B-173903, OCT 21, 1971

B-173903, OCT 21, 1971

CONTRACTS - BILLING BASIS - MATERIAL COSTS DECISION SUSTAINING PRIOR DECISION DISALLOWING CLAIM FOR CERTAIN LABOR AND MATERIAL COSTS INCURRED IN CHANGING CAST IRON WHEELS ON SEVEN GOVERNMENT-OWNED FLAT CARS AT FORT BRAGG, N. C. BY LETTER DATED NOVEMBER 21, 1966 FROM CHIEF, SURFACE EQUIPMENT DIVISION, ARMY MOBILITY EQUIPMENT COMMAND (AMEC), CLAIMANT WAS AUTHORIZED TO MAKE REPAIRS IN ACCORD WITH AAR BILLING RATES FOR REPAIR MADE ON CARS IN INTERCHANGE. CLAIMANT ALLEGES ORAL AGREEMENT BETWEEN LOCAL REPRESENTATIVE OF AMEC WHICH ALLOWED FOR PAYMENT ON COST BASIS, RATHER THAN AAR RATES. CLAIMANT HAD DIFFICULTY FINDING PARTS IN LINE WITH AAR RATES, AND PURCHASED AT A HIGHER PRICE. A WRITTEN AGREEMENT EXISTED ESTABLISHING THE AMOUNT TO BE PAID BY THE GOVERNMENT. UNDER THE PAROLE EVIDENCE RULE, THIS PLAIN LANGUAGE ESTABLISHING THE PRICE TERM MAY NOT BE CONTRADICTED. FURTHER, THE FACT THAT CLAIMANT INCURRED UNFORSEEN DIFFICULTY DOES NOT ENTITLE THEM TO INCREASED COMPENSATION AS THEY AGREED TO PERFORM FOR A SUM CERTAIN.

TO CAPE FEAR RAILWAYS, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 6, 1971, RECEIVED AUGUST 10, 1971, REQUESTING REVIEW OF SETTLEMENT DATED JUNE 18, 1970, WHICH DISALLOWED YOUR CLAIM FOR $3,231.62, WITHHELD BY THE ARMY MOBILITY EQUIPMENT COMMAND, ST. LOUIS, MISSOURI, IN MAKING PAYMENT ON YOUR BILL NO. 1039 1/2, DATED SEPTEMBER 30, 1967, COVERING A CLAIMED REIMBURSEMENT FOR LABOR AND MATERIAL COSTS INCURRED IN CHANGING CAST IRON WHEELS ON SEVEN GOVERNMENT-OWNED, 80-TON, SIX-TRUCK, RAILROAD FLAT CARS AT FORT BRAGG, NORTH CAROLINA, TO 33-INCH, ONE-WEAR STEEL WHEELS.

BY LETTER DATED NOVEMBER 21, 1966, FROM THE CHIEF, SURFACE EQUIPMENT DIVISION, ARMY MOBILITY EQUIPMENT COMMAND, YOUR COMPANY WAS AUTHORIZED TO MAKE THE WHEEL CHANGES ON THE SEVEN RAILROAD FLAT CARS. YOUR COMPANY WAS ADVISED THAT "LABOR AND MATERIAL CHARGES INVOLVED ARE TO BE ON AAR BILLING BASIS." THE BILLING BASIS HAD REFERENCE TO RATES ESTABLISHED UNDER A CODE OF RULES OF THE ASSOCIATION OF AMERICAN RAILROADS FOR REPAIRS MADE ON RAIL CARS IN INTERCHANGE. IN REPLY TO THE LETTER OF AUTHORIZATION, YOU STATED IN A LETTER OF DECEMBER 6, 1966, THAT YOU WERE PLEASED TO HANDLE THE CHANGE OUT CAST IRON WHEELS, TO 33-INCH, ONE-WEAR STEEL WHEELS ON SEVEN FLAT CARS.

THE WORK WAS COMPLETED ON OR BEFORE SEPTEMBER 30, 1967, THE DATE OF YOUR BILL NO. 1039 1/2, IN THE AMOUNT OF $9,940.43, WHICH INCLUDED CLAIMED MATERIAL COSTS OF $7,692.13 AND LABOR CHARGES OF $2,248.30. REPAIR CARDS ATTACHED TO THE INVOICE INDICATED A CHARGE OF $198.82 PER PAIR FOR 41 PAIRS OF NEW WHEELS. WITH RESPECT TO THAT ITEM, THE ARMY MOBILITY EQUIPMENT COMMAND DETERMINED THAT THE CHARGE SHOULD HAVE BEEN $120 FOR A PAIR OF NEW WHEELS, IN ACCORDANCE WITH AAR RULE 101, CODE NOS. 5225, 5226 AND 5208. ON THE BASIS OF THE DIFFERENCE OF $78.82 PER PAIR OF NEW WHEELS, THE AMOUNT OF $3,231.62 (41 X $78.82), WAS WITHHELD IN MAKING PAYMENT ON YOUR BILL NO. 1039 1/2.

YOU CONTEND THAT AN ORAL AGREEMENT HAD BEEN REACHED WITH A REPRESENTATIVE OF THE ARMY MOBILITY EQUIPMENT COMMAND THAT PAYMENT FOR THE WORK WOULD BE MADE ON A COST BASIS INSTEAD OF AT AAR RATES. TWO OFFICIALS AT FORT BRAGG, NORTH CAROLINA, FURNISHED STATEMENTS TO THE EFFECT THAT IT WAS THEIR UNDERSTANDING THAT YOU HAD NOT AGREED TO ACCOMPLISH THE REQUIRED WORK ON AN AAR BILLING BASIS. HOWEVER, IT IS THE POSITION OF THE ARMY MOBILITY EQUIPMENT COMMAND, WHICH AGENCY ARRANGED FOR THE PERFORMANCE OF THE WHEEL CHANGE OUT WORK, THAT THERE WAS NO SUCH UNDERSTANDING IN CONNECTION WITH THE NEGOTIATION OF THE AGREEMENT WITH YOUR COMPANY. THE ARMY MATERIEL COMMAND RECOMMENDED IN ITS REPORT TO OUR OFFICE ON YOUR CLAIM THAT NO AMOUNT BE ALLOWED WITH RESPECT THERETO BECAUSE THERE IS AMPLE EVIDENCE OF A WRITTEN UNDERSTANDING THAT AAR RATES WERE REQUIRED. IN ADDITION TO REFERRING TO THE LETTERS OF NOVEMBER 21 AND DECEMBER 6, 1966, THE ARMY MATERIEL COMMAND INVITED ATTENTION TO A LETTER DATED FEBRUARY 7, 1967, IN WHICH YOU REQUESTED INFORMATION FROM THE SEABOARD AIR LINE RAILROAD COMPANY AS TO WHETHER WHEELS AND AXLES COULD BE OBTAINED FROM SEABOARD WITH RETURN OF THE OLD WHEELS AND AXLES, ON AN AAR BASIS PLUS TRANSPORTATION COST.

THE CLAIM FOR $3,231.62 WAS DISALLOWED IN THE SETTLEMENT OF JUNE 18, 1970, ON THE BASIS THAT THE AUTHORIZATION OF NOVEMBER 21, 1966, RESTRICTED LABOR AND MATERIAL CHARGES TO AN AAR BILLING BASIS, AND YOU DID NOT QUALIFY YOUR AGREEMENT OF DECEMBER 6, 1966, TO HANDLE THE REPAIR WORK ON THE SEVEN RAILROAD FLAT CARS.

IN REQUESTING REVIEW OF THE SETTLEMENT, YOU STATE THAT, AFTER RECEIPT OF AUTHORIZATION TO CHANGE THE WHEELS, YOU SOUGHT AT ONCE TO PURCHASE THE NECESSARY WHEELS AND FOUND A SOURCE IN EXCESS OF AAR BILLING RATES. YOU INDICATE THAT ON JUNE 19, 1967, YOU NOTIFIED MR. JOHN J. QUINN OF THE ST. LOUIS OFFICE OF THE ARMY MOBILITY EQUIPMENT COMMAND, BY TELEPHONE, THAT YOU WOULD CONTINUE TO SEEK OTHER SOURCES. IT IS STATED THAT YOU WERE UNSUCCESSFUL IN FINDING WHEELS AT AAR PRICES, THAT AT NO TIME WERE YOU ADVISED THAT YOUR PRICE MUST BE RESTRICTED TO THAT OF THE AAR MANUAL AND THAT, ON THE CONTRARY, YOUR COMPANY WAS ADVISED THAT TIME WAS OF THE ESSENCE, AS THE WORK HAD BEEN PROGRAMMED FOR COMPLETION ON JUNE 30, 1967.

YOU ALSO SUGGESTED THAT CONSIDERATION BE GIVEN TO THE AMOUNT OF WORK PERFORMED BY YOUR COMPANY FOR THE GOVERNMENT WITHOUT CHARGE, IF YOUR CLAIM IN THIS CASE COULD NOT BE ALLOWED ON OTHER GROUNDS. YOU PROVIDED A STATEMENT SHOWING THE SUM OF $4,200.87 AS THE APPROXIMATE VALUE OF FOUR REPAIR JOBS PERFORMED FOR THE GOVERNMENT WITHOUT CHARGE DURING THE MONTHS OF MARCH AND OCTOBER 1955, JUNE 1961 AND JUNE 1967.

THE RECORD INDICATES THAT YOU OBTAINED THREE QUOTATIONS ON MOUNTED WHEELS AND AXLES BEFORE RECEIVING A LETTER DATED JUNE 12, 1967, REQUESTING COMPLETION OF THE WHEEL CHANGE OUT WORK AND THE SUBMISSION OF AN AAR BILLING COVERING LABOR AND MATERIAL COSTS AS SOON AS POSSIBLE. THE RECORD COPY OF THAT LETTER CONTAINS A NOTATION BY MR. JULIAN ODOM OF YOUR COMPANY THAT HE EXPLAINED TO MR. QUINN THE STATUS OF THE WHEELS AND TOLD HIM THE CHEAPEST PRICE RECEIVED WAS $266.14 PER SET OF WHEELS AND AXLES, F.O.B. JOHNSTOWN, PENNSYLVANIA, BUT THAT YOU WERE STILL TRYING TO SECURE THE WHEELS AT A MORE ECONOMICAL PRICE. IT IS INDICATED IN A REPORT OF A GOVERNMENT EQUIPMENT SPECIALIST (RAIL), THAT WHEN NEW WHEELS WERE DELIVERED TO YOUR COMPANY, THEY WERE SENT WITH THE OLD WHEEL SETS TO ANOTHER COMPANY TO HAVE THE OLD WHEELS PRESSED OFF AND NEW WHEELS MOUNTED. THE REPORT ALSO INDICATES THAT WHEEL CHANGES ON THE SAME TYPE CARS WERE MADE BY THE SOUTHERN PACIFIC RAILROAD AND THE SOUTHERN RAILROAD ON AAR BILLING. IN THAT CONNECTION, THE REPORT STATES THAT THE AVERAGE COST OF EACH CAR WAS $1,015.90, WHEREAS THE AVERAGE COST FOR EACH CAR ON THE BASIS OF YOUR BILLING WAS $1,420.06.

YOUR LETTER OF DECEMBER 6, 1966, AGREEING TO HANDLE THE WHEEL CHANGE OUT REPAIR WORK APPEARS TO HAVE CONSTITUTED A COMPLETE ACCEPTANCE OF THE AUTHORIZATION OF NOVEMBER 21, 1966, INCLUDING THE CONDITION THAT LABOR AND MATERIAL CHARGES WOULD BE SUBMITTED ON AN AAR BILLING BASIS. AS OF THE TIME OF SUCH ACCEPTANCE, THERE EXISTED A BINDING, WRITTEN AGREEMENT OR CONTRACT TO PERFORM THE REQUIRED REPAIR WORK AT THE FIXED RATES ESTABLISHED IN THE CODE OF RULES OF THE ASSOCIATION OF AMERICAN RAILROADS.

IT IS A WELL-SETTLED RULE THAT WHERE ONE AGREES TO DO FOR A FIXED SUM, A THING POSSIBLE TO BE PERFORMED, HE WILL NOT BE EXCUSED OR BECOME ENTITLED TO ADDITIONAL COMPENSATION BECAUSE UNFORESEEN DIFFICULTIES ARE ENCOUNTERED. COLUMBUS RAILWAY AND POWER COMPANY V COLUMBUS, 249 U.S. 399, 412 (1919); DAY V UNITED STATES, 245 U.S. 159, 161 (1917). IT IS ALSO WELL ESTABLISHED THAT THE PARTIES TO A WRITTEN CONTRACT ARE BOUND BY ITS TERMS, THAT PAROL EVIDENCE WILL NOT BE ADMITTED TO ALTER OR VARY THE PLAIN LANGUAGE OF THE CONTRACT, AND THAT WHERE A CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT TO BE PAID, SUCH STIPULATION IS CONCLUSIVE ON THE PARTIES AND MEASURES THE AMOUNT OF RECOVERY FOR PERFORMANCE. BRAWLEY V UNITED STATES, 96 U.S. 168 (1877); SIMPSON V UNITED STATES, 172 ID. 372 (1899).

IN OUR OPINION, THE FOREGOING RULES ARE APPLICABLE HERE. THE GOVERNMENT WAS NOT REQUIRED TO PAY MORE FOR THE WHEEL CHANGE OUT REPAIR WORK ON THE SEVEN RAILROAD FLAT CARS THAN THE AMOUNT PAYABLE ON THE BASIS OF THE AAR BILLING RATES. SINCE THERE WAS IN EXISTENCE A WRITTEN AGREEMENT CONCERNING SUCH WORK, IT IS ALSO APPARENT THAT THERE WAS NO DUTY ON THE PART OF MR. QUINN OR ANY OTHER OFFICIAL OF THE ARMY MOBILITY EQUIPMENT COMMAND TO ADVISE YOU THAT YOUR PRICE MUST BE RESTRICTED TO THAT IN THE AAR MANUAL.

WITH RESPECT TO SERVICES WHICH YOUR COMPANY MAY HAVE PERFORMED FOR THE GOVERNMENT IN THE PAST WITHOUT CHARGE, IT DOES NOT APPEAR THAT CONSIDERATION OF ANY SUCH SERVICES WOULD BE WARRANTED IN DETERMINING THE MERITS OF THE CLAIM HERE INVOLVED. FURTHERMORE, MOST OF THE SERVICES REFERRED TO APPARENTLY WERE PERFORMED MORE THAN 10 YEARS BEFORE AUGUST 10, 1971, THE DATE ON WHICH WE RECEIVED YOUR LETTER OF AUGUST 6, 1971, AND CLAIMS ON ACCOUNT OF THOSE SERVICES WOULD BE BARRED UNDER THE ACT OF OCTOBER 9, 1940, 54 STAT. 1061, 31 U.S.C. 71 (A) AND 237. ESTABLISHING A TIME LIMITATION OF 10 YEARS FOR THE FILING IN OUR OFFICE OF CLAIMS OR DEMANDS AGAINST THE UNITED STATES COGNIZABLE BY OUR OFFICE UNDER 31 U.S.C. 71 AND 236.

ACCORDINGLY, THE SETTLEMENT OF JUNE 18, 1970, IS SUSTAINED.