A-91705, OCTOBER 10, 1938, 18 COMP. GEN. 320

A-91705: Oct 10, 1938

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AS IT WERE. THERE IS NO AUTHORITY FOR PAYMENT OF ANY AMOUNT IN ADDITION TO THE CONTRACT PRICE. NOTWITHSTANDING THE CONTRACTOR MAY HAVE INCREASED THE WAGE RATES OF MINE EMPLOYEES. THE CONTRACT FURTHER PROVIDED THAT THE TONNAGE PRICE THEREIN SPECIFIED WAS BASED UPON THE WAGES IN EFFECT WITH MINE EMPLOYEES ON THE DATE OF OPENING THE BIDS. APPROVED GENERALLY FOR THE MINING DISTRICT IN WHICH THE MINE HEREIN NAMED IS LOCATED. ACCORDING TO WHETHER THE WAGE RATE IS INCREASED OR DECREASED. BY AN AMOUNT WHICH IS THE PRODUCT OF THE F.O.B. IF THE CHANGE IS AN INCREASE IN THE WAGE RATE FOR THE STATED CLASS OF EMPLOYEES. THE RIGHT IS RESERVED TO THE CONTRACTING OFFICER TO DISALLOW ANY INCREASE IN THE CONTRACT PRICE IF IN HIS OPINION THE INCREASE IN THE WAGE RATE AS REPORTED BY THE CONTRACTOR WAS NOT APPROVED GENERALLY BY THE OPERATORS OF MINES IN THE MINING DISTRICT IN WHICH THE MINE NAMED IS LOCATED.

A-91705, OCTOBER 10, 1938, 18 COMP. GEN. 320

CONTRACTS - INCREASED COSTS - WAGES - BIDDER'S DESIGNATION OF SEVERAL CLASSES OF EMPLOYEES INSTEAD OF PREDOMINANT OCCUPATIONAL CLASS - SUBSEQUENT SELECTION OF PREDOMINANT CLASS WHERE COAL PURCHASE CONDITIONS AND CONTRACT PROVIDED FOR A PERCENTAGE CONTRACT PRICE ADJUSTMENT IN CASE OF WAGE CHANGES AFTER THE OPENING OF BIDS, BASED ON THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR RECEIVING THE SAME WAGE RATE, SPECIFIED BY THE CONTRACTOR, AND THE CONTRACTOR'S BID NEVERTHELESS SPECIFIED SEVERAL CLASSES OF EMPLOYEES RECEIVING SEVERAL DIFFERENT WAGE RATES, EVEN TO THE INCLUSION, AS IT WERE, OF ALL EMPLOYEES CONNECTED WITH THE MINE EXCEPT SUPERVISORY AND CLERICAL EMPLOYEES, THERE IS NO AUTHORITY FOR PAYMENT OF ANY AMOUNT IN ADDITION TO THE CONTRACT PRICE, NOTWITHSTANDING THE CONTRACTOR MAY HAVE INCREASED THE WAGE RATES OF MINE EMPLOYEES, AS THE CONTRACT DOES NOT AUTHORIZE THE SELECTION OF A PREDOMINANT CLASS AFTER A CHANGE IN WAGE RATES AT THE MINE AND AN ADJUSTMENT IN PRICE BASED ON THE PERCENTAGE INCREASE IN THE WAGE RATE OF THE CLASS SO SELECTED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE VICKERS COAL COMPANY, OCTOBER 10, 1938:

BY LETTER OF AUGUST 24, 1938, YOU REQUESTED REVIEW OF SETTLEMENT OF THIS OFFICE DATED JULY 9, 1938, WHICH DISALLOWED YOUR CLAIM FOR $774.89, REPRESENTING INCREASED LABOR COST--- RESULTING FROM INCREASES IN THE WAGE SCALES OF THE MINE EMPLOYEES EFFECTIVE APRIL 1, 1937--- OF THE PRODUCTION OF 4,558.20 TONS OF COAL FURNISHED TO THE WAR DEPARTMENT DURING MAY AND JUNE 1937, UNDER CONTRACT NO. W-503-QM 17085, DATED APRIL 23, 1937.

UNDER THE TERMS OF THE CONTRACT YOU AGREED TO DELIVER TO THE QUARTERMASTER, FORT LOGAN, COLORADO, F.O.B. MINE, AT A PRICE OF $2,695 PER TON, APPROXIMATELY 4,575 TONS (2,000 LBS. PER TON) OF BITUMINOUS COAL FROM THE KENNETH MINE, LOCATED AT RUGBY, LAS ANIMAS COUNTY, COLORADO. THE CONTRACT FURTHER PROVIDED THAT THE TONNAGE PRICE THEREIN SPECIFIED WAS BASED UPON THE WAGES IN EFFECT WITH MINE EMPLOYEES ON THE DATE OF OPENING THE BIDS, MARCH 19, 1937, AND THAT ANY CHANGES IN SAID WAGE SCALE RATES SHOULD INCREASE OR DECREASE THE CONTRACT PRICE OF COAL, AS FOLLOWS:

IN THE EVENT OF A CHANGE IN THE WAGE RATE FOR THE HEREIN SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES, APPROVED GENERALLY FOR THE MINING DISTRICT IN WHICH THE MINE HEREIN NAMED IS LOCATED, THE CONTRACT PRICE SHALL BE INCREASED OR DECREASED ON ANY TONNAGE SHIPPED FROM THE MINE AFTER DATE OF SUCH INCREASE OR DECREASE IN THE WAGE RATE, ACCORDING TO WHETHER THE WAGE RATE IS INCREASED OR DECREASED, BY AN AMOUNT WHICH IS THE PRODUCT OF THE F.O.B. MINE PRICE TIMES 0.6, TIMES THE PERCENT CHANGE IN THE WAGE RATE EXPRESSED AS A DECIMAL (THE PERCENT INCREASE OR DECREASE IN THE WAGE RATE SHALL BR COMPUTED TO THE NEAREST TENTH PERCENT AND THE INCREASE OR DECREASE IN THE CONTRACT PRICE SHALL BE COMPUTED TO THE NEAREST TENTH OF A CENT). IF THE CHANGE IS AN INCREASE IN THE WAGE RATE FOR THE STATED CLASS OF EMPLOYEES, THE RIGHT IS RESERVED TO THE CONTRACTING OFFICER TO DISALLOW ANY INCREASE IN THE CONTRACT PRICE IF IN HIS OPINION THE INCREASE IN THE WAGE RATE AS REPORTED BY THE CONTRACTOR WAS NOT APPROVED GENERALLY BY THE OPERATORS OF MINES IN THE MINING DISTRICT IN WHICH THE MINE NAMED IS LOCATED, AND THE CONTRACTING OFFICER'S DECISION SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO SUBJECT ONLY TO APPEAL, WITHIN 60 DAYS, BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION ON SUCH APPEAL SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO. SUCH DETERMINED INCREASE OR DECREASE IN THE CONTRACT PRICE SHALL BE FINAL AND CONCLUSIVE, AND NO ADDITIONAL CLAIM BY THE CONTRACTOR WILL BE CONSIDERED COVERING ANY CHANGES IN WAGE RATES OR OTHER CLASSES OF MINE LABOR EMPLOYED ON A PER TON, OR A MONTHLY, OR A DAILY, OR AN HOURLY, OR ANY OTHER RATE BASIS, OR COVERING ANY CHANGES IN COMPENSATION INSURANCE OR IN ANY OTHER LABOR FACTOR OR FACTORS ENTERING INTO THE COST OF PRODUCING COAL AT THE MINE NAMED.

IN EVENT OF A CHANGE IN THE WAGE RATE FOR THE SPECIFIED PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES THERE SHALL BE FURNISHED TO THE CONTRACTING OFFICER, WITHIN 60 DAYS FROM THE DATE OF THE CHANGE IN THE WAGE RATE, AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING OF BIDS.

THE SPECIAL PURCHASE CONDITIONS UNDER WHICH YOUR BID WAS SUBMITTED, PROVIDED:

A. THE REFERRED TO METHOD PROVIDES FOR AN ADJUSTMENT OF THE CONTRACT PRICE FOR A CHANGE IN WAGE RATES WITH MINE EMPLOYEES; IT IS BASED ON THE FOLLOWING REQUIREMENTS AND CONDITIONS:

"/1) THE BIDDER MUST SPECIFY ON THE APPROPRIATE BIDDING FORM THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE THAT HAS A PREDOMINANT EFFECT ON THE COST OF PRODUCING COAL AT THE MINE NAMED BY HIM; I.E., THAT PARTICULAR OCCUPATIONAL CLASS OF EMPLOYEES RECEIVING THE SAME WAGE RATE TO WHICH ON THE PAYROLL A PREDOMINANT AMOUNT OF MONEY IS REGULARLY PAID FOR PRODUCING COAL. THE CLASS SELECTED SHALL NOT BE FOR SUPERVISORY OR CLERICAL EMPLOYEES.

"/2) THE PREDOMINANT WAGE RATE CLASS OF EMPLOYEES SO SPECIFIED MUST BE DESCRIBED IN SUCH A MANNER THAT IT MAY BE CLEARLY IDENTIFIED IN THE WAGE AGREEMENT BETWEEN THE OPERATOR OF THE MINE AND THE MINE EMPLOYEES IN EFFECT ON THE DATE OF OPENING OF BIDS.'

IN SUBMITTING YOUR BID, INSTEAD OF COMPLYING WITH THE PLAIN TERMS OF THE ABOVE QUOTED CONDITIONS YOU INSERTED IN THE PLACE FOR INDICATING THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES FOR USE IN CALCULATING A CHANGE IN THE CONTRACT PRICE DUE TO A CHANGE IN THE WAGE RATE THEREFOR: "MINING AND YARDAGE RATES, ALL DAY LABOR NOT CLASSIFIED AS SUPERVISORY OR CLERICAL.'

IT APPEARS THAT THERE WAS AN INCREASE IN THE WAGE SCALE OF MINE EMPLOYEES EFFECTIVE ON APRIL 1, 1937; THAT AFTER SUCH INCREASE YOU DELIVERED 4,558.20 TONS (2,000 LBS. EACH) OF COAL UNDER THE CONTRACT; AND THAT YOU HAVE BEEN PAID THEREFOR THE STIPULATED TONNAGE CONTRACT PRICE OF $2.695, LESS SPECIFIED DISCOUNT FOR PROMPT PAYMENTS. YOUR CLAIM FOR $774.89 AS INCREASED LABOR PRODUCTION COST IS AT THE RATE OF 17 CENTS PER TON FOR SAID TONNAGE OF COAL BASED ON AN INCREASE OF 9 CENTS PER TON, OR 10.7 PERCENT, IN THE WAGES OF SOME CLASS OR CLASSES OF MINE EMPLOYEES, NO ONE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE HAVING BEEN DESIGNATED IN YOUR BID.

THE SETTLEMENT OF THIS OFFICE DATED JULY 9, 1938, DISALLOWED YOUR CLAIM FOR THE REASON THAT IN FILING YOUR BID YOU FAILED TO SPECIFY THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES AS REQUIRED, BUT, ON THE CONTRARY, LISTED NUMEROUS CLASSES OF MINE EMPLOYEES.

IT APPEARS FROM THE RECORD THAT AFTER THE CONTRACT WAS EXECUTED THE CONTRACTING OFFICER--- BY LETTERS DATED APRIL 27 AND JUNE 24, 1937--- ADVISED YOU THAT THE INFORMATION FURNISHED WITH YOUR BID RELATIVE TO THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES DID NOT AFFORD ANY BASIS FOR CALCULATING THE INCREASED COSTS DUE TO WAGE RATE INCREASES EFFECTIVE APRIL 1, 1937, AND THAT, THEREAFTER, THERE WAS SUBMITTED THE AFFIDAVIT OF F. R. WOOD, PRESIDENT OF YOUR COAL COMPANY, SWORN TO JULY 7, 1937, IN WHICH IT IS STATED THAT "THE PREDOMINANT OCCUPATIONAL CLASS OF EMPLOYEES AT OUR KENNETH MINE (OVER 50 PERCENT OF THE MEN WORKING) AT THE TIME OF THE OPENING OF THE BID AND DURING THE PERIOD OF SHIPMENTS ON THE CONTRACT WAS PICK MINING.'

THE CONTRACT AUTHORIZES AN INCREASE IN THE PRICE OF COAL FURNISHED THEREUNDER ONLY ON THE BASIS OF AN INCREASE IN THE WAGE RATE OF A PREDOMINANT OCCUPATIONAL CLASS PREVIOUSLY SPECIFIED IN THE BID. YOU FAILED TO SPECIFY IN THE BID THE PARTICULAR PREDOMINANT CLASS, AND, ACCORDINGLY, EVEN IF IT COULD BE ESTABLISHED THAT "PICK MINING" IS A PROPER DESIGNATION OF AN OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME RATE OF PAY, AN ADJUSTMENT OF THE CONTRACT PRICE WOULD NOT BE AUTHORIZED ON THE BASIS OF THE INCREASE IN THE WAGES OF THAT CLASS BECAUSE SUCH CLASS WAS NOT DESIGNATED AS THE PREDOMINANT OCCUPATIONAL CLASS UNTIL AFTER THE CHANGE IN THE WAGE RATES AT THE MINE. MANIFESTLY THE CONTRACT DOES NOT, AND WAS NOT INTENDED TO, PERMIT THE CONTRACTOR TO WAIT UNTIL THERE HAD BEEN AN INCREASE IN MINE WAGES BEFORE MAKING HIS SELECTION AS TO THE PREDOMINANT CLASS AND THEN TO CLAIM AN INCREASE IN THE TONNAGE PRICE BASED ON THE PERCENTAGE INCREASE IN THE WAGE RATE OF THE CLASS SO SELECTED.

THE SPECIAL PURCHASE CONDITIONS, QUOTED ABOVE, SPECIFICALLY MADE IT A CONDITION PRECEDENT TO AN ADJUSTMENT OF THE CONTRACT PRICE THAT THE BIDDER SPECIFY IN THE BID, IN SUCH MANNER THAT IT MIGHT BE CLEARLY IDENTIFIED IN THE WAGE AGREEMENT,"THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE THAT HAS A PREDOMINANT EFFECT ON THE COST OF PRODUCING" THE COAL TO BE FURNISHED. YOU FAILED TO SPECIFY SUCH A PREDOMINANT CLASS BUT INSTEAD NAMED SEVERAL CLASSES OF EMPLOYEES RECEIVING SEVERAL DIFFERENT WAGE RATES--- IN FACT, IT APPEARS THAT YOU MADE THE DESIGNATION IN SUCH TERMS AS TO INCLUDE ALL EMPLOYEES CONNECTED WITH THE MINE EXCEPT SUPERVISORY AND CLERICAL EMPLOYEES. THE CONTRACT MAKES NO PROVISION FOR AN ADJUSTMENT OF THE PRICE STIPULATED THEREIN UNDER SUCH CIRCUMSTANCES, AND, ACCORDINGLY, THIS OFFICE IS NOT AUTHORIZED TO MAKE ANY ALLOWANCE BASED ON SUCH AN ADJUSTMENT. IN THIS CONNECTION SEE 17 COMP. GEN. 621; ID. 44; ID. 917; ID. 929; AND ID. 951.