Pacific Alaska Contractors, Inc. v. United States

• Decision Date: 22 January 1971
• Docket Number: No. 294-67.,294-67.
• Parties: PACIFIC ALASKA CONTRACTORS, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

436 F.2d 461 (1971)

PACIFIC ALASKA CONTRACTORS, INC. v. The UNITED STATES.

No. 294-67.

United States Court of Claims.

January 22, 1971.

Stuart G. Oles, Seattle, Wash., attorney of record, for plaintiff. Allen, DeGarmo & Leedy, Seattle, Wash., of counsel.

Mary J. Turner, Washington, D. C., with whom was Asst. Atty. Gen. William D. Ruckelshaus, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS and SKELTON, Judges.

ON PLAINTIFF'S MOTION AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

PER CURIAM:^*

In accordance with the standards for judicial review prescribed by the Wunderlich Act, plaintiff's motion and defendant's cross-motion for summary judgment present issues concerning the finality of a decision of the Department of Commerce Appeals Board, DCAB No. PR-46, 66-1 BCA ¶ 5532, as modified on motion for clarification and reconsideration, 66-2 BCA ¶ 6043.

I

On October 6, 1959, plaintiff and defendant (by its Bureau of Public Roads, Department of Commerce) entered into contract No. CPR 10-300, by which plaintiff undertook in accordance with defendant's drawings and specifications to perform grading with excavation of cuts and placement of materials in fills, install culverts and provide drainage facilities otherwise, and place overlay material on the accomplished subgrade in the realignment, reconstruction and improvement of 8.7 miles of an existing forest road in Alaska, known as the Hope Highway, located some 80 miles by road from Anchorage.

Basically comprised of agreed unit prices applied to estimated quantities of work and materials, the estimated contract price was $475,002, subject to adjustment to the actual quantities realized in accordance with contract provisions.

The contract provided that performance would be started within 30 calendar days after the date of receipt by plaintiff of defendant's written notice to proceed. Such notice was received by plaintiff on October 30, 1959. The contract allowed 210 calendar days for completion of performance.

Stated in the contract as major items of work were unclassified excavation of an estimated quantity of 216,000 cubic yards of material in the accomplishment of the cuts and fills specified to bring the road to subgrade, and borrow excavation of an estimated 60,000 cubic yards of material for placement of the required overlay on the subgrade.

In the contract performance, plaintiff accomplished and was credited with unclassified excavation in the amount of 181,290 cubic yards, which was about a 16 percent reduction from the 216,000 cubic yards indicated in the contract, not coming within the price adjustments provided by Articles 4.2, 9.3 and 9.5, quoted below. However, plaintiff accomplished and was credited with 144,821 cubic yards of borrow excavation, an overrun of about 141 percent, and the proper basis of compensation for such overrun remains in dispute.

Made part of the contract by express provision are the Standard Specifications for Construction of Roads and Bridges on Federal Highway Projects, FP-57, January 1957, promulgated by the Bureau of Roads, Department of Commerce. Articles 4.2, 9.3 and 9.5 thereof provide:

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4.2 Changes. It is mutually agreed that it is inherent in the nature of highway construction that some changes in the plans and specifications may be necessary during the course of construction to adjust them to field conditions and that it is of the essence of the contract to recognize a normal and expected margin of change within the meaning of the clauses "Changes" and "Changed Conditions" in the "General Provisions" of the contract as not requiring or permitting any adjustment of contract prices, provided that any change or changes do not result in (1) an increase or decrease of more than 25 percent in the original contract amount, in the quantity of any major item, or in the length of project, or (2) a substantial change in the character of the work to be performed under a contract pay item or items that materially increases or decreases the cost of its performance.

Any adjustment in compensation because of a change or changes resulting in one or more of the conditions described in (1) and (2) of the foregoing paragraph, except a change in project length by more than 25 percent, shall be made in accordance with the provisions of article 9.3. Any adjustment in contract time because of such change or changes shall be made in accordance with the provisions of article 8.6. Any change in the project length of more than 25 percent or any other change not within the general scope of the contract shall require a supplemental agreement.

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9.3 Changes and Altered Quantities. It is mutually agreed, pursuant to article 4.2, that upon demand of either party an equitable adjustment satisfactory to both parties shall be made in the basis of payment if any of the following conditions exist:

(1) The final contract amount or total quantity of a major item involves an increase or decrease of more than 25 percent from the original contract amount or original quantity of the major item, respectively. In the case of an increase, any adjustment in payment shall apply only to the related quantities of work performed in excess of the stated percentage. In the event of a decrease, any adjustment in payment shall apply to the quantity or quantities of work actually performed.

(2) The change ordered by the engineer involves a substantial change in the character of the work to be performed under a contract pay item or items and results in materially increasing or decreasing the cost of its performance.

(3) The engineer orders performance of unforeseen work essential to complete the contract but for which no basis of payment is provided therein.

Agreed prices in any adjustment of payment shall not be more than 15 percent in excess of the cost estimated by the engineer.

The prices agreed upon and any agreed adjustment in contract time shall be incorporated in the written order issued by the engineer, which shall be so written as to indicate acceptance on the part of the contractor as evidenced by his signature.

If prices cannot be agreed upon, the contractor shall proceed with the performance of the work on a force-account basis in accordance with the provisions of article 9.5.

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9.5 Force-Account Work. All work performed or labor and materials furnished on a force-account basis shall be paid for on the following basis:

(a) Labor. — For all labor and for foremen in direct charge of the specific operations the contractor shall be paid:

(1) The actual cost of wages paid by him, but at rates not to exceed those for comparable labor currently employed on the project as determined by the engineer.

(2) The actual cost of industrial accident or workmen\'s compensation insurance.

(3) The actual cost of social security taxes and unemployment compensation insurance.

(4) The actual amounts paid by the contractor by reason of an employment contract generally applicable to his employees.

(5) An amount equal to 15 percent of the actual cost of wages and the other costs listed above.

(b) Materials. — For all materials accepted by the engineer and used in the work, the contractor shall be paid the actual cost of such material, including transportation charges, to which cost shall be added a sum equal to 15 percent thereof.

(c) Tools and equipment. — For any machine power tools and special or heavy equipment used, the contractor shall be paid reasonable rentals at rates which shall include compensation for fuel and lubricants, which shall be agreed upon in writing before starting work, except when equipment rental rates to be paid are stated in the special provisions. No percentage shall be added to equipment rental rates and no allowance shall be made for the use of small tools and manual equipment.

(d) Supervision. — No allowance shall be made for general superintendence.

(e) Records. — The contractor\'s representative and the engineer shall compare records of the work performed as ordered on a force-account basis, at the end of each day on which such work is performed. Copies of these records shall be made upon suitable forms provided for this purpose and signed by both the engineer and the contractor\'s representative, one copy being retained by each party. All claims for work done on a force-account basis shall be certified and submitted to the engineer by the contractor, and such statements shall be filed with the engineer not later than the tenth day of the month following that in which the work was actually performed.

Also included in the contract are the General Provisions of Standard Form 23-A, March 1953, prescribed by the General Services Administration for construction contracts. Thus, the contract contains the standard Changes and Changed Conditions articles, the latter providing for an equitable adjustment of the contract price for —

* * * (1) subsurface or latent physical conditions at the site differing materially from those indicated in this contract, or (2) unknown physical conditions at the site, of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in this contract. * * *

Relying on the Changes article and on category (1) of the standard Changed Conditions article, plaintiff claimed, and defendant's contracting officer and the Appeals Board denied, entitlement to an equitable adjustment of the contract price on those theories. Plaintiff believes that the amount of the equitable adjustment under the standard Changes and Changed Conditions articles would under the facts and circumstances of this case exceed amounts allowable under Article 9.5 Force-Account Work, quoted above. No evidence was presented to the Board concerning the amount of such an equitable adjustment because pursuant to an agreement of the parties, determination of the amount of recovery was reserved by the Board for...