B-157361, AUG. 26, 1965

B-157361, AUG. 26, 1965

TO THE HONORABLE J. GEORGE STEWART, ARCHITECT OF THE CAPITOL:

REFERENCE IS MADE TO YOUR LETTER OF JULY 29, 1965, REQUESTING OUR DECISION AS TO WHETHER CERTAIN "NO-SERVICE" ITEMS SHOULD BE INCLUDED IN DETERMINING THE FEE PROPERLY PAYABLE UNDER THE PAYMENT CLAUSE OF CONTRACT ACHO-191 ENTERED INTO ON MAY 20, 1958, BETWEEN YOUR OFFICE WITH ARCHITECTURAL AND ENGINEERING CONSULTANTS JESSE M. SHELTON AND ALAN G. STANFORD (NOW DECEASED), ATLANTA, GEORGIA, FOR FURNISHING THE ARCHITECTURAL AND ENGINEERING SERVICES INCLUDING GENERAL SUPERVISION OF CONSTRUCTION REQUIRED FOR THE DESIGN AND CONSTRUCTION OF SUBWAYS AND SUBWAY TRANSPORTATION SYSTEMS BETWEEN THE HOUSE OFFICE BUILDINGS AND THE UNITED STATES CAPITOL.

IN YOUR LETTER YOU STATE THAT ARTICLE 1 OF THE CONTRACT SPECIFIES THAT THE SERVICES TO BE RENDERED BY THE CONSULTANT SHALL BE FURNISHED UNDER YOUR DIRECTION AND THAT THE PAYMENT CLAUSE IN ARTICLE 2 PROVIDING FOR PAYMENT BY THE GOVERNMENT OF AN AMOUNT EQUAL TO 5 1/2 PERCENT OF THE TOTAL COST OF ALL WORK FOR WHICH SERVICES ARE PERFORMED IS IN EFFECT A STANDARD CLAUSE EMPLOYED IN ALL ARCHITECTURAL AND ENGINEERING CONTRACTS BY YOUR OFFICE FOR LIKE PROFESSIONAL SERVICES. YOU ALSO STATE THAT DURING THE COURSE OF THE CONSTRUCTION OF THE SUBWAY AND SUBWAY SYSTEM BETWEEN THE RAYBURN HOUSE OFFICE BUILDING AND THE UNITED STATES CAPITOL CERTAIN CHANGE ORDERS ISSUED BY THE GOVERNMENT FOR SUSPENSION OF WORK, USE OF PREMIUM TIME, USE OF EXTRA EQUIPMENT, AND OTHER WORK, RESULTED IN ADDITIONAL COST TO THE CONTRACTORS AND REQUIRED CORRESPONDING PRICE ADJUSTMENTS PURSUANT TO THE TERMS OF THE CONSTRUCTION CONTRACTS. YOU STATE FURTHER THAT ALTHOUGH THESE CHANGE ORDERS DID NOT REQUIRE CONSULTATION WITH, OR ANY OTHER WORK ON THE PART OF THE ARCHITECTURAL AND ENGINEERING CONSULTANT, NEVERTHELESS, HE SUBMITTED A REQUISITION WHICH INCLUDED IN HIS FEE BASIS THE CONTRACT PRICE INCREASES ALLOWED THE CONSTRUCTION CONTRACTORS FOR SUCH ITEMS.

YOUR TECHNICAL STAFF, YOU STATE, HAS INTERPRETED THE CONTRACT CLAUSE IN ARTICLE 2--- "FOR WHICH SERVICES ARE PERFORMED"--- AS REQUIRING PAYMENT FOR ACTUAL SERVICES RENDERED ON AN "ITEM-BY-ITEM" BASIS AND THEREFORE HAS REFUSED TO HONOR THE PAYMENT REQUISITION SUBMITTED INSOFAR AS IT INCLUDED A FEE ON THE ITEMS FOR WHICH THE CONSTRUCTION CONTRACT PRICE HAD BEEN INCREASED BY THE ORDERS. THIS ACTION WAS SUSTAINED BY YOUR LETTER TO THE CONSULTANT DATED APRIL 19, 1965,WHEREUPON THE CONSULTANT REQUESTED RECONSIDERATION ON THE BASIS SET OUT IN HIS LETTER DATED JUNE 2, 1965.

UNDER THE TERMS OF ARTICLE 1 OF THE CONTRACT IT WAS AGREED, IN SUMMARY, THAT THE CONSULTANT WOULD MAKE THE REQUIRED PRELIMINARY SURVEYS, STUDIES, AND DRAWINGS AND WOULD SUBMIT A REPORT THEREON WITH AN ESTIMATE OF THE COST OF THE PROJECT, AND UPON THE APPROVAL OF THE PRELIMINARY DRAWINGS, FURNISH THE ARCHITECTURAL AND ENGINEERING WORK NECESSARY FOR THE DESIGN AND CONSTRUCTION OF THE PROPOSED SUBWAY SYSTEM, INCLUDING THE REQUIRED PROVISIONAL WORKING DRAWINGS, DETAILS SPECIFICATIONS AND GENERAL SUPERVISION OF THE CONSTRUCTION WORK. IT WAS EXPRESSLY STIPULATED THAT "ANY QUESTION AS TO THE EXTENT OF THE SERVICES TO BE PERFORMED SHALL BE DECIDED BY THE ARCHITECT OF THE CAPITOL, WHOSE DECISION SHALL BE FINAL.'

THE BASIS FOR DETERMINING THE CONSULTANT'S COMPENSATION AND METHOD OF PAYMENT FOR THE SERVICES REQUIRED TO BE FURNISHED UNDER THE CONTRACT, INCLUDING AN EXPRESS PROVISION FOR PAYMENT OF ADDITIONAL COMPENSATION FOR CHANGES MADE BY THE GOVERNMENT WHICH REQUIRE THE PERFORMANCE OF EXTRA SERVICES BY THE CONSULTANT OR SUBSTANTIAL INCREASES IN HIS EXPENSES ARE STIPULATED IN ARTICLES 2, 3, AND 4 AS FOLLOWS:

"ARTICLE 2. IN CONSIDERATION OF THE FURNISHING BY THE PARTIES OF THE SECOND PART OF THE SERVICES DESCRIBED IN ARTICLE 1 HEREOF, THE PARTY OF THE FIRST PART SHALL PAY THE PARTIES OF THE SECOND PART AS COMPENSATION AN AMOUNT EQUAL TO FIVE AND ONE-HALF PERCENT (5 1/2 PERCENT) OF THE TOTAL COST OF ALL WORK FOR WHICH SERVICES ARE PERFORMED BY THE PARTIES OF THE SECOND PART. FOR THE PURPOSE OF MAKING PARTIAL PAYMENTS AND FOR PAYMENT IN THE EVENT OF TERMINATION OF THE CONTRACT AS HEREINAFTER PROVIDED, THE PERCENTAGES TO BE PAID SHALL BE BASED UPON AN ESTIMATED COST OF TWO MILLION, FIVE HUNDRED THOUSAND DOLLARS ($2,500,000.00) FOR THE CONSTRUCTION WORK UNTIL SUCH TIME AS THE ACTUAL COST CAN BE DETERMINED, AT WHICH TIME THE AMOUNTS DUE SHALL BE ADJUSTED TO CONFORM TO THE ACTUAL COST; AND THE PRELIMINARY DRAWINGS, PROVISIONAL WORKING DRAWINGS, FINAL WORKING DRAWINGS AND SPECIFICATIONS, AND ALL OTHER SERVICES PERFORMED PRIOR TO THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS FOR THE WORK SHALL BE EVALUATED AT SEVENTY-FIVE PERCENT (75 PERCENT) OF THE COMPENSATION, AND THE LARGE-SCALE AND FULL-SIZE DETAIL DRAWINGS, THE SUPERVISION OF THE CONSTRUCTION WORK, CHECKING OF SHOP DRAWINGS, AND OTHER SERVICES PERFORMED AFTER THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS SHALL BE EVALUATED AT TWENTY-FIVE PERCENT (25 PERCENT) OF THE COMPENSATION: PROVIDED, THAT THE ACTUAL COST OF THE WORK SHALL BE DETERMINED BY THE ARCHITECT OF THE CAPITOL.

"ARTICLE 3. PARTIAL PAYMENTS FOR SERVICES UNDER THIS CONTRACT SHALL BE MADE, IF REQUESTED BY THE PARTIES OF THE SECOND PART, AS FOLLOWS: APPROXIMATELY MONTHLY THE ARCHITECT OF THE CAPITOL SHALL CAUSE AN ESTIMATE TO BE MADE OF THE VALUE OF THE SERVICES PERFORMED AT THE DATE OF THE ESTIMATE, AND WILL THEREUPON ISSUE A PAYMENT VOUCHER IN SUCH AMOUNT AS IS ESTIMATED TO BE DUE: PROVIDED, THAT FROM EACH PARTIAL PAYMENT FOR SERVICES PERFORMED PRIOR TO THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS THERE SHALL BE RETAINED TEN PERCENT (10 PERCENT) OF THE ESTIMATED AMOUNT DUE AND THAT PARTIAL PAYMENTS FOR SERVICES PERFORMED AFTER THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS SHALL BE MADE IN FULL, AND THE AMOUNTS RETAINED SHALL BE PAID THIRTY DAYS AFTER ALL THE SERVICES HEREIN REQUIRED SHALL HAVE BEEN SATISFACTORILY COMPLETED.

"ARTICLE 4. IF, AFTER THE ACCEPTANCE BY THE PARTY OF THE FIRST PART OF THE PROVISIONAL WORKING DRAWINGS, THE PARTY OF THE FIRST PART REQUIRES CHANGES TO BE MADE WHICH, IN THE OPINION OF THE ARCHITECT OF THE CAPITOL, SUBJECT TO THE APPROVAL OF THE HOUSE OFFICE BUILDING COMMISSION, ADD MATERIALLY TO THE SCOPE OF THE WORK OR INVOLVE SUBSTANTIAL INCREASES IN EXPENSE TO THE PARTIES OF THE SECOND PART, THE PARTY OF THE FIRST PART SHALL PAY THE PARTIES OF THE SECOND PART, IN ADDITION TO THE COMPENSATION PROVIDED IN ARTICLE 2 HEREOF, AN EQUITABLE AMOUNT FOR THE EXTRA SERVICES PERFORMED AND THE EXTRA EXPENSE INCURRED.'

WHILE ITS MEANING MAY BE SOMEWHAT OBSCURE, THE LANGUAGE IN ARTICLE 2--- "FOR WHICH SERVICES ARE PERFORMED BY THE PARTIES OF THE SECOND PART" (THE CONSULTANT/--- CLEARLY IS DESCRIPTIVE OF THE TERM "ALL WORK.' IN OUR OPINION, THIS LANGUAGE REASONABLY MAY BE CONSTRUED AS EVIDENCING AN INTENTION TO LIMIT THAT TERM SO AS TO EXCLUDE ANY WORK FOR WHICH NO SERVICES ARE PERFORMED BY THE CONSULTANT. FURTHERMORE, THE USE OF SIMILAR LANGUAGE IN THE PROVISION OF ARTICLE 1, QUOTED AS ABOVE, AND THE CLAUSE "OTHER SERVICES PERFORMED," APPEARING IN ARTICLE 2, AS WELL AS THE CLAUSE ,FOR SERVICES PERFORMED" USED IN ARTICLE 3, CONSIDERED WITH THE PROVISIONS OF ARTICLE 4 RELATING TO CHANGES, WE FEEL LENDS SUPPORT TO THIS CONSTRUCTION.

YOU POINTED OUT IN YOUR LETTER THAT THE INTERPRETATION BY YOUR OFFICE OF THE PAYMENT CLAUSE USED IN THIS AND OTHER CONTRACTS HAS NOT BEEN ENTIRELY UNIFORM OVER THE PAST YEARS, BUT, AS A RULE, YOUR OFFICE HAS REJECTED PAYMENTS REQUESTED FOR "NO-SERVICE" ITEMS AND, IN GENERAL, SUCH REJECTIONS HAVE BEEN ACCEPTED WITHOUT PROTEST. AS WILL BE INDICATED BELOW, IT APPEARS THAT THE CONSULTANT HAS IN FACT RECOGNIZED THE PRINCIPLE UNDERLYING THE ADMINISTRATIVE INTERPRETATION THAT COMPENSATION IS DUE UNDER THE CONTRACT ONLY FOR THE SERVICES HE HAS ACTUALLY PERFORMED.

ONE OF THE CARDINAL RULES OF INTERPRETATION WHERE THE LANGUAGE OF A CONTRACT IS AMBIGUOUS OR OBSCURE IS TO ASCERTAIN THE INTENTION OF THE PARTIES FROM THE INSTRUMENT ITSELF, IF POSSIBLE, READ IN THE LIGHT OF ALL THE SURROUNDING FACTS AND CIRCUMSTANCES INCLUDING THE ACTS OF THE PARTIES INDICATING THE INTERPRETATION PLACED UPON IT BY THEMSELVES. THIS IS TO SAY THAT A CONTEMPORANEOUS EXPOSITION OF THE CONTRACT BEFORE IT BECOMES THE SUBJECT OF CONTROVERSY IS ENTITLED TO GREAT, IF NOT CONTROLLING, INFLUENCE IN ASCERTAINING THE UNDERSTANDING OF THE PARTIES, AND SUCH PRACTICAL CONSTRUCTION GENERALLY SHOULD PREVAIL. CF. EASTMOUNTCONST. CO. V. TRANSPORT MFG. AND EQUIP. CO., 301 F.2D 34 (1962), AND THE AUTHORITIES CITED AND QUOTED WITH APPROVAL AT PAGES 39 TO 42.

IN HIS LETTER OF JUNE 2, 1965, REQUESTING RECONSIDERATION, THE CONSULTANT SUBMITTED AN ANALYSIS OF THE CHANGE ORDERS IN QUESTION, STATING HIS REASONS FOR DISAGREEMENT WITH THE ADMINISTRATIVE DETERMINATION IN SOME BUT NOT ALL INSTANCES.

THUS, WITH RESPECT TO CHANGE ORDER NO. 8 ISSUED TO INTERCOUNTY CONSTRUCTION CORPORATION FOR ,REPLACEMENT OF WOODEN RAIL ON BRIDGE WITH STEEL $2,387.76" THE CONSULTANT STATED,"THIS WORK WAS DONE AT THE INSTRUCTION OF YOUR OFFICE BY LETTER DATED JUNE 28, 1963, AND WE DID NOT PERFORM ANY ENGINEERING SERVICES IN CONNECTION HEREWITH, THEREFORE, WOULD NOT EXPECT A FEE ON THIS AMOUNT.' LIKEWISE, WITH RESPECT TO SUPPLEMENT 54 OF CHANGE ORDER NO. 12 ISSUED TO THE SAME CONTRACTOR FOR ,REPLACEMENT OF 20 INCH STORM SEWER $5,202.00," THE CONSULTANT STATED,"WE PERFORMED NO ENGINEERING SERVICES IN CONNECTION WITH THIS SUPPLEMENT AND THEREFORE WILL DELETE THIS FROM OUR REQUEST FOR FEES ON THIS ITEM.'

THE CONSULTANT HAS INDICATED CONCURRENCE WITH YOUR VIEW THAT NO FEE SHOULD BE PAID ON SUPPLEMENT 96 OF CHANGE ORDER NO. 66 ISSUED TO BUCKLEY AND COMPANY "TO REIMBURSE FOR DAMAGES CAUSED BY THE CONTRACTOR.' HE ALSO HAS INDICATED THAT HE IS WITHDRAWING HIS CLAIM BASED ON CHANGE ORDERS NO. 43, ISSUED TO THE SAME CONTRACTOR, AND NO. 1, ISSUED TO INTERCOUNTY CONSTRUCTION CORPORATION, IN THE ABSENCE OF ANY RECORD OR CORRESPONDENCE IN HIS FILE TO SHOW WHAT WORK WAS REQUIRED AND THAT HE PERFORMED ADDITIONAL SERVICES.

REGARDING THE 6 CHANGE ORDERS COVERING "SUSPENSION OF WORK" FOR INTERVALS OF ONE DAY OR LESS ISSUED TO THE CONSTRUCTION CONTRACTORS WITHOUT CONSULTATION WITH THE ARCHITECT OR HIS ASSOCIATES, THE CONSULTANT EXPRESSED THE OPINION IN HIS LETTER THAT "WHEN WORK IS SUSPENDED THAT THE DELAY INCREASES THE LENGTH OF ADMINISTRATIVE TIME IN OUR OFFICE AND ALSO THE TIME OF OUR LIAISON MAN AT THE SITE.' HE ALLEGED THAT,"IN A GREAT MANY INSTANCES, THIS ADDITIONAL FEE WILL NOT COMPENSATE US FOR THE ACTUAL AMOUNT OF THIS ADDITIONAL TIME SPENT BECAUSE OF THE SUSPENSION OF THE WORK.' ON THE OTHER HAND, HE URGED THAT THE CHANGE ORDERS COVERING "OVERTIME" AND "PREMIUM TIME" PAID BY THE CONTRACTORS "TO EXPEDITE CONSTRUCTION" SHOULD BE REGARDED AS "A PART OF THE COST OF CONSTRUCTION FOR WHICH ARCHITECTURAL AND ENGINEERING SERVICES ARE RENDERED AND THEREFORE A FEE SHOULD BE PAID" ALTHOUGH IT REASONABLY APPEARS THE "ADMINISTRATIVE TIME" OF THE CONSULTANT'S OFFICE AND THE TIME OF HIS "LIAISON MAN AT THE SITE" HAVE BEEN REDUCED THEREBY.

IN OUR OPINION, ALL THE FACTS AND CIRCUMSTANCES PERTAINING TO THE ISSUANCE OF THESE CHANGE ORDERS PROPERLY ARE FOR CONSIDERATION IN REACHING THE DETERMINATION REQUIRED TO BE MADE BY YOU UNDER ARTICLE 4 OF THE CONTRACT AS TO WHETHER THE CONSULTANT IS ENTITLED TO "AN EQUITABLE AMOUNT FOR THE EXTRA SERVICES PERFORMED AND THE EXTRA EXPENSE INCURRED" BY HIM, IF ANY, AS A RESULT OF SUCH CHANGES. WE ARE ALSO OF THE OPINION THAT IN CONSIDERING THE CHANGES, COLLECTIVELY OR ON AN ITEM-BY-ITEM BASIS, A FINDING THAT THE CONSULTANT IS ENTITLED TO PAYMENT "IN ADDITION TO THE COMPENSATION PROVIDED IN ARTICLE 2" SHOULD BE SUPPORTED BY A SHOWING THAT THE CHANGES MADE "ADD MATERIALLY TO THE SCOPE OF THE WORK OR INVOLVE SUBSTANTIAL INCREASES IN EXPENSE" TO THE CONSULTANT.