B-83611, JUNE 3, 1949, 28 COMP. GEN. 682

B-83611: Jun 3, 1949

Additional Materials:

Contact:

Ralph O. White
(202) 512-8278
WhiteRO@gao.gov

Kenneth E. Patton
(202) 512-8205
PattonK@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE CONTRACTOR IS NOT ENTITLED TO BE PAID ADDITIONAL COMPENSATION SOLELY FOR THE DELAY INCIDENT TO SUCH CHANGES BEYOND THAT ALLOWED IN THE CHANGE ORDERS WHICH WERE ACCEPTED BY THE CONTRACTOR AS BEING SATISFACTORY. 1949: REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 7. REPRESENTING INCREASED COSTS SAID TO HAVE BEEN INCURRED UNDER CONTRACT I2R-15725. WAS PROVIDED IN PARAGRAPH 24 OF THE SPECIFICATIONS THAT THE CONTRACTOR WOULD BEGIN WORK WITHIN 30 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED AND WOULD COMPLETE ALL OF THE WORK WITHIN 1. THE GOVERNMENT WILL MAKE EVERY REASONABLE EFFORT TO SECURE THE DELIVERY OF ALL METALWORK. FOR WHICH ITEMS ARE PROVIDED IN THE SCHEDULE. WILL BE PAID FOR AT THE UNIT PRICES BID THEREFOR IN THE SCHEDULE.

B-83611, JUNE 3, 1949, 28 COMP. GEN. 682

CONTRACTS - CHANGE ORDERS - DELAYS INCIDENT TO CHANGES WHERE A CONSTRUCTION CONTRACT RESERVED TO THE GOVERNMENT THE RIGHT TO MAKE REASONABLE CHANGES IN THE WORK DUE TO THE DISCOVERY OF SUBSURFACE CONDITIONS DIFFERING MATERIALLY FROM THOSE SHOWN IN THE ORIGINAL PLANS AND SPECIFICATIONS FOR WHICH AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE BASED ON UNIT BID PRICES AND AN EXTENSION OF TIME FOR THE PERFORMANCE THEREOF WOULD BE ALLOWED, BUT NOT ENTITLING THE CONTRACTOR TO DAMAGES ON ACCOUNT OF DELAYS BY THE GOVERNMENT, THE CONTRACTOR IS NOT ENTITLED TO BE PAID ADDITIONAL COMPENSATION SOLELY FOR THE DELAY INCIDENT TO SUCH CHANGES BEYOND THAT ALLOWED IN THE CHANGE ORDERS WHICH WERE ACCEPTED BY THE CONTRACTOR AS BEING SATISFACTORY.

ACTING COMPTROLLER GENERAL YATES TO THE SECRETARY OF THE INTERIOR, JUNE 3, 1949:

REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 7, 1949, REQUESTING DECISION AS TO WHETHER ANY PAYMENT MAY BE MADE TO THE UTAH CONSTRUCTION COMPANY ON ITS CLAIM FOR $822,566.35, REPRESENTING INCREASED COSTS SAID TO HAVE BEEN INCURRED UNDER CONTRACT I2R-15725, DATED JANUARY 15, 1946.

UNDER THE TERMS OF THE CONTRACT, THE UTAH CONSTRUCTION COMPANY AGREED TO FURNISH THE MATERIALS AND PERFORM THE WORK REQUIRED IN THE CONSTRUCTION OF THE DAVIS DAM AND POWER PLANT IN STRICT ACCORDANCE WITH SPECIFICATION NO. 1130 AND SUPPLEMENTAL NOTICES TO BIDDERS DATED NOVEMBER 28 AND DECEMBER 11, 1945, ATTACHED TO AND MADE A PART OF THE CONTRACT, AT THE UNIT AND LUMP-SUM PRICES STATED IN THE SCHEDULE INCLUDED IN THE SPECIFICATIONS. WAS PROVIDED IN PARAGRAPH 24 OF THE SPECIFICATIONS THAT THE CONTRACTOR WOULD BEGIN WORK WITHIN 30 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED AND WOULD COMPLETE ALL OF THE WORK WITHIN 1,200 CALENDAR DAYS FROM THE DATE OF RECEIPT OF SUCH NOTICE.

BY PARAGRAPH 25 OF THE SPECIFICATIONS THE CONTRACTOR AGREED TO PAY TO THE GOVERNMENT, AS LIQUIDATED DAMAGES, THE SUM OF $1,000 PER DAY FOR EACH CALENDAR DAY'S DELAY. PARAGRAPH 26 AND 28 OF THE SPECIFICATIONS PROVIDE AS FOLLOWS:

26. CONSTRUCTION PROGRAM. WITHIN 30 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED, THE CONTRACTOR SHALL FURNISH THE CONTRACTING OFFICER A COMPLETE CONSTRUCTION PROGRAM SHOWING IN DETAIL HIS PROPOSED PROGRAM OF OPERATIONS, WHICH CONSTRUCTION PROGRAM SHALL PROVIDE FOR AN ORDERLY PERFORMANCE OF THE WORK.

THE CONSTRUCTION PROGRAM SHALL BE IN SUCH FORM AND IN SUCH DETAIL AS MAY BE REQUIRED BY THE CONTRACTING OFFICER, AND SHALL BE SUBJECT TO THE APPROVAL OF THE CONTRACTING OFFICER. THE GOVERNMENT WILL MAKE EVERY REASONABLE EFFORT TO SECURE THE DELIVERY OF ALL METALWORK, MACHINERY, AND OTHER CONSTRUCTION MATERIALS REQUIRED TO BE FURNISHED BY THE GOVERNMENT, IN TIME TO AVOID DELAYS IN THE PERFORMANCE OF THE WORK; HOWEVER, SHOULD THE GOVERNMENT FOR ANY REASON FAIL TO SECURE DELIVERY OF SUCH METALWORK, MACHINERY, OR CONSTRUCTION MATERIALS IN TIME TO MEET THE CONSTRUCTION REQUIREMENTS, THE CONTRACTOR SHALL BE ENTITLED TO NO DAMAGES OR ADDITIONAL COMPENSATION ON ACCOUNT OF SUCH DELAYS.

28. RIGHT TO CHANGE LOCATION AND PLANS. WHEN ADDITIONAL INFORMATION REGARDING FOUNDATION OR OTHER CONDITIONS BECOMES AVAILABLE AS A RESULT OF THE EXCAVATION WORK, FURTHER TESTING, OR OTHERWISE, IT MAY BE FOUND DESIRABLE TO CHANGE THE LOCATION, ALIGNMENT, DIMENSIONS, OR DESIGN OF THE DAM, POWER PLANT, OR APPURTENANT WORKS TO CONFORM TO SUCH CONDITIONS. THE GOVERNMENT RESERVES THE RIGHT TO MAKE SUCH REASONABLE CHANGES IN THE DAM, POWER PLANT, AND APPURTENANT WORKS AS, IN THE OPINION OF THE CONTRACTING OFFICER, MAY BE CONSIDERED NECESSARY OR DESIRABLE, AND THE CONTRACTOR SHALL BE ENTITLED TO NO EXTRA COMPENSATION BECAUSE OF SUCH CHANGES, EXCEPT THAT ANY INCREASE IN THE AMOUNT OF EXCAVATION, CONCRETE, OR OTHER REQUIRED WORK, FOR WHICH ITEMS ARE PROVIDED IN THE SCHEDULE, WILL BE PAID FOR AT THE UNIT PRICES BID THEREFOR IN THE SCHEDULE. THE CONTRACTOR'S PLANT SHALL BE LAID OUT AND HIS OPERATIONS SHALL BE CONDUCTED SO AS TO ACCOMMODATE ANY REASONABLE CHANGE IN THE LOCATION AND DESIGN OF THE DAM, POWER PLANT, AND APPURTENANT WORKS, OR ANY PART THEREOF, WITHOUT ADDITIONAL COST TO THE GOVERNMENT.

IN YOUR LETTER IT IS STATED THAT NOTICE TO PROCEED UNDER THE CONTRACT WAS RECEIVED BY THE CONTRACTOR ON MARCH 22, 1946, AND THAT THE CONTRACTOR COMMENCED WORK ON APRIL 3, 1946, AND MADE EXCELLENT PROGRESS IN THE EXCAVATION OF THE FOREBAY CHANNEL, THE SPILLWAY, AND OUTLET WORKS AND INTAKE STRUCTURE, VIRTUALLY COMPLETING THE SAID WORK BY THE END OF FEBRUARY 1947. IT IS STATED THAT AS A RESULT OF THE DISCLOSURE WHILE EXCAVATING IN THE FOREBAY CHANNEL AND IN THE AREAS OF STRUCTURE FOUNDATIONS THAT THE ROCK ENCOUNTERED WAS NOT AS SOLID AS HAD BEEN ANTICIPATED, SIDE SLOPES OF THE FOREBAY CHANNEL AND OF THE EXCAVATION FOR STRUCTURE FOUNDATIONS WAS COMPLETED, APPROXIMATELY TO THE DEPTH ORIGINALLY CONTEMPLATED, A BOARD OF CONSULTING ENGINEERS AND GEOLOGISTS WAS ASSEMBLED AT THE PROJECT DURING THE PERIOD FROM MARCH 5 TO 9, 1947, TO STUDY THE CONDITIONS ENCOUNTERED AND TO ADVISE WITH REGARD TO FOUNDATION TREATMENT. ON FEBRUARY 22, 1947, THE CONTRACTOR COMMENCED ITS PROGRAM OF FOUNDATION GROUTING FOR THE SPILLWAY AND OUTLET STRUCTURES BUT THIS PROGRAM WAS ORDERED SUSPENDED ON MARCH 15, 1947, IN ORDER THAT CONSIDERATION MIGHT BE GIVEN TO THE ADVISABILITY OF PERFORMING ADDITIONAL FOUNDATION EXCAVATION AND GROUTING AND TO THE MAKING OF CHANGES IN THE DESIGNS OF THE STRUCTURES IN THE LIGHT OF THE FOUNDATION CONDITIONS ENCOUNTERED AND THE RECOMMENDATIONS OF THE BOARD OF CONSULTING ENGINEERS WITH RESPECT THERETO. ADDITIONAL EXCAVATION, WHICH INVOLVED EXCAVATING THE MATERIAL PREVIOUSLY GROUTED, WAS ORDERED BY THE CONTRACTING OFFICER AND THE CONTRACTOR COMMENCED THIS WORK ON APRIL 2, 1947. THIS EXCAVATION FOR THE FOUNDATION OF THE SPILLWAY AND OUTLET STRUCTURES WAS COMPLETED ON MAY 13, 1947. THE CONTRACTOR THEN COMMENCED REGROUTING THE AREAS OF THE SPILLWAY AND OUTLET STRUCTURE FOUNDATION, CONTINUING THIS WORK UNTIL JULY 14, 1947, AT WHICH TIME THE CONTRACTOR'S GROUTING PROGRAM WAS COMPLETED TO SUCH AN EXTENT AS TO PERMIT THE PLACING OF CONCRETE IN THE FOUNDATION. HOWEVER, ON JULY 16, 1947, ON THE BASIS OF RECOMMENDATIONS OF THE CONSULTING BOARD, THE CONTRACTOR WAS ORDERED TO COMMENCE A NEW AND GREATLY EXPANDED GROUTING PROGRAM IN THE AREA OF INTAKE STRUCTURE AND THE SPILLWAY AND OUTLET WORKS. THIS PROGRAM PROVIDED FOR THE DRILLING OF HOLES FOR FOUNDATION GROUTING AT CLOSER INTERVALS AND TO DEPTHS GREATER THAN THOSE CONTEMPLATED BY THE SPECIFICATIONS. SUBSEQUENTLY, THE CONTRACTOR WAS REQUIRED TO REGROUT AREAS, SOME OF WHICH HAD TWICE PREVIOUSLY BEEN GROUTED. DECEMBER 11, 1947, THE GROUTING REQUIRED UNDER THE EXPANDED PROGRAM WAS COMPLETED TO SUCH AN EXTENT AS TO PERMIT THE CONTRACTOR TO UNDERTAKE LARGE -SCALE CONCRETE OPERATIONS.

IT APPEARS FURTHER FROM YOUR LETTER THAT UNDER THE CONTRACTOR'S ORIGINAL CONSTRUCTION PROGRAM, WHICH WAS SUBMITTED BEFORE IT WAS KNOWN THAT CHANGES IN THE WORK WOULD BE REQUIRED, INITIAL DIVERSION OF THE RIVER THROUGH THE FOREBAY CHANNEL WAS SCHEDULED FOR DECEMBER 1947. HOWEVER, INITIAL DIVERSION ACTUALLY WAS NOT MADE UNTIL THE LATTER PART OF JUNE 1948. HENCE, PROSECUTION OF THE EXPANDED GROUTING PROGRAM AND OF THE ADDITIONAL EXCAVATION THEREFOR HAD THE EFFECT OF DELAYING FOR SEVERAL MONTHS NOT ONLY THE TIME WHEN THE CONTRACTOR COULD COMMENCE LARGE-SCALE CONCRETE WORK BUT THE TIME WHEN CONSTRUCTION OF THE DAM EMBANKMENT COULD BE UNDERTAKEN. DURING THIS PERIOD, MEN AND EQUIPMENT PLACED ON THE JOB FOR PERFORMANCE OF THE CONCRETE AND DAM EMBANKMENT WORK WERE IN A STAND-BY OR PARTIAL STAND- BY STATUS, IT BEING STATED THAT "THE RECORDS SHOW THAT DURING THE PERIOD FROM FEBRUARY TO DECEMBER, 1947, THE CONTRACTOR'S PAYROLLS ALONE WERE APPROXIMATELY EQUAL TO ITS GROSS EARNINGS UNDER THE CONTRACT.'

IT IS STATED THAT THE CONTRACTING OFFICER HAS DETERMINED THAT THE FOUNDATION CONDITIONS ENCOUNTERED IN THE PERFORMANCE OF THE WORK CONSTITUTED "CHANGED CONDITIONS" WITHIN THE MEANING OF THAT TERM AS USED IN ARTICLE 4 OF THE CONTRACT; THAT THE DISCLOSURE OF THE FOUNDATION CONDITIONS HAS MADE NECESSARY EXTENSIVE REVISIONS IN THE DESIGN OF THE WORK; AND THAT AN ORDER FOR CHANGES PROVIDING FOR SUCH REVISIONS WILL BE EXECUTED AT AN EARLY DATE. ALSO, IT IS STATED THAT " THIS ORDER FOR CHANGES CONTAINING PRICES AGREED TO BY THE CONTRACTOR WILL RESULT IN AN INCREASE IN THE CONTRACTOR'S EARNINGS OF APPROXIMATELY $6,100,000," AND THAT " THE PRICES NEGOTIATED WITH THE CONTRACTOR DO NOT, OF COURSE, CONTAIN ANY ALLOWANCE FOR THE INCREASED COSTS THE CONTRACTOR CLAIMS TO HAVE INCURRED AS A RESULT OF STAND-BY AND DISRUPTION OF ITS CONSTRUCTION PROGRAM.' FINALLY, IT IS STATED THAT, IF IT IS THE DECISION OF THIS OFFICE THAT ANY PAYMENT CAN BE MADE TO THE CONTRACTOR UNDER THE FACTS STATED IN YOUR LETTER, A VOUCHER COVERING SUCH PAYMENT WILL BE SUBMITTED FOR DIRECT SETTLEMENT WITH A REPORT OF THE CONTRACTING OFFICER SETTING FORTH THE DETAILS AS TO HOW THE AMOUNT RECOMMENDED FOR PAYMENT WAS ARRIVED AT.

THERE NOW IS ON FILE IN THIS OFFICE ORDER FOR CHANGES NO. 3, DATED DECEMBER 15, 1948, ORDERING THE CONTRACTOR TO PERFORM THE WORK OF CONSTRUCTING THE DAM AND POWER PLANT IN ACCORDANCE WITH THE REVISED DESIGN AND DETAILS SHOWN ON THE DRAWINGS LISTED THEREIN AND ATTACHED THERETO. THE NET INCREASE IN THE AMOUNT OF THE CONTRACT PRICES ON ACCOUNT OF THE CHANGES ORDERED IS SHOWN AS $6,092,746.66, AND IT IS PROVIDED THAT THE ADJUSTMENT IN THE TIME FOR PERFORMANCE OF THE CONTRACT WILL BE MADE BY ALLOWING THE CONTRACTOR 425 CALENDAR DAYS' ADDITIONAL TIME. THE CONTRACTOR ACCEPTED THE ORDER FOR CHANGES UNDER DATE OF DECEMBER 30, 1948, BY ADVISING THE CONSTRUCTION ENGINEER, BUREAU OF RECLAMATION, DAVIS DAM, NEVADA, THAT THE ADJUSTMENT OF THE AMOUNT OF COMPENSATION DUE UNDER THE CONTRACT AND/OR IN THE TIME REQUIRED FOR ITS PERFORMANCE BY REASON OF THE CHANGES COVERED BY THE ORDER FOR CHANGES WAS SATISFACTORY AND WAS THEREBY ACCEPTED.

THERE IS NO PROVISION IN THE CONTRACT PROPER, OR IN SPECIFICATIONS NO. 1130, PROVIDING, EITHER EXPRESSLY OR BY NECESSARY IMPLICATION, FOR PAYMENT OF ANY AMOUNT IN EXCESS OF THE CONTRACT PRICES TO COMPENSATE THE CONTRACTOR FOR INCREASED COSTS OF PERFORMANCE RESULTING FROM DELAYS DUE TO ACTS OF THE GOVERNMENT OR OTHER EXCUSABLE CAUSES. ON THE CONTRARY, PARAGRAPH 26 OF THE SPECIFICATIONS, SUPRA, EXPRESSLY PROVIDES THAT THE CONTRACTOR WOULD NOT BE ENTITLED TO DAMAGES OR ADDITIONAL COMPENSATION ON ACCOUNT OF DELAYS BY THE GOVERNMENT IN SECURING DELIVERY OF METAL WORK, MACHINERY, OR CONSTRUCTION MATERIALS IN TIME TO MEET THE CONSTRUCTION REQUIREMENTS, AND PARAGRAPH 28 OF THE SPECIFICATIONS, SUPRA, EXPRESSLY LIMITS THE AMOUNT OF ADDITIONAL COMPENSATION TO BE PAID ON ACCOUNT OF REASONABLE CHANGES TO THE UNIT PRICES BID IN THE SCHEDULE. SEE WELLS BROTHERS COMPANY V. UNITED STATES, 254 U.S. 83; WOOD, ET AL. V. UNITED STATES, 258 U.S. 120.

WHILE IT MAY APPEAR THAT THE CHANGES HERE INVOLVED WERE OF SUCH MAGNITUDE AND SCOPE AS TO CONSTITUTE CHANGES BEYOND THOSE APPARENTLY CONTEMPLATED BY PARAGRAPH 28 OF THE SPECIFICATIONS, THERE STILL ARE FOR CONSIDERATION ARTICLE 4 OF THE CONTRACT PROPER AND THE CASE OF UNITED STATES V. RICE, 317 U.S. 61, WHEREIN IT WAS HELD BY THE SUPREME COURT THAT A DELAY RESULTING FROM A CHANGE IN THE SPECIFICATIONS UNDER THE SAID ARTICLE 4, DUE TO DISCOVERY OF SUBSURFACE CONDITIONS DIFFERING MATERIALLY FROM THOSE SHOWN ON THE DRAWINGS OR INDICATED IN THE SPECIFICATIONS, DID NOT CONSTITUTE A BREACH BY THE GOVERNMENT SO AS TO ENTITLE THE CONTRACTOR IN THAT CASE TO DAMAGES. ALSO, SEE CROOK COMPANY V. UNITED STATES, 270 U.S. 4; AND UNITED STATES V. FOLEY COMPANY, 329 U.S. 64.

IN THE PRESENT CASE, THE CHANGES MADE BY THE CONTRACTING OFFICER WERE AUTHORIZED BY ARTICLE 4 OF THE CONTRACT, AND IT REPEATEDLY HAS BEEN HELD BY THE COURT OF CLAIMS THAT THE GOVERNMENT CANNOT BE HELD LIABLE IN DAMAGES BEYOND THE EXTRA COST INVOLVED IN MAKING THE CHANGES THEMSELVES. SEE MCCORD V. UNITED STATES, 9 C.1CLS. 155; MORAN BROTHERS COMPANY V. UNITED STATES, 61 ID. 73; SNARE AND TRIEST COMPANY V. UNITED STATES, 75 ID. 326; AND NEWPORT NEWS SHIPBUILDING COMPANY V. UNITED STATES, 79 ID. 1. WHEN THE CONTRACTOR ACCEPTED THE ORDER FOR CHANGES, IT ACCEPTED THE ADDITIONAL PRICES FIXED FOR THE WORK AS FULL COMPENSATION FOR MAKING THE CHANGES AND THE ADDITIONAL TIME OF 425 CALENDAR DAYS WHICH WAS ALLOWED TO COVER THE TIME REQUIRED FOR PERFORMANCE OF THE CONTRACT BY REASON OF THE CHANGES, THEREBY RELIEVING THE CONTRACTOR FROM THE ASSESSMENT OF LIQUIDATED DAMAGES FOR THAT PERIOD. HENCE, IT CANNOT BE SAID THAT THE GOVERNMENT OBLIGATED ITSELF TO PAY DAMAGES SOLELY BECAUSE OF THE DELAY INCIDENT TO THE CHANGES.

ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD AND IN VIEW OF THE AUTHORITIES CITED ABOVE, I AM CONSTRAINED TO CONCLUDE THAT THERE IS NO LEGAL BASIS FOR PAYMENT OF ANY PART OF THE ADDITIONAL AMOUNT CLAIMED.

Oct 30, 2020

Oct 29, 2020

Oct 28, 2020

Looking for more? Browse all our products here