B-139042, JUL. 6, 1959

B-139042, JUL. 6, 1959

TO THE HONORABLE SUMNER G. WHITTIER:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 10, 1959, REQUESTING RECONSIDERATION OF DECISIONS OF OUR OFFICE DATED APRIL 14, 1959, AND MAY 21, 1959, REGARDING THE INTERPRETATION OF THE PROVISIONS OF VETERANS ADMINISTRATION CONTRACT V1006C-319 WITH THE FRANCHI CONSTRUCTION COMPANY, INC., FOR CONSTRUCTION AT THE VETERANS ADMINISTRATION HOSPITAL, BEDFORD, MASSACHUSETTS, IN THE MATTER OF PAYMENT THEREUNDER FOR ROCK EXCAVATION. IT WAS AGREED AT A CONFERENCE ON MAY 27, 1959, THAT WE WOULD RECONSIDER THE INTERPRETATION GIVEN IN OR DECISIONS TO THE EFFECT THAT THE CONTRACTOR WOULD BE ENTITLED TO AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE WITH RESPECT TO ALL ROCK (AS DEFINED IN PARAGRAPH 1-14 OF THE SPECIFICATIONS) ENCOUNTERED AND EXCAVATED WITHIN THE "ROCK PAYMENT LINES" AS SPECIFIED IN PARAGRAPH 1 19 OF THE CONTRACT SPECIFICATIONS.

AS INDICATED IN YOUR LETTER, IT WAS THE VIEW OF YOUR ENGINEERING PERSONNEL WHO ATTENDED THE CONFERENCE OF MAY 27, 1959, THAT THE CONTRACT INTERPRETED IN ITS ENTIRETY, IN THE LIGHT OF THE ENGINEERING ASPECTS THEREOF, AND THE REFERENCE IN THE SPECIFICATIONS TO ARTICLE 4, CHANGED CONDITIONS, OF THE CONTRACT, REQUIRED THE CONTRACTOR TO REMOVE THE QUANTITIES OF SPECIFICATION ROCK SHOWN ON THE DRAWINGS WITHOUT ADDITIONAL PAYMENT; BUT THAT AN ADJUSTMENT IN THE CONTRACT PURSUANT TO ARTICLE 4 IS INDICATED FOR ADDITIONAL SPECIFICATION ROCK ENCOUNTERED AND REMOVED, SUBJECT, OF COURSE, TO SET-OFF FOR A CORRESPONDING QUANTITY OF EARTH NOT REMOVED.

IT IS REPORTED THAT THE QUANTITIES OF SPECIFICATION ROCK TO BE EXCAVATED AS SHOWN ON THE CONTRACT DRAWINGS TOTAL 4,340 CUBIC YARDS; THAT THE QUANTITIES OF SUCH ROCK ACTUALLY ENCOUNTERED AND EXCAVATED WILL APPROXIMATE 8,000 CUBIC YARDS; THAT STUDIES BY THE VETERANS ADMINISTRATION INDICATE A FAIR AVERAGE PRICE FOR THIS ROCK REMOVAL, INCLUDING CONTRACTOR'S OVERHEAD AND PROFIT, TO BE IN THE NEIGHBORHOOD OF $15 PER CUBIC YARD; AND THAT THE CONTRACTOR'S SUBMISSIONS INDICATE CLAIMS, EXCLUSIVE OF OVERHEAD AND PROFIT, OF $28 AND $36 PER CUBIC YARD, RESPECTIVELY, FOR OPEN CUT ROCK EXCAVATION AND EXCAVATION OF TRENCH ROCK.

IT IS STATED IN YOUR LETTER THAT IN THE COURSE OF THE CONFERENCE YOUR ENGINEERING PERSONNEL REVIEWED THE PLANS AND SPECIFICATIONS WITH OUR OFFICIALS WITH PARTICULAR REFERENCE TO THE ENGINEERING ASPECTS THEREOF, POINTING OUT THE REFERENCES ON CONTRACT DRAWINGS TO QUANTITIES AND CHARACTER OF ROCK TO BE EXCAVATED AND CALLING ATTENTION TO THE LOGS OF CORE BORINGS SHOWN DIAGRAMMATICALLY THEREON INDICATING THE LOCATIONS AND ELEVATIONS AT WHICH ROCK WAS TO BE ANTICIPATED. YOU REFER ALSO TO THE DISCUSSION OF THE TECHNICAL SPECIFICATION PROVISIONS RELATING TO ROCK EXCAVATION, WITH SPECIAL ATTENTION BEING GIVEN TO THE INTERPRETATION TO BE PLACED UPON PARAGRAPH 1-13 THEREOF IN THE LIGHT OF THE DATA GIVEN ON THE DRAWINGS AND THE REFERENCE IN PARAGRAPH 1-13 TO THE MACHINERY FOR ADJUSTMENT IN THE CONTRACT PROVIDED IN ARTICLE 4 FOR SUBSURFACE OR LATENT PHYSICAL CONDITIONS AT THE SITE DIFFERING MATERIALLY FROM THOSE INDICATED IN THE CONTRACT, REFERRED TO SPECIFICALLY IN PARAGRAPH 1-13. FURTHER, YOU STATE THAT YOUR PERSONNEL REVIEWED WITH OUR OFFICIALS THE ABSTRACT OF BIDS RECEIVED FOR THE PROJECT AND THE CONTRACTOR'S COST BREAKDOWN OF JULY 17, 1958, SUBMITTED AFTER AWARD OF CONTRACT FOR PARTIAL PAYMENT PURPOSES. SUGGESTED, SUCH DATA WAS NOT PREVIOUSLY FURNISHED TO OUR OFFICE, NOR HAD THE COST ASPECTS OF THE MATTER BEEN DISCUSSED WITH OUR LEGAL STAFF PRIOR TO THE CONFERENCE OF MAY 27, 1959.

PARAGRAPH 1-13 OF THE CONTRACT SPECIFICATIONS PROVIDES AS FOLLOWS:

"ROCK ESTIMATES: SHOULD ROCK (AS HEREINAFTER DEFINED) BE ENCOUNTERED, THE TOTAL AMOUNT OF ROCK IN PLACE SHALL BE DETERMINED AS HEREINAFTER SPECIFIED. ADJUSTMENT FOR THE EXCAVATION OF SUCH ROCK WILL BE MADE AS PROVIDED IN ARTICLES 3 AND 4 OF THE CONTRACT.'

ARTICLES 3 AND 4 DO NOT SPECIFICALLY RELATE TO ROCK EXCAVATION BUT CONCERN CHANGES AND CHANGED CONDITIONS AND EQUITABLE ADJUSTMENTS THEREFOR. SINCE PARAGRAPH 1-13 OF THE CONTRACT SPECIFICATIONS DOES NOT OTHERWISE INDICATE THAT A LIMITATION WOULD BE PLACED UPON THE QUANTITIES OF CLASSIFICATION ROCK WHICH WOULD BE FOR CONSIDERATION IN DETERMINING THE AMOUNT OF A PRICE ADJUSTMENT FOR ENCOUNTERING SUCH ROCK, THERE WOULD SEEM TO BE A REASONABLE BASIS FOR THE CONCLUSION THAT THE REFERENCE TO ARTICLES 3 AND 4 WAS DESIGNED SOLELY FOR THE PURPOSE OF INDICATING THE PROCEDURES WHICH WOULD BE FOLLOWED IN THE MAKING OF ANY SUCH PRICE ADJUSTMENT AND THAT, IN NO EVENT, WOULD THE ADJUSTMENT BE MADE OTHER THAN ON THE BASIS OF INCREASED COSTS OF PERFORMANCE DUE TO THE ENCOUNTERING OF ROCK AS CLASSIFIED IN PARAGRAPH 1-14 OF THE SPECIFICATIONS. ON THE OTHER HAND, THE REFERENCE TO ARTICLES 3 AND 4 COULD BE CONSTRUED AS MEANING ALSO THAT THE CONTRACT PRICE WAS TO INCLUDE PAYMENT FOR ALL CLASSIFICATION ROCK UP TO THE TOTAL OF THE ESTIMATED QUANTITIES SET FORTH ON THE CONTRACT DRAWINGS, SINCE THE EXCAVATION OF THE ESTIMATED QUANTITIES OF SPECIFICATION ROCK CERTAINLY WOULD NOT ORDINARILY HAVE CONSTITUTED CHANGES OR CHANGED CONDITIONS WITHIN THE MEANING OF ARTICLES 3 AND 4 OF THE CONTRACT.

THE CONTRACTOR'S COST BREAKDOWN OF JULY 17, 1958, INCLUDES THE SUMS OF $111,709 AND $59,089 FOR "EXCAVATION BLDG" AND "ROADS, WALKS, GRADING.' AT THE CONFERENCE OF MAY 27, 1959, YOUR REPRESENTATIVES QUESTIONED THESE AMOUNTS AS BEING UNREASONABLY HIGH, PARTICULARLY IF, AS ALLEGED, THE CONTRACTOR HAD NOT INCLUDED IN ITS BID PRICE AN AMOUNT BELIEVED TO BE SUFFICIENT TO COVER THE EXCAVATION OF THE ESTIMATED QUANTITIES OF CLASSIFICATION ROCK AS SHOWN ON THE CONTRACT DRAWINGS. ALSO, IT APPEARS THAT THE CONTRACTOR HAS NOT BEEN ABLE TO FURNISH INFORMATION TO SUBSTANTIATE SUCH COST FIGURES.

ALTHOUGH THE CONTRACT PROVISIONS RESPECTING PAYMENT FOR CLASSIFICATION ROCK MAY BE CONSIDERED TO BE AMBIGUOUS IN CERTAIN RESPECTS, THE PROBABILITY THAT THE CONTRACTOR INTENDED THAT ITS BID PRICE WOULD INCLUDE THE COST OF EXCAVATING THE ESTIMATED QUANTITIES OF CLASSIFICATION ROCK WOULD SEEM TO WARRANT THE EXCLUSION OF SUCH ESTIMATED QUANTITIES IN COMPUTING THE PRICE ADJUSTMENT DUE UNDER PARAGRAPH 1-13 OF THE CONTRACT SPECIFICATIONS. SPECIFICALLY, YOU ARE ADVISED THAT, IN THE CIRCUMSTANCES, THERE NOW APPEARS TO BE ADEQUATE JUSTIFICATION FOR ADOPTION OF THE INTERPRETATION PLACED UPON THE CONTRACT TERMS BY YOUR ENGINEERING PERSONNEL.

THE CONTRACT SPECIFICATIONS, DRAWINGS, ABSTRACT OF BIDS AND CONTRACTOR'S COST BREAKDOWN ARE RETURNED HEREWITH.