B-157807, OCT. 22, 1965

B-157807, OCT. 22, 1965

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF OCTOBER 6, 1965, FROM THE ASSISTANT SECRETARY REQUESTING A DECISION WHETHER CONTRACT 14-17-0007-223, WITH SOUTH PORTLAND ENGINEERING COMPANY, FOR THE CONSTRUCTION OF A FISHERIES RESEARCH VESSEL, MAY BE REFORMED BECAUSE OF A FIRE WHICH DESTROYED THE BUILDING IN WHICH THE HULL SECTIONS FOR THE VESSEL WERE BEING CONSTRUCTED.

REFORMATION IS RECOMMENDED AS BEING IN THE BEST INTEREST OF THE GOVERNMENT ON THE BASIS THAT THE VESSEL COULD BE OBTAINED AT A LOWER COST AND AT AN EARLIER DATE THAN IF THE CONTRACT WERE TERMINATED AND A NEW CONTRACT AWARDED FOLLOWING A NEW SOLICITATION OF BIDS. IN THAT CONNECTION, IT IS INDICATED THAT THE EXISTING CONTRACT WOULD BE REFORMED TO ALLOW FOR AN INCREASE IN PRICE OF ABOUT $256,429 OVER THE ORIGINAL CONTRACT PRICE OF $1,136,710 TO MAKE A NEW TOTAL CONTRACT PRICE OF ABOUT $1,393,139, WHEREAS IT IS ESTIMATED THAT A NEW ADVERTISED CONTRACT WOULD RESULT IN A TOTAL PRICE OF ABOUT $1,500,000. IN ADDITION, IT IS INDICATED THAT THE CURRENT CONTRACTOR WOULD AGREE TO COMPLETE THE EXISTING CONTRACT WITHIN 480 DAYS AFTER RECEIPT OF AN ORDER TO COMMENCE WORK, A STOP ORDER HAVING BEEN ISSUED PENDING RESOLUTION OF THE MATTER. THE CONTRACTING OFFICER CONSIDERS THAT THE TIME REQUIRED TO ADVERTISE FOR NEW BIDS, AWARD A CONTRACT, AND COMPLETE CONSTRUCTION WOULD BE APPROXIMATELY 645 DAYS. APPEARS THAT THE CONTRACTOR'S PROPOSAL IS PREMISED ON THE VIEW THAT WITHOUT REFORMATION THE EXISTING CONTRACT WOULD BE TERMINATED WITHOUT LIABILITY BECAUSE THE DESTRUCTION OF THE CONTRACTOR'S BUILDING, IN WHICH THE WORK WAS BEING PERFORMED, HAS MADE IT IMPOSSIBLE FOR THE CONTRACTOR TO COMPLETE THE CONTRACT IN THE MANNER CONTEMPLATED BY THE PARTIES AT THE TIME THEY ENTERED INTO THE CONTRACT.

HOWEVER, THERE IS NOTHING IN THE CONTRACT WHICH SPECIFIES THAT THE CONTRACTOR'S PERFORMANCE SHOULD BE INDOORS. AS A MATTER OF FACT, THE REPORT INDICATES THAT THE MORE CONVENTIONAL MANNER OF CONSTRUCTION IS OUTDOORS AND THAT THAT MANNER OF CONSTRUCTION WILL BE EMPLOYED BY THE CONTRACTOR TO COMPLETE THE CONSTRUCTION. THEREFORE, WHILE THE CONTRACTOR MAY HAVE ORIGINALLY CHOSEN INDOOR CONSTRUCTION, WE DO NOT UNDERSTAND HOW IT CAN BE CONSIDERED THAT THE GOVERNMENT ALSO CONTEMPLATED INDOOR CONSTRUCTION.

IN THIS REGARD, IT IS STATED IN 6 WILLISTON ON CONTRACTS, SECTION 1952:

"THERE CERTAINLY CAN BE NO EXCUSE UNLESS BOTH PARTIES CONTEMPLATE A PARTICULAR MEANS OF PERFORMANCE AND CONTRACT ON THE ASSUMPTION OF ITS EXISTENCE. WHERE A PROMISE IS ABSOLUTE IN TERMS TO FURNISH GOODS OR SERVICES, THE MERE FACT THAT THE PROMISOR ALONE CONTEMPLATED A CERTAIN MEANS OF PERFORMANCE AND HAD NO OTHER MEANS WILL NOT EXCUSE HIM FROM LIABILITY WHEN THIS MEANS IS ACCIDENTALLY DESTROYED.'

OF COURSE, IN THE IMMEDIATE SITUATION, THE PROBLEM IS LESS SERIOUS THAN THAT COVERED IN WILLISTON IN THAT THE CONTRACTOR IS NOT WITHOUT AN ALTERNATE MEANS OF PERFORMANCE.

MOREOVER, IN 6 WILLISTON ON CONTRACTS SECTION 1964, IT IS STATED:

"IN MANY CASES A BUILDER OR CONTRACTOR HAS UNDERTAKEN TO ERECT A BUILDING OR OTHER STRUCTURE, IT HAS BEEN INJURED OR DESTROYED WITHOUT FAULT OF EITHER PARTY WHILE IN PROCESS OF ERECTION. IT IS UNIFORMLY HELD THAT THE BUILDER OR CONTRACTOR STILL REMAINS BOUND BY HIS PROMISE AND WILL BE LIABLE IN DAMAGES IF HE FAILS TO COMPLETE THE STRUCTURE. WHETHER THE INJURY OR DESTRUCTION WAS DUE TO TEMPEST, FIRE OR DEFECTIVE SOIL IS IMMATERIAL.'

ADDITIONALLY, IT IS WELL SETTLED THAT CONTRACTORS ARE NOT ENTITLED TO MODIFICATIONS OF THEIR CONTRACTS NOR EXCUSED FROM PERFORMANCE BY REASON OF INTERVENING AND UNFORESEEN CAUSES WHICH RENDER THEIR PERFORMANCE MORE BURDENSOME. COLUMBUS RY AND POWER CO. V. COLUMBUS, 249 U.S. 399; SATTERLEE V. UNITED STATES, 30 CT.CL. 31; 32 COMP. GEN. 25; 22 ID. 260; AND 19 ID. 903. IN THAT CONNECTION, OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO AMEND OR TO MODIFY EXISTING CONTRACTS UNLESS A COMPENSATING BENEFIT OR CONSIDERATION RESULTS TO THE UNITED STATES. J. J. PREIS AND CO. V. UNITED STATES, 58 CT.CL. 81; VULCANITE CEMENT CO. V. UNITED STATES, 74 CT.CL. 692; AND 40 COMP. GEN. 684.

IN THIS CONNECTION, IT IS TO BE OBSERVED THAT ARTICLE 5 OF THE CONTRACT PROVIDES THAT THE CONTRACTOR IS TO COMPLETE PERFORMANCE WITHIN THE TIME PROVIDED IN THE CONTRACT OR AS EXTENDED, THE CONTRACTING OFFICER BEING AUTHORIZED TO EXTEND THE TIME FOR PERFORMANCE FOR CERTAIN UNFORESEEABLE CAUSES INCLUDING FIRE. THE ARTICLE PROVIDES FURTHER THAT IF THE CONTRACTOR REFUSES OR FAILS TO PROSECUTE THE WORK WITH SUCH DILIGENCE AS TO INSURE COMPLETION WITHIN THE REQUIRED TIME, THE GOVERNMENT MAY DEFAULT THE CONTRACTOR AND LOOK TO IT AND ITS SURETIES FOR THE DAMAGES SUSTAINED BY THE GOVERNMENT AS A RESULT OF THE DEFAULT. TO SECURE THE GOVERNMENT IN THIS RESPECT, THE CONTRACTOR FURNISHED A PERFORMANCE BOND IN THE PENAL AMOUNT OF THE CONTRACT PRICE.

HAVING REGARD FOR THE PROVISIONS OF ARTICLE 5, THE CONTRACT REQUIRES THE CONTRACTOR TO PERFORM, WITHOUT ADDITIONAL COMPENSATION, THAT WORK FOR WHICH IT NOW SEEKS ADDITIONAL COMPENSATION. ALSO, SHOULD THE CONTRACT BE TERMINATED FOR DEFAULT AND THE CONTRACT RELET, THE EXPENSE OCCASIONED BY SUCH REPLACEMENT CONTRACT WOULD NOT HAVE TO BE BORNE BY THE GOVERNMENT. FURTHER, ARTICLE 5 PROVIDES THAT LIQUIDATED DAMAGES SPECIFIED IN THE CONTRACT AT THE RATE OF $500 PER DAY FOR EACH CALENDAR DAY OF DELAY, WOULD BE CHARGED AGAINST THE CONTRACTOR FOR DELAYS ARISING OUT OF DEFAULT.

THUS, IN THE CIRCUMSTANCES, IT DOES NOT APPEAR THAT THERE WOULD BE ANY COMPENSATING BENEFIT OR CONSIDERATION MOVING TO THE GOVERNMENT FOR PAYING ADDITIONAL COMPENSATION TO THE CONTRACTOR. WE, THEREFORE, CONCLUDE THAT THERE HAS NOT BEEN PRESENTED ANY ADEQUATE BASIS FOR GRANTING THE RELIEF WHICH HAS BEEN REQUESTED.