B-146555, APR. 4, 1968

B-146555, APR. 4, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO THE CLAIMS OF CHARLES R. SHEPHERD, INC., FOR EQUITABLE ADJUSTMENT IN THE PRICE OF CONTRACT NO. DA-01-076-ENG-3950, DATED JUNE 24, 1957, WHICH WERE FORWARDED TO OUR CLAIMS DIVISION UNDER DATE OF DECEMBER 18, 1967, BY THE DEPUTY GENERAL COUNSEL FOR THE CHIEF OF ENGINEERS. THE CLAIMS WERE SUBMITTED TO THE DISTRICT ENGINEER, UNITED STATES ARMY ENGINEER DISTRICT, MOBILE, MOBILE, ALABAMA, BY THE ATTORNEY FOR SHEPHERD IN LETTERS DATED FEBRUARY 9, 1967.

THE CLAIMS ARE BASED ON THE CHANGED CONDITIONS AND VARIATIONS IN ESTIMATED QUANTITIES CLAUSES OF THE SUBJECT CONTRACT, PERFORMANCE OF WHICH WAS REPORTEDLY COMPLETED AND ACCEPTED ON DECEMBER 31, 1959. BRIEFLY, IT IS THE CONTRACTOR'S CONTENTION THAT SUBGRADE CONDITIONS ENCOUNTERED DURING PERFORMANCE OF THE CONTRACT DIFFERED FROM THOSE SHOWN ON THE GOVERNMENT DRAWINGS AND CONSTITUTED CHANGED CONDITIONS; THAT THE GOVERNMENT WAS PROPERLY NOTIFIED OF THE CHANGED CONDITIONS AND OF ITS REQUEST FOR AN ADJUSTMENT IN THE CONTRACT PRICE DURING PERFORMANCE; AND THAT AS A RESULT OF THE CHANGED CONDITIONS, IT IS ENTITLED TO AN ADJUSTMENT OF OVER $500,000 FOR INCREASED COSTS OF PERFORMANCE. WITH REGARD TO THE "VARIATIONS IN ESTIMATED QUANTITIES" CLAIM, IT APPEARS THAT THIS CLAIM WAS FIRST ASSERTED IN THE ATTORNEY'S LETTER OF FEBRUARY 9, 1967. THIS CLAIM IS BASED ON THE CONTENTION THAT THE ACTUAL QUANTITY OF WORK PERFORMED UNDER ITEMS 4 AND 5 VARIED MORE THAN PERMISSIBLE UNDER THE VARIATIONS IN ESTIMATED QUANTITIES CLAUSE AND, THEREFORE, THE CONTRACTOR IS ENTITLED TO AN ADJUSTMENT OF MORE THAN $27,000 AS PROVIDED THEREIN. IT IS THE CONTRACTOR'S CONTENTION THAT IT WAS PREVENTED FROM A MORE TIMELY PROSECUTION OF THESE CLAIMS BY REASON OF FINANCIAL REVERSES SUFFERED DURING PERFORMANCE AND BECAUSE IT WAS INVOLVED IN LITIGATION UNTIL SHORTLY BEFORE THE CLAIMS WERE SUBMITTED.

THE FILE TRANSMITTED BY THE DEPUTY GENERAL COUNSEL INDICATES THAT ALTHOUGH FINAL PAYMENT ESTIMATES SHOWING A BALANCE OF $5,405.58 DUE THE CONTRACTOR WERE FORWARDED TO THE CONTRACTOR ON AUGUST 23, 1960, AND ON OCTOBER 6, 1964, FOR SIGNATURE, THEY WERE NOT RETURNED. THE BALANCE DUE UNDER THE CONTRACT WAS NEVER PAID TO THE CONTRACTOR AND THE CONTRACT WAS CLOSED AND THE FUNDS DEOBLIGATED IN 1966. THE DEPUTY GENERAL COUNSEL RECOMMENDS DENIAL OF THE CLAIMS BECAUSE OF THE LONG DELAY IN ASSERTING THEM, CITING AS A BASIS THEREFOR THE SIX-YEAR STATUTE OF LIMITATIONS ON FILING CLAIMS IN THE COURT OF CLAIMS, 28 U.S.C. 2501, AND THE EQUITABLE DOCTRINE OF LACHES.

FOR THE REASONS SET FORTH BELOW, WE DO NOT BELIEVE THESE CLAIMS ARE PROPERLY FOR CONSIDERATION BY OUR OFFICE. BOTH THE CHANGED CONDITIONS AND THE VARIATIONS IN ESTIMATED QUANTITIES CLAUSES OF THE CONTRACT PROVIDE THAT THE FAILURE OF THE PARTIES TO AGREE UPON THE CONTRACTOR'S CLAIM FOR AN ADJUSTMENT THEREUNDER SHALL BE TREATED AS A DISPUTED QUESTION OF FACT TO BE DETERMINED IN ACCORDANCE WITH THE DISPUTES CLAUSE OF THE CONTRACT. UNDER THE DISPUTES CLAUSE THE CONTRACTING OFFICER IS REQUIRED TO DECIDE ANY DISPUTE CONCERNING A QUESTION OF FACT, REDUCE HIS DECISION TO WRITING, AND FURNISH A COPY THEREOF TO THE CONTRACTOR, WHO MAY THEN EXERCISE THE RIGHT OF APPEAL PROVIDED FOR THEREIN. THE RECORD BEFORE US CONTAINS NO INDICATION THAT THE CONTRACTING OFFICER REDUCED HIS DECISION TO WRITING AND FURNISHED A COPY TO THE CONTRACTOR.

WHERE, AS HERE, A CONTRACT PROVIDES FOR A DECISION WITH RESPECT TO SPECIFIED MATTERS BY A DESIGNATED OFFICIAL, IT HAS BEEN HELD THAT THE CONTRACTOR IS ENTITLED TO HAVE SUCH DECISION MADE BY THE DESIGNATED OFFICIAL. UNITED STATES V NORTH AMERICAN COMMERCIAL CO., 74 F.145; PHOENIX BRIDGE CO. V UNITED STATES, 85 CT. CL. 603, 629; SAMUEL PLATO V UNITED STATES, 86 CT. CL. 665, 667. WHEN THE CONTRACT CONTAINS A DISPUTES CLAUSE MAKING THE CONTRACTING OFFICER THE ARBITER IN CASE OF A FACTUAL DISPUTE, THE REFUSAL OF THE CONTRACTING OFFICER TO RENDER A DECISION ON THE CONTRACTOR'S CLAIM IS AN APPEALABLE ISSUE. APPEAL OF DUBOIS, ASBCA 3280, 57-1 BCA 1306 (1957); APPEAL OF WOOD AND ASSOCIATES, IBCA 462, 65-1 BCA 4809 (1965). SEE ALSO, MCHUGH AND SONS V UNITED STATES, 99 CT. CL. 414. FURTHER, WHERE THE CONTRACT SETS OUR A PROCEDURE UNDER WHICH DISPUTES AS TO FACT ARE TO BE DECIDED ADMINISTRATIVELY, THE ADMINISTRATIVE REMEDY THEREBY PROVIDED IS BINDING ON ALL PARTIES AND MUST BE EXHAUSTED BY THE CONTRACTOR BEFORE A CLAIM MATERIALLY RELEVANT TO A FACTUAL QUESTION FOR DETERMINATION PURSUANT TO THE PROCEDURE IS COGNIZABLE BY THE COURTS OR BY OUR OFFICE. UNITED STATES V JOSEPH A. HOLPUCH CO., 328 U.S. 234; UNITED STATES V BLAIR, 321 U.S. 730; UNITED STATES V CALLAHAN WALKER CONSTRUCTION CO., 317 U.S. 56.

THERE ARE NO STATUTORY LIMITATIONS TO THE FILING OF CONTRACT CLAIMS AND APPEALS FOR ADMINISTRATIVE DETERMINATION BY CONTRACTING OFFICERS AND APPELLATE BOARDS. THE SIX-YEAR STATUTE OF LIMITATION REFERRED TO IN THE DEPUTY GENERAL COUNSEL'S LETTER RELATES TO PETITIONS FILED IN THE COURT OF CLAIMS AND DOES NOT BEGIN TO RUN UNTIL THE DISPUTES PROCEDURES AFFORDED BY THE CONTRACT ARE EXHAUSTED. CROWN COAT FRONT CO., INC. V UNITED STATES, 386 U.S. 503; NAGER ELECTRIC CO. V UNITED STATES, 368 F.2D 847; APPEAL OF FRANCES VAN WAGNER, SUCCESSOR TO AMERICAN BUILDING CONSTRUCTION AND SUPPLY CO., INC. AND CONRAD HANSON AND CO., INC., ASBCA 11880 (OCTOBER 27, 1967). WHETHER ANY CONTRACTUAL LIMITATIONS FOR THE FILING AND CONSIDERATION OF CLAIMS WERE VIOLATED IS A QUESTION OF FACT, FOR DETERMINATION ADMINISTRATIVELY IN THE FIRST INSTANCE. ALSO, THE AVAILABILITY OF THE AFFIRMATIVE DEFENSE OF LACHES DEPENDS ON A DETERMINATION OF THE FACTS.

ACCORDINGLY, WE ARE RETURNING THE FILE FORWARDED BY THE DEPUTY GENERAL COUNSEL SO THAT THE PROCEDURES PRESCRIBED BY THE "DISPUTES"CLAUSE OF THE CONTRACT MAY BE CARRIED OUT, AND HAVE SO ADVISED THE CONTRACTOR'S ATTORNEY.