B-131789, AUG. 14, 1957

B-131789: Aug 14, 1957

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TO COMMONWEALTH ENGINEERING COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 3. YOU STATE THAT THE AMOUNT PREVIOUSLY ALLOWED WAS NOT ADEQUATE TO COVER THE EXPENSES INCURRED IN PERFORMING THE ADDITIONAL WORK WHICH WAS NOT TAKEN INTO CONSIDERATION IN THE PREPARATION OF YOUR BID. UPON COMPLETION OF THE WORK IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT YOU HAD MADE A BONA FIDE ERROR IN OMITTING THE COST FOR SUCH WORK EQUAL TO $1. WE CONCURRED WITH THE FINDING THAT AS A MATTER OF LAW YOU WERE ENTITLED TO REIMBURSEMENT OF AN AMOUNT DEEMED TO BE FAIR AND REASONABLE FOR SUCH ADDITIONAL COSTS. YOUR COMPLAINT THAT SETTLEMENT IN THE AMOUNT STATED WAS INADEQUATE WAS RETURNED TO THE DEPARTMENT OF THE ARMY FOR RECONSIDERATION IN THE LIGHT OF YOUR MORE RECENT CONTENTIONS.

B-131789, AUG. 14, 1957

TO COMMONWEALTH ENGINEERING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 3, 1957, RELATIVE TO YOUR CLAIM FOR $2,174.19, REPRESENTING THE DIFFERENCE BETWEEN $4,039.79, THE AMOUNT ALLEGED TO BE DUE FOR EXTRA LABOR AND MATERIALS FURNISHED IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NO. DA-44-109-QM-2080, AND THE SUM OF $1,865.60, CERTIFIED FOR PAYMENT BY OUR CLAIMS DIVISION IN SETTLEMENT DATED APRIL 8, 1957. YOU STATE THAT THE AMOUNT PREVIOUSLY ALLOWED WAS NOT ADEQUATE TO COVER THE EXPENSES INCURRED IN PERFORMING THE ADDITIONAL WORK WHICH WAS NOT TAKEN INTO CONSIDERATION IN THE PREPARATION OF YOUR BID, AND THEREFORE YOU REQUEST THAT THE MATTER BE REEXAMINED IN THE LIGHT OF THE CONTENTIONS SET FORTH IN YOUR LETTERS TO US AND TO SENATOR A. WILLIE ROBERTSON.

THE CLAIM AROSE AS A RESULT OF YOUR FAILURE TO INCLUDE IN YOUR PROPOSAL THE COST OF ERECTING CEILINGS, AMONG OTHER ITEMS BEING INSTALLED IN THE FOUR BUILDINGS COVERED THE ABOVE CONTRACT. UPON COMPLETION OF THE WORK IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT YOU HAD MADE A BONA FIDE ERROR IN OMITTING THE COST FOR SUCH WORK EQUAL TO $1,865.60. WE CONCURRED WITH THE FINDING THAT AS A MATTER OF LAW YOU WERE ENTITLED TO REIMBURSEMENT OF AN AMOUNT DEEMED TO BE FAIR AND REASONABLE FOR SUCH ADDITIONAL COSTS, AND THEREFORE AUTHORIZED PAYMENT OF THE ABOVE AMOUNT SO DETERMINED BY THE CONTRACTING OFFICER.

YOUR COMPLAINT THAT SETTLEMENT IN THE AMOUNT STATED WAS INADEQUATE WAS RETURNED TO THE DEPARTMENT OF THE ARMY FOR RECONSIDERATION IN THE LIGHT OF YOUR MORE RECENT CONTENTIONS. BY LETTER OF JULY 29, 1957, FROM THE OFFICE OF THE CHIEF OF FINANCE, THERE WAS FORWARDED HERE A SUPPLEMENTAL REPORT OF THE CONTRACTING OFFICER WHICH STATES IN PERTINENT PART AS FOLLOWS:

"4. THE ESTIMATED COST OF INSTALLING THE CEILINGS AS COMPUTED BY THE POST ENGINEER INCLUDED $1,000 FOR MATERIAL, $600.000 FOR LABOR, $240.00 FOR OVERHEAD AND $160.00 FOR PROFIT FOR A TOTAL OF $2,000.00. HOWEVER, WHEN THE CONTRACTOR'S COST BREAKDOWN WAS RECEIVED INDICATING A 10 PERCENT ALLOWANCE FOR OVERHEAD AND 6 PERCENT FOR PROFIT, THESE FIGURES WERE REDUCED ACCORDINGLY TO REACH THE TOTAL PREVIOUSLY RECOMMENDED BY THIS OFFICE OF $1,865.60. IT IS NOTED THAT THE MATERIAL COSTS AS COMPUTED BY THE CONTRACTOR TOTAL $1,057.71. HOWEVER, IT IS NOTED THAT THESE MATERIAL COSTS INCLUDE $90.00 FOR VARIOUS TYPES OF INSURANCE WHICH ARE COSTS MORE PROPERLY INCLUDED IN OVERHEAD AND $120.00 FOR TRANSPORTATION, $64.00 OF WHICH IS FOR TRANSPORTATION "BEYOND NORMAL WORKING AREA" WOULD SEEM TO BE A QUESTIONABLE COST SINCE CONTRACTOR WAS PRESUMABLY FAMILIAR WITH THE LOCATION OF THE BUILDINGS INVOLVED PRIOR TO SUBMITTING A BID. IT THUS APPEARS THAT THE POST ENGINEER'S ESTIMATE OF MATERIAL COSTS FOR INSTALLATION OF CEILINGS EXCEEDED CONTRACTOR'S ACTUAL COSTS FOR SUCH MATERIAL. ACCORDINGLY, THE PRINCIPAL BONE OF CONTENTION REMAINING CONCERNS LABOR COSTS. IN THIS CONNECTION, ATTENTION IS INVITED TO THE CONTRACATOR'S ORIGINAL COST ESTIMATE FOR INSTALLATION OF CEILINGS, (INCLOSURE 1 TO EXHIBIT 14 OF THE ORIGINAL REPORT OF THIS OFFICE), WHICH LENDS SUPPORT TO THE OPINION OF THE POST ENGINEER THAT CONTRACTOR'S CLAIMED LABOR COSTS FOR CEILING INSTALLATION ARE EXCESSIVE. FURTHERMORE, LABOR COSTS ARE DIRECTLY RELATED TO SUCH MATTERS AS EXPERIENCE AND EFFICIENCY OF THE WORKERS AND IT DOES NOT APPEAR THAT THE GOVERNMENT SHOULD PAY THE CLAIMANT FOR COSTS RESULTING FROM INEFFICIENCY OR INEXPERIENCE OF ITS LABORERS. IT IS FURTHER NOTED THAT OF THE $2,327.87 (EXCLUSIVE OF SOCIAL SECURITY AND COMPENSATION INSURANCE) CLAIMED BY THE CONTRACTOR FOR LABOR COSTS IN INSTALLATION OF CEILINGS, $1,022.40 CONSTITUTES LABOR ALLEGEDLY PERFORMED BY CONTRACTOR'S OWNER, MR. RICHARD COVER. SUCH A LARGE PROPORTION OF TOTAL LABOR COSTS BEING CHARGED TO MR. COVER MAY BE JUSTIFIED BUT ON THE OTHER HAND IT MAY BE A MEANS OF INCREASING THE AMOUNT OF PROFIT CONTRACTOR WOULD HAVE EARNED OR OF ABSORBING LOSSES OTHERWISE INCURRED. IT SHOULD ALSO BE NOTED IN COMPARISON TO THE ORIGINAL CONTRACT PRICE, THE SUM CLAIMED BY THE CONTRACTOR APPEARS EXCESSIVE AS CLAIMED BY THE POST ENGINEER. FOR THE ABOVE REASONS, THE UNDERSIGNED REMAINS OF THE OPINION THAT THE AMOUNT PREVIOUSLY RECOMMENDED BY THIS OFFICE AND ALLOWED BY THE COMPTROLLER GENERAL REPRESENTS REASONABLE AND ADEQUATE COMPENSATION TO THE CONTRACTOR FOR THE INSTALLATION OF THE CEILINGS INVOLVED.'

OF COURSE, OUR OFFICE WAS NOT A PARTY TO THE CONSUMMATION OF THE INSTANT AGREEMENT AND THEREFORE MUST RELY UPON THE FACTS REPORTED BY THE ADMINISTRATIVE OFFICERS AND UPON THE INFORMATION FURNISHED BY YOU. WHERE, AS HERE, THERE IS INVOLVED DISPUTED QUESTIONS OF FACT, IT HAS BEEN THE UNIFORM RULE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO ACCEPT THE ADMINISTRATIVE REPORT IN THE ABSENCE OF SUFFICIENT EVIDENCE TO OVERCOME THE CORRECTNESS OF SUCH REPORT. WHERE THERE EXISTS AN ELEMENT OF DOUBT AS TO THE REASONABLENESS OR CORRECTNESS OF A CLAIM, OR ANY PART THEREOF, THE REFUSAL OF THE ACCOUNTING OFFICERS TO CERTIFY SUCH CLAIM FOR PAYMENT IS SUPPORTED BY THE COURTS. LONGWILL V. UNITED STATES, 17 C.CLS. 288; CHARLES V. UNITED STATES, 19 C.CLS. 316. SUCH DOUBT HERE IS CREATED BY STATEMENTS IN THE RECORD ADVERSE TO CERTAIN ITEMS, OR TO THE AMOUNTS THEREOF, COMPRISING YOUR CLAIM.

WITH RESPECT TO THE MATTER OF DISPUTES ARISING UNDER THE CONTRACT, PARAGRAPH 6 OF THE GENERAL PROVISIONS OF THE AGREEMENT PROVIDES THAT ANY DISPUTES CONCERNING QUESTIONS OF FACT ARE FOR DECISION BY THE CONTRACTING OFFICER, SUBJECT TO APPEAL TO THE HEAD OF THE DEPARTMENT, WHOSE DECISION SHALL BE FINAL AND CONCLUSIVE. THAT PROVISION, GENERALLY MADE A PART OF THE STANDARD FORM GOVERNMENT CONSTRUCTION CONTRACT, HAS BEEN CONSIDERED MANY TIMES BY THE COURTS. AS TO THE FINALITY REQUIRED TO BE ACCORDED ADMINISTRATIVE FINDINGS OF FACT MADE PURSUANT THERETO, SEE UNITED STATES V. MOORMAN, 338 U.S. 457, AND THE CASES CITED THEREIN. ALSO, SEE UNITED STATES V. WUNDERLICH, 342 U.S. 98.

IN VIEW OF THE FOREGOING, WE ARE WITHOUT AUTHORITY TO CERTIFY FOR PAYMENT ANY SUM IN EXCESS OF THE AMOUNT ALLOWED BY SETTLEMENT OF APRIL 8, 1957, AND THEREFORE THE ACTION TAKEN THEREIN IS AFFIRMED.