B-143968, DECEMBER 13, 1960, 40 COMP. GEN. 361

B-143968, DECEMBER 13, 1960, 40 COMP. GEN. 361

CONTRACTS - PRICE ADJUSTMENT DELAYS - GOVERNMENT FURNISHED MATERIAL A CONTRACT CLAUSE WHICH PROVIDES THAT, IN THE EVENT OF DELAY IN DELIVERY OF GOVERNMENT-FURNISHED MATERIAL TO THE CONTRACTOR, AN EXTENSION OF TIME WILL BE GRANTED BUT THAT THE GOVERNMENT SHALL NOT BE SUBJECTED TO ANY LIABILITY FOR DAMAGES OR LOSS OF PROFIT BY REASON OF ANY DELAY MAY NOT BE CONSTRUED AS AUTHORIZING ANY ADJUSTMENT OF PRICE TO COMPENSATE THE CONTRACTOR FOR INCREASED COSTS DUE TO THE GOVERNMENT'S DELAY IN FURNISHING MATERIALS AND, EVEN IF IT WOULD BE ADMITTED THAT THE DELAY WAS SO UNREASONABLE AS TO CONSTITUTE A BREACH SUBJECTING THE GOVERNMENT TO LIABILITY IN THE ABSENCE OF THE CLAUSE, THE PROVISION AGAINST LIABILITY HAS THE EFFECT OF BARRING ANY INCREASED COST ADJUSTMENT CLAIM.

TO INTERSTATE GENERAL CONTRACTORS, INC., DECEMBER 13, 1960:

REFERENCE IS MADE TO YOUR CLAIM FOR $10,021.97 (WHICH WAS INADVERTENTLY STATED IN OUR SETTLEMENT OF AUGUST 31, 1960, TO BE $18,037.67) UNDER CONTRACT NO. FA1-100, DATED JANUARY 6, 1959, WITH THE FEDERAL AVIATION AGENCY; TO YOUR LETTER OF SEPTEMBER 8, 1960, PROTESTING THE DISALLOWANCE OF THE CLAIM; AND TO THE CONFERENCE HELD IN OUR OFFICE ON SEPTEMBER 15, 1960, WITH MR. NELSON.

THE CONTRACT CALLED FOR THE CONSTRUCTION OF AN INSTRUMENT LANDING SYSTEM ON RUNWAY 13 AT THE NATIONAL AVIATION FACILITIES EXPERIMENTAL CENTER, ATLANTIC CITY, NEW JERSEY, FOR THE SUM OF $32,770, WHICH WAS SUBSEQUENTLY INCREASED TO $40,785.70 TO COVER AUTHORIZED CHANGES IN THE WORK. THE WORK WAS REQUIRED TO BEGIN ON JANUARY 12, 1959, THE EFFECTIVE DATE OF THE NOTICE TO PROCEED, AND TO BE COMPLETED WITHIN A PERIOD OF 45 DAYS, OR BY FEBRUARY 25, 1959. BECAUSE OF AUTHORIZED CHANGES IN THE WORK, THE PERIOD OF TIME FOR COMPLETION OF THE CONTRACT WAS EXTENDED A TOTAL OF 51 DAYS BY CHANGE ORDERS NOS. 1 THROUGH 5, OR TO APRIL 17, 1959. THE CONTRACT WAS COMPLETED ON MAY 6, 1959, AND YOU WERE ASSESSED THE SUM OF $950, REPRESENTING LIQUIDATED DAMAGES AT THE CONTRACT RATE FOR 19 DAYS' DELAY. HOWEVER, YOU PROTESTED THE ASSESSMENT OF LIQUIDATED DAMAGES ON THE GROUND THAT THE DELAY WAS DUE TO LATE DELIVERIES OF GOVERNMENT-FURNISHED MATERIALS AND EQUIPMENT, AND, BY LETTER OF JULY 17, 1959, THE CONTRACTING OFFICER ADVISED YOU THAT HE AGREED WITH YOUR CONTENTIONS AND LIQUIDATED DAMAGES WERE, THEREFORE, REMITTED.

IN A LETTER DATED AUGUST 5, 1959, TO THE CONTRACTING OFFICER, YOU REQUESTED IN SUBSTANCE THAT YOU BE PAID THE AMOUNT OF $10,120.97 AS ADDITIONAL COMPENSATION TO COVER THE INCREASED COSTS WHICH YOU STATED YOU HAD INCURRED IN PERFORMING THE CONTRACT AS A RESULT OF THE GOVERNMENT'S REFERRED-TO DELAY IN FURNISHING MATERIALS AND EQUIPMENT. YOU CONTENDED THAT THE GOVERNMENT, BY FAILING TO FURNISH THE MATERIALS AND EQUIPMENT IN SUFFICIENT TIME TO ENABLE YOU TO PROCEED WITH THE PERFORMANCE OF THE WORK AS SCHEDULED OR TO COMPLETE THE SAME WITHIN THE TIME FIXED BY THE CONTRACT, HAD BREACHED THE CONTRACT AND THAT YOU WERE, THEREFORE, ENTITLED TO HAVE THE CONTRACT PRICE INCREASED TO COVER THE ADDITIONAL COSTS INVOLVED.

BY LETTER OF OCTOBER 19, 1959, THE CONTRACTING OFFICER DENIED YOUR REQUEST FOR ADDITIONAL COMPENSATION, STATING THAT, WHILE HE "FOUND THAT THERE WAS SOME DELAY BY THE GOVERNMENT IN FURNISHING MATERIAL," THE CONTRACT PROVIDED A REMEDY FOR DELAY IN DELIVERY OF GOVERNMENT FURNISHED EQUIPMENT WHICH WAS LIMITED TO AN EXTENSION OF THE DATE FIXED FOR COMPLETION OF THE CONTRACT. ON APPEAL, THE CONTRACTING OFFICER'S DECISION WAS SUSTAINED BY THE ACTING ADMINISTRATOR OF THE FEDERAL AVIATION AGENCY BY DECISION OF FEBRUARY 5, 1960, THE CRUX OF THE DECISION BEING THAT THE ADMINISTRATIVE AGENCY WAS WITHOUT ANY AUTHORITY TO ENTERTAIN THE CLAIM.

BY LETTER OF FEBRUARY 15, 1960, YOU FILED CLAIM HERE FOR THE AMOUNT INVOLVED, PLUS INTEREST, AND FOR REIMBURSEMENT OF CERTAIN TRAVEL COSTS STATED TO HAVE BEEN INCURRED BY MR. NELSON IN PRESSING THE CLAIM. THE CLAIM WAS DISALLOWED IN OFFICE SETTLEMENT OF AUGUST 31, 1960, AND BY LETTER OF SEPTEMBER 8, 1960, YOU REQUESTED REVIEW OF THE ACTION TAKEN.

AS POINTED OUT IN THE DECISION OF THE ACTING ADMINISTRATOR OF THE FEDERAL AVIATION AGENCY, THERE IS NO DISPUTE BETWEEN THE PARTIES AS TO THE FACT OF THE GOVERNMENT'S DELAY WITH RESPECT TO SUPPLYING YOU WITH THE MATERIALS AND EQUIPMENT WHICH THE GOVERNMENT WAS OBLIGATED TO FURNISH UNDER THE CONTRACT. HOWEVER, YOUR RIGHTS IN THE MATTER MUST BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT. IN THIS CONNECTION, CLAUSE 32 (B) OF THE ADDITIONAL PROVISIONS OF THE CONTRACT PROVIDES IN PERTINENT PART AS FOLLOWS:

THE DELIVERY OR PERFORMANCE DATES FOR THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE CONTRACTOR UNDER THIS CONTRACT ARE BASED UPON THE EXPECTATION THAT GOVERNMENT-FURNISHED MATERIALS OF A TYPE SUITABLE FOR USE WILL BE DELIVERED TO THE CONTRACTOR IN SUFFICIENT TIME TO ENABLE THE CONTRACTOR TO MEET SUCH DELIVERY OR PERFORMANCE DATES. IN THE EVENT THAT GOVERNMENT-FURNISHED MATERIAL IS NOT DELIVERED TO THE CONTRACTOR BY SUCH TIME OR TIMES, THE CONTRACTING OFFICER SHALL, IF REQUESTED BY THE CONTRACTOR, MAKE A DETERMINATION OF THE DELAY OCCASIONED THE CONTRACTOR THEREBY, AND IF JUSTIFIED, SHALL GRANT TO THE CONTRACTOR A REASONABLE EXTENSION OF TIME IN RESPECT TO SUCH DELAY OR PERFORMANCE DATES. THE GOVERNMENT SHALL NOT BE LIABLE TO THE CONTRACTOR FOR DAMAGES OR LOSS OF PROFIT BY REASON OF ANY DELAY IN DELIVERY OF OR FAILURE TO DELIVER ANY OR ALL OF THE GOVERNMENT FURNISHED MATERIALS, EXCEPT THAT IN CASE OF SUCH DELAY OR FAILURE, UPON THE WRITTEN REQUEST OF THE CONTRACTOR, AN EQUITABLE ADJUSTMENT SHALL BE MADE IN THE DELIVERY OR PERFORMANCE DATES, AND IN ANY OTHER CONTRACTUAL PROVISION AFFECTED THEREBY, IN ACCORDANCE WITH THE PROCEDURES PROVIDED FOR IN THE CLAUSE OF THIS CONTRACT ENTITLED " CHANGES.' * * *

WE AGREE WITH THE CONCLUSION EXPRESSED IN THE DECISION OF THE ACTING ADMINISTRATOR OF THE FEDERAL AVIATION AGENCY THAT THE ABOVE CLAUSE MAY NOT BE CONSTRUED TO AUTHORIZE AN ADJUSTMENT OF THE CONTRACT PRICE BY THE CONTRACTING OFFICER TO COMPENSATE THE CONTRACTOR FOR INCREASED COSTS DUE TO THE PERFORMANCE OF THE WORK. THE CLAUSE, IN OUR OPINION, MUST BE CONSTRUED AS PROVIDING AGAINST ANY LIABILITY ON THE PART OF THE GOVERNMENT FOR DELAY IN DELIVERY OF GOVERNMENT-FURNISHED MATERIALS AND EQUIPMENT. HENCE, EVEN IF IT BE ADMITTED, FOR THE PURPOSE OF ARGUMENT, THAT THE DELAYS OF WHICH YOU COMPLAIN WERE SO UNREASONABLE AS TO HAVE CONSTITUTED A BREACH OF CONTRACT AND THEREBY HAVE SUBJECTED THE GOVERNMENT TO LIABILITY IN THE ABSENCE OF THE PROVISIONS OF CLAUSE 32 (B), THE PROVISION THEREIN THAT THE GOVERNMENT "SHALL NOT BE LIABLE TO THE CONTRACTOR FOR DAMAGES OR LOSS OF PROFIT BY REASON OF ANY DELAY IN DELIVERY OF OR FAILURE TO DELIVER ANY OR ALL OF THE GOVERNMENT FURNISHED MATERIALS" HAS THE EFFECT OF BARRING ANY SUCH CLAIM AS YOU NOW PRESENT. SEE WELLS BROTHERS CO. V. UNITED STATES (1920) 254 U.S. 83; WOOD V. UNITED STATES (1922) 258 U.S. 120; PSATY AND FUHRMAN V. HOUSING AUTHORITY (1949; SUPREME CT. R.I.) A.2D 32; ANTHONY P. MILLER, INC. V. WILMINGTON HOUSING AUTHORITY (1958; U.S. DISTRICT. CT.D.DEL.) 165 F.1SUPP. 275; A. KAPLEN AND SON, LTD. V. HOUSING AUTHORITY (1956; SUPER. CT. N.J., APEL. DIV.) 126 A.2D 13.

ACCORDINGLY, THE ACTION TAKEN WITH RESPECT TO THE DISALLOWANCE OF YOUR CLAIM IS SUSTAINED.