B-154250, OCT. 20, 1964

B-154250, OCT. 20, 1964

TO THE HONORABLE BERNARD L. BOUTIN, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

BY LETTER DATED JULY 20, 1964, WITH ENCLOSURES, YOUR GENERAL COUNSEL SUBMITTED A REPORT WITH RESPECT TO THE CLAIM OF THE POLLOCK REFRIGERATION COMPANY, INC., FOR PAYMENT OF $3,377.16 REPRESENTING DAMAGES ALLEGED TO HAVE BEEN INCURRED IN THE PERFORMANCE OF CONTRACT NO. GS-O3B-11405, COVERING THE INSTALLATION OF AIR-CONDITIONING SYSTEMS IN FOUR ROOMS OF THE EXECUTIVE OFFICE BUILDING, WASHINGTON, D.C.

THE CONTRACT DATED JANUARY 22, 1963, WAS SUBSTANTIALLY COMPLETED ON APRIL 12, 1963. IT APPEARS FROM THE RECORD BEFORE US THAT SECURITY REQUIREMENTS WERE IMPOSED ON THE CONTRACTOR SUBSEQUENT TO CONTRACT AWARD, AND THAT THE ENFORCEMENT OF SUCH SECURITY REQUIREMENTS DELAYED PERFORMANCE TO THE FINANCIAL DETRIMENT OF THE CONTRACTOR REPRESENTED BY LOST MAN-HOURS. THE CONTRACT DID NOT CONTAIN A SUSPENSION OF WORK CLAUSE OR ANY PROVISION RESPECTING SECURITY REQUIREMENTS. A CLAIM FILED BY THE CONTRACTOR UNDER CLAUSE 4 OF THE CONTRACT, ENTITLED "CHANGED CONDITIONS," WAS DENIED BY THE CONTRACTING OFFICER ON AUGUST 5, 1963, ON THE BASIS THAT THE CLAIM WAS ESSENTIALLY ONE FOR UNLIQUIDATED DAMAGES WHICH HE HAD NO AUTHORITY TO SETTLE. THE CONTRACTOR APPEALED THE CONTRACTING OFFICER'S DECISIONS UNDER THE DISPUTES CLAUSE AND BY DECISION OF THE GENERAL SERVICES ADMINISTRATION (GSA) BORAD OF CONTRACT APPEALS, DOCKET NO. 1095, DATED DECEMBER 13, 1963, THE APPEAL WAS DISMISSED WITHOUT PREJUDICE PENDING CONSIDERATION OF THE CLAIM BY OUR OFFICE.

IT IS THE POSITION OF GSA, AS EXPRESSED IN THE GOVERNMENT'S MOTION TO DISMISS THE APPEAL OF POLLOCK, THAT THE "CHANGED CONDITIONS" CLAUSE IS NOT FOR APPLICATION SINCE THE DELAY ALLEGED HERE DID NOT RESULT FROM CHANGED PHYSICAL CONDITIONS AT THE SITE OF THE WORK; AND THAT SUCH CLAUSE HAS NO REFERENCE TO CHANGED GOVERNMENTAL, POLITICAL OR ECONOMIC CONDITIONS, CITING HALLMAN ET AL. V. UNITED STATES, 68 F.SUPP. 204. ALSO, IT IS THE POSITION OF GSA THAT THE CASE OF UNITED STATES V. RICE, 317 U.S. 61, WOULD PRECLUDE PRICE ADJUSTMENT UNDER THE "CHANGES" CLAUSE IN VIEW OF THE HOLDING THEREIN THAT SUCH CLAUSE APPLIED TO STRUCTURAL CHANGES REQUIRED BY ALTERED SPECIFICATIONS AND NOT TO CONSEQUENTIAL DAMAGES ARISING FROM DELAY.

THE ISSUE TO BE DECIDED HERE IS WHETHER THE GOVERNMENT, IN ITS CAPACITY AS A CONTRACTING PARTY, HAS IMPOSED UPON POLLOCK A BURDEN OF PERFORMANCE WHICH IT WAS NOT INTENDED BY THE CONTRACT SHOULD BE BORNE BY POLLOCK WITHOUT AN ADJUSTMENT OF THE CONTRACT PRICE.

IT IS AN IMPLIED CONDITION OF EVERY CONTRACT THAT NEITHER PARTY WILL HINDER THE OTHER IN HIS DISCHARGE OF THE OBLIGATIONS IMPOSED UPON HIM, NOR INCREASE HIS COST OF PERFORMANCE. GEORGE H. EVANS AND CO. V. UNITED STATES, 169 F.2D 500; BEUTTAS V. UNITED STATES, 60 F.SUPP. 771; SUNSWICK CORPORATION OF DELAWARE V. UNITED STATES, 75 F.SUPP. 221. IT IS EQUALLY TRUE THAT BURDENS OTHER THAN THOSE CONTEMPLATED BY THE CONTRACT MAY NOT BE PLACED UPON THE CONTRACTOR WITHOUT ADDITIONAL COMPENSATION. CONTINENTAL CASUALTY CO. V. SCHAEFER, 173 F.2D 5; WUNDERLICH CONTRACTING COMPANY V. UNITED STATES, 240 F.2D 201.

THE INCREASED COSTS WHICH POLLOCK CLAIMS RESULTED FROM A SPECIFIC ORDER ISSUED ON A PARTICULAR JOB, THAT IS, BY REASON OF THE IMPOSITION OF SECURITY REQUIREMENTS NOT CONTEMPLATED BY THE CONTRACT. THE DECISION TO IMPOSE SUCH REQUIREMENTS CLEARLY INCREASED THE OBLIGATIONS OF POLLOCK UNDER THE CONTRACT OVER THOSE ORIGINALLY AGREED TO WHEN THE CONTRACT WAS EXECUTED. WE FEEL THAT THE GOVERNMENT COULD NOT, IN ITS CAPACITY AS A CONTRACTING PARTY, COMPEL POLLOCK TO ASSUME THE ADDITIONAL BURDEN OF SECURITY REQUIREMENTS WITHOUT SUBJECTING ITSELF TO LIABILITY FOR A BREACH OF THE IMPLIED CONDITION THAT NEITHER PARTY WOULD INCREASE THE OTHER'S COST OF PERFORMANCE. CF. SUNSWICK CORPORATION OF DELAWARE V. UNITED STATES, SUPRA; 41 COMP. GEN. 436.

WE THEREFORE ARE OF THE OPINION THAT THE CLAIM OF POLLOCK SHOULD BE CONSIDERED ADMINISTRATIVELY TO DETERMINE THE EXTENT OF EQUITABLE PRICE ADJUSTMENT. IN VIEW THEREOF, THE FILE SUBMITTED WITH THE REPORT OF JULY 20, 1964, IS RETURNED WITH THE RECOMMENDATION THAT THE CONTRACTING OFFICER DETERMINE THE EXTENT OF AN EQUITABLE PRICE ADJUSTMENT ALLOWABLE IN THIS CASE AND PAYMENT BE MADE ON THAT BASIS.