B-83611, JANUARY 19, 1950, 29 COMP. GEN. 304

B-83611: Jan 19, 1950

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1950: REFERENCE IS MADE TO LETTER OF SEPTEMBER 9. THERE WAS CONSIDERED THE QUESTION WHETHER THE UTAH CONSTRUCTION COMPANY WAS ENTITLED TO PAYMENT OF ADDITIONAL COMPENSATION FOR THE INCREASED COSTS OF PERFORMANCE RESULTING FROM DELAYS BY THE GOVERNMENT INCIDENT TO MAKING CHANGES IN THE CONTRACT WORK COVERED BY CONTRACT NO. 12R-15725 DATED JANUARY 15. IT WAS HELD THEREIN THAT WHERE A CONSTRUCTION CONTRACT RESERVED TO THE GOVERNMENT THE RIGHT TO MAKE REASONABLE CHANGES IN THE WORK. THE CONTRACTOR IS NOT ENTITLED TO BE PAID ADDITIONAL COMPENSATION FOR THE DELAYS INCIDENT TO THE CHANGES. THERE WERE CITED VARIOUS COURT CASES. IT WAS STATED IN 28 COMP. 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.

B-83611, JANUARY 19, 1950, 29 COMP. GEN. 304

CONTRACTS - CHANGE ORDERS - ADDITIONAL COMPENSATION THE RESERVATION BY A CONTRACTOR, AS A CONDITION TO ACCEPTING AN ORDER CHANGING THE SPECIFICATIONS OF A CONSTRUCTION CONTRACT BECAUSE OF UNANTICIPATED SUBSURFACE CONDITIONS, OF A RIGHT TO MAKE CLAIM FOR COSTS INCIDENT TO THE DELAY OCCASIONED BY THE CHANGE, DOES NOT OBLIGATE THE UNITED STATES TO PAY THE CONTRACTOR'S STAND-BY COSTS INCURRED DURING SUCH DELAY WHERE THE ORIGINAL CONTRACT PERMITS SUCH CHANGE ORDERS AND PROVIDES THAT DELAYS RESULTING THEREFROM SHALL NOT ENTITLE THE CONTRACTOR TO DAMAGES OR TO PAYMENT OF ADDITIONAL COMPENSATION. 28 COMP. GEN. 682, AMPLIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE INTERIOR, JANUARY 19, 1950:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 9, 1949, FROM THE ASSISTANT SECRETARY OF THE INTERIOR, REQUESTING TO BE ADVISED WITH RESPECT TO THE MATTER PRESENTED IN AN ENCLOSED COPY OF A LETTER DATED AUGUST 25, 1949, FROM THE ACTING CHIEF ENGINEER, BUREAU OF RECLAMATION, RELATIVE TO THE DECISION OF THIS OFFICE DATED JUNE 3, 1949, B-83611, 28 COMP. GEN. 682.

IN THE DECISION OF JUNE 3, 1949, THERE WAS CONSIDERED THE QUESTION WHETHER THE UTAH CONSTRUCTION COMPANY WAS ENTITLED TO PAYMENT OF ADDITIONAL COMPENSATION FOR THE INCREASED COSTS OF PERFORMANCE RESULTING FROM DELAYS BY THE GOVERNMENT INCIDENT TO MAKING CHANGES IN THE CONTRACT WORK COVERED BY CONTRACT NO. 12R-15725 DATED JANUARY 15, 1946. IT WAS HELD THEREIN THAT WHERE A CONSTRUCTION CONTRACT RESERVED TO THE GOVERNMENT THE RIGHT TO MAKE REASONABLE CHANGES IN THE WORK, DUE TO SUBSURFACE CONDITIONS DIFFERING MATERIALLY FROM THOSE SHOWN IN THE ORIGINAL PLANS AND SPECIFICATIONS FOR WHICH AN EXTENSION OF TIME FOR PERFORMANCE AND AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE WOULD BE ALLOWED, THE CONTRACTOR IS NOT ENTITLED TO BE PAID ADDITIONAL COMPENSATION FOR THE DELAYS INCIDENT TO THE CHANGES. IN SUPPORT OF THAT HOLDING, THERE WERE CITED VARIOUS COURT CASES, AND IN PARTICULAR THE CASE OF UNITED STATES V. RICE, 317 U.S. 61, WHEREIN THE COURT HELD THAT A DELAY RESULTING FROM A CHANGE IN THE SPECIFICATIONS UNDER ARTICLE 4, SUCH AS HERE INVOLVED, DUE TO DISCOVERY OF SUBSURFACE CONDITIONS DIFFERING MATERIALLY FROM THOSE SHOWN ON THE DRAWINGS OR INDICATED IN THE SPECIFICATIONS, DID NOT CONSTITUTE A BREACH OF THE CONTRACT BY THE GOVERNMENT SO AS TO ENTITLE THE CONTRACTOR TO DAMAGES. ALSO, IT WAS STATED IN 28 COMP. GEN. 682 THAT, 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; AND IT WAS STATED FURTHER THAT THE GOVERNMENT DID NOT OBLIGATE ITSELF TO PAY DAMAGES SOLELY BECAUSE OF THE DELAY INCIDENT TO THE CHANGES.

IT IS POINTED OUT BY THE ACTING CHIEF ENGINEER, BUREAU OF RECLAMATION, IN HIS LETTER OF AUGUST 25, 1949, THAT THIS OFFICE MAY HAVE OVERLOOKED THE FACT THAT ON PAGE 71 OF THE CHANGE ORDER," ORDER FOR CHANGES NO. 3," IT WAS STIPULATED THAT THE UNIT PRICES ESTABLISHED FOR THE WORK TO BE PERFORMED ON THE SAID ORDER DID NOT INCLUDE ANY ALLOWANCES FOR COSTS WHICH THE CONTRACTOR HAS ALLEGED TO HAVE "INCURRED AS A RESULT OF STAND-BY OR DISRUPTION OF ITS CONSTRUCTION PROGRAM DURING THE PERIOD FROM APRIL 15, 1947, TO DECEMBER 11, 1947.' IT IS STATED THAT THIS PROVISION WAS INCLUDED IN THE CHANGE ORDER AT THE INSTANCE OF THE CONTRACTOR AND UPON ITS REFUSAL TO ACCEPT A CHANGE ORDER UNLESS ITS RIGHT TO ASSERT A CLAIM FOR SUCH ADDITIONAL COMPENSATION WOULD BE PRESERVED.

THE RESERVATION BY THE CONTRACTOR OF ITS RIGHT TO ASSERT A CLAIM FOR STAND-BY COSTS WAS NOT THE CONTROLLING FACTOR IN REACHING THE CONCLUSION AS TO ITS RIGHT TO ADDITIONAL COMPENSATION. SINCE THE SUPREME COURT HAS HELD THAT A DELAY RESULTING FROM A CHANGE IN THE SPECIFICATIONS UNDER SAID ARTICLE 4 DUE TO DISCOVERY OF UNANTICIPATED SUBSURFACE CONDITIONS DOES NOT CONSTITUTE A BREACH BY THE GOVERNMENT SO AS TO ENTITLE THE CONTRACTOR TO DAMAGES OR PAYMENT OF ADDITIONAL COMPENSATION THEREFOR, THE RESERVATION BY THE CONTRACTOR OF A CLAIM FOR SUCH ADDITIONAL COMPENSATION BECAUSE OF DELAYS IN MAKING CHANGES IN PLANS AND SPECIFICATIONS DOES NOT CREATE AN OBLIGATION ON THE PART OF THE GOVERNMENT TO MAKE PAYMENT OF SUCH ADDITIONAL COMPENSATION. THE FACTS AND THE TERMS OF THE CONTRACT IN THE CASE OF UNITED STATES V. RICE, SUPRA, ARE SIMILAR TO THOSE HERE INVOLVED AND IN THAT CASE IT WAS HELD THAT THE CONTRACTOR WAS NOT ENTITLED TO ADDITIONAL COMPENSATION FOR INCREASED COSTS INCURRED DURING THE PERIOD OF DELAY OCCASIONED BY THE CHANGE IN PLANS BY THE GOVERNMENT. ALSO, TO THE SAME EFFECT, SEE UNITED STATES V. FOLEY COMPANY, 329 U.S. 64.

ACCORDINGLY, IT MUST BE HELD THAT EVEN THOUGH THE CONTRACTOR RESERVED THE RIGHT TO ASSERT A CLAIM FOR THE STAND-BY COSTS HERE INVOLVED, THE FACTS AFFORD NO LEGAL BASIS FOR PAYMENT OF SUCH COSTS.

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