B-147297, NOV. 21, 1961

B-147297, NOV. 21, 1961

TO THE SECRETARY OF STATE:

WE REFER TO YOUR LETTER OF SEPTEMBER 26, 1961, WITH ENCLOSURES, REQUESTING OUR DECISION AS TO THE PROPRIETY OF PAYMENT ON A VOUCHER IN THE AMOUNT OF $45,000, TO COMPAGNIE INDUSTRIELLE DE TRAVAUX, AS FULL PAYMENT FOR DAMAGES RESULTING FROM DELAYS UNDER CONTRACT NO. S-456-FBO 37.

THE CONTRACT WAS ENTERED INTO ON JULY 14, 1958, BY THE OFFICE OF FOREIGN BUILDINGS, DEPARTMENT OF STATE, AND COMPAGNIE INDUSTRIELLE DE TRAVAUX, FOR THE CONSTRUCTION OF THE EMBASSY OFFICE BUILDING AND AMBASSADOR'S RESIDENCE IN RABAT, MOROCCO. IT CALLED FOR COMPLETION OF THE PROJECT WITHIN 540 CALENDAR DAYS, AT A PRICE OF 401,224,890 MOROCCAN FRANCS. THE CONTRACT CONTAINED THE FOLLOWING PROVISION:

"1-13 CHANGES

"/A) THE CONTRACTING OFFICER MAY AT ANY TIME, BY A WRITTEN ORDER, AND WITHOUT NOTICE TO THE SURETIES MAKE CHANGES IN THE DRAWINGS AND/OR SPECIFICATIONS OF THIS CONTRACT AND WITHIN THE GENERAL SCOPE THEREOF. SUCH CHANGES CAUSE AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THIS CONTRACT, OR IN THE TIME REQUIRED FOR ITS PERFORMANCE, AND EQUITABLE ADJUSTMENT SHALL BE MADE AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY. ANY CLAIM OF THE CONTRACTOR FOR ADJUSTMENT UNDER THIS CLAUSE MUST BE ASSERTED IN WRITING WITHIN 30 DAYS FROM THE DATE OF RECEIPT BY THE CONTRACTOR OF THE NOTIFICATION OF CHANGES AND IN NO CASE AT THE COMPLETION OF WORK.'

SOON AFTER WORK BEGAN, A STRIKE LASTING FROM OCTOBER 6, 1958, THROUGH MARCH 23, 1959, AFFECTED SOME OF THE METAL WORK ON THE PROJECT. IT WAS SUBSEQUENTLY DETERMINED (ON NOVEMBER 25, 1959) BY THE OFFICE OF FOREIGN BUILDINGS' REPRESENTATIVE ON THE JOB, THAT THE CONTRACTOR SHOULD BE GIVEN AN EXTENSION OF TIME FOR THE PERIOD FROM FEBRUARY 9 THROUGH JUNE 27, 1959, TO COVER THE DELAYS ATTRIBUTABLE TO THE STRIKE. THE CONTRACT COMPLETION DATE WAS EXTENDED BY 139 DAYS.

IN THE MEANTIME, ON AUGUST 19, 1959, THE DEPARTMENT ISSUED A STOP ORDER ON WORK ON THE CONSTRUCTION OF WALLS AND PARTITIONS IN THE OFFICE BUILDINGS AND ON THE WALLS OF THE AMBASSADOR'S RESIDENCE. IT IS REPORTED THAT THE PARTIAL STOP ORDER AROSE OUT OF A RE-PROGRAMMING OF SPACE IN THE OFFICE BUILDING AND URGENT REQUESTS FROM THE EMBASSY FOR A RECONSIDERATION OF THE FENESTRATION SOLUTION OF THE TWO BUILDINGS. WORK ON THOSE PORTIONS OF THE PROJECT WAS STOPPED ON AUGUST 21, 1959, AND WAS NOT RESUMED UNTIL FEBRUARY 18, 1960, WHEN THE EMBASSY, UPON RECEIPT OF INSTRUCTIONS FROM THE DEPARTMENT, DIRECTED THE CONTRACTOR TO RESUME WORK UNDER NEW SPECIFICATIONS. PURSUANT TO THE SPECIFICATION REVISION, THE DEPARTMENT OF STATE EXECUTED A CHANGE ORDER, COVERING AN ADDITIONAL CONTRACT AMOUNT OF 17,708,400 MOROCCAN FRANCS, AND AN EXTENSION OF THE CONSTRUCTION COMPLETION DATE TO DECEMBER 31, 1960. THE CONTRACTOR PROCEEDED WITH THE WORK BUT REFUSED TO SIGN THE CHANGE ORDER, BECAUSE IT MADE NO ALLOWANCE FOR ITS CLAIMS FOR DAMAGES ARISING FROM DELAYS. (IT ALSO HAD REFUSED TO SIGN A PREVIOUS CHANGE ORDER RELATING TO THE TIME EXTENSION FOR THE STRIKE EFFECTS FOR THE SAME REASON.) HOWEVER, ON OCTOBER 10, 1960, CHANGE ORDER NO. 43 WAS SIGNED BY THE CONTRACTOR, EXTENDING THE COMPLETION DATE TO DECEMBER 31, 1960, AND PROVIDING FOR THE ADDITIONAL AMOUNT OF 17,708,400 MOROCCAN FRANCS, AFTER THE CONTRACTOR WAS ADVISED BY DEPARTMENT REPRESENTATIVES THAT IT WOULD NOT AFFECT ITS CLAIM FOR DELAY DAMAGES.

A JOINT DETERMINATION HAS BEEN MADE BY THE OFFICE OF FOREIGN BUILDINGS "SUPERVISOR OF CONSTRUCTION" FOR THIS PROJECT, WITH THE ASSISTANCE OF THE REGIONAL DIRECTOR OF THE OFFICE OF FOREIGN BUILDINGS, AND THE CONTRACTOR, AS TO A REASONABLE EVALUATION OF DAMAGES SUSTAINED BY THE CONTRACTOR ARISING FROM UNREASONABLE DELAYS IN THE COMPLETION OF THE CONTRACT ATTRIBUTABLE TO THE GOVERNMENT. IT WAS ESTABLISHED AND MUTUALLY AGREED UPON THAT 133 DAYS CONSTITUTE THE PERIOD OF UNREASONABLE DELAY ATTRIBUTABLE TO THE GOVERNMENT. THE 133 DAY PERIOD OF "UNREASONABLE DELAY" WAS DETERMINED TO HAVE ARISEN AS FOLLOWS: IT WAS DETERMINED THAT 81 DAYS OF UNREASONABLE DELAY RESULTED DURING THE TIME FROM THE AUGUST 1959 PARTIAL STOP ORDER, TO THE TIME THE CONTRACTOR COMPLETED THE CHANGES TO THE METAL FRAME WORK AND FENESTRATION. ANOTHER 22 DAYS WERE FOUND TO HAVE ARISEN OUT OF SLOWNESS ON THE PART OF THE GOVERNMENT IN APPROVING SHOP DRAWINGS PRIOR TO THE PARTIAL STOP ORDER; AND 30 DAYS WERE CHARGED TO THE GOVERNMENT FOR AFTER EFFECTS OF THE PARTIAL STOP ORDER. THE GOVERNMENT'S REPRESENTATIVES CALCULATED THAT APPROXIMATELY $51,600 FOR OVERHEAD COSTS IS ATTRIBUTABLE TO THE 133 DAYS OF DELAY. HOWEVER, THE CONTRACTOR HAS AGREED, THROUGH NEGOTIATION, TO ACCEPT THE SUM OF $45,000 IN COMPLETE SETTLEMENT OF THE OVERHEAD EXPENSES INCURRED BY THE CONTRACTOR DURING THE AFOREMENTIONED PERIOD OF 133 DAYS.

IT IS NOTED THAT THE CONTRACTOR'S CLAIM WAS INITIALLY IN THE AMOUNT OF $106,500, AND THAT THE AMOUNT OF THE PRESENT CLAIM ($45,000) APPEARS TO HAVE BEEN ARRIVED AT AS A COMPROMISE. THE EVIDENCE SUBMITTED IS NOT IN SUFFICIENT DETAIL NOR SUFFICIENTLY SUPPORTED BY COST DATA TO ENABLE US TO MAKE A DETERMINATION AS TO THE VALIDITY OF THE AMOUNT CLAIMED. FOR EXAMPLE, IT APPEARS FROM THE "JOINT STATEMENT OF EVALUATION OF DAMAGES" SUBMITTED THAT THE CLAIM CONSISTS FOR THE MOST PART, IF NOT ENTIRELY, OF OVERHEAD EXPENSES INCURRED BY THE CONTRACTOR DURING A PERIOD OF 133 DAYS' DELAY. WHILE IT IS STATED THAT THE REGIONAL DIRECTOR OF FBO WAS SATISFIED FROM AN EXAMINATION OF THE CONTRACTOR'S ACCOUNTS THAT AN OVERHEAD RATE OF 35 PERCENT WAS JUSTIFIED, NO ACCOUNTING DATA HAS BEEN SUBMITTED TO SUPPORT A CONCLUSION THAT THIS WAS IN FACT THE ACTUAL RATE OF OVERHEAD EXPENSE INCURRED BY THE CONTRACTOR DURING THE PERIOD IN QUESTION.

IF ACCOUNTING SUPPORT FOR THE AMOUNT CLAIMED IS FURNISHED, WE WILL BE GLAD TO RECONSIDER THE MATTER AS A DIRECT CLAIM FROM THE CONTRACTOR, BUT IN THE PRESENT CIRCUMSTANCES WE ARE UNABLE TO APPROVE THE PROPOSED PAYMENT.