B-150791, DEC. 8, 1966

B-150791, DEC. 8, 1966

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO AN AMENDATORY AGREEMENT MADE JANUARY 14,1966, TO CONTRACT NO. GS-02B-10700, A CONTRACT TO CONSTRUCT A UNITED STATES CUSTOMS COURT AND FEDERAL OFFICE BUILDING, FOLEY SQUARE, NEW YORK, NEW YORK, WHEREBY, PURSUANT TO PARAGRAPH 4 (CHANGED CONDITIONS) OF STANDARD FORM 23- A, GENERAL PROVISIONS (CONSTRUCTION CONTRACT) APRIL 1961, YOUR AGENCY GRANTED THE CONTRACTOR, TURNER CONSTRUCTION COMPANY, A TIME EXTENSION AND INCREASED THE CONTRACT PRICE BY $4,135,929 TO COMPENSATE FOR ADDITIONAL COSTS INCURRED WHEN UNFORESEEN SUBSOIL CONDITIONS CAUSED FOUNDATION CHANGES AND INCLUDING $2,252,929 IN "DECELERATION COSTS" CAUSED DIRECTLY OR INDIRECTLY BY SAID CONDITIONS.

THIS PERIOD OF DELAY INCLUDED NOT ONLY THE USUAL PERIOD FOR REDESIGNING AND INSTALLING THE CHANGED FOUNDATION, BUT ALSO A PERIOD OF MONTHS DURING WHICH THE CONTRACTOR EXPERIMENTED WITH VARIOUS TYPES OF PILE DRIVERS IN AN EFFORT TO AVOID DAMAGING NEIGHBORING UNSTABLE BUILDINGS, THE TIME REQUIRED FOR THE GOVERNMENT TO CONDEMN THE ADJACENT PROPERTY WHEN IT WAS REALIZED THAT ANY TYPE OF PILE DRIVING COULD NECESSARILY HARM SAID BUILDINGS, AND A PERIOD OF ALMOST A YEAR DURING WHICH A COURT ORDER OBTAINED BY THE RESIDENTS OF THE CONDEMNED BUILDINGS ENJOINED ANY WORK ON THE JOB SITE WHICH WOULD FURTHER DISTURB THE BUILDINGS.

ALTHOUGH YOUR LETTER OF JUNE 27, 1966, STATES THAT THE AMENDATORY AGREEMENT IS "NOT PREMISED ON DECELERATION COSTS OR ANY THEORY OF DAMAGES FOR BREACH OF CONTRACT," THE LETTER OF SEPTEMBER 27, 1965, FROM MR. WILLIAM A. SCHMIDT, ACTING COMMISSIONER, PUBLIC BUILDING SERVICE, TO MR. LAWSON B. KNOTT, JR., ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, REPEATEDLY REFERS TO DECELERATION COSTS AS AN ELEMENT OF ADJUSTMENT, RECOMMENDING THAT $2,252,929 BE ACCEPTED IN FULL SETTLEMENT OF THE DECELERATION COSTS.

IT IS THE OPINION OF THIS OFFICE THAT WHERE A CONTRACT DOES NOT CONTAIN A "SUSPENSION OF WORK" CLAUSE OR OTHER PROVISION EXPRESSLY GRANTING THE CONTRACTOR A RIGHT TO COMPENSATION FOR DELAY, AN AMENDATORY AGREEMENT WHICH INCORPORATES COMPENSATION FOR DECELERATION COSTS IS AN UNAUTHORIZED SETTLEMENT FOR BREACH OF CONTRACT DAMAGES. THEREFORE, THE CONTRACTING OFFICER HERE ACTED BEYOND THE LEGITIMATE LIMITS OF HIS AUTHORITY WHEN HE GRANTED TURNER CONSTRUCTION COMPANY DECELERATION COSTS IN ADDITION TO THE TIME EXTENSION CONTRACTUALLY STIPULATED IN PARAGRAPH 5 OF STANDARD FORM 23 -A, APRIL 1961.

ALTHOUGH THIS AMENDATORY AGREEMENT INCLUDES A SETTLEMENT FOR BREACH OF CONTRACT DAMAGES WHICH WAS BEYOND THE AUTHORITY OF YOUR OFFICE TO GRANT, IT APPEARS THAT SINCE THE AMOUNT OF THE SETTLEMENT IS REASONABLE UNDER THE CIRCUMSTANCES AND SINCE TURNER MIGHT WELL RECOVER A GREATER AMOUNT IF IT WERE TO SUE IN A COURT OF LAW, IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO PERMIT THIS SETTLEMENT TO STAND.

THEREFORE, DESPITE THE RESERVATIONS WE HAVE REGARDING THE AUTHORITY OF YOUR AGENCY TO MAKE SUCH A SETTLEMENT, THIS OFFICE WILL NOT QUESTION THE LEGALITY OF THIS EXPENDITURE.