Source: https://supreme.justia.com/cases/federal/us/321/730/
Timestamp: 2019-04-24 00:26:51+00:00

Document:
1. The Government construction contract here involved imposed no duty on the Government to take affirmative steps to prevent a contractor from unreasonably delaying or interfering with the attempt of another contractor to complete construction in advance of the time specified, and the Government was not liable for damages for such delay. P. 321 U. S. 733.
The fact that, after the execution of the contract, the contractor gave notice to all other parties of his intention to finish ahead of schedule does not alter the obligation of the Government.
2. An award of damages by the Court of Claims against the Government on items which were the subject of "disputes concerning questions arising under this contract" -- though the actions of the Government agents upon which the claims were based be assumed to have been unauthorized, unreasonable and arbitrary -- held erroneous in view of the failure of the contractor to appeal to the departmental head as required by Article 15 of the contract, it not appearing that the appeal procedure provided was in fact inadequate. P. 321 U. S. 735.
3. The Court of Claims properly allowed a claim of the contractor, to the use of a subcontractor, for extra labor costs incurred by the subcontractor under conditions erroneously imposed by the Government superintendent. P. 321 U. S. 737.
99 Ct.Cls. 71 reversed in part.
Certiorari, 320 U.S. 720, to review a judgment for the plaintiff in a suit against the Government upon a contract.
States to perform the plumbing, heating, and electrical work in the buildings to be constructed by respondent. Redmon's work was to be commenced promptly after receipt of notice to proceed, and was to be completed at a date not later than that provided in respondent's contract.
Respondent proceeded promptly with the construction work. He planned to complete the work within 314 days, instead of the 420 days allowed him by the contract. However, no representative of Redmon reported at the worksite until nearly three months after he received notice to proceed. The contracting officer had previously made many urgent demands that Redmon proceed with his work, and had advised him that the progress of respondent's construction work was being delayed by his failure to start work; Redmon had also been threatened with termination of his contract. He finally started work, but made slow progress. At no time did Redmon have adequate equipment or a sufficient number of men on the job properly to carry on the work called for by his contract, nor was he financially able at this time to complete his work. The Court of Claims found that reasonable inquiry by the Government would have disclosed these facts, but that no such inquiry was made because of false statements and reports made to the contracting officer by the Government agents in charge of the work at the site.
Redmon's right to proceed, that the cost of the delay to respondent was $51,249.52, and that the United States was liable therefor.
We are of the opinion, however, that nothing in the Government construction contract used in this case imposed an obligation or duty on the Government to aid respondent in completing his contract prior to the stipulated completion date, and that it was error for the Court of Claims to award damages to respondent based upon a breach of this nonexistent obligation.
If the parties did intend to impose such an obligation or duty on the Government, they failed to embody that intention expressly in the contract. Article 13 of the contract merely obligates the contractor to cooperate with other Government contractors and to refrain from committing or permitting any act which would delay such other contractors. Article 9 imposes liquidated damages upon the contractor for delay in completing his work unless due to such unforeseeable causes as "acts of the Government." Nowhere is there spelled out any duty on the Government to take affirmative steps to prevent a contractor from unreasonably delaying or interfering with the attempt of another contractor to finish ahead of his schedule.
could not give rise to a new obligation on the Government to compel accelerated performance from Redmon.
Respondent had the undoubted right to finish his construction work in less time than the stipulated 420 days, but he could not be forced to do so under the terms of the contract. To hold that he can exact damages from the Government for failing to cooperate fully in changing the contract by shortening the time provisions would be to imply a grossly unequal obligation. We cannot sanction such liability without more explicit language in the contract. Compare Crook Co. v. United States, 270 U. S. 4; United States v. Rice, 317 U. S. 61.
The Court of Claims, in addition to awarding damages for the Government's delay in terminating Redmon's contract, awarded respondent $79,661.56 damages for extra labor and materials, excess wages and miscellaneous costs found to be the result of unauthorized acts, rulings, and instructions of the Government superintendent and his assistant. The court also found that these acts, rulings, and instructions were unreasonable, and in many instances arbitrary, capricious, and so grossly erroneous as to imply bad faith.
"concerning questions arising under this contract shall be decided by the contracting officer or his duly authorized representative, subject to written appeal by the contractor within 30 days to the head of the department concerned or his duly authorized representative, whose decision shall be final and conclusive upon the parties thereto as to such questions."
of the items on which the recovery of $79,661.56 was based were the subject of "disputes concerning questions arising under this contract." Respondent appealed some of the decisions or instructions of the Government superintendent to the contracting officer, which resulted in at least one ruling favorable to respondent. [Footnote 3] As to the adverse rulings, however, respondent made no further appeal to the head of the appropriate department or his authorized representative. Moreover, the remaining items which were the subject of sharp dispute between respondent and the superintendent were not even appealed by respondent to the contracting officer. And where the contracting officer could be said to have acquiesced in the superintendent's rulings, no attempt was made to appeal further to the departmental head.
Respondent has thus chosen not to follow "the only avenue for relief," United States v. Callahan Walker Const. Co., 317 U. S. 56, 317 U. S. 61, available for the settlement of disputes concerning questions arising under this contract. In Article 15, the parties clearly set forth an administrative procedure for respondent to follow. Such a procedure provided a complete and reasonable means of correcting the abuses alleged to exist in this case. Arbitrary rulings and actions of subordinate officers are often adjusted most easily and satisfactorily by their superiors. Furthermore, Article 15 provided the Government with an opportunity to mitigate or avoid damages by correcting errors or excesses of its subordinate officers. Having accepted and agreed to these provisions, respondent was not free to disregard them without due cause, accumulate large damages, and then sue for recovery in the Court of Claims. Nor can the Government be so easily deprived of the benefits of the administrative machinery it has created to adjudicate disputes and to avoid large damage claims.
different case. But here we must insist not that respondent turn square corners, but that he exhaust the ample remedies agreed upon.
Included in the $79,661.56 award of miscellaneous damages was one item of $9,730.27 on a claim to the use of the Roanoke Marble & Granite Company, Inc., a subcontractor of respondent who furnished the materials and performed the labor necessary to install the title, terrazzo, marble, and soapstone work called for in respondent's contract with the Government. This award was based upon extra labor costs incurred under conditions erroneously exacted by the Government superintendent. Respondent appealed this matter to the contracting officer, who finally rendered a decision in favor of respondent and the subcontractor. The Government has not reimbursed either respondent or the subcontractor for these excess labor costs; nor has respondent paid the subcontractor for such costs. The court below made no finding, and the subcontract as introduced in the record does not expressly indicate, that respondent was liable to the subcontractor for the acts of the Government upon which the claim was based.
costs were incurred or such services were performed personally or through a subcontractor. Respondent's contract with the Government is thus sufficient to sustain an action for extra costs wrongfully demanded under that contract. Hunt v. United States, 257 U. S. 125.
The form of Government contract here involved was "U.S. Government Form P.W.A. 51," the critical provisions of which are substantially the same as those in the standard form of Government construction contract.
See 321 U. S. infra.
Those dealing with the Government must no doubt turn square corners. While agents for private principals may waive or modify provisions in contracts which circumstances have rendered harsh, provisions in government contracts cannot be so alleviated. But, in order to enforce the terms of a government contract, courts must first construe them. And there is neither law nor policy that requires that courts, in construing the terms of a government contract, should turn squarer corners than if the same terms were contained in a contract between private parties.
"A government contract should be interpreted as are contracts between individuals -- with a view to ascertaining the intention of the parties and to give it effect accordingly, if that can be done consistently with the terms of the instrument."
States, 223 U. S. 695, 223 U. S. 701-702; United States v. Smith, 256 U. S. 11, 256 U. S. 16.
Accordingly, provisions in a government contract defining methods for settling controversies by appeal to the contracting branch of the Government presuppose effective resort to such methods of settling questions that arise in carrying out a contract -- they presuppose that administrative remedies as a condition to judicial relief are not rendered futile and nugatory. This does not, of course, question the good faith of the head of the Veterans' Administration. But, where the man on the spot, in his daily relations with the contractor, shows the kind of arbitrary attitude found by the Court of Claims, he cannot be effectively supervised by the head of a department. In any event, the burden of incurring the subordinate's future hostility by appeals to the head of a department should not be cast on the contractor. The findings of the Court of Claims in this case can only mean that it would have been wholly futile, and worse than futile, to invoke the explicit provisions of the contract for resort to administrative relief. Therefore, as a reciprocal duty of the Government, the contract brings into operation the implied warranty that those who have in effective keeping the administrative machinery for settling controversies will not prevent its utilization for all practical purposes.
government officers required the contractor "to do things admittedly not required of him under the contract on threat of reprisals for refusal." These were not empty threats. The evidence shows that an unauthorized and unreasonable order to erect outside scaffolding for laying bricks was enforced by rejecting brickwork which was not precisely uniform to a maximum of one-sixteenth of an inch by measurement, and exacting of plaintiff mortar joints that did not vary more than one-eighth of an inch by measurement. That these rejections and exactions were willful and oppressive became clear when all objections ceased as soon as the contractor decided to comply and erect the outside scaffolds. This is but one illustration of what was apparently a systematic practice of unjustified demands and vexations.
"resented plaintiff's making protest to the contracting officer, thereby rendering it impossible for plaintiff effectively to protest in writing in each instance to the contracting officer through the defendant's officer at the site of the work. . . . The contracting officer in those cases involving unreasonable and arbitrary acts and instructions of the officers at the site of the work stated to plaintiff that he understood and appreciated the troubles and difficulties under which plaintiff was having to perform the work, but there was practically nothing he could do about it, and that plaintiff should keep him informed, but that plaintiff 'would just have to do the best he could to get along' with the officers and inspectors at the site of the work, to the end that the work be completed as soon as possible."
If there is substantial evidence supporting these findings, this Court's power of review is confined to questions of law. 53 Stat. 752, 28 U.S.C. § 288.
law. The contractor was awarded $107.50 for the extra cost of temperature steel used by order of the superintendent of construction in slabs reinforced with two-way rods. The record makes clear that the contract specifications supported this order of the superintendent, in that no distinction was made as to whether the slabs were reinforced by one-way or two-way rods, and the fact that the contracting officer subsequently relieved the contractor of this requirement as to two-way rods does not justify the award. In view of what I deem to be legal principles governing the construction of contracts, I should therefore affirm the judgment of the Court of Claims for damages resulting from the acts of the superintending officers after deducting $107.50.

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