B-150587, MAY 24, 1963

B-150587: May 24, 1963

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SHAPIRO AND WOOL: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 18. UNLESS THE DELAY IS DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN FRAUDULENT. NOTICE TO PROCEED WAS RECEIVED BY THE CONTRACTOR ON MARCH 24. THE WORK WAS SUBSTANTIALLY COMPLETED ON JANUARY 27. AN EXTENSION OF 28 DAYS WAS GRANTED BY THE CONTRACTING OFFICER TO COMPENSATE FOR THE CHRISTMAS RUSH SEASON DURING WHICH NO WORK COULD BE PERFORMED. LIQUIDATED DAMAGES WERE THEREFORE ASSESSED IN THE AMOUNT OF $4. THE CONTRACTOR HAD REQUESTED AN EXTENSION FOR THE ENTIRE PERIOD OF DELAY FOR THE STATED REASON THAT THE DELAY WAS CAUSED BY THE ILLNESS OF A MASTER MARBLE SETTER IN THE EMPLOY OF A SUBCONTRACTOR AND THAT TAKING THE JOB AWAY FROM THE SUBCONTRACTOR AFTER THE MARBLE WAS ORDERED WOULD HAVE CAUSED SERIOUS FINANCIAL LOSS.

B-150587, MAY 24, 1963

TO SUISMAN, SHAPIRO AND WOOL:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 18, 1962, AND SUBSEQUENT CORRESPONDENCE REQUESTING THAT WE REVIEW THE ASSESSMENT OF LIQUIDATED DAMAGES AGAINST B. L. JONES D.B.A. JONES PLUMBING COMPANY, FOR DELAY IN COMPLETION OF CONTRACT NO. GS-01B-2841, DATED MARCH 18, 1959, FOR REPLACEMENT OF WATER PIPES AND PLUMBING FIXTURES, ETC., IN THE POST OFFICE AT MYSTIC, CONNECTICUT.

THE CONTRACT PROVIDES FOR COMPLETION OF THE WORK WITHIN 90 CALENDAR DAYS FROM DATE OF RECEIPT OF NOTICE TO PROCEED AND FOR ASSESSMENT OF LIQUIDATED DAMAGES IN THE AMOUNT OF $25 FOR EACH CALENDAR DAY OF DELAY, UNLESS THE DELAY IS DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, OR DUE TO SIMILARLY EXCUSABLE DELAYS OF SUBCONTRACTORS OR SUPPLIERS. THE CONTRACT FURTHER PROVIDES THAT IN THE EVENT OF DELAY THE CONTRACTING OFFICER SHALL ASCERTAIN THE FACTS AND 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 SUBJECT ONLY TO APPEAL TO THE HEAD OF THE DEPARTMENT, WHOSE DECISION, OR THAT OF HIS DULY AUTHORIZED REPRESENTATIVES FOR THE HEARING OF SUCH APPEALS, SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN FRAUDULENT, ARBITRARY, CAPRICIOUS, OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH.

NOTICE TO PROCEED WAS RECEIVED BY THE CONTRACTOR ON MARCH 24, 1959, THEREBY ESTABLISHING JUNE 22, 1959, AS THE DATE FOR COMPLETION OF THE CONTRACT. THE WORK WAS SUBSTANTIALLY COMPLETED ON JANUARY 27, 1960, OR 219 DAYS AFTER THE SCHEDULED COMPLETION DATE. AN EXTENSION OF 28 DAYS WAS GRANTED BY THE CONTRACTING OFFICER TO COMPENSATE FOR THE CHRISTMAS RUSH SEASON DURING WHICH NO WORK COULD BE PERFORMED. LIQUIDATED DAMAGES WERE THEREFORE ASSESSED IN THE AMOUNT OF $4,775 FOR 191 CALENDAR DAYS AT $25 PER DAY.

THE CONTRACTOR HAD REQUESTED AN EXTENSION FOR THE ENTIRE PERIOD OF DELAY FOR THE STATED REASON THAT THE DELAY WAS CAUSED BY THE ILLNESS OF A MASTER MARBLE SETTER IN THE EMPLOY OF A SUBCONTRACTOR AND THAT TAKING THE JOB AWAY FROM THE SUBCONTRACTOR AFTER THE MARBLE WAS ORDERED WOULD HAVE CAUSED SERIOUS FINANCIAL LOSS. IT IS FURTHER ARGUED THAT THE ACTUAL LOSS OCCASIONED THE GOVERNMENT BY THE DELAY WAS NEGLIGIBLE, AND THAT CONSIDERATION SHOULD BE GIVEN TO MR. JONES' COMPLETION OF NUMEROUS CONTRACTS WITHIN THE TIME ALLOWED.

THE CONTRACTOR APPEALED THE CONTRACTING OFFICER'S FAILURE TO FURTHER EXTEND THE TIME FOR COMPLETING THE WORK, WHICH APPEAL WAS DENIED ON SEPTEMBER 27, 1962, BY DECISION OF THE GENERAL SERVICES ADMINISTRATION BOARD OF CONTRACT APPEALS. IN DENYING THE APPEAL THE BOARD CONCLUDED THAT THE ALLEGED CAUSES OF DELAY WERE NOT EXCUSABLE UNDER THE TERMS OF THE CONTRACT, THAT THE QUESTION OF ACTUAL DAMAGE WAS NOT FOR CONSIDERATION, AND THAT THE ACCRUAL OF LIQUIDATED DAMAGES EQUAL TO A SUBSTANTIAL PERCENTAGE OF THE CONTRACT PRICE WAS NOT GROUNDS FOR RELIEF.

WHEN THE CONTRACTOR AGREED TO PERFORM THE WORK WITHIN THE ALLOTTED TIME, IT WAS HIS RESPONSIBILITY TO MAKE ALL NECESSARY ARRANGEMENTS FOR MEN AND MATERIALS, AND DEFINITELY IN HIS INTEREST TO PROTECT HIMSELF BY AN APPROPRIATE AGREEMENT FROM ANY POSSIBLE LIABILITY IN THE EVENT OF AN INEXCUSABLE DELAY BY A SUBCONTRACTOR. THE POSSIBLE ILLNESS OF A MARBLE SETTER WAS CERTAINLY FORESEEABLE AND THE FACT THAT A REPLACEMENT MAY NOT HAVE BEEN AVAILABLE WITHIN A 50-MILE RADIUS WOULD NOT PLACE THE SECURING OF SUCH REPLACEMENT BEYOND THE CONTROL OF THE CONTRACTOR AND SUBCONTRACTOR, WITHIN THE MEANING OF THE PERTINENT CONTRACT PROVISION. NOR WOULD A FINANCIAL LOSS TO THE SUBCONTRACTOR BE GROUNDS FOR RELIEF.

THE AMOUNT OF ACCRUED LIQUIDATED DAMAGES AND THE QUESTION OF ACTUAL DAMAGE TO THE GOVERNMENT ARE NOT FOR CONSIDERATION. IT IS AN ACCEPTED PRINCIPLE OF LAW THAT WHERE DAMAGES ARE OF AN UNCERTAIN NATURE THE PARTIES MAY ESTIMATE AND AGREE UPON THE MEASURE OF DAMAGES THAT MAY BE SUSTAINED FROM THE BREACH OF AN AGREEMENT, AND WHEN THE AMOUNT OF DAMAGES IS THUS LIQUIDATED IN ADVANCE, IT IS NOT ONLY UNNECESSARY TO PROVE ACTUAL DAMAGES BUT EVIDENCE IN CONNECTION THEREWITH IS NOT EVEN ADMISSIBLE. SUN PRINTING AND PUBLISHING ASSOCIATION V. MOORE, 183 U.S. 642, 674.

MR. JONES' EXEMPLARY PERFORMANCE UNDER OTHER CONTRACTS IS APPRECIATED, BUT IT MAY NOT BE CONSIDERED IN DETERMINING HIS LEGAL OBLIGATIONS UNDER THE PRESENT CONTRACT.

FOR THE REASONS STATED IT SEEMS CLEAR THAT THE DECISION OF THE GENERAL SERVICES ADMINISTRATION BOARD OF CONTRACT APPEALS NOT ONLY WAS NOT ARBITRARY, CAPRICIOUS OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, BUT WAS FULLY SUPPORTED BY THE EVIDENCE IN THE CASE. WE MUST THEREFORE CONCLUDE THAT NO LEGAL BASIS EXISTS FOR RELIEVING THE COMPANY FROM THE ASSESSMENT OF LIQUIDATED DAMAGES.

WITH REGARD TO THE EQUITABLE REMISSION OF SUCH DAMAGES, 41 U.S.C. 256A PROVIDES THAT UPON THE RECOMMENDATION OF THE HEAD OF AN AGENCY THE COMPTROLLER GENERAL MAY REMIT ALL OR PART, AS HE CONSIDERS JUST AND EQUITABLE, OF ANY LIQUIDATED DAMAGES ASSESSED FOR DELAY IN PERFORMING A CONTRACT OF THAT AGENCY WHICH PROVIDES FOR SUCH DAMAGES. IN THIS REGARD, IT SHOULD BE NOTED THAT BEFORE OUR OFFICE CAN GIVE FAVORABLE CONSIDERATION TO A CLAIM FOR REMISSION OF LIQUIDATED DAMAGES ON AN EQUITABLE BASIS, THE HEAD OF THE AGENCY CONCERNED MUST RECOMMEND REMISSION. IN A REPORT TO OUR OFFICE DATED JANUARY 28, 1963, THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, RECOMMENDED AGAINST THE EQUITABLE REMISSION OF LIQUIDATED DAMAGES.