B-165946, MAR. 5, 1969

B-165946: Mar 5, 1969

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THE APPLICATION WAS APPROVED BY THE GRANTOR IN A LETTER DATED FEBRUARY 21. THE LETTER STATED THAT THE INVITATION WAS PART OF THE TERMS AND CONDITIONS OF THE GRANT. AMONG OTHER TERMS AND CONDITIONS OF THE GRANT SET FORTH IN THE LETTER WERE THE FOLLOWING: "/1) THE WORK ON THIS PROJECT WILL BE PERFORMED BY CONTRACT. COMMONWEALTH DEVELOPMENT ASSOCIATION OF PENNSYLVANIA WILL CONTRIBUTE TO THE PROJECT. "THE CONTRACTOR WILL BE REQUIRED (A) TO PROCESS A MINIMUM OF 400. 000 CUBIC YARDS OF MATERIAL HAVE BEEN PROCESSED IN THE 3 MONTH PERIOD. ARE SUBJECT TO THE REVIEW AND APPROVAL OF THE DEPARTMENT OF HEALTH. 000 WILL BE MADE TO THE GRANTEE WHEN THE GRANTEE NOTIFIES THE DEPARTMENT OF HEALTH. A SECOND PAYMENT OF HALF OF THE BALANCE WILL BE PAID THE FOLLOWING MONTH.

B-165946, MAR. 5, 1969

TO MR. SECRETARY:

WE REFER TO LETTER DATED JANUARY 9, 1969, FROM YOUR GENERAL COUNSEL, REQUESTING OUR ADVICE REGARDING THE AMOUNT DUE UNDER GRANT NO. 68A 4113D, WHICH THE NATIONAL CENTER FOR AIR POLLUTION CONTROL (NOW THE NATIONAL AIR POLLUTION ADMINISTRATION), HEREAFTER CALLED THE GRANTOR, AWARDED TO THE COMMONWEALTH DEVELOPMENT ASSOCIATION OF PENNSYLVANIA, HEREAFTER CALLED THE GRANTEE.

ON AUGUST 21, 1967, THE GRANTEE, A NONPROFIT ORGANIZATION, APPLIED TO THE GRANTOR FOR A GRANT IN THE AMOUNT OF $300,000 TO DEMONSTRATE METHODS FOR THE EXTINGUISHMENT AND CONTROL OF BURNING COAL REFUSE PILES. THE APPLICATION WAS APPROVED BY THE GRANTOR IN A LETTER DATED FEBRUARY 21, 1968, BASED UPON REVISIONS TO QUALIFIED CONTRACTORS INVITATION TO BID NO. 100, AS AGREED BY THE PARTIES ON FEBRUARY 20, 1968. THE LETTER STATED THAT THE INVITATION WAS PART OF THE TERMS AND CONDITIONS OF THE GRANT. AMONG OTHER TERMS AND CONDITIONS OF THE GRANT SET FORTH IN THE LETTER WERE THE FOLLOWING:

"/1) THE WORK ON THIS PROJECT WILL BE PERFORMED BY CONTRACT. COMMONWEALTH DEVELOPMENT ASSOCIATION OF PENNSYLVANIA WILL CONTRIBUTE TO THE PROJECT, FOR USE BY THE CONTRACTOR, FOUR D-8 OR EQUIVALENT BULLDOZERS, THREE CARRYALLS, EACH WITH A MINIMUM CAPACITY OF NINETEEN CUBIC YARDS, POWER SWITCH GEAR INSTALLATION, 4000 GALLON PER MINUTE PUMP, WATER SYSTEM AND WATER.

"/2) THE CONTRACT SHALL BE AWARDED ON THE BASIS OF THE INVITATION TO BID PROVIDED THAT THE BID DOES NOT EXCEED $275,000 PLUS THE USE OF THE EQUIPMENT SPECIFIED TO BE FURNISHED BY COMMONWEALTH DEVELOPMENT ASSOCIATION OF PENNSYLVANIA.

"THE CONTRACTOR WILL BE REQUIRED (A) TO PROCESS A MINIMUM OF 400,000 CUBIC YARDS OF MATERIAL FROM THE HUBER BANK, UTILIZING THE METHODS DESCRIBED IN THE INVITATION TO BID, AND (B) TO CONDUCT SUCH WORK FOR A PERIOD OF AT LEAST THREE MONTHS AFTER COMMENCING OPERATIONS. A MINIMUM OF 100,000 CUBIC YARDS OF MATERIAL SHALL BE REMOVED, EXTINGUISHED AND COMPACTED BY EACH METHOD.

"/3) THE VOLUME OF MATERIAL PROCESSED SHALL BE DETERMINED FROM SURVEYS AND MAPPING PERFORMED PRIOR TO AND UPON COMPLETION OF THE CONTRACT BY A SURVEYOR REGISTERED BY THE COMMONWEALTH OF PENNSYLVANIA. IN THE EVENT THE SURVEYS SHOW THAT MORE THAN 400,000 CUBIC YARDS OF MATERIAL HAVE BEEN PROCESSED IN THE 3 MONTH PERIOD, THE CONTRACTOR SHALL BE PAID FIFTEEN CENTS FOR EACH CUBIC YARD OF MATERIAL IN EXCESS OF 400,000 CUBIC YARDS UP TO A MAXIMUM PAYMENT OF $300,000 INCLUDING THE AMOUNT AWARDED UNDER THE CONTRACT.

"A MINIMUM OF 10 DAYS SHALL ELAPSE BETWEEN THE DATE OF THE GRANT AWARD AND THE AWARD OF THE CONTRACT. ALL CONTRACTS, PRIOR TO THEIR AWARD, ARE SUBJECT TO THE REVIEW AND APPROVAL OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE.

"/11) A FIRST PAYMENT OF $100,000 WILL BE MADE TO THE GRANTEE WHEN THE GRANTEE NOTIFIES THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE THAT THE CONTRACT HAS BEEN AWARDED. A SECOND PAYMENT OF HALF OF THE BALANCE WILL BE PAID THE FOLLOWING MONTH, AND THE BALANCE OF THE AMOUNT DUE FOR COMPLETION OF THE PROJECT WILL BE PAID WHEN THE CONTRACTOR HAS PROVIDED EVIDENCE THAT AT LEAST 400,000 CUBIC YARDS OF MATERIAL HAVE BEEN PROCESSED AND THAT WORK HAS BEEN CARRIED OUT ON THE PROJECT IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. THE GRANTEE SHALL WITHHOLD $2,000 UNTIL THE CONTRACTOR HAS SUBMITTED THE COST AND OPERATING DATA UPON WHICH THE FINAL REPORT OF THE GRANTEE IS TO BE BASED.'

THE INVITATION TO BID INCLUDED THE FOLLOWING PERTINENT PROVISIONS:

"WORK REQUIRED OF CONTRACTOR

"THE CONTRACTOR WILL BE REQUIRED TO REMOVE, EXTINGUISH, AND COMPACT A MINIMUM OF 400,000 CUBIC YARDS OF MATERIAL FROM THE HUBER BANK UTILIZING METHODS DESCRIBED IN THE INVITATION TO BID AND ALSO TO CONDUCT SUCH WORK FOR A PERIOD OF AT LEAST 3 CALENDAR MONTHS AFTER COMMENCING OPERATIONS. WORK PERIOD OF 176 HOURS SHALL BE DEEMED TO CONSTITUTE 1 MONTH. IT IS UNDERSTOOD THAT IF THE CONTRACTOR SHALL NOT HAVE REMOVED, EXTINGUISHED AND COMPACTED 400,000 CUBIC YARDS WITHIN THREE MONTHS, HE SHALL CONTINUE TO WORK UNTIL AT LEAST THAT AMOUNT HAS BEEN ACCOMPLISHED. A MINIMUM OF 100,000 CUBIC YARDS OF MATERIAL SHALL BE REMOVED, EXTINGUISHED AND COMPACTED BY EACH OF THE METHODS DEMONSTRATED.

"BONUS PAYMENT

"THE CONTRACTOR SHALL RECEIVE A BONUS PAYMENT OF FIFTEEN CENTS PER CUBIC YARD FOR EVERY CUBIC YARD OF CULM REMOVED, EXTINGUISHED, AND COMPACTED, WITHIN THE FIRST THREE MONTHS OF OPERATION, IN EXCESS OF 400,000 CUBIC YARDS, PROVIDED THAT THE TOTAL CASH PAYMENTS TO THE CONTRACTOR, INCLUDING ANY BONUS, SHALL NOT EXCEED $300,000.

"METHOD OF PAYMENT

"THE COMMONWEALTH DEVELOPMENT ASSOCIATION OF PENNSYLVANIA WILL PAY THE CONTRACTOR ON AN EQUAL MONTHLY BASIS, PREDICATED ON RECEIPT OF THE CONTRACTOR'S MONTHLY PROGRESS REPORT CERTIFIED BY THE PROJECT REPRESENTATIVE OF THE COMMONWEALTH DEVELOPMENT ASSOCIATION OF PENNSYLVANIA. IN THE EVENT THAT THE CONTRACTOR HAS NOT REMOVED, QUENCHED, AND COMPACTED 400,000 CUBIC YARDS OF CULM AT THE END OF THE THIRD MONTH, PAYMENT FOR THE THIRD MONTH AND SUBSEQUENT WORK SHALL BE WITHHELD UNTIL THE WORK CONTRACTED FOR HAS BEEN COMPLETED. IN ANY EVENT, $2,000 SHALL BE WITHHELD FROM THE FINAL PAYMENT UNLESS AND UNTIL THE DRAFT OF THE FINAL REPORT HAS BEEN DELIVERED.'

THE CONTRACTOR'S BID WAS IN THE AMOUNT OF $274,045, WHICH WAS IN ADDITION TO THE $100,000 IN KIND TO BE CONTRIBUTED BY THE GRANTEE. THE RECORD FURTHER INDICATES THAT THE CONTRACTOR ACTUALLY PROCESSED 451,271 CUBIC YARDS OF CULM, AND IT IS THE AMOUNT PAYABLE FOR THE 51,271 CUBIC YARDS IN EXCESS OF THE 400,000 CUBIC YARD MINIMUM QUANTITY WHICH IS AT ISSUE. IS OUR UNDERSTANDING THAT ALL OF THE PROCESSING WAS COMPLETED DURING THE SPECIFIED MINIMUM WORK PERIOD OF THREE MONTHS.

THE GRANTEE CLAIMS THAT THE TOTAL LUMP-SUM CONTRACT PRICE OF $374,045 APPLIES ONLY TO THE MINIMUM QUANTITY OF 400,000 CUBIC YARDS. ON THE BASIS, THEREFORE, THAT THE BASE RATE PAYABLE FOR THE PROCESSED MATERIAL IS $ .935 PER CUBIC YARD ($374,045 DIVIDED BY 400,000), THE GRANTEE FURTHER CLAIMS THAT COMPENSATION FOR THE 51,271 CUBIC YARDS IS DUE AT SUCH BASE RATE PLUS THE BONUS OF 15 CENTS PER CUBIC YARD, OR $1.085 PER CUBIC YARD FOR SUCH PORTION OF THE WORK. UNDER SUCH METHOD OF COMPUTATION, THE PRICE FOR THE 51,271 CUBIC YARDS WOULD BE $42,811.29, WHICH WOULD ENTITLE THE GRANTEE TO PAYMENT FROM FEDERAL FUNDS OF THE DIFFERENCE BETWEEN THE $274,045 CONTRACT PRICE AND THE $300,000 MAXIMUM.

IN SUPPORT OF ITS POSITION, WHICH THE GRANTEE STATES IS ALSO THE POSITION OF THE CONTRACTOR, THE GRANTEE ASSERTS THAT ITS METHOD OF COMPUTATION WOULD BE "USED IN THE TRADE" TO COMPUTE THE BONUS. FURTHER, THE GRANTEE MAKES NOTE OF THE FACT THAT THE IDEA OF THE EXTRA PAYMENT ORIGINATED WITH THE GRANTOR AND THAT THE INVITATION, UNLIKE THE GRANT APPROVAL LETTER, DID NOT ADD THE WORDS ,INCLUDING THE AMOUNT AWARDED UNDER THE CONTRACT" FOLLOWING THE $300,000 LIMITATION ON THE PAYMENT FROM FEDERAL FUNDS IN THE EXTRA PAYMENT PROVISION.

THE GRANTOR VIEWS THE CONTRACT AS OBLIGATING THE CONTRACTOR TO PERFORM FOR THE LUMP-SUM CONTRACT PRICE THREE MONTHS' WORK AT A REASONABLE LEVEL OF PERFORMANCE AND TO PROCESS A MINIMUM OF 400,000 CUBIC YARDS WITHOUT LIMITATION OF TIME. THE 15-CENT PAYMENT, IT IS EXPLAINED, WAS DESIGNED TO INSURE THE CONSTANCY OF THE CONTRACTOR'S EFFORTS SINCE RELIABLE COMPARATIVE PER YARD COST DATA WAS THE OBJECT OF THE PROJECT, AND IT WAS RECOGNIZED THAT THERE MIGHT BE A SLACKENING OF EFFORT ON THE PART OF THE CONTRACTOR, WHICH WOULD IMPAIR THE RELIABILITY OF THE DEMONSTRATION RESULTS, ONCE THE CONTRACTOR WAS AWARE THAT IT HAD FULFILLED THE MINIMUM CUBIC YARDAGE REQUIREMENT OF THE CONTRACT. ON THE BASIS, THEREFORE, THAT ALL OF THE WORK WHICH WAS COMPLETED BY THE CONTRACTOR IN THREE MONTHS WOULD, IN THE ABSENCE OF THE 15-CENT EXTRA, HAVE BEEN REQUIRED TO BE PERFORMED AT THE LUMP-SUM CONTRACT PRICE, THE GRANTOR ASSERTS THAT THE ADDITIONAL 15 CENTS PER CUBIC YARD AUTHORIZED FOR THE QUANTITY WHICH EXCEEDED THE 400,000 CUBIC YARD MINIMUM REQUIRED WAS A TRUE BONUS IN THE ACCEPTED SENSE, IN THAT IT WAS "SOMETHING GIVEN IN ADDITION TO WHAT IS USUAL OR STRICTLY DUE.' WEBSTER'S SEVENTH NEW COLLEGIATE DICTIONARY, 1965. ACCORDINGLY, THE GRANTOR COMPUTES THE PAYMENT DUE UNDER THE GRANT AGREEMENT FOR THE ADDITIONAL 51,671 CUBIC YARDS AS $7,690 (51,671 X $ .15 PER CUBIC YARD), WHICH INCREASES THE TOTAL CONTRIBUTION FROM FEDERAL FUNDS TO $281,735 ($274,045 PLUS $7,690), OR SOME $18,000 LESS THAN IS CLAIMED BY THE GRANTEE.

THE GRANTEE HAS NOT USED THE WORD "AMBIGUITY" IN PRESSING ITS VIEW THAT THE LUMP-SUM CONTRACT PRICE COVERED ONLY THE MINIMUM QUANTITY OF CULM AND THAT ANY QUANTITY IN ADDITION THERETO IS COMPENSABLE AT A COMPARABLE BASE RATE PLUS THE 15-CENT BONUS PROVIDED IN THE GRANT. IT IS APPARENT, HOWEVER, THAT THE GRANTOR'S CLAIM CAN BE SUPPORTED ONLY ON THE PREMISE THAT THE BONUS LANGUAGE, WHICH WAS APPROVED BY THE GOVERNMENT, WAS REASONABLY SUSCEPTIBLE TO THE MEANING URGED BY THE GRANTEE, THEREBY BRINGING THE MATTER WITHIN THE ESTABLISHED RULE THAT AN AMBIGUOUS CONTRACT WILL BE CONSTRUED MOST STRONGLY AGAINST THE PARTY EMPLOYING THE WORDS CONCERNING WHICH DOUBT ARISES. 21 COMP. GEN. 197.

IN DETERMINING THE INTENT AND MEANING OF A CONTRACT, THE ENTIRE AGREEMENT MUST BE CONSIDERED AND EACH PROVISION IS TO BE CONSTRUED IN ITS RELATIONSHIP TO OTHER PROVISIONS AND IN THE LIGHT OF THE GENERAL PURPOSE INTENDED TO BE ACCOMPLISHED BY THE CONTRACT PARTIES. 22 COMP. GEN. 250. FURTHER, THE MEANING OF A CONTRACT MUST BE CONSTRUED, IF POSSIBLE, FROM THE LANGUAGE OF THE CONTRACT ITSELF. 14 COMP. GEN. 191.

THE LANGUAGE QUOTED ABOVE FROM THE GRANT APPROVAL LETTER AND FROM THE INVITATION TO BID EMPLOYS THE TERM "MINIMUM" WITH RESPECT TO THE 400,000 CUBIC YARDS OF CULM TO BE PROCESSED DURING THE CONTRACT PERIOD AND ALSO WITH RESPECT TO THE PERFORMANCE PERIOD OF THREE MONTHS.

ONE OF THE ACCEPTED MEANINGS OF THE WORK "MINIMUM," WHEN USED AS A NOUN, IS "THE LEAST QUANTITY ASSIGNABLE, ADMISSIBLE, OR POSSIBLE IN A GIVEN CASE.' WHEN USED AS AN ADJECTIVE, THE WORD ,MINIMUM" IS DEFINED AS "RELATING TO, OR CONSTITUTING A MINIMUM: LEAST ATTAINABLE OR POSSIBLE.' WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY.

IN THE LIGHT OF SUCH DEFINITIONS, THE 400,000 CUBIC YARDS MUST BE REGARDED AS THE LEAST QUANTITY, NOT NECESSARILY THE ACTUAL QUANTITY, WHICH WAS REQUIRED TO BE PROCESSED BY THE CONTRACTOR, AND THREE MONTHS AS THE SHORTEST PERFORMANCE PERIOD, IN ORDER TO ENTITLE THE CONTRACTOR TO THE LUMP-SUM CONTRACT PRICE. THIS VIEW, WHICH ACCORDS WITH THE STATED PURPOSE OF THE GRANT, IS SUPPORTED BY THE LANGUAGE QUOTED ABOVE FROM THE PAYMENT CLAUSE IN THE GRANT APPROVAL LETTER TO THE EFFECT THAT THE FINAL PORTION OF THE LUMP-SUM PRICE WOULD BE PAID WHEN THE CONTRACTOR HAD FURNISHED EVIDENCE THAT AT LEAST 400,000 CUBIC YARDS OF MATERIAL HAD BEEN PROCESSED AND THAT THE WORK HAD BEEN CARRIED OUT IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. FURTHER, NO LANGUAGE APPEARS IN EITHER DOCUMENT APPORTIONING THE LUMP-SUM GRANT PRICE OVER THE MINIMUM QUANTITY OR ANY OTHER QUANTITY IN ORDER TO ESTABLISH A BASE PRICE PER CUBIC YARD OF PROCESSED MATERIAL, OR PROVIDING FOR ANY PAYMENT OR ADJUSTMENT ON A UNIT PRICE BASIS. ACCORDINGLY, ANY ENTITLEMENT THE CONTRACTOR HAS TO A PAYMENT FROM FEDERAL FUNDS IN ADDITION TO THE LUMP-SUM PRICE BY REASON OF THE FACT THAT IT PROCESSED MORE THAN 400,000 CUBIC YARDS OF MATERIAL DURING THE THREE MONTHS OF OPERATION MUST DERIVE FROM THE LANGUAGE APPEARING IN BOTH DOCUMENTS REGARDING THE ADDITIONAL 15 CENTS PER CUBIC YARD.

THE TWO DOCUMENTS EXPRESS THE ADDITIONAL PAYMENT AUTHORIZATION IN DIFFERENT MANNERS, TO BE SURE, BUT WE FIND THAT THE EFFECT IS THE SAME. BOTH DOCUMENTS PROVIDE FOR A PAYMENT OF ONLY 15 CENTS FOR EACH CUBIC YARD OF MATERIAL IN EXCESS OF 400,000 CUBIC YARDS PROCESSED DURING THE FIRST THREE MONTHS OF OPERATION (NO OTHER RATE OF PAYMENT FOR SUCH QUANTITY IS MENTIONED), AND BOTH DOCUMENTS TAKE COGNIZANCE OF THE FACT THAT SUCH ADDITIONAL PAYMENT, WHEN ADDED TO THE LUMP-SUM GRANT PAYMENT, WAS NOT TO MAKE THE TOTAL CONTRIBUTION FROM FEDERAL FUNDS EXCEED THE $300,000 LIMITATION SET BY THE GOVERNMENT.

NOR DO WE FIND THAT THE USE OF THE WORD "BONUS" WARRANTS ANY BROADER INTERPRETATION OF THE ADDITIONAL PAYMENT PROVISION IN THE INVITATION TO BID. IN ADDITION TO THE DEFINITION CITED BY THE GRANTOR, ONE OF THE DEFINITIONS IN WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY FOR THE WORD ,BONUS" IS "SOMETHING GIVEN OR RECEIVED THAT IS OVER AND ABOVE WHAT IS EXPECTED.' WE THINK THIS IS THE LOGICAL MEANING OF THE WORD AS USED IN THE INVITATION. THE CONTRACTOR WAS ALREADY BOUND TO PROCESS FOR THE LUMP- SUM GRANT PRICE WHATEVER QUANTITY OF MATERIAL MIGHT BE POSSIBLE DURING THE FIRST THREE MONTHS OF OPERATION, AND THE ADDITIONAL 15 CENTS PER CUBIC YARD FOR ANY QUANTITY PROCESSED IN EXCESS OF THE 400,000 CUBIC YARD MINIMUM QUANTITY WAS A REWARD TO THE CONTRACTOR OVER AND ABOVE THE LUMP- SUM GRANT PAYMENT FOR CONSTANCY OF PERFORMANCE FOR THE ENTIRE MINIMUM CONTRACT PERIOD. WE THEREFORE ARE UNABLE TO FIND ANY AMBIGUITY IN THE GRANT AGREEMENT, AND IT IS NOT NECESSARY, THEREFORE, TO CONSIDER WHAT THE PRACTICE IN THE TRADE MIGHT HAVE BEEN. IN THE CIRCUMSTANCES, WE CONCUR WITH THE POSITION TAKEN BY THE GRANTOR THAT THE AMOUNT PAYABLE FROM FEDERAL FUNDS TO THE GRANTEE FOR THE MATERIAL PROCESSED BY THE CONTRACTOR MAY NOT EXCEED THE LUMP-SUM GRANT PAYMENT OF $274,045 PLUS $7,690 (15 CENTS PER CUBIC YARD FOR 41,271 CUBIC YARDS), OR A TOTAL OF $281,735.