B-142947, JUN. 16, 1960

B-142947: Jun 16, 1960

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YOU REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT ON THE VOUCHER IS AUTHORIZED. YOU ARE AUTHORIZED TO FOREGO ASSESSMENT OF LIQUIDATED DAMAGES BASED ON THE FINDINGS OF FACT AND DETERMINATION MADE BY THE CONTRACTING OFFICER. THE FACILITY WAS FOUND TO BE "99 PERCENT COMPLETE. " THAT IS. THAT THEY WERE CORRECTED IMMEDIATELY UPON RECEIPT OF MATERIALS. THAT THE FACILITY WAS "ABSOLUTELY COMPLETE ON 8 SEPTEMBER 1959.'. THE CONTRACTING OFFICER ALSO STATED THAT "COURT AND BOARD DECISIONS WHICH SET FORTH THE PATTERN AND CRITERIA FOR CONTRACT ADMINISTRATION ARE IN ACCORD WITH THE PRINCIPAL THAT THERE IS A DATE PRIOR TO THE DATE OF ABSOLUTE COMPLETION WHEN THE ASSESSMENT OF LIQUIDATED DAMAGES SHOULD CEASE BECAUSE SUBSTANTIAL COMPLETION HAS BEEN ACHIEVED.'.

B-142947, JUN. 16, 1960

TO MR. W. E. PILCHER, FINANCE AND ACCOUNTING OFFICER, DEPARTMENT OF THE ARMY:

THERE HAS BEEN RECEIVED BY REFERENCE FROM HEADQUARTERS, DEPARTMENT OF THE ARMY, (FINXE-B 167/27 APR 60 SOUTHERN INDUSTRIAL PIPING COMPANY), YOUR LETTER OF APRIL 13, 1960, TRANSMITTING A VOUCHER DATED APRIL 7, 1960, IN THE AMOUNT OF $10,439.28 IN FAVOR OF SOUTHERN INDUSTRIAL PIPING COMPANY, HOUSTON, TEXAS, COVERING FINAL PAYMENT UNDER CONTRACT DA-03-050-ENG-3394, FOR CONSTRUCTION OF AIRCRAFT WASHRACK WITH CONTROL CENTER AND WASTE DISPOSAL FACILITIES AT ENGLAND AIR FORCE BASE, ALEXANDRIA, LOUISIANA. YOU REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT ON THE VOUCHER IS AUTHORIZED.

THE FINAL ESTIMATE ATTACHED TO THE VOUCHER WHICH COVERS THE PERIOD JULY 16 TO SEPTEMBER 8, 1959, SHOWS 100 PERCENT COMPLETION OF THE CONTRACT AND TOTAL CONTRACT EARNINGS OF $153,427.28. THE CONTRACT, AS MODIFIED BY CHANGES AGREED TO BY THE CONTRACTOR, REQUIRED HIM TO COMPLETE THE ENTIRE WORK BY JULY 31, 1959, AND PROVIDED FOR THE ASSESSMENT OF LIQUIDATED DAMAGES OF $50 FOR EACH CALENDAR DAY OF DELAY. YOU EXPRESS DOUBT AS TO WHETHER, AS A DISBURSING OFFICER, YOU ARE AUTHORIZED TO FOREGO ASSESSMENT OF LIQUIDATED DAMAGES BASED ON THE FINDINGS OF FACT AND DETERMINATION MADE BY THE CONTRACTING OFFICER.

CLAUSE 5 OF THE GENERAL PROVISIONS OF THE CONTRACT PROVIDES THAT THE "CONTRACTING OFFICER SHALL ASCERTAIN THE FACTS AND THE EXTENT OF THE DELAY AND EXTEND THE TIME FOR COMPLETING THE WORK WHEN IN HIS JUDGMENT THE FINDINGS OF FACT JUSTIFY SUCH AN EXTENSION, AND HIS FINDINGS OF FACT THEREON SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO, SUBJECT ONLY TO APPEAL AS PROVIDED BY THE DISPUTES CLAUSE OF THIS CONTRACT.'

IN HIS "FINDING OF FACT COMPLETION OF WORK UNDER CONTRACT NO. DA-03 050- ENG-3394," DATED OCTOBER 28, 1959, THE CONTRACTING OFFICER STATED THAT ON JULY 30, 1959, DURING A JOINT FINAL INSPECTION WITH REPRESENTATIVES OF THE CONTRACTING OFFICER AND THE USING SERVICE, THE FACILITY WAS FOUND TO BE "99 PERCENT COMPLETE," THAT IS, EXCEPT FOR THE INSTALLATION OF WINDOW SCREENS OF A CONTROL CENTER BUILDING AND THE INSTALLATION OF TWO DOORS AND FRAMES BETWEEN TWO PREFABRICATED BUILDINGS AND AN EXISTING NOSE DOCK, AND THAT AS A RESULT OF THIS JOINT INSPECTION, THE USING SERVICE ACCEPTED BENEFICIAL OCCUPANCY SUBJECT TO CORRECTION OF THE DEFICIENCIES; THAT THE DEFICIENCIES VALUED AT APPROXIMATELY $1,400 DID NOT AFFECT THE USABILITY OF THE FACILITY; THAT THEY WERE CORRECTED IMMEDIATELY UPON RECEIPT OF MATERIALS, AND THAT THE FACILITY WAS "ABSOLUTELY COMPLETE ON 8 SEPTEMBER 1959.' THE CONTRACTING OFFICER ALSO STATED THAT "COURT AND BOARD DECISIONS WHICH SET FORTH THE PATTERN AND CRITERIA FOR CONTRACT ADMINISTRATION ARE IN ACCORD WITH THE PRINCIPAL THAT THERE IS A DATE PRIOR TO THE DATE OF ABSOLUTE COMPLETION WHEN THE ASSESSMENT OF LIQUIDATED DAMAGES SHOULD CEASE BECAUSE SUBSTANTIAL COMPLETION HAS BEEN ACHIEVED.' IN SUPPORT OF THIS STATEMENT THE CONTRACTING OFFICER REFERRED TO APPEAL OF URBAN PLUMBING AND HEATING COMPANY, IBCA-43, 6 CCF 62030; CONTINENTAL ILLINOIS NATIONAL BANK V. UNITED STATES, 121 C.CLS. 203; APPEAL OF MCDONALD BROTHERS BEFORE THE CORPS OF ENGINEERS CLAIMS AND APPEALS BOARD NO. 1442; APPEAL OF ELMER A. ROMAN, IBCA-57, 1320; AND APPEAL OF ED L. POWERS CONTRACTING COMPANY, ASBCA NO. 1430. THE CONTRACTING OFFICER CONCLUDED "IN VIEW OF THE FACT THAT THE CONTRACT WAS COMPLETE EXCEPT FOR THE HEREINABOVE ENUMERATED MINOR DEFICIENCIES, WHICH SAID MINOR DEFICIENCIES DID NOT AFFECT THE USE AND OCCUPANCY OF THE FACILITY, I FIND THAT WORK UNDER SAID CONTRACT NO. DA 03-050-ENG-3394 WAS SUBSTANTIALLY COMPLETE ON 30 JULY 1959 AND THAT LIQUIDATED DAMAGES SHOULD NOT BE ASSESSED THEREAFTER.'

IT SEEMS WELL ESTABLISHED THAT UNDER BUILDING AND CONSTRUCTION CONTRACTS A FINDING BY THE AUTHORITY DESIGNATED IN THE CONTRACT THAT THERE HAS BEEN SUBSTANTIAL PERFORMANCE BY THE CONTRACTOR IS SUFFICIENT JUSTIFICATION FOR A DETERMINATION THAT THE CONTRACT WORK HAS BEEN COMPLETED WITHIN THE CONTEMPLATION OF THE CONTRACTING PARTIES. WHAT CONSTITUTES "SUBSTANTIAL PERFORMANCE" DEPENDENTS, OF COURSE, ON THE FACTS OF EACHCASE. IN GENERAL, THERE IS SUBSTANTIAL PERFORMANCE OF A BUILDING OR CONSTRUCTION CONTRACT NOT ONLY WITH RESPECT TO THE MANNER AND CHARACTER OF THE WORK PERFORMED BUT ALSO INSOFAR AS THE TIME ELEMENT IS CONCERNED, WHEN THE CONTRACTOR HAS IN GOOD FAITH ENDEAVORED TO PERFORM ALL THAT IS REQUIRED OF HIM BY THE TERMS OF HIS CONTRACT AND THERE REMAIN ONLY MINOR OMISSIONS OR DEVIATIONS WHICH MAY BE READILY ASCERTAINED, REMEDIED AND ADJUSTED, AND THE PARTY WITH WHOM HE HAS CONTRACTED HAS RECEIVED AND RETAINED THE BENEFITS OF SUCH PERFORMANCE. SEE CITY OF ST. CHARLES V. STOCKEY, 8TH C.C.A. 1907, 154 F. 772; HAMMAKER V. SCHLEIGH, MD.C.AP. 1929, 147 A. 790; UNITED STATES V. BIGGS CONSTRUCTION COMPANY, 7TH C.C.A. 1940, 116 F.2D 768; CONTINENTAL ILLINOIS NATIONAL BANK V. UNITED STATES, 1952, 121 C.CLS. 203, 101 F.SUPP. 755, CERT. DEN. 343 U.S. 963; SHELL V. SCHMIDT, D.C.A. CALIF. 1958, 330 P.2D 817; KIZZIAR V. DOLLAR, 10TH C.C.A. 1959, 268 F.2D 914; AND THE AUTHORITIES COLLECTED IN THE ANNOTATIONS IN 23 A.L.R. 1435. HOWEVER, AS STATED BY MR. JUSTICE CARDOZO IN WHAT MAY BE REGARDED AS A LANDMARK CASE, JACOB AND YOUNGS V. KENT, C. OF AP. N.Y. 1921, 129 N.E. 889, THE EQUITABLE DOCTRINE OF SUBSTANTIAL PERFORMANCE HAS BEEN DEVELOPED BY THE COURTS BASED ON CONSIDERATIONS OF INTENTION AND JUSTICE, AND IS NOT FOR APPLICATION WHERE THERE HAVE BEEN WILLFUL OR SUBSTANTIAL OMISSIONS AND DEVIATIONS BY THE CONTRACTOR. CF. SGARLAT V. GRIFFITH, SUP.CT. OF PA. 1944, 36 A.2D 330. SEE, ALSO, CONTINENTAL ILLINOIS NATIONAL BANK V. UNITED STATES, 1953, 126 C.CLS. 631, 115 F.SUPP. 892, WHERE THE COURT HELD THAT THE GOVERNMENT'S DELAY IN TAKING OVER THE PROJECT AS OF THE DATE OF SUBSTANTIAL COMPLETION CONSTITUTED A BREACH OF CONTRACT.

THUS, ASSUMING IN THE INSTANT CASE THAT THE CONTRACTOR MADE AN HONEST ENDEAVOR TO COMPLETE THE ENTIRE WORK BY THE CONTRACT COMPLETION DATE, JULY 31, 1959, WHICH SEEMS EVIDENT FROM THE CONTRACTING OFFICER'S FINDINGS OF FACT THAT THE CONTRACT WAS 99 PERCENT COMPLETE ON JULY 30, 1959, AND THAT THE MINOR DEFICIENCIES WERE NOT ATTRIBUTABLE TO WILLFUL CONDUCT ON THE PART OF/THE CONTRACTOR, THE CONTRACTING OFFICER'S DETERMINATION MUST BE REGARDED FINAL AND CONCLUSIVE, AS PROVIDED BY THE CONTRACT.

ACCORDINGLY, YOU ARE ADVISED THAT PAYMENT OF THE VOUCHER WHICH IS RETURNED HEREWITH IS AUTHORIZED, IF OTHERWISE CORRECT.