B-141269, DECEMBER 28, 1959, 39 COMP. GEN. 478

B-141269, DECEMBER 28, 1959, 39 COMP. GEN. 478

CONTRACTS - DELAYS - STRIKES - UNFORESEEABLE CAUSES - EXTENSIONS OF TIME A STRIKE WHICH IS IN EXISTENCE AND KNOWN TO THE CONTRACTING PARTIES AT THE TIME OF AN AWARD OF A CONSTRUCTION CONTRACT WHICH CONTAINS A CLAUSE EXCUSING PERFORMANCE DELAYS DUE TO UNFORESEEABLE CAUSES MAY NOT BE REGARDED AS AN UNFORESEEABLE CAUSE TO JUSTIFY AN EXTENSION OF TIME FOR PERFORMANCE OF THE CONTRACT. UNDER A CONTRACT WHICH DOES NOT REQUIRE THAT THE CAUSES OF DELAY BE UNFORESEEABLE IN ORDER TO EXCUSE PERFORMANCE, A STRIKE WHICH IS BEYOND THE CONTROL AND WITHOUT THE FAULT OF THE CONTRACTOR AND PREVENTS HIM FROM MEETING THE DELIVERY SCHEDULE JUSTIFIES THE EXTENSION OF TIME FOR PERFORMANCE COMMENSURATE WITH THE STRIKE DELAY, AND IT IS IMMATERIAL WHETHER THE CONTRACT WAS AWARDED AFTER THE DATE OR PRIOR TO THE DATE THE STRIKE BEGAN.

TO THE ADMINISTRATOR, FEDERAL AVIATION AGENCY, DECEMBER 28, 1959:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 16, 1959, REQUESTING OUR OPINION REGARDING THE PROPRIETY OF GRANTING EXTENSIONS OF TIME FOR PERFORMANCE UNDER TWO DIFFERENT TYPES OF CONTRACTS EXECUTED BY YOUR AGENCY, ON WHICH PERFORMANCE HAS BEEN DELAYED BECAUSE THE RECENT STRIKE IN THE STEEL MANUFACTURING INDUSTRY HAS PREVENTED TIMELY SUPPLY OF MATERIALS TO THE CONTRACTORS.

YOUR FIRST QUESTION ARISES IN CONNECTION WITH A CONTRACT FOR CONSTRUCTION OF AN AIRPORT HIGH INTENSITY LIGHTING SYSTEM ON WHICH BIDS WERE REQUESTED AFTER THE STEEL STRIKE HAD STARTED, AND ON WHICH AWARD WAS MADE WHILE THE STRIKE WAS STILL IN PROGRESS. THE PROVISIONS OF ARTICLE 5 (C) OF STANDARD FORM 23A WERE INCLUDED IN THE CONTRACT PROVISIONS, AND THE CONTRACT REQUIRED COMPLETION OF ALL WORK WITHIN 75 DAYS, WITH PROVISION FOR ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAY. HOWEVER, ON OCTOBER 22 THE CONTRACTOR ADVISED THAT HE WAS UNABLE TO OBTAIN NECESSARY STEEL AND THAT HE, THEREFORE, WAS UNABLE TO PROCEED WITH THE WORK. IN VIEW OF THE ABOVE, YOU HAVE ASKED US TO ASSUME THAT THE FACTS WILL SUPPORT THE CONTRACTOR'S CLAIM AND TO ADVISE WHETHER YOU WOULD BE JUSTIFIED IN GRANTING THE CONTRACTOR AN EXTENTION OF TIME IN WHICH TO PERFORM THE CONTRACT.

ARTICLE 5 (C) OF STANDARD FORM 23A PROVIDES, IN PERTINENT PART, AS FOLLOWS:

THE RIGHT OF THE CONTRACTOR TO PROCEED SHALL NOT BE TERMINATED * * * NOR THE CONTRACTOR CHARGED WITH LIQUIDATED OR ACTUAL DAMAGES * * * BECAUSE OF ANY DELAYS IN THE COMPLETION OF THE WORK DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD, OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT * * *, ACTS OF ANOTHER CONTRACTOR * * *, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER, OR DELAYS OF SUBCONTRACTORS OR SUPPLIES DUE TO SUCH CAUSES: * * *

THE PURPOSE AND APPLICATION OF THE PHRASE "UNFORESEEABLE CAUSES," AS USED IN THE ABOVE PARAGRAPH WAS EXPLAINED AS FOLLOWS IN FEBRUARY 1943, BY THE SUPREME COURT, IN THE CASE OF UNITED STATES V. BROOKS-CALL AWAY CO., 318 U.S. 120:

THE PURPOSE OF THE PROVISO IS TO REMOVE UNCERTAINTY AND NEEDLESS LITIGATION BY DEFINING WITH SOME PARTICULARITY THE OTHERWISE HAZY AREA OF UNFORESEEABLE EVENTS WHICH MIGHT EXCUSE NONPERFORMANCE WITHIN THE CONTRACT PERIOD. THUS CONTRACTORS KNOW THEY ARE NOT TO BE PENALIZED FOR UNEXPECTED IMPEDIMENTS TO PROMPT PERFORMANCE, AND, SINCE THEIR BIDS CAN BE BASED ON FORESEEABLE AND PROBABLE, RATHER THAN POSSIBLE HINDRANCES, THE GOVERNMENT SECURES THE BENEFIT OF LOWER BIDS AND AN ENLARGED SELECTION OF BIDDERS.

THE PURPOSE OF THE PROVISO, TO PROTECT THE CONTRACTOR AGAINST THE UNEXPECTED, AND ITS GRAMMATICAL SENSE, BOTH MILITATE AGAINST HOLDING THAT THE LISTED EVENTS ARE ALWAYS TO BE REGARDED AS UNFORESEEABLE, NO MATTER WHAT THE ATTENDANT CIRCUMSTANCES ARE. RATHER THE ADJECTIVE ,UNFORESEEABLE" MUST MODIFY EACH EVENT SET OUT IN THE "INCLUDING" PHRASE.

NOT EVERY FIRE OR QUARANTINE OR STRIKE OR FREIGHT EMBARGO SHOULD BE AN EXCUSE FOR DELAY UNDER THE PROVISO. * * * A STRIKE MAY BE AN OLD AND CHRONIC ONE WHOSE SETTLEMENT WITHIN AN EARLY PERIOD IS NOT EXPECTED. ANY OF THESE SITUATIONS THERE WOULD BE NO POSSIBLE REASON WHY THE CONTRACTOR, WHO OF COURSE ANTICIPATED THESE OBSTACLES IN HIS ESTIMATE OF TIME AND COST, SHOULD HAVE HIS TIME EXTENDED BECAUSE OF THEM.

* * * THE SENSE OF THE PROVISO REQUIRES IT TO BE UNFORESEEABLE BEFORE REMISSION OF LIQUIDATED DAMAGES FOR DELAY IS WARRANTED.

IN B-35485, JULY 14, 1943, 23 COMP. GEN. 25, AFTER REFERRING TO THE REASONING OF THE COURT AS SET OUT ABOVE, IT WAS HELD, IN PERTINENT PART, AS FOLLOWS:

HENCE THERE NOW CAN BE NO DOUBT THAT, IN ORDER FOR AN ACT OF THE GOVERNMENT TO BE CLASSED AS AN EXCUSABLE CAUSE FOR FAILURE TO PERFORM PROPERLY UNDER A CONTRACT SUCH AS HERE INVOLVED, IT FIRST MUST BE ESTABLISHED THAT THE ACT WAS SO ABNORMAL, EXTRAORDINARY, OR UNUSUAL, THAT IT REASONABLY COULD NOT HAVE BEEN FORESEEN AND PROVIDED AGAINST IN THE CONTRACT. * * *

SINCE IT IS THUS READILY APPARENT THAT ANY CONDITIONS BROUGHT ABOUT BY THE ISSUANCE OF THE SAID DIRECTIVE AND ORDER WHICH MAY HAVE AFFECTED THE CONTRACTOR'S ABILITY TO PERFORM THE CONTRACT IN ACCORDANCE WITH ITS REQUIREMENTS, EITHER WERE IN EXISTENCE OR SHOULD HAVE BEEN ANTICIPATED AT THE TIME THE CONTRACT WAS EXECUTED, IT NECESSARILY FOLLOWS THAT SUCH CONDITIONS PROPERLY MAY NOT BE REGARDED AS CONSTITUTING "UNFORESEEABLE CAUSES" WITHIN THE MEANING OF THAT TERM AS USED IN THE CONTRACT.

ONE PRINCIPLE SEEMS QUITE APPARENT FROM THESE CASES. IF THE CAUSE OF THE DELAY WAS IN EXISTENCE AT THE TIME THE CONTRACT WAS AWARDED AND THE CONTRACTING PARTIES WERE AWARE OF ITS EXISTENCE, IT IS NOT AN "UNFORESEEABLE CAUSE" WITHIN THE MEANING OF THAT TERM AS USED IN STANDARD FORM 23A. SEE, IN THIS CONNECTION, SECTION 1-16.404 (E) OF THE FEDERAL PROCUREMENT REGULATIONS, UNDER WHICH THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, MAY AUTHORIZE A CONTRACTING AGENCY TO DELETE THE WORD "UNFORESEEABLE" FROM STANDARD FORM 23A UNDER CERTAIN CIRCUMSTANCES.

CONCERNING THE REFERENCE IN YOUR LETTER TO THAT PORTION OF SECTION 1933 OF WILLISTON ON CONTRACTS, WHICH INDICATES THAT WHERE THE CONTRACTING PARTIES KNOW ALL THE FACTS BUT ERRONEOUSLY BELIEVE KNOWN DIFFICULTIES ARE NOT INSUPERABLE AND CAN BE REMOVED THERE WILL BE NO LIABILITY IF THE DIFFICULTIES PROVE TO BE INSUPERABLE, WE DO NOT BELIEVE SUCH RULE CAN BE APPLIED IN INSTANCES WHERE THE APPLICABLE CONTRACT REQUIRES EXCUSABLE CAUSES TO BE "UNFORESEEABLE.'

IT IS, THEREFORE, OUR OPINION THAT THE FACTS YOU HAVE PRESENTED IN THE FIRST CASE TO WHICH YOU REFER WOULD NOT JUSTIFY AN EXTENSION OF TIME FOR PERFORMANCE OF THE CONTRACT.

YOUR SECOND QUESTION ARISES IN CONNECTION WITH SUPPLY CONTRACTS AWARDED DURING THE STEEL STRIKE. THESE CONTRACTS INCORPORATED THE PROVISIONS OF ARTICLE 11 (C) OF STANDARD FORM 32, WHICH DOES NOT REQUIRE THE CAUSES OF DELAY TO BE "UNFORESEEABLE.' YOU ADVISE THAT UNDER SUCH A CONTRACT WITH A MANUFACTURER OF STEEL TOWERS, THE CONTRACTOR INFORMED YOU WHILE THE STRIKE WAS IN PROGRESS THAT HE COULD NOT DELIVER BECAUSE OF LACK OF STEEL BUT, AT YOUR INSISTENCE, HE LOCATED SOURCES OF WAREHOUSE STEEL AND WAS ABLE TO MAKE THE EARLIEST DELIVERY REQUIRED BY THE CONTRACT. HOWEVER, HE HAS AGAIN ADVISED THAT STEEL IS NOT OBTAINABLE, PRESUMABLY BECAUSE WAREHOUSE STEEL IS EXHAUSTED, AND HE HAS ASKED FOR A 45-DAY EXTENSION ON HIS DELIVERY SCHEDULE. YOU REQUEST OUR OPINION AS TO WHETHER SUCH EXTENSION, TOGETHER WITH SUCH OTHER EXTENSIONS AS MAY BE NECESSARY TO COVER ANY REMAINING PERIOD THE STEEL STRIKE MAY COVER, WOULD BE PROPER.

AS INDICATED IN OUR DECISION OF FEBRUARY 16, 1956, 35 COMP. GEN. 460, THE INCLUSION OF ARTICLE 11 (C) OF STANDARD FORM 32 IN A SUPPLY CONTRACT OPERATES TO RELIEVE THE CONTRACTOR OF LIABILITY FOR DEFAULT ARISING FROM CAUSES (INCLUDING STRIKES) BEYOND HIS CONTROL AND WITHOUT HIS FAULT OR NEGLIGENCE, AND IT IS IMMATERIAL WHETHER SUCH CAUSES ARE SUPERVENING OR WERE IN EXISTENCE AND KNOWN TO THE CONTRACTING PARTIES AT THE TIME OF CONTRACT AWARD. IN VIEW THEREOF, WE SEE NO OBJECTION TO YOUR PRACTICE OF ADMINISTERING CONTRACTS, WHICH INCLUDE ARTICLE 11 (C) OF STANDARD FORM 32 AND WERE AWARDED AFTER THE DATE OF COMMENCEMENT OF THE STEEL STRIKE, IN THE SAME MANNER AS THOSE AWARDED PRIOR TO SUCH DATE, AND WHERE YOUR AGENCY IS ABLE TO DETERMINE, IN ACCORDANCE WITH ARTICLE 11 (C), THAT THE CONTRACTOR'S INABILITY TO PERFORM IS ATTRIBUTABLE TO THE STEEL STRIKE, EXTENSIONS OF THE TIME FOR PERFORMANCE, COMMENSURATE WITH THE DELAY OCCASIONED THEREBY, WOULD BE PERMISSIBLE.