B-134500, FEB. 6, 1961

B-134500: Feb 6, 1961

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REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER COVERING A CLAIM OF THE FLIPPIN MATERIALS COMPANY FOR THE AMOUNT OF $9. YOUR DOUBT AS TO THE PROPRIETY OF PAYMENT IS OCCASIONED BY PREVIOUS DECISIONS OF OUR OFFICE INVOLVING THE SAME MATTER. FOR THE COARSE AGGREGATE PAYMENT WAS TO BE MADE AT $2.41 PER TON AND FOR THE FINE AGGREGATE. THE PRICE WAS $2.54 PER TON. ALTHOUGH THE CONTRACT WAS ESSENTIALLY A FIXED- PRICE CONTRACT. "C. IN THE EVENT THAT THE CONTRACTOR'S ADJUSTED COST IS LESS THAN THE COMPUTED CONTRACT PRICE. "D. IT IS UNDERSTOOD AND AGREED BETWEEN THE PARTIES HERETO THAT THE ACTUAL COST OF PERFORMANCE SHALL INCLUDE ALL EXPENDITURES ACTUALLY MADE OR COST INCURRED IN THE PERFORMANCE OF THE CONTRACT AND SHALL BE COMPUTED IN ACCORDANCE WITH RECOGNIZED COMMERCIAL ACCOUNTING PRINCIPLES.

B-134500, FEB. 6, 1961

TO DISBURSING OFFICER, CORPS OF ENGINEERS, U.S. ARMY:

YOUR LETTER OF DECEMBER 21, 1960, REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER COVERING A CLAIM OF THE FLIPPIN MATERIALS COMPANY FOR THE AMOUNT OF $9,194.51 UNDER CONTRACT NO. W-03-050- ENG-525, DATED NOVEMBER 3, 1947, HAS BEEN REFERRED HERE BY THE CHIEF OF ENGINEERS.

YOUR DOUBT AS TO THE PROPRIETY OF PAYMENT IS OCCASIONED BY PREVIOUS DECISIONS OF OUR OFFICE INVOLVING THE SAME MATTER. THE CONTRACTING OFFICER HAS RECOMMENDED THAT THE AMOUNT OF $5,158.12 BE PAID AS STATED IN PARAGRAPH 21 OF HIS FINDING OF FACT DATED NOVEMBER 23, 1960.

THE CONTRACT HERE INVOLVED REQUIRED THE CONTRACTOR TO DELIVER, PROCESS AND PLACE ESTIMATED QUANTITIES OF CONCRETE AGGREGATES INTO DESIGNATED STORAGE PILES AT THE BULL SHOALS DAM SITE. FOR THE COARSE AGGREGATE PAYMENT WAS TO BE MADE AT $2.41 PER TON AND FOR THE FINE AGGREGATE, THE PRICE WAS $2.54 PER TON. ALTHOUGH THE CONTRACT WAS ESSENTIALLY A FIXED- PRICE CONTRACT, ARTICLE 29 CALLED FOR A REDUCTION IN THE CONTRACT PRICE IN THE EVENT THAT THE CONTRACTOR'S ADJUSTED COST SHOULD BE LESS THAN THE COMPLETED CONTRACT PRICE. SAID ARTICLE READS IN PART, AS FOLLOWS:

"A. THE TERM "CONTRACTOR'S ADJUSTED COST" SHALL BE THE CONTRACTOR'S ACTUAL COST OF PERFORMANCE AS DETERMINED IN ACCORDANCE WITH SUBPARAGRAPH D BELOW, PLUS 10 PERCENT.

"B. THE TERM "COMPUTED CONTRACT PRICE" SHALL BE THE TOTAL CONTRACT PRICE COMPUTED AT THE UNIT PRICES PROVIDED IN SCHEDULE "A" AND IN PARAGRAPH SC- 12D OF THE SPECIFICATIONS USING THE ACTUAL QUANTITIES OF WORK PERFORMED.

"C. IN THE EVENT THAT THE CONTRACTOR'S ADJUSTED COST IS LESS THAN THE COMPUTED CONTRACT PRICE, THE CONTRACT PRICE SHALL BE REDUCED BY A LUMP SUM EQUAL TO ONE-HALF THE DIFFERENCE BETWEEN THE CONTRACTOR'S ADJUSTED COST AND THE COMPUTED CONTRACT PRICE.

"D. IT IS UNDERSTOOD AND AGREED BETWEEN THE PARTIES HERETO THAT THE ACTUAL COST OF PERFORMANCE SHALL INCLUDE ALL EXPENDITURES ACTUALLY MADE OR COST INCURRED IN THE PERFORMANCE OF THE CONTRACT AND SHALL BE COMPUTED IN ACCORDANCE WITH RECOGNIZED COMMERCIAL ACCOUNTING PRINCIPLES. THE FOLLOWING COSTS SHALL BE INCLUDED. IT IS UNDERSTOOD AND AGREED THAT THE FOLLOWING LIST IS NOT A COMPLETE OUTLINE OF COSTS TO BE INCLUDED AND THAT THE APPLICABILITY OF ITEMS NOT LISTED SHALL BE DETERMINED IN ACCORDANCE WITH THE PRINCIPLES SET FORTH ABOVE.

"/2) HOME OFFICE EXPENSE AT THE RATE OF TWO PERCENT (2 PERCENT) OF THE TOTAL COSTS OF PERFORMING THE WORK UNDER THE CONTRACT.

"G. IF THE PARTIES FAIL TO AGREE UPON THE ADJUSTMENT TO BE MADE THE DISPUTE SHALL BE DETERMINED AS PROVIDED IN ARTICLE 11 THEREOF.' ARTICLE 11 REFERRED TO IN SUBPARAGRAPH (G) OF ARTICLE 29 PROVIDES THAT- -

"EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS CONTRACT, ALL DISPUTES CONCERNING QUESTIONS OF FACT ARISING UNDER THIS CONTRACT SHALL BE DECIDED BY THE CONTRACTING OFFICER SUBJECT TO WRITTEN APPEAL BY THE CONTRACTOR WITHIN 30 DAYS TO THE HEAD OF THE DEPARTMENT CONCERNED OR HIS DULY AUTHORIZED REPRESENTATIVE WHOSE DECISION SHALL BE FINAL AND CONCLUSIVE UPON THE PARTIES HERETO. IN THE MEANTIME THE CONTRACTOR SHALL DILIGENTLY PROCEED WITH THE WORK AS DIRECTED.'

UPON THE COMPLETION OF THE CONTRACT WORK AND AFTER AN AUDIT OF THE CONTRACTOR'S COSTS SOME QUESTION AROSE AS TO THE COMPUTATION OF THE ADJUSTMENT DUE THE GOVERNMENT UNDER THE FORMULA PROVIDED UNDER ARTICLE 29 OF THE CONTRACT. BY LETTER DATED SEPTEMBER 16, 1957, YOU REQUESTED A DECISION AS TO PAYMENT ON A VOUCHER COVERING A CLAIM OF THE CONTRACTOR FOR $25,415.64 ALLEGED TO BE DUE UNDER THE CONTRACT. AMONG THE ITEMS IN QUESTION INCLUDED IN THE CONTRACTOR'S STATEMENT WAS THE ITEM OF $11,881.78 COVERING LEGAL EXPENSES, ETC., IN PROCESSING CLAIMS AGAINST THE GOVERNMENT. PURSUANT TO OUR DECISION OF MARCH 18, 1958, TO YOU, THAT ITEM WAS ELIMINATED IN THE ADJUSTMENT OF THE CLAIM OF THE CONTRACTOR. UPON A RECONSIDERATION OF THAT DECISION OUR OFFICE IN A DECISION OF AUGUST 13, 1959, TO THE CONTRACTOR, ADVISED IT THAT THE CONTRACTING OFFICER HAD DETERMINED THAT THE EXPENSES INVOLVING CONTROVERSIES BETWEEN THE PARTIES PARTICIPATING IN A PORTION OF THE PROFITS REALIZED UNDER THE CONTRACT SHOULD BE PAID FROM FUNDS AVAILABLE FOR HOME OFFICE OPERATIONS. AND SINCE IT HAD BEEN STIPULATED THAT THE AMOUNT OF TWO PERCENT OF THE TOTAL COSTS OF PERFORMING WORK UNDER THE CONTRACT WAS TO BE ADDED AS AN ITEM OF COST UNDER THE HEADING OF HOME OFFICE EXPENSE, A SEPARATE AMOUNT TO COVER LEGAL EXPENSES FOR PROCESSING CLAIMS AGAINST THE GOVERNMENT WAS NOT ALLOWABLE AS AN ITEM OF COST. HOWEVER, WITH REGARD TO THE CONTRACTOR'S REQUEST AS TO THE ADMINISTRATIVE PROCEDURE AVAILABLE AT THE TIME, SINCE IT HAD NOT BEEN ADVISED BY THE CONTRACTING OFFICER AS TO THE MERITS OF ITS CLAIM AFTER IT SUBMITTED THAT CLAIM TO HIM ON OCTOBER 15, 1958, ITS ATTENTION WAS INVITED TO THE PROVISIONS OF ARTICLES 11 AND 29 (G) OF THE CONTRACT. SUBSEQUENTLY THE CONTRACTOR MADE SEVERAL REQUESTS THAT THE CONTRACTING OFFICER MAKE A DECISION IN REGARD TO THIS MATTER. ON JANUARY 7, 1960, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR THAT SINCE OUR OFFICE HAD RENDERED A DECISION IN THE MATTER AND SINCE SUCH A DECISION WAS CONCLUSIVE ON THE EXECUTIVE BRANCH OF THE GOVERNMENT, HE WAS PRECLUDED FROM RENDERING ANY FURTHER DECISION IN REGARD THERETO. APPEAL FROM THE CONTRACTING OFFICER'S REFUSAL TO RENDER A DECISION WAS MADE BY THE CONTRACTOR ON FEBRUARY 2, 1960, AND THE APPEAL WAS FORWARDED TO THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS. IN THE PROCEEDINGS BEFORE THE BOARD THE GOVERNMENT FILED A MOTION TO DISMISS. THAT MOTION WAS DENIED AND IN ITS DECISION OF JUNE 10, 1960, THE BOARD HELD THAT THE CONTRACTOR HAD BEEN DENIED ITS CONTRACT RIGHT TO BE INFORMED BY THE CONTRACTING OFFICER OF HIS DECISION ON DISPUTED QUESTIONS OF FACT SO THAT AN APPEAL FROM AN ADVERSE DECISION COULD BE TAKEN TO THE BOARD. THE MATTER WAS REMANDED TO THE CONTRACTING OFFICER. ON NOVEMBER 23, 1960, THE CONTRACTING OFFICER MADE A FINDING OF FACT AND IN PARAGRAPH 21 OF THAT FINDING HE FOUND THAT THE CONTRACTOR WAS ENTITLED TO THE AMOUNT OF $5,158.12. WHILE NO DEFINITE STATEMENT HAS BEEN MADE THAT A COPY OF THIS FINDING WAS GIVEN TO THE CONTRACTOR, YOU STATE ON PAGE TWO OF YOUR LETTER OF DECEMBER 21, 1960, THAT THE CONTRACTOR HAS CONCURRED IN THIS FINDING.

ORDINARILY THE DECISION OF OUR OFFICE ARE BINDING AND FINAL ON THE EXECUTIVE BRANCH OF THE GOVERNMENT. IN THIS CASE OUR DECISION WAS BASED ON REPORTED FACTS AND RECOMMENDATIONS RATHER THAN ON FACTS AS TO WHICH THERE WAS A DISPUTE AND WHICH HAD BEEN ESTABLISHED IN ACCORDANCE WITH THE PROCEDURE REQUIRED BY THE CONTRACT. A DETERMINATION AS TO THE DISPUTED FACTS HAS NOW BEEN MADE IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT. OUR OFFICE MUST ACCORD FINALITY TO AN ADMINISTRATIVE DECISION UNLESS IT IS FOUND TO BE FRAUDULENT, CAPRICIOUS OR ARBITRARY OR GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH OR IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE (41 U.S.C. 321). WE DO NOT SO FIND.

SINCE THE RECORD SHOWS THAT THE CONTRACTOR HAS CONCURRED IN THE DETERMINATION MADE BY THE CONTRACTING OFFICER, PAYMENT TO THE CONTRACTOR MAY BE MADE IN THE AMOUNT AS FOUND BY THE CONTRACTING OFFICER.

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