B-145291, MAR. 31, 1961

B-145291: Mar 31, 1961

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THE GOVERNMENT SHALL PROMPTLY PAY TO THE CONTRACTOR THE UNPAID BALANCE OF THE LUMP-SUM COMPENSATION AND REIMBURSABLE COSTS LESS (I) DEDUCTIONS DUE UNDER THE TERMS OF THIS CONTRACT AND (II) ANY SUM REQUIRED TO SETTLE ANY UNSETTLED CLAIM WHICH THE GOVERNMENT MAY HAVE AGAINST THE CONTRACTOR IN CONNECTION WITH THIS CONTRACT.'. IT IS STATED IN EFFECT THAT WORK UNDER THE CONTRACT COMMENCED IN APRIL 1957 AND WAS COMPLETED ON FEBRUARY 24. THE CONTRACTOR WAS NOTIFIED THAT THE WORK REQUIRED UNDER THE CONTRACT HAD BEEN ACCEPTED BY THE COMMISSION AND THAT IT WAS PROPOSED TO CLOSE OUT THE CONTRACT AND MAKE FINAL PAYMENT. THE CONTRACTOR WAS FURNISHED WITH FOUR COPIES OF A FINAL ESTIMATE AND TWO COPIES OF A RELEASE FOR EXECUTION AND WAS NOTIFIED THAT THE TOTAL AMOUNT ON THE RELEASE SHOULD INCLUDE ALL REIMBURSABLE ITEMS AND THE LUMP-SUM AMOUNT OF THE CONTRACT.

B-145291, MAR. 31, 1961

TO CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

ON MARCH 8, 1961, THE DEPUTY GENERAL MANAGER FORWARDED HERE FOR DECISION THE QUESTION WHETHER THE CLAIM OF JOHN A. BLUME AND ASSOCIATES, ENGINEERS, FOR $2,420.90 REPRESENTING AN ADDITIONAL AMOUNT ALLEGED TO BE DUE UNDER CONTRACT NO. AT/04-3/-140, DATED APRIL 2, 1957, AS AMENDED, BETWEEN THE ATOMIC ENERGY COMMISSION AND JOHN A. BLUME AND ASSOCIATES, ENGINEERS, AND JOHN C. WARNECKE, HEREINAFTER REFERRED TO AS THE CONTRACTOR, MAY BE ALLOWED.

THE CONTRACT, AS AMENDED BY SUPPLEMENTAL AGREEMENTS NOS. 1, 2, 3 AND 4, PROVIDES FOR THE FURNISHING OF ARCHITECT-ENGINEERS SERVICES FOR THE DESIGN OF ENGINEERING BUILDING NO. 170, AND FACILITIES THEREIN, DESIGN OF VENTILATION SYSTEM FOR BUILDING NO. 112, AND DESIGN OF VENTILATION SYSTEM FOR BUILDING NO. 130 FOR A TOTAL CONTRACT PRICE OF $169,651. ARTICLE V (A) SPECIFIED THAT THIS AMOUNT WOULD CONSTITUTE FULL COMPENSATION FOR ALL SERVICES AND MATERIALS FURNISHED UNDER THE CONTRACT EXCEPT THE SERVICES AND MATERIALS THEREIN AFTER SPECIFIED IN THE PARAGRAPH (B) OF ARTICLE V ENTITLED "REIMBURSEMENT FOR CERTAIN COSTS.' SUBPARAGRAPH (5) OF PARAGRAPH (B) OF THE SAME ARTICLE PROVIDED FOR REIMBURSEMENT OF THE ACTUAL DIRECT LABOR COSTS FOR EXTRAORDINARY SERVICES SUCH AS EXPEDITING OR INSPECTING MATERIAL AND EQUIPMENT, AS APPROVED IN ADVANCE BY THE CONTRACTING OFFICER.

PARAGRAPH (E) OF ARTICLE V PROVIDED:

"FINAL PAYMENT. UPON COMPLETION OF THE WORK AND ITS ACCEPTANCE BY THE GOVERNMENT, AND UPON THE FURNISHING BY THE CONTRACTOR OF A RELEASE, IN SUCH FORM AND WITH SUCH EXCEPTIONS AS MAY BE APPROVED BY THE CONTRACTING OFFICER, OF ALL CLAIMS AGAINST THE GOVERNMENT UNDER OR ARISING OUT OF THIS CONTRACT, THE GOVERNMENT SHALL PROMPTLY PAY TO THE CONTRACTOR THE UNPAID BALANCE OF THE LUMP-SUM COMPENSATION AND REIMBURSABLE COSTS LESS (I) DEDUCTIONS DUE UNDER THE TERMS OF THIS CONTRACT AND (II) ANY SUM REQUIRED TO SETTLE ANY UNSETTLED CLAIM WHICH THE GOVERNMENT MAY HAVE AGAINST THE CONTRACTOR IN CONNECTION WITH THIS CONTRACT.'

IT IS STATED IN EFFECT THAT WORK UNDER THE CONTRACT COMMENCED IN APRIL 1957 AND WAS COMPLETED ON FEBRUARY 24, 1960. BY LETTER DATED FEBRUARY 26, 1960, THE CONTRACTOR WAS NOTIFIED THAT THE WORK REQUIRED UNDER THE CONTRACT HAD BEEN ACCEPTED BY THE COMMISSION AND THAT IT WAS PROPOSED TO CLOSE OUT THE CONTRACT AND MAKE FINAL PAYMENT. THE CONTRACTOR WAS FURNISHED WITH FOUR COPIES OF A FINAL ESTIMATE AND TWO COPIES OF A RELEASE FOR EXECUTION AND WAS NOTIFIED THAT THE TOTAL AMOUNT ON THE RELEASE SHOULD INCLUDE ALL REIMBURSABLE ITEMS AND THE LUMP-SUM AMOUNT OF THE CONTRACT. UNDER DATE OF FEBRUARY 29, 1960, THE CONTRACTOR EXECUTED A GENERAL RELEASE AS REQUIRED UNDER PARAGRAPH (3) OF ARTICLE V OF THE CONTRACT. THE RELEASE RECITED A TOTAL CONSIDERATION OF $202,385.82 AND STATED THAT THE AMOUNT OF $184,836.89 HAD ALREADY BEEN PAID, LEAVING A BALANCE OF $17,548.93 TO BE PAID BY THE GOVERNMENT TO THE CONTRACTOR, WHICH AMOUNT IT IS STATED WAS PAID TO THE CONTRACTOR.

BY LETTER DATED MAY 26, 1960, THE CONTRACTOR ALLEGED AN ACCOUNTING ERROR IN COMPUTING THE AMOUNT DUE UNDER THE CONTRACT IN THAT IN BILLING THE COMMISSION SEVERAL AUTHORIZED REIMBURSABLE ITEMS AGGREGATING $2,420.90 PAID BY IT WERE INADVERTENTLY OVERLOOKED. IN REPLY OF JULY 6, 1960, THE CONTRACTOR'S REQUEST FOR RELIEF WAS DENIED FOR THE STATED REASON THAT IT HAD EXECUTED A COMPLETE AND UNCONDITIONAL RELEASE.

BY LETTER DATED JULY 27, 1960, THE CONTRACTOR SUBMITTED THE ORIGINAL OF EACH LETTER AUTHORIZING IT TO RETAIN ABBOTT A. HANKS, INC., TO PERFORM CERTAIN INSPECTION SERVICES ON A REIMBURSABLE BASIS. IN ADDITION THE CONTRACTOR SUBMITTED INVOICES AGGREGATING $2,420.90 IN FAVOR OF ABBOTT A. HANKS, INC., REPRESENTING AUTHORIZED PROFESSIONAL INSPECTION SERVICES RENDERED TOGETHER WITH COPIES OF THE CONTRACTOR'S CHECKS COVERING PAYMENT OF SUCH INVOICES. IT IS STATED THAT THE FURNISHING OF THE SERVICES REPRESENTED BY THE INVOICES HAS BEEN CONFIRMED AND THAT THE CONTRACTOR HAS NOT BEEN REIMBURSED FOR SUCH SERVICES.

RELEASES, ALTHOUGH IN GENERAL TERMS, ORDINARILY ARE TO BE CONSTRUED AS LIMITED IN THEIR OPERATION TO CLAIMS AND DEMANDS CONTEMPLATED BY THE PARTIES AT THE TIME OF EXECUTION. BUCKLEY V. BASFORD, 184 F.SUPP. 870; BUTCHER V. UNITED ELECTRIC COAL CO., 174 F.2D 1003; 45 AM.JUR. RELEASE SEC. 710; 30 COMP. GEN. 335.

THE CIRCUMSTANCES INCIDENT TO THE EXECUTION OF THE RELEASE AS REPORTED IN THE SUBMISSION CLEARLY ESTABLISH THAT THE CLAIM FOR $2,420.90 FOR WHICH REIMBURSEMENT IS NOW CLAIMED WAS NOT WITHIN THE CONTEMPLATION OF THE PARTIES AT THE TIME OF ITS EXECUTION. THERE IS NOTHING IN THE RECORD TO INDICATE THAT AT THE TIME OF THE "FINAL PAYMENT" AND RELEASE THERE WAS ANY INTENTION OF THE PARTIES OTHER THAN THAT THE CONTRACTOR SHOULD BE PAID THE ENTIRE BALANCE DUE IT UNDER THE CONTRACT. SO FAR AS THE RECORD SHOWS THERE WAS NO DISAGREEMENT OR DISPUTE OR OCCASION FOR ANY COMPROMISE. THE CONTRACTOR HAD BEEN SPECIFICALLY AUTHORIZED TO ENTER INTO A SUBCONTRACT FOR THE INSPECTION SERVICES FOR WHICH REIMBURSEMENT IS NOW CLAIMED. THE FACTS AS REPORTED INDICATE THAT THE CONTRACTOR LIKE THE GOVERNMENT REPRESENTATIVES SUPPOSED THAT THE "FINAL PAYMENT" OF $17,548.93 REPRESENTED THE ENTIRE BALANCE DUE THE CONTRACTOR AND FURTHER THAT THERE WAS NO INTENTION TO BAR ANY PROPER CLAIM THE CONTRACTOR MIGHT HAVE FOR REIMBURSEMENT OF AUTHORIZED EXPENDITURES AT THE TIME THE RELEASE WAS EXECUTED.

FURTHERMORE, IT IS DOUBTFUL WHETHER LEGAL CONSIDERATION COULD BE FOUND TO SUPPORT THE RELEASE OF THIS CLAIM IN VIEW OF THE ESTABLISHED RULE THAT PAYMENT OF A LIQUIDATED, UNDISPUTED, MATURED OBLIGATION DOES NOT FURNISH CONSIDERATION FOR A RELEASE OF ANY ADDITIONAL OBLIGATION. SEE 33 COMP. GEN. 93, 95 AND CASES THEREIN CITED. IN THE CIRCUMSTANCES, THE RELEASE IN THIS INSTANCE NEED NOT BE REGARDED AS PRECLUDING PAYMENT OF THE ADDITIONAL AMOUNT OF $2,420.90 REPRESENTING REIMBURSABLE COSTS PREVIOUSLY APPROVED BY THE CONTRACTING OFFICER.

ACCORDINGLY, PAYMENT OF THE CLAIM IN THE AMOUNT OF $2,420.90 IS AUTHORIZED, IF CORRECT IN OTHER RESPECTS. A COPY OF THIS DECISION SHOULD BE CITED ON THE PAYMENT VOUCHER.

THE ENCLOSURES FORWARDED WITH THE LETTER OF MARCH 8, 1961, ARE RETURNED.