Morrison-Knudsen Co. v. United States, 46770.

• Decision Date: 06 June 1949
• Docket Number: No. 46770.,46770.
• Parties: MORRISON-KNUDSEN CO., Inc. v. UNITED STATES.
• Court: U.S. Claims Court

84 F. Supp. 282

113 Ct. Cl. 536

MORRISON-KNUDSEN CO., Inc. v. UNITED STATES.

No. 46770.

United States Court of Claims.

June 6, 1949.

Herman J. Galloway, Washington, D. C. (King & King, Washington, D. C., on the brief), for plaintiff.

Grover C. Sherrod, Washington, D. C., and H. G. Morison, Asst. Atty. Gen., for defendant.

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

MADDEN, Judge.

The plaintiff made a contract with the Government to construct the Roza diversion dam, bench flume, and railroad bridge in the Roza Division of the Yakima Project of the Bureau of Reclamation, Department of the Interior. The work was near Yakima, Washington. Specifications for the work and invitations for bids were sent out on July 2, 1938. Bids were opened on August 5. The plaintiff was the low bidder, and being satisfied that it would be awarded the contract in due course, it started work on August 15 at its own risk of not ultimately getting the contract. On August 29 it was awarded the contract which was dated August 30. The contract was based on unit prices bid by the plaintiff, so much, e. g., for placing a cubic yard of concrete. The contract prices, applied to the Government's estimate of the number of units of work, gave an estimated cost of $526,860 for the performance of the contract.

The plaintiff was given notice to proceed on September 24, 1938. The contract provided that work should commence within 30 days after notice to proceed, and should be completed within 550 days thereafter. Thus the completion date was fixed at March 27, 1940. In fact, the work was accepted by the Government on December 28, 1939. On April 19, 1940, there was a settlement of the contract account, final payment was made to the plaintiff and it gave the Government a release in which, however, it reserved eight items of claim, which items constitute the subject of this suit. The suit alleges that in various ways the Government breached its contract with the plaintiff.

Transmission Line

As shown in our Finding No. 9, the Government, in the contract, agreed that it owned or would acquire a certain electric power transmission line which led to a point near the project, and would permit the contractor to use the line without charge in performing the contract work. This provision had been written into the proposed contract when it was sent out with invitations for bids, and remained in the contract made with the plaintiff. It so happened that this power line had been built by the power company some two years before under an arrangement with the plaintiff, which was then performing another contract with the Government and needed power. As soon as the plaintiff started work on the contract here in litigation, it made an arrangement with the power company to extend the line from its former terminus to a point near the new work, and to install the necessary equipment to make the power available. This was done. The Government did not actually obtain a deed for the power line until August 1940. The plaintiff claims that the Government, by not acquiring title to the power line immediately, breached its contract to make the line available without charge, to the plaintiff's damage. It claims some $1,800 as the rental value for the period, or some $1,900 as reimbursement of payments made by it to the power company for the use of the line. The plaintiff is not entitled to rent, since it did not own the line or any such interest in it as would form a basis for rent. Its former arrangement with the power company had been to reimburse the company for labor and depreciation when the line was dismantled, as it was then contemplated that it would be. In fact it was not dismantled, but was bought by the Government, and, so far as appears, the plaintiff was never called upon to reimburse the power company. As to the payments which the plaintiff says it made to the company, the evidence is not satisfactory, but it seems more probable that those payments were not for the use of the old line but for the extension and equipment of the new line, and hence were not covered by the Government's promise to acquire and make available the old line. The plaintiff has not proved that it was harmed by the Government's tardy acquisition of title to the old line, and cannot recover on this item.

Compacted Fills

The provisions of the contract relating to this item are quoted in Finding No. 12. The plaintiff says that the Government breached its contract in requiring it to use for these fills material excavated on this job, although this material contained more than 25% of oversize rock which had to be picked out of the material and disposed of before the material could be properly compacted. The plaintiff points to paragraph 46(b) of the specifications which says that, "Insofar as practicable, suitable material satisfactory to the contracting officer, obtained from required excavations" shall be used, "but where sufficient suitable material is not available from this source additional materials shall be obtained from borrow pits designated by the contracting officer". It says it was not "practicable" within the meaning of the contract, to require the contractor to go to the expense of picking out the oversize rocks to make the excavated material usable for compacting. It says that the Government showed this lack of consideration for the interests of the plaintiff in order to save itself the extra cost, 50 cents per cubic yard, which it would have had to pay if new material had been taken from a borrow pit and used in place of the material already excavated and paid for. We do not say that such a lack of consideration for the interests of the plaintiff might not constitute a breach of contract, but we find the same impediment to recovery here as in the item of the claim relating to the transmission line. The plaintiff has not shown that it was harmed by not being given the privilege. It has not shown that there was available any source of borrow material that could have been obtained at a cost less than the cost of picking out the oversize rock from the excavated material, considering, of course, the extra 50 cents per cubic yard which it would have received for taking material from the borrow pit. The area of the work, as described in our Finding No. 23, was a short, narrow oval-shaped valley. If there was within this area an available borrow location, the plaintiff has not given evidence of its existence or location. If it would have been necessary to go outside this valley for borrow, the cost of hauling, as shown in Finding No. 33 would have soon accounted for any saving otherwise made. The plaintiff not having proved that it was damaged, or, if damaged, how much, may not recover on this item of its claim.

Rock Protection

The contract called for the placing of rock protection in the forms of dumped riprap, placed riprap, and dry rock paving. The provisions of the contract are set out in Finding No. 22. As to the dumped riprap, which constituted the great preponderance of the cubic yardage of rock protection, the contract required that a considerable proportion of the rocks should contain six or more cubic feet. When the rock for this work was blasted at the quarry site, it did not produce rocks of this size. A change order reducing the size to four cubic feet and reducing the unit price from $1.40 to $1.30 per cubic yard was offered to the plaintiff, which refused to accept the reduction in price. It placed the smaller rock, and was ultimately paid the original contract price and made a profit on this part of the rock protection work.

As to the placed riprap and dry rock paving, it was found that the rock in the valley where the work was located would not break to the sizes specified in the contract, and it was ultimately necessary for the plaintiff to secure rock for the placed riprap from a quarry 6½ miles downstream from the project, and rock for the dry rock paving from a quarry 13½ miles upstream. The cost to the plaintiff was considerably more than the contract price, and, taking all three kinds of rock protection into account, the plaintiff's cost was $33,670.53 and it was paid $27,712.55, suffering a loss of $5,957.98.

As shown in Finding No. 22, paragraph 50 of the specifications provided that, "The rock used for rock protection shall be hard, dense, and durable and equivalent in this respect, in the opinion of the contracting officer, to the best rock for resisting wear or erosion that exists in the vicinity of the work." When the plaintiff bid on the contract, it reasonably assumed, from an examination of the locality, that suitable rock for the rock protection work was available in the vicinity of the work, i. e., in the area described in Finding No. 23, and depicted on Drawing 2 of the specifications, and labeled a "Vicinity Map". We think that this was the correct interpretation of the writing and drawing. As it turned out, the rock was not thus available, but had to be found at considerable distances and at greatly increased expense. The plaintiff requested an adjustment under Article 4 of the contract, quoted in Finding No. 7, which promised such an adjustment if unforeseen or latent conditions should be encountered and should increase the cost of the work. We think the plaintiff's request was well-founded. The contracting officer and, on appeal, the head of the department refused any adjustment, but did not find, as a fact, that unforeseen conditions had not been encountered, as the plaintiff claimed. They interpreted the contract erroneously, we think, to mean that the plaintiff had to find suitable rock, at whatever distance from the work, for the bid price. This interpretation is not consistent with the requirement of the specification that the rock placed should be equivalent in quality "to the best rock * * * that exists in the vicinity of the work." If the rock in the vicinity was suitable, they should have...