ENCOUNTERED EXCLUSIVE OF THE GRADING, FILL AND EXCAVATION FOR OTHER STRUCTURES WITHIN 5 FEET THEREOF.' CERTAIN PROVISIONS OF THE CONTRACT SPECIFICATIONS WERE CITED AS AN INDICATION THAT THERE IS NO CONNECTION BETWEEN THE OUTSIDE UTILITY WORK AND THE BUILDING CONSTRUCTION. HOWEVER, SUCH PROVISIONS APPEAR TO HAVE NO BEARING UPON THE QUESTION HERE INVOLVED, SINCE THEY SHOW ONLY THAT, IF CONTRACTS HAD BEEN AWARDED SEPARATELY FOR THE BUILDING AND THE OUTSIDE UTILITY SYSTEMS, THE BUILDING CONTRACTOR WOULD HAVE BEEN REQUIRED TO MAKE EXCAVATIONS TO A POINT 5 FEET BEYOND THE BUILDING LINES AND THAT THE UTILITY CONTRACTOR WOULD HAVE BEEN REQUIRED TO MAKE THE NECESSARY INSTALLATIONS AND CONNECTIONS FOR THE OUTSIDE FACILITIES.

IT IS OUR OPINION THAT THE TERM "UTILITY TRENCH," AS USED IN PARAGRAPH SC -42A OF THE CONTRACT SPECIFICATIONS, REASONABLY IMPLIES ANY EXCAVATIONS NECESSARY FOR THE PLACEMENT OF UTILITY PIPES OUTSIDE AS WELL AS WITHIN THE BUILDING LINES, AND THAT IT WAS CLEARLY CONTEMPLATED THAT ROCK ENCOUNTERED IN MAKING SUCH EXCAVATIONS WOULD BE CONCLUDED FROM THE COMPUTATION OF THE AMOUNT PAYABLE FOR ROUGH GRADING ROCK EXCAVATION UNDER PARAGRAPH SC-42B.

YOUR CONTRACT INCLUDES THE CONSTRUCTION OF A STORM DRAINAGE SYSTEM, A WATER DISTRIBUTION SYSTEM, A GAS DISTRIBUTION SYSTEM, AN ELECTRIC DISTRIBUTION SYSTEM AND A SANITARY SEWER SYSTEM (ITEMS 51, 52, 54, 55 AND 57 OF SCHEDULE I OR ITEMS 153, 154, 156, 157 AND 159 OF SCHEDULE VI). SCHEDULE VI IS HEADED AS "THE CONSTRUCTION OF ALL EXTERIOR UTILITIES AND STRUCTURES AS LISTED BELOW," ETC., AND THE HEADING STATES THAT "FINAL CONNECTIONS TO BUILDINGS AT THE POINT FIVE (5) FEET OUTSIDE THE BUILDINGS ARE INCLUDED IN THIS SCHEDULE.'

THE OFFICE OF THE CHIEF OF ENGINEERS HAS REPORTED THAT ON DRAWING 1 C, ISSUED BY ADDENDUM DURING THE BIDDING PERIOD, THE ROCK ELEVATIONS ALONG THE LINES OF THE OUTSIDE UTILITY TRENCHES ARE SHOWN AND THAT, IN ACCORDANCE WITH PARAGRAPH SC-14 OF THE SPECIFICATIONS, YOU SUBMITTED, AT THE COMMENCEMENT OF THE JOB, A DETAILED BREAKDOWN OF QUANTITIES AND COSTS FOR ALL OF THE ITEMS INCLUDED IN YOUR BID. THIS BREAKDOWN IS REPORTED AS HAVING LISTED 45,000 CUBIC YARDS OF ROCK EXCAVATION FOR THE GENERAL SITE GRADING AND QUANTITIES OF 16,729, 3,585, 1,696 AND 1,606 CUBIC YARDS OF ROCK EXCAVATION FOR THE STORM DRAINAGE SYSTEM, SANITARY SEWERS, THE WATER DISTRIBUTION SYSTEM, THE ELECTRIC DISTRIBUTION SYSTEM AND THE GAS DISTRIBUTION SYSTEM. ALSO, THE BREAKDOWN IS REPORTED AS HAVING LISTED 4,294 CUBIC YARDS OF ROCK EXCAVATION FOR THE STEAM DISTRIBUTION SYSTEM (ITEM 61 OF SCHEDULE I).

IT HAS FURTHER BEEN REPORTED THAT, IN ACCORDANCE WITH YOUR BREAKDOWN OF COSTS FOR THE OUTSIDE FACILITIES, THE COST OF TRENCH EXCAVATION REPRESENTED 69 PERCENT OF THE INDICATED TOTAL BID PRICE FOR THE CONSTRUCTION OF THE STORM SEWERS; 42 PERCENT OF THE INDICATED TOTAL BID PRICE FOR THE SANITARY SEWERS; 52 PERCENT OF THE INDICATED TOTAL BID PRICE FOR THE WATER DISTRIBUTION SYSTEM; 20 PERCENT OF THE INDICATED TOTAL BID PRICE FOR THE ELECTRIC DISTRIBUTION SYSTEM; AND 72 PERCENT OF THE INDICATED TOTAL BID PRICE FOR THE GAS DISTRIBUTION SYSTEM.

YOUR ATTORNEYS HAVE STATED THAT NO OUTSIDE UTILITY TRENCHES WERE CONSTRUCTED AND IT APPEARS THAT THIS STATEMENT IS BASED UPON A METHOD OF OPERATION BY WHICH ALL ROCK EXCAVATION NECESSARY FOR THE PLACEMENT OF UTILITY PIPES OUTSIDE THE BUILDING LINES AND ALL ROCK EXCAVATION FOR ROUGH GRADING WAS PERFORMED AT THE SAME TIME. THIS METHOD OF OPERATION COULD HAVE RESULTED IN THE REMOVAL OF MORE OR LESS ROCK THEN ORDINARILY WOULD HAVE BEEN NECESSARY TO PLACE THE UTILITY PIPES AT THE REQUIRED DEPTHS. SUCH METHODS OF OPERATION WOULD NOT, HOWEVER, HAVE THE EFFECT OF PREVENTING THE GOVERNMENT FROM INSISTING UPON AN ADJUSTMENT WHEREBY THE QUANTITIES OF ROCK EXCAVATION WHICH NORMALLY WOULD HAVE BEEN REQUIRED FOR THE CONSTRUCTION OF THE OUTSIDE UTILITY TRENCHES WOULD BE EXCLUDED FROM THE COMPUTATION OF THE PAYMENT TO BE MADE UNDER PARAGRAPH SC-42B OF THE CONTRACT SPECIFICATIONS FOR EXCESS ROUGH GRADING ROCK EXCAVATION.

IN THE CIRCUMSTANCES, AND PARTICULARLY SINCE IT IS EVIDENT THAT YOUR LUMP -SUM CONTRACT PRICE INCLUDED A CONSIDERABLE AMOUNT FOR THE COST OF TRENCH EXCAVATION FOR THE OUTSIDE UTILITIES, THE ACTION TAKEN BY OUR CLAIMS DIVISION IN THE MATTER IS HEREBY SUSTAINED.

WE ARE ADVISED BY THE OFFICE OF THE CORPS OF ENGINEERS THAT THE SUM OF $100 WAS WITHHELD FROM PAYMENT UNDER YOUR CONTRACT AND THAT SUCH AMOUNT IS PROPERLY FOR CREDITING AGAINST THE REPORTED OVERPAYMENT OF $158,337. ACCORDINGLY, IT IS REQUESTED THAT THE BALANCE OF $158,237, CONSIDERED AS HAVING BEEN OVERPAID UNDER YOUR CONTRACT, BE REMITTED BY CERTIFIED CHECK OR BANK DRAFT MADE PAYABLE TO THE "U.S. GENERAL ACCOUNTING OFFICE" WITHIN THE NEXT 30 DAYS. OTHERWISE, IF THERE ARE INSUFFICIENT AMOUNTS AVAILABLE FOR SET-OFF AGAINST THIS CLAIM OF THE GOVERNMENT, THE MATTER WILL BE REFERRED TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE ACTION.