Case ID: us-ct-cl_158/html/0455-01.html
Source: Caselaw Access Project
Author: {"author": "Whitaker, Judge,\n     Laramoee, Judge, JoNes, Chief Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BATESON-STOLTE, INC. v. THE UNITED STATES
    [No. 141-57.
    Decided July 18, 1962]
    
      
      Jolin L. Kilcullen for plaintiff. McNutt, Dudley and East-erwood were on the brief.
    
      Alfred H. O. Boudreau, Jr., with whom was Assistant Attorney General William H. Orrich, Jr., for defendant.
   Whitaker, Judge,

delivered the opinion of the court:

This is a suit for $193,637.95, additional expenses alleged to have been incurred by plaintiff in the performance of a contract for the construction of a power house and appurtenant structures at the Clark Hill Project in Georgia and South Carolina.

Under the Davis-Bacon Act, as amended (40 U.S.C. 276a, et seq. 1946 Ed.), plaintiff was required to pay not less than the prevailing wage rate in the vicinity of the project, as determined by the Secretary of Labor. In addition, for a short period of time, plaintiff was not only required to pay not less than this minimum wage rate but also was prohibited from paying any more. However, plaintiff admits that it suffered no damage during this period.

At the time of the execution of the contract for the Clark Hill Project, on October 11, 1950, the Government, acting through the Atomic Energy Commission (hereinafter, AEC), was planning the construction of a major project, involving expenditures estimated at over a billion dollars. While the AEC at that time had not selected a site for its project, a site 40 miles down the Savannah Eiver from the Clark Hill Project was one of several under serious consideration. This site was finally selected on November 24,1950, and the project was constructed at this point. This AEC project required a very large labor force, much larger than could be obtained in the immediate neighborhood of the project, necessitating the recruiting of labor from the larger municipalities in the area. This made it necessary for the AEC to pay considerably higher wages than the wages established by the Secretary of Labor as the prevailing wage in the vicinity of the Clark Hill Project. Since the AEC project was only 40 miles downstream from the Clark Hill Project, this great demand for labor, and the payment of wages higher than the prevailing wage, made it necessary for plaintiff to pay its workers, as soon as permission to do so could be obtained, wages higher than the prevailing wages, and higher than it would have been required to pay had the AEC project not been in competition with it.

Plaintiff sues for the difference in the wages predetermined by the Secretary of Labor and the wages it was required to pay.

This case was previously before us on defendant’s motion for judgment on the pleadings. In an opinion rendered on April 8, 1959, 145 Ct. Cl. 387, we expressed the opinion that if the Corps of Engineers knew that this project was to be located in this vicinity and that this large labor force would be necessary to construct the AEC project, to secure which wages considerably higher than the prevailing wage rate would have to be paid, the Corps of Engineers was under the duty to disclose it. Although the United States was the contractor both for the Clark Hill Project and for the AEC project, we nevertheless held that, in view of the vastness of the business engaged in by the United States Government, with its multitudinous departments and bureaus and independent agencies scattered all over the world, the knowledge of the AEC could not be imputed to the Corps of Engineers. We stated that the Government was liable only if the Corps of Engineers had knowledge that the AEC project was to be located in the immediate vicinity of the Clark Hill Project, and that it would require a very large labor force, who would have to be paid a higher wage than that prevailing in the vicinity.

The case was remanded to the Trial Commissioner to take proof on these questions. The case is now before us upon the Commissioner’s report. That report shows that the Corps of Engineers was requested by the AEC to survey more than 100 sites in Arkansas, Louisiana, Texas, Mississippi, Alabama, Georgia, Tennessee, Kentucky, West Virginia, Missouri, Illinois, Indiana and Ohio as possibly suitable locations for the erection of this project. The Corps of Engineers was told -by the AEC the location would have to be in the vicinity of a town of not less than 25,000 to 50,000 inhabitants, in order to secure the necessary labor force. The Corps of Engineers was not advised of the immensity of the project, nor of the large labor force that would be required, but it was told that an area of from 100,000 to 150,000 acres would be required.

Among the 100 sites surveyed was the one in the neighborhood of the Clark Hill Project, and the Corps of Engineers recommended it as one of a number of suitable sites. However, it was still surveying sites, in Wisconsin, Michigan, and Minnesota, when bids were opened. It was not until November 10,1950, that the contractor for the AEC project finally made its selection of the site to be recommended to the AEC, and the AEC did not make the final selection until November 24,1950. Our Trial Commissioner has found, which finding we have adopted:

On October 11, 1950, when the plaintiff and a contracting officer of the Corps of Engineers entered into the contract for the construction of the powerhouse and appurtenant works at the Clark Hill Project, neither the plaintiff nor the Corps of Engineers knew, or could have known through the exercise of reasonable diligence, that the new production plant of the Atomic Energy Commission would be located and constructed within the same geographical area that included the Clark Hill Project of the Corps of Engineers. * * *

Furthermore, when the contract for the Clark Hill Project was awarded, the Corps of Engineers had no knowledge of the large amount of labor that would be required.

In view of these findings of the commissioner, which we have adopted as the findings of fact of the court, we do not think the Corps of Engineers was in possession of any information which it was under the duty to disclose to plaintiff prior to the execution of the contract.

On oral argument we understood plaintiff to say that it no longer relied upon the failure of the Corps of Engineers to disclose pertinent information, but relied, rather, on .the defendant’s breach of its implied promise not to hinder or delay plaintiff in the performance of its contract. It says the establishment of the AEC project in the vicinity of the Clark Hill project and the fixing of a minimum wage for this project higher than the minimum plaintiff was required to pay was a breach of this implied condition. •

Let it be remembered that the provision for the contractor of a minimum wage was not for the benefit of the contractor and was no warranty that he would not be required to pay a higher wage. Binghampton Construction Co. v. United States, 347 U.S. 171. But if the defendant directly required the contractor to pay a higher wage, it is liable for the increase. Sunswick Corp. v. United States, 109 Ct. Cl. 772. Also, if the defendant required the contractor to pay increased wages by the doing of some act it had explicitly or impliedly agreed not to do, it would be liable. Absent such an agreement, the defendant was at liberty' to do what it pleased.

So, our question would seem to be: Did the defendant agree, expressly or impliedly, when it let the Clark Hill contract, not to start any other project in the'vicinity during the life of the contract that would require a large supply of labor? Did the defendant agree to give plaintiff first call on the labor market, and promise not to interfere therewith, whatever might be the needs of the Government? Did the Government thus tie its hands for the life of the Clark Hill contract, which was to require four years to complete?

Can you not imagine what the reply of the Corps of Engineers would have been, had plaintiff requested the incorporation of such a provision in the contract? Since defendant would never have expressly agreed to such a provision, it cannot be successfully contended that defendant impliedly agreed to it.

Indeed, no contracting officer had the power to thus bind the hands of the Congress and the various departments and independent agencies of the Government. It is not conceivable that the contracting officer on the Clark Hill Project would have assumed to say that the Atomic Energy Commission, or any other Government agency, would not build any other project in the vicinity that required a large labor force. He could not thus circumscribe the exercise of the sovereign power, and he would not have assumed to do so.

Nor can it be said that the Corps of Engineers impliedly promised that if another agency did start another project in the vicinity within the four-year term of the contract, as a result of which plaintiff was required to pay higher wages, it would pay the increased cost. The project of the AEC was to promote the national defense. Could any contracting officer restrict the Government in the doing of an act deemed necessary for the national defense? On the principle of the cases of Jones, et al. v. United States, 1 Ct. Cl. 383, and Horowitz v. United States, 58 Ct. Cl. 189, 267 U.S. 458, the answer must be no. In Horowitz the Supreme Court quoted with approval what we had said in Jones v. United States, supra, as follows:

* * * In the Jones case, supra, the court said: “The two characters which the government possesses as a contractor and as a sovereign cannot be thus fused; nor can the United States while sued in the one character be made liable in damages for their acts done in the other. Whatever acts the government may do, be they legislative or executive, so long as they be public and general, cannot be deemed specially to alter, modify, obstruct or violate the particular contracts into which it enters with private persons ... In this court the United States appear simply as contractors; and they are to be held liable only within the same limits that any other defendant would be in any other court. Though, their sovereign acts performed for the general good may work injury to some private contractors, such parties gain nothing by having the United States as their defendants.”
It was upon this ground that the demurrer in the present case was sustained by the Court of Claims. We think this was correct, and the judgment is affirmed.

In LeVeque, et al. v. United States, 96 Ct. Cl. 250, plaintiffs had a contract that required the payment of a miuimum wage. Plaintiffs alleged that “during the period of the contract the defendant authorized increased working hours and increased wages on a general scale in connection with a Resettlement project known as Green Hills in North Cincinnati, and that such Government work being carried on contemporaneously with plaintiffs’ work the defendant thereby created a condition which forced plaintiffs to increase wages in order to insure the timely and satisfactory completion of the work for which they had contracted.” Of this claim we said, at page 254:

We do not think the fact that another branch of the Government found it advisable to increase wages on an entirely different project in the same vicinity created any obligation on the part of the Government to vary the terms of the contract which plaintiffs had undertaken.

In Beuttas v. United States, 101 Ct. Cl. 748, we held the Government liable for increasing the minimum wage in a contract to erect the superstructure of a building over the wages specified in a contract for the foundation. The Supreme Court reversed (324 U.S. 768) on the ground that the contract for the foundation was supposed to be completed before the work on the superstructure began, and that the union representing plaintiff’s laborers had agreed to work for the wages specified throughout the contract period, and defendant had no reason to believe that its action would cause the union to breach its contract.

We call attention to the fact that in the Beuttas case it was the same governmental agency involved in both contracts; whereas here they were different agencies, one agency having no control over the activities of the other, nor the power to bind the other.

In York Engineering Co. v. United States, 103 Ct. Cl. 613, plaintiff sued, first, because its work was delayed by the Government’s failure to supply sufficient labor, and to supply the necessary skilled labor; second, because the Government refused to reimburse it for increased taxes, and, lastly, because the Government required it to pay increased wages by paying WPA laborers in the vicinity more than the minimum amount which plaintiff was required to pay under the contract. We held, Judge Littleton dissenting, that “* * * The Government’s action in raising WPA wages made it impossible or difficult for the plaintiff to secure labor at 45 cents an hour. If so, it was a violation of the terms which we found in Beuttas v. United States, 101 Ct. Cl. 748, to be implied in all contracts, i.e., subject to exceptions not here necessary to define, one party to the contract will not so act as to increase the cost of performance by the other.” This opinion was handed down on February 5, 1945.

On April 2, 1945, following, we decided the case of Standard Accident Insurance Co., et al. v. United States, 103 Ct. Cl. 607. In that case the plaintiff claimed reimbursement for increased wages which it was required to pay by reason of the fact that immediately after the award of the contract to plaintiff, defendant entered into a number of lump-sum contracts in the immediate vicinity of plaintiff’s project, under which contracts wages were paid in excess of those which plaintiff had theretofore been required to pay. We said that when the defendant entered into its contract with plaintiff, it did not either expressly or impliedly stipulate that it would not thereafter enter into cost-plus contracts, and that it, indeed, had no power to do so. Hence, we concluded that the making of these contracts by the Government, even though they had the incidental effect of requiring plaintiff to pay its laborers increased wages, was not a violation of plaintiff’s contract.

In KircKhof, et al. v. United States, 121 Ct. Cl. 476, plaintiffs’ fixed-price construction contract with the Government contained minimum wage rates determined by the Secretary of Labor under the Davis-Bacon Act. These rates were also maximum rates because they could not be increased without authorization from the War Labor Board. While construction under plaintiffs’ contract was progressing, that Board authorized payment of labor on other projects in plaintiffs’ area at rates higher than the rates specified in plaintiffs’ contract. To prevent their workers from leaving to work on these other projects, plaintiffs sought, and obtained, permission from the Board to increase their wage rates to the wage level prevailing on the other projects. Plaintiffs contended that the actions of the Wage Adjustment Board in increasing rates on non-federal work (which forced plaintiffs to pay higher rates to keep the job going) constituted a breach of the implied contractual condition that defendant would not hinder plaintiffs in their discharge of the contract. Of this we said, at page 491:

It is true that plaintiffs may have been compelled by circumstances to pay the increased wages authorized by the Wage Adjustment Board but they were not so compelled by the Government in its capacity as a contractor, and there is no provision in plaintiffs’ contract which requires the Government to reimburse plaintiffs for increased wages voluntarily paid by plaintiffs * * *.

We conclude that when the Corps of Engineers entered into its contract with plaintiff, it neither expressly nor impliedly agreed that the AEC would not enter into its contracts in the vicinity. We think this would have been true of any contract entered into by another agency of the Government. It is especially true where the subsequent contract was entered into in order to promote the national defense. This was a sovereign act for which the Government is not liable in damages.

Plaintiff’s petition will be dismissed.

It is so ordered.

Davis, Judge; and Dtjruee, Judge, concur.

Laramoee, Judge,

concurring:

I concur in the result for the reasons set forth in my dissenting opinion in this case, when the same was decided on defendant’s motion for judgment on the pleadings, No. 141-57, decided April 8, 1959. In other words, I believe plaintiff cannot recover in this action because of the Supreme Court’s decision in United States v. Binghamton Construction Co., 347 U.S. 171, 176-178, wherein the Court stated:

The Act itself confers no litigable rights on a bidder for a Government construction contract. The language of the Act and its legislative history plainly show that it was not enacted to benefit contractors, but rather to Erotect their employees from substandard earnings by xing a floor under wages on Government projects. Congress sought to accomplish this result by directing the Secretary of Labor to determine, on the basis of prevailing rates in the locality, the appropriate minimum wages for each project. The correctness of the Secretary’s determination is not open to attack on judicial review.
$ ‡ ‡ ‡
On its face, the Act is a minimum wage law designed for the benefit of construction workers. The Act does not authorize or contemplate any assurance to a successful bidder that the specified minima will in fact be the prevailing rates. Indeed, its requirement that the contractor pay “not less” than the specified minima presupposes the possibility that the contractor may have to pay higher rates. Under these circumstances, even assuming a representation by the Government as to the prevailing rate, respondent’s reliance on the representation in computing its bid cannot be said to have been justified.

In all other respects I agree with the majority opinion.

JoNes, Chief Judge,

concurring in the result:

While still adhering to the views expressed in my opinion concurring in part in the previous opinion in this case, 145 Ct. Cl. 387, 393, in the present posture of the case I have no choice but to concur in the result.

It is true that the contract in terms stipulated that the wages should be at the minimum rate specified in the contract. Nevertheless, almost immediately the Government, by executive decree, froze the wages then being paid which made the minimum wages being paid by plaintiff the maximum wages that could be paid. Wage freeze order, dated January 26, 1951, was published in the Federal Register January 30, 1951 (16 Fed. Reg. 816).

Within a few days thereafter, the Government established a billion-dollar project in the same area and immediately began paying wages substantially in excess of the wages which plaintiff was permitted to pay. This act, of course, drained off all the available labor in that and in surrounding areas. This freeze remained in effect several months before the defendant finally made an exception to the so-called wage freeze which permitted plaintiff after that time to pay wages somewhat comparable to the wages being paid by the defendant in the adjoining project.

On August 2, 1951, the Wage Stabilization Board issued an order which lifted the wage freeze of January 25, 1951, and authorized the employers in the construction industry to pay wages not in excess of the wage rates determined to be prevailing in a given locality by the Secretary of Labor pursuant to the Act. This regulation lifting the wage freeze was published in the Federal Begister of August 2, 1951 (16 Fed. Beg. 7565).

It seemed to me then and it seems to me now that plaintiff at least should have been permitted to recover the damages proximately flowing from the defendant’s direct action which made plaintiff completely helpless during these few months when the freeze order was in effect.

However, plaintiff apparently in an effort to concentrate on the much larger basis of recovery has abandoned this particular phase of its claim. This may have been due in part to the wording of the previous majority opinion. Nevertheless, if I understood correctly the plaintiff’s counsel’s statement in open court, this phase of the case is not now before us.

In the present state of the pleadings, evidence, and findings of fact I concur in the result.

FINDINGS OF FACT

The court, having considered the evidence, the report of Trial Commissioner Mastín G. White, and the briefs and argument of counsel, makes findings of fact as follows:

1. The plaintiff, Bateson-Stolte, Inc., is a joint venturer, composed of J. W. Bateson Company, Inc., a corporation organized and existing under the laws of the State of Texas, and Stolte, Inc., a corporation organized and existing under the laws of the State of California.

2. On June 12,1950, the Atomic Energy Commission wrote a secret letter to E. I. du Pont de Nemours and Company, requesting that company to consider undertaking the design, construction, and operation for the Commission of new production facilities. No determination had been made by the Atomic Energy Commission as of June 12, 1950, regarding the location of the new production facilities. Indeed, the evidence indicates that the Atomic Energy Commission had not at the time considered any particular site or sites. (E. I. du Pont de Nemours and Company will usually be referred to hereafter in the findings as “du Pont.”)

3. The Corps of Engineers, United States Army, was first informed regarding the intention of the Atomic Energy Commission to construct a new production plant, and the cooperation of the Corps of Engineers was requested, in a classified letter dated June 19,1950, from the General Manager of the Atomic Energy Commission to the Chief of Engineers. This letter stated in part as follows:

The President has recently approved an expansion in the atomic energy program which will, in all probability, necessitate a new site for the construction of additional production facilities. The Atomic Energy Commission will shortly submit a request to Congress for supplemental funds required to initiate this expansion. The purpose of this letter is to alert you to this pending development inasmuch as we will request your office to undertake the acquisition of the new site once it is selected.
While our current thinking is general and quite tentative, it appears that we will probably need an area between 100,000 to 150,000 acres; * * * and power requirements will probably not exceed 100,000 kw. While we consider it highly desirable to locate in an area where power is available, we could, of course, construct generating facilities if necessary. The site must be in a fairly isolated area although, despite this requirement, we feel that it should be within commuting distance, say, fifteen miles of a town of twenty-five to fifty thousand population or more. This would make available a reasonable labor supply and should preclude the necessity of constructing a Government-owned community. It is, of course, also desirable that adequate rail and highway transportation facilities be reasonably available to the site.
Geographically, we desire that the site be somewhere within the area covered by Arkansas, Northern Louisiana, East Texas, Mississippi, Alabama, Northern Georgia, Tennessee, Kentucky, West Virginia, Missouri, Illinois, Indiana, Ohio.
We are not at the moment prepared to proceed definitely with site selection. However, it would be helpful in our preliminary planning if we could secure from you a list of possible sites that might be considered, particularly any Government-owned facilities which might meet the general criteria outlined above and which lie within the geographic region indicated. Even though a complete facility of the size desired is not available, there might be some existing properties which could constitute the nucleus of the area sought and be expanded by further land acquisition.
We consider it important that at this stage nothing be divulged regarding our expansion program, including our interest in acquiring a site. Accordingly, we desire that this matter be held in complete confidence by you and that you not reveal the interest of the Atomic Energy Commission in the course of any inquiries you may make.

4. After receiving the letter referred to in finding 3, the Chief of Engineers requested Division Engineers of the Corps of Engineers in different geographical regions of the United States to prepare and submit to the Chief of Engineers reports on possible locations for the new production plant of the Atomic Energy Commission, in the light of the site criteria stated by the Commission. The Division Engineers were instructed that this matter was of a classified nature.

5. On or shortly before July 17, 1950, the Chief of Engineers submitted to the Atomic Energy Commission reports relative to 5 possible sites for the Commission’s new production plant within the geographical area of the Ohio River Division, 22 possible sites within the area of the Southwestern Division, 2 possible sites within the area of the South Atlantic Division, 6 possible sites within the area of the Missouri Diver Division, and 6 possible sites within the area of the Great Lakes Division. The Corps of Engineers at that time was still assembling information with respect to other possible sites.

6. (a) On July 18, 1950, the Savannah District of the South Atlantic Division, Corps of Engineers, issued an invitation for bids on the construction of a powerhouse and appurtenant works at the Clark Hill Project, a multipurpose dam and reservoir project of the Corps of Engineers on the Savannah Diver, which (with its tributaries, the Tug-aloo and Chattanooga Divers) forms the boundary between South Carolina and Georgia. The powerhouse was to be constructed in the vicinity of Clark Hill, South Carolina, and approximately 20 miles upstream from Augusta, Georgia. The invitation stated that the bids would be opened on October 5,1950.

(b) A wage determination for the powerhouse job at the Clark Hill Project had been made prior to July 18,1950, by the Secretary of Labor pursuant to the provisions of the Davis-Bacon Act, as amended (40 U.S.C., 1946 ed., 276a et seq.). This determination was based upon the wage rates prevailing at the time in the vicinity of the Clark Hill Project, and it prescribed the minimum rates of pay for various classes of laborers and mechanics employed on the powerhouse job. Information regarding the minimum rates prescribed in the wage determination was furnished to prospective bidders on the powerhouse contract.

(c) It was indicated in the invitation for bids that the powerhouse contract was to be performed within a period of about 4 years.

7. On or shortly before July 21, 1950, the Chief of Engineers submitted to the Atomic Energy Commission additional reports relative to 2 possible sites for the Commission’s new production plant within the geographical area of the South Atlantic Division and 12 possible sites within the area of the Ohio Diver Division.

8. On or shortly before July 28, 1950, the Chief of Engineers submitted to the Atomic Energy Commission additional reports relative to 8 possible sites for the Commission’s new production plant within the geographical area of the South Atlantic Division.

9. On or shortly before August 1,1950, the Chief of Engineers submitted to the Atomic Energy Commission additional reports relative to 10 possible sites for the Commission’s new production plant in Virginia and 1 possible site in Tennessee.

10. On or shortly before August 1, 1950, du Pont informally agreed to undertake the assignment mentioned in the secret letter of June 12,1950, from the Atomic Energy Commission (see finding 2). By means of a top-secret letter dated August 1, 1950, the Atomic Energy Commission authorized du Pont to begin work under the assignment.

11. The Atomic Energy Commission on August 2, 1950, issued a press release announcing its intention to construct new production facilities. The press release stated that the Atomic Energy Commission had selected du Pont as the contractor for the design, construction, and operation of the new production plant, which would be located at a site to be determined thereafter. The press release also stated that the Commission’s staff and du Pont, with the assistance of several Government agencies, were attempting to locate a site, which might include 200,000 acres. Five factors of major importance in the selection of a site were stated in the press release.

12. On the basis of the reports submitted by the Corps of Engineers, the Atomic Energy Commission arranged for teams, consisting of representatives of the Commission, of du Pont, and of the Corps of Engineers, to visit and inspect the places which the Commission regarded as most nearly meeting the criteria for the location of its new production plant. The first series of such inspection visits involved two possible sites in South Carolina, two possible sites in Texas, and one possible site in Oklahoma. These places were visited during the period August 7-10,1950. Both of the possible sites in South Carolina were located in the same geographical area that included the Clark Hill Project of the Corps of Engineers. One of them, which later assumed great importance (see the subsequent findings), was located adjacent to the Savannah River, approximately 20 miles downstream from Augusta, Georgia.

13. In the continuing search for a suitable site for the new production plant of the Atomic Energy Commission, a team consisting of representatives of the Commission, of du Pont, and of the Corps of Engineers inspected three possible sites in Wisconsin, Michigan, and Minnesota on October 4, 5, and 6, 1950.

14. The bids on the contract for the construction of the powerhouse and appurtenant works at the Clark Hill Project of the Corps of Engineers on the Savannah River (see finding 6) were opened on October 5, 1950. The contract was awarded to the plaintiff as the lowest bidder.

15. (a) During the period while the plaintiff was preparing and submitting its bid on, and receiving the award of, the powerhouse contract, the only other construction activity of any substantial size in the area either known to or reasonably anticipated by the plaintiff was that relating to the construction of the dam at the Clark Hill Project. The contract covering the construction of the dam was about four times as large, in a monetary and labor-requirement sense, as the new contract for the construction of the powerhouse. When the powerhouse contract was awarded to the plaintiff, the dam had been under construction for 3 years and was about 80 percent complete. The labor requirements for the dam construction had reached a peak, and the work force required for that job could reasonably be expected to decline as the plaintiff needed to build up its work force on the powerhouse job. Because of this factor and other available labor supply data, the plaintiff, in bidding on the powerhouse contract, believed that an adequate supply of labor would be available in the area for the construction of the powerhouse.

(b) In estimating its labor costs for the purpose of bidding on the powerhouse contract, the plaintiff used the wage rates previously determined by the Secretary of Labor to be prevailing at the time in the vicinity of the Clark Hill Project (see finding 6 (b)). No allowance was made by the plaintiff for possible increases in wage rates during the 4-year life of the contract, although, wages in the building trades had been rising steadily since 1939 in most areas.

16. (a) On October 11,1950, the Atomic Energy Commission transmitted to du Pont a proposed letter contract that was designed to constitute an interim agreement, pending the negotiation and execution of a definitive contract, relative to du Pont’s work in connection with the design, construction, and operation of the Commission’s new production facilities.

(b) No site for the new production plant of the Atomic Energy Commission had been selected by the Commission as of October 11,1950, and various possible sites on which generally favorable reports had been received were under consideration by the Commission. Among the possible sites under consideration at the time on the basis of favorable reports was one located in South Carolina adjacent to the Savannah River, approximately 20 miles downstream from Augusta, Georgia. That location was within the geographical area of the South Atlantic Division of the Corps of Engineers, and a generally favorable report on such location had been included among the reports prepared by the South Atlantic Division and transmitted by the Chief of Engineers to the Atomic Energy Commission. Also, the South Carolina location referred to in this paragraph had been inspected on August 7,1950, by a team representing the Atomic Energy Commission, du Pont, and the Corps of Engineers (see finding 12), and had been the subject of a generally favorable report by the inspecting team.

17. (a) On October 11, 1950, the plaintiff and the defendant (represented by the District Engineer, Savannah District, South Atlantic Division, Corps of Engineers, as contracting officer) entered into a formal contract for the construction by the plaintiff of the powerhouse and appurtenant works at the Clark Hill Project of the Corps of Engineers on the Savannah River. The contract was numbered DA-09-133-eng-525 and was in the amount oí $7,079,790.50. The date specified for the completion of the work was November 30, 1954.

(b) The contract mentioned in paragraph (a) of this finding contained a schedule of minimum wage rates to be paid by the plaintiff to various classes of laborers and mechanics employed in connection with the performance of the contract. This schedule was based upon the wage determination previously made by the Secretary of Labor under the Davis-Bacon Act to reflect the wage rates prevailing at the time in the vicinity of the Clark Hill Project (see finding 6(b)).

18. At the time when the plaintiff entered into the contract mentioned in finding 17, the plaintiff neither knew nor could have ascertained by the exercise of reasonable diligence that the Atomic Energy Commission was considering a location in South Carolina, adjacent to the Savannah Hi ver and approximately 40 miles downstream from the Clark Hill Project, as one of the possible sites for the Commission’s new production plant.

19. The proposed letter contract between the Atomic Energy Commission and du Pont (see finding 16(a)) was accepted by du Pont on October 17,1950.

20. Possible sites in Michigan and Montana for the new production plant of the Atomic Energy Commission were inspected on October 30-31 and November 2, 1950, by a team representing the Commission and du Pont.

21. In a letter dated November 10, 1950, du Pont recommended to the Atomic Energy Commission that the Commission’s new production plant be located in South Carolina, adjacent to the Savannah River and about 20 miles downstream from Augusta, Georgia. This letter stated in part as follows:

We wish to advise that the du Pont Company recommends to the Atomic Energy Commission that the main production plant be located in South Carolina, adjacent to the Savannah River, about 20 air miles downstream from Augusta, Georgia. This recommendation is based on construction and operating factors only and will be supported by a report which will be issued about the first of December.
* * # * *
No outstandingly attractive site was found. Before the final choice, most of the one hundred-odd sites which were studied were eliminated for one reason or another, leaving four which showed the most promise. Two are in the “First Defense Zone,” one on the Savannah River and one in northern Texas on the Red River; one, with moderately cold water temperature, is in the “Second Defense Zone” in southern Illinois on the Wabash River, and one, with low water temperature, is just outside the “Second Defense Zone” in Wisconsin on Lake Superior.
A study of cost differentials, assuming a reactor of fixed design and computing the average effective productivity at each site, disclosed that no significant differences in construction plus operating costs could be expected. It has been concluded that the advantages of the Southern site promise to outweigh the cooling water deficiencies even though dependence upon refrigeration might be required.

22. On November 13, 1950, the Atomic Energy Commission wrote a letter to the Chairman of the Military Liaison Committee, stating in part as follows:

The du Pont Company, the contractor for the design, construction and operation of these facilities, has now concluded an intensive study which started last June, during which over one hundred sites were considered. This study has resulted in reducing the sites under _ consideration to four, and the du Pont Company considers the Savannah River site in South Carolina the most satisfactory of those considered, and has recommended that the main production plant be located at this site. The four sites involved are the Savannah River site in South Carolina, about twenty air miles downstream from Augusta, Georgia; a site in northern Texas on the Red River; a site in southern Illinois on the Wabash River, and a site in Wisconsin on Lake Superior. The general location of each of these sites is noted upon the attached map.
It is now planned that the du Pont Company study and recommendation will be submitted for formal Commission consideration at an early date. We believe it important to ascertain whether the Department of Defense has any objections to any of these four sites for the production facilities. We would appreciate receiving the views of the Department as soon as possible. The Commission is most anxious, for a number of reasons, that there be no premature disclosure of the du Pont recommendation or of the other sites under consideration.

23. The Site Review Committee, which had been established to make a recommendation to the Atomic Energy Commission regarding the location of the Commission’s new production plant, made a report to the Commission under the date of November 17, 1950. The report stated in part as follows:

■ The committee has visited the most promising sites and has examined all information available on these sites as well as information on several other sites, including a medium cold water site and a very cold, water site. In our opinion the so-called cold water sites do not offer particular advantages, but many disadvantages, and do not warrant any consideration over and above other sites where refrigeration will be resorted to.
Great emphasis must be placed on the supply and quantity of water for heat exchange purposes for an installation of this nature. As a result of this, Site No. 125 on the Bed River in Texas, although in many other respects satisfactory, has been rejected by E. I. du Pont de Nemours Company. The water supply at this site is, in our opinion, for practical reasons unsuitable for use on any heat exchanger to be used in connection with the proposed project. For this reason, we concur in the rejection as recommended by E. I. du Pont de Nemours Company.
The committee, after considerationn of the factors involved and within the basic site requirements furnished us, unanimously concur in the selection of Site No. 5 located in South Carolina on the Savannah River, about twenty air miles southeast of Augusta, Georgia.

24. In response to the communication referred to in finding 22, the Chairman of the Military Liaison Committee wrote a letter on November 21, 1950, to the Atomic Energy Commission, stating in part as follows:

This matter was referred to the Joint Chiefs of Staff who have indicated they have no objection to any of the sites mentioned in the above letter, but consider that from the viewpoint of vulnerability the site on the Red River in Northern Texas is the most desirable.

25. On November 24, 1950, the Atomic Energy Commission decided to locate its new production plant in South Carolina, at a site adjacent to the Savannah River and approximately 20 miles downstream from Augusta, Georgia, as recommended by du Pont and the Site Review Committee.

26. Under the date of November 28,1950, the Atomic Energy Commission wrote a letter to the Chief of Engineers, stating in part as follows:

We wrote you on June 19, 1950 advising you that a new site would probably be required for construction of additional production facilities and that in such event we would request the Office of the Chief of Engineers to acquire the site we had selected. We also requested you to furnish a list of possible sites meeting the preliminary criteria set forth m our letter. The assistance of the Corps of Engineers in the site selection has been most helpful and we appreciate the cooperation that has been freely extended.
The Commission has now determined to acquire a site containing approximately 240,000 acres in South Carolina on the Savannah River about twenty air-miles downstream from Augusta, Georgia. The_ Commission requests the services of the Corps of Engineers in the acquisition of this land.
The lands to be acquired are generally shown on the attached map. The detailed boundary of the lands to be acquired and minor revisions of the boundary will be furnished to your local representative by the Manager of Operations or his site representative.
It is desired to acquire all of this land in fee. It is essential that the Commission obtain the right to enter upon certain areas of this land immediately in order that construction operations may commence. The areas and schedules for evacuation of residents also will be furnished to your local representative by the Manager of Operations or his site representative.

27. The Office of the Chief of Engineers responded to the communication mentioned in finding 26 by means of a letter dated December 4, 1950, stating in part as follows:

The Corps of Engineers is pleased to undertake the acquisition and will make every endeavor to acquire consistent with the requirements and policies of the Atomic Energy Commission. The acquisition will be under the immediate supervision and control of Colonel Bernard L. Robinson, Division Engineer, having his offices at Atlanta, Georgia. It is proposed to establish a real estate project office in the vicinity of the site. This office will maintain close liaison with the AEC-du Pont management. Preliminary acquisition work has already been commenced.

28. (a) The construction of the Atomic Energy Commission’s new production plant in South Carolina, at a site adjacent to the Savannah River and about 40 miles downstream from the Clark Hill Project of the Corps of Engineers, involved expenditures totaling more than a billion dollars. (This installation will usually be referred to hereafter in the findings as “the Savannah River Plant of the AEC.”)

(b) E. I. du Pont de Nemours and Company was in charge of the construction of the Savannah River Plant of the AEC under a cost-plus-a-fixed-fee contract with the Government.

29. On February 9, 1951, shortly before construction started on the Savannah River Plant of the AEC, the Secretary of Labor made a wage determination under the Davis-Bacon Act respecting the minimum wage rates that were to be paid to various classes of laborers and mechanics employed in connection with the construction of that plant. The minimum wage rates thus established by the Secretary of Labor for the Savannah River Plant of the AEC were higher than the minimum wage rates that had previously been prescribed by the Secretary of Labor for the powerhouse job at the Clark Hill Project of the Corps of Engineers. During the construction of the Savannah River Plant of the AEC, the wage rates on that job were increased annually by du Pont, with the approval of the Government, which bore the burden of the increased labor costs.

30. The work force on the Savannah River Plant of the AEC numbered approximately 19,000 workmen at the end of 1 year after construction began, and it numbered approximately 30,000 workmen at the end of 1 y2 years. This created a severe drain on the supply of construction workers in the area, and resulted in an acute shortage of such workers.

31. The disparity between the wages offered to workmen at the Savannah River Plant of the AEC and the lower wages which the plaintiff and its principal subcontractors, the Farwell Company, Inc., a Texas corporation, and the Patterson-Emerson-Comstock Company of Alabama, Inc., an Alabama corporation, had been paying to workmen employed on the powerhouse job at the Clark Hill Project of the Corps of Engineers made it extremely difficult for the plaintiff and its subcontractors to maintain an adequate work force on the powerhouse job. Although the plaintiff and its subcontractors were operating under union agreements and were offering union rates of pay fixed for the area, they were not able to obtain a sufficient supply of labor through the unions because of the demands upon the labor supply made by the Savannah River Plant of the AEC. As a result, the plaintiff and its subcontractors experienced an acute shortage of labor on the powerhouse job.

32. In an effort to maintain an adequate work force on the powerhouse job, the plaintiff and its principal subcontractors, the Earwell Company, Inc., and the Patterson-Emerson-Comstock Company of Alabama, Inc., found it necessary to raise the wages of their workmen above the rates that had prevailed in the vicinity of the Clark Hill Project at the time when the plaintiff entered into the powerhouse contract. From time to time as the work progressed, it was necessary to grant successive raises to most of the trades, with the result that the ultimate wage rates paid on the powerhouse job were substantially above the level of the wage rates that had prevailed in the vicinity of the Clark Hill Project at the time when the plaintiff entered into the powerhouse contract, as reflected in the wage determination of the Secretary of Labor for the powerhouse job under the Davis-Bacon Act.

33. The total wages which the plaintiff and its principal subcontractors, the Farwell Company, Inc., and the Patterson-Emerson-Comstock Company of Alabama, Inc., paid in the performance of the powerhouse contract exceeded by $293,469.16 the amount which the plaintiff and the subcontractors would have been required to pay as wages for the same volume of work if they had been able to maintain, during the performance of the powerhouse contract, the level of wage rates that they used in estimating their labor costs for the powerhouse job. Their estimates of labor costs were based on the wage rates that prevailed in the vicinity of the Clark Hill Project at the time when the plaintiff entered into the powerhouse contract, as reflected in the wage determination of the Secretary of Labor for the powerhouse job under the Davis-Bacon. Act. The Patterson-Emerson-Comstock Company of Alabama, Inc., in estimating its labor costs, began with the prevailing wage rates and then provided for an anticipated 5-percent wage increase each year. However, the plaintiff and the Farwell Company, Inc., in estimating their labor costs, did not take into account the possibility of any wage increase during the 4-year life of the powerhouse contract, although wages in the building trades had been rising steadily since 1939 in most areas, and this general trend upward continued during the life of the powerhouse contract.

34. The plaintiff seeks in the present action to recover $293,469.16 on behalf of itself and its principal subcontractors, the Farwell Company, Inc., and the Patterson-Emerson-Comstock Company of Alabama, Inc.

35. An important reason, but not the sole reason, why the plaintiff and its principal subcontractors were compelled during the performance of the powerhouse contract to raise the wages of their workmen substantially above the wage-rate level that had prevailed in the vicinity of the Clark Hill Project at the time when the plaintiff entered into the powerhouse contract was in order to meet the competition for workmen from the Savannah River Plant of the AEC. A second factor of importance was the continuing upward trend of wages for workers throughout the construction industry. The evidence in the record is not sufficient to permit the $293,469.16 mentioned in finding 33 to be allocated with precise accuracy as between the competition from the Savannah River Plant of the AEC in particular and the general upward trend of wages. However, it appears that substantial fairness would be achieved if $142,153.28 of the $293,469.16 were allocated to the competition for manpower from the Savannah River Plant of the AEC and $151,315.88 were allocated to the general upward trend of wages in the construction industry. ■

36. On October 11, 1950, when the plaintiff and a contracting officer of the. Corps of Engineers entered into the contract for tlie construction of the powerhouse and appurtenant works at the Clark Hill Project, neither the plaintiff nor the Corps of Engineers knew, or could have known through the exercise of reasonable diligence, that the new production plant of the Atomic Energy Commission would be located and constructed within the same geographical area that included the Clark Hill Project of the Corps of Engineers. As indicated in finding 25, the decision of the Atomic Energy Commission to locate its new production plant adjacent to the Savannah Biver and downstream from the Clark Hill Project was not made until November 24, 1950.

37. The claim that is involved in the present litigation was first presented by the plaintiff to the contracting officer; and the plaintiff subsequently appealed from that officer’s unfavorable decision to the Claims and Appeals Board of the Corps of Engineers, representing the Chief of Engineers. A hearing on the appeal was held on February 15,1956. A decision denying the plaintiff’s appeal was rendered by the Claims and Appeals Board on August 24,1956. The plaintiff then filed the present action on March 28,1957.

CONCLUSION OE LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover, and its petition is, therefore, dismissed. 
      
       Tile omitted material related to tile anticipated water requirements of the new plant. Such information was cut out of the copy of the letter that was offered in evidence.
     
      
      
        emoept along the Gulf Coast.
     
      
       The contract price was later Increased by successive change orders to $7,723,837.77.
     
      
       The fee was $1.
     
      
       The , petition, as'originally filed, sought ¿'judgment in the amount of $193,637.95. However, the-petition was amended at a pretrial conference so as to ask for a judgment in the amount of $3T6,17S.92, and this amount was subsequently reduced by $22,709.76 to $293,469.16 during the course oCthe trial.