Winn-Senter Const. Co. v. United States, 45999

• Citation: 110 Ct. Cl. 34,75 F. Supp. 255
• Decision Date: 05 January 1948
• Docket Number: No. 45999,46593.,46592,45999
• Parties: WINN-SENTER CONST. CO. v. UNITED STATES. GEER CO. v. SAME. SOTHMAN CO. et al. v. SAME.
• Court: U.S. Claims Court

75 F. Supp. 255

110 Ct. Cl. 34

WINN-SENTER CONST. CO. v. UNITED STATES.

GEER CO. v. SAME.

SOTHMAN CO. et al. v. SAME.

Nos. 45999, 46592, 46593.

Court of Claims.

January 5, 1948.

Clifford B. Kimberly, of Kansas City, Mo. (J. L. Milligan, Thos. E. Deacy, Clifford B. Kimberly and Milligan, Kimberly & Deacy, all of Kansas City, Mo., on the brief), for plaintiffs.

James J. Sweeney, of Washington, D. C., and Peyton Ford, Asst. Atty. Gen., for defendant.

Before JONES, Chief Justice, and MADDEN, HOWELL, WHITAKER and LITTLETON, Judges.

MADDEN, Judge.

The plaintiffs made contracts with the Government to perform parts of the construction of the Cornhusker Ordnance Plant at Grand Island, Nebraska. The plaintiff in the first named suit had a separate contract, the plaintiff in the second named suit had two contracts and the two plaintiffs in the third named suit had, as joint contractors, two contracts. Each contract was a separate contract. The cases are treated together because the same findings of fact relate, in large part, to all of them, and the issues involved are, with exceptions that will be stated, the same.

All of the contracts here in suit were lump sum contracts. They were made after bids had been submitted pursuant to a public invitation for bids. Because of the necessity for haste in getting the work started, letter contracts rather than full formal ones were issued at first, late in April or in May 1942. Formal contracts were signed in May, June, or July. Work was begun on each of the contracts within 5 days after each letter contract was issued.

Before the plaintiffs' contracts were entered into, the Government had made a cost plus fixed fee contract with a corporation and an individual whereby those contractors jointly agreed to perform all architectural, engineering, and management services necessary in the construction of the plant to which the plaintiffs' contracts, later made, related. In the findings and in this opinion, the joint contractors in that contract are called the A. E. M. That contract contemplated that most of the actual construction of the plant would be done by other contractors, but it provided that the A. E. M. should assemble a force of supervisors and skilled workmen to perform any work which was not awarded to other contractors. It provided that the A. E. M. should direct and supervise the work of all the construction contractors. The A. E. M. employed a force of carpenters and laborers to perform any work not contracted out to others, and to take over and complete any work on which other contractors were delayed. It operated a personnel and labor procurement office, and all labor, except supervisory labor, which the plaintiffs and other contractors used, was obtained by requisitions on the A. E. M. All labor, with the same exception was cleared by the A. E. M. through the offices of the United States Employment Service.

The contracts of the plaintiffs and the A. E. M. with the Government required them to pay not less than the prevailing wage in the area as determined by the Secretary of Labor and stated in the specifications. These provisions of the plaintiffs' contracts are set out in finding 6. In the A. E. M.'s contract and the plaintiffs' contracts the prevailing wage for carpenters was stated to be $1.12½ per hour and for unskilled labor $.50 per hour.

The A. E. M. arrived on the project about April 8, 1942. Investigation of the labor market and supply showed that other projects which drew labor from the same sources were paying higher wages than those stated above, and the A. E. M. thought that its project could not be adequately manned at these wages. It immediately asked the Area Engineer, who was the Contracting Officer, to obtain an increase in the wage rates. On May 30, it sent a letter to the Area Engineer pressing for action on this request and asking that the rates be set at $1.25 for carpenters and $.60 for laborers. This letter, quoted in finding 11 describes the situation as the A. E. M. found it. The letter was sent by the Area Engineer, who was the Contracting Officer, to the District Engineer, whose office was at Omaha, together with a recommendation that the increases be authorized. By telephone and teletype the question was presented to the Chief of Engineers who sent to the Division Engineer, who was also at Omaha, a teletype message, which we have quoted in finding 13, authorizing the increases requested and saying "Wage adjustment order in process of issuance." This message was sent down through channels to the Contracting Officer, whose office notified the A. E. M. and said "Please inform all interested parties." On June 11 the A. E. M. wrote the plaintiffs giving them the information. On June 19 the Area Engineer's Office wrote the plaintiffs stating that the wage rates had been increased and saying "It is requested that you change your rates accordingly." On June 20 and 22 the Office of the Area Engineer sent letters to the plaintiffs returning pay rolls to them for correction and requiring that they pay the increased rates retroactively to carpenters to June 1 and to laborers to June 8. The plaintiffs made the retroactive increases, and paid the increased rates during their entire performances of their contracts.

A Mr. Knox, General Manager of the A. E. M. held weekly meetings in his office at the project, attended by the Contracting Officer, the various contractors, and the supervisory personnel of the A. E. M. At a meeting about June 11, the plaintiffs complained about the additional costs they would incur in paying the increased rates, and asked what action would be taken to reimburse them. Mr. Knox said, in the presence of the Contracting Officer, that when the contracts were completed and the additional costs could be determined, each contractor would be reimbursed by being given a change order.

After some telephone conversations which are shown in our findings and not repeated here, the wage adjustment order promised in the Chief of Engineers teletype of May 30 came through to the Contracting Officer on July 16. It made authorized increases applicable only to the A. E. M. contract. The plaintiffs were so notified. However, they continued to pay the increased wages, and it would not have been possible for them to do otherwise.

The communication of May 30 from the Chief of Engineers referred to the Cornhusker Ordnance Plant, and the wage "rate for this project." By its plain meaning and as it was interpreted by everyone who read it, it applied to all the carpenters employed by all contractors at the project.

The statements of wage rates in the plaintiffs' contracts and the A. E. M. contract were made pursuant to the Davis Bacon Act, 54 Stat. 399, 40 U.S.C.A. § 276a. That act requires that a contractor with the Government bind himself to pay not less than the wages found by the Secretary of Labor to be the prevailing wages in the area where the contract is performed. The act expresses the purpose of the Government not to profit by using a contractor who keeps costs down by paying sub-standard wages. Neither it, nor any other law force at the time here in question, put any ceiling on wages to be paid by lump sum Government contractors such as the plaintiffs. They, by making their contracts agreed to pay whatever wages they had to pay to get the labor necessary to do the job.

The A. E. M., a cost-plus contractor, on the other hand, had agreed in its contract, as shown in finding 11, that it could not include in its costs any wages paid in excess of those approved in writing by the Government Agency with which it contracted. It was, therefore, necessary for it, to avoid an actual out-of-pocket loss of money, to...