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B-139280, JUL. 13, 1960

B-139280 Jul 13, 1960
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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED MAY 24. INQUIRING WHETHER SUCH ADDITIONAL INFORMATION WILL ALTER OUR PREVIOUS DECISION. ARE ESSENTIALLY SEPARATE AND DISTINCT FROM THE DESIGN. ARE ENTIRELY OPTIONAL WITH THE GOVERNMENT. ARE NOT LIMITED AS TO TIME BUT PROBABLY ARE TO BE RENDERED IN LARGE PART AFTER THE DELIVERY DATE OF THE TURBINES. ARE NOT OF A KIND WHICH WOULD BE DIRECTLY AFFECTED BY FLUCTUATIONS IN PRODUCTION LABOR COSTS OR MATERIAL PRICES. SINCE SECTION 3 IS SILENT AS TO ADJUSTMENT OF THE DAILY RATES OF COMPENSATION QUOTED. SUCH RATES ARE TO BE CONSTRUED AS FIRM AND NOT SUBJECT TO ESCALATION. IT IS POINTED OUT THAT DESPITE THE WORDING OF THE PERTINENT CLAUSE.

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B-139280, JUL. 13, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED MAY 24, 1960, FROM THE ASSISTANT GENERAL COUNSEL FOR LITIGATION, OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY, CONCERNING OUR DECISION, B-139280, DATED JUNE 8, 1959, SUBMITTING ADDITIONAL FACTS WHICH HAD NOT HERETOFORE BEEN PRESENTED TO US, AND INQUIRING WHETHER SUCH ADDITIONAL INFORMATION WILL ALTER OUR PREVIOUS DECISION.

IN OUR ABOVE-MENTIONED DECISION OF JUNE 8, 1959, WE CONCLUDED THAT SINCE THE SERVICES, AS SPECIFIED BY SECTION 3 OF THE SPECIFICATIONS (PERTAINING TO ERECTING ENGINEERS), ARE ESSENTIALLY SEPARATE AND DISTINCT FROM THE DESIGN, MANUFACTURE, AND DELIVERY OF THE TURBINES; ARE ENTIRELY OPTIONAL WITH THE GOVERNMENT; ARE NOT LIMITED AS TO TIME BUT PROBABLY ARE TO BE RENDERED IN LARGE PART AFTER THE DELIVERY DATE OF THE TURBINES; AND ARE NOT OF A KIND WHICH WOULD BE DIRECTLY AFFECTED BY FLUCTUATIONS IN PRODUCTION LABOR COSTS OR MATERIAL PRICES; AND SINCE SECTION 3 IS SILENT AS TO ADJUSTMENT OF THE DAILY RATES OF COMPENSATION QUOTED, SUCH RATES ARE TO BE CONSTRUED AS FIRM AND NOT SUBJECT TO ESCALATION.

IN THE LETTER OF MAY 24, 1960, FROM THE ASSISTANT GENERAL COUNSEL FOR LITIGATION, IT IS POINTED OUT THAT DESPITE THE WORDING OF THE PERTINENT CLAUSE, THE SERVICES OF ERECTING ENGINEERS ARE NOT, IN PRACTICE, OPTIONAL, BUT ARE NECESSARILY REQUIRED IN EVERY INSTALLATION OF EQUIPMENT OF THE TYPE INVOLVED; AND THAT THE ONLY OPTIONAL FEATURE INTENDED WAS AS TO WHETHER THERE SHOULD BE ONE OR SEVERAL ERECTING ENGINEERS FURNISHED BY THE CONTRACTOR. IT IS STATED THAT IF THE CONSTRUCTION CONTRACTOR (WHO INSTALLS THE TURBINES) WORKS MORE THAN ONE SHIFT, IT WILL BE NECESSARY TO REQUIRE AN ERECTING ENGINEER FOR EACH SHIFT. THIS PROCEDURE HAS BEEN COMMON PRACTICE SINCE 1940 AND IS UNDERSTOOD BY THE HYDRAULIC TURBINE INDUSTRY, WHOSE REPRESENTATIVES COOPERATED WITH THE GOVERNMENT PROCUREMENT AGENCIES IN HAVING THE BUREAU OF LABOR STATISTICS PREPARE AND MAINTAIN THE INDICES ON WHICH PRICE ADJUSTMENT IS BASED.

IT IS FURTHER EXPLAINED THAT ERECTING ENGINEERS ARE NOT PROFESSIONAL ENGINEERS; INSTEAD, THEY ARE USUALLY MASTER MECHANICS WHO ARE LEAD MECHANICS ON THE SHOP FABRICATION AND ASSEMBLY OF THE FIRST TURBINE UNIT UNDER THE CONTRACT. FURTHERMORE, THEIR SERVICES ARE ALWAYS REQUIRED UNDER THE CONTRACT, AND THE ESTIMATED COST THEREOF IS INCLUDED IN THE CONTRACT PRICE AS PRODUCTIVE LABOR; AND THEIR WAGES ARE DIRECTLY AFFECTED BY THE CHANGES IN WAGE LEVELS. MOREOVER, IT IS POINTED OUT THAT THESE SERVICES ARE NOT REQUIRED UNTIL THE START OF INSTALLATION OF THE EQUIPMENT, WHICH MAY BE THREE OR MORE YEARS FROM THE INCEPTION OF THE CONTRACT AND, DEPENDING UPON THE NUMBER OF UNITS INVOLVED, MAY BE REQUIRED FOR A PERIOD OF ONE TO FIVE YEARS--- OR EVEN LONGER. CONSEQUENTLY, IT IS NECESSARY THAT THEIR WAGES BE SUBJECT TO ESCALATION. IN CONCLUSION, THE ASSISTANT GENERAL COUNSEL FOR LITIGATION ADVISES THAT CURRENT SPECIFICATIONS HAVE BEEN CHANGED SO THAT THERE WILL BE NO DOUBT AS TO THE INTENT OF THE CONTRACT THAT PAYMENTS FOR ERECTING ENGINEERS ARE SUBJECT TO ESCALATION. IT IS UNDERSTOOD, HOWEVER, THAT THERE ARE A LARGE NUMBER OF CONTRACTS STILL IN FORCE AND UNCOMPLETED WHICH CONTAIN THE SAME PROVISIONS AS THOSE INVOLVED IN THE DECISION OF JUNE 8, 1959.

IN THE LIGHT OF THE FOREGOING ADDITIONAL INFORMATION, WHICH WAS NOT AVAILABLE AT THE TIME OF OUR DECISION OF JUNE 8, 1959, WE NOW PERCEIVE NO OBJECTION TO THE APPLICATION OF ESCALATION TO THE AMOUNTS PAYABLE FOR SERVICES OF ERECTING ENGINEERS UNDER CONTRACTS OF THIS TYPE. THEREFORE, SO FAR AS APPLICABLE TO THE SUBJECT OF ERECTING ENGINEERS, THE ABOVE- MENTIONED DECISION WILL NOT BE REQUIRED TO BE FOLLOWED.

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