B-154792, OCT. 29, 1965, 45 COMP. GEN. 213

B-154792, OCT. 29, 1965, 45 COMP. GEN. 213

CONTRACTS - PAYMENTS - PARTIAL - OFF-SITE STORAGE OF MATERIALS UNDER A CONSTRUCTION CONTRACT AUTHORIZING PARTIAL PAYMENTS AND PROVIDING THAT IN PREPARING ESTIMATES OF PAYMENTS THE MATERIAL DELIVERED ON THE SITE MAY BE TAKEN INTO CONSIDERATION, DELIVERY OF MATERIAL TO AN OFF-SITE STORAGE YARD MAY NOT BE VIEWED AS DELIVERY TO THE SITE FOR THE PURPOSE OF PARTIAL PAYMENT, AND THE FACT THAT DELAY IN THE CONSTRUCTION MAY RESULT IF OFF-SITE STORAGE IS NOT INCLUDED IN PAYMENT ESTIMATES IS IMMATERIAL, THE CONTRACTOR HAVING THE LEGAL RESPONSIBILITY TO COMPLETE THE CONSTRUCTION ON TIME; HOWEVER, THE CONTRACT MAY BE MODIFIED TO AUTHORIZE PARTIAL PAYMENTS FOR MATERIALS STORED "OFF-SITE" IF IT IS IN THE INTEREST OF THE UNITED STATES, AND ADEQUATE SECURITY FOR ANY PAYMENTS MADE IS PROVIDED.

TO THE ARCHITECT OF THE CAPITOL, OCTOBER 29, 1965:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 20, 1965, REQUESTING A DECISION WHETHER YOUR OFFICE IS AUTHORIZED TO MAKE PARTIAL PAYMENTS UNDER CONSTRUCTION CONTRACT ACHO-264 WITH BALTIMORE CONTRACTORS, INC., FOR GRANITE FABRICATED BUT NOT DELIVERED TO THE SITE OF CONSTRUCTION.

ACCOMPANYING YOUR LETTER THERE ARE COPIES OF CORRESPONDENCE FROM BALTIMORE CONTRACTORS, INC., AND DAVIDSON GRANITE CO., INC., THE LATTER BEING THE SUBCONTRACTOR FOR THE GRANITE WORK, INDICATING THAT, BECAUSE OF LIMITED STORAGE FACILITIES ON THE SITE OF CONSTRUCTION, THE CONTRACTOR AND THE SUBCONTRACTOR WOULD LIKE TO STORE THE FABRICATED GRANITE IN THE CONTRACTOR'S STORAGE YARD AT FIRST AND O STREETS, S.E., SOME DISTANCE FROM THE SITE OF THE WORK AT THE ADDITIONAL HOUSE OFFICE BUILDING, UNTIL THE GRANITE CAN BE USED IN THE BUILDING, AND THAT THEY WOULD LIKE TO GET A PARTIAL PAYMENT FOR THE GRANITE EVEN THOUGH IT IS NOT DELIVERED TO THE SITE.

IN THAT CONNECTION, YOU REPORT THAT THE PAYMENT CLAUSE IN THE CONTRACT IS AS FOLLOWS:

1-07 PAYMENTS TO CONTRACTORS.--- (A) UNLESS OTHERWISE PROVIDED IN THE SPECIFICATIONS, PARTIAL PAYMENTS WILL BE MADE AS THE WORK PROGRESSES AT THE END OF EACH CALENDAR MONTH, OR AS SOON THEREAFTER AS PRACTICABLE, OR AT MORE FREQUENT INTERVALS AS DETERMINED BY THE CONTRACTING OFFICER. PREPARING ESTIMATES THE MATERIAL DELIVERED ON THE SITE AND PREPARATORY WORK DONE MAY BE TAKEN INTO CONSIDERATION.

YOU STATE FURTHER THAT THE INSERTION OF A PROVISION FOR PARTIAL PAYMENT FOR OFF-SITE STORAGE WAS CONSIDERED IN DRAFTING THE CONTRACT TERMS AND IT WAS OMITTED INTENTIONALLY. IT IS INDICATED THAT SUCH A PROVISION WAS CONSIDERED UNDESIRABLE BECAUSE OF THE ADDITIONAL EXPENSE WHICH WOULD RESULT FROM HAVING TO MAKE A DUAL INSPECTION, I.E., ONE WHEN THE GRANITE WOULD BE DELIVERED AT THE STORAGE YARD AND ANOTHER WHEN IT WOULD BE DELIVERED TO THE SITE. IT IS INDICATED FURTHER THAT THE PAYMENT FOR DELIVERY OF MATERIAL OFF SITE IS CONSIDERED TO BE UNFAIR TO THE OTHER BIDDERS WHO BID ON THE CONTRACT SINCE EARLY PAYMENT WOULD RESULT IN A FINANCIAL BENEFIT FLOWING TO THE CONTRACTOR WHICH THE OTHER BIDDERS COULD NOT HAVE EXPECTED WHEN BIDDING FOR THE JOB. ADDITIONALLY, IT IS STATED THAT BEFORE THE SUBCONTRACTOR WAS SELECTED TO DO THE GRANITE WORK, IT WAS ADVISED AT A CONFERENCE WITH YOUR REPRESENTATIVES THAT THE GRANITE COULD NOT BE PAID FOR UNDER THE CONTRACT UNTIL DELIVERED TO THE SITE.

THE CONTRACTOR AND SUBCONTRACTOR SUGGEST THAT DELIVERY TO THE OFF SITE STORAGE YARD SHOULD BE CONSIDERED DELIVERY TO THE SITE FOR THE PURPOSE OF THE PARTIAL PAYMENT. MOREOVER, THEY BOTH STATE THAT THE PROJECT WILL BE DELAYED UNLESS THE PARTIAL PAYMENT WHICH IS REQUESTED IS RECEIVED.

INASMUCH AS SECTION 2-16 (A) OF THE SPECIFICATIONS, QUOTED IN THE SUBCONTRACTOR'S LETTER OF OCTOBER 1 TO THE CONTRACTOR, PROVIDES FOR STORAGE "AT THE SITE" AND "OFF THE SITE," BUT THE PAYMENT CLAUSE IN THE CONTRACT PROVIDES FOR MATERIAL DELIVERED "ON THE SITE" BEING CONSIDERED FOR PARTIAL PAYMENT PURPOSES, WE DO NOT BELIEVE THAT DELIVERY TO A STORAGE YARD "OFF THE SITE" SHOULD BE CONSIDERED AS DELIVERY TO THE STORAGE SPACE "ON THE SITE" WITHIN THE MEANING OF THE PAYMENT CLAUSE. IN THIS REGARD, SECTION 2-16 (A) IS QUOTED BY THE SUBCONTRACTOR AS PROVIDING THAT SINCE AVAILABLE STORAGE SPACE "AT THE SITE" WILL BE LIMITED FOR MATERIAL FOR IMMEDIATE USE, THE CONTRACTOR SHALL PROVIDE STORAGE YARDS "OFF THE SITE" AS NEEDED.

IN DECISION A-39249 OF APRIL 21, 1933, TO THE THEN ARCHITECT OF THE CAPITOL, OUR OFFICE ADVISED IN CIRCUMSTANCES QUITE SIMILAR TO THIS CASE THAT A REQUEST FOR PARTIAL PAYMENT FOR MATERIAL NOT DELIVERED TO THE SITE COULD NOT BE APPROVED FOR PAYMENT UNDER THE CONTRACT. IN THAT CASE THE MILL AND CABINET WORK SUBCONTRACTOR HAD FABRICATED MATERIAL FOR INCLUSION IN THE SUPREME COURT BUILDING THEN BEING BUILT. THE SUBCONTRACTOR FOUND THIS TO BE AN UNUSUAL FINANCIAL BURDEN AND THE CONTRACTOR REQUESTED PERMISSION TO INCLUDE FOR ALLOWANCE IN ITS MONTHLY PAY ESTIMATES THE COST OF THE MATERIAL FABRICATED AND BEING HELD IN STORAGE IN THE SUBCONTRACTOR'S PLANT. THE CONTRACTOR REPRESENTED THAT IF THIS WAS NOT DONE, THE SUBCONTRACTOR WOULD NOT BE ABLE TO CONTINUE FABRICATION AND THERE WOULD BE MATERIAL DELAYS IN COMPLETION OF THE CONTRACT AS A RESULT. OUR OFFICE HELD THAT PAYMENT FOR THE MATERIAL NOT DELIVERED AT THE SITE WAS PRECLUDED BY THE CONTRACT PAYMENT CLAUSE WHICH LIKE THE ONE IN THE IMMEDIATE CONTRACT PROVIDED THAT "IN PREPARING ESTIMATES THE MATERIAL DELIVERED ON THE SITE AND PREPARATORY WORK DONE MAY BE TAKEN INTO CONSIDERATION.' WITH REGARD TO THE SUGGESTION BY THE CONTRACTOR IN THE EARLIER CASE THAT IT MIGHT NOT BE ABLE TO COMPLETE THE CONTRACT ON TIME IF THE REQUESTED PAYMENTS WERE NOT AUTHORIZED, IT WAS OBSERVED IN THE DECISION THAT IT WAS THE LEGAL RESPONSIBILITY OF THE CONTRACTOR TO COMPLETE ON TIME.

IN VIEW OF THE FOREGOING, WE HAVE TO CONCLUDE ON THE BASIS OF THE PRESENT RECORD THAT YOUR OFFICE IS UNAUTHORIZED TO MAKE THE PARTIAL PAYMENTS WHICH HAVE BEEN REQUESTED IN THIS CASE. HOWEVER, OUR DECISION SHOULD NOT BE CONSTRUED AS PRECLUDING YOUR OFFICE FROM MODIFYING THE CONTRACT TO PROVIDE FOR PARTIAL PAYMENTS FOR MATERIALS STORED "OFF SITE" UNDER CIRCUMSTANCES WHERE IT WOULD BE IN THE INTEREST OF THE UNITED STATES TO DO SO, AND PROVIDED ANY SUCH MODIFICATION MAKES PROVISION FOR ADEQUATE SECURITY FOR ANY PAYMENTS MADE. 20 COMP. GEN. 917; 28 ID. 468.