B-145879, AUG. 29, 1961

B-145879: Aug 29, 1961

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TO COWAN AND PADDOCK: REFERENCE IS MADE TO YOUR ATTORNEYS' LETTER OF MAY 5. THE PERIOD OF PERFORMANCE WAS STATED TO BE "WITHIN THREE HUNDRED AND SIXTY (360) DAYS AFTER RECEIPT OF WRITTEN NOTICE TO PROCEED.'. THE CONTRACT WAS DATED DECEMBER 22. WAS DULY APPROVED JANUARY 24. NOTICE OF AWARD AND NOTICE TO PROCEED WAS DATED JANUARY 26. PROVIDED: "THIS IS AN OFFICIAL NOTICE OF AWARD OF CONTRACT NO: AF 45/631/-273 FOR TITLE II ARCHITECTURAL ENGINEERING SERVICES INSPECTION FOR WHERRY FAMILY HOUSING. "THIS NOTICE OF AWARD IS YOUR AUTHORITY TO PROCEED WITH ALL ACTIONS UNDER THIS CONTRACT.'. A CONFERENCE WAS HELD IN YOUR OFFICE WITH REPRESENTATIVES OF THE CONTRACTOR AND HIS MAJOR SUBCONTRACTORS AND THAT ON JANUARY 6.

B-145879, AUG. 29, 1961

TO COWAN AND PADDOCK:

REFERENCE IS MADE TO YOUR ATTORNEYS' LETTER OF MAY 5, 1961, REQUESTING REVIEW OF GENERAL ACCOUNTING OFFICE SETTLEMENT DATED JUNE 17, 1960, WHICH DISALLOWED YOUR CLAIM IN THE AMOUNT OF $2,137.75 REPRESENTING COMPENSATION FOR SERVICES RENDERED PRIOR TO THE DATE OF THE NOTICE TO PROCEED UNDER NEGOTIATED LUMP-SUM CONTRACT NO. AF 45/631/-273.

BY THE TERMS OF THE CONTRACT AS AMENDED, YOU AGREED TO FURNISH TO THE GOVERNMENT ARCHITECTURAL ENGINEERING SERVICES NECESSARY FOR THE ACCOMPLISHMENT AND DELIVERY OF PLANS, SPECIFICATIONS, DRAWINGS, DESIGN ANALYSIS, COST ESTIMATES, INSPECTION AND SUCH OTHER WORK AS SPECIFIED IN CONNECTION WITH A FAMILY HOUSING PROJECT AT LARSON AIR FORCE BASE, WASHINGTON. THE PERIOD OF PERFORMANCE WAS STATED TO BE "WITHIN THREE HUNDRED AND SIXTY (360) DAYS AFTER RECEIPT OF WRITTEN NOTICE TO PROCEED.' THE CONTRACT WAS DATED DECEMBER 22, 1958, SUBJECT TO APPROVAL BY THE SECRETARY OF THE AIR FORCE OR HIS AUTHORIZED REPRESENTATIVE, AND WAS DULY APPROVED JANUARY 24, 1959. NOTICE OF AWARD AND NOTICE TO PROCEED WAS DATED JANUARY 26, 1959, AND PROVIDED:

"THIS IS AN OFFICIAL NOTICE OF AWARD OF CONTRACT NO: AF 45/631/-273 FOR TITLE II ARCHITECTURAL ENGINEERING SERVICES INSPECTION FOR WHERRY FAMILY HOUSING, LARSON AIR FORCE BASE, WASHINGTON, IN THE AMOUNT OF $32,760.00.

"THIS NOTICE OF AWARD IS YOUR AUTHORITY TO PROCEED WITH ALL ACTIONS UNDER THIS CONTRACT.'

IT APPEARS THAT CONSTRUCTION WORK ON THE PROJECT HAD COMMENCED ON OR ABOUT JANUARY 6, 1959. YOU STATE IN YOUR LETTER OF DECEMBER 16, 1959, THAT ON JANUARY 5, 1959, A CONFERENCE WAS HELD IN YOUR OFFICE WITH REPRESENTATIVES OF THE CONTRACTOR AND HIS MAJOR SUBCONTRACTORS AND THAT ON JANUARY 6, 1959, YOUR FIELD OFFICE WAS ESTABLISHED ON THE SITE AND "ACTUAL DAILY SUPERVISION AND INSPECTION WORK WAS STARTED BY INSPECTION OF THE CONTRACTOR'S PLANT SETUP AND INITIAL OPERATIONS, AS WELL AS ATTENDING A MEETING WITH LAFB HOUSING REPRESENTATIVES.' IT IS STATED IN YOUR LETTER ALSO THAT SUCH SERVICES WERE COMMENCED BY YOU ON THE VERBAL ADVICE OF AIR FORCE REPRESENTATIVES; THAT YOU VISITED THE BASE PROCUREMENT OFFICE AND INFORMED THE CONTRACTING OFFICER THAT THE SERVICES WERE BEING RENDERED AND "REQUESTED CLARIFICATION OF OUR (YOUR) ON-SITE STATUS WITHOUT A FORMAL NOTICE TO PROCEED; " AND THAT YOU WERE VERBALLY ADVISED THAT APPROVAL OF THE CONTRACT WAS EXPECTED SOON. YOUR CLAIM IN THE AMOUNT OF $2,137.75 IS FOR SERVICES RENDERED DURING THE PERIOD JANUARY 5 TO JANUARY 26, 1959.

IN THIS CONNECTION THE FOLLOWING PERTINENT OBSERVATIONS WERE MADE BY THE CONTRACTING OFFICER:

"2. AT THE TIME OF SIGNING OF THE A-B TITLE II CONTRACT, MR. COWAN WAS ADVISED THAT HIGHER HEADQUARTER'S APPROVAL OF SAID CONTRACT WAS REQUIRED, AND MINIMUM TIME ALLOWANCE FOR THIS APPROVAL WOULD BE APPROXIMATELY TWENTY DAYS. HE WAS ALSO ADVISED AT THIS TIME THAT A NOTICE TO PROCEED WOULD BE ISSUED ONLY AFTER RECEIPT OF THE APPROVED CONTRACT.

"3. AT THE PRE-CONSTRUCTION CONFERENCE WHICH MR. COWAN WAS INVITED TO ATTEND, HE WAS AGAIN ADVISED THAT AN APPROVED CONTRACT WOULD NOT BE EXPECTED PRIOR TO 15 JANUARY 1959 AT THE EARLIEST, AND THAT AUTHORIZATION TO COMMENCE PERFORMANCE OF SERVICES PRIOR TO THE ISSUANCE OF A NOTICE TO PROCEED COULD NOT BE GRANTED. * * * TO THE KNOWLEDGE OF THE UNDERSIGNED, NO AF REPRESENTATIVE ADVISED MR. COWAN TO COMMENCE WORK. IT WAS EMPHASIZED TO MR. COWAN BY THE UNDERSIGNED THAT IF HE DID PROCEED WITH PERFORMANCE OF SERVICE OF ANY NATURE, HE WOULD DO SO AT HIS OWN RISK AND EXPENSE WITHOUT PROPER AUTHORITY AND WITHOUT RECOURSE FOR PAYMENT BY THE GOVERNMENT.

"4. * * * WHEN THE UNDERSIGNED WAS MADE AWARE THAT THE CONTRACTOR WAS ESTABLISHING A FIELD OFFICE, MR. COWAN WAS AGAIN ADVISED THAT HE WAS DOING THIS WITHOUT PROPER AUTHORITY SINCE THE SUBJECT CONTRACT HAD NOT BEEN APPROVED. THE UNDERSIGNED CONTRACTING OFFICER DID NOT CONSENT TO THE CONTRACTOR PERFORMING SERVICES PRIOR TO ISSUANCE OF THE NOTICE TO PROCEED.'

THIS IS CONTRARY TO YOUR STATEMENTS SUMMARIZED ABOVE. THUS, THERE IS CREATED A DISPUTED QUESTION OF FACT AS TO WHICH WE ARE REQUIRED, UNDER THE ESTABLISHED RULE OF OUR OFFICE (37 COMP. GEN. 568) TO ACCEPT THE ADMINISTRATIVE VERSION IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF. WE DO NOT FEEL THAT SUCH EVIDENCE HAS BEEN PRESENTED HERE.

SINCE YOU WERE ADVISED TO PROCEED "AT YOUR OWN RISK" PRIOR TO RECEIPT OF THE WRITTEN NOTICE TO PROCEED, NO OBLIGATION ARISING FROM WORK OR SERVICES RENDERED "AT YOUR OWN RISK" MAY BE IMPOSED UPON THE GOVERNMENT. SEE THOMAS EARLE AND SONS, INC. V. UNITED STATES, 90 CT.CL. 308.

CONCERNING THE REQUIREMENT THAT THE CONTRACT BE APPROVED BY THE SECRETARY OR HIS AUTHORIZED REPRESENTATIVE, PARAGRAPH 21 OF THE GENERAL CONTRACT PROVISIONS PROVIDED THAT THE CONTRACT "SHALL NOT BE BINDING UNTIL SO APPROVED.' IT IS WELL SETTLED THAT WHERE, AS HERE, A CONTRACT CONTAINS A CLAUSE WHICH MAKES ITS FINAL EXECUTION DEPENDENT UPON THE APPROVAL OF THE HEAD OF A DEPARTMENT OR SOME SUPERVISING OFFICIAL OF THE GOVERNMENT, IT IS NOT A BINDING OBLIGATION UNTIL SO APPROVED. SEE MONROE V. UNITED STATES, 184 U.S. 524; LITTLE FALLS KNITTING MILL CO. V. UNITED STATES, 44 CT.CL. 1, 17; M. K, CATHELL ET AL. V. UNITED STATES, 46 ID. 368, 371; AUGUST C. BRANT V. UNITED STATES, ID. 409, 415; GEORGE GRIFFITHS CONSTRUCTION CO. V. UNITED STATES, 77 ID. 542, 550.

HENCE, THE SERVICES RENDERED PRIOR TO CONTRACT APPROVAL DID NOT CONSTITUTE A VALID OBLIGATION UNDER THE CONTRACT ON ACCOUNT OF WHICH APPROPRIATED FUNDS PROPERLY COULD BE EXPENDED.

FURTHER, UNDER THE PLAIN TERMS OF THE CONTRACT, YOUR RIGHT TO COMPENSATION WAS LIMITED TO THE PERIOD BEGINNING WITH THE RECEIPT BY YOU OF THE WRITTEN NOTICE TO PROCEED. THE COURTS AND OUR OFFICE HAVE HELD THAT A CONTRACTOR WHO ELECTS TO BEGIN WORK ON A GOVERNMENT CONTRACT PRIOR TO RECEIPT OF A NOTICE TO PROCEED DOES SO AT HIS OWN RISK AND MUST BEAR ANY LOSS RESULTING FROM SUCH ACTION SHOULD THE GOVERNMENT DELAY OR FAIL TO GIVE NOTICE TO PROCEED. PARISH V. UNITED STATES, 98 F.SUPP. 347, CERTIORARI DENIED, 342 U.S. 953; 13 COMP. GEN. 409; B-56678 DATED AUGUST 22, 1946. SEE, ALSO, WARREN BROS. ROADS CO. V. UNITED STATES, 105 F.SUPP. 826; STAFFORD V. UNITED STATES, 74 F.SUPP. 155. IMPLICIT IN SUCH PRINCIPLE IS THAT WHERE, AS HERE, A CONTRACT RESERVES TO THE GOVERNMENT THE RIGHT TO DETERMINE THE STARTING DATE OF CONTRACT PERFORMANCE BY THE ISSUANCE OF A NOTICE TO PROCEED, THE CONTRACTOR IS UNDER NO LEGAL OBLIGATION TO BEGIN WORK UNTIL SUCH TIME THAT HE RECEIVES NOTICE TO PROCEED. WHILE PRUDENCE MAY DICTATE THE COMMENCEMENT OF PRELIMINARY STEPS, WHEN A CONTRACTOR SO ELECTS SUCH CHOICE HE DOES SO AT HIS OWN RISK AND MAY NOT LOOK TO THE GOVERNMENT FOR REIMBURSEMENT BECAUSE OF LOSSES INCURRED AS A RESULT OF SUCH ELECTION.