B-3692, JUNE 20, 1940, 19 COMP. GEN. 1007

B-3692, JUNE 20, 1940, 19 COMP. GEN. 1007

CONTRACTS - PRICE ADJUSTMENT WHERE A CONTRACT SPECIFICALLY STATES THAT ADJUSTMENTS IN PRICE FOR EXCAVATION OF ANY GREATER OR LESS AMOUNT OF ROCK THAN THE ESTIMATED AMOUNT INDICATED SHALL BE MADE AT THE UNIT PRICES SPECIFIED, THERE IS NO AUTHORITY FOR DISREGARDING THE UNIT PRICES STIPULATED, AND MAKING ADJUSTMENT UNDER THE EQUITABLE ADJUSTMENT PROVISIONS OF THE CONTRACT, MERELY BECAUSE OF A MAJOR VARIATION BETWEEN THE ESTIMATED QUANTITY OF ROCK AND THE QUANTITY ACTUALLY REMOVED. DECISION B-3692, DATED SEPTEMBER 23, 1939, AUTHORIZING AN EQUITABLE ADJUSTMENT WHERE CHANGES WERE MADE IN THE SITE AND DESIGN OF THE BUILDINGS INVOLVED, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JUNE 20, 1940:

I HAVE YOUR LETTER OF MAY 7, 1940, AS FOLLOWS:

IN MY LETTER TO YOU OF MAY 9, 1939, I POINTED OUT THE LIMITATION WHICH WAS MADE UPON TIME FOR AWARDING CONTRACTS FROM FUNDS WHICH WERE ALLOTTED UNDER THE PROVISIONS OF THE PUBLIC WORKS APPROPRIATION ACT OF 1938 AND THE CIRCUMSTANCES UNDER WHICH THE FOLLOWING STIPULATION WAS INCLUDED IN THE BID FORM, VIZ:

" NOTE.--- THE ABOVE BID IS MADE WITH THE UNDERSTANDING THAT SHOULD ANY ADDITIONS OR DEDUCTIONS IN THE QUANTITIES SHOWN ON THE DRAWINGS OR REQUIRED BY THE SPECIFICATIONS BECOME NECESSARY IN ORDER TO COMPLETE THE PROJECT, ADDITIONS TO OR DEDUCTIONS FROM THE CONTRACT PRICE WILL BE MADE FOR THE FOLLOWING MATERIALS ON THE BASIS OF THE UNIT PRICES GIVEN HEREIN:

EARTH EXCAVATION (AS SPECIFIED) ----------- PER CUBIC YARD --$0.60

ROCK EXCAVATION (AS DEFINED BY

SPECIFICATIONS) ---------------------- PER CUBIC YARD -- 7.00

REINFORCED CONCRETE (IN PLACE, INCLUDING

FORMS AND REMOVAL OF FORMS) ---------- PER CUBIC YARD --25.00

REINFORCING STEEL (IN PLACE) -------------- PER TON ---------80.00 " IT WAS STATED IN THIS COMMUNICATION THAT:

"THE INTENT IN SPECIFYING THE ABOVE-QUOTED UNIT PRICES WAS IN ORDER THAT MINOR ADJUSTMENTS, INDICATED BY THE SOIL-TEST DATA TO BE SUBMITTED BY THE CONTRACTOR, AND AS OTHERWISE REQUIRED MIGHT BE MORE READILY AFFECTED. DEVELOPED THAT WHILE IN MOST CASES ONLY MINOR ADJUSTMENTS AS CONTEMPLATED WERE NECESSARY THERE WERE SEVERAL CASES IN WHICH THE CHANGES TO BE MADE WERE OF A MAJOR CHARACTER AND IN CONNECTION WITH WHICH IT IS NOT CONSIDERED THAT THE UNIT PRICES SPECIFIED ARE OF NECESSITY APPLICABLE IN VIEW OF THE PROVISIONS OF ARTICLES 3 AND 4 OF THE CONTRACT.'

IN SUBMITTING THIS MATTER TO YOU IT WAS BROUGHT OUT THAT UNDER CONTRACT VAC-906 AT VETERANS' ADMINISTRATION FACILITY, BEDFORD, MASSACHUSETTS, THE CONTRACT DRAWING STATED THAT THE ESTIMATED QUANTITY OF ROCK TO BE REMOVED WAS 1,200 CUBIC YARDS AND THAT THIS ESTIMATE WAS BASED UPON PREVIOUS EXPERIENCE HAD BY THE VETERANS' ADMINISTRATION ON OTHER CONSTRUCTION WORK IT HAD PERFORMED AT THIS FACILITY. IT WAS ALSO STATED THAT THE FORMATION OF THE EARTH AT THE SITES OF THE BUILDINGS UNDERCONSTRUCTION WAS OF ENTIRELY DIFFERENT CHARACTER THAN AT THE SITES OF THE FORMER BUILDINGS AND THAT IT WAS ONLY NECESSARY FOR THE CONTRACTOR TO REMOVE 42 1/2 CUBIC YARDS OF ROCK. IN VIEW OF THIS GREAT VARIANCE BETWEEN THE ESTIMATED QUANTITY OF ROCK AND THAT WHICH WAS ACTUALLY REMOVED YOUR DECISION WAS REQUESTED AS TO WHETHER THE VETERANS' ADMINISTRATION WOULD BE AUTHORIZED TO DISREGARD THE UNIT PRICES STIPULATED IN THE PROPOSAL AND TO MAKE SETTLEMENT WITH THE CONTRACTOR UNDER THE PROVISIONS OF ARTICLES 3 AND 4 OF THE CONTRACT, PROVIDING FOR AN ADJUSTMENT ON AN EQUITABLE BASIS.

BASED UPON YOUR DECISION OF MAY 29, 1939 (B-3692), CHANGE ORDER "O" DATED JULY 17, 1939, WAS ISSUED UNDER CONTRACT VAC-906 PROVIDING FOR A CREDIT OF $7.00 PER CUBIC YARD FOR ROCK OR A DEDUCTION OF $8,102.50 FOR EXCAVATING 1,157.5 CUBIC YARDS LESS OF ROCK THAN THAT CALLED FOR IN THE CONTRACT AT $7.00 A CUBIC YARD. CREDIT ALLOWANCES WERE MADE IN THIS CHANGE ORDER FOR EARTH EXCAVATION IN AMOUNT $1,367.70. PURSUANT TO THE PROVISIONS OF ARTICLE 15 OF THE CONTRACT, THE CONTRACTOR (J. L. ROBINSON CONSTRUCTION COMPANY, SUBSEQUENTLY REORGANIZED AS THE J. D. HEDIN CONSTRUCTION COMPANY) APPEALED TO ME FROM THE FINDING OF THE CONTRACTING OFFICER AS REPRESENTED BY THIS CHANGE ORDER, IT BEING HIS CONTENTION THAT WHEN FIGURING THE JOB HE ASSUMED AFTER AN EXAMINATION OF THE SITE AND CONSULTATION WITH LOCAL EXCAVATORS THAT THE QUANTITY OF ROCK INDICATED ON THE DRAWINGS WAS REASONABLY CORRECT AND THAT IN ANY EVENT THE UNIT PRICES WOULD APPLY ONLY FOR A SMALL PERCENTAGE VARIATION OF THE QUANTITIES. THE CONTRACTOR SUBMITTED AN AGREEMENT WHICH HE HAD WITH DOOLEY BROTHERS, INC., FOR REMOVAL OF THE SPECIFIED ROCK AT $3.00 A CUBIC YARD AND HAS ADVISED THE VETERANS' ADMINISTRATION, INFORMALLY, THAT HE IS PREPARED TO SUBMIT HIS ESTIMATE SHEETS SHOWING THAT THIS WAS THE PRICE ON WHICH HIS BID WAS BASED AND UPON WHICH PAYMENT WAS MADE TO DOOLEY BROTHERS, INC. BY LETTER DATED APRIL 23, 1940 (COPY ATTACHED), THE CONTRACTOR HAS REQUESTED THAT THERE BE SUBMITTED TO YOU FOR DECISION THE QUESTION OF LAW INVOLVED IN HIS APPEAL.

IN CONNECTION WITH CONTRACT VAC-929 WITH ROBERT E. MCKEE FOR CONSTRUCTION WORK AT VETERANS' ADMINISTRATION FACILITY, LOS ANGELES, CALIFORNIA, WHERE QUESTION OF THE ABOVE-MENTIONED UNIT PRICES WAS ALSO INVOLVED, YOU STATED BY LETTER OF SEPTEMBER 23, 1939, THAT:

"ON THE BASIS OF THE FACTS AS NOW UNDERSTOOD, I HAVE TO ADVISE THAT THIS OFFICE IS NOT REQUIRED TO OBJECT TO AN ADJUSTMENT OF THE CONTRACT PRICE BY THE MAKING OF SUCH REDUCTION THEREIN AS YOU MAY DETERMINE TO BE REASONABLE AND JUST, ON ACCOUNT OF THE DEDUCTIONS IN THE CONTRACT WORK RESULTING FROM THE CHANGE IN SITE AND CHANGES IN DESIGN OF THE BUILDINGS, WITHOUT NECESSARILY COMPUTING THE REDUCTION ON THE BASIS OF THE UNIT PRICES STATED IN THE PROPOSAL ON WHICH THE CONTRACT WAS BASED.'

ACCORDINGLY, A CHANGE ORDER WAS ISSUED IN CONNECTION WITH CONTRACT VAC- 929 MAKING AN EQUITABLE ADJUSTMENT WITH THIS CONTRACTOR AS PROVIDED BY ARTICLES 3 AND 4 OF THE CONTRACT.

IT SHALL APPRECIATE YOUR FURTHER CONSIDERATION OF THE CLAIM OF THE J. D. HEDIN CONSTRUCTION COMPANY AND IF IT SHOULD BE YOUR CONCLUSION UPON RECONSIDERATION OF THIS MATTER THAT THE VETERANS' ADMINISTRATION WOULD BE AUTHORIZED TO DISREGARD THE UNIT PRICES STIPULATED IN THE PROPOSAL FORM ACTION WILL BE TAKEN TO MAKE AN EQUITABLE ADJUSTMENT WITH THE CONTRACTOR AS PROVIDED BY ARTICLES 3 AND 4 OF THE CONTRACT.

YOU WERE INFORMED IN THE DECISION OF MAY 29, 1939, REFERRED TO IN YOUR LETTER, THAT THE VETERANS' ADMINISTRATION WOULD NOT BE AUTHORIZED TO DISREGARD THE UNIT PRICES STIPULATED IN CONTRACTS NOS. VAC-906 AND VAC-929 IN MAKING ADJUSTMENTS UNDER ARTICLES 3 AND 4 THEREOF TO COVER DEDUCTIONS IN THE QUANTITIES OF MATERIALS AS SHOWN ON THE DRAWINGS. THIS RULING, AS IT RELATED TO VAC-929, WAS SUBSEQUENTLY RECONSIDERED AND BY DECISION OF SEPTEMBER 23, 1939, YOU WERE ADVISED THAT THIS OFFICE WOULD NOT OBJECT TO THE MAKING OF SUCH REDUCTIONS IN CONTRACT PRICE "ON ACCOUNT OF THE DEDUCTIONS IN THE CONTRACT WORK RESULTING FROM THE CHANGE IN SITE AND CHANGES IN DESIGN OF THE BUILDINGS," AS WERE CONSIDERED REASONABLE AND JUST--- AND THAT ANY PRICE CHANGES SO MADE WERE NOT REQUIRED TO BE COMPUTED ON THE BASIS OF THE UNIT PRICES STATED IN THE CONTRACT PROPOSAL FORM. IN YOUR PRESENT LETTER YOU INVITE ATTENTION TO THE CONCLUSION REACHED IN THE DECISION OF SEPTEMBER 23, 1939, WITH RESPECT TO CONTRACT VAC-929, AND, APPARENTLY ON THE BASIS OF THAT DECISION, YOU REQUEST RECONSIDERATION OF THE DECISION OF MAY 29, 1939, AS IT RELATES TO CONTRACT VAC-906.

IT APPEARS FROM AN ANALYSIS OF THE RECORD IN THIS CASE THAT THE FACTS AS THEY RELATE TO CONTRACT VAC-929 ARE MATERIALLY DIFFERENT FROM THOSE RELATING TO CONTRACT VAC-906, WITH THE RESULT THAT IT DOES NOT NECESSARILY FOLLOW THAT THE STATEMENTS MADE AND THE CONCLUSIONS REACHED IN THE DECISION OF SEPTEMBER 23, 1939, HAVE ANY MATERIAL BEARING UPON THE QUESTION NOW PRESENTED. THE FACT WAS STRESSED IN SAID DECISION THAT AFTER CONTRACT VAC-929 WAS ENTERED INTO THE SITE OF THE CONSTRUCTION WORK WAS CHANGED AND, IN ADDITION, CONSIDERABLE CHANGES WERE MADE IN THE DESIGN OF THE BUILDINGS. IN OTHER WORDS, THE CONTRACTOR ENTERED A BID WITH RELATION TO BUILDINGS OF A SPECIFIED DESIGN TO BE CONSTRUCTED AT A SPECIFIED LOCATION, BUT AFTER PREPARING HIS ESTIMATES AND COMPUTING HIS BID ON THAT BASIS HE WAS ASKED TO CONSTRUCT A BUILDING OF DIFFERENT DESIGN ON ANOTHER SITE. THE PROTEST OF THE CONTRACTOR IN THAT CASE RELATED PRINCIPALLY TO THE FACT THAT THERE WAS NOTHING IN THE SPECIFICATIONS, INVITATION, PROPOSAL FORM OR DRAWINGS TO INDICATE ANY CHANGE IN LOCATION OR IN THE DESIGN OF THE BUILDING. AFTER OUTLINING THESE FACTS, AND ON THE BASIS THEREOF, IT WAS CONCLUDED IN THE DECISION OF SEPTEMBER 23, 1939, AS FOLLOWS:

CLEARLY THE DEDUCTIONS INCIDENT TO THESE CHANGES WERE NOT "NECESSARY IN ORDER TO COMPLETE THE PROJECT" AS ORIGINALLY CONTRACTED FOR. THEREFORE, IT WOULD NOT APPEAR THAT THE UNIT PRICES SPECIFIED IN THE CONTRACT ARE CONTROLLING IN THE PRICE ADJUSTMENT MADE NECESSARY BY THE ACTION OF THE GOVERNMENT IN CHANGING THE LOCATION AND DESIGN OF THE BUILDINGS. THOSE UNIT PRICES HAD AS THEIR PRIMARY PURPOSE THE MODIFICATION OF THE CONTRACT PRICE BY REASON OF ANY VARIATIONS ENCOUNTERED OR CHANGES REQUIRED WHEN THE ACTUAL SOIL CONDITIONS AT THE SITE DESIGNATED IN THE CONTRACT BECOME KNOWN. ( ITALICS SUPPLIED.)

IT DOES NOT APPEAR, HOWEVER, THAT THE SITE OF THE BUILDING CONSTRUCTED UNDER CONTRACT VAC-906 WAS CHANGED OR THAT ANY MATERIAL ALTERATIONS IN DESIGN WERE MADE. ON THE CONTRARY, THE CONTRACT WHICH THE CONTRACTOR WAS REQUIRED TO PERFORM APPEARS TO HAVE BEEN THE EXACT CONTRACT AWARDED TO HIM. THE BASIS OF THE COMPLAINT IN RESPECT TO THIS CONTRACT RELATES TO THE FACT THAT IN CONSTRUCTING THE BUILDING AS CALLED FOR IN THE SPECIFICATIONS ONLY 42 1/2 CUBIC YARDS OF ROCK WERE FOUND AT THE SITE SHOWN IN THE CONTRACT, WHEREAS THE CONTRACT DRAWINGS INDICATED THAT AN ESTIMATED QUANTITY OF 1,200 CUBIC YARDS OF ROCK MIGHT BE EXPECTED. IT WAS MADE CLEAR, HOWEVER, THAT NO GUARANTEE AS TO QUANTITY OF ROCK WAS BEING MADE BY THE GOVERNMENT AND THAT:

* * * IN THE EVENT ANY GREATER OR LESS AMOUNT OF THE ABOVE DEFINED ROCK BE ENCOUNTERED THAN THE TOTAL ESTIMATED AMOUNT INDICATED ON THE DRAWINGS, SAID DIFFERENCE IN TOTAL AMOUNT SHALL BE DETERMINED AND PAYMENT FOR ANY SUCH GREATER AMOUNT OR CREDIT FOR ANY SUCH LESS AMOUNT OF THE ABOVE DEFINED ROCK TO BE EXCAVATED SHALL BE MADE SUBJECT TO SUCH ADJUSTMENT AS IS PROVIDED BY ARTICLES 3 AND 4 OF THE CONTRACT AND AT THE UNIT PRICES AS SPECIFIED IN THE BID FORM. THE BID FORM SPECIFIED A UNIT PRICE OF $7 PER CUBIC YARD FOR ROCK EXCAVATION.

IN YOUR PRESENT LETTER THERE IS QUOTED THE STATEMENT CONTAINED IN YOUR LETTER OF MAY 9, 1939, THAT "THE INTENT IN SPECIFYING THE ABOVE QUOTED UNIT PRICES WAS IN ORDER THAT MINOR ADJUSTMENTS, INDICATED BY THE SOIL- TEST DATA TO BE SUBMITTED BY THE CONTRACTOR, AND AS OTHERWISE REQUIRED MIGHT BE MORE READILY AFFECTED.' THERE IS NOTHING IN THE TERMS OF CONTRACT VAC-906 TO INDICATE THAT THE UNIT PRICES STATED THEREIN WERE ONLY APPLICABLE IN THE CASE OF MINOR CHANGES; ON THE CONTRARY, THE CONTRACT REFERS (SEE PROVISION QUOTED ABOVE) TO ADJUSTMENTS "FOR ANY SUCH GREATER AMOUNT OR * * * ANY SUCH LESS AMOUNT," AND IN THE BID FORM IT IS SPECIFIED THAT THE UNIT PRICES THEREIN NAMED SHALL APPLY IN ADJUSTING THE PRICES IN THE CASE OF "ANY ADDITIONS OR DEDUCTIONS IN THE QUANTITIES SHOWN ON THE DRAWINGS OR REQUIRED BY THE SPECIFICATIONS.' ( ITALICS SUPPLIED.) THE TERMS OF THE CONTRACT AS THEY RELATE TO THIS MATTER ARE CLEAR AND UNAMBIGUOUS AND, CONSEQUENTLY, MAY NOT BE ALTERED BY ANY SUBSEQUENT COLLATERAL STATEMENTS AS TO WHAT WAS INTENDED BY SAID TERMS.

THEREFORE, IN RESPONSE TO YOUR INQUIRY YOU ARE ADVISED THAT THE VETERANS' ADMINISTRATION IS NOT AUTHORIZED TO DISREGARD THE UNIT PRICES STIPULATED IN THE BID FORM IN MAKING EQUITABLE ADJUSTMENTS WITH THE CONTRACTOR AS PROVIDED BY ARTICLES 3 AND 4 OF THE CONTRACT, BECAUSE THE CONTRACT SPECIFICALLY STATES THAT SUCH ADJUSTMENTS SHALL BE MADE "AT THE UNIT PRICES AS SPECIFIED IN THE BID FORM.'