B-165797, FEB. 7, 1969

B-165797: Feb 7, 1969

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JENSEN: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 15. THE CORPORATION WAS ALSO REQUIRED TO FURNISH A STORAGE TANK FOR THE EMULSIFIED ASPHALT TO BE FURNISHED BY THE GOVERNMENT. YOU STATE THAT THE VOUCHER IS BASED ON A CLAIM BY THE CORPORATION THAT THE GOVERNMENT FAILED TO DELIVER A SUITABLE ASPHALT MIXTURE FOR STORAGE IN ITS TANK. YOU STATE THAT YOU ARE OF THE OPINION THAT THE FAILURE OF THE GOVERNMENT. THE RECORD INDICATES THAT THE IMPROPER ASPHALT MIXTURE WAS OBTAINED BY THE GOVERNMENT UNDER A GENERAL SERVICES ADMINISTRATION (GSA) FEDERAL SUPPLY SERVICE CONTRACT WITH THE CHEVRON ASPHALT COMPANY AND THAT SUCH COMPANY OBTAINED THE SERVICES OF REDDAWAY'S TRUCK LINE. YOU STATE THAT THE BEST INFORMATION AVAILABLE INDICATES THAT THE TRUCK HAULING THE ASPHALT CONTAINED SOME CONTAMINANT SUCH AS FUEL OIL OR DIESEL OIL WHICH INTERFERED WITH THE ACTION OF THE EMULSIFYING AGENT IN THE ASPHALT SO THAT THE EMULSION FORMED WAS NOT ADEQUATE TO PASS THROUGH THE PUMP AND SPREADER.

B-165797, FEB. 7, 1969

TO MR. JENSEN:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 15, 1968, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER IN FAVOR OF THE DOUGLAS CONSTRUCTION CORP. IN THE AMOUNT OF $1,356.32, REPRESENTING THE COST OF REPAIRING A STORAGE TANK, PUMP, AND SPREADER TRUCKS FURNISHED UNDER FOREST SERVICE RENTAL CONTRACT NO. 15-67-32.

UNDER THE CONTRACT, THE CORPORATION AGREED TO FURNISH TO THE FOREST SERVICE FULLY OPERATED EQUIPMENT FOR REPAIR AND MAINTENANCE WORK ON CERTAIN ROADS LOCATED WITHIN THE UMPQUA NATIONAL FOREST, IDLEYLD PARK, OREGON. THE EQUIPMENT CONSISTED OF ONE GRADER, ONE STEEL WHEEL ROLLER, TWO WATER TANK TRUCKS, AND TWO PORTABLE PUMPING STATIONS. THE CORPORATION WAS ALSO REQUIRED TO FURNISH A STORAGE TANK FOR THE EMULSIFIED ASPHALT TO BE FURNISHED BY THE GOVERNMENT.

YOU STATE THAT THE VOUCHER IS BASED ON A CLAIM BY THE CORPORATION THAT THE GOVERNMENT FAILED TO DELIVER A SUITABLE ASPHALT MIXTURE FOR STORAGE IN ITS TANK, AND THAT SUCH IMPROPER MIXTURE DAMAGED THE STORAGE TANK, PUMP, AND THE SPREADER TRUCKS. IN YOUR LETTER IN WHICH YOU RECOMMEND ALLOWANCE OF THE CLAIM, YOU STATE THAT YOU ARE OF THE OPINION THAT THE FAILURE OF THE GOVERNMENT, FOR WHATEVER REASON, TO DELIVER SUITABLE MATERIAL FOR APPLICATION BY THE CONTRACTOR AMOUNTED TO A BREACH OF THE CONTRACT. THE RECORD INDICATES THAT THE IMPROPER ASPHALT MIXTURE WAS OBTAINED BY THE GOVERNMENT UNDER A GENERAL SERVICES ADMINISTRATION (GSA) FEDERAL SUPPLY SERVICE CONTRACT WITH THE CHEVRON ASPHALT COMPANY AND THAT SUCH COMPANY OBTAINED THE SERVICES OF REDDAWAY'S TRUCK LINE, INC., TO HAUL THE MATERIAL AND BILLED THE FOREST SERVICE FOR THE COST OF MATERIAL AND TRANSPORTATION.

YOU STATE THAT THE BEST INFORMATION AVAILABLE INDICATES THAT THE TRUCK HAULING THE ASPHALT CONTAINED SOME CONTAMINANT SUCH AS FUEL OIL OR DIESEL OIL WHICH INTERFERED WITH THE ACTION OF THE EMULSIFYING AGENT IN THE ASPHALT SO THAT THE EMULSION FORMED WAS NOT ADEQUATE TO PASS THROUGH THE PUMP AND SPREADER. YOU ALSO STATE THAT THE IMPROPER ASPHALT MIXTURE TENDED TO SET UP RATHER THAN REMAINING LIQUID, RESULTING IN DIFFICULTY IN THE STORAGE TANK.

PARAGRAPH 5 (LIABILITY) OF THE SUPPLEMENTAL SPECIAL PROVISIONS OF THE RENTAL CONTRACT PROVIDES THAT THE CONTRACTOR WILL ASSUME ALL RISK OF LOSS OR DAMAGE TO HIS EQUIPMENT AND INJURY TO HIMSELF OR HIS EMPLOYEES, AND WILL HOLD AND SAVE THE GOVERNMENT AND ITS EMPLOYEES HARMLESS FROM LIABILITY OF ANY NATURE OR KIND RESULTING FROM PERFORMANCE OF THIS CONTRACT, EXCEPT FOR NEGLIGENT ACTS OF GOVERNMENT EMPLOYEES.

THE QUESTION FOR CONSIDERATION IS WHETHER THE GOVERNMENT'S ACTION IN FURNISHING UNSUITABLE ASPHALT TO THE DOUGLAS CONSTRUCTION CORP. WAS A BREACH CONSTITUTING THE PROXIMATE CAUSE OF DAMAGE FOR WHICH COMPENSATION MUST BE PAID, NOTWITHSTANDING THE CONTRACT CLAUSE IMPOSING "ALL RISK OF LOSS OR DAMAGE TO HIS EQUIPMENT" UPON THE CONTRACTOR, EXCEPT FOR NEGLIGENT ACTS OF GOVERNMENT EMPLOYEES.

THE CONTRACT IN QUESTION COVERED ONLY THE RENTAL OF CERTAIN EQUIPMENT FROM THE CONTRACTOR AND DID NOT CONTAIN ANY PROVISION IN REGARD TO THE FURNISHING OF THE ASPHALT FOR REPAIR AND MAINTENANCE OF FOREST SERVICE ROADS. IT APPEARS FROM THE RECORD THAT IT WAS THE UNDERSTANDING OF THE PARTIES TO THE CONTRACT THAT THE GOVERNMENT WOULD FURNISH THROUGH A GSA CONTRACT THE REQUIRED ASPHALT. SINCE THE GOVERNMENT UNDERTOOK THE TASK OF FURNISHING THE ASPHALT REQUIRED FOR THE ROAD REPAIR AND MAINTENANCE WORK TO BE PERFORMED BY THE DOUGLAS CONSTRUCTION CORP., IT IS OUR OPINION THAT THE GOVERNMENT ASSUMED AN OBLIGATION TO FURNISH ASPHALT WHICH WOULD BE SUITABLE FOR USE WITH THE CONTRACTOR'S EQUIPMENT. THE CIRCUMSTANCES IN THE PRESENT CASE ARE SOMEWHAT SIMILAR TO THOSE WHERE THE GOVERNMENT FURNISHES ITS PERSONAL PROPERTY FOR TEMPORARY USE BY A PRIVATE FIRM IN THE MANUFACTURE OF A FINISHED PRODUCT FOR THE GOVERNMENT. IN A NUMBER OF CASES, THE COURTS HAVE IMPLIED A WARRANTY BY THE GOVERNMENT AS TO FITNESS AND SUITABILITY FOR THE PURPOSE INTENDED. SEE EKCO PRODUCTS COMPANY V UNITED STATES, 312 F.2D 768 (CT.CL. 1963). SEE, ALSO, TOPKIS BROTHERS COMPANY V UNITED STATES, 297 F.2D 536 (CT.CL. 1961).

IN THE SITUATION AT HAND, THERE IS NO QUESTION THAT THE DAMAGE FOR WHICH REIMBURSEMENT IS SOUGHT WAS A DIRECT RESULT OF THE UNSUITABLE ASPHALT MIXTURE FURNISHED TO THE CONTRACTOR BY THE GOVERNMENT. TO HOLD THE CONTRACTOR RESPONSIBLE FOR DAMAGE RESULTING FROM THE GOVERNMENT'S ACTS OR OMISSIONS WOULD VIRTUALLY NULLIFY ANY RESPONSIBILITY FOR THE IMPLIED REQUIREMENT TO PROVIDE AN ASPHALT SUITABLE FOR USE WITH THE CONTRACTOR'S EQUIPMENT. THE GOVERNMENT'S DUTY TO SUPPLY A SUITABLE ASPHALT MIXTURE WAS NOT CHANGED BY THE EXPRESS CLAUSE IMPOSING UPON THE CONTRACTOR ALL RISK OF LOSS OR DAMAGE TO HIS EQUIPMENT RESULTING FROM ITS PERFORMANCE OF THE CONTRACT. IT IS MORE REASONABLE TO REGARD PARAGRAPH 5 OF THE RENTAL CONTRACT AND THE GOVERNMENT'S IMPLIED DUTY TO FURNISH SUITABLE MATERIAL AS COMPLEMENTING ONE ANOTHER RATHER THAN OPPOSING EACH OTHER, AND AS IMPOSING UPON THE CONTRACTOR RESPONSIBILITY ONLY FOR HAZARDS OTHER THAN THOSE INVOLVING THE FITNESS FOR USE OF THE ASPHALT MIXTURE PROVIDED.

INASMUCH AS THE GOVERNMENT FAILED TO SATISFY ITS OBLIGATION TO FURNISH A SUITABLE ASPHALT MIXTURE FOR THE CONTRACTOR'S EQUIPMENT, WE BELIEVE THAT THE CONTRACTOR SHOLD BE COMPENSATED FOR THE DAMAGE TO ITS EQUIPMENT.

ACCORDINGLY, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT IN THE AMOUNT OF $1,356.32.