B-168478, JAN. 19, 1970

CONTRACTS--PAYMENTS--ARMED SERVICES BOARD OF CONTRACT APPEALS DISPUTES DECISION TO SECRETARY OF AIR FORCE CONCERNING DESIRE OF ACCOUNTING FINANCE OFFICER FOR DECISION ON PROPRIETY OF PAYMENT OF $52,309.55 AWARDED BY ASBCA AS AN EQUITABLE ADJUSTMENT UNDER CONTRACT WITH SOUTHERN ROOFING AND PETROLEUM CO. AT LOVING AIR FORCE BASE. SINCE THE REQUEST FOR ADVANCE DECISION FROM THE FINANCE OFFICER WAS NOT FORWARDED TO GAO, THE MATTER WILL BE CONSIDERED AS A CLAIM BY THE CONTRACTOR FOR PAYMENT IN ACCORDANCE WITH THE DECISION OF ASBCA AND CONTRACT MODIFICATION. THE CONTRACTOR TOOK NO EXCEPTION TO THE DECISION HENCE ONLY CLAIMS ON WHICH ACTION WAS FAVORABLE TO THE CONTRACTOR WILL BE DISCUSSED. A REVIEW OF RECORD DOES NOT REFLECT ANY BASIS FOR CONSIDERING BOARD'S DECISION FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. COMPUTATIONS OF AMOUNTS WERE IN ACCORDANCE WITH SPECIALTY CASE HOLDING. HENCE PAYMENT OF CLAIMS MAY BE MADE.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER DATED DECEMBER 4, 1969, FROM YOUR DEPUTY GENERAL COUNSEL, FORWARDING A COPY OF ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA) DECISION NO. 12841, DATED APRIL 4, 1969, AND THE SUPPORTING RECORD. THAT LETTER REFERS TO THE DESIRE OF THE ACCOUNTING FINANCE OFFICER, LORING AIR FORCE BASE, MAINE, FOR AN ADVANCE DECISION BY OUR OFFICE CONCERNING THE PROPRIETY OF PAYMENT OF THE AMOUNT OF $52,309.55 AWARDED BY THE ASBCA AS AN EQUITABLE ADJUSTMENT OF THE ORIGINAL PRICE OF DEPARTMENT OF THE AIR FORCE CONTRACT F17600-67-C-0118 WITH THE SOUTHERN ROOFING & PETROLEUM CO; INC.

THE CONTRACT COVERED REMOVAL AND REPLACEMENT OF THE ROOFS ON SOME 1,425 WHERRY HOUSING UNITS AT LORING AIR FORCE BASE, AND CERTAIN ADDITIONAL WORK INCIDENTAL TO THE REPLACEMENT WORK. THE CONTRACTOR FILED SEVERAL CLAIMS FOR EQUITABLE ADJUSTMENT, SEVEN OF WHICH WERE DENIED BY THE CONTRACTING OFFICER AND APPEALED TO THE ASBCA. THESE SEVEN CLAIMS INCLUDED TWO ARISING OUT OF ALLEGED "EXTRAORDINARY, UNFORESEEABLE, AND UNUSUAL CONDITIONS AT THE JOB SITE"; FOUR FOR WORK ALLEGEDLY PERFORMED AT THE DIRECTION OF THE GOVERNMENT IN EXCESS OF THE CONTRACT SPECIFICATIONS REQUIREMENTS; AND ONE INCIDENT TO SUSPENSION OF THE WORK BY THE GOVERNMENT.

BASED ON THE EVIDENCE PRESENTED BY THE PARTIES, INCLUDING THE TESTIMONY OF OFFICERS AND SUPERVISORY EMPLOYEES OF THE CONTRACTOR AND SUBCONTRACTOR, EXPERT WITNESSES, AN ENGINEER EMPLOYED BY THE DEPARTMENT OF THE ARMY, AND THE AIR FORCE PROJECT ENGINEER FOR THE CONTRACT WORK, THE BOARD ALLOWED FOUR OF THE CLAIMS IN PART AND DENIED ALL THE REST. BY DECISION DATED MAY 26, 1969, THE BOARD DENIED A MOTION BY THE GOVERNMENT FOR RECONSIDERATION ON THE BASIS THAT THE GOVERNMENT HAD INTRODUCED NO MATTERS WHICH WERE NOT FULLY CONSIDERED BY THE BOARD IN ITS ORIGINAL DECISION. THE PROJECT ENGINEER'S MEMORANDUM OF JUNE 12, 1969, APPEARS TO PRESENT NO NEW MATTER, BUT CONSISTS ONLY OF A RESTATEMENT BY THE PROJECT ENGINEER OF HIS VIEW, EXPRESSED IN HIS TESTIMONY BEFORE THE BOARD AND IN THE RECORD, THAT THE CONTRACTOR IS ENTITLED TO NO ADJUSTMENT ON ANY OF THE CLAIMS.

BY AN AMENDMENT DATED JULY 3, 1969, THE CONTRACT WAS MODIFIED BY AGREEMENT OF THE CONTRACTOR AND THE CONTRACTING OFFICER TO PROVIDE FOR ADJUSTMENT OF THE CONTRACT PRICE IN ACCORDANCE WITH THE BOARD'S DECISION OF APRIL 4. THE AMENDMENT BEARS THE SIGNATURE OF THE CONTRACTOR'S REPRESENTATIVE UNDER DATE OF JULY 14 AND THE SIGNATURE OF THE CONTRACTING OFFICER UNDER DATE OF JULY 25. PAYMENT OF THE ADJUSTED BALANCE WAS REFUSED BY THE COGNIZANT FINANCE OFFICER PENDING ACTION UPON HIS REPORTED REQUEST FOR REVIEW. THE MATTER WAS FIRST BROUGHT TO OUR ATTENTION BY A LETTER DATED NOVEMBER 21, 1969, FROM A MEMBER OF CONGRESS, FORWARDING A LETTER FROM THE CONTRACTOR'S ATTORNEY IN WHICH HE STATED THAT HE HAD BEEN INFORMED THAT THE FINANCE OFFICER HAD FORWARDED THE MATTER TO THIS OFFICE. YOUR DEPUTY GENERAL COUNSEL'S LETTER OF DECEMBER 4 RESULTED FROM OUR INQUIRIES TO YOUR DEPARTMENT CONCERNING THIS STATEMENT, AND THE DOCUMENTS TRANSMITTED THEREWITH INCLUDED A COPY OF A MEMORANDUM DATED JUNE 12, 1969, FROM THE PROJECT ENGINEER WHICH, WE UNDERSTAND, CONSTITUTED THE BASIS FOR THE FINANCE OFFICER'S REQUEST.

INASMUCH AS WE DO NOT HAVE THE REQUEST FOR ADVANCE DECISION FROM THE FINANCE OFFICER, WE WILL CONSIDER THE MATTER AS A CLAIM BY THE CONTRACTOR FOR PAYMENT IN ACCORDANCE WITH THE DECISION OF THE ASBCA AND THE CONTRACT MODIFICATION.

THE CONTRACTOR HAS TAKEN NO EXCEPTION TO THE BOARD'S DECISION OF APRIL 4. THEREFORE ONLY THE CLAIMS ON WHICH ACTION WAS FAVORABLE TO THE CONTRACTOR WILL BE DISCUSSED. THE FOUR CLAIMS MAY BE DESCRIBED, IN BRIEF, AS (1) STUCK DOWN ROOFING; (2) FLOATING RAFTERS; (3) EXTRA NAILING; AND (4) EXTRA GRAVEL.

THE RECORD SHOWS THAT THE CONTRACTOR ENCOUNTERED TWO CONDITIONS AT THE CONTRACT SITE WHICH WERE CLAIMED TO BE UNUSUAL AND WHICH THE CONTRACTOR ASSERTED IT HAD NO REASON TO EXPECT. ONE CONDITION, THE STUCK DOWN ROOFING, PREVENTED THE CONTRACTOR FROM ROLLING THE OLD ROOF OFF IN ACCORDANCE WITH USUAL ROOFING PROCEDURES AND WAS FOUND TO HAVE RESULTED IN ADDITIONAL EXPENSES FOR PERFORMANCE AND DELAY INCIDENT THERETO. THE SECOND CONDITION, THE FLOATING RAFTERS, WHICH WERE SAID NOT TO BE STANDARD IN CONSTRUCTION, ALSO WAS FOUND TO HAVE INCREASED THE COST OF PERFORMANCE AND INVOLVED A DELAY IN PERFORMANCE AND ADDITIONAL EXPENSES INCIDENT TO DAMAGES FROM FALLS BY WORKMEN ON THE UNSTEADY RAFTERS. THE TWO CLAIMS BASED UPON THESE CONDITIONS WERE ALLOWED IN PART BY THE BOARD UNDER THE "CHANGED CONDITIONS" CLAUSE OF THE CONTRACT WHICH PROVIDED FOR AN EQUITABLE ADJUSTMENT FOR INCREASED COSTS OCCASIONED BY UNKNOWN CONDITIONS "OF AN UNUSUAL NATURE, DIFFERING MATERIALLY FROM THOSE ORDINARILY ENCOUNTERED AND GENERALLY RECOGNIZED AS INHERING IN WORK OF THE CHARACTER PROVIDED FOR" IN THE CONTRACT. ABSENT DATA FROM WHICH THE EXTRA COSTS COULD BE MEASURED WITH PRECISION, THE BOARD ESTABLISHED THE CONTRACTOR'S ENTITLEMENT ON BOTH CLAIMS BY THE JURY VERDICT METHOD, IN LINE WITH GEORGE A. FULLER COMPANY, ASBCA NO. 9563, 67-1 BCA 6366 (1967).

THE EXTRA NAILING CLAIM COVERED USE OF MORE NAILS THAN WERE REQUIRED BY THE SPECIFICATIONS TO FASTEN THE BASE SHEET TO THE PREVIOUSLY INSTALLED PLYWOOD SHEATHING, TO AVOID DAMAGE BY THE HIGH WINDS AT THE CONTRACT SITE. THE BOARD FOUND THAT THE PROJECT ENGINEER, WITH THE APPARENT CONSENT AND APPROVAL OF THE CONTRACTING OFFICER, HAD IN EFFECT ORDERED THE USE OF THE EXTRA NAILS, ALTHOUGH HE HAD QUALIFIED THE ORDER BY STATING THAT THIS WAS FOR THE CONTRACTOR'S PROTECTION, AND THAT THE GOVERNMENT INSPECTORS HAD EFFECTUATED THE ORDER. THE BOARD THEREFORE FOUND THAT THE CONTRACTOR HAD REASON TO BELIEVE THAT IT MUST COMPLY WITH THE ORDER AND WAS THEREBY DEPRIVED OF THE FREEDOM OF CHOICE TO WHICH IT WAS ENTITLED BY THE TERMS OF THE CONTRACT TO DETERMINE HOW TO DISCHARGE ITS RESPONSIBILITY TO PROTECT THE PROJECT AGAINST WIND DAMAGE.

THE EXTRA GRAVEL CLAIM INVOLVED ADDITIONAL GRAVEL FOUND TO HAVE BEEN USED BECAUSE THE QUANTITY SPECIFIED BY THE GOVERNMENT WAS NOT SUFFICIENT TO ACHIEVE THE RESULT WHICH THE GOVERNMENT INSISTED UPON. THE CONTRACTOR HAD TIMELY PROTESTED THE FAULTY SPECIFICATION, WHICH WAS NOT UP TO INDUSTRY STANDARDS, AND EXPERT WITNESSES TESTIFIED TO SUCH EFFECT. ALLOWANCE WAS BASED ON THE QUANTITY OF GRAVEL REQUIRED TO MEET THE ACCEPTED STANDARD EMPLOYED BY THE ROOFING INDUSTRY, ALTHOUGH THE QUANTITY ACTUALLY USED APPEARED TO HAVE BEEN EVEN GREATER.

WE HAVE CAREFULLY CONSIDERED THE BRIEFS WHICH WERE FILED WITH THE BOARD, THE EXHIBITS SUBMITTED IN EVIDENCE AT THE HEARING, OTHER DOCUMENTS INCORPORATED AS A PART OF THE RECORD, THE 886-PAGE TRANSCRIPT OF THE TESTIMONY GIVEN AT THE HEARING, AND THE PROJECT ENGINEER'S MEMORANDUM OF JUNE 12, 1969, TO THE BASE FINANCE OFFICER URGING REVIEW BY THE COMPTROLLER OF THE CLAIMS IN QUESTION. WE FIND NO BASIS FOR CONSIDERING THE BOARD'S DECISION TO BE FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. FURTHER, WE ARE UNABLE TO CONCLUDE THAT THE COMPUTATIONS OF THE AMOUNTS ALLOWED ON THE STUCK DOWN ROOFING AND THE FLOATING RAFTERS CLAIMS WERE NOT IN ACCORDANCE WITH THE JURY VERDICT METHOD AS DISCUSSED IN SPECIALTY ASSEMBLY AND PACKING CO; INC. V. UNITED STATES, 174 CT. CL. 153 (1966), AT PAGE 184; I.E; THAT THE BOARD DID NOT EXERCISE ITS BEST JUDGMENT UPON THE BASIS OF THE EVIDENCE PROVIDED BY THE PARTIES. SINCE WE FIND NO LEGAL BASIS TO QUESTION THE DECISION OF THE BOARD, WE SEE NO LEGAL OBJECTION TO PAYMENT OF THE CLAIMS IN QUESTION UNDER THE MODIFICATION OF THE CONTRACT EFFECTED IN ACCORDANCE WITH SUCH DECISION, IF OTHERWISE PROPER.

THE FILE FORWARDED BY YOUR DEPUTY GENERAL COUNSEL IS RETURNED.

A COPY OF THIS DECISION IS BEING FURNISHED BY OUR LETTER OF TODAY TO THE LAW FIRM OF BAKER, WORTHINGTON, BARNETT, CROSSLEY & STANSBERRY, ATTORNEYS FOR THE CONTRACTOR.