[Request for Reconsideration of Protest of DLA Sale]

A-7953, OCTOBER 14, 1926, 6 COMP. GEN. 255

CONTRACTS - SUPPLEMENTAL - DAMAGES FOR DELAYS BY UNITED STATES UNDER A CONTRACT FOR THE ERECTION OF STRUCTURAL STEEL WORK UPON A FOUNDATION TO BE LAID BY THE UNITED STATES, THE WORK TO BE COMPLETED WITHIN A SPECIFIED TIME SUBJECT TO THE ASSESSMENT OF LIQUIDATED DAMAGES AGAINST THE CONTRACTOR FOR DELAYS, BUT MAKING NO PROVISION FOR DELAYS DUE TO THE GOVERNMENT OTHER THAN TO AUTHORIZE AN EXTENSION OF TIME THEREFOR, NO DAMAGES ARE PAYABLE BY THE UNITED STATES BY REASON OF ITS DELAYS FOR WHICH AN EXTENSION OF TIME WAS GRANTED, AND ANY SUPPLEMENTAL AGREEMENT TO INCREASE THE AMOUNT TO BE PAID BY THE UNITED STATES FOR ANY PORTION OF THE WORK BECAUSE OF SUCH DELAYS IS WITHOUT CONSIDERATION AND VOID.

DECISION BY COMPTROLLER GENERAL MCCARL, OCTOBER 14, 1926:

THE AMERICAN BRIDGE CO. APPLIED JULY 16, 1926, FOR RECONSIDERATION OF DECISION OF MARCH 1, 1926, 55 MS. COMP. GEN. 3, WHEREIN UPON REVIEW OF SETTLEMENT NO. M-6314-N, DATED MARCH 20, 1924, CREDITS AMOUNTING TO $28,149 WERE DISALLOWED IN THE DISBURSING ACCOUNTS OF LIEUT. EDWARD MIXON (S.C.), UNITED STATES NAVY, TO COVER CERTAIN UNAUTHORIZED PAYMENTS MADE TO THE CLAIMANT COMPANY UNDER CONTRACT NO. 3604 WITH THE NAVY DEPARTMENT DATED DECEMBER 26, 1918, AND SUPPLEMENTAL AGREEMENTS THERETO DATED FEBRUARY 27, 1920, AND SEPTEMBER 15, 1920, RESPECTIVELY.

UNDER THE CONTRACT IN QUESTION THE AMERICAN BRIDGE CO. OBLIGATED ITSELF TO FURNISH, DELIVER, ERECT UPON FOUNDATIONS PROVIDED BY THE NAVY DEPARTMENT, AND PAINT CERTAIN STRUCTURAL STEEL WORK FOR VARIOUS BUILDINGS AT THE NAVAL ORDNANCE PLACE, SOUTH CHARLESTON, W.VA., IN ACCORDANCE WITH PLANS AND SPECIFICATIONS THEREFOR AT A PRICE OF $0.054 PER POUND OF STEEL IN PLACE. THE CONTRACTOR AGREED TO COMPLETE THE WORK WITHIN 240 CALENDAR DAYS FROM DATE A COPY OF THE CONTRACT WAS DELIVERED TO IT, OR ON OR BEFORE SEPTEMBER 24, 1919, A COPY OF THE EXECUTED CONTRACT HAVING BEEN RECEIVED BY THE COMPANY JANUARY 27, 1919. THE CONTRACT PROVIDED THAT LIQUIDATED DAMAGES AT THE RATE STIPULATED IN PARAGRAPH 13 OF THE SPECIFICATIONS SHOULD BE DEDUCTED FOR EACH DAY'S DELAY IN COMPLETING THE WORK, NOT DUE TO UNAVOIDABLE CAUSES, DEFINED AS BEING CAUSES BEYOND THE CONTROL OF THE CONTRACTOR SUCH AS "ACTS OF PROVIDENCE, FORTUITOUS EVENTS, INEVITABLE ACCIDENTS, ABNORMAL CONDITIONS OF WEATHER OR TIDES, OR STRIKES OF SUCH SCOPE AND CHARACTER AS TO INTERFERE MATERIALLY WITH THE PROGRESS OF THE WORK" AND FOR "DELAYS CAUSED BY ACTS OF THE GOVERNMENT.'

BY SUPPLEMENTAL AGREEMENT NO. 3604-X, DATED FEBRUARY 27, 1920, THE CONTRACTOR FURTHER OBLIGATED ITSELF TO FURNISH AND DELIVER AT THE SITE AN ADDITIONAL QUANTITY OF APPROXIMATELY 400 TONS OF STRUCTURAL STEEL FOR A SUBSTATION BUILDING AT $98 PER TON, AND TO ERECT SAME, IF REQUIRED, FOR THE ADDITIONAL SUM OF $18 PER TON. THIS STEEL WAS TO BE DELIVERED WITHIN 180 CALENDAR DAYS AND THE BUILDING ERECTED, IF REQUIRED BY THE DEPARTMENT, WITHIN 210 CALENDAR DAYS FROM THE DATE OF RECEIPT BY THE CONTRACTOR OF A COPY OF THE SUPPLEMENTAL CONTRACT. AN EXECUTED COPY THEREOF HAVING BEEN DELIVERED TO THE COMPANY ON OCTOBER 6, 1920, THE STRUCTURAL STEEL FOR THE SUBSTATION BUILDING WAS DUE FOR DELIVERY APRIL 4, 1921, AND COMPLETION OF THE ERECTION THEREOF, IF REQUIRED, BY MAY 4, 1921, AND FOR ANY DELAY THEREIN LIQUIDATED DAMAGES WERE PROVIDED TO BE DEDUCTED AT THE RATE OF $10 PER CALENDAR DAY RESPECTIVELY.

UNDER DATE OF SEPTEMBER 15, 1920, SUPPLEMENTAL AGREEMENT NO. 3604-Y, WAS ENTERED INTO WHEREIN PROVISION WAS MADE FOR PAYMENT TO THE CONTRACTOR OF AN ADDITIONAL SUM OF $11 PER TON FOR THE ERECTION OF APPROXIMATELY 2,559 TONS OF STRUCTURAL STEEL THEN REMAINING TO BE ERECTED FOR THE BUILDINGS PROVIDED FOR IN THE ORIGINAL CONTRACT, AND THE CONTRACT TIME FOR COMPLETION OF THE WORK WAS EXTENDED TO OCTOBER 15, 1920, ON ACCOUNT OF DELAYS STATED TO HAVE BEEN CAUSED BY THE GOVERNMENT. THE NECESSITY FOR THIS SUPPLEMENTAL AGREEMENT IS STATED IN THE PREAMBLE AS BEING DUE TO DELAYS OF THE GOVERNMENT IN FURNISHING FOUNDATIONS AS PROVIDED IN THE CONTRACT WHEREBY "THE EFFECTIVE PROSECUTION OF THE WORK AT THE SITE WILL BE MATERIALLY DELAYED" AND--

BECAUSE OF SAID DELAY IN FURNISHING THE NECESSARY FOUNDATIONS AND OF THE INCREASE IN THE COST OF THE ERECTION OF THE STEELWORK INCIDENT THERETO, CERTAIN CHANGES IN THE PROVISIONS OF SAID CONTRACT ARE NECESSARY AND PROPER.

THE WORK CALLED FOR BY THE CONTRACT, AS SUPPLEMENTED, APPEARS NOT TO HAVE BEEN COMPLETED IN ALL ITS PARTS UNTIL IN JUNE, 1921, BUT OWING TO DELAYS ON THE PART OF THE GOVERNMENT IN NOT PROVIDING FOUNDATIONS AS REQUIRED BY THE CONTRACT TERMS THE TIME LIMIT WAS WAIVED BY THE NAVY DEPARTMENT AND NO LIQUIDATED DAMAGES WHATEVER WERE ASSESSED BY REASON OF DELAYS IN PERFORMING SAID WORK.

THE MATTER HERE IN QUESTION CONCERNS THE PAYMENT TO THE CONTRACTOR OF $28,149 AS THE ADDITIONAL CONSIDERATION OF $11 PER TON FOR THE ERECTION OF 2,559 TONS OF STRUCTURAL STEEL, PROVISION FOR WHICH WAS MADE IN THE SECOND SUPPLEMENTAL AGREEMENT AND FOR WHICH THE DISBURSING OFFICER HAS BEEN DENIED CREDIT IN HIS ACCOUNTS. THE CONTRACTOR HAS NOT REFUNDED ANY PART OF SAID AMOUNT TO THE UNITED STATES AND CONTENDS THAT THE PAYMENT WAS PROPERLY MADE. IN SUPPORT OF ITS CONTENTIONS A BRIEF HAS BEEN FILED IN WHICH VARIOUS COURT CASES ARE CITED AS HAVING A BEARING ON THE QUESTION INVOLVED IN THE MATTER, INCLUDING AN EXTENDED QUOTATION FROM THE CASE OF UNITED STATES V. WYCKOFF PIPE AND CREOSOTINGCO., INC., DECIDED BY THE SUPREME COURT OF THE UNITED STATES MAY 24, 1926.

THE DECISION IN THAT CASE, WHILE HOLDING THAT THE CONTRACTOR HAVING PERFORMED THE WORK AFTER BEING DELAYED BY THE GOVERNMENT TO SUCH AN EXTENT AS MIGHT HAVE JUSTIFIED REFUSAL TO PERFORM, WAS NOT ENTITLED TO RECOVER DAMAGES ON THE BASIS OF THE HIGHER MARKET VALUE OF THE WORK OR FOR THE INCREASED MARKET VALUE OF MATERIALS PURCHASED FOR USE ON THE CONTRACT, BUT WAS ENTITLED TO RECOVER LOSSES ACTUALLY SUSTAINED BY THE DELAY, IS NOT CONSIDERED APPLICABLE HERE, FOR THE ONLY QUESTION BEFORE THE COURT WAS WHETHER THERE WAS ERROR IN THE MEASURE OF DAMAGES ADOPTED BY THE COURT OF CLAIMS IN A JUDGMENT RENDERED IN FAVOR OF THE CLAIMANT COMPANY IN SAID CASE. SEE 59 CT.CLS. 908. THE QUESTION OF WHETHER THE CONTRACTOR WAS ENTITLED TO DAMAGES UNDER A CONTRACT AUTHORIZING AN EXTENSION OF CONTRACT TIME WITH CONSEQUENT REMISSION OF LIQUIDATED DAMAGES FOR DELAYS CAUSED BY THE GOVERNMENT WAS NOT SQUARELY BEFORE THE COURT, AND APPARENTLY NO CONSIDERATION WAS GIVEN TO THAT FEATURE OF THE MATTER AT THE TIME THE DECISION WAS RENDERED. THAT PARTICULAR QUESTION HAD, JUST A SHORT TIME PREVIOUSLY, ON JANUARY 25, 1926, BEEN DECIDED BY THE SUPREME COURT IN THE CASE OF H. E. CROOK CO., INC., V. UNITED STATES, 270 U.S. 4.

IN THE CROOK CASE, WHICH INVOLVED PRACTICALLY THE SAME FACTS AS ARE INVOLVED IN THE INSTANT MATTER EXCEPT THAT NO SUPPLEMENTAL CONTRACT HAD BEEN ENTERED INTO AND THE DELAYS IN QUESTION WERE CAUSED BY BUILDING CONSTRUCTION CONTRACTORS WHICH MAY ALSO HAVE BEEN THE CASE HERE BUT THE FACTS CONCERNING THE MATTER ARE NOT OF RECORD, THE COURT SAID:

* * * DELAYS BY THE BUILDING CONTRACTORS WERE UNAVOIDABLE FROM THE POINT OF VIEW OF BOTH PARTIES TO THE CONTRACT IN SUIT. THE PLAINTIFF AGREED TO ACCEPT IN FULL SATISFACTION FOR ALL WORK DONE UNDER THE CONTRACT THE CONTRACT PRICE, REDUCED BY DAMAGES DEDUCTED FOR HIS DELAYS AND INCREASED OR REDUCED BY THE PRICE OF CHANGES, AS FIXED BY THE CHIEF OF THE BUREAU OF YARDS AND WORKS. NOTHING MORE IS ALLOWED FOR CHANGES, AS TO WHICH THE GOVERNMENT IS MASTER. IT WOULD BE STRANGE IF IT WERE BOUND FOR MORE IN RESPECT OF MATTERS PRESUMABLY BEYOND ITS CONTROL. THE CONTRACT PRICE, IT IS SAID IN ANOTHER CLAUSE, SHALL COVER ALL EXPENSES OF EVERY NATURE CONNECTED WITH THE WORK TO BE DONE. LIABILITY WAS EXCLUDED EXPRESSLY FOR UTILITIES THAT THE GOVERNMENT PROMISED TO SUPPLY. WE ARE OF OPINION THAT THE FAILURE TO EXCLUDE THE PRESENT CLAIM WAS DUE TO THE FACT THAT THE WHOLE FRAME OF THE CONTRACT WAS UNDERSTOOD TO SHUT IT OUT, ALTHOUGH IN SOME CASES THE GOVERNMENT'SLAWYERS HAVE BEEN MORE CAREFUL. WOOD V. UNITED STATES, 258 U.S. 120. THE PLAINTIFF'S TIME WAS EXTENDED AND IT WAS PAID THE FULL CONTRACT PRICE. IN OUR OPINION IT IS ENTITLED TO NOTHING MORE.

THIS DECISION IN EFFECT OVERRULES THE PRINCIPLE ANNOUNCED IN THE CASES DECIDED BY FEDERAL COURTS AND BY THE COURT OF CLAIMS CITED BY THE CLAIMANT, AND IN SO FAR AS THIS OFFICE IS CONCERNED THE RULING THERE LAID DOWN IS HELD AND CONSIDERED AS CONCLUSIVE AND BINDING IN CASES INVOLVING STATEMENTS OF FACT SIMILAR TO THOSE INVOLVED IN THE INSTANT CASE. 4 COMP. GEN. 404.

IT WAS SAID IN DECISION OF MARCH 1, 1926, IN THIS MATTER THAT UNDER THE PROVISIONS OF THE ADDENDA TO THE GENERAL PROVISIONS OF THE CONTRACT RELATING TO ADJUSTMENT OF WAGES, THEREIN QUOTED, THAT THE CONTRACTOR WOULD BE ENTITLED TO SUCH AN AMOUNT AS MAY BE DETERMINED BY PROPER AUTHORITY IN ACCORDANCE WITH SAID PROVISIONS AS BEING DUE THE CONTRACTOR FOR ANY INCREASE IN WAGES NECESSITATED BY THE GOVERNMENT'S DELAY IN PROVIDING FOUNDATIONS FOR THE BUILDINGS AND THUS PROLONGING THE WORK, UPON THE SUBMISSION TO THE BUREAU OF YARDS AND DOCKS, NAVY DEPARTMENT, OF EVIDENCE TO CONCLUSIVELY SHOW THAT A HIGHER WAGE WAS PAID DURING THE PERIOD OF COMPLETION OF THE BUILDING THAN WAS BEING PAID WHEN THE ORIGINAL CONTRACT WAS ENTERED INTO, SUCH, HOWEVER, TO BE APPLICABLE TO THE PERIOD SUBSEQUENT TO JUNE 12, 1920, TO WHICH DATE THE RECORD SHOWS AN ADJUSTMENT OF WAGES WAS MADE IN ACCORDANCE WITH THAT PROVISION OF THE CONTRACT. IN SO FAR AS THIS OFFICE HAS BEEN ADVISED NO STEPS HAVE BEEN TAKEN, IF HIGHER WAGES WERE IN FACT PAID DURING THAT PERIOD, TO HAVE AN ADJUSTMENT THEREOF MADE AS AUTHORIZED BY THE CONTRACT.

EXCEPT FOR THE PROVISIONS OF THE CONTRACT RELATING TO THE ADJUSTMENT OF WAGES THE CONTRACTOR IS NOT CONSIDERED AS BEING ENTITLED TO ANY PAYMENTS IN ADDITION TO THOSE AUTHORIZED TO BE MADE BY THE ORIGINAL CONTRACT AND SUPPLEMENTAL AGREEMENT OF FEBRUARY 27, 1920, NOR IS THE CONTRACTOR CONSIDERED AS BEING ENTITLED TO RETAIN THE AMOUNT RECEIVED UNDER SUPPLEMENTAL CONTRACT OF SEPTEMBER 15, 1920.

UPON RECONSIDERATION DECISION OF MARCH 1, 1926, IS AFFIRMED AND DEMAND IS HEREBY MADE ON THE CONTRACTOR FOR REFUNDMENT OF THE SUM OF $28,149, THE AMOUNT RECEIVED UNDER THE ILLEGAL AND UNAUTHORIZED SUPPLEMENTAL AGREEMENT OF SEPTEMBER 15, 1920. UNLESS A REFUND OF SAID AMOUNT IS MADE WITHIN 30 DAYS FROM DATE HEREOF ACTION WILL BE TAKEN LOOKING TO ITS COLLECTION AS IN OTHER LIKE CASES.