B-150715, MAR. 7, 1963

B-150715, MAR. 7, 1963

TO EDWIN GROSSMAN, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 8, 1963, RELATING TO THE CLAIMS OF THE MISSOURI PETROLEUM PRODUCTS COMPANY FOR THE SUMS OF $72,687.85 AND $24,471.30, REPRESENTING AMOUNTS ALLEGED TO BE DUE UNDER CONTRACTS NOS. DA-23-037-AV-1160, DATED JUNE 30, 1958, AND DA-23-037-AV- 1328, DATED OCTOBER 10, 1959, RESPECTIVELY, WITH THE DEPARTMENT OF THE AIR FORCE. BY LETTER DATED FEBRUARY 21, 1963, WE ADVISED YOU THAT INSTRUCTIONS HAD BEEN ISSUED TO OUR CLAIMS DIVISION TO CERTIFY FOR PAYMENT TO YOUR CLIENT THE SUM OF $24,471.30, COVERING THE AMOUNT RECOMMENDED BY THE SUCCESSOR CONTRACTING OFFICER FOR ALLOWANCE UNDER THE CONTRACT DATED OCTOBER 10, 1959.

UNDER DATE OF OCTOBER 23, 1962, THE FINANCE CENTER, UNITED STATES ARMY, INDIANAPOLIS, INDIANA, TRANSMITTED TO OUR CLAIMS DIVISION FOR DIRECT SETTLEMENT A CLAIM BY THE MISSOURI PETROLEUM PRODUCTS COMPANY, WITH A RECOMMENDATION BY THE SUCCESSOR CONTRACTING OFFICER FOR PAYMENT IN THE AMOUNT OF $72,687.85, THAT SUM HAVING BEEN ARRIVED AT BY NEGOTIATIONS BETWEEN THE PARTIES. THE STATED REASONS FOR REFERRING THE CLAIM TO OUR CLAIMS DIVISION FOR SETTLEMENT WERE THAT DOUBTFUL QUESTIONS OF LAW ARE INVOLVED AND BECAUSE FUNDS ARE "NOT AVAILABLE LOCALLY, TO MAKE PAYMENT DUE TO LAPSED APPROPRIATIONS.

THE CONTRACT IN THIS CASE WAS AN ADVERTISED PROCUREMENT AWARD TO YOUR CLIENT FOR FURNISHING HOT MIX ASPHALTIC CEMENT ROAD SURFACING AND CONSTRUCTION OF CONCRETE CURBS, GUTTERS AND DRAINAGE STRUCTURES AT FORT LEONARD WOOD, MISSOURI, AT THE ORIGINAL CONTRACT PRICE OF $109,250. THE CONTRACT WAS SUBSEQUENTLY MODIFIED SO AS TO INCREASE THE CONTRACT PRICE TO $145,415.90.

THE CONTRACTOR CONTENDED, AMONG OTHER THINGS, THAT THE GOVERNMENT FAILED TO PROVIDE TIMELY AND ADEQUATE DRAWINGS DURING THE PERIOD OCTOBER 24, 1958, TO JUNE 12, 1959, AND THAT WHEN ROUGH DRAWINGS WERE AVAILABLE, THE GOVERNMENT FAILED TO PROVIDE AN ADEQUATE NUMBER OF GRADE STAKES, THUS PREVENTING NORMAL PROGRESSION OF THE WORK. THE CONTRACTOR ALSO ALLEGED THAT THE GOVERNMENT INTENTIONALLY DELAYED WORK PROGRESS WHILE IT WAS CONSIDERING INSTALLATION OF A STORM WATER DRAINAGE SYSTEM AND ON-STREET PARKING IN THE CONTRACT AREA. THE RECORD SHOWS THAT AT THE FINAL CONFERENCE ON JULY 13, 1962, THE CONTRACTING OFFICER AND CONTRACTOR'S COUNSEL, ON BEHALF OF THE CONTRACTOR, AGREED TO A SETTLEMENT ON THE BASIS OF AN ALLOWANCE OF $72,687.85 TO THE CONTRACTOR FOR ITSELF AND ON BEHALF OF ITS SUBCONTRACTOR, DONALD MAGGI.

AN EXAMINATION OF THE CLAIMS SUBMITTED BY THE CONTRACTOR FOR A PRICE ADJUSTMENT UNDER THE INDICATED CONTRACT SHOWS THAT THERE WAS INCLUDED THEREIN ON BEHALF OF THE SUBCONTRACTOR, DONALD MAGGI, A CLAIM FOR INCREASED COSTS AMOUNTING TO $17,086.18--- REDUCED BY THE SUCCESSOR CONTRACTING OFFICER TO THE SUM OF $15,456.62--- AND ON THE BASIS OF THE PRESENT RECORD A QUESTION ARISES AS TO WHETHER THE GOVERNMENT IS LIABLE FOR THE AMOUNT OF THE SUBCONTRACTOR'S CLAIM. THE CASES CONCERNING GOVERNMENT LIABILITY TO A SUBCONTRACTOR WHERE NO PRIVITY OF CONTRACT EXISTS, AS IN THIS CASE, ARE TO THE EFFECT THAT A CONTRACTOR'S CLAIM ON BEHALF OF A SUBCONTRACTOR WILL NOT BE SUSTAINED WHEN SUCH CLAIM IS MADE UNDER A PROVISION OF THE PRIME CONTRACT, AND THE CONTRACTOR APPEARS TO BE PROTECTED AGAINST LIABILITY TO THE SUBCONTRACTOR BY AN EXCULPATORY CLAUSE IN THE CONTRACT. SEE NILS. P. SEVERIN V. UNITED STATES, 99 CT.CL. 435 (1943), CERTIORARI DENIED, 322 U.S. 733. THE SUCCESSOR CONTRACTING OFFICER POINTS OUT THAT WHILE THERE IS NO CLAUSE IN THE SUBCONTRACT ABSOLVING THE PRIME CONTRACTOR FROM LIABILITY, IT STILL DOES NOT APPEAR THAT THE CONTRACTOR'S LIABILITY TO MR. MAGGI IS SATISFACTORILY ESTABLISHED.

SINCE THERE IS NO PRIVITY OF CONTRACT BETWEEN THE UNITED STATES AND SUBCONTRACTORS OF FIRMS ENGAGED IN THE PERFORMANCE OF GOVERNMENT CONTRACTS, IT APPEARS THE ONLY OBLIGATION OF THE GOVERNMENT IN THESE MATTERS WOULD BE TO REIMBURSE THE MISSOURI PETROLEUM PRODUCTS COMPANY FOR THE AMOUNTS PROPERLY PAID BY IT FOR THE WORK IN QUESTION OR FOR WHICH THERE IS A LEGAL RESPONSIBILITY TO PAY ON THE PART OF THE CONTRACTOR. THE CASE OF CHARLES H. TOMPKINS COMPANY, ASBCA NO. 2661, 1955, THE ARMED SERVICES BOARD OF CONTRACT APPEALS HELD THAT IF A SUBCONTRACTOR HAS NOT WAIVED ITS RIGHT TO ASSERT A CLAIM AGAINST THE PRIME CONTRACTOR FOR DAMAGES CAUSED BY UNREASONABLE DELAYS OR SUSPENSION OF THE WORK, THE PRIME CONTRACTOR MAY RECOVER SUCH DAMAGES FROM THE GOVERNMENT AND THAT SUCH RULE DOES NOT DEPEND ON ACTUAL PAYMENT BY THE PRIME CONTRACTOR IF THE LEGAL OBLIGATION TO PAY EXISTS, CITING THE CASES OF UNITED STATES V. BLAIR, 321 U.S. 730, WARREN BROS. ROADS COMPANY V. UNITED STATES, 123 CT.CL. 48, AND THE APPEAL OF GENERAL INSTALLATION COMPANY, ASBCA NO. 2061.

THE SUCCESSOR CONTRACTING OFFICER HAS FOUND IN EFFECT THAT THE FACTS IN THIS CASE ARE SUCH AS TO CONFIRM THE CONTRACTOR'S CONTENTIONS CONCERNING THE REPORTED DELAYING INCIDENTS AND HE CONCLUDED THAT A SUSPENSION OF WORK ORDER (AUTHORIZED BY GC-11 OF THE GENERAL CONDITIONS OF THE CONTRACT) SHOULD HAVE BEEN ISSUED FOR THE PERIOD OCTOBER 24, 1958, TO JUNE 12, 1959. THE SUCCESSOR CONTRACTING OFFICER ALSO DETERMINED THAT THE GOVERNMENT SUSPENDED THE WORK FOR ONE MONTH DURING THE PERIOD JUNE 12 TO OCTOBER 5, 1959, BY FAILING TO PROVIDE AN ADEQUATE NUMBER OF GRADE STAKES.

UPON CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES IN THIS CASE AND IN VIEW OF THE HOLDING OF THE COURT OF CLAIMS IN THE CASE OF GEORGE A. FULLER COMPANY V. UNITED STATES, 108 CT.CL. 70, WE ARE INCLINED TO GIVE FAVORABLE CONSIDERATION TO THE CONTRACTOR'S CLAIM TO THE EXTENT OF $57,231.23--- $72,687.85 LESS $15,456.62. WE TAKE THIS POSITION ON THE BASIS OF THE FACT THAT THERE IS NO SHOWING THAT YOUR CLIENT IS LEGALLY OBLIGATED TO PAY THE SUBCONTRACTOR'S CLAIMS. ACCORDINGLY, UPON RECEIPT OF YOUR ADVICES THAT YOUR CLIENT IS WILLING TO ACCEPT THE AMOUNT OF $57,231.23 IN FULL SETTLEMENT OF ITS CLAIM, APPROPRIATE INSTRUCTIONS WILL BE ISSUED DIRECTING THAT THIS AMOUNT BE CERTIFIED FOR PAYMENT.