B-154625, APR. 14, 1965

B-154625, APR. 14, 1965

TO MR. A. A. KINSFATHER, FINANCE AND ACCOUNTING OFFICER, DEPARTMENT OF THE ARMY:

THERE HAS BEEN RECEIVED BY REFERENCE FROM HEADQUARTERS, DEPARTMENT OF THE ARMY (ENGEC-FA), YOUR LETTER OF MAY 19, 1964, TRANSMITTING VOUCHER AND SCHEDULE OF PAYMENTS NO. 11-64-551 DATED MAY 20, 1964, IN THE AMOUNT OF $5,625.06 IN FAVOR OF GUY F. ATKINSON COMPANY, IN CARE OF WILLAMETTE IRON AND STEEL COMPANY, PORTLAND, OREGON, COVERING THE 51ST AND FINAL PAYMENT ESTIMATE UNDER CONTRACT NO. DA-45-164-CIVENG-59-38, DATED SEPTEMBER 27, 1958, FOR POWERHOUSE COMPLETION CONSTRUCTION, ICE HARBOR LOCK AND DAM, WALLA WALLA AND FRANKLIN COUNTIES, WASHINGTON. YOU REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT UNDER ITEM NO. 279 CLAIMED UNDER THE VOUCHER IS AUTHORIZED.

ITEM NO. 279 COVERS THE AMOUNT PROPOSED FOR PAYMENT IN THE SUM OF $4,621.50 PURSUANT TO ,MODIFICATION 107" OF THE CONTRACT IN SETTLEMENT OF A CLAIM BY THE CONTRACTOR FOR THE REMOVAL AND REPLACEMENT OF METALLIC HARDENED CONCRETE FLOORS IN THE MACHINE AND ELECTRICAL SHOPS WHICH HAD THERETOFORE BEEN DENIED BY A DECISION OF THE CONTRACTING OFFICER UNDER THE CONTRACT "DISPUTES" CLAUSE. THE PROPOSED PAYMENT WOULD ALLOW THE CONTRACTOR APPROXIMATELY TWO-THIRDS OF THE ESTIMATED COST OF THE WORK INVOLVED SUBJECT TO THE STIPULATION IN "MODIFICATION 107" THAT THE EXECUTION OF THE MODIFICATION "WILL NOT IN ANY WAY BE BINDING ON THE CONTRACTING OFFICER TO MAKE PAYMENT UNLESS APPROVED BY THE COMPTROLLER GENERAL.'

YOU QUESTION THE PROPRIETY OF PAYING ITEM NO. 279 ON THE GROUND "THAT WHEN THE CONTRACTING OFFICER RENDERED HIS FINAL DECISION DENYING THE CONTRACTOR RECOVERY UPON ANY PART OF HIS CLAIM AND THE CONTRACTOR FAILED TO TIMELY APPEAL THEREFROM, THE GOVERNMENT ACQUIRED A VESTED RIGHT IN THE FINALITY AND CONCLUSIVENESS OF THAT DECISION WHICH THE CONTRACTING OFFICER CANNOT NOW SET ASIDE BY AGREEING TO A SETTLEMENT WHICH HOLDS THE GOVERNMENT PARTIALLY RESPONSIBLE FOR FAILURE OF THE METALLIC HARDENED CONCRETE FLOOR AND ALLOWS PARTIAL PAYMENT OF THE CONTRACTOR'S CLAIM.'

THE WORK CALLED FOR BY THE CONTRACT INCLUDED THE FURNISHING, PLACING AND FINISHING OF A METALLIC HARDENED CONCRETE FLOOR IN THE MACHINE SHOP, TOOL ROOM AND ELECTRICAL SHOP AT A LUMP-SUM PRICE OF $22,856.91 IN ACCORDANCE WITH TECHNICAL PROVISIONS PRESCRIBING IN DETAIL THE DESIGN MIX AND THE INSTALLING PROCEDURES REQUIRED. THE WORK WAS PERFORMED BY A SUBCONTRACTOR IN MAY AND JUNE 1961. BY LETTER DATED OCTOBER 2, 1961, THE RESIDENT ENGINEER ADVISED THE CONTRACTOR THAT THE FLOORS WERE "UNSATISFACTORY AND UNACCEPTABLE AND MUST BE REPLACED WITHOUT ADDITIONAL COST TO THE GOVERNMENT.'

THE CONTRACTOR RESPONDED BY LETTER DATED OCTOBER 20, 1961, ADVISING THAT IT WAS PROCEEDING WITH THE REMOVAL AND REPLACEMENT OF THE FLOOR WITH THE UNDERSTANDING SUCH ACTION SHOULD NOT BE CONSTRUED AS INDICATING ITS ACCEPTANCE OF RESPONSIBILITY FOR THE FLOOR FAILURE OR AN INTENTION TO REPLACE THE FLOOR WITHOUT ADDITIONAL COMPENSATION, AND THAT ITS RESPONSIBILITY ON THE ADDITIONAL WORK WAS LIMITED TO FOLLOWING THE SPECIFICATIONS WITHOUT ANY GUARANTEE AS TO THE RESULTS. THE CONTRACTOR ENCLOSED A LETTER DATED OCTOBER 16, 1961, FROM ITS SUBCONTRACTOR GIVING A DETAILED DESCRIPTION OF THE WORK PERFORMED AND SERVING NOTICE THAT SINCE THE MATERIALS AND METHOD OF INSTALLATION WERE DICTATED DOWN TO THE LAST DETAIL, FULL COMPENSATION FOR ANY ADDITIONAL WORK WOULD BE EXPECTED. THE CONTRACTOR THEREAFTER REQUESTED BY LETTER DATED FEBRUARY 13, 1962, THAT A CONTRACT MODIFICATION BE ISSUED PROVIDING FOR AN INCREASE OF $9,243 CLAIMED TO BE DUE FOR THE WORK PERFORMED.

CLAUSE 6 OF THE GENERAL PROVISIONS OF THE CONTRACT PRESCRIBED A PROCEDURE FOR THE SETTLEMENT OF DISPUTES, AS FOLLOWS:

"6. DISPUTES.--- (A) EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER, WHO SHALL REDUCE HIS DECISION TO WRITING AND MAIL OR OTHERWISE FURNISH A COPY THEREOF TO THE CONTRACTOR. THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE UNLESS, WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH COPY, THE CONTRACTOR MAILS OR OTHERWISE FURNISHES TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO THE SECRETARY. THE DECISION OF THE SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVE FOR THE DETERMINATION OF SUCH APPEALS SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN FRAUDULENT, OR CAPRICIOUS, OR ARBITRARY, OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. IN CONNECTION WITH ANY APPEAL PROCEEDING UNDER THIS CLAUSE, THE CONTRACTOR SHALL BE AFFORDED AN OPPORTUNITY TO BE HEARD AND TO OFFER EVIDENCE IN SUPPORT OF ITS APPEAL. PENDING FINAL DECISION OF A DISPUTE HEREUNDER, THE CONTRACTOR SHALL PROCEED DILIGENTLY WITH THE PERFORMANCE OF THE CONTRACT AND IN ACCORDANCE WITH THE CONTRACTING OFFICER'S DECISION.

"/B) THIS "DISPUTES" CLAUSE DOES NOT PRECLUDE CONSIDERATION OF LAW QUESTIONS IN CONNECTION WITH DECISIONS PROVIDED FOR IN PARAGRAPH (A)ABOVE: PROVIDED, THAT NOTHING IN THIS CONTRACT SHALL BE CONSTRUED AS MAKING FINAL THE DECISION OF ANY ADMINISTRATIVE OFFICIAL, REPRESENTATIVE, OR BOARD ON A QUESTION OF LAW.'

THE CONTRACTING OFFICER RENDERED A DECISION DATED AUGUST 23, 1962, ACCOMPANIED BY DETAILED FINDINGS OF FACT DATED SEPTEMBER 10, 1962, DENYING THE CONTRACTOR'S CLAIM, WHICH WERE RECEIVED IN THE MAIL ON SEPTEMBER 13, 1962, AS CERTIFIED BY THE CONTRACTOR ON THE "RETURN RECEIPT REQUESTED.' THE CONTRACTING OFFICER MADE A DETAILED ANALYSIS AND EVALUATION OF THE CLAIM IN THIS DECISION WHICH CONCLUDED AS FOLLOWS:

"IF, HOWEVER, IN YOUR OPINION MY FINDINGS AND DECISION AS CONTAINED HEREIN INVOLVE A DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT, YOU ARE ADVISED THAT PURSUANT TO CLAUSE 6,"DISPUTES" OF THE ABOVE-NUMBERED CONTRACT YOU MAY APPEAL IN WRITING FROM THIS DECISION TO THE CHIEF OF ENGINEERS. YOUR APPEAL MAY BE IN THE FORM OF A LETTER OR ANY OTHER WRITTEN FORM PRESENTING ALL NECESSARY DATA, SPECIFIC FACTS AND ARGUMENTS, COMPLETE IN REASONABLE DETAIL IN SUPPORT OF YOUR APPEAL. THE APPEAL SHALL BE ADDRESSED TO THE CHIEF OF ENGINEERS AND MUST BE MAILED TO OR FILED WITH THE UNDERSIGNED CONTRACTING OFFICER WITHIN THIRTY (30) DAYS AFTER RECEIPT OF THIS LETTER.'

BY LETTER DATED OCTOBER 13, 1962, ADDRESSED TO THE DISTRICT ENGINEER THE CONTRACTOR ACKNOWLEDGED RECEIPT OF THE CONTRACTING OFFICER'S DECISION STATING THAT A "STUDY OF YOUR "FINDING OF FACT" HAS BEEN MADE AND IN VIEW OF THE FACT THAT YOU HAVE NOT BEEN FULLY INFORMED OF ALL OF THE CONDITIONS, WE ARE ASKING THAT AFTER FULLY REVIEWING THE CIRCUMSTANCES AS PRESENTED HEREIN YOU RECONSIDER YOUR DECISION.' THERE FOLLOWED AN EXTENDED DISCUSSION OF THE CLAIM INVOLVED CONCLUDING AS FOLLOWS:

"IN VIEW OF THE FACT THAT THE WORK WAS PERFORMED IN EACH INSTANCE STRICTLY AS OUTLINED IN THE CONTRACT SPECIFICATIONS AND UNDER VERY RIGID INSPECTION BY YOUR REPRESENTATIVES WHO ALLOWED NO DEVIATIONS OR PROPOSED CHANGES BY THE CONTRACTOR, WE DO NOT FEEL THAT THE FAILURE OF THE FIRST INSTALLATION WAS OUR RESPONSIBILITY, AND WE RESPECTFULLY REQUEST THAT YOU RECONSIDER YOUR DENIAL OF OUR REQUEST FOR THE ADDITIONAL WORK WHICH WE WERE REQUIRED TO DO.'

IN HIS LETTER DATED JANUARY 14, 1963, THE CONTRACTING OFFICER REAFFIRMED HIS FINAL DECISION AND NOTED THAT THE CONTRACTOR HAD NOT APPEALED THE DECISION. BY LETTER OF FEBRUARY 11, 1963, THE CONTRACTOR APPEALED FROM THE DECISION OF THE CONTRACTING OFFICER AND GAVE ITS REASONS FOR NOT PREVIOUSLY APPEALING. ON MARCH 12, 1963, THE CONTRACTING OFFICER ISSUED A SUPPLEMENTAL FINDINGS OF FACT TO THE EFFECT THAT THE CONTRACTOR'S APPEAL WAS NOT TIMELY. IN LETTER DATED MARCH 22, 1963, THE CONTRACTOR REITERATED ITS APPEAL FROM THE FINAL DECISION AND ALSO APPEALED FROM THE SUPPLEMENTAL FINDINGS.

WITH RESPECT TO THE CONTRACTING OFFICER'S ACTION FOLLOWING THE EXCHANGE OF CORRESPONDENCE YOU STATE IN YOUR LETTER AS FOLLOWS:

"THEREAFTER, DURING LATE 1963 AND EARLY 1964, THE CONTRACTING OFFICER CARRIED ON NEGOTIATIONS WITH THE CONTRACTOR WHICH EVENTUALLY RESULTED IN AN AGREEMENT TO SETTLE THE ORIGINAL CLAIM FOR THE SUM OF $4,621.50, AS EXPRESSED IN MODIFICATION NO. 107, DATED 17 MARCH 1964. IN HIS FINDINGS OF FACT ATTACHED TO SAID MODIFICATION, THE CONTRACTING OFFICER HAS FOUND THE GOVERNMENT AND THE CONTRACTOR SHOULD EACH PROPORTIONATELY SHARE RESPONSIBILITY FOR THE FAILURE OF THE METALLIC HARDENED CONCRETE FLOOR AND THE COSTS OF REMOVAL AND REPLACEMENT THEREOF. IN A LETTER ACCOMPANYING SAID MODIFICATION, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR THAT THERE WAS A QUESTION WHETHER HE COULD LEGALLY MAKE PAYMENT BECAUSE OF THE CONTRACTOR'S FAILURE TO TIMELY APPEAL FROM HIS ORIGINAL DECISION DENYING ADJUSTMENT. (EXHIBIT 10, CONTRACTING OFFICER'S LETTER DATED 17 MARCH 1964, MODIFICATION 107, DATED 17 MARCH 1964, AND FINDINGS OF FACT DATED 17 MARCH 1964 ATTACHED THERETO). THE CONTRACTOR ACCEPTED MODIFICATION 107 BUT HAS ASSERTED THAT ON ADVICE OF ITS LEGAL COUNSEL IT BELIEVES THE CONTRACTING OFFICER HAS SUCH AUTHORITY AND FURTHER DOES NOT AGREE THAT ITS APPEAL WAS UNTIMELY. (EXHIBIT 11, CONTRACTOR'S LETTER DATED 20 MARCH 1964).'

IN HIS LETTER OF MARCH 17, 1964, TO WHICH YOU REFER THE CONTRACTING OFFICER TRANSMITTED ,MODIFICATION 107" TO THE CONTRACTOR STATING AS FOLLOWS:

"INCLOSED IS MODIFICATION NO. 107 TO THE ABOVE-REFERENCED CONTRACT WHICH PROVIDES FOR ADJUSTMENT TO YOU FOR REPLACEMENT OF THE METALLIC HARDENED FLOORS IN THE MACHINE SHOP AND ELECTRICAL SHOP. AS WAS PREVIOUSLY DISCUSSED WITH YOU, THERE IS A QUESTION OF WHETHER I MAY LEGALLY MAKE THE PAYMENT PRESCRIBED BY THIS MODIFICATION IN VIEW OF THE FACT THAT YOU DID NOT MAKE TIMELY APPEAL FROM MY ORIGINAL DECISION WHICH HAD DENIED ANY ADJUSTMENT TO YOU FOR THE REPLACEMENT OF THE FLOOR. THE QUESTION OF MY AUTHORITY IN THIS REGARD WILL BE REFERRED TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR DECISION.

"IF THE INCLOSED MODIFICATION NO. 107 TO CONTRACT DA-45-164-CIVENG 59-38 IS SATISFACTORY, PLEASE NOTE YOUR ACCEPTANCE THEREOF IN THE SPACE PROVIDED BELOW AND RETURN THE ORIGINAL OF THIS LETTER TO THIS OFFICE. THE INCLOSED COPY OF THE MODIFICATION AND THE COPY OF THE LETTER ARE FOR YOUR RETENTION. I AM PRESENTING THIS MODIFICATION TO YOU FOR SIGNATURE AND ACCEPTANCE WITH THE PARTICULAR UNDERSTANDING THAT EXECUTION OF THE MODIFICATION IN THIS MANNER WILL NOT IN ANY WAY BE BINDING ON THE CONTRACTING OFFICER TO MAKE PAYMENT UNLESS APPROVED BY THE COMPTROLLER GENERAL. YOU WILL BE ADVISED WHEN THE REQUIRED APPROVAL IS RECEIVED.'

THE CONTRACTOR RESPONDED BY ITS LETTER OF MARCH 20, 1964, AS FOLLOWS:

"WE ARE ENCLOSING THE ORIGINAL LETTER OF ACCEPTANCE FOR MODIFICATION NO. 107, DULY EXECUTED BY AN AUTHORIZED REPRESENTATIVE OF OUR COMPANY.

"WE WISH THE RECORD TO SHOW THAT WE DO NOT AGREE THAT OUR APPEAL WAS UNTIMELY AS STATED IN YOUR LETTER.'

IRRESPECTIVE OF THE QUESTION AS TO WHETHER THE CONTRACTOR MADE A TIMELY REQUEST UPON THE CONTRACTING OFFICER TO RECONSIDER HIS FINAL DECISION THE ULTIMATE QUESTION PRESENTED BY THIS SITUATION IS ONE OF LAW PREDICATED ON THE INTERPRETATION OF THE CONTRACT SPECIFICATIONS. UNDER THE PROVISIONS OF THE WUNDERLICH ACT, 41 U.S.C. 321-22, AND THE TERMS OF THE CONTRACT "DISPUTES" CLAUSE, ADMINISTRATIVE DETERMINATIONS OF QUESTIONS OF LAW ARE NOT FINAL AND CONCLUSIVE. SEE BRUNO NEW YORK INDUSTRIES CORP. V. UNITED STATES, CT.CL. NO. 393-59, DECIDED MARCH 12, 1965; COPCO STEEL AND ENGINEERING CO. V. UNITED STATES, CT.CL. NO. 196 62, DECIDED FEBRUARY 19, 1965; AND W. H. EDWARDS ENGINEERING CORPORATION V. UNITED STATES, CT.CL. NO. 218-59, DECIDED APRIL 5, 1963. THEREFORE SUCH DETERMINATIONS ARE SUBJECT TO REVIEW AND FINAL DETERMINATION BY THE COURTS AND BY OUR OFFICE WITHOUT REGARD TO THE 30 DAY LIMITATION APPLICABLE TO APPEALS FROM CONTRACTING OFFICER DETERMINATIONS ON DISPUTED QUESTIONS OF FACT. SEE THE CASE OF C. J. LANGENFELDER AND SON, INC. V. UNITED STATES, DECIDED BY THE COURT OF CLAIMS, FEBRUARY 19, 1965, WHERE THE COURT RECOGNIZES THAT ONE OF THE MAJOR REASONS FOR THE PASSAGE OF THE WUNDERLICH ACT WAS TO ASSURE TO THE GENERAL ACCOUNTING OFFICE REVIEW AUTHORITY COMPARABLE TO THAT GIVEN THE COURTS.

IN HIS SUPPLEMENTAL FINDINGS OF FACT DATED MARCH 6, 1954, ACCOMPANYING "MODIFICATION NO. 107," THE CONTRACTING OFFICER HAS FOUND THAT THE FAILURE OF THE CEMENT FLOOR INSTALLATION IN QUESTION STEMMED IN LARGE PART FROM THE STRICT CONDITIONS IMPOSED ON THE CONTRACTOR BY THE CONTRACT SPECIFICATIONS DRAWN BY THE GOVERNMENT; THAT IN THE FIRST INSTALLATION ALLOWABLE MOISTURE IN THE DESIGN MIX WAS LIMITED TO 0.37 PART BY WEIGHT AND THE CONTRACTOR WAS NOT PERMITTED TO ADD MOISTURE TO ADJUST FOR JOB SITE CONDITIONS; THAT THE DRYNESS OF THE MIX VERY LIKELY DID NOT LEND ITSELF TO THE PROPER ACCOMPLISHMENT OF THE NECESSARY TAMPING AND SCREEDING ORDINARILY REQUIRED TO FACILITATE A BOND BETWEEN THE EXISTING FLOOR AND THE NEW TOPPING. IN THE SECOND INSTALLATION, ALTHOUGH THE SAME DESIGN MIX WAS USED AND WEATHER CONDITIONS WERE COOL AND HUMIDITY WAS RELATIVELY HIGH, THE GOVERNMENT REPRESENTATIVE AT THE SITE INSTRUCTED THE CONTRACTOR TO ADD ADDITIONAL MOISTURE TO MAKE THE FLOOR TOPPING MORE WORKABLE. THUS, A COMPARISON OF THE TWO OPERATIONS WITH RESPECT TO MOISTURE CONTENT IN THE MIX DISCLOSES THAT THE PRIMARY CAUSE FOR FAILURE OF THE FIRST INSTALLATION WAS THE USE OF RELATIVELY DRY MIX IN A PERIOD OF TIME WHEN WEATHER CONDITIONS ARE HOT AND DRY AND THAT THE CONTRACTING OFFICER'S REPRESENTATIVES SHOULD HAVE PERMITTED ADJUSTMENT OF THE MOISTURE CONTENT TO ALLOW FOR CONDITIONS PREVAILING AT THE TIME OF PLACEMENT. ON THE OTHER HAND, THE FINDINGS SHOW THAT THE CONTRACTOR DID NOT WET OR SOAK THE EXISTING FLOOR SLAB AS THOROUGHLY AS IT MIGHT HAVE WHICH CONTRIBUTED TO THE FAILURE OF THE ORIGINAL FLOOR INSTALLATION AND CONSEQUENTLY THE CONTRACTOR REASONABLY SHOULD BE HELD PARTIALLY RESPONSIBLE THEREFOR. THE PARTIES HAVE PROPOSED THAT 70 PERCENT OF THE ADDITIONAL COSTS BE BORNE BY THE GOVERNMENT AND 30 PERCENT BY THE CONTRACTOR AND THE CONTRACTOR IS WILLING TO ACCEPT THE SUM OF $4,621.50, WHICH AMOUNT THE CONTRACTING OFFICER HAS FOUND TO BE FAIR AND REASONABLE.

BASED UPON A CAREFUL CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES SUBMITTED IT IS OUR DETERMINATION THAT THE INFORMATION AND EVIDENCE OF RECORD ADEQUATELY SUPPORT THE FINDINGS OF LIABILITY AND JUSTIFY A CONCLUSION THAT THE PROPOSED SETTLEMENT IS JUST AND REASONABLE. CF. BEACON CONSTRUCTION COMPANY OF MASS. V. UNITED STATES, 314 F.2D 501 (CT.CL. 1963), AND GUYLER V. UNITED STATES, 314 F.2D 506 (CT.CL. 1963).

ACCORDINGLY, YOU ARE ADVISED THAT PAYMENT OF ITEM 279 CLAIMED ON THE VOUCHER SUBMITTED IN FULL AND FINAL SETTLEMENT OF THE CLAIM IS AUTHORIZED IF OTHERWISE CORRECT. THE VOUCHER AND THE CONTRACTOR'S LETTER OF OCTOBER 13, 1962, TO THE DISTRICT ENGINEER ARE RETURNED HEREWITH.