B-160796, AUG. 4, 1967

B-160796: Aug 4, 1967

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MAY NOT HAVE CLAIM FOR AMOUNT UNDER PREVIOUS CHANGE ORDER REGARDED AS BEING RESERVED FROM THE RELEASE AND THEREFORE REFUSAL OF GSA TO INCREASE AMOUNT UNDER RELEASE WAS PROPER. REPRESENTS AMOUNTS WHICH WERE WITHHELD BY THE GENERAL SERVICES ADMINISTRATION. WHICH WAS A PART OF THE INSTANT CONTRACT AND WHICH PROVIDES AS FOLLOWS: "/C) IN MAKING SUCH PROGRESS PAYMENTS. THE AMOUNT DUE THE CONTRACTOR UNDER THE CONTRACT SHALL BE PAID UPON PRESENTATION OF A PROPERLY EXECUTED VOUCHER AND AFTER THE CONTRACTOR SHALL HAVE FURNISHED THE GOVERNMENT WITH A RELEASE. OTHER THAN CLAIMS IN STATED AMOUNTS AS MAY BE SPECIFICALLY EXCEPTED BY THE CONTRACTOR FROM THE OPERATION OF THE RELEASE. * * * " THE COMPLETION DATE SPECIFIED IN THE CONTRACT WAS DECEMBER 11.

B-160796, AUG. 4, 1967

CONTRACTS - RELEASES DECISION TO H. HALVORSON, INC., RE REQUEST FOR ADDITIONAL COMPENSATION UNDER CONTRACT WITH GSA FOR CONSTRUCTION OF POST OFFICE IN PIERRE, SOUTH DAKOTA. CONTRACTOR WHO EXECUTED CONTRACT SETTLEMENT RELEASE WHICH RESERVED ONLY FUTURE CLAIMS FOR REPAIR OF DEFECTIVE WORK ATTRIBUTABLE TO FAULT OF GOVT. MAY NOT HAVE CLAIM FOR AMOUNT UNDER PREVIOUS CHANGE ORDER REGARDED AS BEING RESERVED FROM THE RELEASE AND THEREFORE REFUSAL OF GSA TO INCREASE AMOUNT UNDER RELEASE WAS PROPER.

TO MR. PATRICK A. SULLIVAN, H. HALVORSON, INCORPORATED, C/O KEITH, WINSTON AND REPSOLD:

WE REFER TO YOUR LETTER OF JANUARY 24, 1967, WITH ENCLOSURES, ON BEHALF OF H. HALVORSON, INCORPORATED, REQUESTING EQUITABLE RELIEF IN THE FORM OF ADDITIONAL COMPENSATION OF $10,911 UNDER CONTRACT NO. GS 06B-8073 FOR THE CONSTRUCTION OF THE UNITED STATES POST OFFICE AND COURTHOUSE AT PIERRE, SOUTH DAKOTA.

THE $10,911 REQUESTED IN YOUR LETTER OF JANUARY 24, 1967, REPRESENTS AMOUNTS WHICH WERE WITHHELD BY THE GENERAL SERVICES ADMINISTRATION, GSA, PURSUANT TO THE PROVISIONS OF PARAGRAPH 7/C) OF STANDARD FORM 23A, WHICH WAS A PART OF THE INSTANT CONTRACT AND WHICH PROVIDES AS FOLLOWS:

"/C) IN MAKING SUCH PROGRESS PAYMENTS, THERE SHALL BE RETAINED 10 PERCENT OF THE ESTIMATED AMOUNT UNTIL FINAL COMPLETION AND ACCEPTANCE OF THE CONTRACT WORK. * * * "

CLAUSE 7/E) OF STANDARD FORM 23A, PROVIDES AS FOLLOWS:

"/E) UPON COMPLETION AND ACCEPTANCE OF ALL WORK, THE AMOUNT DUE THE CONTRACTOR UNDER THE CONTRACT SHALL BE PAID UPON PRESENTATION OF A PROPERLY EXECUTED VOUCHER AND AFTER THE CONTRACTOR SHALL HAVE FURNISHED THE GOVERNMENT WITH A RELEASE, IF REQUIRED, OF ALL CLAIMS AGAINST THE GOVERNMENT ARISING BY VIRTUE OF THIS CONTRACT, OTHER THAN CLAIMS IN STATED AMOUNTS AS MAY BE SPECIFICALLY EXCEPTED BY THE CONTRACTOR FROM THE OPERATION OF THE RELEASE. * * * "

THE COMPLETION DATE SPECIFIED IN THE CONTRACT WAS DECEMBER 11, 1964. FOR VARIOUS REASONS THE CONTRACT COMPLETION DATE WAS EXTENDED TO OCTOBER 11, 1965, AND THE CONTRACT WAS ACTUALLY SUBSTANTIALLY COMPLETED ON OCTOBER 15, 1965.

DURING THE COURSE OF CONSTRUCTING THE PROJECT A NUMBER OF CHANGE ORDERS WERE ISSUED BY GSA AND A NUMBER OF THESE CHANGE ORDERS WERE IN DISPUTE SUBSEQUENT TO THE ACTUAL COMPLETION DATE OF OCTOBER 15, 1965. UNDERSTAND THAT SEVERAL MEETINGS WERE HELD SUBSEQUENT TO OCTOBER 15, 1965, BETWEEN YOU AND REPRESENTATIVES OF GSA TO RESOLVE THE VARIOUS CLAIMS ARISING IN CONNECTION WITH THE INSTANT CONTRACT AND THAT DIFFICULTIES WERE ENCOUNTERED. APPARENTLY THESE MEETINGS CONCLUDED WITHOUT A DEFINITIVE RESOLUTION OF THE MATTERS INVOLVED.

A TELEGRAM DATED MAY 13, 1966, FROM GSA TO THE CONTRACTOR CONFIRMED VARIOUS AGREEMENTS WHICH HAD BEEN REACHED BETWEEN GSA AND THE CONTRACTOR IN A TELEPHONE CONVERSATION ON MAY 12, 1966. THE TELEGRAM STATED THAT GSA AGREED TO SETTLE ALL ITEMS FOR $147,733 LESS PREVIOUS PAYMENTS OF $70,841 AND THAT UPON FURNISHING OF CERTAIN ADDITIONAL DOCUMENTATION RELATING TO THE WORK BY SUBCONTRACTORS ON THE COOLING TOWER SPRINKLER SYSTEM, GSA'S SETTLEMENT COULD BE AS HIGH AS $149,433. THE TELEGRAM ADVISED THAT THE SETTLEMENT WAS CONTINGENT ON THE CONTRACTOR'S WITHDRAWAL OF THE APPEAL OF CHANGE ORDER NO. 35 AND THE CONTRACTOR'S SUBMISSION OF OUTSTANDING PAYROLLS AND THE EXECUTION OF A RELEASE OF ALL CLAIMS.

BY LETTER OF MAY 20, 1966, COUNSEL FOR THE CONTRACTOR AGREED TO ACCEPT GSA'S OFFER TO SETTLE THE INSTANT CONTRACT FOR $149,433 LESS PREVIOUS PAYMENTS OF $70,841. THE LETTER OF MAY 20, ADVISED GSA THAT THE JUSTIFICATION FOR THE EQUITABLE ADJUSTMENT FOR THE COOLING TOWER SPRINKLER SYSTEM HAD BEEN SENT TO GSA BY LETTER DATED MAY 16, 1966, AND THAT IT WAS THE CONTRACTOR'S UNDERSTANDING THAT IF THE JUSTIFICATION WAS NOT SUFFICIENT THE SETTLEMENT WOULD BE FOR AN AMOUNT SOMEWHERE BETWEEN $147,733 AND $149,433. WITH THE LETTER OF MAY 20 THE CONTRACTOR FORWARDED THE WITHDRAWAL OF THE APPEAL OF CHANGE ORDER NO. 35, AS REQUESTED BY GSA. THE FOURTH PARAGRAPH OF THE LETTER OF MAY 20, 1966, STATED:

"IT IS OUR UNDERSTANDING THAT YOU WILL PREPARE A RELEASE OF CLAIMS WHICH I WILL HAVE THE CONTRACTOR EXECUTE UNDER THE SUBJECT CONTRACT AND THE PAYMENT OF ALL FURTHER SUMS DUE UNDER THE CONTRACT AS NOTED ABOVE INCLUDING ALL AMOUNTS NOW HELD IN LIEU OF LIQUIDATED DAMAGES AND RETAINAGE UNDER THE CONTRACT WILL BE PROMPTLY PAID.'

ON JUNE 15, 1966, GSA ACKNOWLEDGED THE LETTER OF MAY 20, 1966, AND ADVISED THE CONTRACTOR THAT PURSUANT TO THE REVIEW OF THE DOCUMENTATION FURNISHED BY THE CONTRACTOR REGARDING THE COOLING TOWER SPRINKLER SYSTEM, $315 WOULD BE ADDED TO THE $147,733 SETTLEMENT PROPOSED BY GSA IN ITS TELEGRAM OF MAY 13, 1966, FOR A FINAL SETTLEMENT IN THE AMOUNT OF $148,048 LESS PREVIOUS PAYMENTS. A RELEASE OF ALL CLAIMS FOR A SETTLEMENT OF $148,048 LESS PREVIOUS PAYMENTS WAS ALSO FORWARDED WITH THE LETTER OF JUNE 15, 1966.

ON JUNE 22, 1966, THE CONTRACTOR EXECUTED GSA FORM 1142, ENTITLED "RELEASE OF CLAIMS" UNDER CONTRACT NO. GS-06B-8073. THE SPECIFIC LANGUAGE OF THE RELEASE WAS AS FOLLOWS:

"THE UNDERSIGNED CONTRACTOR UNDER CONTRACT GS-06B-8073, DATED MAY 24 1963, BETWEEN THE UNITED STATES OF AMERICA AND SAID CONTRACTOR FOR THE CONSTRUCTION OF U.S. POST OFFICE AND COURT HOUSE, LOCATED AT PIERRE, SOUTH DAKOTA, IN ACCORDANCE WITH CLAUSE 1-14 (D) OF SAID CONTRACT, HEREBY RELEASE THE UNITED STATES FROM ANY AND ALL CLAIMS ARISING UNDER OR BY VIRTUE OF SAID CONTRACT OR ANY MODIFICATION OR CHANGE THEREOF EXCEPT AS FOLLOWS:

"/HERE ITEMIZE CLAIMS AND AMOUNTS DUE. IF NONE, SO STATE.)

"NONE UPON PAYMENT OF $148,048, LESS PREVIOUS PAYMENTS IN THE AMOUNT OF $70,841 FOR A NET AMOUNT DUE OF $77,207, WHICH SUM OF $148,048 REPRESENTS PAYMENT IN FULL OF ALL CLAIMS AGAINST THE GOVERNMENT * (SEE RESERVATION BELOW)

"WITNESS THE SIGNATURE AND SEAL OF THE UNDERSIGNED THIS 22ND DAY OF JUNE, 1966.'

THE FACE OF THE RELEASE INCLUDED THE FOLLOWING RESERVATION INSERTED BY THE CONTRACTOR:

"* ANY FUTURE CLAIMS WHICH MAY ARISE BY VIRTUE OF CONTRACTOR'S EXPENDITURES OR THOSE OF HIS AGENTS OR SUBCONTRACTORS IN THE CORRECTION, REPAIR OR REPLACEMENT OF ANY ITEM OR WORK AS DIRECTED BY THE CONTRACTING OFFICER, WHICH ITEM OR WORK IS FOUND TO BE DEFECTIVE OR DAMAGED BY REASON OF DESIGN DEFECT OR BY OTHER ACTION OF THE GOVERNMENT, ITS AGENT, OR OTHER PERSONS NOT A PARTY TO THIS CONTRACT.'

ON JULY 12, 1966, GSA TRANSMITTED A PAYMENT VOUCHER TO THE CONTRACTOR IN THE AMOUNT OF $78,707. IN THIS CONNECTION GSA HAS ADVISED THAT PURSUANT TO A REVIEW OF THE CONTRACT IT WAS FOUND THAT A PAYMENT OF $1,500 UNDER CHANGE ORDER NO. 34 HAD NOT BEEN MADE. WE HAVE ALSO BEEN ADVISED THAT THE $1,500 DUE THE CONTRACTOR FOR THIS CHANGE ORDER WAS NOT IN DISPUTE AND WAS NOT INVOLVED IN THE SETTLEMENT AMOUNT OF $148,048; THEREFORE, GSA ADDED $1,500 TO THE SETTLEMENT INDICATED IN THE RELEASE EXECUTED ON JUNE 22, 1966, OR $148,048 LESS $70,841. THIS PAYMENT VOUCHER FOR $77,207 INDICATED THAT IT WAS TO BE A FINAL PAYMENT VOUCHER.

YOU ALLEGE THAT THE QUOTED PORTION OF YOUR LETTER OF MAY 20, 1966, INDICATES IT WAS NOT INTENDED THAT THE $10,911 SHOULD HAVE BEEN INCLUDED IN THE SETTLEMENT COVERED BY THE RELEASE EXECUTED BY THE CONTRACTOR ON JUNE 22, 1966. ALSO, YOU CONTEND THAT GSA'S TREATMENT OF THE $1,500 DUE UNDER CHANGE ORDER NO. 34 AND THE $10,911 WHICH IS THE SUBJECT OF YOUR CLAIM IS INCONSISTENT UNLESS IT IS FOUND THAT BOTH ITEMS SHOULD NOT BE INCLUDED IN THE SETTLEMENT COVERED BY THE RELEASE. YOUR LETTER OF JANUARY 24, 1967, ADVISES THAT IN VIEW OF THE CONTRACTOR'S ECONOMIC SITUATION IT WAS NECESSARY TO NEGOTIATE THE CHECK FOR $78,707 WHICH WAS TRANSMITTED TO THE CONTRACTOR WITH THE PAYMENT VOUCHER OF JULY 12, 1966.

GSA HAS ADVISED THAT IT IS THE POSITIVE RECOLLECTION OF GSA REPRESENTATIVES WHO PARTICIPATED IN THE NEGOTIATIONS WHICH LED TO THE SETTLEMENT OF THE INSTANT CONTRACT THAT THE STIPULATED AMOUNT AGREED TO AS FINAL PAYMENT INCLUDED THE ADJUSTMENTS FOR THE $10,911 RETAINED UNDER THE CONTRACT AND COVERED ALL OUTSTANDING CLAIMS WHICH WERE NOT SETTLED PRIOR TO THE START OF NEGOTIATIONS.

THE RELEASE EXECUTED BY THE CONTRACTOR ON JUNE 22, 1966, GAVE THE CONTRACTOR THE OPPORTUNITY TO ITEMIZE CLAIMS AND AMOUNTS DUE WHICH WERE TO BE RESERVED FROM THE ITEMS INCLUDED IN THE SETTLEMENT. IF"NONE" WERE TO BE RESERVED THE RELEASE PROVIDED IT SHOULD BE SO STATED. REGARDING CLAIMS AND AMOUNTS DUE WHICH WERE TO BE RESERVED FROM THE ITEMS INCLUDED IN THE SETTLEMENT THE RELEASE SPECIFICALLY STATED "NONE" UPON PAYMENT OF THE AMOUNTS SET FORTH THEREIN. THE CONTRACTOR'S RESERVATION IN THE RELEASE IS APPLICABLE TO FUTURE CLAIMS FOR CORRECTION, REPAIR OR REPLACEMENT OF DEFECTIVE WORK ATTRIBUTABLE TO FAULT BY THE GOVERNMENT AND WOULD NOT BE APPLICABLE TO THE $10,911 WHICH IS THE SUBJECT OF THE INSTANT CLAIM. THEREFORE, WE FIND NOTHING ON THE FACE OF THE RELEASE WHICH WOULD INDICATE THAT THE CONTRACTOR INTENDED TO RESERVE THE $10,911 FROM BEING INCLUDED IN THE ITEMS COVERED BY THE RELEASE.

THE CONTRACTOR'S LETTER OF MAY 20, 1966, ALSO DOES NOT ESTABLISH THAT IT WAS INTENDED THAT THE $10,911 SHOULD BE RESERVED FROM THE SETTLEMENT COVERED BY THE RELEASE. A REASONABLE CONSTRUCTION OF THE QUOTED PORTION OF THE LETTER OF MAY 20, 1966, IS THAT THE SUM OF BETWEEN $147,733 AND $149,433 WHICH WAS AGREED TO AS THE SETTLEMENT IN THE FIRST TWO PARAGRAPHS OF THE LETTER OF MAY 20, 1966, INCLUDED THE AMOUNT OF $10,911 WHICH WAS HELD UNDER THE CONTRACT. YOUR LETTER OF MAY 20, 1966, WAS APPARENTLY CONSTRUED IN THIS MANNER BY THE CONTRACTING OFFICER AND WE CANNOT SAY THAT THIS CONSTRUCTION IS UNREASONABLE.

IN OUR VIEW THE INSTANT CASE IS A SITUATION WHERE A CONTRACTOR HAS COMPLETED HIS CONTRACT, AND, AS PROVIDED BY THE CONTRACT HAS RECEIVED HIS FINAL PAYMENT UPON THE EXECUTION OF A FULL RELEASE AND THEN LATER ATTEMPTS TO ASSERT CLAIMS. IN THOSE SITUATIONS THE COURTS HAVE HELD THAT THE RELEASE OPERATES TO BAR SUCH CLAIMS AS ARE COVERED BY THE RELEASE. SEE J. G. WATTS CONSTRUCTION COMPANY V. THE UNITED STATES, 161 CT. CL. 801 (1963) AND H. L. C. AND ASSOCIATES CONSTRUCTION COMPANY, INC. V. THE UNITED STATES, CT. CL. NO. 317-64 (DECIDED JUNE 10, 1966). BOTH OF THE CITED CASES MENTION SPECIFIC INSTANCES WHERE THE PROSECUTION OF CLAIMS HAS BEEN PERMITTED DESPITE THE EXECUTION OF A GENERAL RELEASE; HOWEVER, THESE EXCEPTIONS WOULD NOT BE APPLICABLE TO THE INSTANT CASE. IN THE CIRCUMSTANCES WE CAN ONLY CONCLUDE THAT THE CONTRACTOR WAS BOUND BY WHAT HE SIGNED AND WAS PRESUMED TO KNOW THE LEGAL CONSEQUENCES THEREOF. SEE B- 152660, APRIL 17, 1964. CONSEQUENTLY, WE FIND THERE IS NO LEGAL BASIS FOR PAYING YOU AN ADDITIONAL $10,911.

WE DO NOT AGREE THAT THERE IS ANY INCONSISTENCY BETWEEN THE TREATMENT OF THE $1,500 DUE UNDER CHANGE ORDER NO. 34 AND THE $10,911 WHICH IS THE SUBJECT OF YOUR CLAIM. THERE SEEMS TO BE NO QUESTION THAT THE $1,500 DUE UNDER CHANGE ORDER NO. 34 WAS INADVERTENTLY OMITTED FROM THE SETTLEMENT FIGURE OF $148,048; CONSEQUENTLY, GSA PROPERLY ADDED THIS $1,500 TO THE FINAL SETTLEMENT FIGURE IN THE PAYMENT VOUCHER OF JULY 12, 1966. WITH RESPECT TO THE $10,911, IT HAS NOT BEEN ESTABLISHED THAT THIS ITEM SHOULD BE RESERVED FROM THE ITEMS INCLUDED IN THE SETTLEMENT COVERED BY THE RELEASE. GSA, THEREFORE, PROPERLY REFUSED TO INCREASE THE FINAL PAYMENT BY $10,911.

WITH RESPECT TO YOUR REQUEST FOR EQUITABLE RELIEF WE HAVE STATED THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT. SEE B- 152660, APRIL 17, 1964.