B-145839, MAY 31, 1961

B-145839: May 31, 1961

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF MAY 10. INSPECTION OF THE WORK WAS TO BE FINAL EXCEPT AS REGARDS LATENT DEFECTS. THE PROVISIONS WITH REGARD TO INSPECTION WERE NOT TO RESTRICT THE GOVERNMENT'S RIGHT UNDER THE GUARANTY CLAUSE OF THE CONTRACT. CONSTRUCTION OF THE INCINERATOR WAS COMPLETED. ACCEPTED THE PROJECT AND RELIEVED IT OF RESPONSIBILITY FOR ALL MATERIALS DELIVERED AND WORK PERFORMED EXCEPT CORRECTION OF DEFECTS AND OMISSIONS BUY THE GUARANTEES UNDER THE CONTRACT WERE TO REMAIN IN EFFECT. THE HOSPITAL ADMINISTRATOR ADVISED THE PBS OF YOUR AGENCY THAT THE BRICK ROOF LINING OF THE INCINERATOR WAS FAILING IN THAT SOME OF THE BRICK HAD DROPPED DOWN ABOUT 2 INCHES FROM ITS INSTALLED POSITION.

B-145839, MAY 31, 1961

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF MAY 10, 1961, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN ON THE CLAIM OF THE STANDARD CONSTRUCTION CO., INC., FOR REIMBURSEMENT IN THE AMOUNT OF $3,058 FOR THE REPAIR OF THE INCINERATOR AT THE D.C. HOSPITAL CENTER, CONSTRUCTED UNDER CONTRACT NO. GS -00-B-2691, DATED NOVEMBER 10, 1954.

THE CONTRACT PROVIDED FOR THE CONSTRUCTION OF A HOSPITAL BUILDING, BOILER HOUSE, GARAGE AND COOLING TOWER ENCLOSURE, AND NURSES' HOME AT THE U.S. SOLDIERS HOME GROUNDS, WASHINGTON, D.C., FOR THE CONSIDERATION OF $15,790,000. THE WORK TO BE PERFORMED INCLUDED THE FURNISHING AND INSTALLATION OF A WASTE INCINERATOR AS SPECIFIED IN SECTION 88 OF THE SPECIFICATIONS. THE CONTRACT CONTAINED THE USUAL PROVISIONS WITH RESPECT TO CHANGES IN THE DRAWINGS AND/OR SPECIFICATIONS BY THE CONTRACTING OFFICER AND FOR AN EQUITABLE ADJUSTMENT IN THE AMOUNT DUE, OR THE TIME REQUIRED, FOR PERFORMANCE. INSPECTION OF THE WORK WAS TO BE FINAL EXCEPT AS REGARDS LATENT DEFECTS, DEPARTURES FROM SPECIFIC REQUIREMENTS OF THE CONTRACT, DAMAGE OR LOSS IN TRANSIT, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD. THE PROVISIONS WITH REGARD TO INSPECTION WERE NOT TO RESTRICT THE GOVERNMENT'S RIGHT UNDER THE GUARANTY CLAUSE OF THE CONTRACT. THE CONTRACT PROVIDED THAT THE CONTRACTOR GUARANTEED ALL WORK, MATERIALS AND EQUIPMENT TO BE IN ACCORDANCE WITH CONTRACT REQUIREMENTS FOR ONE YEAR AFTER THE DATE OF FINAL SETTLEMENT OR FROM AN EARLIER DATE DETERMINED BY THE CONTRACTING OFFICER.

CONSTRUCTION OF THE INCINERATOR WAS COMPLETED, AND THE USE BEGAN, ABOUT SEPTEMBER 1957. COMPLETE OCCUPANCY OF THE PROJECT BEGAN ON MARCH 10, 1958. PRIOR TO COMPLETE OCCUPANCY, OR ON JANUARY 10, 1958, THE COMMISSIONER, PUBLIC BUILDINGS SERVICE (PBS), ADVISED THE CONTRACTOR BY LETTER THAT THE GOVERNMENT DESIRED THE RIGHT TO FULLY OCCUPY AND USE THE PROJECT, AND IN CONSIDERATION OF SUCH RIGHT, ACCEPTED THE PROJECT AND RELIEVED IT OF RESPONSIBILITY FOR ALL MATERIALS DELIVERED AND WORK PERFORMED EXCEPT CORRECTION OF DEFECTS AND OMISSIONS BUY THE GUARANTEES UNDER THE CONTRACT WERE TO REMAIN IN EFFECT.

ON APRIL 21, 1959, THE HOSPITAL ADMINISTRATOR ADVISED THE PBS OF YOUR AGENCY THAT THE BRICK ROOF LINING OF THE INCINERATOR WAS FAILING IN THAT SOME OF THE BRICK HAD DROPPED DOWN ABOUT 2 INCHES FROM ITS INSTALLED POSITION. AN INVESTIGATION WAS MADE BY A PBS ENGINEER ON MAY 5, 1959, BUT NO ACTION WAS TAKEN ON HIS REPORT. ON OCTOBER 8, 1959, THE HOSPITAL ADMINISTRATOR ADVISED THE PBS THAT THE INCINERATOR ROOF HAD FALLEN IN. WITHIN A FEW DAYS THEREAFTER THE PBS INFORMALLY ADVISED THE CONTRACTOR AND ITS SUBCONTRACTOR OF THE CONDITION OF THE INCINERATOR. THEREAFTER, ON OCTOBER 29, 1959, THE PBS NOTIFIED THE CONTRACTOR IN WRITING THAT RESTORATION WAS CONSIDERED THE RESPONSIBILITY OF THE CONTRACTOR BECAUSE OF THE FACT THAT ACTUAL CONSTRUCTION OF THE INCINERATOR HAD VARIED CONSIDERABLY FROM THE CONSTRUCTION DETAILS SHOWN ON THE APPROVED SHOP DRAWING, EVEN THOUGH THE 12-MONTH GUARANTY PERIOD HAD EXPIRED. THE CONTRACTOR DISPUTED ITS RESPONSIBILITY IN THE MATTER BUT NEVERTHELESS DIRECTED ITS SUBCONTRACTOR TO PROCEED WITH THE REPAIR WORK ON NOVEMBER 9, 1959, BECAUSE THE PBS HAD IN EFFECT ORDERED IT TO PROCEED WITH THE WORK.

THE DISPUTE BETWEEN THE CONTRACTING OFFICER AND THE CONTRACTOR AS TO WHETHER THE CONTRACTOR HAD PROCEEDED WITH CONSTRUCTION IN ACCORDANCE WITH THE APPROVED SHOP DRAWINGS WAS REFERRED TO THE BOARD OF REVIEW OF YOUR AGENCY FOR CONSIDERATION AND DECISION. THE BOARD HAD DETERMINED, AND YOU HAVE CONCURRED IN ITS FINDING, THAT THE CONTRACTOR HAD NOT FAILED IN ANY MATERIAL WAY TO PERFORM ITS CONTRACT AND IT WAS CONCLUDED THAT THE FAILURE IN QUESTION WAS DUE IN LARGE PART TO THE USE OF THE INCINERATOR IN A MANNER NOT CONTEMPLATED BY THE DESIGN AND CONSTRUCTION, AND IN PART TO THE FACT THAT THE HOSPITAL AUTHORITIES PAID LITTLE ATTENTION TO THE NECESSITY OF REGULAR MAINTENANCE OF THE INCINERATOR ALTHOUGH THEY HAD BEEN FURNISHED GENERAL OPERATING INSTRUCTIONS. THE BOARD OF REVIEW AGREED WITH THE PBS THAT THE REASONABLE VALUE OF THE WORK WAS THE AMOUNT OF $2,199.51 WHICH THE CONTRACTOR PAID ITS SUBCONTRACTOR FOR DOING THE WORK PLUS 10 PERCENT ON THE PAYMENT EXCLUDING SOCIAL SECURITY TAXES ($212.75), OR A TOTAL OF $2,412.26.

THE REPORTED FACTS SHOW THAT THE CONTRACTOR PERFORMED THE WORK UNDER PROTEST AFTER THE EXPIRATION OF THE CONTRACTUAL 1-YEAR GUARANTY PERIOD AND THAT THE WORK WAS BEYOND THE SCOPE OF THE WORK REQUIRED TO BE PERFORMED UNDER THE CONTRACT. SINCE THE WORK INVOLVED WAS NECESSARY FROM THE GOVERNMENT STANDPOINT AND SINCE THE GOVERNMENT HAS ACCEPTED THE BENEFITS OF THE WORK, THE CONTRACTOR SHOULD BE PAID ON A QUANTUM MERUIT BASIS. THE AMOUNT OF $2,412.26 MAY BE ACCEPTED AS CONSTITUTING THE REASONABLE VALUE OF THE WORK AND PAYMENT MAY BE MADE ACCORDINGLY.