Appendix — United States v. Utah Construction and Mining Co

Supreme Court brief1965

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Supreme Court of the United States

OCTOBER TERM, 1965

No. 440

UNITED STATES, PETITIONER

vs.

UTAH CONSTRUCTION AND MINING CO.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF CLAIMS

INDEX

Original Print

Record from the United States Court of Claims

PIN sieictchationninsisstabibcidoel atlciedsdiniehcsidaneciiccgcbhis cine 1 1

Exhibit A—(Excerpts)—Articles 3, 4, 9,

15, 16(d), and GC-25 from Contract for

Construction between the United States

and Utah Construction Company, dated

BU NS hn aoe 20 15

INIT OI cst cersoens seb eidincociuss<etienies 26 19

Defendant’s amended answer ..................-00-0.-.--. 48 34

Commissioner’s order and memorandum re ap-

plicability of Bianchi decision —.......00........... 53 37

Exhibits to defendant’s supplemental brief

i 76 52

Concrete Aggregate Appeal No. 121—Part

1—Letter from Atomic Energy Commis-

sion to Utah Construction Company,

dated December 20, 1956 2.0.0.0... 76 52

ii INDEX

Original Print

Record from the United States Court of Claims—

Continued

Exhibits to defendant’s supplemental brief

(Excerpts )—Continued

Concrete Aggregate Appeal No. 121—Part

| Geeeiir shemales gic : iret CER ES 80 57

Brief of the contracting officer on

motion to dismiss Utah’s appeal for

its failure to make a timely pre-

sentation of its claim .............-.--------- 80 57

Decision of the Atomic Energy Com-

mission in Docket No. CA-121, Oc-

tober 1, 1959 ......-...--------------eerettete 87 64

Pier Drilling Appeal No. 87 -......-.--------------- 102 77

Memorandum of decision ..........-.---------- 102 77

Findings of fact and recommendation.. 103 78

Letters from Atomic Energy Commis-

sion to Utah Construction Company,

dated April 1, 1955, and April 19,

oi. onesanttinbanonnmemnverenivneontons 120 94

Shield Window Appeal No. 76 ......---------------- 125 99

Memorandum of decision .........-..---------- 125 99

Findings of fact and recommendation.. 126 100

Letter from Atomic Energy Commis-

sion to Utah Construction Company,

dated June 26, 1954 ...........-.---------+-- 148 121

Shield Door Appeal No. 95 .........------------------- 151 125

Memorandum of decision ...........-.--------- 151 125

Findings of fact and recommendation.. 152 126

Letter from Atomic Energy Commis-

sion to Utah Construction Company,

dated October 27, 1955 .........-..---------- 164 138

Opinion, Whitaker, J. ....---------------------- 167 142

Opinion, concurring, Cowen, Ch. Be cdcieiais 179 155

Opinion, concurring in part and dissenting in

a PATE, Davis, J. .--cceeccecescnneeeeeeeeeeeeeeeeeeceececeeennnnens 180 156

—~_ Order extending time to file certicrar 3... 188 164

Order allowing certiorari -...........------------------ee-rrrre 189 165

(foi. 1]

IN THE UNITED STATES COURT OF CLAIMS

No. 3-61

UTAH CONSTRUCTION AND MINING COMPANY, PLAINTIFF

vs,

THE UNITED STATES, DEFENDANT

PETITION—Filed January 6, 1961

1. Plaintiff, Utah Construction and Mining Company,

formerly and during the times hereir-mentioned known as

Utah Construction Company, is, ard at all times herein

pertinent was, a corporation organized and existing under

the laws of the State of Delaware, with its office and

principal place of business in the City and County of

San Francisco, State of California, now being located

at 550 California Street in said City and County.

2. On March 19, 1953, pursuant to competitive unit

price and lump-sum bids, plaintiffs was awarded and

entered into a contract with the defendant, acting by and

through the United States Atomic Energy Commission,

designated Contract No. AT (10-1) -645, under which plain-

[fol.2] tiff was to furnish the plant, equipment, labor and

materials and to perform the work, except as hereinafter

alleged, for the construction of a large assembiy and

maintenance area at the defendant’s National Reactor

Testing Station in Jefferson and Butte Counties, Idaho.

A copy of the contract, together with Advance Notice, In-

vitation No. AT (10-1) -645, Instructions to Bidders, plain-

tif’s bid, general conditions, special conditions, and per-

tinent drawings, schedules, specifications, addenda and

modifications are annexed hereto as Exhibit “A” and by

this reference made a part hereof.

3. In estimating its cost of the performance of the

work set forth in the plans and specifications, and the

addenda thereto, of said contract, and in submitting its

bid and entering into said contract for the performance

of such work, plaintiff relied on defendant’s express and

implied representations and warranties that:

(a) all work could be completed, at the latest, within

approximately one calendar year from the award of said

contract, or specifically, by March 30, 1954;

(b) all equipment and materials to be furnished by de-

fendant for the completion of said contract would be sup-

plied to plaintiff completely designated, tested, inspected,

and in a fit condition for installation or use at the respec-

tive times necessary to meet work schedules, and in the

ordinary and economical course of the performance of said

contract, and in accordance with the plans and specifica-

tions of said contract;

(ce) all specifications and plans, shop drawings and

models would be furnished at the respective times neces-

[fol. 3] sary to meet the work schedules, and in the ordi-

nary and economical course of the performance of said

contract;

(d) any and all decisions pertinent to changes or mate-

rial alterations of the required performance under said

contract would be made in a reasonable and prompt man-

ner, so as not to interfere unduly with plaintiff’s work

on said project, or to interfere with or preclude the ordi-

nary and economic course of the performance of said

contract;

(e) all plans and specifications, addenda thereto, and

modifications under said contract were intended and pre-

pared to produce a desired end-result, and were complete

and adequate to produce such desired end-result;

(f) all the information in defendant’s possession and

within its special knowledge concerning the conditions of

the job-site, and the materials and equipment to be fur-

nished by defendant was disclosed to all bidders, including

plaintiff ;

(g) the plans and specifications prepared by defendant

were complete, and not such as to mislead as to any item

of work covered by said contract;

(h) defendant would not cause plaintiff any delay in the

prosecution of its work, or protract the period of perform-

ance, or interfere in the performance of its work under

said control; and

(i) defendant would not make unreasonable, arbitrary

or excessive inspection demands, or arbitrarily or unrea-

sonably reject any of plaintiff’s completed work, or unduly

delay in approving completed phases of said contract.

[fol.4] 4. Plaintiff promptly commenced the perform-

ance of the contract work after receipt of defendant’s

Notice to Proceed, dated March 19, 1953, and during the

entire period of such performance under said contract,

defendant failed to perform in accordance with Said con-

tract, and its express and implied warranties and repre-

sentations; specifically, defendant did not formulate a de-

sired end-result prior to its Invitation to Bidders; defend-

ant did not prepare adequate plans and specifications for

tract, or for any end-result; defendant did not furnish

plans and specifications, shop-drawings, models, equipment

or materials in a timely manner, or in accordance with

work schedules, or in the ordinary and economical course

of the performance of said contract; defendant did not

furnish equipment or materials to plaintiff completely de-

signed, tested or inspected or in a condition fit for its

intended use; defendant did not disclose to plaintiff all

of its information concerning known job-site conditions

and government-furnished equipment and materials; de-

fendant did not make prompt or reasonable decisions with

respect to changes and materia] alterations of said con-

tract ; defendant interfered with and unnecessarily delayed

plaintiff in the prosecution of its work under said contract;

defendant arbitrarily, unreasonably and excessively de-

manded inspection of both plaintiff’s work in progress

and its completed work; defendant arbitrarily and unrea-

sonably rejected plaintiff’s work in progress and its com- ~

pleted work; defendant unreasonably and arbitrarily de-

layed approval of plaintiff’s completed work on said proj-

ect; and defendant intentionally misrepresented to plain-

(fol. 5] tiff that the contemplated work under said con-

tract, or subjectively contemplated by defendant, or the

desired end-result under said contract, or any end-result,

could be completed or produced within one calendar year.

5. As a result of defendant’s said misrepresentations

and failure to perform in accordance with said contract

and its implied and express warranties, plaintiff did not

complete its work on said project and under said contract,

the subsequent modifications and the change orders, num-

bering one-hundred thirty-six (136) in all, until on or

about January 7, 1955. All of plaintiff’s work required

by defendant on said project was completed within the

contract time as extended by defendant.

6. As a result of plaintiff’s detrimental reliance on said

defendant’s delays, misrepresentations and failures to per-

form in accordance with said contract and its implied and

express warranties, including, but not limited to, the acts

of defendant with respect to major phases of said contract,

hereinafter referred to, which independently and cumula-

tively constituted a breach of contract by defendant (sub-

paragraphs 7(a), (b), (ce), (d) and (e) herein), plaintiff

was obliged to pay increased excavation costs in the

amount of $17,734.63, added shield door costs in the

amount of $4,457.24, increased concrete finishing costs in

the amount of $109,356.00, added winter p.;otection costs

in the amount of $183,431.46, added administrative, over-

head and equipment costs in the amount of $216,717.63,

added labor costs in the amount of $79,844.18, and added

excessive inspection costs in the amount of $55,000.00.

None of the additional costs referred to herein would

[fol.6] have been incurred by plaintiff except for said

failures of defendant to perform in accordance with said

contract, representations and implied and express war-

ranties.

7. The delayed completion date of said contract, and

the increased costs to plaintiff herein referred to were due

in large part, but not limited to, the following acts of

defendant on the following specific phases of said con-

tract:

(a) Pier Drilling—Included in plaintiffs contract with

defendant, Exhibit “A” hereto, was the drilling and ex-

cavation for “piers” or foundation shafts for certain

building. to be constructed by plaintiff. In drilling the

shafts for the piers, plaintiff’s subcontractor encountered,

on or about June 1, 1953, conditions differing materially

from those indicated in the contract documents, namely,

“float rock” (individual rocks of various sizes, detached

from the principal bedrock by glacial or geological action

and subsequently covered by silt suspending such rocks

below the surface of the ground). Such changed condi-

tions delayed excavation procedures to such an extent that

plaintiff was forced to protect and perform subsequent

concrete work in inclement winter weather.

On or about February 18, 1955, plaintiff claimed addi-

tional compensation in the amount of $17,734,63 for the

extra costs of drilling said “float rock”. Defendant de-

nied said claim on April 1, 1955. On or about March 31,

1955, plaintiff claimed additional compensation in the

amount of $83,431.46 and a time extension of eleven

months for additional costs to cover winter protection

and performance resulting from the delayed excavation.

Defendant denied said claim on April 19, 1955.

[fol.7] On or about April 27, 1955, plaintiff appealed

from the above decisions to the Atomic Energy Commis-

sion’s Advisory Board on Contract Appeals, which found

that (1) the “float rock” encountered constituted a

“changed condition” within the meaning of Article 4 of

said contract, that (2) this condition caused some delay in

the drilling operation, (3) that no additional cost to plain-

tiff resulted from such changed condition, except insofar

as plantiff was liable over to its drilling subcontractor

(for which the Board recommended that the matter be

remanded to the Contracting Officer to determine) and

(4) that the excavation delay did not operate to delay

the pouring of concrete because such latter delay was due

primarily to a dispute over defendant’s failure to furnish

concrete aggregate of the quality specified in the contract

and such aggregate dispute was not before the Board in

the particular proceeding.

Defendant well knew, or should have known, of the

actual subsurface soil conditions and did in fact mislead

plaintiff and misrepresent such subsurface soil conditions.

Further, defendant did find that some delay was attribut-

able to the misleading specifications and misrepresenta-

tions prepared by defendant; however, defendant has not

compensated plaintiff for any of its increased costs as a

result thereof, namely (a) $17,934.63 for the additional

excavation work and for a fair and reasonable apportion-

ment of the total increased costs for added winter protec-

tion in the amount of $183,431.46, (b) added administra-

tive, overhead and equipment costs in the amount of $216,-

717.62, (c) added labor costs of $79,864.18, and (d) added

(fol. 8] excessive inspection costs of $55,000.00 attributa-

ble to such delay and failure to perform, to which plaintiff

is fully entitled. Plaintiff will ask leave of court to amend

this petition when the precise amount of such apportion-

ment has been determined.

(b) Concrete Aggregate—It was contemplated under

said contract and the specifications, that plaintiff would

pour approximately 18,000 cubic yards of concrete, On or

about July 17, 1958, defendant suspended plaintiff’s con-

crete mixing and pouring operations because of informa-

tion received by its Contracting Officer on the project that

the cement mixture being used was deficient in the

strength requirements as specified by the contract (Sec-

tion III, Division S-2). On or about July 21, 1953, de-

fendant’s Contracting Officer authorized resumption of

work “. . . pending an investigation and determination of

deficient strength requirements, . . .”

Subsequent tests revealed that the presence of small

sands, or “fines” in the concrete aggregate furnished by

defendant to plaintiff caused the deficient strength.

Thereafter, defendant undertook, through another con-

tractor, to clean the aggregate and remove such condition.

Further, defendant authorized plaintiff, at defendant’s

cost, to increase the corcrete mixture by one bag of ce

ment, thereby increasing the mixture to six, instead of

the originally specified five, bags of cement per cubic

yard. Such added bag of cement provided the necessary

strength, but increased plaintiff’s finishing costs.

On or about July 19, 1956, plaintiff presented a claim

to defendant’s Contracting Officer in the amount of $109,-

(fol. 9] 356.00 for additional costs incurred by plaintiff

due to defendant’s failure to furnish aggregate to meet

the specifications imposed by section S-2 as represented in

9C-18 of Exhibit “A” hereto, on the grounds that such

failure was a changed condition within the meaning of

Article IV of said contract.

Said Contracting Officer denied said claim on the

grounds that plaintiff’s claim was for breach of contract

or unliquidated damages and hence not within his juris-

diction. On appeal, Docket N 0. CA-121, Decision dated Oc-

aid plans and specifications, plaintiff was forced to pour

ement in severe and inclement winter weather at greatly

183,431.46, (b) added administrative, overhead and

yuipment costs in the amount of $216,717.63, (c) added

bor costs in the amount of $79,844.18, and (d) added

‘cessive inspection costs in the amount of $55,000.00

tributable to such delay and failure to perform. Plaintiff

ill ask leave of court to amend this petition when the

ol. 10] precise amounts of such apportionment have been

termined.

cessary to the completion of the shield door installation

required by the plans and specifications. In accordance

th such plans and specifications, plaintiff submitted ven-

rs shop drawings to defendant on or about July 11,

53 for the intended purpose of determining whether the

yposed products were within the limits of contract spe-

cations. Defendant determined that certain features not

bearing on contract drawings should be added, namely,

cific finish requirements, stee] content, and specific ar-

igement and location of shield-door drive units,

Jefendant’s insistent imposition of additiona] design in-

mation and ultimate partial withdrawal and reversal

uch action on October 26, 1953, delayed a firm commit-

ment to said vendors from July until November 8, 1953.

Due to such delay on or about February 17, 1954, plain-

tiff was forced to postpone the pouring of concrete shield

doors, as well as the necessary concrete on the buildings’

and structures affected thereby, until June, 1954, or a

total of four months delay. Such delay in turn delayed

all phases of work, including, but not limited to, the Shield

Window and Amercoat Paint delays hereinafter referred

to.

On or about October 29, 1955, defendant’s Contracting

Officer denied plaintiff’s claim for extra work and delay

resulting from defendant’s inadequate plans, specifications

and shop drawings with respect to shield doors. On or

(fol. 11] about November 8, 1955, plaintiff appealed to the

Atomic Energy Commission’s Advisory Board on Contract

Appeals. Said Board of Appeals, in Docket No. 95, Find-

ings of Fact and Recommendations dated April 25, 1957,

upheld said Contracting Officer’s denial on the grounds

that added costs of work arising from the necessity of

completing inadequate design, plans, specifications or

drawings were not “changes” within the meaning of

Article III of said contract.

Plaintiff is entitled to recover from defendant all costs

resulting from defendant’s failure to furnish adequate

and complete plans and specifications, as well as its fail-

ure to disclose all facts within its knowledge, namely,

direct costs of extra work in the amount of $4,457.24 and

a fair and reasonable apportionment of (a) added winter

protection costs of $183,431.46, (b) added administrative,

overhead and equipment costs of $216,717.68, (c) added

labor costs of $79,844.18, and (d) added excessive inspec-

tion costs of $55,000.00 attributable to such delay and fail-

ure to perform. Plaintiff will ask leave of court to amend

this petition when the precise amount of such apportion-

ment has been determined.

(d) Shield Windows—Pursuant to a letter of intent

issued by defendant to plaintiff in June, 1953, and Modi-

fications No, 2 and No. 4 of Exhibit “A” hereto, plaintiff

negotiated a contract with Corning Glass Works, under the

general direction of defendant, for the procurement of

shield windows, which were originally to be furnished

plaintiff by defendant for installation in the structure

designated in said contract as Building No. 607. As the

(fol. 12] result of defendant’s insistence, the following

language was inserted in plaintiff’s contract with Corn.

ing Glass Works:

(1) “All glass supplied will conform to the re-

quired specifications as tested and approved by the

Argonne National Laboratory.”

(2) “It is understood and agreed that all compo-

nents and assemblies of the shield windows are sub-

ject to the inspection of authorized Government repre-

sentatives in manufacturer’s plant and at site,”

(3) “The Corning Glass Works shall submit shop

drawings and samples . . . as required in sufficient

time to allow for processing and final approval to

preclude the possibility of delaying job progress.”

representatives and rejected all Type II windows. The

rejected glass was returned to Corning Glass Works on

or about July 9, 1954,

Corning Glass Works maintained that the glass in ques-

tion was within the tolerances established by defendant’s

plans and specifications and appealed to the Director of

Reactor Branch, United States Atomic Energy Commis-

sion for competent unbiased inspection. Such an inspec-

tion was conducted and, on or about February 1, 1955,

defendant reversed its decision and plaintiff was allowed

to proceed with its work after a further delay of 35 days.

On or about August 12, 1954, defendant discovered that

the mineral oils in one of the installed Type I windows

had acquired a cloudy haziness. On or about August 16,

1954, Corning Glass Works advised defendant, by letter,

that such cloudy condition had been encountered in other

locations and that it had been determined that the condi-

tion could be eliminated by de-colorizing the oil. Despite

this information defendant, on or about September 2, 1954,

rejected Type I windows, without inspection or testing,

on the ground that moisture in the windows was causing

the cloudiness. Defendant made no effort to test the oil

and determine whether actualities or prejudice was the

basis of its rejection until October 15, 1954, or 43 days

after the September 2, 1954 rejection. It was not until

October 26, 1954, or 105 days after the cloudy oil was first

[fol. 14] noted, that defendant’s representatives verbally

notified plaintiff that defendant’s rejection was erroneous

and that the cloudy oil was not plaintiff’s responsibility.

Installation of Type I.windows was completed five days

later.

Plaintiff presented a claim, undey Article IV of said

contract, to defendant’s Contracting Officer for the extra

work and costs of delay resulting from defendant’s erro-

neous, arbitrary, unreasonable and excessive inspection

and rejection, which was denied by said Contracting Offi-

cer on or about June 26, 1954. On or about June 26, 1954,

plaintiff appealed to the Atomic Energy Commission’s

Advisory Board on Contract Appeals and the Board, in

Docket No. 76, by Findings of Ract and Recommendation

dated July 23, 1957, found that plaintiff could not exercise

much, if any, discretion with respect to the procurement

of materials for the windows; that plaintiff, in assuming

defendant’s initial responsibilities under said contract at

defendant’s request, received no assistance from defend-

ant in the difficulties encountered with shield windows;

that the “modus operandi on changes and shop drawings

was not calculated to assure a maximum expedition ;” that

plaintiff performed to the best of its ability; that plaintiff

was “subjected to delays that were not of its making.”

Said Board allowed an extension of time under said con-

tract to November 2, 1954, plus such additional time neces-

sary to complete operations dependent upon window in-

stallation, but denied plaintiff’s claim for increased costs.

In addition to said extension of time, plaintiff is entitled

to a fair and reasonable apportionment of the (a) added

(fol. 15] winter protection costs of $183,431.46, (b) added

administrative, overhead and equipment costs of $216,-

717.63, (c) added labor costs of $79,844.18 and (d) added

excessive inspection costs of $55,000.00 attributable to

such delay and failure to perform. Plaintiff wil] ask leave

of court to amend this petition when the precise amount

of such apportionment has been determined.

covered that government furnished materials for the “hot

shop”, namely, top and bottom guide rails, four travelling

boom systems and miscellaneous items of machinery, were

of (1) questionable quality and (2) rust and mill scale

had not been removed before a factory coat of paint had

been applied, and (3) improper crating caused consider-

able transit damage.

Defendant directed plaintiff to perform the necessary

removal of rust and mill scale and to paint all govern-

ment furnished materials or equipment, including shield

doors, in the “hot shop” with “Amercoat”. Plaintiff

proceeded with such work, under protest, maintaining that

defendant’s painting specifications made no mention of

“Amercoat” paint being required on anything but the

walls of the “hot shop”. Plaintiff suspended and post-

poned the pouring of concrete in the “hot shop” until

May, 1954, dismantled assembled shield doors, sand-blasted

all surfaces and applied the “Amercoat” paint as re-

quested by defendant.

Defendant advised plaintiff in June, 1954 that shield

doors were “movable walls”, and hence within the paint-

ing specifications prepared by defendant. On or about

[fol. 16] December 6, 1954, after eight months of delay,

successor representatives of defendant reversed the earlier

decision of April, 1954, and agreed to a settlement formula

with respect to the added direct costs of the additional

required painting.

Plaintiff, in addition to such added direct costs, is

entitled to recover a fair and reasonable apportionment

of the total increase in (a) winter protection costs of

$183,431.46, (b) added adminisirative, overhead and

equipment costs of $216,717.63, (c) added labor costs of

$79,844.18, and (d) added excessive inspection costs of

$55,000.00 attributed to such delay and failure to perform.

Plaintiff will ask leave of court to amend this petition

when the precise amount of such apportionment has been

determined.

8. Plaintiff estimates that ninety per cent (90%) of

the aggregate of said additional costs referred to in para-

graphs 6 and 7 hereof were due to defendant’s delays

and failures to perform in accordance with said contract,

representations and implied and express warranties, on

the phrases of said project specified in sub-paragraphs

7(a), (b), (c), (d) and (e); therefore, plaintiff incorpo-

rates herein by reference said sub-paragraphs as the

major, aggragated, serious, independent and specific fail-

ures by defendant to perform in accordance with said

contract, representations, and implied and express war-

ranties.

9. Subsequent to the award by defendant on March 19,

1953, of said contract, Exhibit “A” hereto, and thereafter,

during the entire course of plaintiff’s work, including, but

(fol. 17] not limited to, the above five phases of said proj-

ect (sub-paragraphs 7(a), (b), (c), (d) and (e) herein),

and continuing until the work was completed and accepted

on January 7, 1955, defendant failed to make necessary

corrections relating to design and general arrangement, or

to pass upon shop drawings with reasonable promptness

in accordance with said contract.

On or about April 15, 1958, defendant’s Architect-

Engineer directed plaintiff to forward shop drawings for

approval to Los Angeles, California. Plaintiff objected

to such procedure on the grounds that the specifications

called for inspection by the defendant, presumably at the

job-site, and that such procedures would cause delay. On

or about April 27, 1958, defendant modified the Architect-

Engineer’s above direction and instructed plaintiff to sub-

mit shop drawings to the Architect-Engineer at Idaho

Falls, Idaho. This modified procedure compounded the

delays anticipated earlier by plaintiff since the Architect-

Engineer submitted such shop-drawings to its office in

Los Angeles, California, in spite of defendant’s modifica-

tion of April 27, 1953, and added a transmittal link in the

procedure for the submission and approval of shop-draw-

ings. During the entire course of plaintiff’s work there

was a five to seven week elapse of time between shop-

drawing submittal by plaintiff and approval by defendant

resulting in a four-month over-all delay on the project.

Defendant’s failure to promptly pass upon shop-drawings

was due partly to its lack of supervision and qualified

personnel at the job-site, necessitating transmittal of such

drawings to the Architect-Engineer’s main office in Los

(fol. 18] Angeles, California, and in large part, to inade-

quate specifications for which a desired end-result, if any,

could not be obtained by alteration of such drawings with-

out making in effect, major and material changes, alter-

ations and additions to such plans and specifications by

unreasonably, arbitrarily and excessively imposing on

plaintiff added design responsibility and extra work.

Defendant well knew at the time that it awarded said

contract to plaintiff that its end-result, as represented in

said contract, was not the end-result it would ultimately

desire; and, further, defendant well knew that the state-

ment of work and plans and specifications for this entire

project were not, as represented, adequate for producing

the end-result represented in said contract, or any end-

result which defendant desired.

As a result of defendant’s failure to formulate a de-

sired end-result prior to the award to plaintiff of said

contract, and, as a result of defendant’s failure to prepare

ad2quate plans and specifications for the construction and

completion of the end-result represented in said contract,

or aly end-result, and as a result of defendant’s attempt

to fcrmulate and carry out the actual end-result during

the course of plaintiff's work by imposing additional de-

sign and extra work through shop-drawing procedures,

said contract became, in effect, a nullity, and plaintiff was

obliged to incur actual costs of $6,415,858.75 for the com-

pletion of said contract, or $1,100,965.23 in excess of the

contract price of $5,314,893.52. .

10, No one other than the plaintiff is the owner of the

claims herein and no assignment or transfer of the same

[fol. 19] has been made, No other action has been had on

said claim in Congress, or by any of the departments ex-

cept as herein alleged, and plaintiff is justly entitled to

the amounts herein claimed from the United States, after

allowing all just credits and set offs.

WHEREFORE, plaintiffs prays (1) that said contract

be rescinded and declared null and void, and demands

judgment for its actual costs of performance on said proj-

ect in the amount of $6,415,858.73 plus a reasonable profit

of six per cent (6%) or a total of $6,800,809.73, less the

actual amount paid under said contract, $5,314,893.52, or

a total sum due of $1,485,916.21; or, alternatively, plain-

tiff demands judgment in the amount of $666,541.15 for

defendant’s delays on said project; or, alternatively, plain-

tiff demands judgment for ninety per cent (90%) of said

defendant’s delays occurring on the herein described ma-

- ~ of said contract, namely, the sum of $590,-

3.02.

/s/ Gardiner Johnson

111 Sutter Street,

San Francisco 4, California

Attorney for Plaintiff.

THomas E, STANTON, JR.,

CHARLES J, HEYLER,

Of Counsel,

' (fol. 20}

EXHIBIT A TO PETITION (EXCERPTS)

CONTRACT FOR CONSTRUCTION

This Contract, entered into this 19th day of March,

1953, by THE UNITED STATES OF AMERICA, here-

inafter called the Government, represented by the contract-

ing officer executing this contract, and UTAH CON.

STRUCTION COMPANY, a corporation organized and

existing under the laws of the State of Utah, of the city

of Salt Lake City in the State of Utah, hereinafter

called the contractor, witnesseth that the parties hereto

do mutually agree as follows:

(fol. 21]

e . . .

ARTICLE 3. Changes.—The contracting officer may at

any time, by a written order, and without notice to the

sureties, make changes in the drawings and/or specifica-

tions of this contract and within the general scope there-

of. If such changes cause an increase or decrease in the

amount due under this contract, or in the time required

for its performance, an equitable adjustment shall be

made and the contract shall be modified in writing accord-

ingly. Any claim for adjustment under this article must

be asserted within 10 days from the date the change is

ordered: Provided, however, That the contracting officer,

if he determines that the facts justify such action, may

receive and consider, and with the approval of the head

of the department or his duly authorized representative,

adjust any such claim asserted at any time prior to the

date of final settlement of the contract. If the parties

fail to agree upon the adjustment to be made the dispute

shall be determined as provided in Article 15 hereof. But

nothing provided in this article shall excuse the contrac-

tor from proceeding with the prosecution of the work so

changed,

ARTICLE 4, Changed conditions.—Should the contractor

encounter, or the Government discover, during the pro-

gress of the work subsurface and/or latent conditions at

the site materially differing from those shown on the

drawings or indicated in the specifications, or 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

plans and specifications, the attention of the contracting

officer shall be called immediately to such conditions be-

fore they are disturbed. The contracting officer shall

thereupon prompty investigate the conditions, and if he

finds that they do so materially differ the contract shall

be modified to provide for any increase or decrease of

cost and/or difference in time resulting from such con-

ditions.

"fol, 22]

* * * ”

ARTICLE 9. Delays—Damages.—-If the contractor re-

fuses or fails to prosecute the work, or any separable

part thereof, with such diligence as will insure its com-

pletion within the time specified in article 1, or any ex-

tension thereof, or fails to complete said work within

such time, the Government may, by written notice to

the contractor, terminate his right to proceed with the

work or such part of the work as to which there has

been delay. In such event the Government may take over

the work and prosecute the same to completion, by con-

tract or otherwise, and the contractor and his sureties

shall be liable to the Government for any excess cost

occasioned the Government thereby. If the contractor’s

right to proceed is so terminated, the Government may

take possession of and utilize in completing the work

such materials, appliances, and plant as may be on the

site of the work and necessary therefor. If the Govern-

ment does not terminate the right of the contractor to

proceed, the contractor shall continue the work, in which

event it will be impossible to determine the actual dam-

ages for the delay and in lieu thereof the contractor shall

pay to the Government as fixed, agreed, and liquidated

damages for each calendar day of delay until the work is

completed or accepted the amount as set forth in the

specifications or accompanying papers and the contractor

and his sureties shall be liable for the amount thereof:

ided, That the right of the contractor to proceed

shall not be terminated or the contractor charged with

* * * *

(fol. 23]

” * * *

ARTICLES 15, Disputes.—Except as otherwise specifi-

cally provided in this contract, all disputes concerning

questions of fact arising under this contract shall be

decided by the contracting officer subject to written appeal

by the contractor within 30 days to the head of the

department concerned or his duly authorized representa-

tive, whose decision shall be final and conclusive upon the

parties thereto. In the meantime the contractor shall

diligently proceed with the work as directed,

ARTICLE 16, Payments to contractors,—* * *

(d) Upon completion and acceptance of all work re-

quired hereunder, the amount due the contractor under

this contract will be paid upon the presentation of a

properly executed and duly certified voucher therefor,

after the contractor shall have furnished the Government

with a release, if required, of all claims against the Gov-

ernment arising under and by virtue of this contract,

other than such claims, if any, as may be specifically

excepted by the contractor from the operation of the

release in stated amounts to be set forth therein.

(fol. 24] 11/17/52

SPECIFICATIONS FOR CONSTRUCTION CONTRACT

GENERAL CONDITIONS

e * * *

F (fol. 25] ‘ =

GC-25 SUSPENSION OF WORK. The Commission

may by written order direct the Contractor to

suspend all or any part of the work for such

period of time as may be determined by the

Commission to be necessary or desirable for the

convenience of the Government. If such suspen-

sion delays the progress of the work and causes

additional expense or loss to the Contractor in

the performance of the work, not due to the fault

or negligence of the Contractor, the Commission

shall make an equitable adjustment in the con-

tract price and time of performance and modify

the contract accordingly; Provided, however,

that no adjustment will be made under this

article for suspensions ordered under any other

article of the contract or provision of the speci-

fications; and provided further, that any claim

for adjustment hereunder must be asserted with-

in 80 days from the date such suspension is

ordered. If the parties fail to agree upon the

adjustment to be made, the dispute shall be de-

termined as provided in the article of this con-

tract entitled “Disputes”.

* * * «

(fol. 26]

IN THE UNITED STATES COURT OF CLAIMS

No, 3-61

[Title Omitted]

DEFENDANT'S ANSWER—Filed November 1, 1961

As and for its answer herein defendant alleges as fol-

lows:

1. Defendant’s attorney does not have knowledge or in-

formation sufficient to form a belief as to the truth of the

allegations contained in paragraph 1 of the petition, and

defendant therefore denies them,

2. Defendant admits the allegations contained in para-

graph 2 of the petition except the defendant refers to all

allegations contained in paragraph 3 of the petition, and

defendant therefore denies them,

4, Answering paragraph 4 of the petition defendant

fendant admits that the work under the contract was

completed on or about January 7, 1955, and that the work

Defendant further alleges that any claims based on extra

work are irrelevant, immateria] and outside the Scope of

plaintiff’s claim filed herein for breach of contract, (See

page 5, items numbers 7 and 8 in plaintiff’s objection to

defendant’s motion for more definite statement filed here-

in September 27, 1961.)

7. Defendant denies the allegations contained in the

first. sentence of paragraph 7 of the petition.

7(a) Defendant admits the allegations contained in the

first sentence of subparagraph (a) of paragraph 7 of the

petition. Defendant denies the remaining allegations

contained in the first paragraph of subparagraph (a)

of paragraph 7. Defendant further alleges that plaintiff

never made any claim for “float rock” during the time

of the performance of the contract.

Defendant admits the allegations contained in the sec-

ond paragraph of subparagraph (a) of paragraph 7 of

the petition.

(fol. 28] Answering the third paragraph of subpara-

graph (a) which begins “On or about April 27,” defend-

ant admits that plaintiff took an appeal to the Atomic

Energy Commission’s Advisory Board on Contract Ap-

peals and that that Board in Docket No. 87 heard the

appeai, and rendered a decision. Defendant refers to this

decision of that Board for a complete statement of the

decision of the Board. Defendant further alleges that

there is no allegation contained in the petition that this

decision was arbitrary, capricious, or not supported by

substantial evidence.

Defendant further alleges that any discussion based on

“changed conditions” is irrelevant, immaterial and out-

side the scope of this cause of action for a breach of

contract. (See page 5, items numbers 7 and 8 in plain-

tiff’s objection to defendant’s motion for more definite

statement filed herein September 27, 1961.)

Defendant denies the allegations contained in para-

graph 4 of subparagraph (a) of paragraph 7 of the peti-

tion which begins “Defendant well knew, or should have

known,”. Defendant incorporates by reference herein its

allegations made in paragraph 6 of this answer concerning

the irrelevance and immaterially of claims based on extra

work under plaintiff’s breach of contract theory. Defend-

ant further specifically denies that plaintiff is entitled

to receive any sum from the defendant.

Answering the second paragraph of 7(b) of the petition

defendant admits that there were fines in the concrete ag-

gregate furnished by the defendant to the plaintiff. De-

fendant denies that the fines in the concrete aggregate

Answering the third paragraph of 7(b) of the petition

which begins “On or about J uly 19, 1956,” defendant ad-

mits that plaintiff presented this claim to the Contracting

Officer long after all of the work under the subject con-

trace was completed.

Answering paragraph 4 of paragraph 7( b) of the peti-

tion which begins “Said Contracting Officer” defendant

admits that the Contracting Officer denied the claim and

further admits that the plaintiff took an appeal (Docket

No. CA-121) to the Contract Appeals Board and that

the decision rendered on that appeal denied the plaintiff’s

(fol. 30] claim. Defendant refers to the Contracting Offi-

cer’s decision and to the decision of the Hearing Examin-

er for a complete statement of these decisions,

Defendant further alleges that there is no allegation

contained in the petition that this decision by the Hearing

Examiner was arbitrary, capricious or not supported by

substantial evidence. Defendant further alleges that

plaintiff did not petition the Atomic Energy Commission

for a review of the Hearing Examiner’s decision even

though it had a right to petition for this review under

the terms of the applicable regulations for administrative

remedies, Defendant further alleges that under these

same regulations in the absence of such a petition for

review, the decision of the Hearing Examiner became

the final action of the Commission sixty days after it was

rendered,

Defendant denies the allegations contained in para-

graph 6 of subparagraph 7(b) which begins “Due to the

delays”. Defendant further incorporates herein by refer

ence its allegations contained in paragraphs 6 and 7 of

this answer at pages above concerning the irrele

vance and immateriality of claims based on extra work

and changed conditions under plaintiff's theory of breach

oi contract.

Tic) Defendant's attorney does not have knowledge

or information sufficient to form a belief as to the truth of

the allegations contained in the first sentence of para-

graph 7(c) of the petition and defendant therefore de-

nies them. Defendant denies the remaining allegations

contained in the said paragraph, :

Defendant denies the allegations contained in the second

paragraph of subparagraph 7(c) of the petition.

[fol. 81} Answering the third paragraph of subpara-

graph 7(c) of the petition which begins “On or about

October 29, 1955,” defendant admits that plaintiff's claim

was denied by the Contracting Officer, and that the

Atomic Energy Commission's Advisory Board on Contract

Appeals in a decision dated April 25, 1957 (Docket No.

95) upheld the Contracting Officer’s denial. The defend-

ant refers to the Contracting Officer’s decision and to the

Roard decision for a complete statement of these decisions,

Defendant further alleges that there is no allegation

contained in the petition that the decision of the rd

was arbitrary, capricious or not supported by substantial

evidence,

Defendant denies the allegations contained in paragraph

4 of subparagraph 7(c) of the petition which begins

_ .

“Plaintiff is entitled” and specifically denies that plaintiff

is entitled to recover any sum from the defendant, De-

fendant incorporates herein by reference its allegations

contained in paragraphs 6 and 7 at pages above

concerning the irrelevance and immateriality of claims

7(d) Defendant admits the allegations contained in

the first sentence of paragraph 7(d) of the petition, Fur

ther answering the said subparagraph, defendant admits

that the quoted la age from the plaintiff's contract with

Corning Glass Works Which is set out at the top of

12 of the petition appears in that contract. Defendant

(fol. 832] denies that the language appears in the contract

as a result of defendant’s insistence, Defendant refers

to the plaintiff's entire contract with Corning Glass

— for a complete statement of its terms and con-

itions,

Defendant denies the allegations contained in the second

paragraph of subpa eraph 7(d). Defendant further

alleges that substantially all of the diagrams, specifica-

tions and shop drawings for the windows had been ap-

proved on a date prior to December 80, 1958 when the

plaintiff finally entered into the negotiated price

ment with the defendant for the installation of the shield

windows. Accordingly, any costs for delays on account

of approval of the shop drawings which occurred prior

to the time the plaintiff entered into this negotiated agree-

ment were, or should have been, included in the price

es — the ee ee in the third

paragrap sudparagraph 7(d) of the petition which

begins “On or about February 18, 1954”,

dant denies the allegations contained in para-

graph 4 of subparagraph 7(d) of the petition, and de.

fendant further alleges that the work under this contract

was completed on or about January 7, 1955 as plaintiff

alleges in paragraph 5 of the petition,

Answering the first Sentence of paragraph 5 of sub-

paragraph 7(d) defendant alleges that defendant and

representatives of the plaintiff discovered the cloudy

haziness in one of the shield windows. Answering the

[fol. 33] second sentence of the said paragraph defendant

admits that it received a letter concerning this condition

from the Corning Glass Works and refers to that letter

for a statement of its contents. Defendant denies the

third sentence of the said paragraph and specifically de-

nies that it rejected the windows. Defendant alleges that

its representative advised the plaintiff that it would be

proceeding with the installation of the windows at its own

risk if it installed them prior to the time that the matter

of the haze condition was cleared up. Defendant denies

the allegations contained in the fourth sentence of the

said paragraph. Defendant denies the allegations con-

tained in the fifth sentence of the said paragraph and

specifically denies that any delay in the installation of the

windows held up any of the other contract work which

remained to be done. Answering the last sentence of the

said paragraph defendant admits that practically all of

the work of the installation of the Type I shield windows

had been completed prior to the time that the hazy condi-

tion was discovered and that this work was entirely com-

pleted shortly after plaintiff recommenced it.

Answering paragraph 6 of subparagraph 7(d) defend-

ant admits that the plaintiff presented a claim to the Con-

tracting Officer and that after the denial of this claim

the plaintiff appealed to the Atomic Energy Commission’s

Advisory Board on Contract Appeals. Defendant further

admits that in Docket No. 76 the Board decided that the

plaintiff was entitled to an extension of time but was not

entitled to any extra compensation. Defendant refers to

[fol. 34] the decisions of the Contracting Officer and the

Board for a complete statement of these decisions.

Defendant further alleges that there is nothing in the

plaintiff’s petition which alleges that the said decision

of the Board was arbitrary, capricious or not supported

by substantial evidence.

Defendant denies the allegations contained in the last

paragraph of subparagraph 7(d) which begins “In ad-

dition to said extension of time” and specifically denies

that plaintiff is entitled to receive any sum from the de-

fendant. Defendant incorporates herein by reference its

statements in paragraphs 6 and 7 at pages above

concerning the irrelevance and immateriality of claims

based on extra work and changed conditions under plain-

tiff’s theory of breach of contract.

7(e)* Defendant denies all of the allegations contained

in all of the paragraphs of the petition beginning with

numbered paragraph 7(e) and continuing down to para-

graph 8, ;

In clarification of these items of claim the defendant

deems it necessary to make the following allegations:

There were 3 claims by the plaintiff concerned with Amer-

coat Paint under this contract. One of these claims was

(fol. 35] tract in which plaintiff was again fully compen-

sated for that work. The third claim was on account of

the withholding of funds from the plaintiff by the defend-

ant because certain of the plaintiff’s Amercoat Paint work

cracked and peeled and had to be redone by another con-

tractor at defendant’s expense. This third claim was the

subject of a reservation in the release which was exe

cuted by the plaintiff and which is discussed in defend-

ant’s affirmative defense number I at page below.

This third claim was later also paid by the defendant.

Accordingly, all of the plaintiff’s claims for Amercoat

Paint have been fully paid and settled, and the only one

8. Defendant denies the allegations contained in para-

graph 8 of the petition.

* This paragraph is again marked in the petition (c) but probably

should be (e),

9. Defendant denies the allegations contained in the

first paragraph of numbered paragraph 9 of the petition.

Answering the second paragraph in numbered para-

graph 9 defendant admits that in order to save time de-

fendant’s Architect-Engineer directed plaintiff to forward

shop drawings for approval to its office at Los Angeles,

(fol. 36] California. Answering the second sentence of

the said paragraph defendant admits that the plaintiff

objected to this procedure on the ground, among others,

that under this arrangement it would have to pay the air

mail postage for the forwarding of the drawings. Defend-

ant refers to that letter for a full statement of its con-

tents. Defendant admits the allegations contained in the

third sentence of the said paragraph which ends with the

phrase “at Idaho Falls, Idaho”. Defendant further alleges

that in certain instances approval of shop drawings was

waived in order to expedite the work. Defendant denies

all of the remaining allegations contained in all of the re-

maining paragraphs of paragraph 9.

Defendant incorporates herein by reference its allega-

tions contained in paragraphs 6 and 7 above concerning

the irrelevance and immateriality of claims based on

extra, work and changed conditions under plaintiff’s theory

of breach of contract.

10. Defendant denies the allegations contained in the

first sentence of paragraph 10 of the petition. Defend-

ant’s attorney does not have knowledge or information

sufficient to form a belief as to the truth of the allega-

tions contained in the remainder of paragraph 10 of the

petition, and defendant therefore denies them. Defend-

ant further specifically denies that the plaintiff is due

any sum from the defendant.

11. Defendant denies each and every allegation con-

tained in the petition including those in the Wherefore

en which are not specifically admitted or qualified

erein.

(fol. 37] AFFIRMATIVE DEFENSES

I. Release

12. In a release dated March 22, 1957, plaintiff herein

released the Government from all claims arising under, in

Amercoat appeal.

Subsequent to the execution of this release, defendant

paid the plaintiff the sum of $5,606.39 in settlement of the

Amercoat Paint appeal. Accordingly, all claims under

this contract except those for shield windows, pier drilling,

shield doors and concrete aggregate are forever released.

Consequently, in so far as any claims in plaintiff’s peti-

tion relate to or arise in connection with any matters

except the shield windows, pier drilling, shield doors, and

concrete aggregate, these claims are barred by the said

release,

II. Payments

pe) Concrete Aggregate And Related Claims (Pet.

7(b))

Defendant caused the aggregate to be cleaned, and on

March 20, 1954 paid plaintiff according to the account

which it had stated. This fulfillment by the defendant

of all of plaintiff’s requests as they were expressed in the

two letters of July 23 and 31, and the statement of ac-

count of February 9, including extra payment for gen-

eral expense constitutes a complete settlement of all Phases

of this claim.

(b) Amercoat Paint

By agreement of the parties in Contract Modification

20, items 4 and 7, plaintiff was fully compensated for all

of its claims based on Amercoat painting, cleaning, etc.

except for the claim which it reserved in the release.

Subsequent to the execution of the release, defendant also

paid that claim which had been reserved. Accordingly,

all of plaintiff’s claims based upon or arising in connec-

be with Amercoat Paint have been fully paid and satis-

ed.

III. Estoppel

14(a) Concrete Aggregate And Amercoat Paint

Defendant incorporates by reference here its allega-

tions contained in paragraphs 13(a) and (b) immediately

above. After statement of account or price negotiations

followed by payment, and the lapse of a considerable peri-

od of time, plaintiff is estopped from adding to the set-

[fol. 39] tled claims other alleged costs which are allegedly

based upon these settled claims.

(b) Shield Window Claim

Defendant incorporates here by reference its allega-

tions in paragraph 7(d) above concerning the fact that

at the time plaintiff entered into the negotiated price

agreement with defendant for installation of the shield

windows substantially all of the shop drawings had al-

ready been approved. Having entered into this negotiated

price agreement, plaintiff is estopped from now asserting

delay costs based on delivery of shop drawings which

occurred prior to the execution of the price agreement.

IV. Failure To Exhaust Administrative Remedies

15(a) Finishing And Other Costs Based On The Ap-

gregate Claim

More than one year after the work under the subject

contract was completed, plaintiff presented a claim con-.

cerning these alleged finishing and other-costs based on the

aggregate claim to the Contracting Officer. The Contract-

ing Officer denied the claim. Subsequently the Atomic

Energy Hearing Examiner held in Docket No. CA-121

that this late claim by plaintiff was untimely under the

[fol.40] (b) Pier Drilling (Docket No. 87)

On February 18, 1955

» approximately a month after

completion of the entire contract, plaintiff first presented

a claim for “float rock” in connection with pier drilling

for the foundation. Defendant alleges that this was an

untimely presentation of a claim which arose, if it arose

at all, at the very beginning of the contract in the Spring

of 1953.

Still later plaintiff presented a larger claim for ad-

ditional compensation and an extensij i i

whether or not plaintiff was thus actually liable to its

subcontractor,

After the matter was remanded to the Co

Officer, that officer wrote plaintiff in a letter dated July

(fol. 41] (ce) Amercoat Paint

Plaintiff never took an administrative appeal in con-

nection with the two items of its Amercoat Paint claim

which were settled by items 4 and 7 of Modification 20,

Accordingly, all claims based on these items are barred by

plaintiff’s failure to exhaust its administrative remedies

as well as by plaintiff's acceptance of payment in settle-

ment of these items.

(d) Dockets Numbers 76 and 95

These claims concerning shield windows and shield doors

were also remanded to the Contracting Officer for a deter-

mination of whether plaintiff was entitled to further ex-

tensions of time. Plaintiff was requested by letter dated

July 25, 1958 to notify the Contracting Officer if it wished

to proceed further in these matters, Plaintiff having re-

ceived extensions of time by contract modification did not

make such a request and accordingly it failed to exhaust

its administrative remedies in this regard. Therefore

any matters which were encompassed in these appeals

that appear in plaintiff’s petition are barred by its failure

to exhaust administrative remedies.

(e) Other Administrative Appeals

In addition to the administrative appeals which are dis-

cussed above, plaintiff herein began the processing of two

other appeals. These were Dockets Nos, 91 and 96 con-

cerning extensions of time, and a claim in connection with

generators.

The Atomic Energy Commission Advisory Board re-

manded these matters back to the Contracting Officer for

[fol. 42] further proceedings. The petition contains no

allegations that these decisions were arbitrary capricious

or not supported by substantial evidence. After the re-

mand, plaintiff abandoned the generator claim and never

requested further proceedings regarding the time ex-

tensions because it received sufficient extension by negoti-

ation. Accordingly, in so far as any matters contained in

the present petition are encompassed by these appeals

which plaintiff allowed to die such matters are barred in

this Court by plaintiff’s failure to exhaust available ad-

ministrative remedies.

V. Laches

16. (a) On February 18, 1955, more than a month

after the work under the subject contract was completed,

(b) Conerete Aggregate

On March 20, 1954, defendant paid plaintiff accovding

(fol. 43] to its statement of account for extra cement and

for supervision, genera] expense and profit in connection

therewith.

(ec) Shield Doors

Plaintiff did not present this claim until after the com-

pletion of the contract and accordingly defendant was pre-

vented from promptly investigating the situation and from

mitigating the damages, if there were any. Accordingly,

this claim should be barred by laches,

(d) Shield Windows

(1) Claim For Delay In The Delivery Of Shop Draw-

ings Which Occurred Prior To The Execution Of The

Negotiated Price Agreement. On December 30, 1953 plain-

tiff and defendant entered into a negotiated price agvee-

ment for the installation by plaintiff of the shield win-

dows. Defendant had a right to rely upon the fact that

the price which was fixed in this agreement took into ac-

count any prior damages and delays which the plaintiff

might have suffered in connection with the shield windows.

However, plaintiff later presented a claim based in part

upon alleged delays which occurred prior to the execution

(fol. 44] of the price agreement. This late presentation

of this portion of the claim damaged the defendant and

prevented its making a prompt investigation of the situa-

tion and mitigating damages, if there were any. Accord-

ingly, this claim should be barred by laches,

(2) Presentation Of A More Limited Claim Than The

One Which Is Presented Here. Even when the contractor

first presented this claim to the Contracting Officer (on

June 23 and 24, 1954) it only alleged three conditions

which were: lateral movement and distortion of the |

Koroseal gaskets under compression, specifications which

were too indefinite, and use of a selective assembly pro-

cedure in the assembly of the shield windows.

It was only later, during November 1955, at the Board

Hearing that plaintiff raised numerous other issues such

as revisions made under the contract, delays in submitting

drawings, etc. This delay in the presentation of these

various claims and issues by the plaintiff prevented the

defendant from promptly investigating the situation and

mitigating damages, if there were any. Accordingly, this

entire claim concerning shield windows should be barred

by laches.

(e) Amercoat Paint Claims

By payment of these various claims as alleged in para-

graph 13(b) above, defendant had a right to believe that

these claims were settled. Plaintiff by raising matters

based upon these claims at this late date has obviously

prevented the defendant from promptly investigating the

situation and mitigating damages, if any, which occurred

in connection with these new matters based upon the old

claims. Accordingly, these claims should be barred by

laches.

{fol.45] (f) Delay In The Presentation Of The Entire

laim

The work under this contract was completed on Janu-

ary 7, 1955. However, plaintiff waited 5 years and 364

days until January 6, 1961 before filing its petition in this

Court. This further delay in addition to those recited in

the foregoing paragraphs compounds defendant’s damage.

For defendant will obviously encounter considerably more

difficulty and will have to incur considerably more expense

in defending this action than would have been necessary

had the petition been filed promptly, or even within a

reasonable time after completion of the contract. This

is particularly true in a construction case such as this

where most of the contract workers scatter to other loca-

tions soon after the completion of the job. Five years and

364 days later they are considerably more diffiez!+ to lo-

cate, and their memories are less vivid than would have

been true had the petition been filed promptly. Accord-

ingly, this entire claim should be barred by laches,

VI. Equitable Estoppel

17. Defendant incorporates here by reference all of

paragraph 16 and all of its subparagraphs immediately

above except the last sentence in the paragraph and in

each subparagraph. Defendant substitutes the following

sentence in place of the last sentence in each instance.

“Accordingly, this claim should be barred by equitable

estoppel.”

(fol. 46] WHEREFORE, defendant prays that plaintiff’s

petition be dismissed.

/s/ William H. Orrick, Jr.

Assistant Attorney General

Civil Division

/s/ Melford O. Cleveland

Attorney, Civil Division

Department of Justice

(fol. 47] [File Endorsement Omitted]

(fol. 48]

IN THE UNITED STATES COURT OF CLAIMS

No. 3-61

[Titie Omitted]

DEFENDANT’S AMENDED ANSWER—Filed November 30,

1961

Pursuant to Rule 18(a) of the Rules of this Court de

fendant amends its answer as follows:

2. Paragraph 2 of defendant’s answer is deleted and

the following paragraph is substituted therefor:

2. Defendant admits the allegations contained in

paragraph 2 of the petition with the exception of the

phrase “except as hereinafter alleged”. Defendant

denies the allegations contained in this phrase. De-

fendant refers to all the contract documents and

drawings for an ascertainment of their contents.

7(b) Defendant substitutes the following sentence in

place of the second sentence in subparagraph 7(b) of its

answer:

Defendant admits that some of the concrete mixture

being used was deficient in the strength require-

ments as specified by the contract.

Defendant substitutes the following sentence in place of

the third sentence in the second paragraph of subpara-

graph 7(b) of its answer:

Defendant admits that it had fines removed from

some of the concrete aggregate.

[fol.49] 7(c) Defendant substitutes the following sen-

tence in place of the first sentence in the third para-

graph of subparagraph 7(c) of the petition:

Answering the third paragraph of subparagraph

7(c) of the petition which begins “On or about Oc-

tober 29, 1955,” defendant acmits that plaintiff's

claim which was in the sum of $4,457.25 for eleven

decision.

7(d) Defendant substitutes the following sentence in

place of the first sentence in subparagraph 7(d) of its

answer:

Defendant refers to this letter of plaintiff’s dated

April 21, 1953, for a full Statement of its contents.

13. (a) Defendant inserts ‘the following paragraph as

paragraph 13(a) of the answer:

(fol.50] After investigation the AEC determined that

in 47 cases out of the 111 pier holes on which drill-

ing had been commenced, lava bedrock was en-

countered above elevation 4747’. The contractor was

thereafter permitted to drill each pier hole two feet

into solid lava bedrock and stop whether this bed-

rock was encountered above or below elevation 4747’;

and was paid for this two feet at the rate provided

for solid lava rock excavation. (The subject of “float

rock” was never mentioned ai that time.)

Plaintiff accepted this adjustment together with

the payments made in accordance with its terms, and

recommended and finished the pier drilling without

protest. This payment made under these circum-

stances which was accepted by plaintiff without pro-

test constitutes a complete settlement of all phases

of the pier drilling claim.

(b) Defendant changes numbered paragraph 13(a) in

the original answer to numbered paragraph 13(b) in

the amended answer.

in the original answer to numbered paragraph 13(c)

in the amended answer.

14. (a) Defendant substitutes the following for the

heading and first sentence in paragraph 14(a) of the

answer:

14. (a) Pier Drilling, Concrete Aggregate, And

Amercoat Paint

Defendant incorporates by reference here its alle-

gations contained in paragraphs 13(a), (b), and

(b) Defendant substitutes the following sentence in

place of the last sentence in paragraph 14(b) of the

answer.

Having entered into this negotiated price agreement,

plaintiff is estopped from now asserting delay costs

based upon any activities in connection with the

shield windows which occurred prior to the execu-

tion of the price agreement.

{fol.51]) All other language in the original answer re-

mains as it was originally filed.

WHEREFORE, defendant prays that plaintiff’s peti-

tion be dismissed.

/8/ William H. Orrick, Jr,

Assistant Attorney General

Civil Division

/8/ Melford O. Cleveland

/s/ James F. Merow

Attorney, Civil Division

Department of Justice

(fol. 52] [File Endorsement Omitted]

[fol. 53]

IN THE UNITED STATES COURT OF CLAIMS

No. 3-61

[File Endorsement Omitted ]

[ Title Omitted]

COMMISSIONER’s ORDER AND MEMORANDUM RE APPLICA-

BILITY OF BIANCHI DECISION—February 18, 1964

In March 1958 the plaintiff was awarded a contract to

construct an assembly and maintenance area for the

Atomic Energy Commission’s National Reactor Testing

Station in Idaho for completion a year later. The con-

tract was completed on Jan

ing been extended by

made by the plaintiff

sidered in whole or in part administratively relate to

Pier Drilling, Concrete Aggregates, Shield Doors, Shield

Windows, and Amercoat Paint. Another general catch-

all claim sounding in breach of contract is alleged in par-

agraph 9 of the petition but was not claimed adminis-

tratively.

{fol.54] On March 22, 1957, the parties entered into a

Receipt and Release under which, in consideration of the

payment of $52,382.92, the plaintiff released the Gov-

ernment from all claims “of whatever kind or char-

acter, arising under, in connection with or by virtue of”

the contract, with certain enumerated exceptions cover-

ing the administrative claims for Shield Windows, Pier

Drilling, Shield Door, Concrete Aggregate, and Amer-

coat Paint.

On June 17, 1963, the undersigned commissioner di-

rected the parties to file briefs to enable him to decide

to what extent the case is bound by the decision in United

States v. Bianchi, 373 U.S. 703 (1963). Briefs were

filed by the parties indicating the need for a separate

determination as to each of the several claims con-

tained in the petition. In order to ascertain the exact

nature of the administrative determinations the com-

missioner borrowed from the defendant the administrative

files i each of the administrative appeals, and examined

carefully as to each the contractor’s claims and the de-

cisions of both the contracting offices and the AEC on

appeal. As a result of such examination, and in con-

sideration of the briefs of the parties, certain conclu-

sions were reached as set forth in the following para-

graphs:

(fol. 55] Pier Drilling Claim

At the outset of its contract performance the plaintiff

ran into float rock in drilling holes in the ground for con-

crete piers. On June 1, 1953, it notified the contracting

officer that it had encountered subsurface conditions ma-

terially differing from those indicated in the drawings

and specifications. On February 18 and March 81, 1955,

the plaintiff filed its formal claims with the contracting

officer, the first requesting payment of the increased

by the changed subsurface condi-

tions, and the second demanding payment of its costs re-

The net effect of the foregoing recital of ad‘ \.aistra-

tive proceedings is that first, the Board has ratified the

decision of the contracting officer that the plaintiff's

excavation difficulties at the outset of the contract were

not responsible for the delay in pouring concrete in

the winter months and the consequent winter protection

expenses; and second, the plaintiff has failed to exhaust

[fol. 57] any administrative remedy it might have with

reference to the excessive drilling costs it experienced as

the result of changed subsurface conditions found by the

The Board had no authority to adjudicate the first ele-

ment of plaintiff’s claim because the relief sought was for

the recovery of unliquidated damages for delays allegedly

caused by the Government. The Board’s sole power un-

der the contract was to adjudicate equitable adjustment

for the changed subsurface conditions, and the plaintiff's

expenses providing winter protection for the freshly

poured concrete could not be paid as part of an equitable

adjustment because it was not expended in direct rela-

tion to the drilling either in point of time or in func-

tion. Since the Board could not adjudicate such a claim,

its findings as to the cause of the delay lack the finality

accorded by the disputes clause to findings of fact under

the Disputes Clause, for findings made as to facts under-

lying a claim cognizable only in the courts are merely ad-

visory. Therefore, in reviewing the decision on this ele-

ment of the claim the court is not restricted to the ad-

ministrative record but may receive and consider evidence

de novo.

As to the remanded part of the claim, the determina-

tion of the amount of the excess diilling costs is a mat-

ter of fact under the changed conditions clause, but the

determination of whether plaintiff can sue in behalf of its

(fol. 58] subcontractor is a matter of law because it in-

volves a legal interpretation of the subcontract pro-

visions or a legal analysis of any other circumstances

which might prevent the subcontractor’s recovery from

the plaintiff. The plaintiff had to establish both of

these propositions in order to recover administratively,

and no doubt the agency was ready and willing to pass

6: them both if the plaintiff had prosecuted its claim to

the end, even though strictly speaking the Board had

no authority to adjudicate the legal issue with any fin-

ality. However, since it is obvious that the Board would

have done so, it cannot be said that the plaintiff had no

administrative remed available. Whether or not the

claim. But as to that part of the claim relating to

excess costs of drilling the court’s action is restricted to

a determination of whether the decision below (if any)

was arbitrary, capricious, or not Supported by substantial

evidence in the administrative record.

The contract involved a large quantity of concrete con-

struction. It provided that the contractor could pur-

chase suitable aggregates from Government supplies or

from other sources, but imposed no obligation on the

up to specification requirements. While this was being

{fol.60] done it directed the plaintiff to increase the

strength of the concrete by adding one sack of cement

in each cubic yard of concrete mix. This was done for

several months until the condition of the aggregate im-

proved to the point that adequate strength was obtained

without using the extra sack of cement. Pursuant to

plaintiff’s request of July 31, 1958, for payment of the

extra cement used as a changed condition, and plaintiff’s

later billing in February 1954 in the amount of $8,640.93

for the cost of the extra cement including “supervision,

general expense, and profit”, the defendant issued Modi-

fication No. 6, part of which reimbursed the plaintiffs in

the amount it had claimed for this item. The contract

was completed in January 1955, and it was not until July

1956 that plaintiff filed a claim with the contracting offi-

cer for approximately $109,000 for costs stated to have

been incurred because of the poor condition of the aggre-

gates.

The contracting officer rejected the claim on the

grounds that it appeared to be one for breach of contract,

not properly before him under the Disputes Article, and

in the alternative that (1) the claim was untimely, and

(2) the plaintiff had failed to explain the nature of the

additional costs it was claiming.

{fol.61] The plaintiff duly appealed to the AEC in

January 1957 under Article 15 of the contract and re

quested a hearing.

In March 1957 the plaintiff executed a general receipt

and release under which, for $52,382.92, it released the

defendant from all claims “arising under, in connection

with or by virtue of” the contract, specifically excepting

cert xin enumerated claims including “Concrete aggregate

claim for additional compensation to Contractor’’,

Under newly inaugurated procedures of the AEC the

plaintiff’s appeal was assigned to a Hearing Examiner.

In May 1959 the contracting officer filed motions to dis-

miss the appeal proceeding for lack of jurisdictiun [i.e.,

breach of contract], and failure to make timely presenta-

tion of claim, and filed a third motion for a more definite

statement. A hearing was held before the Hearing Ex-

aminer on the motions, Subsequently the plaintiff filed

a brief in opposition to the motions.

On October 1, 1959, the Hearing Examiner filed his

decision which contained findings and determinations.

The plaintiff's appeal was denied and the contracting offi-

cer’s motion to dismiss for plaintiff’s failure to make a

timely presentation of its claim was granted. No hear-

ing on the merits was held. The plaintiff did not petition

the AEC for review of the Hearing Examiner’s decision

[fol.62] The decision of the Hearing Examiner dis-

cussed all phases of the appeal, made specific findings of

fact, and dismissed the appeal on the stated ground that

the claim was not timely. However, the decision also ob-

served that, although plaintiff had based its claim under

the Changed Conditions Article, the article was not ap-

plicable because the condition of the aggregates was vis-

ible on inspection and hence was not an unknown condi-

tion. Moreover, if the plaintiff's theory was on breach of

warranty of fitness of the aggregates, such a claim would

not be within the jurisdiction of the AEC.

It must be concluded that the Bianchi decision does not

apply to the claim for aggregates, primarily vecause the

decision of the Hearing Examiner of the AEC was predi-

cated upon oral argument of counsel addressed to disposi-

tive motions, and was not based upon a hearing on the

merits affording plaintiff an opportunity (as it had re-

quested) to prevent evidence. Further, the Hearing Ex-

aminer disposed of the appeal on the stated ground that

the claim was not timely in its presentation, although

neither the contract nor any cited regulations prescribe a

definite time for the filing of such claims other than the

requirement of the Changed Conditions Article that

notice of a claim thereunder be given immediately by the

contractor. Whether a claim such as the present one,

sounding in unliquidated damages, filed one and one-half

(fol. 63] years after completion of performance under

the contract is timely is a question involving the discre-

tionary judgment of this court, assuming that in any

event the agency has jurisdiction over such a claim. The

contracting officer felt that he had no such jurisdiction

because the claim was for unliquidated damages.

If the claim was for unliquidated damages for breach

of warranty that the aggregates were suitable and is thus

beyond the jurisdiction of the agency, then three conse-

quences ensue to the defendant’s position:

(1) No requirement existed that the claim be appealed

to the AEC.

_ (2) The defendant’s argument fails that the plaintiff

has failed to exhaust its administrative remedy by fail-

ing to seek a review by the AEC of the adverse decision

of the Hearing Examiner.

(3) There need be no remand to the AEC to hold a

hearing on the merits.

It is not specifically mentioned by the defendant in its

brief, but in comparable situations the Government has

urged that factual decisions by the agency underlying le-

gal decisions over which the agency lacks jurisdiction,

nevertheless possess finality on review by this court. In

view of the rulings by the court in comparable situations

any argument, if made, that the Hearing Examiner’s de-

cisions as to the facts possess finality, would not be ten-

able.

[fol.64] The plaintiff is entitled to a de novo trial on

the issue of concrete aggregates, and no finality attaches

to the AEC decision on this item of the claim.

Shield Windows Claim

Under the original contract the plaintiff was to install

shield windows to be furnished by the defendant. Shield

windows were elaborate viewing apertures to permit per-

sonnel to watch developments inside specially insulated

rooms, without radioactive leakage. They involved special

seals and several thicknesses of special glass filled with

fluid which would shield radioactive rays but not impede

vision. Shortly after the award of the contract a Modifi-

cation was issued requiring the plaintiff to furnish the

shield windows by subcontract with a Government-ap-

proved supplier, and a subcontract was let to Corning,

which was about the only supplier experienced in this

limited field. There is strong indication that during the

performance of the contract the Government and its firm

tractor to the plaintiff, because of the latter’s lack of ef-

fective control.

{fol. 65] The plaintiff experienced difficulties with the

assembling and installation of the shield windows, In

June 1954 the plaintiff notified the contracting officer that

changed conditions had been encountered materially alter-

ing the scope of the work and forcing plaintiff to suspend

all operations until the extent of the changed conditions

cording to specifications, The plaintiff contended that the

design of the Architect-Engineer for the gaskets was

faulty and that the defendant’s Architect-Engineer was

the AEC and requested a hearing which was held.

(fol. 66] On July 23, 1957 the AEC Advisory Board on

ances for additional costs incurred because of the alleged

and specifications were adequate to achieve the desired

result, assuming the plaintiff’s competence, Plaintiff con-

tended that the delays it suffered were not its responsi-

bility but were due in part to the AEC’s arbitrary action

——

in bypassing plaintiff and in part to the arbitrary action

of the Architect-Engineer and the Corning Glass Com-

pany.

At the conclusion of a remarkably thoughtful and sym-

pathetic opinion the Board denied plaintiff’s appeal for

an equitable adjustment for increased costs but allowed

the appeal for an extension of time for excusable delay,

and remanded the latter to the contracting officer for

computation. The question for remand became moot

when the defendant extended the plaintiff’s overall time

to the actual contract completion date. The Board made

a series of specific findings of fact which in effect put the

blame for the series of delays on neither side to the ex-

clusion of the other, and instead held that the delays were

[fol. 67] chiefly the result of the inherent difficulties of

assembling and installing shield doors and windows rec-

ognized to be beyond the knowledge and experience of any

person or company, and which involved new techniques.

The Board findings enumerated the specific delays

which apparently involved a substantial total of lost time.

It does not appear in the decision that the plaintiff par-

ticularized or even totaled its claim for equitable adjust-

ment, so it cannot be determined from the administrative

record what part of its claim would be for direct costs

reimbursable under the contract and what part (if any)

would be delay damages. Assuming that, the Board

would have had no jurisdiction to adjudicate a claim for

delay damages (quite apart from the authority of the

agency to settle such a claim), it is apparent that the

basic issue involved in the administrative proceeding was

whether the plaintiff was unreasonably delayed by actions

of the Government, a typical delay damages type of in-

quiry sounding in unliquidated damages.

Accordingly, since the final settlement and release en-

tered into on March 22, 1957 reserved plaintiff’s claim for

“additional compensation” covering the shield windows

complaint, it is concluded that the decision of the Board

lacks finality, that the Bianchi decision does not apply,

and that the plaintiff is entitled to a de novo trial in this

court on the question of delays. It is urged, however,

(fol. $8] that the parties give full consideration to the

possibility of obviating or at least curtailing the trial by

adoption of the administrative record, which includes

many exhibits and a 453-page transcript of testimony

taken during a three-day hearing. It may be that the

requirements of the parties as to the facts of the claim

may be fully satisfied in the existing record, and that

they would merely want the court to reappraise the evi-

dence de novo without any bar of finality to overcome.

Finally, the defendant alleges in its answer that plain-

tiff has failed to allege that the action of the Board was

arbitrary, capricious, etc. Assuming that the Board had

no jurisdiction over the type of claim it considered, such

allegations in *he petition would be superfluous.

Shield Door Claim

On January 28, 1955, the plaintiff submitted a claim

of $4,457.25 to the contracting officer in the form of a

proposal for a change order covering extra work on cer-

tain shield doors ordered by the Architect-Engineer a

year earlier by means of changes made on shop drawings

prepared by plaintiff’s subcontractor. By a supplemental

letter plaintiff asked for a time extension due to the de-

lays involved.

{fol.69] On October 27, 1955, the contracting officer

denied the claim on the principal ground that the plain-

tiff had presented its claim a year late instead of within

10 days, as required by the Changes Article, and on the

further ground that the changes made by the Architect-

Engineer to the shop drawings did not change the con-

tract drawings and specifications and thus constitute ex-

tra work. The plaintiff appealed to the AEC and a hedr-

ing was held before the ABCA. Through mistake no re-

porter was present to transcribe the testimony, but by

agreement of the parties this was waived.

The Board made its decision on April 25, 1957, deny-

ing plaintiff's claim for adjustment under the chanr-s

clause but granting its claim for a time extension, re-

manding the latter to the contracting officer to determine

the amount of the time extension. As to the major part

of the plaintiff’s claim the Boaré: held that, while the con-

tract drawings were inexcusably in error, the specifica-

tions themselves were adequate, so that the changes made

by the Architect-Engineer to the subcontractor’s shop

drawings did not constitute changes under the changes

clause. As to other changes, made by the Architect-En-

gineer to the subcontractor’s shop drawings, the Board

held that they did constitute changes to the contract

drawings and specifications, but that the plaintiff’s fail-

ure to present its claim within the 10-day period pre-

scribed by the Changes Article barred any right to re-

covery, although the contracting officer had the discretion

to consider such a claim but was not required to, The

[fol. 70] Board then remanded the plaintiff’s claim for a

time extension to the contracting officer to determine the

amount.

Three major points are to be made: First, the failure

of the Board to prepare a transcript of its hearing pre-

vents an adequate review by the court, and this lack is

not cured because the plaintiff may have agreed to hav-

ing no transcript made. The omission could be corrected

by return of the claim to the Board for rehearing, but it

is not believed that the Bianchi decision requires such a

remand in every case where the prospect of even greater

delay would be assured. The Lianchi decision must be

read with discretion, and the Supreme Court’s admonition

against “delay at its worst” should be given considera-

tion. To return the claim to the Board for a redetermi-

nation on the basis of a complete record would ada per-

haps several more years to the ultimate decision of a

claim already 10 years old in its inception.

Second, it is observed that certain aspects of this item

of claim might well have been subjected to a dispositive

motion (if seasonably brought), such as the delay in pres-

entation of the claim administratively and possibly the

lack of authority of the Architect-Engineer, thus avoiding

a trial.

Third, it is noted that at no time did the plaintiff claim

administratively anything other than its direct costs, and

made no claim for delay damages as it makes for the first

(fol. 71] time in paragraph 7 (c) of its petition. On

March 22, 1957, the plaintiff executed a full receipt and

release with enumerated exceptions, including “Shield

Door Claim for additional compensation to Contractor”.

In view of the fact that the contracting officer was em-

powered to settle all kinds of claims (whether liquidated

gotiations leading up to the final release would preclude

the contractor from advancing it later as an afterthought.

It would be a disservice to the contracting officer to per-

mit a contractor to remain silent as to his potential

ment, and then, after agreement is reached on a sup-

posedly all-inclusive amount, the contractor reveals his

new claims, The willingness of the contracting officer to

enter into a final payment agreement would necessarily

be substantially affected by his knowledge of delay claims,

and if the contractor remains silent he is bound by his

acceptance of the final settlement by way of accord and

satisfaction, The particular reservation which the plain-

tiff inserted in the release in question would mean to the

(fol. 72] which plaintiff had held quietly in reserve. The

precise situation was present in the recommendations for

conclusions of law filed by this commissioner in Brock ¢&

Blevins Company, Inc., v. United States, No. 292-59, on

December 6, 1963, and the reasoning given there is in-

corporated here by reference.

In short, the plaintiff is entitled to a de novo trial on

those shield door costs which it claimed adrainistratively,

but not as to any collateral delay costs which it advanced

subsequent to the execution of the reisase on March 22,

1957,

Amercoat Paint Claim

In March 1954 it was discovered that various metal

components furnished by defendant for the “hot shop” re-

quired de-rusting and painting with Amercoat. Plaintiff

performed this work under protest, contending that it

was outside of the painting xpecifications and involved

dismantling, sandblasting, ete. There wa3 some disagree- |

ment as to whether Amercoating the shield doors should

be considered as part of the plaintiff’s obligation to Amer-

coat the “hot shop” walls. The contracting officer’s deci-

sion in June 1954 that shield doors were movable walls

and thus were contract obligations of plaintiff to paint

was reversed in December 1954 by successor Government

representatives, and the parties agreed to a settlement

{fol. 73] formula as to the direct costs of the extra paint-

ing. It does not appear that the plaintiff made any ad-

ministrative claim for delay damages in this connection

as it is urging here. The defendant contends that plain-

tiff was paid in full for this Amercoating claim, and that

the only reservation in the release executed by plaintiff in

March 1957 was as to an amount withheld but subse-

quently paid to plaintiff for some defective paint work.

The defendant also says that the present claim for extra

work and changed conditions is not relevant to a breach

of contract action.

Since the plaintiff did not advance its present claim for

delay damages at any time prior to execution of the re

lease in March 1957 and the sole claim reserved in the

release was later paid, on the principle of accord and sat-

isfaction the plaintiff should be barred from further re-

covery. The immediate issue is whether Bianchi applies

to preclude a de novo consideration of the administrative

decision, and the above observation as to accord and sat-

isfaction is technically not relevant and should perhaps

be the subject of an appropriate motion. However, since

the object of the present proceeding is to ascertain what

areas of the claim will require trial, it is relevant to rule

that, for other reasons, a trial here should be denied and

court review be limited to an examination of the adminis-

trative record.

(fol. 74] Delay-damage Claim

In paragraph 9 of its petition the plaintiff claims

$1,100,965.23 for defendant’s failure throughout the con-

tract to (1) “formulate a desired end-result prior to the

award”, and (2) “prepare adequate plans and specifica-

tions”, thereby “imposing additional design and extra

work through shop-drawing procedures”, It was alleged

as part of this clai S procedure for

extent certain parts of

ratively as described in

amount claimed), so tha ve been cogniz-

able by the AEC even i ted. But the

fact that it had not

in the release would

(fol. 75] other speci

subject-matter for a

accorded, but

time in the peti-

administratively,

but a dispositive motion should

/8/ C. Murray Bernhardt,

Commissioner.

February 18, 1964

(fol. 76]

EXHIBITS TO DEFENDANT'S SUPPLEMENTAL BRIEF

CONCRETE AGGREGATE APPEAL No. 121, PART 1

UNITED STATES

ATOMIC ENERGY COMMISSION

P. 0. BOX 1221

IDAHO FALLS, IDAHO

December 20, 1956

In Reply Refer To:

OC:WLR

Utah Construction Company

142 East Third South Street

Salt Lake City, Utah

Attention: Mr. Glen Staker

Gentlemen:

By letter dated July 16, 1956, you presented to me for

decision as Contracting Officer under Contract AT (10-1)-

645 your claim for additional compensation in the amount

of $109,356.00, which sum you represent you were re

quired to expend as a result of the “Commission’s failure

to furnish concrete aggregate that would meet the con-

tract specifications”. Inasmuch as all the work under the

contract was completed and accepted January 7, 1955,

my investigation of your claim has been restricted to (1)

a review of the Commission’s records and (2) discussions

with those few Commission and Ralph M. Parsons Com-

pany employees presently in the vicinity of Idaho Falls

who had any connection with the work being performed

under Contract AT (10-1)-645. As a result of that limited

investigation I have made the following findings and de-

terminations in accordance with the provisions of Article

15. of the contract entitled “Disputes” and Section 3.10

of the Rules of Procedure of United States Atomic En-

Commission Advisory Board of Contract Appeals

(10 C.F.R. Chapter 1, Part 3). A copy of those rules is

attached for your convenience.

FINDINGS

1, On March 19, 1953, the Government and the Utah

Construction Company entered into Contract AT(10-1)-

645 for the performance of certain construction work.

2. SC-18. Concrete Aggregate of Section II—Special

Conditions of that contract provides, in part, that “Con-

crete Aggregate suitable for all standard portland cement

concrete requirements on this job will be available to this

Contractor at the price of $2.90 per ton from the Com-

mission’s stockpile near the ANP Area”.

Registered Mail

Return Receipt Requested

(fol. 77] 8. The Contractor’s July 16, 1956 claim for

additional compensation is predicated on a failure of the

Commission to make available suitable concrete aggregate

in accordance with the provisions of SC-18 of the contract

and is therefore a claim for damages for an alleged

breach of contract by the Commission which is not prop-

erly before me for consideration under the Disputes Ar-

ticle,

DETERMINATION

It is my determination from the above findings that your

claim is one for damages for breach of contract which

cannot properly be considered under the Disputes Article.

Nevertheless, I make the following additional] findings of

fact, without prejudice to this determination, in order

to insure compliance with Section 3.10 of the above-

referenced Rules of Procedure.

FINDINGS

4. Utah was not required by any provision of the con-

tract to use the concrete aggregate which the Commission

made available and SC-21 of Section II—Special Condi-

tions of the contract applies only to mandatory Govern-

ment-furnished property.

5. Cylinder tests conducted during June and July in-

dicated the concrete being placed on the ANP Project

varied greatly with respect to compressive strength and

that some of the concrete did not meet the minimum

strength requirements established by Table 3A of Divi-

sion S-2 of the Technica] Specifications.

6. Utah claimed the wide variation in the compressive

strengths of the concrete being placed on the ANP Proj-

ect and the failure, in several instances, of the concrete to

meet minimum strength requirements was due to the fact

that the concrete aggregate which was being made availa-

ble by the Commission was “overburdened with fine ma-

terials and seriously deficient in the coarser parts”.

7. Tests made during July 1953 of the concrete aggre-

gate being made available to Utah by the Commission re-

vealed that the percentage of concrete aggregate passing

the smaller sized screens exceeded the allowable percent-

ages set forth in the gradation tables contained in

Division S-2 of the Technical Specifications of the con-

tract.

8. By letter dated July 21, 1953, over the signature of

J. Warren Evans, Chief, Construction Branch, the Com-

mission authorized Utah to increase the “five (5) sacks

of cement per cubic yard as outlined in Section III,

Division S-2, Page 7 in subparagraph (2), under para-

graph b. ‘Proportioning Limitations’, to six (6) sacks

of cement per cubic yard” pending an investigation and

determination of the deficiencies in the strength of “re

cent concrete placed on the ANP Project”.

[fol.78] 9. By letter dated July 31, 1958 over the

signature of Glen Staker, Project Manager, Utah noti-

fied the Commission that it regarded the poor quality of

the concrete aggregate being “furnished” by the Commis-

sion as a changed condition under its contract and that

said letter was to be regarded as notification of that

changed condition.

10. The only monetary relief requested by the Con-

tractor in its July 31, 1958 letter was payment for the

additional cement used in making concrete if the Com-

mission decided to utilize the existing concrete aggregate

with the additional of one extra bag of cement per cubic

year of concrete mix.

11. Utah was authorized and did use one extra bag of

cement per cubic year of concrete mix placed on the

ANP Project from July 21 to October 30, 1958, by which

time another Contractor had substantially completed re-

processing the 1-114” to 34” coarse concrete aggregate,

12. By letter to the Commission dated February 7,

1954, Utah presented its cost for adding the one bag of

to the concrete mix one bag of cement to each cubic yard

of structural concrete placed under the contract between

July 21 and October 30, 1958, as directed by the Resident

Engineer, in consideration of payment to the Contractor

of an additional $8,640.93.

14. Although any failure of the Commission to make

available suitable concrete aggregate under the contract

would constitute a breach of contract rather than a

changed condition as alleged in Utah’s July 31, 1958

letter, Utah received all the monetary relief requested in

its July 31, 1953 letter, which relief fully compensated

the Contractor for the matter brought to the Contract-

ing Officer’s attention by its July 31, 1958 letter.

15. Although the concrete aggregate made available

by the Commission may well have been a contributing

factor in the production of below strength concrete by

Utah, it was not the sole cause of that condition.

16. Although the Contractor’s July 16, 1956 claim for

additional compensation is predicated on the Commission’s

failure to make available concrete aggregate of the proper

quality, as was its July 31, 1953 claim, the former is in

fact a separate and distinct claim which had never been

mentioned or presented to the Contracting Officer for

consideration prior to July 16, 1956.

17. The submission of the Contractor’s July 16, 1956

claim was not timely and the delay in presenting such

claim has acted to the prejudice of the Commission in

the investigation of the claim, especially with respect to

[fol. 79] making findings as to whether the concrete ag-

gregate made available by the Commission did in some

Way ca ise an increase in the cost of finishing the con-

crete placed on the ANP Project and the extent, if any,

to which the increased cost alleged by the Contractor was

attributable to the concrete aggregate used.

18. Utah has not indicated the nature of the additional

costs alleged to have been incurred, nor has it indicated,

even in a general manner, how the concrete aggregate

made available by the Commission was responsible for an

increase in the cost of finishing the concrete.

19. The sole support for Utah’s July 16, 1956 claim

consists of (i) a computation which indicates that Utah’s

actual concrete finishing costs exceeded its estimated

concrete finishing costs (with a contingency factor of 50

per cent) by $109,356.00, and (ii) a bare allegation that

the Contractor was forced to expend that entire sum be-

cause the Commission failed to “furnish concrete aggre-

gate that would meet the contract specifications”.

20. Utah has not submitted evidence in support of its

July 16, 1956 claim which would justify my finding that

Utah incurred any additional cost for finishing concrete

placed on the ANP Project as a result of the quality of

concrete aggregate made available by the Commission,

DETERMINATION

As previously stated, it is my determination that your

July 16, 1956 claim is a claim for damages for breach

of contract which is not properly before me for considera-

tion under the Disputes Article. However, even if that

determination were overruled, it is my further deter-

mination in view of findings 4 through 20 that your July

16, 1956 clair must be denied in its entirety.

Very truly yours,

ALLAN C, JOHNSON, Manager

Idaho Operations Officer

Contracting Officer

Enclosure:

Rules of Procedure

oc E&C USAF E&C M

WLRowberry:jm Ashton Heasley Leppich Johnson

12-20-56

[fol. 80]

CONCRETE AGGREGATE APPEAL No. 121, PART 2

UNITED STATES ATOMIC ENERGY COMMISSION

HEARING EXAMINER

FOR

CONTRACT APPEALS

Docket No. 121

RECEIVED

May 21, 1959

U.S.A.E.C.

Public Document Room

APPEAL OF UTAH CONSTRUCTION COMPANY

UNDER CONTRACT No. AT (10-1) -645

Brief of the Contracting Officer on Motion to Dismiss

Utah’s Appeal for its Failure to Make a Timely

Presentation of its Claim

This brief is submitted on behalf of the Contracting

Officer, United States Atomic Energy Commission (here-

inafter referred to as the “Commission”), Idaho Opera-

tions Office, Idaho Falls, Idaho, in support of his motion

to dismiss the appeal of UTAH CONSTRUCTION COM-

PANY (hereinafter referred to as the “Contractor” )

for failure to submit its claim for additional conipensation

due to alleged increase in concrete finishiug costs for

approximately three years after the Contractor submitted

its notice of a “changed condition” and for approximately

one and one-half years after all work under the subject

contract had been accepted.

FACTUAL SUMMARY

In the instant case the alleged changed condition was

encountered on July 16, 1953. By letter dated July 21,

1953 the Commission directed the Contractor to add an

extra bag of cement to the concrete mix “pending an in-

vestigation and determination of deficient strengt

quirements .. .” (Encl. 7 of Record on Appeal, he

after termed “Record”). Tests revealed that the

erete being placed did not comply with the strengt

quirements of the contract (Encl. 8, Record). On

$1, 1958 the Contractor transmitted to the Comm

its “notice” of a “changed condition” (Encl. 10, Rec

The only monetary relief requested in this letter of

$1, 1953 was for the cost of adding an additional b

cement.

[fol. 81] The Commission concluded its investig:

(see Encls. 11 and 12, Record), and decided to cor

the addition of the extra bag of cement until certs

the conerete aggregates had been screened to elin

the excess fines. This was done under a contract

another contractor (Encl. 17, Record), after the

tractor refused the job (Encl. 15, Record). After c

of the aggregates were screened, the Commission’

thorization to use the extra bag of cement was re

(Encl. 18, Record). Thereafter, the Contractor sub!

its costs for the extra bag of cement (Encl. 20, Re

saying nothing with respect to any other costs

might be incurred in the future or which were then

incurred as a result of the alleged “changed condi

Acting in good faith, on the basis of the Contractor’s

representations and incidations that it desired reim

ment only for the added bag of cement, the Comn

to the Contractor’s proposal and enterec

Modification No. 6 to the subject contract which pr

for payment for the added bag of cement in the a

requested by the Contractor (Encl. 5, Record). '

after, the Commission continued its regular course ¢

duct, relying on the fact that Modification No.

finally disposed of the entire controversy surroundi:

quality of aggregate and the Contractor’s claim

thereon. It was not until approximately three

after the controversy concerning the aggregates

that the Commission was made aware of the instant,

purportedly based on facts arising out of this sam

troversy.

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LEGAL ANALYSIS

In the Appeal of Frontier Drilling Company, USAEC-

BCA, Docket No. 93 (Novy, 1956), the AEC’s Advisory

Board of Contract Appeals stated:

“Unlike other articles of the standard contract, where

the notice requirement serves only to insure a review

of the claim while evidence on the merits is available,

the requirement in Article 4 serves a second function.

Extra costs involved in the Changes and Delay-

Damages situations have already occurred; but in the

Changed Condition situation the Contracting Officer

may, given immediate notice, not only discover the true

facts, but, if he so desires, prevent or reduce the

(fol. 82] costs by appropriate change orders. It is for

this reason that the Board ruled in Appeal of Mc-

Kee, Docket No. 10, that the notice under Article

4 must not only warn of the condition but of the in-

tent to claim extra costs.” (Emphasis added.)

In the Appeal of Utah Construction Company, USAEC-

BCA, Docket No. 95 (April 1957), the Board stated:

“In general it is true, as the Board has said in other

opinions, that the primary purpose of early notice is to

afford the Contracting Officer an opportunity to ascer-

tain the facts while they are fresh, and that, there-

fore, if the facts can still be determined, a late claim

should be decided on its merits. However, we have

recognized an additional purpose in early filing of

claims under the ‘Changed Condition’ article—namely

an opportunity to mitigate damage by deletion of,

or changes in, the work required.” (Emphasis added. )

it is quite apparent that since the Contractor in the

instant case did not present the subject claim for approxi-

mately three years after it had submitted its notice of a

“changed condition”, the Commission was not afforded

the opportunity to mitigate damages, if any. The Board’s

interpretation of the notice requirement in the aforecited

cases finds clear-cut and convincing support in the two

equitable theories of estoppel and laches.

The instant case presents the classic case for the appli-

cation of the principles of equitable estoppel. One of the

many facets of the doctrine of equitable estoppel is that

of acquiescence. In Harvey Radio Laboratories, Inc. v.

he aaa States, 126 Ct. Cl. 383, 391 (1953), the court

stated:

“When a party ‘with knowledge or the means of

knowledge of his rights and of the material facts does

what amounts to a recognition of the transaction as

existing, or acts in a manner inconsistent with its

repudiation, or permits the other party to deal with

the subject matter under the belief that the trans-

action has been recognized, or abstains for a consid-

erable length of time from impeaching it, so that the

other is reasonably induced to suppose that it is

recognized, there is acquiescence, and the transaction,

though it be originally impeachable becomes unim-

peachable.”

[fol. 88] In Mahoning Investment Co. v. United States,

78 Ct. Cl. 231, 247 (1933), the court stated:

“All that is shown in these cases [of acquiescence]

is that the acts of the party estopped were such as to

mislead the party claiming the estoppel to continue

in the course already begun, believing the same to be

acceptable to the party estopped.”

It is clear that the Contractor had means of knowledge

of its rights since it had previously filed a claim pursuant

to Article 4 of the General Provisions of the contract,

and since it obviously had complete and sole control of its

cost records, including the costs of concrete finishing.

From the period of July 16, 1953 until February 5,

1954 the only subjects of discussion between Contractor

and the Commission with respect to the entire controversy

were the strength aspects of the concrete and the Con-

tractor’s sole monetary claim, which was for the ad-

ditional bag of cement. On February 5, 1954 the Con-

tractor and the Commission entered into Modification No.

6 to the subject contract which finally disposed of the

Contractor’s claim. There would seem to be no question

but that the Contractor recognized the contract modifi-

cation as disposing of its only monetary claim and that

it permitted the Commission to believe that the modifica-

tion had finally disposed of the entire controversy. This

latter proposition is particularly compelling since the Con-

tractor abstained for approximately two and one-half

years (from February 1954 to July 1956) from impeach-

ing the contract modification as not being dispositive of

the entire controversy.

In Joseph Behr & Sons, Inc. v. The United States, 137

Ct. Cl. 688, 689 (1957), the plaintiff had purchased cer-

tain war surplus materials from the Government. The

plaintiff claimed that there was a shortage in certain

items and made a claim therefor which was subsequently

satisfied. More than a year after the sale had been

[fol. 84] consummated the plaintiff claimed that additional

items were missing and claimed $25,387.80 therefor. The

court stated:

“In the first place, we think it is estopped to assert

the claim sued on. When it presented its claim for

the shortage of cots and the saw, and for pilferage

from the trucks, it made no mention of the alleged

shortage for which it now sues, although it says it

knew of them at the time. And when it later paid

the balance of the purchase price, less the amount

claimed for the cots and the saw and the pilferage

from the trucks, it deducted nothing for the items

for which it now sues, and made no mention of them.

“When claim was made on account of the cots, the

saw, and the pilferage from the trucks, defendant

sent its agent McMillen to Maui to investigate, but

he made no investigation of the alleged shortage

now asserted, because no claim with respect thereto

had then been made. When, more than a year later,

the present claim was first asserted, plaintiff had

disposed of all of the goods and no investigation

was possible,

“Under such circumstances, we think plaintiff has

waived the claim on which it sues, and is estopped

from asserting it.”

It is noted that in the instant case the Commission

made an investigation concerning the strength require-

ments of the concrete as they were affected by the quality

of aggregate but no investigation was made with respect

to the claim now asserted, because no claim had then

been made. If the Contractor, within a reasonable time

after it had given its “notice” of a “changed condition”

had also notified the Commission that the quality of

aggregate furnished by the Commission was causing an

increase in finishing costs, the Contracting Officer could

have made an investigation with respect to the finishing

costs, and if he found the Contractor’s allegations were

true, and that the same constituted a “changed condi-

tion”, he could have prevented or reduced the costs by

appropriate change orders or other action. Appeal of

Frontier Drilling Co.; Appeal of Utah Construction Co.,

supra. To presently allow the Contractor to assert its

claim would clearly result in prejudice and injury to the

Commission, since the Contractor has precluded the Com-

mission from preventing or reducing the damages, if any.

[fol.85] The doctrine of laches is substantially similar

to the doctrine of estoppel. It is generally stated that a

claim will be barred on the ground of laches where there

is a delay in asserting the claim; lack of knowledge or

notice on the part of the defendant that the claimant

would assert such a claim; and a injury or prejudice to

the defendant in the event the complainant’s claim is

allowed; e.g., Galliher v. Cadwell, 145 U.S. 368, 372, 373

(1892) ; Southern Pac. Co. v. Bogert, 250 U. S. 483, 488,

489 (1919); Holmberg v. Armbrecht, 327 US. 392

(1946). The fact that there was a delay in asserting the

claim for approximately three years after the notice of the

changed condition readily appears from a reading of the

Contractor’s notice of a changed condition dated July 31,

1958, the Contractor’s present claim dated July 19, 1956

and the affidavit of the Contracting Officer and the accept-

ance of work (which documents are attached to the sub-

ject motion). The affidavit of the Contracting Officer also

states that the Commission did not have notice or knowl-

edge of the Contractor’s present claim prior to July 19,

1956. As heretofore stated, the delay by the Contractor

in submitting its present claim has acted to the prejudice

of the Commission.

CONCLUSION

_ The conclusion seems inescable that the Contractor did

not comply with the notice requirement of the “Changed

Conditions” article since the Commission was not afforded

the opportunity to mitigate damages, if any; that the

Contractor acquiesced in the proceedings to dispose of the

only monetary claim which it had presented, inducing

the Commission to believe that no further claim would be

presented ; that the Commission has been prejudiced there-

hy; that the Contractor “slept on” its present claim for

an unreasonable period of time; and, therefore, the Con-

tractor is estopped from asserting its present claim or

barred therefrom by reason of laches or precluded there-

from by reason of Article 4 of the General Provisions of

the contract.

(fol. 86] To allow a contractor’s claim under circum-

stances similar to the instant case would set a precedent

which would make a farce out of the notice requirement of

the “Changed Conditions” article. A contractor could

submit an initial notice and claim and then, after all the

work was completed, he would be allowed to “re-open”

his original claim to include any costs which he “feels”

are attributable to the “changed condition”, thereby en-

tirely precluding the Contracting Officer from mitigating

damages, if any, and requiring its claim to be judged

on the basis of facts which, if they exist at all, are en-

tirely inadequate due to the passage of time; and, in the

case of subsurface conditions, such facts are literally

buried. As the Supreme Court of the United States stated

in Dickerson v. Colgrove, 100 U.S. 578, 581 (1880):

“There is no rule more necessary to enforce good

faith than that which compels a person to abstain

from asserting claims which he has induced others

to suppose he would not rely on.”

Therefore, it is respectfully requested that the Con-

tracting Officer’s motion be granted.

DISPOSITION OF THE MOTION

Without prejudice to any other motion the Contracting

Officer might present, it is respectfully requested that

the Hearing Examiner make a full disposition of this

motion prior to taking any other action with respect to

this appeal. It is the position of the Contracting Officer

that this motion is dispositive of the appeal and, there-

fore, will preclude the necessity of a hearing on the merits.

/s/ Howard K. Shapar

Attorney for the Contracting Officer

USAEC, Idaho Operations Office

Iraho Falls, Idaho

(fol. 87]

RECEIVED

Oct. 5, 1959

U.S.A.E.C.

Public Document Room

TO ic rerinctresese snore sengtenrrnenvignstmeoners

UNITED STATES OF AMERICA

ATOMIC ENERGY COMMISSION

Docket No. CA-121

IN THE MATTER OF THE APPEAL

UTAH CONSTRUCTION COMPANY

UNDER ConTRACT No. AT (10-1) -645

Appearances

Gardner Johnson, Esq. for

Utah Construction Company

Howard K. Shapar, Esq. and W. L. Rowberry, Esq. for

The Contracting Officer of the Atomic Energy Commission

DEcIsIoN—October 1, 1959

Utah Construction Company of Salt Lake City, (Utah)

executed a contract on March 19, 1958 with the United

States Atomic Energy Commission and was therein desig-

nated as “Contractor” to construct a large assembly and

maintenance area at the Commission’s National Reactor

Testing Station in Idaho. Among other obligations, it was

contemplated that Utah would pour approximately 18,000

cubic yards of concrete.

Upon completion of that work, in so far as herein mate-

rial, a dispute has arisen between the Contracting Officer

and Utah concerning the availability, suitability, and use

[fol. 88] Some of the important clauses are as follows;

others are set forth later in the decision where detailed

“Article 1. Statement of the Work. The contractor

shall furnish ( except as the specifications may other-

wise provide) the plant, equipment, labor and ma-

terials and perform the work necessary for the con-

struction .. . . in strict accordance with the specifi-

cations, schedules, and drawings, all of which are

made a part hereof and designated as follows: Spe-

cifications, Invitation No. AT (10-1)-645,....

“Article 4. Changed Conditions. Should the con-

tractor encounter, or the Government discover, during

the progress of the work subsurface and/or latent

conditions at the site materially differing from those

shown on the drawings or indicated in the specifica-

tions, or 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 plans and specifications,

the attention of the Contracting Officer Shall be

called immediately to such conditions before they

are disturbed. The Contracting Officer shall there-

upon promptly investigate the conditions, and if he

finds that they do so materially differ the contract -

shall . . . be modified to provide for any increase or

decrease of cost and/or difference in time resulting

from such conditions.”

The acceptance of the bid provided:

“In compliance with your Invitation for Bids No.

AT (10-1)-645, dated December 22, 1952, the under-

signed hereby proposes to furnish the plant, equip-

ment, labor and materials (except as the specifica-

se may otherwise provide) and perform the

work, .. .”

The specifications of the general conditions for the con-

struction contract provided, in part:

“GC-11. It is understood and agreed thet the Con-

tractor has, by careful examination, satisfied himself

as to the nature and location of the work, the char-

acter, quality, and quantity of the materials which

will be required . . . . and all other matters which

can in any way affect the work under the contract.

“GC-18 Claims for Extras. The Contractor shall,

when ordered in writing by the Commission, perform

extra work and furnish extra material . . . shall be

paid for at actual necessary cost as determined by

the Commission, plus 10% for superintendence gen-

[fol. 89] eral expense and profit. The actual necessary

cost will include all expenditures for material, labor,

including compensation for insurance and social] se-

curity taxes, and supplies furnished by the Contrac-

tor, and a reasonable allowance for the use of the

plant and equipment where required, this allowance

to be agreed upon in writing before the work is be-

gun, but will, in no case, include allowance for

office expenses, general superintendence or other gen-

eral expenses.”

A special condition respecting concrete aggregate was:

| Concrete aggregate suitable for all

standard portland cement . . . aggregate require

ments on this job will be available to this Contrac-

tor at the price of $2.90 per ton from the Commis-

sion’s stockpiles near the . . . Area.

Approximate quantities of various gradations availa-

ble in the concrete aggregate stockpiles are as fol-

This Contractor shall assume full responsibilty for

the total 50,000 tons of stockpiled aggregate and

shall make his own arrangements for all loading and

handling in connection with his concrete batching

operations, . . .

While Utah

Government-fu

“. . . Government-owned materials held in storage

by the Commission at the . +. Station . . . Subject to

the right of the Contractor to inspect and reject the

materials for good and sufficient reason prior to ac-

ceptance, the Contractor shal] reecive such materials

in their then condition, without warranty expressed

or implied on the part of the Commission as to serv-

iceability or fitness for use.”

Uath filed a claim approximately a year and a half

ter the work was completed and accepted, and sought

approximately $109,000 for costs Stated to have been

incurred because of the poor condition of the aggregates.

i i ision and found

on, and, in the

ve, he found that the appeal did not involve a

conditio:. within the contemplation of that clause

contract, and finally that there had not been a

timely presentation of the claim. An appeal having been

taken from that decision in accordance with the Rules of

the Commission for procedure in contract appeals, the

Contracting Officer filed 3 motions: (1) to dismiss for

failure to make a timely presentation of the claim; (2)

to dismiss for lack of jurisdiction, because either (a)

the asserted claim is not within the terms of changed

conditions clause of the contract, or (b) the asserted

claim is for unliquidated damages; and (3) for a more

definite statement of the claim.

An oral argument was held in Idaho Falls, Idaho on

June 9, 1959, on these motions and briefs in support

thereof, after which the Contractor filed an answering

brief on July 23, 1959 and the Contracting Officer filed

a reply brief on August 28, 1959.

It appears without dispute that sometime prior to July

17, 1953, the Contractor commenced work, and that on

July 17 the Contracting Officer, through the Chief of the

Construction Branch, suspended a portion, at least, of the

concrete mixing and pouring in view of information re-

ceived by him through tests that the cement mixture when

placed in cast compression cylinders was deficient in the

strength requirements as specified by the contract. On

July 21, 1958, the Contracting Officer authorized resump-

tion of work and stated that “.... pending an investiga-

tion and determination of deficient strength require-

ments, .. .” Utah was authorized to increase the concrete

[fol. 91] mix by one bag of cement thereby increasing to

6, instead of the originally specified 5, bags of cement

per cubic yard. From this point on in the transaction

there appears to be a difference of views as to the cause

of the deficient strength in the poured concrete and the

costs involved in the full correction of that condition.

The substance generally des gnated as “aggregates”

used by Utah in the concrete mix was located in a pile

on the site of the Reactor Testing Station, and was nearby

te the location where the mixing of cement and aggre

gates occurred, and also near to the place where it was

poured into final form. After the information had been

received that there was a deficiency in the strength re

quirements, tests were then undertaken of the aggregates.

These revealed the presence of small sands, or “fines”

which may have contributed in some way to the problems

of deficiency in the strength requirements.

After this discovery, the Contracting Officer undertook

the cleaning of the aggregates to remove this condition.

This was done through another contractor selected for this

single purpose and at cost to the Contracting Officer of

$7,744. The provisions of the applicable specifications

respecting cement mixtures contain detailed definitions

of fine and course aggregates, and directions as to per-

missible limits of deleterious substances and organic im-

purities as well as strength requirements in a concrete

mix. The proportioning limitations, as mentioned, first

provided for 5 sacks of cement per cubic yard, but this

was changed, when it was determined that the cement

mixture produced by the Contractor was deficient in

strength, to 6 sacks per cubic yard. The contract pro-

[fol. 92]vided authority for this change in proportioning

of the cement mixture under this clause, S2-03 (c):

“(1) Changes by Engineer may be made during

progress of work should it be found impracticable

to obtain concrete of required workability and

strength with materials being furnished by Con-

tractor; in such cases, changes in proportions or

materials or both, may be made as necessary to secure

required results.”

Utah, in its appeal, relies upon 2 of its letters addressed

to the Atomic Energy Commission; one written July 23

and one on July 31, 1953 in reference to this deficient

strength condition being due to the condition of the aggre-

gates. The first letter states, among other things that:

“a visual examination of the aggregate piles reveals... .

clean aggregate free from these objectionable small fines

while in the center .. . the aggregate is coated together

by these fines...” This letter also referred to the Com-

mission’s directive to add a bag of cement with the com-

ment: “We... will expect to be reimbursed for the

(5) bag limit.” And further, the letter concluded : ee

since the aggregate furnished by the AEC, which we are

required to use under the terms of the contract, does not

in any classification meet the specifications set up by the

contract, we cannot be responsible if the result in con-

crete does not live up to the requirements .. . we request

that steps be taken immediately to furnish us with con-

crete aggregates that will meet the specifications.”

The letter of July 31 had similar conclusions . . . “im-

mediate steps be taken to furnish us with aggregates...”

and, further, “. . . this letter our formal notification that

materially changed conditions have been discovered in the

quality of the aggregate . . . furnished by the AEC. More

importantly, this letter requested 4 things: “If the AEC

[fol. 93] does not elect to furnish us with... . aggregate

which will meet the specifications set forth in Paragraph

S-2-02' of the Structural Concrete Specifications:

1. The contract be modified and that compliance with

this section of the specification be waived.

2. The modifications show that this waiver is being

made at the request and for the convenience of the

Atomic Energy Commission.

3. If it is the decision of the Atomic Energy Com-

mission that the present aggregate be utilized by

the addition of one extra bag of cement per yard of

concrete mixed, that the same be considered an ad-

ditional expense to the contractor above and beyond

the original scope of the contract, which shall be

a fully unquestioned reimbursable item.

4. The modification relieve the Contractor from any

responsibility for unsatisfactory conditions that

may result from the use of the present deficient

aggregate.

The direction for the addition of one bag of cement was

effective from July 21, 1952 to October 30, 1953; after

this latter date the mix was in accordance with the orig-

inal specifications of 5 bags per cubic yard. By a report

dated November 6, 1958, tests revealed that after the

cleaning by the other contractor, the aggregates were

determined to be unusually clean.

[fol. 94] Following these events, Utah, on February 9,

1954, referring to (a) the direction to use an extra bag of

cement, and (b) its own letter of July 23 requesting re

imbursement, submitted a statement in the amount of

$8,640.00, which included provisions for the cost of cement

and for its “Supervision, General Expense, and Profit.”

1§2-01 of this Division of Technical Specifications provides in

part: “SCOPE: The Contractor shall furnish all . . . material. ..

to complete all structural concrete.”

(Underlines added) This statement was paid by the Com-

mission as reflected by Modification No. 6 to the con-

tract, which is particularly important in that it not only

paid the aforesaid claim, but embraced many other items

which related to other phases of the contract, such as hot

shop tunnel in a building, locomotive pit, flushwood door,

ete. The modification recited that the parties agreed to

modify the contract “in the following particulars, but in

no others;” and then followed with the one payment of

$8,640.03 for the hen ction hm oe to the cost and

genera] expense in adding a g of cement per yard.

The record in this case also reveals that the Commis-

sion engineers become dissatisfied with the rate of prog-

ress by Utah in completing the contract, and expressed its

dissatisfaction in a letter dated March 29, 1954. At or

about the same time, Utah claimed an extension in con-

tract performance time was due because of various mat-

reservation respecting any other claim or contention in any

of these 14 modifications, and until July 19, 1956, Utah

ing that it claimed $109,356, which is stated to be due

because the Commission failed tc furnish suitable aggre-

gates to Utah and it “. . . was forced to expend an ad-

ditional sum of $109,356.00, as fully shown in the at-

tached enclosures . . .”*

?It was also to this enclosure that the Contracting Officer’s mo-

tion was directed to have a more definite Statement. The enclosure

After the hearing of the oral argument, Utah stated

that it rested its case upon its allegation that the situa-

tion in reference to the aggregates was “an unknown

condition® of an unusual nature differing materially

from that ordinarily encountered or generally recognized

as inhering in work of the character provided for in the

plans and specifications.”

This recitation of these several facts has been made be-

cause it appears to be clear that Utah has failed to

promptly notify the Contracting Officer of any claim it

might have in relation to the condition of the aggregates.

[fol. 96] In fact, it would seem that Utah might be con-

sidered to have misled the Contracting Officer by filing a

claim in 1956 after requesting certain specific action in

its letter of July 31, 1953 which the Contracting Officer

fulfilled by cleaning the aggregates,‘ and by making the

requested payment not only for the extra bag of cement,

’ but also the “general expense” in connection with it. This

payment alone, of one general expense claim, while not

stressed at the hearing or in the motion papers, could be

construed as settlement of an account stated, which would

of itself bar any further claims. The statement of an

item in an account or claim, followed by the payment

thereof, operates to eliminate controversy in reference

thereto.

Reed v. Thomas, 134 Kans 849, 8 Pac 2nd 379

See: Restatement of Contracts, Sec, 422

Willistor. on Contracts, Sec, 1862

84 A, L. R, 114

In any event, the determination of a timely filing or

conversely, an untimely one, must depend upon the vary-

set forth a computation of cost for a certain quantity of concrete

mix, not identified for the time period involved as compared with

an estimate of a normal cost,

‘This claim of lack of knowledge is to be contrasted with the

statement in Utah’s July 23, 1953 letter that: “A visual examina-

tion of the aggregate pile . . reveals . .” coupled with its certifica-

tion at the time of its bid that it had visited the site, and also its

agreement that it understood the quality of materials required.

‘The obligation of the Contracting Officer to do this is not clear.

ing circumstances of particular cases.° In some instances,

perhaps a filing made 2 months after an incident alleged

to give cause to additional expense would be untimely, in

others, maybe a year after an event would be considered

timely. Whatever be the time interval, however, two

aspects of a filing are fundamental, (a) the filing must

give the Contracting Officer time to mitigate the extent

[fol. 97] of the claim, if possible, and (b) the asserted

claim must indicate an intention to claim a dollar amount.

This latter element, of course, excludes both the July 23

and July 31, 1953 jetters from being sufficient.

Appeal of Frontier Drilling Company, USAEC-BCA

DOCKET NO. 93 (1957)

The Contracting Officer contends that while consideration

of laches and estoppel are distinct, yet the necessary in-

gredients of both are present here. While those matters

might be more fully developed on a record if this case

were heard on its merits, it is concluded that there is not

any need to do so for the untimely character of the 1956

claim, which was the first indication of a dollar amount,°

seems readily apparent from the circumstances surround-

ing this transaction shown in the present record. The

filing in 1956 was made approximately three years after

the letter describing a changed condition, and approxi-

mately one and one half years after all work under the

contract had been accepted.

The Contracting Officer also argues further that to con-

sider specifically the basis urged by Utah for its claim

shows equally conclusively that the changed conditions

clause has no application. The initial facet of Utah’s

contention that the condition of the aggregate was un-

known at the time of the contract was executed in March,

letters are the basis of the appeal, the claims there made were paid;

if the 1956 letter is the basis, the time interval is more than usual

and no justification for late filing was given.

* Other than the statement of February 9, 1954, Specifying ce-

ment costs and general expense, which was paid.

1958 appears directly contrary to Utah’s admission 4

months later that even a visual examination of the stock-

pile showed excessive “fines”. Utah also urges that the

condition of the stockpile was as fathomless as if the

needed aggregates were underground and test borings

would lend no aid as to their character. Utah, in fact,

stated at the oral argument that it believed there was not

any difference here whether the aggregates were above

{fol. 98] ground or underground, apparently regardless

of what the visual examination revealed. The Contracting

Officer also contends that the standard changed condition

clause applies generally to an unknown underground

condition related specifically to the main objective of the

work to be accomplished, such as an excavation needed

for footings for a building contracted to be constructed.

For those situations, however, of conditions that are

readily observable the Contracting Officer contends the

relief under a changed conditions clause is not available,

and while a hearing on the merits might better enable the

Contracting Officer to present the factual support for this

contention, the disposition of the claim as untimely obvi-

ates a determination of that phase of his contention. Like-

wise, if Utah argues that the description of the aggre-

gates as “suitable” implied any warranty as to condition,

or fraud in that representation, the remedy for unliqui-

dated damages is beyond the jurisdiction of this proceed-

ing. Suffice it to say, however, that Utah rests its case

upon the changed conditions clause and the facts relied

upon by Utah do not support that view. Utah also urges that

this case be set down for hearing on the merits to per-

mit Utah to expand this presentat n, but the substance

of Utah’s claim is in the existing record. If the condition

of the aggregates was observable upon a “visual examina-

tion”, it must be presumed that Utah, the bidder, when it

visited the site, looked at what there was to see.’ Credence

must be given to Utah’s admission that it could see the

“fines” that may have caused, but it is not certain that

’ The contractor was to be charged with such knowledge of the

physical conditions of the site as could have been gained by a rea-

sonable site investigation. Bailey-Lewis-Williams of Georgia, Inc.,

ASBCA No. 4997, Army Appeals Panel 59-1, 5-11-59, BCA-2225.

that alone caused the deficiency in strength of the con-

crete mix.

(fol. 99] The foregoing determinations make it unneces-

sary to resolve the Contracting Officer’s motion for a more

definite statement by Utah of the portions of the Con-

tracting Officer’s decision from which the appeal is taken.

In addition to the foregoing findings and determina-

tions, the Hearing Examiner finds:

1. Utah Construction Company (Utah), a Utah

Corporation, was the contractor, as designated in a

contract executed un March 29, 1953 with the

United States Atomic Energy Commission for the

purpose of constructing a large assembly and main-

tenance area at the Commission’s Reactor Testing

Station in Idaho,

2. Utah duly entered upon the performance of that

contract which included the construction of several

buildings, many appurtenant facilities, as well as

the pavement of a large area with a concrete mix

specified to be laid according to a formula com-

prising ingredients in proportions detailed in the

contract, and including concrete and aggregates.

3. The contract contained a provision respecting the

availability of aggregates which were described

as suitable, as quoted in the foregoing findings,

but did not impose any obligation on Utah to use

those aggregates nor on the Commission to furnish

them,

4. The condition of the aggregates or the use of that

portion thereof containing excessive fines in the

{fol.100] concrete mix and in part causing a deficiency

in the strength requirements was corrected by the

addition of an extra bag of cement as directed by

the Commission’s engineer on J uly 17, 1953.

5. The Commission never held Utah responsible for

the condition of the concrete mix having a defiency

in the strength requirements,

6. Utah requested additional payment for the ad-

dition made by it to the concrete mix between July

21, 1958 and October 30, 1953 and the Commission

paid the amount designated in the Utah statement

which included provisions for both the added ce-

— and also for general expense as computed by

7. The Government warranty for Government-furn-

ished material provided for the performance of the

contract did not extend to the aggregates utilized

by Utah.

8. The requests made by Utah in its July 17 and

July 31, 1953 letters, after the direction to Utah

to use an additional bag of cement in the concrete

mix, were sufficiently fulfilled by the Commission

and the Commission could properly conclude in

1958 as well as on March 20, 1954, when payment

therefore was made, that Utah had no further

claim for this transaction respecting excessive fines,

or the condition of the aggregates, or for additional

general expense in connection therewith. :

9. The statement for additional expense filed by Utah

and dated July 19, 1956 in be amount of $109,356

[fol. 101] and described to be an itional cost incurred

on account of the Commission’s failure to furnish

concrete aggregate that would meet contract speci-

fications, was untimely filed and was an untimely

presentation of a specific dollar claim.

DECISION

The appeal of the Utah Construction Company in the

amount of $109,356 is denied and its claim rejected.

Further, the motion of the Contracting Officer is granted

to dismiss the appeal from the decision of the Contract-

ing Officer for failure to make a timely presentation of

its claim.

SAMUEL W. JENSCH

Presiding Officer

Issued :

October 1, 1959

Germantown, Maryland

{fol. 102]

Prex DRILLING APPEAL No, 87

MEMORANDUM OF DECISION

“ IN THE MATTER OF THE APPEAL

THE UTAH CONSTRUCTION COMPANY

UNDER CONTRACT No. AT(10-1)-645

Docket No. 87

I hereby adopt the recommendation of the Advisory Board

on Contract Appeais dated April 30, 1957, that this appeal

be (1) remanded to the Contracting Officer for further

consideration of the claim for increased costs due to the

“float rock,” issue, but not as to any costs attributable to

the delay beyond the completion of the drilling and (2) be

denied in all other respects.

/8/ R. W. Cook

Deputy General Manager

[fol. 108] /s/ H. M. Leppich

UNITED STATES ATOMIC ENERGY COMMISSION

ADVISORY BOARD ON CONTRACT APPEALS

IN THE MATTER OF THE APPEAL

UTAH CONSTRUCTION COMPANY

UNDER CONTRACT No. AT (10-1) -645

Docket No. 87

FINDINGS OF FACT AND RECOMMENDATION

RosBerT KINGSLEY

3518 University Avenue

Los Angeles 7

California

EDMUND R. PURVES

1735 New York Avenue, N.W.

Washington 6, D.C.

{fol. 104]

UNITED STATES ATOMIC ENERGY COMMISSION

ADVISORY BOARD ON CON TRACT APPEALS

Docket No, 87

(Pier Drilling)

IN THE MATTER OF THE APPEAL

UTAH Constmvorion COMPANY

UNDER ConTRACT No, AT (10-1) -645

FINDINGS OF FACT AND RECOMMENDATION

JURISDICTION

The present appeal was taken by the Contractor, the

Utah Construction Company, 101 Bush Street, San Fran-

cisco, California, the prime Contractors under Contract

No. AT(10-1)-645 with the Atomic Energy Commission,

on April 27, 1955, from decisions dated April 1, 1955, and

April 19, 1955, by the Manager of the Idaho Operations

Office and the Contracting Officer, Atomic Energy Com-

mission, Idaho Falls, Idaho.

The appeal is in two parts—

(1) From the Contracting Officer’s April 1, 1955, de-

cision denying the Contractor’s claim of February 18,

1955, for additiona) compensation in the amount of $17,-

784.63 for the drilling of materia! alleged to be “float

rock,” the existence of which the Contractor contended

constituted changed conditions in the pier drilling con-

tract within the meaning of Article IV—Changed Con-

ditions of the Contract; and

(2) The Contracting Officer’s decision of April 19,

1955, denying the Contractor’s

winter protection, which costs allegedly would not have

(fol. 105] been incurred had the drilling, unhampered by

float rock, proceeded in accordance with the projected

schedule of operations.

For purposes of simplification in this Findings of Fact

and Recommendation, the term “Contractor” shall desig-

nate the Utah Construction Company, the term “Subcon-

tractor” shall designate the George Casey Company of

Los Angeles, California, and the term “Architect-Engi-

neer” or “A-E” shall designate the Ralph M. Parsons

Company, the Government’s representative for conducting

the inspection of ‘the work performed under Contract

AT (10-1) -645.

Article 15 of the General Provisions of the prime con-

tract provides that:

“Disputes. Except as otherwise specifically provided

in this contract, all disputes concerning questions of

fact arising under this contract shall be decided by

the contracting officer subject to written appeal by

the contractor within 30 days to the head of the de-

partment concerned or his duly authorized represen-

tative, whose decision shall be final and conclusive

upon the parties thereto. In the meantime the con-

tractor shall diligently proceed with the work as di-

rected.”

The appeal was within the time provided and jurisdic-

tion of the Advisory Board on Contract Appeals, United

States Atomic Energy Commission, is clear.

PROCEDURE

An initial hearing in the matter was held in Confer-

ence Room “B”, Atomic Energy Building, Idaho Falls,

Idaho, on November 11, 1955. Although two other wit-

nesses were called and testified, the initial hearing was

held primarily to accommodate one of the Government

witnesses, Mr. McDowell, who was available only on that

occasion, being present in the room when the hearing

on Docket 76 was taking place and being one of the wit-

nesses on that other case. Mr. McDowell was due to

leave for foreign lands at the termination of the hearings

{fol. 106] on November 11, 1955. The hearing was re-

sumed in Room 59, Federal Office Building, Civic Center,

San Francisco, California, on J anuary 24, 1956, before

Advisory Board members Edmund R. Purves and Robert

Kingsley. Gardiner J ohnson, Esquire, of the firm of

Johnson and Stanton, San Francisco, California, and

Peter Jacobson, Esquire, of San Francisco, California,

appeared on behalf of the Contractor ; W. L. Rowberry,

Esquire, Attorney of Idaho Falls, Idaho, appeared on be-

half of the Atomic Energy Commission, Mr. Purves act-

ed as Chairman of the panel,

At the termination of the hearing both parties were

requested to submit briefs,

The hearings were time-consuming and the files in this

case are voluminous. In the opinion of the Board, both

the time consumed and the material in the files are exces-

sive inasmuch as the issue itself is relatively simple and

the questions more or less factual. It appeared to the

Board that much of the testimony was irrelevant. The

Board must make mention of the fact that it was ham-

pered by the absence of qualified expert witnesses,

BACKGROUND

The Utah Construction Company, prime Contractors

for the construction of Assembly and Maintenance Area,

Aircraft Propulsion Project, Contract AT (10-1) -645,

USAEC National Reactor Testing Station, Idaho Falls,

Idaho, included in its contract the drilling and excavation

for piers or foundation shafts. The Subcontractor under

the Contractor for this drilling and excavation was

the George Casey Company of Los Angeles, California.

However, the Contractor’s claim is on behalf of itself.

The hearings were not concerned with any dispute be-

tween the Contractor and its Subcontractor or any

(fol. 107] relations between the two. The Contractor

claimed that, in excavating for or drilling the shafts for

the piers, conditions were encountered differing materi-

ally from those indicated on the contract documents and

from the data furnished by those documents. The prin-

cipal deviation from the furnished data is alleged to have

the existence of, and the encountering of, what is

spoken of throughout this issue as “float rock.” This is

a term not universally used in the construction industry

throughout the United States. However, it does appear

to be a term which is simply expressive in itself to de-

seribe a condition. This condition is the existence of in-

dividual stones or rocks of various sizes, detached from

the principal bedrock by glacial or other geologic action,

and subsequently covered by silt or other deposits so that

the individual stones or rocks are suspended in the de-

posits below the surface of the ground. (When such

stones or rocks have worked their way to the surface

they are generally known as field stone.) However, it is

possible for “float rock” to exist below the surface and,

by reason of the absence of field stone on the surface of

the ground, give no indication of its existence. It is

also conceivable that core borings will fail to reveal the

existence of “float rock.” Float rock obviously presents

difficulties in excavating and extracting the excavated

material, especially when the excavation is confined to a

series of holes of relatively small diameter. In such cir-

cumstances, float rock would present, to the excavator, a

problem of extraction, comparable in difficulty with the

excavating and extraction of solid rock. No indication of

the existence of “float rock” was furnished to the Con-

tractor. The Government may not have been aware of

the existence of float rock, and we assume that it was not.

(fol. 108] Lava contour maps were furnished showing

the depth at which solid lava rock would be encountered

as near as the depth could be ascertained from borings.

Borings are admittedly an indifferent method at. best,

but the only method currently available. It developed at

the hearing that bedrock was encountered in some places

above the levels indicated on the drawings. The Contractor

claimed that the Government withheld information and

that the encountering of the “float rock” considerably de

layed the excavation, to such an extent that the Con-

tractor was forced into protecting the subsequent concrete

work against the winter weather. The excavation was

actually the form for the concrete piers to support the

building. Delays were encountered which brought the

actual pouring to the winter months with a consequent

risk of damage by freezing—a risk which the Contractor

had to guard against and the cost for which guarding

was not included in his original contract.

The Government claimed that the excavator did not

ciently; his equipment was old and faulty; and the gen-

eral operational problems, which included the traffic

problems incident to the hauling away of excavated ma-

terial, were not solved skillfully.

(fol. 109] By letter of June 1, 1953, the Contractor al-

leged sub-surface conditions materially different from those

shown on the drawings and indicated and described in

the specifications and ceased operations for pier drilling

ae ameordance with Article 4 of the contract, which is as

ollows:

they are disturbed. The contracting officer shall

thereupon promptly investigate the conditions, and

if he finds that they do so materially differ the con-

tract shall, with the written approval of the head

of the department or his duly authorized representa-

tive, be modified to provide for any increase or de-

crease of cost and/or difference in time resulting

from such conditions.”

The Commission wrote the Contractor on June 2, 1953,

directing it to proceed with the work. On the basis of its

June 1, 1953, notice, the Contractor, by letter of Febru-

ary 18, 1955, and its enclosures, presented a claim for

$17,934.63 for the increased cost of excavation resulting

from encountering the “float rock.” As noted, by its

letter of March 31, 1955, the Contractor claimed an ad-

ditional $83,431.46, as the increased costs of construction

of the building resulting from the delays caused by the

“float rock” problemi.

DISCUSSION

For the reasons set out below, the Board concludes:

(1) That “float rock” was encountered and that this

did constitute a “changed condition” within the meaning

of Article 4;

(2) That this condition caused some delay in the drill-

ing operations;

ffol.110] (8) But that this delay did not operate to

delay the building construction; and

(4) That no additional cost to the Contractor resulted

from the “float rock” condition, except insofar as it is

liable over to its subcontractor.

As in other cases that have come to the attention of

the Board, we find here that the absence of qualified ex-

pert testimony on behalf of either party is not only a

source of annoyance, in that the Board does not feel con-

fident that all questions have been answered correctly

from a technical point of view, but also we feel that

the presence of expert witnesses would have served to

expedite hearings. It seems to the Board that in this

case the question as to whether or not the Contractor

encountered conditions unanticipated by anyone (assum-

ing, as we do, that the Government was not privy to in-

formation which it did not afford the bidders) should have

been relatively simple to determine. Such a determina-

tion did not require a parade of witnesses, some of whom

threw little light on the issue before the Board. It is

true that the Government produced two witnesses, Mr.

West and Mr. McDowell, who though not technically

trained, nevertheless possessed sufficient rudimentary ex-

corollary questions as to whether or not the Contractor’s

operation was performed efficiently. Here we have only

the off-the-cuff criticism of men who were not trained

or experienced in the multitude of problems involved in

excavating and in the disposing of the excavated materi-

als, and in the other hampering physical conditions, but

(fol. 111] also were unable to comment expertly on such

questions as to whether or not the delays encountered or

assumed were sufficient to force the Contractor into pour-

ing concrete during winter conditions. The Board, there-

fore, has had to draw its own conclusions from the tes-

timony of partisan witnesses who were not necessarily

completely expert in those fields on which they were

testifying.

It is recognized that much of the evidence in general in

courts is circumstantial and from biased witnesses, but

in this instance we are dealing with questions of fact and

questions of scientific knowledge, which, if properly pre-

sented to the Board, would facilitate the work of the

Board and expedite the settlement of the issues involved.

The basis issue around which this dispute revolves is

whether or not the existence of what is termed “float

rock” constituted an unforeseen and unknown condition

causing delay within the meaning of Article 4. There

certainly would appear to be sufficient evidence that

“float rock” was encountered. Whether or not this might

have been foreseen is open to very little conjecture in the

eyes of the Board.

On one of the estimated drawing (No. ANP-004-IDO-

1) the diagram of the results of the core borings indi-

cates the existence of gravel at approximately elevation

4732 feet. It is significant that the existence of gravel

appears, insofar as the estimating drawings are con-

cerned, in only one location. If this existence of gravel

had been indicated in more than one location, then the

bidder might have assumed that gravel existed in general

throughout the area. If the Government had reason to

imagine that gravel or “float rock” was prevalent through-

out the area, then it was culpable in not having advised

{fol. 112] the bidders of its belief. Test borings are in-

conclusive but they are our only present means of deter-

mining subsurface conditions. Presumably at some future

date science will dévise a method of accurately disclos-

ing subsurface conditions throughout an entire given

area. Test borings are essentially spot checks and ob-

viously incomplete and inconclusive.

The Board is of the opinion that, following common

practice and procedures and customary assumptions, the

Contractor was well within its rights in estimating that

the excavation would be simple and capable of being per-

formed by rotary rigs until bedrock was struck.

The Board is intrigued by the theory (expressed in the

Contracting Officer’s Findings) that the term “gravel”

ean include “float rock.” Although there appears to be a

dictionary definition which would substantiate this as-

sumption, we are sure that it would be a rare Contractor

in any part of the United States who would think that

gravel is anything other than an ingredient of concrete,

the material for the foundation bed of a slab, or the

material for a garden path—none of which would present

serious difficulties in extracting from mother Earth.

The contract called fox various types of estimates on

excavation. Naturally, the excavation of simple earth

costs the least per vuit measure excavated. Un

material would cost more than simple earth, and bedrock,

naturally, would be the most expensive to excavate.

There is some question as to the classification in which

“float rock” would fall. It is the opinion of the Board

that “float rock” would be unclassified. It is obvious to

anyone with any experience in digging, or to any farmer

or rancher who has ever dug holes for fence posts, that

digging proceeds with ease until stone is encountered.

Digging with ordinary implements through solid rock is

impossible and extracting loose stone from a post hole,

(fol. 113] the stone being imbedded in the earth, is

difficult with varying degrees. In any case, it is far more

difficult and time-consuming than the excavating of earth.

The difficulty increases with the size of stone encountered ;

and when the stone exceeds in diameter ihe diameter of

the excavation the difficulty may be nearly as @reat as if a

solid rock were encountered, and equally as difficult if

the stone is of any appreciable depth. In fact, “float

rock” (if the term “gravel” is used to describe it) could

be of sufficient size as to constitute bedrock for all prac-

tical purposes.

The testimony is not clear as to the amount and kind of

“float rock” encountered, but that it was encountered by

the Contractor does not appear to have been successfully

contradicted by the Government.

A considerable amount of testimony revolves around

and efficiency of planning with

rotary rig was obviously pro-

y_make inefficient use of the equipment

at his disposal. We find that the selection of equipment

[fol.114] A second criticism of efficiency advanced by

the Government concerns the maneuvering of equipment

on the site and the sequence of drilling the several shafts

as they were sunk, and the traffic problems incidental

to the arriving, loading and departing of trucks. There

was no evidence presented to convince the Board that the

Contractor had not organized his work and carried out

his part of the work in as satisfactory a method as was

possible under the circumstances which prevailed. Again

we find that the procedures used were reasonable and

proper.

The Government claimed that, under General Condition

II, it was incumbent upon the Contractor to satisfy him-

self as to the conditions encountered. However, manifest-

ly a Contractor cannot satisfy himself as to subsurface

conditions unless some information is given to him. He

can only assume that conditions will be satisfactory and

if he assumes they are unsatisfactory, then the latter

assumption, when taken in competition with other bid-

ders who have not mage the assumption, are almost cer-

tain to insure that he will lose the award of the contract,

especially in public bidding. The Board does not find

the Government’s position tenable on its insistence on a

liberal interpretation of General Condition II. This is

insisting on the Contractor’s gambling extensively on the

unknown. A good deal of testimony and time at the

hearing was taken up with matters relating to the au-

thorship, authenticity, and even whereabouts of certain

charts and work records. It is not clear to the Board

how these documents would assist in determining wheth-

er or not changed conditions had occurred, although they

might have thrown some light on the amounts that might

be due the Contractor, should the Contractor’s claims

for delay have been upheld.

It is worthy of note that bedrock was encountered in

places at elevations higher than had been indicated or

anticipated. This, while resulting in a saving to the

(fol. 115] Government, does not reflect well on the ac-

curacy of the information which the Government fur-

nished to the bidders.

The Government claims the following:

“1, The concrete batch plant operated by the Contrac-

tor (Tr. p. 146) was not put into operation until

May 26, 1953 (Tr. pp. 227-285), by which time

over thirty pier holes had been drilled and were

available for the pouring of concrete piers (Gov.

Ex. I).

“2. The drilling of pier holes remained substantially

ahead of the concrete pouring of piers until ap-

proximately the 29th of June (Gov. Ex. I), and

the concrete pouring of piers was never delayed

for lack of an available pier hole in which con-

crete could be poured (Tr. p. 121),

“8. At times pier holes were

and there is evidence that drilled pier holes had

area was completed by July 3, 1953 (Tr. pp. 820,

821), but the concrete for the storage pool was

not poured until approximately July 30, 1953, al-

most four weeks later (Tr. pp. 232, 2388). This

delay occurred as a result of a question concern-

ing the quality of the concrete aggregate (Tr. pp.

249, 250).

“5. No concrete was poured on July 17, 18, 19 and

20, again due to the question concerning the quali-

ty of the concrete aggregate (Tr. pp. 253-255),

and the concrete pouring operations were limited

thereafter, allegedly for the same reason (Tr. pp.

260-270).

“6. All placement of concrete for piers had been com-

pleted by July 31, 1953 (Tr. p. 169; Enel. 7),

but concrete pouring of the first wall for Building

No. 607 did not commence until August 11, 1953

(Tr. pp. 245, 250) [although the forms had been

placed three weeks prior to that time (Tr. p. 271) ],

due to the question concerning the quality of the

concrete aggregate (Tr. p. 245), and the concrete

pouring did not proceed steadily thereafter, but

was delayed due to other interruptions unrelated

to the pier drilling (Tr. p. 250).

“7, All placement of concrete for the piers w

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