Cosmo Construction Company v. United States, No. 119-68.

CourtCourt of Federal Claims
Writing for the CourtPER CURIAM
Citation439 F.2d 160
PartiesCOSMO CONSTRUCTION COMPANY and the First National Bank & Trust Company of Tulsa v. The UNITED STATES.
Decision Date19 March 1971
Docket NumberNo. 119-68.

439 F.2d 160 (1971)

COSMO CONSTRUCTION COMPANY and the First National Bank & Trust Company of Tulsa

No. 119-68.

United States Court of Claims.

March 19, 1971.

439 F.2d 161

Joe Francis, Tulsa, Okl., attorney of record, for plaintiffs.

John C. Ranney, Washington, D. C., with whom was Asst. Atty. Gen. L. Patrick Gray, III, for defendant.




This case was referred to Trial Commissioner Louis Spector with directions to prepare and file his opinion on the issues of plaintiffs' motion and defendant's cross-motion for summary judgment under the order of reference and Rule 166(c). The commissioner has done so in an opinion and report filed on July 31, 1970, wherein such facts as are necessary to the opinion are set forth. Defendant has filed a request for review of the opinion by the court and the case has been submitted to the court on oral argument of counsel and the briefs before the commissioner.

Since the court agrees with the opinion and recommended conclusion of the trial commissioner, with minor modifications by the court, it hereby adopts the same, as modified, as the basis for its judgment in this case as hereinafter set forth. Therefore, plaintiffs' motion and defendant's cross-motion for summary judgment are both denied and plaintiffs' alternative motion that the case be set down for trial and determination of the issues of fact and law is granted with the case remanded to the trial commissioner accordingly.

Commissioner Spector's opinion, as modified by the court, is as follows:

This is a contract claim in the approximate amount of $125,000,1 originating out of the construction by plaintiff-contractor for the Department of Interior (Bureau of Reclamation) of Norman Dam on the Little River, near Norman, Oklahoma.

There is a resemblance between this case and that recently decided in Merritt-Chapman & Scott Corp. v. United States,2 in that the issue presented here also involves the adequacy of the "equitable adjustment" in contract price allowed by defendant following the admitted discovery of "subsurface or latent physical conditions at the site differing materially from those indicated" in the contract.3

As in Merritt-Chapman, supra, the contracting agency, over plaintiff-contractor's objection, has self-imposed certain limitations on the elements of cost it will consider in computing an equitable

439 F.2d 162
adjustment in contract price. Unlike Merritt-Chapman, however, this contract does not contain a "Suspension of Work" clause, or one of similar import,4 with the result that a "jurisdictional" issue has been raised in this case. Following a decision by the contracting officer on the "Changed Conditions" claim, an appeal was taken under the contract "Disputes" article,5 to the head of the agency, represented by its board of contract appeals. With respect to the specific element of cost involved in this petition, the board stated
We have held on many other occasions that the Board lacks jurisdiction to pay for the cost of standby or idled equipment in the absence of a "pay-for-delay" or suspension of work type of contract clause.14
14. Peter Kiewit Sons\' Company, IBCA 405 (November 17, 1965), 72 I.D. 415, 65-2 BCA par. 5157, and authorities cited therein.6
Accordingly, the appeal is dismissed as to Claim No. VII.

The Government's counsel had asked the board to take this action.

The background facts are not in dispute.7 The contract is dated June 28, 1962. It was in the originally estimated amount of $3,692,176.80, and called for construction of an earthen dam, and the relocation of a highway. The dam required excavation of a so-called core trench in the long axis thereof, to a depth of about 45 feet below natural ground surface. The trench was to be backfilled with fine material to form a relatively impermeable core within the dam which would inhibit water seepage. The cutoff trench was designed in the form of an inverted prism, 35 feet wide at the bottom. It was designed to rest there on an assumed rock surface at about elevation 950. It then proceeded upward on a 2 to 1 slope to natural ground surface at approximate elevation 995, where the trench reached a designed

439 F.2d 163
width of 200 feet. The impermeable core of fine material then was designed to taper and narrow upward from ground surface to the crest of the dam, where its width was about 10 feet

Performance began in the latter part of 1962 when plaintiff-contractor stripped surface soil to a depth approximating the top of the water table. Then the dewatering subcontractor commenced borings to locate its well point equipment. As the board opinion states, these borings demonstrated on or about March 25, 1963, "that the actual top of sound rock was much lower than the assumed level indicated on the plans." The opinion continues:

* * * The contractor promptly notified the Government by letter of March 28, 1962 sic concerning the conditions that had been encountered, and requested that the Government make an investigation. The Government soon thereafter analyzed the borings of the de-watering firm and advised the contractor that excavation could proceed in accordance with staking as revised in the field.
The work of de-watering was begun under a revised subcontract with a negotiated increase in price amounting to $78,000.00 for the first two months and $555.00 per day thereafter. The original subcontract price was $22,680.00 for the first two months and $221.00 per day thereafter. Three stages of well points were used instead of one stage as planned.
The excavation of the cutoff trench continued with successive restakings until a level of sound rock was reached that was satisfactory to the Government. The depth of the actual sound rock line varied from about 8 feet below the elevation indicated by the plans, near the south end of the cutoff trench, to a maximum of about 25 feet below the original assumed rock level, at the lowest elevation of 927 feet, near the north end of the trench. An earth slide occurred during the latter stages of excavation, and this contributed to the difficulties.
After several conferences and repeated requests by the contractor for a determination with respect to the conditions so encountered, the Government in August 1963, issued Part 1 of Change Order No. 3, conceding that changed conditions existed, and providing for the payment to the contractor of the sum of $110,000.00 as a tentative settlement to include additional costs of de-watering for the period ending October 1, 1963. Emphasis supplied.

The foregoing developments, of course, ultimately required substantial alteration of the dimensions of the cutoff trench and of the impermeable core from those originally designed, and above described. All work resulting from discovery of the changed conditions was finally completed by December 4, 1963. This is a unit price, estimated quantity type of construction contract featuring a long schedule of pay items, including items for excavation and fill. However, the contracting officer, in acknowledging the discovery of changed conditions and adjusting the contract price, took a narrow view of the costs to be considered. He did not, for example, recognize any increase in the cost of work within the confines of the cutoff trench as it had originally been designed, nor would he consider the effect of the changed conditions beyond the area between stations 21+00 and 36+00. Plaintiff-contractor, on appeal, maintained that the consequences of the changed conditions were not so confined, and claimed that its expenses for all of the work performed at the site between March 25, 1963 and December 4, 1963, under bid items 1, 3, 4, 5, 8, 9, 10, 11 and 13, together with its claim for idled equipment, and correction of a resultant earth slide, should have been adjusted. This was the issue before the board on appeal.

The board took a broader view than had the contracting officer of the equitable adjustment to which plaintiff-contractor

439 F.2d 164
was entitled, but it nevertheless imposed residual limitations which have resulted in this lawsuit. In this connection, the board stated
At the outset, we must reject the appellant\'s thesis that all of the increases in costs that have a consequential relation to the changed conditions are properly for inclusion in the adjustment pool. On the other side of the coin, we do not hold with the Government\'s view that the volume of the originally designed prism of the cutoff trench, ipso facto, should be excluded from consideration, nor do we adopt the hypothesis that the clause was intended to provide compensation only for the expense of "correcting the changed condition," as that expression has been used to describe what might be better expressed as "coping with," or "overcoming" the changed condition. * * *
* * * * * *
The Board concludes that the equitable adjustment intended by the Changed Conditions clause is by no means limited in scope to the narrow confines of the area where the changed condition was found to exist. We shall proceed, therefore, to consideration of the several claims, with a view to determining reasonable limitations of eligibility.

Additional amounts are then allowed or denied for various items of work designated as "claims" I through IX. As indicated above, this action relates exclusively to "Claim No. VII — Idle Equipment — $115,815.32," which is the only "claim" dismissed by the board for want of jurisdiction. In the petition herein, plaintiffs plead it as a breach by defendant "in that it failed to perform the administrative duties required of it under the contract terms in the following particulars, to-wit:

(a) Defendant failed to make a prompt investigation of the changed condition.
(b) Defendant failed to furnish Cosmo any timely order,

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1 practice notes
  • Air Express International Corp. v. United States, No. 132-68.
    • United States
    • Court of Federal Claims
    • 19 Marzo 1971
    ...a statute of limitations specifically applicable to air carriers if that had been its intention.1 The absence of such Congressional 439 F.2d 160 action persuades us that 28 U.S.C. § 2501 is the only statutory limitation on actions of air carriers such as those presented in the instant case ......
1 cases
  • Air Express International Corp. v. United States, No. 132-68.
    • United States
    • Court of Federal Claims
    • 19 Marzo 1971
    ...a statute of limitations specifically applicable to air carriers if that had been its intention.1 The absence of such Congressional 439 F.2d 160 action persuades us that 28 U.S.C. § 2501 is the only statutory limitation on actions of air carriers such as those presented in the instant case ......

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