B-164845, OCT. 11, 1968

B-164845, OCT. 11, 1968

TO E. AND E. J. PFOTZER:

BY LETTER OF JULY 5, 1968, WITH ENCLOSURES, YOU REQUEST RECONSIDERATION OF THE ACTION OF OUR CLAIMS DIVISION, DATED JUNE 3, 1968, WHEREIN YOUR CLAIM UNDER CONTRACT NO. DA-49-080-ENG-27, ISSUED BY THE CORPS OF ENGINEERS FOR THE CONSTRUCTION OF SIX ADDITIONAL FILTERS FOR THE DALECARLIA FILTRATION PLANT, WASHINGTON, D.C., WAS CONSIDERED BARRED PURSUANT TO THE ACT OF OCTOBER 9, 1940, 31 U.S.C. 71A.

THE PROVISIONS OF 31 U.S.C. 71A PROVIDE IN PART THAT A CLAIM "SHALL BE FOREVER BARRED UNLESS SUCH CLAIM, * * * SHALL BE RECEIVED * * * WITHIN TEN FULL YEARS AFTER THE DATE SUCH CLAIM FIRST ACCRUED: * * *.' OUR CLAIMS DIVISION, IN RESPONSE TO YOUR CLAIM, STATED IN PART:

"OUR RECORDS SHOW THAT BY -NOTICE OF COMPLETION- DISPATCHED APRIL 19, 1951, THE CORPS OF ENGINEERS, WASHINGTON DISTRICT, NOTIFIED YOU THAT WORK UNDER CONTRACT NO. DA-49-080-ENG-27 -IS ACCEPTED ON BEHALF OF THE UNITED STATES OF AMERICA AS OF 17 FEBRUARY 1951.- THEREFORE, THE LATTER DATE MUST BE REGARDED AS THE DATE THE CONTRACT IN QUESTION WAS COMPLETED, AND THE DATE UPON WHICH YOUR CLAIM THEREUNDER ACCRUED. INASMUCH AS YOUR CLAIM UNDER THAT CONTRACT WAS FIRST RECEIVED IN OUR OFFICE DECEMBER 4, 1961, IT IS OBVIOUS THAT MORE THAN TEN FULL YEARS HAD ELAPSED SINCE THE DATE YOUR CLAIM FIRST ACCRUED, AND IT FOLLOWS THAT CONSIDERATION OF YOUR CLAIM IS BARRED BY THE PROVISIONS OF THE ACT OF OCTOBER 9, 1940.'

THE RECORD DISCLOSES THAT YOU HAVE FILED SEVERAL CLAIMS FOR ADDITIONAL COMPENSATION UNDER VARIOUS PROVISIONS OF THE SUBJECT CONTRACT WITH THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS (BOARD). ON JANUARY 13, 1966, THE BOARD DENIED THESE CLAIMS. SEE ENG. BCA 2678.

ADDITIONALLY, YOU FILED A CLAIM, BASED ON THE THEORY OF AN ALLEGED MISTAKE IN YOUR BID, WHICH THE BOARD DENIED BY STATING THAT NEITHER THE CONTRACTING OFFICER NOR THE BOARD HAD JURISDICTION TO CONSIDER IT UNDER THE DISPUTES CLAUSE OF THE SUBJECT CONTRACT. SEE ENG. BCA 2685, JANUARY 12, 1966.

YOUR CLAIM TO THIS OFFICE IS THE CLAIM CONSIDERED BY THE BOARD AS ENG. BCA 2685, AND SINCE OUR PREVIOUS DENIAL WAS BASED UPON A CONCLUSION THAT THE CLAIM WAS TIME BARRED THE PRINCIPAL QUESTION FOR CONSIDERATION IS WHETHER THE CLAIM FIRST ACCRUED AT THE TIME OF THE COMPLETION OF THE SUBJECT WORK, OR AT A LATER DATE. IN CROWN COAT FRONT CO. V U.S., 386 U.S. 503, THE COURT STATED AT PAGE 509 IN PART AS FOLLOWS:

"SINCE THE DECISION BELOW, THE COURT OF CLAIMS HAS DECIDED NAGER ELECTRIC CO., INC. V UNITED STATES, 177 CT. CL. 234, 368 F.2D 847, A UNANIMOUS DECISION BY THAT COURT SUPPORTED BY AN EXHAUSTIVE OPINION BY JUDGE DAVIS DEALING WITH THE APPLICATION OF THE -FIRST ACCRUAL- LANGUAGE OF 28 U.S.C. SEC. 2501 TO BOTH BREACH AND DISPUTES CLAUSE CLAIMS UNDER THE TYPICAL GOVERNMENT CONTRACT. THE CONCLUSION OF THE COURT OF CLAIMS WAS THAT IT WOULD ADHERE TO WHAT IT CONSIDERED TO BE ITS LONG-STANDING RULE: (1) WHEN ADMINISTRATIVE PROCEEDINGS WITH RESPECT TO A CONTRACTOR'S CLAIM SUBJECT TO THE DISPUTES CLAUSE EXTEND BEYOND THE COMPLETION OF THE CONTRACT, HIS RIGHT OF ACTION FIRST ACCRUES WHEN THE ADMINISTRATIVE ACTION IS FINAL, AND NOT BEFORE, AND (2) WHEN THE CONTRACTOR HAS BREACH CLAIMS AS WELL AS DISPUTES CLAUSE CLAIMS THE STATUTE BEGINS TO RUN ON BREACH CLAIMS AS WELL ONLY AT THE CONCLUSION OF ADMINISTRATIVE ACTION ON THE CLAIMS ARISING UNDER THE CONTRACT. AS WILL BE EVIDENT BELOW, WE DO NOT REACH THE QUESTION OF BREACH CLAIMS IN THIS CASE. BUT WITH RESPECT TO CLAIMS ARISING UNDER THE CONTRACT, SUCH AS ONE ASSERTED UNDER THE CHANGES CLAUSE, WE AGREE WITH THE COURT OF CLAIMS AND ESSENTIALLY FOR THE REASONS WHICH THAT COURT ARTICULATED.'

TO THE EXTENT THAT YOUR CLAIM IS BASED ON A MISTAKE IN BID THEORY, IT IS SIMILAR TO A BREACH OF CONTRACT CLAIM, IN THAT IT DOES NOT ARISE UNDER THE PROVISIONS OF THE CONTRACT, AND THEREFORE, IT IS NOT SUBJECT TO THE "DISPUTES" PROCEDURE. THE SUPREME COURT IN THE CROWN COAT FRONT COMPANY CASE DID NOT DECIDE WHETHER A CLAIM, NOT ARISING UNDER THE CONTRACT, ACCRUES AT THE DATE OF THE COMPLETION OF THE CONTRACT WORK OR AT A LATER DATE. HOWEVER, IN NAGER ELECTRIC COMPANY, INC. V U.S., 368 F.2D 847, THE COURT OF CLAIMS HELD THAT A CLAIM UNDER A GOVERNMENT CONTRACT DOES NOT ACCRUE PIECEMEAL AND NO CLAIM UNDER A GOVERNMENT CONTRACT CONTAINING A "DISPUTES" PROVISION ARISES UNTIL THE ADMINISTRATIVE REMEDY IS EXHAUSTED. BASED ON THE FOREGOING, WE CONCLUDE THAT YOUR CLAIM ACCRUED ON JANUARY 13, 1966, AND WE WILL THEREFORE CONSIDER ITS MERITS.

IN ANALYZING YOUR CLAIM FOR ADDITIONAL COMPENSATION, IT APPEARS THAT RELIEF IS SOUGHT ON THE THEORY THAT THE CONTRACTING OFFICER FAILED TO DISCHARGE HIS ERROR DETECTION DUTY BY NOT CALLING TO YOUR ATTENTION THE ALLEGED MISTAKE IN YOUR BID; THEREFORE, YOU CLAIM THAT YOU ARE ENTITLED TO COMPENSATION IN THE AMOUNT OF $356,000, WHICH IS IN ADDITION TO THE FULL CONTRACT PRICE OF $292,790 ALREADY PAID TO YOU.

THE RECORD INDICATES THAT SIX BIDS WERE RECEIVED IN THE FOLLOWING AMOUNTS: $292,790; $298,980; $386,710; $393,000; $412,786; $417,714. THE GOVERNMENT'S ESTIMATE WAS $356,200. ASSUMING, ARGUENDO, THAT YOU DID MAKE AN ERROR IN YOUR BID, THE PRIMARY QUESTION IS WHETHER THE CIRCUMSTANCES WERE SUCH AS TO PRECLUDE A VALID AND BINDING CONTRACT FROM BEING CONSUMMATED BY ACCEPTANCE OF THE BID. AT THE TIME OF ACCEPTANCE, THE CONTRACTING OFFICER HAD RECEIVED NO NOTICE FROM YOU OF ERROR, AND THERE WAS NOTHING ON THE FACE OF YOUR BID TO INDICATE THAT THE PRICE WAS NOT INTENDED TO BE AS QUOTED. YOUR BID WAS ONLY 18 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE, AND ONE OTHER BID WAS RECEIVED WHICH WAS 16 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE. SINCE THE CONTRACTING OFFICER NEED ONLY LOOK TO THE REASONABLENESS OF THE TOTAL BID PRICES, AND IS NOT REQUIRED TO CHECK INDIVIDUAL ITEM PRICES, WE SEE NO VALID BASIS ON WHICH HE CAN BE CHARGED WITH CONSTRUCTIVE NOTICE OF ERROR IN YOUR BID. THE ACCEPTANCE OF YOUR BID THEREFORE, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V UNITED STATES, 259 U.S. 75.

ACCORDINGLY, ON THE BASIS OF THE FACTS OF RECORD AND THE LAW APPLICABLE THERETO, THERE APPEARS TO BE NO BASIS FOR ANY RELIEF TO YOU ON ACCOUNT OF THE ALLEGED MISTAKE IN YOUR BID.