B-135531, APR. 4, 1958

B-135531, APR. 4, 1958

TO DISBURSING OFFICER, CORPS OF ENGINEERS:

BY 2ND INDORSEMENT DATED MARCH 10, 1958, FILE ENGCR 167 (27 FEB 58) DA 01 -076-ENG-3029, THE OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY, WASHINGTON, D.C., FORWARDED TO OUR OFFICE YOUR COMMUNICATION OF FEBRUARY 27, 1958, FILE SALVF/SEC, WHEREIN YOU REQUEST A DECISION AS TO THE PROPRIETY OF PAYING A VOUCHER FOR $16,168.88 TO THE WESTINGHOUSE ELECTRIC CORPORATION UNDER CONTRACT NO. DA-01-076-ENG 3029.

UNDER THE CONTRACT THE WESTINGHOUSE ELECTRIC CORPORATION AGREED TO FURNISH TO THE MOBILE DISTRICT, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, ALL LABOR, MATERIALS, PLANT AND EQUIPMENT AND PERFORM, IN STRICT ACCORDANCE WITH APPLICABLE SPECIFICATIONS, DRAWINGS, ETC., ALL WORK NECESSARY TO DESIGN, MANUFACTURE, AND DELIVER TWO POWER TRANSFORMERS, AS SPECIFIED, TOGETHER WITH CERTAIN ACCESSORIES, SPARE PARTS AND, AT THE OPTION OF THE GOVERNMENT, THE SERVICES OF AN ERECTING ENGINEER, FOR THE TOTAL SUM OF $253,367. IT APPEARS THAT ALL MATERIALS AND EQUIPMENT WERE SCHEDULED FOR DELIVERY NOT LATER THAN AUGUST 1, 1956, BUT THE CONTRACT CONTAINED NO PROVISION FOR LIQUIDATED DAMAGES. YOU REPORT THAT DELIVERY OF PARTS AND EQUIPMENT WAS MADE ON VARIOUS DATES, THE LATEST OF WHICH WAS DECEMBER 26, 1956. ALSO, YOU REPORT THAT THE SERVICE OF THE ERECTION ENGINEER WAS INVOKED IN MAY 1957 AND THE TOTAL CONTRACT COMPLETED ON MAY 19, 1957. CONTRACT NO. DA-01-076-ENG 3029 CONTAINED, UNDER PART III, SPECIAL CONDITIONS, PARAGRAPH SC-14, PROVISIONS FOR THE ADJUSTMENT OF PRICES FOR THE LABOR AND MATERIAL WHICH SET FORTH CERTAIN METHODS AND FORMULAS FOR COMPUTING ESCALATED PRICES BASED UPON, AMONG OTHERS, WORK PERFORMED IN ANY ONE MONTH WITHOUT LIMITATION AS TO THE CONTRACT COMPLETION DATE. THE WESTINGHOUSE ELECTRIC CORPORATION HAS SUBMITTED TO YOU FOR PAYMENT UNDER THE CONTRACT A VOUCHER FOR $16,168.88, WHICH IS BASED UPON ESCALATION PRICES FOR THE MONTH OF AUGUST 1956. SINCE YOU HAD DOUBT AS TO THE PROPRIETY OF PAYMENT DUE TO THE METHOD OF COMPUTING THE ESCALATED PRICES INCLUDED IN THE VOUCHER, YOU HAVE SUBMITTED THE MATTER TO US FOR A DECISION.

SUB-PARAGRAPH (C) OF PARAGRAPH SC-14, OF PART III OF THE SPECIAL CONDITIONS OF CONTRACT NO. DA-01-076-ENG-3029 PROVIDES, IN PERTINENT PART, THAT:

"THE ESTIMATES OF WORK SUBMITTED BY THE CONTRACTOR AND APPROVED, AND UPON WHICH PAYMENT IS MADE BY THE CONTRACTING OFFICER, SHALL BE USED AS THE BASIS FOR ADJUSTMENTS IN PAYMENTS. THE TOTAL AMOUNT FOR WORK PERFORMED IN ANY ONE MONTH SHALL BE THE BASIC UNIT UPON WHICH ADJUSTMENTS IN PAYMENTS ARE TO BE MADE.'

IN THE DECISION CITED IN YOUR LETTER, 34 COMP. GEN. 565, WE HELD THAT ACCEPTANCE OF LATE DELIVERY UNDER A CONTRACT CONTAINING AN ESCALATOR CLAUSE DOES NOT REQUIRE THE GOVERNMENT TO ASSUME ADDITIONAL COSTS AS A RESULT OF INCREASES IN PRICES OCCURRING AFTER DATE DELIVERY SHOULD HAVE BEEN MADE. AND, WE AGREE THAT IT IS NOT LIKELY, OR EVEN TO BE REASONABLY EXPECTED, THAT THE WESTINGHOUSE ELECTRIC CORPORATION WOULD ACTUALLY HAVE PERFORMED SOME WORK ON AUGUST 1, 1956, AND STILL MAKE DELIVERY OF THE EQUIPMENT ON THE SAME DATE. MOREOVER, OF MORE IMPORTANCE IS THE FACT THAT THERE WOULD BE ONLY ONE DAY, AUGUST 1, 1956, UPON WHICH THE "ESTIMATES" AND "TOTAL AMOUNT OF WORK PERFORMED IN ANY ONE MONTH," REFERRED TO IN SUB- PARAGRAPH (A), COULD BE BASED FOR THE PURPOSE OF AN ADJUSTMENT IN PAYMENTS. IN OUR VIEW THE ESTIMATES OF THE WORK SUBMITTED OR PERFORMED BY THE CONTRACTOR FOR ONLY ONE DAY OUT OF A MONTH CANNOT BE SAID TO REPRESENT A PROPER BASIS FOR APPLYING THAT PART OF THE PRICE ESCALATION CLAUSE, AND THERE IS NOTHING TO INDICATE THAT SUCH A RESULT WAS INTENDED BY THE CONTRACTING PARTIES. LIKEWISE, AS SUGGESTED IN YOUR SUBMISSION, THE PRICE ADJUSTMENT PROVISIONS OF THE CONTRACT MAY NOT BE CONSTRUED TO APPLY TO THE OPTIONAL ITEM FOR THE ERECTION ENGINEER'S SERVICES.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR THE PAYMENT OF ANY AMOUNT WHICH WOULD REPRESENT A PAYMENT IN EXCESS OF THE JULY 1956 ESCALATION RATES.

THE PAPERS, WITH THE EXCEPTION OF YOUR COMMUNICATION OF FEBRUARY 27, 1958, ARE RETURNED HEREWITH.