B-59805, SEPTEMBER 24, 1951, 31 COMP. GEN. 100

B-59805, SEPTEMBER 24, 1951, 31 COMP. GEN. 100

CONTRACTS - FINAL SETTLEMENT DATE - MILLER ACT OF AUGUST 24, 1935 UNDER THE MILLER ACT OF OF AUGUST 24, 1935, PROVIDING THAT THE COMPTROLLER GENERAL IS AUTHORIZED AND DIRECTED TO FURNISH A CERTIFIED STATEMENT OF THE DATE OF FINAL SETTLEMENT OF CONTRACTS WITHIN THE PURVIEW OF THAT ACT WHICH SHALL BE CONCLUSIVE UPON THE PARTIES, THE DATE STATED IN A GENERAL ACCOUNTING OFFICE CERTIFICATE AS THE DATE OF FINAL SETTLEMENT OF THE CONTRACT IS THE DATE HE ADMINISTRATIVE OFFICE DETERMINES WHAT IS DUE AND OWING UNDER THE CONTRACT, NOTWITHSTANDING THE FACT THAT CONTRACTOR HAS APPEALED SUCH DETERMINATION TO A REVIEW BOARD OR HAS FILED SUITS IN THE COURT OF CLAIMS FOR ADDITIONAL AMOUNTS DUE UNDER THE CONTRACT.

COMPTROLLER GENERAL WARREN TO CROWELL AND ROUSE, SEPTEMBER 24, 1951:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 8, 1951, WITH FURTHER REFERENCE TO THE DATE OF FINAL SETTLEMENT OF CONTRACT NO. NOY-6303, SPECIFICATION NO. 11264, DATED OCTOBER 18, 1943, BETWEEN THE UNITED STATES OF AMERICA AND ANTHONY M. MEYERSTEIN, INC., FOR TWO FLOATING CRANES.

IN YOUR LETTER YOU MAINTAIN, AS IN PREVIOUS CORRESPONDENCE, THAT THE CERTIFICATE ISSUED BY THIS OFFICE ON SEPTEMBER 20, 1950, CERTIFYING JULY 29, 1946, AS THE DATE OF FINAL SETTLEMENT UNDER THE ABOVE CONTRACT, WAS INCORRECT, SUBSTANTIALLY FOR THE REASON THAT YOUR INVESTIGATION HAS DISCLOSED THAT THE SAID ANTHONY M. MEYERSTEIN, INC., HAS BROUGHT TWO ACTIONS AGAINST THE UNITED STATES IN THE COURT OF CLAIMS FOR THE RECOVERY OF CERTAIN AMOUNTS WHICH THE CONTRACTOR CLAIMS TO BE DUE UNDER HIS PRIME CONTRACT FOR THE FLOATING CRANES REFERRED TO. YOU POINT OUT THAT AN EXAMINATION OF THE PETITIONS IN THE ABOVEMENTIONED ACTIONS, WITH THE EXHIBITS ANNEXED THERETO, CLEARLY INDICATES THAT VARIOUS QUESTIONS PERTAINING TO THE CONTRACT BETWEEN THE UNITED STATES AND ANTHONY M. MEYERSTEIN, INC., HAVE NOT BEEN SETTLED UP TO THE PRESENT TIME AND REMAIN OPEN FOR THE DETERMINATION OF THE COURT. YOU FURTHER STATE THAT IT APPEARS FROM THE PETITIONS THAT THE CLAIMANT, ANTHONY M. MEYERSTEIN, INC., HAD FILED ITS CLAIM WITH THE BUREAU OF YARDS AND DOCKS, WHICH CLAIM WAS REFERRED TO THE NAVY DEPARTMENT WAR CONTRACTS RELIEF BOARD FOR DETERMINATION; THAT THE FINAL DETERMINATION OF SAID BOARD APPEARS TO HAVE BEEN FILED ON DECEMBER 27, 1948, DENYING THE CLAIM; AND THAT THE DETERMINATION AND THE STATEMENT OF FACTS RECITED THEREIN STATED THAT THE CONTRACTOR APPEALED TO THE NAVY BOARD OF CONTRACT APPEALS, WHERE THE MATTER IS STILL PENDING. IN VIEW THEREOF, YOU CONTEND THAT IT IS APPARENT THAT THE WHOLE MATTER STILL REMAINED OPEN AND UNSETTLED AT THE TIME OF FILING SAID DETERMINATION OF THE NAVY DEPARTMENT WAR CONTRACTS RELIEF BOARD ON DECEMBER 27, 1948, AND, ACCORDINGLY, IT IS CLEAR TO YOU THAT THE DATE OF FINAL SETTLEMENT OF THE CONTRACT IN QUESTION DEFINITELY COULD NOT HAVE BEEN JULY 29, 1946, AS STATED IN THE CERTIFICATE ISSUED BY THIS OFFICE.

AS YOU WERE INFORMED IN OFFICE DECISION DATED DECEMBER 28, 1950, B 59805, A REPORT OBTAINED FROM THE DEPARTMENT OF THE NAVY, BUREAU OF YARDS AND DOCKS, ADVISED THAT THE WORK UNDER THE CONTRACT WAS COMPLETED ON OR ABOUT MAY 30, 1945. SUBSEQUENTLY, CHANGE ORDER "B," DATED JULY 29, 1946, SUMMARIZED ALL CHANGES TO THE CONTRACT AND REPRESENTS THE DEPARTMENT OF THE NAVY'S DETERMINATIONS OF THE AMOUNT OF INCREASES AND DECREASES IN THE CONTRACT PRICE. THE RESULTING UNPAID BALANCE OF THE CONTRACT, APPROXIMATELY $41,000, HAS NOT BEEN PAID AND THAT AMOUNT, PLUS $264,424.62, REPRESENTING A CLAIM FOR AN INCREASE IN THE CONTRACT PRICE, IS, AS YOU STATE, PRESENTLY THE SUBJECT OF SUIT BY THE CONTRACTOR AGAINST THE GOVERNMENT IN THE UNITED STATES COURT OF CLAIMS. HOWEVER, AS WAS FURTHER STATED IN THE DECISION OF DECEMBER 28, 1950, THE FACT THAT ALL ITEMS IN DISPUTE MAY NOT HAVE BEEN ADJUSTED FINALLY DOES NOT PREVENT AN ADMINISTRATIVE DETERMINATION AS TO WHAT IS DUE AND OWING UNDER A CONTRACT FROM AMOUNTING TO FINAL SETTLEMENT, THE COURTS HAVING HELD SPECIFICALLY THAT FINAL SETTLEMENT MAY BE MADE PRIOR TO A FINAL DETERMINATION OF THE MERITS OF EXTRA WORK CLAIMS. SEE THE VARIOUS CASES CITED IN THE DECISION OF DECEMBER 28, 1950.

IT IS TRUE, OF COURSE, THAT THE QUESTIONS OF WHAT CONSTITUTES THE DATE OF FINAL PAYMENT HAS BEEN THE SUBJECT OF MANY CONFLICTING DECISIONS THROUGH THE YEARS, BUT IT WAS CLARIFIED CONSIDERABLY IF NOT PUT AT REST BY DECISION OF THE SUPREME COURT OF THE UNITED STATES ON MARCH 5, 1934, IN THE CASE OF GLOBE INDEMNITY COMPANY V. UNITED STATES, 291 U.S. 476. THAT DECISION HELD THAT THE DATE OF FINAL SETTLEMENT WHICH FIXES THE TIME WITHIN WHICH SUIT IS PERMITTED IS THE DATE OF DETERMINATION MADE AND RECORDED IN ACCORDANCE WITH ESTABLISHED ADMINISTRATIVE PRACTICE BY THE ADMINISTRATIVE OFFICER OR DEPARTMENT HAVING THE CONTRACT IN CHARGE; THAT THE CONTRACT HAS BEEN COMPLETED AND THAT THE FINAL PAYMENT IS DUE. THAT CASE THERE WAS PRESENTED A FACTUAL SITUATION SOMEWHAT SIMILAR TO THE CASE HERE INVOLVED. THERE, THE FIRST ASSISTANT SECRETARY OF THE DEPARTMENT OF THE INTERIOR UNDER DATE OF JUNE 16, 1927, FORWARDED THE CLAIM OF A CONTRACTOR TO THE GENERAL ACCOUNTING OFFICE FOR DIRECT SETTLEMENT BY A LETTER WHICH STATED THAT THE CONTRACT HAD BEEN COMPLETELY PERFORMED AND THAT, AFTER DEDUCTING A STIPULATED AMOUNT AS LIQUIDATED DAMAGE FOR DELAY IN PERFORMANCE, THE BALANCE DUE WAS $8,889.30. THE LETTER CONCLUDED: " THE CLAIM HAS RECEIVED ADMINISTRATIVE EXAMINATION, IS APPROVED FOR $8889.30, AND I RECOMMEND THAT THE AMOUNT FOUND DUE BE PAID" FROM A DESIGNATED APPROPRIATION. FOUR MONTHS LATER, ON OCTOBER 26, 1927, THE GENERAL ACCOUNTING OFFICER ISSUED ITS FORMAL CERTIFICATE OF SETTLEMENT CONFIRMING THE BALANCE FOUND DUE BY THE DEPARTMENT OF THE INTERIOR, AND THE CLAIM WAS PAID BY THE TREASURER OF THE UNITED STATES ON NOVEMBER 5, 1927. THE QUESTION PRESENTED WAS WHETHER FINAL SETTLEMENT UNDER THE ACT WAS EFFECTED BY THE ACTION OF THE INTERIOR DEPARTMENT OF JUNE 16, 1927, OR ONLY BY THE CERTIFICATE OF THE GENERAL ACCOUNTING OFFICE OF OCTOBER 26. THE SUPREME COURT OF THE UNITED STATES STATED, IN PERTINENT PART, AS FOLLOWS:

THE POLICY OF THE STATUTE TO AFFORD PROTECTION TO THE INTERESTS OF LABORERS AND MATERIAL MEN WOULD NOT BE EFFECTED UNLESS THEY WERE ALLOWED TO BRING SUIT WITH REASONABLE PROMPTNESS AFTER THE UNITED STATES HAS DETERMINED THAT IT WILL HAVE NO CLAIM ON THE BOND AND UNLESS THE DATE OF FINAL SETTLEMENT WHICH FIXES THE TIME WITHIN WHICH SUIT IS PERMITTED COULD BE ASCERTAINED WITH REASONABLE CERTAINTY AND FINALITY. A DETERMINATION, MADE AND RECORDED IN ACCORDANCE WITH ESTABLISHED ADMINISTRATIVE PRACTICE BY THE ADMINISTRATIVE OFFICER OR DEPARTMENT HAVING THE CONTRACT IN CHARGE, THAT THE CONTRACT HAS BEEN COMPLETED AND THAT THE FINAL PAYMENT IS DUE, FULFILLS THESE REQUIREMENTS. SEE ILLINOIS SURETY CO. V. UNITED STATES TO THE USE OF PEELER, SUPRA. SUCH WAS THE DETERMINATION MADE HERE BY THE INTERIOR DEPARTMENT, WHICH ALONE WAS IN POSSESSION OF THE KNOWLEDGE AND DATA NECESSARY TO PROMPT DECISION. THE DEPARTMENT, IN FORWARDING THE CLAIM, MADE EVERY DETERMINATION PREREQUISITE TO PAYMENT. SEE ILLINOIS SURETY CO. V. UNITED STATES TO THE USE OF PEELER, SUPRA; MANDEL V. UNITED STATES, SUPRA. IT DECLARED THAT THE CONTRACT HAD BEEN COMPLETELY PERFORMED; IT STATED THE BALANCE DUE AFTER DEDUCTING THE STIPULATED AMOUNT FOR LIQUIDATED DAMAGES FOR DELAY; IT DECLARED THAT THE CLAIM HAD RECEIVED ADMINISTRATIVE EXAMINATION AND WAS APPROVED FOR THE BALANCE FOUND DUE; AND IT RECORDED ITS FINDINGS. * * * IF, AS RESPONDENT MAINTAINS, THIS DETERMINATION WOULD MARK THE PERIOD OF LIMITATION, AND SUITS BEGUN WITHIN THE STATUTORY PERIOD MEASURED FROM THIS DETERMINATION MIGHT HAVE TO BE DISCONTINUED AND BEGUN ANEW IF THE DEPARTMENTAL HEAD OR DISBURSING OFFICER SHOULD LATER REFER THE CLAIM TO THE COMPTROLLER GENERAL. A CONSTRUCTION SO OUT OF HARMONY WITH ADMINISTRATIVE PRACTICE, SO INCONVENIENT IN OPERATION AND SO INCONSISTENT WITH THE OBVIOUS PURPOSE OF THE STATUTE IS NOT TO BE ENTERTAINED.

THE COURT THEN CONCLUDED BY SAYING:

NO SUCH CONSEQUENCES EITHER TO THE GOVERNMENT OR TO SUBCONTRACTORS CAN RESULT FROM TREATING THE DEPARTMENTAL SETTLEMENT AS THE FINAL ONE WITHIN THE MEANING OF THE HEARD ACT. THERE IS NO MORE OCCASION FOR DELAYING SUIT ON THE BOND BECAUSE OF THE CONTINGENCY THAT THE DEPARTMENTAL DETERMINATION MAY NOT BE APPROVED BY THE COMPTROLLER GENERAL IN HIS AUDITING OF THE ACCOUNTS, THAN BECAUSE OF THE CONTINGENCY THAT ANY ADMINISTRATIVE DETERMINATION MAY NOT BE APPROVED BY THE COURTS. * * * ( ITALICS SUPPLIED.)

WHILE THE GLOBE INDEMNITY CASE AROSE UNDER THE HEARD ACT OF 1894, 28 STAT. 278, AND NOTWITHSTANDING THE FACT THAT THE MILLER ACT OF AUGUST 24, 1935, 49 STAT. 793, ESTABLISHED A NEW PROCEDURE, IT DID NOT IN ANY WAY CHANGE THE BASIS FOR DETERMINING THE DATE OF FINAL SETTLEMENT. SECTION 3 OF THE LATTER ACT PROVIDES THAT " THE COMPTROLLER GENERAL IS AUTHORIZED AND DIRECTED TO FURNISH * * * A CERTIFIED STATEMENT OF THE DATE OF SUCH SETTLEMENT, WHICH SHALL BE CONCLUSIVE AS TO SUCH DATE UPON THE PARTIES.' READING THIS PROVISION IN THE LIGHT OF THE SUPREME COURT DECISION, THERE OBVIOUSLY IS NO LEGAL BASIS FOR DEPARTING FROM THE RULE WHICH THE COURT HAS SO EMPHATICALLY DECLARED WITH RESPECT TO THE TERM "FINAL SETTLEMENT" UNDER THE EARLIER ACT.

ACCORDINGLY, IT MUST BE HELD THAT SINCE THE RECORD IN THE PRESENT CASE INDICATES THAT THE ADMINISTRATIVE DETERMINATION THAT THE WORK HAD BEEN COMPLETED, AND AS TO THE FINAL BALANCE DUE WAS MADE ON JULY 29, 1946, THE CERTIFICATE PREVIOUSLY FURNISHED YOU IN THE MATTER MUST REMAIN UNCHANGED.