B-152660, APR. 17, 1964

B-152660, APR. 17, 1964

TO EDWARD R. GALLAGHER:

FURTHER REFERENCE IS MADE TO YOUR LETTER TO THIS OFFICE DATED OCTOBER 8, 1963, ASSERTING THE CLAIM OF LOUIS DISCENZA FOR AN UPWARD ADJUSTMENT OF PRICE IN THE AMOUNT OF $2,320 UNDER FIXED-PRICE CONSTRUCTION CONTRACT NO. AF 19/617/-2427 LET BY THE DEPARTMENT OF THE AIR FORCE ON JUNE 28, 1961. THE CONTRACT, FOR $32,003.63, COVERED THE MODIFICATION OF A PHOTO LABORATORY BUILDING LOCATED AT WESTOVER AIR FORCE BASE IN MASSACHUSETTS.

THE CLAIM WAS ORIGINALLY FILED WITH THE CONTRACTING OFFICER BY LETTER DATED OCTOBER 15, 1962, AFTER GOVERNMENT INSPECTORS REFUSED TO ACCEPT THREE STAINLESS STEEL DRIP PANS ASSEMBLED BY A WELDING OPERATION FOR INSTALLATION IN THE FACILITY DUE TO THEIR FAILURE TO LIE FLAT AGAINST A CONCRETE EMPLACEMENT. YOUR CLIENT, THE PRIME CONTRACTOR ON THE PROJECT, TOOK THE POSITION THAT THE REQUIREMENT FOR PERFECTLY FLAT PANS HAD NOT BEEN EMBODIED IN EITHER THE PRINTS OR THE SPECIFICATIONS AND THAT SAID REQUIREMENT WAS IMPOSSIBLE OF PERFORMANCE DUE TO THE THINNESS OF THE MATERIAL WHICH MADE SOME DEGREE OF WARPAGE INEVITABLE.

THE REJECTED PANS HAD BEEN FABRICATED AND INSTALLED BY ONE ALBERT KLEEBERG, DOING BUSINESS AS KLEEBERG'S SHEET METAL OF CHICOPEE, MASSACHUSETTS, PURSUANT TO A SUBCONTRACT DATED JULY 5, 1961. WHILE TRYING TO OBTAIN REVERSAL OF THE GOVERNMENT'S DETERMINATION THAT THE PANS DID NOT MEET SPECIFICATIONS, YOUR CLIENT, IN A LETTER TO THE CONTRACTING OFFICER DATED SEPTEMBER 29, 1961, STATED THAT IF HE WERE TO BE REQUIRED TO REORDER THE PANS FROM ANOTHER SUPPLIER "* * * IT (WOULD BE) ONLY JUST THAT THE COST BE PASSED ON TO THE GOVERNMENT.' HE MADE THIS FURTHER STATEMENT IN ANOTHER LETTER DATED OCTOBER 7, 1961:

"WE ARE NOW AT THE POINT WHERE EITHER THE EXISTING PANS MUST BE ACCEPTED, OR A NEW SPECIFICATION SHOULD BE ISSUED. * * *.'

THE CONTRACTING OFFICER REMAINED ADAMANT IN HIS REFUSAL TO ACCEPT THE ORIGINAL PANS. A QUOTATION ON A NEW SET OF STAINLESS STEEL PANS WAS SUBMITTED BY THE PRIME CONTRACTOR FOR THE CONTRACTING OFFICER'S APPROVAL. THE CONTRACTING OFFICER, ON OCTOBER 25, 1961, ADVISED MR. DISCENZA AS FOLLOWS:

"STAINLESS STEEL PANS DESCRIBED IN THE THIRD PARAGRAPH OF THE * * * (HOUSTON FEARLESS CORPORATION) * * * COMMUNICATION WHICH STATES THAT THE WARPAGE WILL NOT EXCEED 1/4 INCH AT ANY PLACE THROUGHOUT THE PAN, WILL BE ACCEPTABLE FOR INCORPORATION INTO THIS CONTRACT.'

ACCORDINGLY A NEW SET OF PANS WAS ORDERED, FABRICATED, INSTALLED, AND, ON DECEMBER 7, 1961, ACCEPTED. PERFORMANCE UNDER THE CONTRACT WAS COMPLETED IN THE END OF NOVEMBER OF 1961, AND, ON DECEMBER 27, 1961, AFTER THE GOVERNMENT HAD ACCEPTED THE WORK AS SATISFACTORY, THE CONTRACTOR EXECUTED A GENERAL RELEASE OF ALL CLAIMS AGAINST THE GOVERNMENT, WITHOUT EXCEPTION, ON HIS OWN LETTERHEAD, IN EXCHANGE FOR FINAL PAYMENT UNDER THE CONTRACT.

A SUIT TO RECOVER THE COST OF THE ORIGINAL PANS WAS BROUGHT AGAINST YOUR CLIENT BY THE ORIGINAL SUBCONTRACTOR, ALBERT KLEEBERG, ON MARCH 12, 1962, IN THE DISTRICT COURT OF SPRINGFIELD (MASSACHUSETTS) AND THE PLAINTIFF IN THAT ACTION RECOVERED A JUDGMENT IN THE AMOUNT OF $1,655.

THE CONTRACTING OFFICER BY LETTER DATED NOVEMBER 14, 1962, WHICH INFORMED THE CONTRACTOR OF HIS RIGHT TO APPEAL, DENIED YOUR CLIENT'S CLAIM ON THE GROUNDS THAT NO REQUEST FOR EQUITABLE ADJUSTMENT HAD BEEN FILED, AS PROVIDED IN THE CHANGES ARTICLE, WITHIN THIRTY DAYS AFTER RECEIPT OF THE LETTER DATED OCTOBER 25, 1961, OR INDEED, PRIOR TO FINAL SETTLEMENT, AND BECAUSE HE HAD EXECUTED THE GENERAL RELEASE. THE ARMED SERVICES BOARD OF CONTRACT APPEALS, BY DECISION DATED SEPTEMBER 25, 1963 (ASBCA NO. 8794), HELD THE RELEASE TO BE AN ABSOLUTE BAR TO THE CLAIM AND DISMISSED AN APPEAL TAKEN FROM THE CONTRACTING OFFICER'S DECISION.

YOU REQUEST THIS OFFICE TO REVIEW THE FACTS AND CIRCUMSTANCES SURROUNDING THE CLAIM AND, IF POSSIBLE, TO GRANT THE CONTRACTOR EQUITABLE RELIEF.

THE CONTRACT IN QUESTION CONSTITUTED A FIXED-PRICE, ARMS LENGTH TRANSACTION BETWEEN YOUR CLIENT AND THE GOVERNMENT. IN THIS CONNECTION THE SPECIFICATIONS STATE AT SECTION 4-07 THAT ALL COSTS CONNECTED WITH THE STAINLESS STEEL PANS WERE TO BE INCLUDED IN THE LUMP-SUM CONTRACT PRICE AND THAT NO SEPARATE PAYMENT WOULD BE MADE FOR THIS ASPECT OF THE WORK.

ALTHOUGH IT IS NOT CLEAR TO THIS OFFICE WHETHER OR NOT THE REQUIREMENT FOR THE PANS TO LIE FLAT IS TO BE CONSIDERED AN INTEGRAL PART OF THE INITIAL DRAWINGS AND SPECIFICATIONS EITHER EXPLICITY OR BY CUSTOM IN THE TRADE, IT IS OBVIOUS THAT YOUR CLIENT'S CLAIM WOULD HAVE TO BE DENIED AS UNMERITORIOUS IF THE WORK WERE, FROM THE START, REQUIRED TO BE COMPLETED IN THIS MANNER. LET US ASSUME, ARGUENDO, THAT THE DRAWINGS AND SPECIFICATIONS WERE AMBIGUOUS IN THIS RESPECT AND THAT, AS ALLEGED BY YOUR CLIENT, THE REQUIREMENT IS IMPOSSIBLE TO FULFILL. THE GOVERNMENT WOULD THEN HAVE BEEN ENTITLED TO THAT INSTALLATION OF THE PANS WHICH WAS MOST REASONABLE TO ACCOMPLISH UNDER THE CIRCUMSTANCES AND WHICH MOST CLOSELY ACCORDED WITH THE BEST PRACTICES KNOWN TO INDUSTRY. SINCE THE CONTRACTING OFFICER EVENTUALLY ALLOWED AS ACCEPTABLE PANS HAVING A MAXIMUM OF 1/4 INCH WARPAGE ACROSS THE PERIPHERY, AND SINCE THE ACCEPTED PANS EXCELLED THE REJECTED PANS IT MAY BE CONCLUDED THAT THE FORMER SATISFIED THE REASONABLE REQUIREMENTS OF THE CONTRACT AND THAT THE LATTER DID NOT.

BUT EVEN IF THE GOVERNMENT WAS OBLIGATED TO ACCEPT THE PANS FIRST PRESENTED, THE LETTER DATED OCTOBER 25, 1961, FROM THE CONTRACTING OFFICER TO YOUR CLIENT, WOULD HAVE TO BE REGARDED AS A CONSTRUCTIVE CHANGE ORDER. BY THE TERMS OF THE "CHANGES" ARTICLE ANY REQUEST FOR AN EQUITABLE ADJUSTMENT IN PRICE WOULD HAVE HAD TO HAVE BEEN PERFECTED WITHIN THIRTY DAYS AFTER RECEIPT THEREOF. THE CLAIM IN THIS CASE WAS NOT LODGED UNTIL OCTOBER 15, 1962, MORE THAN NINE MONTHS AFTER YOUR CLIENT HAD EXECUTED AN UNCONDITIONAL GENERAL RELEASE.

A CONTRACTOR WHO HAS RELEASED THE GOVERNMENT FROM ANY AND ALL CLAIMS ARISING BY VIRTUE OF HIS CONTRACT WITH THE GOVERNMENT UPON RECEIPT OF A PAYMENT MARKED "FINAL" MUST BE HELD BOUND BY THE RELEASE. UNITED STATES V. WILLIAM CRAMP AND SONS COMPANY, 206 U.S. 118; HELLANDER V. UNITED STATES, 178 F.SUPP. 932; A. L. COUPE CONSTRUCTION CO., INCORPORATED V. UNITED STATES, 139 F.SUPP. 61 CERTIORARI DENIED 352 U.S. 834; C. R. WILSON BODY COMPANY V. UNITED STATES, 59 CT.CL. 611. ONE IS BOUND BY WHAT HE SIGNS, AND IS PRESUMED TO KNOW THE LEGAL CONSEQUENCES THEREOF. WESTERN MARYLAND DAIRY CORPORATION V. BROWN, 181 A. 468.

AN EXCEPTION TO THE RULE THAT CLAIMS NOT SET OUT IN AN EXCEPTION TO A RELEASE CANNOT BE SUED UPON IS SOMETIMES MADE IN CASES WHERE BOTH PARTIES TO THE INSTRUMENT INTENDED THAT THE PARTICULAR CLAIM BE EXCEPTED BUT WHERE THE INSTRUMENT FAILED TO REFLECT THEIR INTENT. WINN SENTER CONSTRUCTION COMPANY V. UNITED STATES, 75 F.SUPP. 255. IT CAN HARDLY BE CONTENDED THAT THE EXCEPTION WOULD APPLY TO THIS CASE OR THAT THE RELEASE HERE IN POINT WAS SECURED BY DURESS.

WITH RESPECT TO YOUR REQUEST FOR EQUITABLE RELIEF, WE REGRET WE MUST REMIND YOU THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT. UNITED STATES V. AMERICAN SALES COMPANY, 27 F.2D 389, AFF. 32 F.2D 141, CERT. DENIED, 280 U.S. 574.

FOR THE ABOVE-STATED REASONS WE MUST AFFIRM THE DECISION OF THE BOARD AND DENY THE CLAIM OF LOUIS DISCENZA.