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B-154837, JUL. 12, 1965

B-154837 Jul 12, 1965
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TO THE POSTMASTER GENERAL: REFERENCE IS MADE TO YOUR LETTER OF MAY 28. AS INDICATED IN YOUR LETTER THE PRESENT CLAIM IS SIMILAR TO THE CLAIM OF ARNOLD H. OR ANY WORK ON HOLIDAYS OR OTHER DAYS WHEN POSTAL INSTALLATIONS ARE CLOSED. THE CONTRACTOR SHALL BE COMPENSATED FOR OVERTIME WORK OF ITS TECHNICAL PERSONNEL ONLY TO THE EXTENT THAT WORK IS ACTUALLY PERFORMED BY ITS EMPLOYEES WITH THE APPROVAL OF THE CONTRACTING OFFICER.'. AS WELL AS HOURS WORKED ON HOLIDAYS AND OTHER DAYS WHEN POSTAL FACILITIES ARE CLOSED. THE SUMMARY REFERRED TO IS DATED FEBRUARY 10. YOUR LETTER INDICATES THAT THE DEMAND FOR PAYMENT OF THE TOTAL AMOUNT STATED AS DUE THEREON FROM THE CONTRACTOR WAS ASSERTED ON THE BASIS THAT ITS TECHNICAL PERSONNEL COULD NOT QUALIFY AS PROFESSIONAL EMPLOYEES SINCE THEY WERE NOT COMPENSATED ON A SALARY BASIS AS REQUIRED BY APPLICABLE LABOR DEPARTMENT REGULATIONS.

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B-154837, JUL. 12, 1965

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO YOUR LETTER OF MAY 28, 1965, REQUESTING OUR DECISION AS TO WHETHER A. E. EPSTEIN AND SONS, INCORPORATED, MAY BE PAID ADDITIONAL COMPENSATION UNDER THREE CONTRACTS FOR ARCHITECTURAL AND ENGINEERING SERVICES. THE CONTRACTS NUMBERED NC 2-62, RE 1-63 AND RE 4-64, DATED JULY 1, 1961, JULY 1, 1962. AND JUNE 28, 1963, COVERED SERVICES FOR THE FISCAL YEARS 1962, 1963 AND 1964, RESPECTIVELY, AND AS INDICATED IN YOUR LETTER THE PRESENT CLAIM IS SIMILAR TO THE CLAIM OF ARNOLD H. VOLLMER ASSOCIATES CONSIDERED IN OUR DECISION OF AUGUST 31, 1964, B-154837, TO YOU.

THE CONTRACTS HERE INVOLVED REQUIRED THE CONTRACTOR TO MAKE ENGINEERING STUDIES FOR THE PURPOSE OF DETERMINING AND RECOMMENDING OPTIMUM CONSTRUCTION, MECHANIZATION AND EQUIPMENT STANDARDS AND CRITERIA FOR POSTAL FACILITIES; PERFORM STRUCTURAL ARCHITECTURAL DESIGN PREPARATION OF SCHEMATIC DRAWINGS AND DEVELOPMENT OF SPECIFICATIONS FOR CONSTRUCTION AND MODERNIZATION OF POSTAL FACILITIES AS DESIGNATED BY THE DEPARTMENT; DEVELOP LAYOUTS, PREPARE SCHEMATIC DRAWINGS FOR, AND NARRATIVE DESCRIPTIONS OF, FIXED MECHANIZATION, WORK FLOW, AND EQUIPMENT ARRANGEMENTS FOR MODERNIZATION OF POSTAL FACILITIES AS DESIGNATED BY THE DEPARTMENT AND CARRY OUT SELECTED ENGINEERING STUDIES AND PREPARE REQUIRED REPORTS AND RECOMMENDATIONS.

EACH OF THE CONTRACTS HAD A COST LIMITATION SUBJECT HOWEVER, TO INCREASE BY THE DEPARTMENT.

PARAGRAPH A, ARTICLE 3, OVERTIME AND HOLIDAYS PROVIDED:

"A. OVERTIME SHALL BE CONSIDERED THOSE HOURS IN EXCESS OF 40 IN ANY ONE WEEK, OR 8 IN ANY ONE DAY, OR ANY WORK ON HOLIDAYS OR OTHER DAYS WHEN POSTAL INSTALLATIONS ARE CLOSED. FOR THE PURPOSE OF THIS CONTRACT, HOLIDAYS SHALL BE THOSE DAYS OBSERVED BY THE FEDERAL GOVERNMENT AS HOLIDAYS. THE CONTRACTOR SHALL BE COMPENSATED FOR OVERTIME WORK OF ITS TECHNICAL PERSONNEL ONLY TO THE EXTENT THAT WORK IS ACTUALLY PERFORMED BY ITS EMPLOYEES WITH THE APPROVAL OF THE CONTRACTING OFFICER.'

PARAGRAPH B OF THE SAME ARTICLE PROVIDED:

"B. COMPENSATION FOR ALL HOURS WORKED BY CONTRACTOR'S TECHNICAL PERSONNEL, WHETHER WITHIN OR BEYOND NORMAL WORKING HOURS, AS WELL AS HOURS WORKED ON HOLIDAYS AND OTHER DAYS WHEN POSTAL FACILITIES ARE CLOSED, SHALL BE AT REGULAR RATES AS SET OUT IN ARTICLE 2 ABOVE, WITHOUT PREMIUM COMPENSATION. THE GOVERNMENT SHALL NOT BE OBLIGATED TO PAY FOR CONTRACTOR'S EMPLOYE LOST TIME REGARDLESS OF REASON.'

BY LETTER DATED FEBRUARY 22, 1965, THE CONTRACTOR REFERRED TO THE THREE CONTRACTS AND ADVISED THE DEPARTMENT THAT ON "FEBRUARY 17 WE RECEIVED SUMMARY OR UNPAID WAGES FROM THE U.S. DEPARTMENT OF LABOR IN THE AMOUNT OF $14,409.40 CLAIMING PREMIUM PAY DUE OUR EMPLOYEES FOR OVERTIME WORKED FROM DECEMBER 24, 1962, THROUGH JULY 5, 1964.' THE SUMMARY REFERRED TO IS DATED FEBRUARY 10, 1965, AND YOUR LETTER INDICATES THAT THE DEMAND FOR PAYMENT OF THE TOTAL AMOUNT STATED AS DUE THEREON FROM THE CONTRACTOR WAS ASSERTED ON THE BASIS THAT ITS TECHNICAL PERSONNEL COULD NOT QUALIFY AS PROFESSIONAL EMPLOYEES SINCE THEY WERE NOT COMPENSATED ON A SALARY BASIS AS REQUIRED BY APPLICABLE LABOR DEPARTMENT REGULATIONS. YOUR LETTER STATES THAT AFTER REVIEWING THE SITUATION THE DEPARTMENT CONCURS WITH THE CONCLUSION OF THE DEPARTMENT OF LABOR.

IT IS STATED IN YOUR LETTER THAT THE LITERAL LANGUAGE OF THE CONTRACTS DOES NOT SUPPORT PAYMENT OF THE CLAIM AND IN ADDITION IT IS POINTED OUT THAT THE CONTRACTOR HAS EXECUTED A GENERAL RELEASE UNDER EACH CONTRACT. IT IS STATED, HOWEVER, THAT THE OVERTIME WORK WAS PERFORMED FOR THE BENEFIT OF THE DEPARTMENT AND WITH ITS APPROVAL. IT IS FURTHER STATED THAT IT WAS THE INTENTION OF THE PARTIES THAT THE CONTRACTOR RECOVER ALL ITS NECESSARY DIRECT LABOR COSTS FOR TECHNICAL PERSONNEL AND THE PARTIES IN FACT BELIEVED THAT IT DID SO. IT IS CONCLUDED THAT BECAUSE OF THE UNANTICIPATED APPLICATION OF THE OVERTIME REQUIREMENTS, THE CONTRACTS DO NOT EXPRESS THE TRUE INTENTION OF THE PARTIES AND THEREFORE IT IS STATED THAT IT IS BELIEVED THE CLAIMS SHOULD BE ALLOWED NOTWITHSTANDING THE TERMS OF THE CONTRACTS.

WITH RESPECT TO THE PRELIMINARY NEGOTIATIONS PRIOR TO THE EXECUTION OF THE CONTRACTS IT IS STATED THAT THE EPSTEIN CONTRACTS WERE PATTERNED AFTER THE VOLLMER CONTRACTS AND THAT THE CONTRACTING OFFICER'S REPRESENTATIVES HAVE ADVISED THAT IN DISCUSSING WITH EPSTEIN THE TERMS WHICH THE DEPARTMENT WANTED IN THE ORIGINAL CONTRACT A COPY OF THE VOLLMER CONTRACT WAS USED BY THE PARTIES AND MARKED UP AS A DRAFT AGREEMENT. IT IS STATED, HOWEVER, THAT THERE IS NOTHING IN THE DEPARTMENT'S FILES INDICATING ANY SPECIFIC DISCUSSION WITH EPSTEIN REGARDING THE OVERTIME SITUATION AND THAT THE DEPARTMENT'S NEGOTIATOR HAS NO INDEPENDENT RECOLLECTION AS TO WHETHER OR NOT IT WAS DISCUSSED.

FOR THE REASONS STATED IN THE ABOVE DECISION OF AUGUST 31, 1964, THERE APPEARS TO BE NO QUESTION AS TO THE APPLICABILITY OF THE FAIR LABOR STANDARDS ACT IN THIS CASE.

THE CONTRACTOR IN REFERRING TO THE PRELIMINARY CONTRACT NEGOTIATIONS HAS STATED THAT IT UNDERSTOOD THAT THE DEPARTMENT WAS FAMILIAR WITH THE PREMIUM PAY REQUIREMENTS FOR CONTRACTORS SINCE FOR SEVERAL YEARS IT HAD BEEN INVOLVED WITH SIMILAR CONTRACTS WHICH HAD NO PREMIUM PAY PROVISION AND THAT THE CONTRACTOR WAS AWARE OF THE EXISTENCE OF THE OTHER CONTRACTS AND UNDERSTOOD THAT THE DEPARTMENT WAS SATISFIED THAT THEY CONFORMED WITH LABOR DEPARTMENT REGULATIONS. ALSO, THE CONTRACTOR HAS CONTENDED THAT THE BASIS AND THE FORM OF CONTRACT NEGOTIATIONS WERE IDENTICAL TO THOSE PRECEDING THE VOLLMER CONTRACTS.

AS INDICATED IN YOUR LETTER THE CONTRACTOR HAS EXECUTED RELEASES UNDER THE THREE CONTRACTS. IN EACH RELEASE, HOWEVER, THE CONTRACTOR EXCEPTED THEREFROM CLAIMS, TOGETHER WITH REASONABLE EXPENSES INCIDENTAL THERETO, BASED UPON LIABILITIES OF THE CONTRACTOR TO THIRD PARTIES ARISING OUT OF PERFORMANCE OF THE CONTRACT WHICH WERE NOT KNOWN TO THE CONTRACTOR ON THE DATE OF THE EXECUTION OF THE RELEASE AND OF WHICH THE CONTRACTOR GAVE WRITTEN NOTICE TO THE CONTRACTING OFFICER WITHIN THE PERIOD SPECIFIED IN THE CONTRACT. THE RELEASES INCIDENTAL TO CONTRACTS NUMBERED NC 2-62 AND RE 1-63 WERE EXECUTED ON JANUARY 7, 1963, AND FEBRUARY 20, 1964, RESPECTIVELY, AND SINCE THE SUMMARY OF UNPAID WAGES WAS NOT ISSUED UNTIL FEBRUARY 10, 1965, AND SINCE IT WAS NOT RECEIVED BY THE CONTRACTOR UNTIL FEBRUARY 17, 1965, THE AMOUNTS CLAIMED FOR PREMIUM PAY UNDER THESE TWO CONTRACTS MUST BE REGARDED AS EXCEPTED FROM THE OPERATION OF THOSE TWO RELEASES. ROTBERG V. DODWELL AND CO. 152 F.2D 100; BUCKLEY V. BASSFORD, 184 F.SUPP. 870; 76 C.J.S. RELEASE, SEC. 52. THEREFORE, PAYMENT OF THE ADDITIONAL AMOUNT CLAIMED UNDER CONTRACTS NUMBERED NC 2-62 AND RE 1-63 IS AUTHORIZED IF OTHERWISE CORRECT.

THE RELEASE UNDER CONTRACT NUMBERED RE 4-64, WAS EXECUTED ON MARCH 3, 1965, OR TWO WEEKS AFTER THE CONTRACTOR'S RECEIPT OF THE SUMMARY OF UNPAID WAGES FROM THE DEPARTMENT OF LABOR. THE RELEASE MADE NO EXCEPTION TO THE UNPAID WAGES AS ITEMIZED IN THE SUMMARY. FROM ADDITIONAL INFORMATION CONTAINED IN LETTER DATED JUNE 30, 1965, FROM YOUR GENERAL COUNSEL, HOWEVER, IT NOW APPEARS THAT ON FEBRUARY 18, 1965, THE ACTING ASSISTANT DIRECTOR, PROGRAMMING AND CONTROL OFFICE OF RESEARCH AND ENGINEERING (THE CONTRACTING OFFICER) HAD BEEN INFORMED BY MR. SULLIVAN THAT THE DEPARTMENT OF LABOR HAD FILED A CLAIM IN THE AMOUNT OF $14,409.40 AGAINST THE CONTRACTOR. THERE IS QUOTED IN THE ABOVE LETTER OF JUNE 30, 1965, AN EXCERPT FROM THE "FINAL CONTRACT AUDIT REPORT" OF CONTRACT NUMBERED RE 4- 64, THE FOLLOWING:

"EXCEPT FOR A POSSIBLE LIABILITY FOR PREMIUM PAY ON OVERTIME WORK, THERE ARE NO KNOWN ITEMS SUBJECT TO APPEAL AS CITED IN THE CONTRACTOR'S STATEMENT OF RELEASE. UNDER THE TERMS OF THE CONTRACT, OVERTIME WORK WAS COMPENSATED AT REGULAR HOURLY RATES WITHOUT PREMIUM COMPENSATION, WHICH METHOD, WE ARE INFORMED, IS CURRENTLY UNDER REVIEW BY ANOTHER AGENCY OF THE GOVERNMENT BECAUSE OF AN ALLEGED VIOLATION OF THEIR PRESCRIBED LAWS AND REGULATIONS.'

ALSO, IT IS STATED THAT THE RELEASE DATED MARCH 3, 1965, WAS SECURED IN A ROUTINE MANNER BY THE INTERNAL AUDIT DIVISION OF THE BUREAU OF THE CHIEF POSTAL INSPECTOR; THAT NEITHER THE OFFICE OF RESEARCH AND ENGINEERING NOR THE GENERAL COUNSEL'S OFFICE WAS CONSULTED CONCERNING THE CONTRACTOR'S OVERTIME CLAIMS; THAT IT APPEARS FROM THE ABOVE-QUOTED PROVISION OF THE AUDIT REPORT THAT THE CONTRACTOR DID NOT INTEND TO RELEASE HIS CLAIM FOR ADDITIONAL OVERTIME PAY AND THAT NEITHER YOUR GENERAL COUNSEL'S OFFICE NOR THE OFFICE OF RESEARCH AND ENGINEERING UNDERSTOOD THAT THE CONTRACTOR INTENDED TO RELEASE ITS CLAIM.

IT HAS BEEN HELD THAT THE EXECUTION OF A RELEASE DOES NOT OPERATE AS A BAR TO A CLAIM ASSERTED THEREAFTER WHERE THE CONDUCT OF THE PARTIES IN CONTINUING TO CONSIDER THE CLAIM AFTER THE EXECUTION OF SUCH RELEASE MAKES IT PLAIN THAT THEY NEVER CONSTRUED THE RELEASE AS CONSTITUTING AN ABANDONMENT OF THE CLAIM. WINN-SENTER CONSTRUCTION CO. V. UNITED STATES, 110 CT.CL. 34. J. G. WATTS CONSTRUCTION COMPANY V. UNITED STATES, 161 CT.CL. 801, 807. SINCE THE RECORD PRESENTED CLEARLY ESTABLISHES THAT AFTER THE EXECUTION OF THE RELEASE THE CONDUCT OF THE PARTIES MADE IT CLEAR THAT THEY NEVER CONSTRUED THE RELEASE AS AN ABANDONMENT OF THE CLAIM, PAYMENT OF THE ADDITIONAL COMPENSATION ATTRIBUTABLE TO CONTRACT NO. RE 4-64 ALSO IS AUTHORIZED IF CORRECT IN OTHER RESPECTS.

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