B-126314, JAN. 31, 1956

B-126314, JAN. 31, 1956

TO THE HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 6, 1955, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING A CLAIM OF GIL WYNER COMPANY, INC., AND CAMPANELLA AND CARDI CONSTRUCTION COMPANY, JOINT VENTURERS, FOR ADDITIONAL PAYMENT FOR CHANGES DIRECTED BY MODIFICATION NO. 47 TO CONTRACT DA-19-016-ENG-838.

CONTRACT DA-19-016-ENG-838 WAS ENTERED INTO BY LETTER CONTRACT ON MAY 4, 1951, FOR CONSTRUCTION OF PAVEMENTS, UTILITIES AND REFUELING SYSTEM AT LORING AIR FORCE BASE, LIMESTONE, MAINE. WHEN THE DEFINITIVE CONTRACT WAS NEGOTIATED, LOT XI COVERED CONSTRUCTION OF THE REFUELING SYSTEM. ITEM 10 OF THE SCHEDULE OF PAYMENTS FOR LOT XI PROVIDED A LUMP-SUM PRICE FOR EACH CONTROL PIT IN THE REFUELING SYSTEM, AND PARAGRAPH 5-27B OF THE SPECIFICATIONS PROVIDED THAT THE 6-INCH FILL LINE WAS INCLUDED IN THE PRICE OF THE CONTROL PITS. ON MARCH 12, 1952, MODIFICATION NO. 47 WAS ISSUED INCORPORATING INTO THE CONTRACT CERTAIN CHANGES TO LOT XI, AND THE LUMP-SUM PRICE FOR ITEM 10 WAS INCREASED BY $506.35 FOR EACH CONTROL PIT, IN ACCORDANCE WITH THE CONTRACTOR'S ESTIMATE OF INCREASED COSTS.

THE CHANGES ORDERED BY MODIFICATION NO. 47 INCLUDED, AMONG OTHER THINGS, THE ADDITION OF AN EXPANSION LOOP TO EACH 6-INCH FILL LINE, WHICH NECESSITATED A TOTAL OF 500 FEET OF PIPE BEING ADDED IN THE FIFTEEN CONTROL PITS. BY LETTER DATED OCTOBER 29, 1952, THE CONTRACTOR SUBMITTED A CLAIM FOR THE ADDITIONAL 500 FEET OF 6-INCH FILL LINE, WHICH IT CLAIMED HAD NOT BEEN INCLUDED IN THE $506.35 INCREASE UNDER THE CHANGE ORDER, AND BY LETTER DATED APRIL 30, 1953, THE CONTRACTING OFFICER DENIED THIS REQUEST ON THE GROUND THAT, SINCE THE PRICE FOR THE PITS INCLUDED THE FILL LINE THE CONTRACTOR WAS BOUND BY ITS ACCEPTANCE OF THE CHANGE ORDER. LETTER DATED JUNE 20, 1955, THE CONTRACTOR ALLEGED ERROR IN THAT THE ADDITIONAL PIPE COST WAS NOT CONSIDERED IN THE ADJUSTMENT UNDER MODIFICATION NO. 47 THROUGH MUTUAL MISTAKE.

THE CONTRACTING OFFICER IN HIS FINDING OF FACTS STATES THAT, ALTHOUGH ESTIMATING ERRORS WERE MADE BY BOTH PARTIES DURING THE NEGOTIATION OF THE MODIFICATION, THE ERRORS INVOLVED DIFFERENT MATTERS IN THAT THE GOVERNMENT ERRED IN ITS ESTIMATE OF THE AMOUNT OF ADDITIONAL PIPING THAT WOULD BE REQUIRED AS A RESULT OF THE ADDITION OF THE EXPANSION LOOPS TO THE 6-INCH FILL LINES. THE CONTRACTOR ALLEGES THAT THE REASON THAT IT DID NOT INCLUDE IN ITS ESTIMATE THE COST OF THE ADDITIONAL PIPING FOR THE EXPANSION LOOPS WAS THAT, PREVIOUS TO THE EXECUTION OF MODIFICATION NO. 47, THE GOVERNMENT HAD MADE, AND THE CONTRACTOR HAD RECEIVED, PAYMENT FOR THE 6-INCH FILL LINES ON A LINEAR FOOT BASIS UNDER ITEM 7 OF THE SCHEDULE OF PAYMENTS FOR LOT XI. ITEM 7 OF LOT XI PROVIDED FOR PAYMENT FOR THE DEFUELING LINES CONNECTED WITH THE CONTROL PITS. IT IS REPORTED THAT BOTH THE CONTRACTING OFFICER AND THE CONTRACTOR NOW AGREE THAT PAYMENT FOR THE FULL LINES ON A LINEAR-FOOT BASIS WAS ERRONEOUS IN THAT SUCH PAYMENT WAS COVERED IN THE LUMP-SUM PRICE PERTAINING TO THE CONTROL PITS; HOWEVER, IT DOES NOT APPEAR THAT THE ERROR HAD BEEN CORRECTED AT THE TIME THE CHANGE ORDER WAS NEGOTIATED.

THE CONTRACTING OFFICER STATES IN HIS REPORT THAT THE GOVERNMENT'S ESTIMATE OF $9,675, AS AGAINST THE JOINT VENTURER'S ESTIMATE OF $7,595.25, FOR THE COST OF PERFORMING THE CHANGES IN THE FIFTEEN CONTROL PITS ORDERED BY CHANGE ORDER NO. 47, WAS NOT SO GREAT AS TO INDICATE THAT THE JOINT VENTURERS HAD MADE A MISTAKE IN COMPUTING THEIR ESTIMATE. HOWEVER, IT IS FURTHER STATED THAT THE GOVERNMENT'S ESTIMATE INCLUDED APPROXIMATELY 300 ADDITIONAL FEET OF PIPE WHEREAS 500 FEET WAS REQUIRED, AND THAT IF THE GOVERNMENT'S ESTIMATE HAD BEEN BASED ON 500 FEET OF PIPE RATHER THAN 300 FEET, IT IS POSSIBLE THE GOVERNMENT'S ESTIMATE WOULD HAVE BEEN $1,000 MORE AND THEREFORE THE CONTRACTING OFFICER WOULD HAVE BEEN ON NOTICE THAT THE JOINT VENTURER HAD MADE A MISTAKE IN COMPUTING THE COST OF PERFORMING THE CHANGED WORK. THE CONTRACTING OFFICER'S ARGUMENT THAT HE WAS NOT ON NOTICE THAT THE CONTRACTOR'S ESTIMATE DID NOT INCLUDE THE ADDITIONAL PIPE IS NOT UNDERSTOOD, SINCE THE RECORD SHOWS THAT THE CONTRACTOR'S LETTER OF APRIL 11, 1952, FURNISHING ITS ESTIMATE OF INCREASED COST FOR THE CHANGES REQUIRED BY MODIFICATION NO. 47, WAS ACCOMPANIED BY A SUMMARY SHEET AND COST BREAKDOWNS, WHICH, ACCORDING TO A LETTER OF MARCH 27, 1953, FROM THE SUBCONTRACTOR WHO DID THE WORK, SHOWED THAT THE ESTIMATE DID NOT INCLUDE ADDITIONAL PIPE. NO COPY OF THE COST BREAKDOWN REFERRED TO HAS BEEN INCLUDED IN THE RECORD FURNISHED BUT, SINCE THE CONTRACTING OFFICER HAS NOT DENIED THAT THE COST BREAKDOWN SHOWED THAT THE COST OF PIPE WAS NOT INCLUDED, WE ASSUME THAT THE CONTRACTOR'S ALLEGATIONS ARE TRUE, AND THEREFORE CONCLUDE THAT THE CONTRACTING OFFICER WAS ON NOTICE OF THE MISTAKE IN THE CONTRACTOR'S ESTIMATE.

THE FACTS PRESENTED ARE NOT SUCH AS TO JUSTIFY A REFORMATION OF THE CHANGE ORDER, SINCE IT DOES NOT APPEAR THAT ANY MUTUAL UNDERSTANDING WAS EVER IN FACT ARRIVED AT. RATHER, WE ARE OF OPINION THAT THE PRICE ADJUSTMENT CONTAINED IN MODIFICATION NO. 47 IS NOT BINDING ON THE CONTRACTOR WITH RESPECT TO ITS PRESENT CLAIM, SINCE THE CONTRACTING OFFICER WAS ON NOTICE THAT THE ADJUSTMENT CLAIMED WOULD NOT INCLUDE ANY PIPE COST, AND WE FIND NO GROUND FOR CHARGING THE CONTRACTOR WITH NOTICE OF THE CONTRACTING OFFICER'S APPARENT INTENTION TO INCLUDE THAT ITEM IN THE FIGURE FROM WHICH THE CONTRACTOR HAD EXCLUDED IT.

ACCORDINGLY, IT WOULD APPEAR THAT IT IS THE DUTY OF THE CONTRACTING OFFICER UNDER ARTICLE 3 OF THE CONTRACT NOW TO MAKE AN EQUITABLE ADJUSTMENT IN PRICE FOR THE CHANGES REQUIRED BY CHANGE ORDER NO. 47, EITHER BY AGREEMENT, OR BY HIS DETERMINATION WHICH WOULD THEN BE SUBJECT TO APPEAL BY THE CONTRACTOR UNDER THE DISPUTES ARTICLE.