B-131601, JUN. 20, 1957

B-131601, JUN. 20, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO SECOND INDORSEMENT DATED MARCH 7, 1957, FILE ENGAC- 803, WITH WHICH THE OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY, FORWARDED TO OUR OFFICE FOR DIRECT SETTLEMENT THE CLAIM OF THE CITY OF MOBRIDGE, SOUTH DAKOTA, FOR $5,490 REPRESENTING THE ESTIMATED COST OF INSTALLATION OF A 700-FOOT 12-INCH MAIN UNDER CONTRACT NO. DA-25-066- CIVENG-56-278, DATED FEBRUARY 10, 1956, INVOLVING THE RELOCATION OF THE CITY'S WATER SUPPLY INTAKE AND ITS WATER TREATMENT PLANT INCIDENT TO THE CONSTRUCTION OF THE OAHE DAM AND RESERVOIR PROJECT.

THE CONTRACT IS THE USUAL FORM OF LUMP-SUM CONTRACT WITH AN OWNER FOR RELOCATION, REARRANGEMENT, OR ALTERATION OF FACILITIES. ARTICLE 1 PROVIDES, IN PART, AS FOLLOWS:

"OBLIGATION OF THE OWNER. A. THE OWNER SHALL FURNISH ALL SERVICES, LABOR, MATERIALS, TOOLS AND EQUIPMENT NECESSARY TO PERFORM RELOCATION, REARRANGEMENT, OR ALTERATION OF FACILITIES. ARTICLE 1 INTAKE TO BE CONSTRUCTED BY THE GOVERNMENT) CONSISTING OF A WATER TREATMENT PLANT * * ; RAW WATER MAIN CONNECTION FROM THE INTAKE STRUCTURE, SUPPLY LINE CONNECTION TO THE OWNER'S DISTRIBUTION SYSTEM * * *.'

THE AMOUNT CLAIMED REPRESENTS THE ESTIMATED CONSTRUCTION COST OFA 700- FOOT SECTION OF THE RAW WATER MAIN LYING BETWEEN THE INTAKE STRUCTURE AND THE GOVERNMENT TAKING LINE, WHICH LINE PASSES BETWEEN THE INTAKE STRUCTURE AND THE WATER TREATMENT PLANT. THERE IS NO QUESTION CONCERNING THE CITY'S OBLIGATION WITH RESPECT TO THE PORTION OF THE LINE FROM THE TAKING LINE TO THE TREATMENT PLANT.

THE CITY'S CLAIM FOR THE ADDITIONAL AMOUNT WAS FIRST BROUGHT TO THE ATTENTION OF THE DISTRICT ENGINEER BY LETTER OF APRIL 12, 1956, FROM THE CITY'S ARCHITECT-ENGINEER WHEREIN IT IS STATED, IN EFFECT, THAT DURING THE CONTRACT NEGOTIATIONS IT WAS UNDERSTOOD THAT THE GOVERNMENT WOULD BE RESPONSIBLE FOR THAT PORTION OF THE LINE COVERED BY THE CLAIM. IN SUPPORT OF THIS STATEMENT THERE WAS FORWARDED WITH THE ABOVE LETTER A COPY OF THE CITY'S ESTIMATE USED IN THE NEGOTIATIONS. ITEM 22 OF THE ESTIMATE IS AS FOLLOWS:

"PLANT INFLUENT LINE, 12 INCH (FROM TAKE LINE TO PLANT) $3,100"

ON THE SECOND PAGE OF THE ESTIMATE, UNDER "TRANSMISSION LINES," THE FOLLOWING ITEM APPEARS:

"12 INCHES FROM PLANT TO PRESENT 10 INCHES $15,250"

IN THE ADMINISTRATIVE REPORT OF JANUARY 22, 1957, THE CONTRACTING OFFICER STATES THAT THE LUMP-SUM PRICE WAS NEGOTIATED WITH THE UNDERSTANDING THAT THE PORTION OF THE LINE BETWEEN THE INTAKE STRUCTURE AND THE GOVERNMENT TAKING LINE WOULD BE CONSTRUCTED BY THE GOVERNMENT AND THAT IT WOULD NOT BE INCLUDED AS PART OF THE CITY'S OBLIGATION UNDER THE CONTRACT. EVIDENCE THAT THIS WAS THE INTENTION OF THE PARTIES HE STATES THAT PRIOR TO THE TIME THE CONTRACT WAS EXECUTED THE GOVERNMENT INFORMED THE CITY'S ARCHITECT-ENGINEER BY LETTER OF DECEMBER 22, 1955, THAT ONLY THE PORTION OF THE RAW WATER LINE OUTSIDE OF THE PROPOSED GOVERNMENT TAKING LINE SHOULD BE INCLUDED IN THE CITY'S ESTIMATE; THAT THE THINKING AT THAT TIME WAS TO THE EFFECT THAT ALL NECESSARY CONSTRUCTION ACROSS GOVERNMENT PROPERTY WOULD BE INCLUDED IN A GOVERNMENT CONSTRUCTION CONTRACT FOR THE INTAKE FACILITIES; AND THAT BOTH THE GOVERNMENT'S ESTIMATE AND THE ESTIMATE PREPARED BY THE CITY'S ARCHITECT-ENGINEER OMITTED THE 700 FEET OF LINE BETWEEN THE INTAKE STRUCTURE AND THE GOVERNMENT TAKING LINE. STATES THAT THE ABOVE TWO ITEMS OF $3,100 AND $15,250 IN THE CITY'S ESTIMATE CONSTITUTE ALL OF THE 12-INCH LINE IN SUCH ESTIMATE. AS FURTHER EVIDENCE THAT THE CONTRACT AS EXECUTED IS CONTRARY TO THE INTENTIONS OF THE PARTIES HE REFERS TO THE ITEM ON PAGE 3 OF THE GOVERNMENT'S ESTIMATE UNDER THE HEADING "WATER LINES," AS FOLLOWS:

"12 INCH C.I. MAIN--- 7 FT. COVER LIN. FT. 2,920 8.38 24,470"

HE STATES THAT THE FOOTAGE OF 2,920 AS SHOWN IS THE ESTIMATED DISTANCE BETWEEN THE TAKING LINE AND THE POINT OF CONNECTION WITH THE EXISTING LINE; THAT IT DOES NOT INCLUDE THE 700 FEET BETWEEN THE INTAKE STRUCTURE AND THE TAKING LINE; AND THAT NO OTHER REFERENCE TO THE 12-INCH MAIN IS MADE IN THE ESTIMATE. IN CONCLUSION THE CONTRACTING OFFICER STATES THAT THE ADDITIONAL AMOUNT OF $5,490 CLAIMED BY THE CITY REPRESENTS A UNIT COST OF $7.84 PER LINEAL FOOT, WHICH IS LESS THAN THE GOVERNMENT'S ESTIMATE OF $8.38 AND THAT IF THE WORK COVERED BY THE CLAIM HAD BEEN INCLUDED IN THE ORIGINAL GOVERNMENT'S ESTIMATE THE LUMP-SUM PAYMENT UNDER THE CONTRACT WOULD HAVE BEEN$5,866 MORE THAN THE AMOUNT STIPULATED. HE STATES THAT IF PAYMENT OF THE CLAIM SHOULD BE ALLOWED THE CONTRACT WILL BE MODIFIED TO PROVIDE FOR PAYMENT OF THE INVOLVED WORK.

THE RECORD SUFFICIENTLY ESTABLISHES THAT BOTH THE CITY AND THE GOVERNMENT ENTERED INTO THE CONTRACT ON THE BASIS THAT THE LUMP-SUM CONTRACT PRICE INCLUDED ONLY THAT PART OF THE WATER LINE OUTSIDE THE GOVERNMENT TAKING LINE AND THAT IT DID NOT INCLUDE THE 700-FOOT PORTION OF THE LINE BETWEEN THE INTAKE STRUCTURE AND THE GOVERNMENT TAKING LINE. THUS, THE CONTRACT AS EXECUTED WAS CONTRARY TO THE INTENTIONS OF THE PARTIES.

ACCORDINGLY, OUR OFFICE WILL NOT OBJECT TO A MODIFICATION OF THE CONTRACT TO CONFORM TO THE ACTUAL INTENTION OF THE PARTIES AS SUGGESTED BY THE CONTRACTING OFFICER. PAYMENT OF THE CLAIM, HOWEVER, WILL NOT BE MADE BY THIS OFFICE AS RECOMMENDED BY THE CONTRACTING OFFICER SINCE THE RECORD SHOWS THAT THE COMPLETION DATE UNDER THE CONTRACT IS MARCH 31, 1958, AND THAT THE WORK HAS NOT BEEN COMPLETED. WHILE IT IS REPORTED THAT IT WAS ORIGINALLY INTENDED THAT THE GOVERNMENT'S PART OF THE INTAKE LINE WOULD BE INCLUDED IN A CONTRACT COVERING CONSTRUCTION OF THE INTAKE STRUCTURE, NO FURTHER INFORMATION WAS FURNISHED AS TO THE IMPLEMENTATION OF THAT INTENTION. IF THE LINE FOR WHICH THE CITY IS CLAIMING WAS IN FACT INCLUDED IN ANY OTHER CONTRACT, IT SHOULD, OF COURSE, BE ELIMINATED THEREFROM, WITH AN ADJUSTMENT OF THE CONTRACT PRICE COMMENSURATE WITH THE PAYMENT TO THE CITY.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT AND THE VOUCHER ON WHICH PAYMENT WILL BE MADE.