B-161557, MAY 15, 1969

B-161557, MAY 15, 1969

TO DEKORA:

THIS IS IN REPLY TO YOUR LETTER OF MAY 12, 1967, AND SUBSEQUENT CORRESPONDENCE ON BEHALF OF THE FIRM DEKORA, RELATING TO A CLAIM ARISING UNDER A CONTRACT WITH THE UNITED STATES ARMY IN EUROPE WHICH WAS THE SUBJECT OF ADMINISTRATIVE APPEALS BROUGHT BEFORE THE U.S. ARMY, EUROPE, BOARD OF CONTRACT APPEALS, USAREUR BCA NOS. 291 AND 303.

THE INSTANT CONTRACT COVERED INTERIOR PAINTING OF THE HEADQUARTERS BUILDING AND ANNEXES A AND B IN FRANKFURT, GERMANY, AT A TOTAL PRICE OF DM 172,670.01 ($43,493.71). CLAIMANT BEGAN WORK ON NOVEMBER 9, 1964, BUT BY A LETTER DATED JANUARY 15, 1965, ADVISED THE CONTRACTING OFFICER OF THE RESULTS OF AN ANALYSIS OF THE EXISTING PAINT LAYERS THE FIRM HAD COMMISSIONED AN EXPERT TO PERFORM WHICH, THE FIRM CLAIMED, SHOWED THAT THE SPECIFICATIONS WERE IMPOSSIBLE TO PERFORM IN THAT THE EXISTING LAYERS COULD NOT BE REMOVED IN THE MANNER SPECIFIED BY THE CONTRACT -- THAT IS, BY WASHING AND SCRAPING. THE CONTRACTING OFFICER WAS FURTHER ADVISED THAT THE FIRM HAD SUSPENDED OPERATIONS PENDING ARRANGEMENTS FOR REVISION OF THE CONTRACT. UPON THE CONTRACTING OFFICER'S DISAGREEMENT WITH THE CONTRACTOR'S CONTENTIONS, AND THE CONTRACTOR'S REFUSAL TO PROCEED FURTHER, THE CONTRACT WAS TERMINATED FOR DEFAULT. AN APPEAL FROM THAT ACTION WAS HEARD UNDER THE DISPUTES CLAUSE OF THE SUBJECT CONTRACT BY THE BOARD OF CONTRACT APPEALS, WHICH HELD IN BCA NO. 291 THAT THE CONTRACT WAS NOT IMPOSSIBLE TO PERFORM AS SPECIFIED AND THAT IT WAS PROPERLY TERMINATED FOR DEFAULT.

WHILE THE ABOVE APPEAL WAS PENDING THE GOVERNMENT UNDERTOOK REPURCHASE ACTION FOR THE WORK NOT COMPLETED UNDER THE TERMINATED CONTRACT AND IT SUBSEQUENTLY ASSESSED EXCESS COSTS AGAINST THE CONTRACTOR. THE CONTRACTOR ALSO TOOK AN APPEAL FROM THIS ACTION TO THE BOARD (BCA NO. 303). CONSIDERING THE ASSESSMENT OF EXCESS REPROCUREMENT COSTS THE BOARD BEGAN WITH THE PREMISE THAT THE TERMINATION FOR DEFAULT WAS PROPER UNDER THE CONTRACT TERMS, SINCE THAT ISSUE WAS SETTLED IN BCA NO. 291, AND FOUND THAT THE GOVERNMENT WAS ENTITLED TO EXCESS COSTS IN THE AMOUNT OF DM 13,172.33, AGAINST WHICH DEKORA HAD A CREDIT OF DM 15,863.43, FOR WORK PERFORMED PRIOR TO TERMINATION.

AN ANALYSIS OF ALL THE CORRESPONDENCE SUBMITTED INDICATES THAT YOU SEEK PAYMENT FOR WORK PERFORMED IN AN AMOUNT IN EXCESS OF THAT DUE AT THE CONTRACT RATES, ON SUBSTANTIALLY THE SAME BASIS AS MIGHT BE USED ON A TERMINATION FOR CONVENIENCE CLAIM. IN ITS PRESENT POSTURE ONLY TWO BASIC ASPECTS OF YOUR CLAIM ARE OPEN FOR CONSIDERATION: THE BOARD'S AFFIRMATION OF THE TERMINATION FOR DEFAULT IN BCA NO. 291 AND THE BOARD'S ASSESSMENT OF EXCESS REPROCUREMENT COSTS IN BCA NO. 303.

AS POINTED OUT IN OUR LETTER OF MAY 23, 1967, CONSIDERATION OF YOUR CLAIM BY THIS OFFICE, WHERE IT INVOLVES A FACTUAL DISPUTE REQUIRED BY THE CONTRACT TO BE RESOLVED PURSUANT TO THE DISPUTES CLAUSE, MUST BE ON THE BASIS OF THE ADMINISTRATIVE DETERMINATION OF THE FACTS UNDER THE PROCEDURE PROVIDED THEREBY. UNDER THE WUNDERLICH ACT, 41 U.S.C. 321, 322, SUCH DETERMINATION ON A QUESTION OF FACT IS FINAL AND CONCLUSIVE UNLESS IT IS SHOWN TO BE "FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.' ADMINISTRATIVE DISPUTES CLAUSE DECISIONS ARE NOT FINAL ON QUESTIONS OF LAW.

YOU HAVE TAKEN THE POSITION THAT THE BOARD'S FINDINGS IN BCA NO. 291 DO NOT MEET THE ABOVE QUOTED WUNDERLICH CRITERIA AND ARE NOT FINAL, SINCE THE RECORD BEFORE THE BOARD SHOWS THAT IT WAS NECESSARY TO REMOVE ALL EXISTING LAYERS OF PAINT BEFORE A PERFECT AND DURABLE NEW COAT COULD BE APPLIED. YOU STATE THIS COULD NOT BE ACCOMPLISHED IN THE MANNER SPECIFIED IN THE CONTRACT, THAT IS, BY WASHING AND SCRAPING. IN SUPPORT THEREOF YOU REFER TO TWO EXPERT OPINIONS WHICH WERE CONSIDERED BY THE BOARD WHICH RECOMMENDED THE MORE EXPENSIVE AND TIME CONSUMING USE OF CAUSTICS FOR PREPARING THE WALLS FOR PAINTING.

WE HAVE CONSIDERED THE MERITS OF THE POINTS ADVANCED BY YOU AND WE HAVE REVIEWED THE BOARD'S RECORDS IN THIS MATTER. HOWEVER, WE BELIEVE THAT THE TWO EXPERT OPINIONS COMMISSIONED BY DEKORA FALL SHORT OF ESTABLISHING THAT THE DISPUTED CONTRACT SPECIFICATION WAS IMPOSSIBLE TO PERFORM. SPECIFICALLY, THE FIRST OPINION SUBMITTED ON YOUR BEHALF BY DR. RESSMANN TAKES THE POSITION THAT THE MOST UPPER WATERPROOF COATS OF PAINT AND THE NEXT LAYER OF WATER DISSOLVED LIME PAINT WOULD HAVE TO BE COMPLETELY REMOVED BEFORE REPAINTING COULD BE PERFORMED. WHILE THIS OPINION FURTHER RECOGNIZED THAT THE ADHESIVE STRENGTH OF A REPAINTING WOULD BE STILL MORE INSURED IF THE WATERPROOF PAINT EXISTING UNDER THE UPPERMOST WATERPROOF AND LIME PAINT COATS WERE ALSO REMOVED, IT CLEARLY DID NOT TAKE THE POSITION THAT THIS WAS AN INDISPENSABLE REQUIREMENT. MOREOVER, THE SECOND EXPERT OPINION SUBMITTED BY DEKORA TAKES THE POSITION THAT THE TOP LAYERS, WHICH THE FIRST OPINION STATED WERE REQUIRED TO BE COMPLETELY REMOVED, COULD BE WASHED AND SCRAPED OFF. WE NOTE, HOWEVER, THAT AS TO THE NECESSITY FOR REMOVING ALL OF THE EXISTING COATS OF PAINT THE SECOND OPINION CONCLUDED THAT, UNLESS REMOVED, EXFOLIATING TO A HIGH EXTENT MUST BE TAKEN INTO ACCOUNT AND THAT IN ORDER TO PREPARE A SATISFACTORY AND PERMANENT NEW PAINT IT WOULD BE REQUIRED TO REMOVE ALL WATERPROOF LAYERS OF PAINT WITH CAUSTICS.

THE CONTRACT SPECIFICATIONS WITH RESPECT TO THE MAJOR ITEM OF WALL PAINTING REQUIRED ONLY THAT THE CEILINGS AND WALLS BE "SCRAPED OFF AND WASHED OFF TO AN EXTENT WARRANTING THE APPLICATION OF A PERFECT AND DURABLE NEW COAT OF PAINT.' THE CONTRACTING OFFICER'S DECISION INCLUDED HIS FINDING THAT WORK PERFORMED AS CONTEMPLATED WOULD BE ACCEPTABLE TO THE GOVERNMENT.

THE BOARD'S RECORDS ALSO INCLUDE STATEMENTS BY THE GOVERNMENT'S TECHNICIANS TO THE EFFECT THAT ACCEPTABLE WORK COULD BE ACHIEVED BY REMOVING ONLY THOSE LAYERS WHICH THE PARTIES AGREED WERE REMOVABLE BY WASHING AND SCRAPING. IT WAS THE GOVERNMENT'S POSITION THAT THE ADHESIVE STRENGTH OF THE WATERPROOF (POLYVINYL ACETATE) PAINT REMAINING AFTER ADEQUATE WASHING AND SCRAPING, WOULD NOT BE ADVERSELY AFFECTED BY MOISTURE FROM THE NEW RESIN EMULSION PAINT SPECIFIED FOR APPLICATION IN THE CONTRACT.

BASED UPON THE EVIDENCE OUTLINED ABOVE THE BOARD CONCLUDED THAT THE DISPUTED CONTRACT SPECIFICATION WAS NOT IMPOSSIBLE TO PERFORM AND IN VIEW OF THE CONTRACTOR'S REFUSAL TO PROSECUTE THE WORK, THE BOARD AGREED THAT THE CONTRACT WAS PROPERLY TERMINATED FOR DEFAULT IN ACCORDANCE WITH THE EXPRESS CONTRACT PROVISION COVERING THIS VERY CONTINGENCY. IT IS OUR VIEW THAT A REASONABLE MIND COULD ACCEPT THE GOVERNMENT TECHNICIANS' OPINIONS AS ADEQUATE SUPPORT FOR THE CONCLUSION REACHED BY THE BOARD AND THEREFORE WE MUST ACCEPT IT AS FINAL AND BINDING. 46 COMP. GEN. 441, 462.

YOU ALSO CONTEND THAT DEKORA'S FAILURE TO PROSECUTE THE WORK WAS EXCUSABLE BECAUSE OF THE GOVERNMENT'S FAILURE TO REVEAL AT THE TIME OF DEKORA'S PRE-BID SITE INSPECTION THE TRUE SCOPE OF THE NECESSARY WORK AND MATERIALS AND THAT DEKORA'S REPRESENTATIVES WERE DIRECTED WITHOUT ESCORT TO ONLY A FEW ROOMS IN THE AREA FOR EXAMINATION. IN OPPOSITION TO THIS, DEPOSITIONS OF GOVERNMENT EMPLOYEES WERE INTRODUCED WHICH CONTRADICT THE STATEMENTS OF DEKORA'S REPRESENTATIVES CONCERNING THE PRE-BID INSPECTION VISIT. THESE DEPOSITIONS STATE THAT TWO DEKORA REPRESENTATIVES CONTACTED THE CONTRACTING OFFICE ON OR ABOUT JUNE 15, 1964, AND, IN ACCORDANCE WITH THE PROVISION IN THE SOLICITATION, WERE REFERRED TO THE GOVERNMENT ENGINEER FOR AN ON-SITE INSPECTION, BUT THAT THE GOVERNMENT EMPLOYEES AT THE ENGINEERING DIVISION WHO WERE RESPONSIBLE FOR CONDUCTING AN ON-SITE INSPECTION WERE NEVER CONTACTED BY DEKORA'S REPRESENTATIVES. MOREOVER, THE QUESTIONNAIRE TO BE FILLED OUT BY PROSPECTIVE CONTRACTORS IS SILENT ON THE SUBJECT OF WHICH PERSON ACTUALLY FURNISHED JOB SITE INFORMATION TO THE DEKORA REPRESENTATIVES. THE BOARD APPARENTLY ACCEPTED THE GOVERNMENT EVIDENCE AND FOUND THAT DEKORA HAD ACCESS TO THE SAME PHYSICAL FACTS AS THE GOVERNMENT, AND CONCLUDED THAT WHERE IT DID NOT SEE FIT TO CHECK OR ANALYZE THE CONDITIONS OF THE OLD PAINT IT MUST BEAR THE RISK OF ANY ERRONEOUS CONCLUSIONS IT MAY HAVE DRAWN.

UPON REVIEW OF THE ENTIRE RECORD IN THE LIGHT OF ALL THE CONTENTIONS AND ARGUMENTS PRESENTED IN YOUR CORRESPONDENCE TO THIS OFFICE, WE DO NOT BELIEVE WE WOULD BE JUSTIFIED IN CONCLUDING THAT THE FACTUAL FINDINGS OF THE BOARD ARE FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. THEREFORE, WE MUST ACCEPT THEM AS FINAL AND BINDING UPON US.

WE BELIEVE YOU ARE IN ERROR AS A MATTER OF LAW IN YOUR POSITION THAT DEKORA WAS NOT IN DEFAULT IN CEASING PERFORMANCE FOR THE REASON THAT THE GERMAN LAW TO WHICH IT WAS SUBJECT PROVIDES THAT A CONTRACTOR SHALL NOT BE EXPECTED TO PERFORM SERVICES AT AN ERRONEOUS PRICE. WHILE WE ARE NOT IN A POSITION TO EITHER AGREE OR DISAGREE WITH YOUR REPRESENTATION REGARDING THE LAW OF GERMANY, IT IS OUR OPINION, NOTWITHSTANDING THE EXISTENCE OF ANY SUCH LAW, THAT UNDER THE CIRCUMSTANCES OF THIS CASE THE CONTRACTOR SHOULD BE HELD TO HIS EXPRESS AGREEMENT TO CONTINUE THE WORK PENDING THE RESOLUTION OF DISPUTES, AND PERMITTING THE GOVERNMENT TO TERMINATE THE CONTRACT FOR DEFAULT AND TO ASSESS DAMAGES FOR EXCESS REPROCUREMENT COSTS WHERE THERE IS NO EXCUSABLE CAUSE FOR DELAY AS DEFINED UNDER THE CONTRACT.

WITH REGARD TO THE BOARD'S DETERMINATION OF THE AMOUNT OF EXCESS REPROCUREMENT COSTS ASSESSED AGAINST DEKORA, YOU CONTEND THAT THE DECISION IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE SINCE THE INCREASE IS PREMISED UPON A GENERAL RISE IN LABOR AND MATERIAL COSTS AND THE REPLACEMENT CONTRACT INVOLVED AN INCREASE OF 84 PERCENT. IT IS APPARENT FROM THE DECISION THAT AN 84 PERCENT INCREASE OCCURRED ONLY IN ONE OF THE EIGHT LINE ITEMS OF THE CONTRACT. IN OUR OPINION YOUR CONTENTION IS NOT A SUFFICIENT BASIS FOR CONTESTING THE BOARD'S FINDINGS THAT:

"THE EXTENT OF THE SOLICITATION FOR THE REPROCUREMENT WAS ADEQUATE. THIRTEEN FIRMS WERE INVITED TO SUBMIT PROPOSALS, AND SEVEN RESPONDED. THE CONTRACT WAS AWARDED TO THE LOWEST OFFEROR, AND ONLY AFTER ITS PRICE HAD BEEN NEGOTIATED DOWN. IN THE MATTER OF TIMELINESS, WE FIND NO PREJUDICIAL DELAY. APPELLANT'S CONTRACT WAS TERMINATED ON 20 MAY AND THE REPURCHASE CONTRACT WAS AWARDED ON 26 JULY FOLLOWING. CONSIDERING THE EXTENT OF SOLICITATION AND THE NATURE OF THE WORK CONTRACTED FOR, THIS WAS A REASONABLE PERIOD IN WHICH TO EFFECT THE REPROCUREMENT.'

MOREOVER, WE NOTE THAT THE BOARD WAS CAREFUL TO COMPUTE THE ALLOCATION OF WHAT DEKORA PERFORMED AND WHAT THE REPROCUREMENT CONTRACTOR PERFORMED IN THE LIGHT OF THE ORIGINAL CONTRACT WORK REQUIRED. ACCORDINGLY, NO BASIS IS PRESENTED FOR CONTESTING THE COMPUTATION AND FINDINGS.

IN THE CIRCUMSTANCES, WE FIND NO LEGAL BASIS FOR ALLOWING YOUR CLAIM, WHICH IS THEREFORE DENIED.