B-150645, MAR. 4, 1963

B-150645: Mar 4, 1963

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THERE WAS FORWARDED TO OUR OFFICE YOUR LETTER OF SEPTEMBER 10. REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER FOR $3. DA-23-028 ENG- 3722 WAS ENTERED INTO BY THE CORPS OF ENGINEERS WITH THE SHARP BROTHERS CONTRACTING COMPANY FOR THE CONSTRUCTION OF OPERATIONAL ALERT FACILITIES AT THE WHITEMAN AIR FORCE BASE. 769.45 WAS INCREASED TO $2. FINAL PAYMENT UNDER THE CONTRACT WAS MADE ON JULY 14. THE CONTRACTOR PERFORMED CERTAIN REMEDIAL WORK BUT WAS EVENTUALLY ORDERED TO REMOVE AND MAKE SATISFACTORY REPLACEMENTS FOR THE SURFACE PAVING. THE CONTRACTOR DISPUTED THE ADMINISTRATIVE DETERMINATION THAT THE CONTRACTOR WAS RESPONSIBLE FOR THE DEFECTS IN THE ORIGINAL CONSTRUCTION BUT ELECTED TO PROCEED WITH THE NECESSARY REPAIRS UNDER PROTEST.

B-150645, MAR. 4, 1963

TO MR. R. F. HATFIELD, DEPARTMENT OF THE ARMY:

BY THIRD INDORSEMENT OF JANUARY 14, 1963, FROM THE OFFICE OF THE CHIEF OF ENGINEERS, THERE WAS FORWARDED TO OUR OFFICE YOUR LETTER OF SEPTEMBER 10, 1962, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER FOR $3,000, COVERING A CLAIM OF THE SHARP BROTHERS CONTRACTING COMPANY, KANSAS CITY, MISSOURI, FOR MAKING REPAIRS TO THE STABILIZED SHOULDERS OF TAXIWAYS NOS. 17 AND 18 AT THE WHITEMAN AIR FORCE BASE, KNOB NOSTER, MISSOURI.

THE RECORD SHOWS THAT ON FEBRUARY 19, 1959, CONTRACT NO. DA-23-028 ENG- 3722 WAS ENTERED INTO BY THE CORPS OF ENGINEERS WITH THE SHARP BROTHERS CONTRACTING COMPANY FOR THE CONSTRUCTION OF OPERATIONAL ALERT FACILITIES AT THE WHITEMAN AIR FORCE BASE. THE CONTRACT INCLUDED A CONSIDERABLE AMOUNT OF WORK TO BE PERFORMED AT STATED UNIT PRICES AND BY 22 CONTRACT MODIFICATIONS THE ORIGINAL CONTRACT PRICE OF $2,041,769.45 WAS INCREASED TO $2,095,886.65 ON ACCOUNT OF VARIATIONS BETWEEN THE ESTIMATED AND THE ACTUAL QUANTITIES OF SUCH WORK.

FINAL PAYMENT UNDER THE CONTRACT WAS MADE ON JULY 14, 1960. HOWEVER, AN INSPECTION ON OCTOBER 5, 1960, DISCLOSED THAT DEPRESSED AREAS HAD DEVELOPED IN THE ASPHALT PAVING ON THE STABILIZED SHOULDERS OF TAXIWAYS NOS. 17 AND 18. THE CONTRACTOR PERFORMED CERTAIN REMEDIAL WORK BUT WAS EVENTUALLY ORDERED TO REMOVE AND MAKE SATISFACTORY REPLACEMENTS FOR THE SURFACE PAVING, BASE COURSE AND OBJECTIONABLE SUBGRADE MATERIALS. THE CONTRACTOR DISPUTED THE ADMINISTRATIVE DETERMINATION THAT THE CONTRACTOR WAS RESPONSIBLE FOR THE DEFECTS IN THE ORIGINAL CONSTRUCTION BUT ELECTED TO PROCEED WITH THE NECESSARY REPAIRS UNDER PROTEST. AFTER COMPLETION OF THE JOB THE CONTRACTOR PRESENTED A CLAIM FOR $4,892.40.

THE CONTRACTING OFFICER DETERMINED THAT AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE SHOULD BE MADE UNDER THE PROVISIONS OF THE "CHANGES" CLAUSE OF THE CONTRACT AND A SETTLEMENT FIGURE OF $3,000 WAS NEGOTIATED. MODIFICATION NO. 23 TO THE CONTRACT WAS ISSUED ON JULY 6, 1962, PROVIDING FOR AN INCREASE OF $3,000 IN THE CONTRACT PRICE AND A VOUCHER FOR THAT AMOUNT WAS THEN PROCESSED FOR PAYMENT.

IN ORDERING THE REPAIR WORK TO BE PERFORMED THE CONTRACTING OFFICER HAD RELIED ON THE CONDITION OF SECTION 9 (D) OF THE GENERAL PROVISIONS OF THE CONTRACT (STANDARD FORM 23A), TO THE EFFECT THAT INSPECTION AND FORMAL ACCEPTANCE OF MATERIALS AND FINISHED ARTICLES INCORPORATED IN THE WORK REQUIRED UNDER THE CONTRACT WOULD BE FINAL EXCEPT AS REGARDS LATENT DEFECTS OR DEPARTURES FROM SPECIFIC REQUIREMENTS OF THE CONTRACT. HOWEVER, AN EXAMINATION INTO THE MERITS OF THE CONTRACTOR'S CLAIM IN THE LIGHT OF THE FACT THAT THE GOVERNMENT HAD ASSUMED UNDER SECTION 48 OF THE CONTRACT SPECIFICATIONS THE RESPONSIBILITY FOR THE PERFORMANCE OF TESTS TO ASSURE PROPER GRADATION AND COMPACTION OF MATERIALS FOR THE BASE COURSE LED TO THE CONCLUSION THAT THE DEFECTS IN THE ORIGINAL CONSTRUCTION COULD HAVE BEEN DISCOVERED IF THE GOVERNMENT HAD ACCOMPLISHED ADEQUATE GRADATION AND COMPACTION TESTS IN THE STABILIZED SHOULDER AREAS OF TAXIWAYS NOS. 17 AND 18 WHERE TRENCHES HAD BEEN EXCAVATED FOR INSTALLATION OF ELECTRICAL DUCTWORK.

YOU STATE THAT THE VALIDITY OF MAKING PAYMENT OF THE VOUCHER FOR $3,000 IS QUESTIONED, NOT BECAUSE OF ANY DOUBT AS TO ENTITLEMENT OF THE PAYEE TO THE AMOUNT INVOLVED, BUT BECAUSE PAYMENT IS PROPOSED UNDER A CONTRACT MODIFICATION ISSUED SUBSEQUENT TO FINAL ACCEPTANCE OF THE WORK AND FINAL PAYMENT UNDER THE CONTRACT. YOU REFER TO 25 COMP. GEN. 332 AND 31 COMP. GEN. 685 INSOFAR AS THOSE DECISIONS INCLUDED REFERENCE TO THE GENERAL RULE THAT A CONTRACT CANNOT BE AMENDED AFTER IT HAS CEASED TO EXIST. YOU ALSO REFER TO THE CONTRACTING OFFICER'S POSITION IN THE MATTER AS BEING THAT THE RIGHT OF THE GOVERNMENT UNDER SECTION 9 (D) OF THE GENERAL PROVISIONS OF THE CONTRACT TO DEMAND THE CORRECTION OF DEFECTIVE WORK SURVIVES FINAL PAYMENT EVEN TO THE EXTENT THAT IT SUBSEQUENTLY MAY BE DETERMINED THAT A LATENT DEFECT IN THE ORIGINAL CONSTRUCTION HAD NOT IN FACT EXISTED.

THE OFFICE OF THE CHIEF OF ENGINEERS HAS ALSO SUGGESTED THAT THE REPAIR WORK WAS PERFORMED RELATIVE TO A CONTINUING OBLIGATION UNDER THE CONTRACT, AND WE ARE INCLINED TO AGREE WITH THE CONTRACTING OFFICER THAT THE CONTRACTOR'S CLAIM WAS PROPERLY CONSIDERED AS BEING REASONABLY SUBJECT TO SETTLEMENT BY CONTRACT MODIFICATION UNDER THE "CHANGES" CLAUSE OF THE CONTRACT WHICH AUTHORIZES THE MAKING OF AN APPROPRIATE CONTRACT MODIFICATION PROVIDING FOR AN INCREASE OR DECREASE IN THE CONTRACT PRICE IF CHANGES IN CONTRACT REQUIREMENTS "CAUSE AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THIS CONTRACT.'

IN ANY EVENT, IT APPEARS THAT OUR OFFICE WOULD NOT BE REQUIRED TO OBJECT TO THE PROPOSED PAYMENT TO THE CONTRACTOR IF WE FOUND IT NECESSARY TO CONCLUDE THAT THE CONTRACTING OFFICER HAD NO AUTHORITY TO ISSUE A CONTRACT MODIFICATION AFTER FINAL PAYMENT UNDER THE CONTRACT HAD BEEN MADE. THE GOVERNMENT ORDERED AND RECEIVED THE BENEFIT OF THE CORRECTIVE WORK RELATED TO DEFECTS IN THE ORIGINAL CONSTRUCTION FOR WHICH THE GOVERNMENT WAS AT LEAST PARTIALLY RESPONSIBLE AND WE HAVE NO REASON TO QUESTION THE ADMINISTRATIVE DETERMINATION THAT PAYMENT OF THE SUM OF $3,000 WOULD CONSTITUTE A REASONABLE SETTLEMENT OF THE CONTRACTOR'S CLAIM FOR $4,892.40.

ACCORDINGLY, AND SINCE NO APPROPRIATION PROBLEM IS HERE INVOLVED, PAYMENT OF THE VOUCHER FOR $3,000 IS AUTHORIZED. THE VOUCHER AND ITS ACCOMPANYING PAPERS ARE RETURNED HEREWITH.