B-49537, JUNE 22, 1945, 24 COMP. GEN. 917

B-49537: Jun 22, 1945

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CONTRACTS - EXTRA WORK - CONTRACTOR'S COST-PLUS-PERCENTAGE AS INCLUDING SUBCONTRACTORS' OVERHEAD AND PROFIT UNDER THE "EQUITABLE ADJUSTMENT" PROVISIONS OF A DISTRICT OF COLUMBIA CONSTRUCTION CONTRACT PURSUANT TO WHICH THE CONTRACTOR IS TO BE PAID FOR EXTRA WORK IN ACCORDANCE WITH CHANGE ORDERS ON THE BASIS OF ACTUAL COSTS OF LABOR. THE 15 PERCENT TO WHICH THE PRIME CONTRACTOR IS ENTITLED. 1945: I HAVE YOUR LETTER OF MAY 3. SHALL BE AS FOLLOWS: (1) WHEN CHANGES ARE MADE IN THE PLANS OR SPECIFICATIONS UNDER THE PROVISIONS OF ARTICLES 3 AND 4 OF THE CONTRACT. THE FOLLOWING WILL BE ALLOWED. WHICH ADDITIONAL PAYMENTS ARE NECESSITATED BY SUCH EXTRA WORK. CHANGE ORDER NO. 3 WAS ISSUED OCTOBER 5.

B-49537, JUNE 22, 1945, 24 COMP. GEN. 917

CONTRACTS - EXTRA WORK - CONTRACTOR'S COST-PLUS-PERCENTAGE AS INCLUDING SUBCONTRACTORS' OVERHEAD AND PROFIT UNDER THE "EQUITABLE ADJUSTMENT" PROVISIONS OF A DISTRICT OF COLUMBIA CONSTRUCTION CONTRACT PURSUANT TO WHICH THE CONTRACTOR IS TO BE PAID FOR EXTRA WORK IN ACCORDANCE WITH CHANGE ORDERS ON THE BASIS OF ACTUAL COSTS OF LABOR, EQUIPMENT, AND MATERIALS, PLUS 15 PERCENT THEREOF FOR OVERHEAD, PROFIT, ETC., ANY OVERHEAD AND PROFIT PAID TO SUBCONTRACTORS ON LABOR, MATERIALS AND EQUIPMENT FURNISHED MUST BE REGARDED AS COMING OUT OF, OR AS PART OF, THE 15 PERCENT TO WHICH THE PRIME CONTRACTOR IS ENTITLED.

COMPTROLLER GENERAL WARREN TO THE PRESIDENT, BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA, JUNE 22, 1945:

I HAVE YOUR LETTER OF MAY 3, 1945, WHEREIN YOU REQUEST A DECISION AS TO THE PROPRIETY OF PAYMENT OF $388.29 TO EUGENE SIMPSON AND BROTHER, FOR EXTRA WORK FURNISHED PURSUANT TO CHANGE ORDER NO. 3, DURING THE PERFORMANCE OF CONTRACT NO. 15486, ENTERED INTO JULY 9, 1943, BETWEEN THE DISTRICT OF COLUMBIA AND THE SAID COMPANY.

UNDER THE TERMS OF THE CONTRACT, EUGENE SIMPSON AND BROTHER AGREED TO FURNISH THE MATERIAL AND PERFORM THE WORK FOR THE CONSTRUCTION OF CERTAIN ADDITIONAL FACILITIES AT GALLINGER MUNICIPAL HOSPITAL, IN STRICT ACCORDANCE WITH THE DRAWINGS AND SPECIFICATIONS MADE PART THEREOF, FOR THE SUM OF $56,841.

ARTICLE 3 OF THE CONTRACT PROVIDES:

ART. 3. CHANGES.--- THE ENGINEER COMMISSIONER MAY, AT ANY TIME, BY A WRITTEN ORDER, AND WITHOUT NOTICE TO THE SURETY, MAKE CHANGES OF THE DRAWINGS AND/OR SPECIFICATIONS OF THIS CONTRACT AND WITHIN THE GENERAL SCOPE THEREOF. IF SUCH CHANGES CAUSE AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THIS CONTRACT, OR IN THE TIME REQUIRED FOR ITS PERFORMANCE, AN EQUITABLE ADJUSTMENT SHALL BE MADE AS PROVIDED FOR IN ARTICLE 4 (B) HEREOF. * * * AND THE REFERRED-TO ARTICLE 4 (B) CONTAINS THE FOLLOWING PROVISIONS:

(B)ADJUSTMENTS.--- THE BASIS FOR EQUITABLE ADJUSTMENTS, FOR ADDITIONAL WORK AUTHORIZED BY THE ENGINEER COMMISSIONER, SHALL BE AS FOLLOWS:

(1) WHEN CHANGES ARE MADE IN THE PLANS OR SPECIFICATIONS UNDER THE PROVISIONS OF ARTICLES 3 AND 4 OF THE CONTRACT, TO PROVIDE FOR ADDITIONAL WORK ORDERED BY THE ENGINEER COMMISSIONER, * * * WHICH CAUSES AN INCREASE IN THE AMOUNT DUE TO THE CONTRACTOR, AND A DIFFERENCE IN THE CONTRACT TIME, THE CONTRACTOR SHALL WHEN DIRECTED BY THE ENGINEER COMMISSIONER, FURNISH THE NECESSARY MATERIALS, LABOR AND PLANT AND PERFORM SUCH ADDITIONAL OR EXTRA WORK AT: * * *

(4) ACTUAL COST OF NECESSARY LABOR AND MATERIALS DIRECTLY EMPLOYED ON THE WORK, AND SUCH ALLOWANCE FOR USE OF ANY PLANT OR MACHINERY ACTUALLY EMPLOYED ON SUCH EXTRA WORK, AS MAY BE DETERMINED BY THE ENGINEER COMMISSIONER, PLUS 15 PERCENT TO COVER THE USE OF TOOLS, GENERAL SUPERINTENDENCE, OFFICE ACCOUNTING, ENGINEERING EXPENSES AND PROFIT. ADDITION TO THE FOREGOING, THE FOLLOWING WILL BE ALLOWED; THE ACTUAL PAYMENTS BY THE CONTRACTOR FOR WORKMEN'S COMPENSATION AND PUBLIC LIABILITY INSURANCE; PERFORMANCE AND SEPARATE LABOR (IF ANY) BONDS; AND ALL UNEMPLOYMENT AND OTHER SOCIAL SECURITY CONTRIBUTIONS (IF ANY) MADE BY THE CONTRACTOR PURSUANT TO FEDERAL, DISTRICT OF COLUMBIA OR STATE STATUTES, WHICH ADDITIONAL PAYMENTS ARE NECESSITATED BY SUCH EXTRA WORK.

PURSUANT TO ARTICLE 3 OF THE CONTRACT, CHANGE ORDER NO. 3 WAS ISSUED OCTOBER 5, 1943, WHICH PROVIDED THAT ALL WORK INCLUDED IN ITEMS 1 AND 6 TO 14, INCLUSIVE, OF THE CHANGES WERE TO BE PERFORMED ON THE BASIS OF ACTUAL COST PLUS 15 PERCENT TO COVER THE COST OF GENERAL SUPERINTENDENCE, OFFICE ACCOUNTING, ENGINEERING EXPENSES AND PROFIT. THE RECORD INDICATES THAT THE CONTRACTOR HAS PRESENTED A CLAIM FOR THE WORK PERFORMED UNDER THOSE ITEMS WHICH INCLUDES 15 PERCENT COMMISSION BASED ON THE TOTAL AMOUNT OF THE COST OF LABOR, MATERIALS AND EQUIPMENT FURNISHED BY THE SUBCONTRACTORS PLUS THE OVERHEAD AND PROFIT CHARGES BY SUCH SUBCONTRACTORS ON LABOR, MATERIALS AND EQUIPMENT FURNISHED BY THEM.

YOU REQUEST A DECISION "AS TO WHETHER THE DISTRICT OF COLUMBIA MAY LEGALLY MAKE A PAYMENT, UNDER THE TERMS OF ARTICLE 4 (B) (4) OF THE CONTRACT, TO WHICH IT REFERS, IT IS EVIDENT THAT THE DISTRICT OF COLUMBIA UNDERTOOK TO BEAR THE ACTUAL COSTS OF NECESSARY LABOR, EQUIPMENT AND MATERIALS EMPLOYED ON THE WORK COVERED THEREBY AND TO PAY THE CONTRACTOR 15 PERCENT OF SUCH COSTS TO COVER OVERHEAD, PROFIT, ETC. IN ADDITION THERETO SAID ARTICLE 4 (B) (4) PROVIDES FOR THE ALLOWANCE TO THE CONTRACTOR FOR THE ACTUAL PAYMENTS MADE BY IT FOR WORKMEN'S COMPENSATION AND PUBLIC LIABILITY INSURANCE AND ALL UNEMPLOYMENT AND OTHER SOCIAL SECURITY CONTRIBUTIONS. HENCE, IT MUST BE CONCLUDED THAT THE OVERHEAD AND PROFIT PAID BY THE CONTRACTOR TO A SUBCONTRACTOR ARE TO COME OUT OF, OR BE REGARDED AS A PART OF, THE 15 PERCENT TO WHICH IT IS ENTITLED UNDER THE SAID ARTICLE 4 (B) (4).

CONSEQUENTLY, IF CORRECT IN OTHER RESPECTS, THERE APPEARS PROPER FOR PAYMENT UNDER THE CHANGE ORDER INVOLVED, THE SUM OF $341.56, COMPUTED AS FOLLOWS:

COST OF LABOR, MATERIALS AND EQUIPMENT $215.91, $61.56 AND

$13.87-------------------------------------------------- $291.34

15 PERCENT AS OVERHEAD AND PROFIT------------------------- 43.70

UNEMPLOYMENT AND SOCIAL SECURITY TAX------------------ 6.52

TOTAL--------------------------------------------- 341.56 ..END :