B-141058, NOV. 10, 1959

B-141058, NOV. 10, 1959

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 19, 1959, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REGARDING THE CLAIM OF PRICE BROTHER'S MCCLUNG, INC., FOR ADDITIONAL COMPENSATION IN THE AMOUNT OF $41,322 ALLEGED TO BE DUE FOR WORK PERFORMED UNDER CONTRACT NO. DA-20-064-CIVENG- 57-131, DATED JUNE 13, 1957.

UNDER THE TERMS OF THE CONTRACT THE CONTRACTOR WAS TO FURNISH ALL LABOR, EQUIPMENT AND MATERIALS AND PERFORM ALL WORK OF DREDGING IN LITTLE RAPIDS CHANNEL OPPOSITE FRECHETTE POINT AND IN MIDDLE NEEBISH CHANNEL, ST. MARYS RIVER, MICHIGAN, FOR THE PRICE OF $1.07 PER CUBIC YARD. THE CONTRACT WAS ON STANDARD FORM 23 AND CONTAINED, AMONG OTHER THINGS, THE STANDARD GENERAL PROVISIONS, INCLUDING CLAUSE 4, CHANGED CONDITIONS. THAT CLAUSE PROVIDED THAT IF THE SUBSURFACE OR LATENT PHYSICAL CONDITIONS AT THE SITE DIFFERED MATERIALLY FROM THOSE INDICATED IN THE CONTRACT OR IF UNKNOWN PHYSICAL CONDITIONS AT THE SITE WERE OF AN UNUSUAL NATURE AND DIFFERED MATERIALLY FROM THOSE ORDINARILY ENCOUNTERED AND GENERALLY RECOGNIZED AS INHERING IN THE WORK, THE CONTRACT PRICE SHOULD BE INCREASED OR DECREASED TO COMPENSATE THE CONTRACTOR FOR THE INCREASE OR DECREASE IN COST OF PERFORMANCE.

IT APPEARS THAT ON SEPTEMBER 9, 1957, THE CONTRACTOR ENCOUNTERED MATERIAL CONTAINING BOULDERS WHICH IMPEDED HIS PROGRESS IN EXCAVATING AND ON THE FOLLOWING DATE NOTIFIED THE CONTRACTING OFFICER'S REPRESENTATIVE OF THIS FACT. THE LATTER MADE AN INVESTIGATION WHICH INDICATED THAT THE CONTRACTOR WAS PERFORMING WORK WHICH SHOULD BE PAID AT AN INCREASED PRICE UNDER CLAUSE 4 OF GENERAL PROVISIONS. BEFORE ANY MODIFICATION OF THE CONTRACT WAS CONSUMMATED, THE CONTRACTOR HAD REMOVED APPROXIMATELY 15,000 CUBIC YARDS OF MATERIAL FROM THE AREA OF THE CHANGED CONDITONS, LEAVING 8,800 CUBIC YARDS OF HARD MATERIAL TO BE REMOVED. ON MARCH 19, 1958, MODIFICATION NO. 2 TO THE CONTRACT WAS EXECUTED, WHEREBY THE GOVERNMENT AGREED TO PAY $2.90 PER CUBIC YARD FOR AN ESTIMATED QUANTITY OF 23,800 CUBIC YARDS OF DREDGING HARD MATERIAL. THE WORK OF DREDGING 8,800 CUBIC YARDS WAS, HOWEVER, MORE DIFFICULT THAN IT WAS BELIEVED TO BE, AND CONSEQUENTLY THE DRAGLINE EQUIPMENT INTENDED TO BE USED HAD TO BE PLACED BY A DIPPER DREDGE FOR WHICH A RENTAL RATE OF $10,000 PER DAY WAS PAID BY THE CONTRACT OR WITH THE RESULT THAT HIS COST FOR DREDGING WAS $41,322 IN EXCESS OF THE PRICE AGREED UPON IN MODIFICATION NO. 2.

IT IS CONTENDED BY THE CONTRACTOR THAT BOTH HE AND THE GOVERNMENT MADE A MISTAKE IN EXECUTING MODIFICATION NO. 2 IN THAT BOTH PARTIES ASSUMED THE 8,800 CUBIC YARDS OF MATERIAL COULD BE DREDGED WITH A 3 1/2 CUBIC YARD DRAGLINE DERRICK BOAT AND THAT HE SHOULD, THEREFORE, BE ENTITLED TO THE ADDITIONAL EXPENDITURE INCURRED IN RENTING A DIFFERENT DREDGE.

WITH REGARD TO THE CONTRACTOR'S CONTENTION, IT APPEARS THAT HE MADE A REQUEST BY LETTER OF OCTOBER 31, 1957, THAT THE CONTRACT PRICE FOR THE REMOVAL OF APPROXIMATELY 15,000 CUBIC YARDS BE INCREASED TO $3.67 PER CUBIC YARD, BUT THE GOVERNMENT CONSIDERED THIS PRICE EXCESSIVE. THEREAFTER, IN HIS LETTER OF FEBRUARY 8, 1959, HE PROPOSED A COMPOSITE PRICE FOR THE 15,000 CUBIC YARDS ALREADY REMOVED AND THE 8,800 CUBIC YARDS TO BE REMOVED BY STATING THAT THE FIRST ITEM SHOULD BE PAID FOR AT $2.25 PER CUBIC YARD AND THE SECOND ITEM AT $4 PER CUBIC YARD, OR AN AVERAGE PRICE OF $2.90 PER CUBIC YARD. ATTACHED TO AND ENCLOSED WITH THAT LETTER WAS A COPY OF A LETTER THE CONTRACTOR HAD RECEIVED FROM HIS SUBCONTRACTOR IN WHICH THE SUBCONTRACTOR HAD STATED THAT HIS PRICE FOR REMOVAL OF THE 8,800 CUBIC YARDS WOULD BE $4 PER CUBIC YARD AND THAT HE ASSUMED THAT HE COULD USE HIS DRAGLINE "CELT" FOR THIS PURPOSE BUT THAT IF A DIPPER DREDGE HAD TO BE USED HE EXPECTED TO BE PAID A HIGHER PRICE. THE CONTRACTING OFFICE, IN ITS LETTER TO THE CONTRACTOR ON FEBRUARY 19, 1958, REQUESTED CONFIRMATION OF HIS QUOTATION, AS FOLLOWS:

"IN ORDER THAT THERE BE NO MISUNDERSTANDING OF YOUR QUOTATION THERE FOLLOWS BELOW OUR INTERPRETATION OF THE INTENT OF YOUR 8 FEBRUARY 1958 LETTER:

"A. A NEW FIRM UNIT PRICE OF $2.90 PER CUBIC YARD FOR APPROXIMATELY 23,800 CUBIC YARDS FOR MATERIAL BETWEEN STATION C.S. 122 PLUS 75 AND C.S. 128 PLUS 00.

"B. AN EXTENSION OF THE CONTRACT COMPLETION DATE TO 15 SEPTEMBER 1958.

"IF YOU ARE IN AGREEMENT WITH THE ABOVE INTERPRETATION, YOUR CONFIRMATION IS REQUESTED.'

BY LETTER OF FEBRUARY 27, 1958, THE CONTRACTOR ACKNOWLEDGED HIS AGREEMENT WITH THE INTERPRETATION OF THE CONTRACTING OFFICE OF THE INTENT OF HIS QUOTATION. THERE WAS NO MENTION MADE IN ANY OF THIS CORRESPONDENCE THAT IF THE 8,800 CUBIC YARDS INVOLVED COULD NOT BE REMOVED BY A DRAGLINE THAT THE CONTRACT PRICE WAS TO BE INCREASED. THEREFORE, WHEN MODIFICATION NO. 2 WAS EXECUTED, IT MUST BE CONSIDERED THAT THE PARTIES REDUCED THEIR PREVIOUS AGREEMENT TO A FORMAL WRITTEN DOCUMENT. SEE 26 COMP. GEN. 654. THERE IS NO EVIDENCE TO SHOW THAT THE MATERIAL ENCOUNTERED DIFFERED FROM THAT ANTICIPATED UNDER THE MODIFICATION EVEN THOUGH THE CONTRACTOR OR HIS SUBCONTRACTOR MAY NOT HAVE BEEN CERTAIN WHETHER THE WORK COULD BE PERFORMED BY DRAGLINE OR WHETHER A DIPPER DREDGE WAS REQUIRED.

IN THE CIRCUMSTANCES, THERE EXISTS NO LEGAL BASIS FOR THE ALLOWANCE OF ADDITIONAL COMPENSATION BECAUSE OF THE FAILURE OF MODIFICATION NO. 2 TO EXPRESS THE INTENTION OF THE PARTIES TO THE CONTRACT.