Case: JOSEPH H. ROBERTS v. THE UNITED STATES; GREAT AMERICAN INSURANCE COMPANY, THIRD-PARTY DEFENDANT
Abbreviation: Roberts v. United States
Decision Date: 1966-03-18
Docket Number: No. 17-61
Citation: 174 Ct. Cl. 940
Volume: 174
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: JOSEPH H. ROBERTS v. THE UNITED STATES; GREAT AMERICAN INSURANCE COMPANY, THIRD-PARTY DEFENDANT
Judges: Before CoweN, Chief Judge, Laramore, Dureee, Davis, and ColijNS, Judges.
Pages: 940–984

Head Matter:
(357 F. 2d 938)
JOSEPH H. ROBERTS v. THE UNITED STATES; GREAT AMERICAN INSURANCE COMPANY, THIRD-PARTY DEFENDANT
[No. 17-61.
Decided March 18, 1966.
Defendant’s motion for reconsideration denied July 15, 1966]
Edward Gallagher, attorney of record, for plaintiff.
Robert R. Donlan, with whom was Assistcmt Attorney General John W. Douglas, for defendant.
Before CoweN, Chief Judge, Laramore, Dureee, Davis, and ColijNS, Judges.

Opinion:
CoweN, Chief Judge,
delivered the opinion of the court;
The plaintiff seeks recovery on a quantum meruit basis (measured by his total costs, less payments) for the reasonable value of a concrete roadway constructed by him for the Smithsonian Institution at the National Air Museum Storage Area, Silver Hill, Maryland. The plaintiff contends that the defendant breached his contract by furnishing misleading drawings and by overzealous supervision amounting to interference on the part of the defendant's construction representative on the job. The defendant counterclaims for delay in completion, costs expended in determining whether the road met specifications, savings realized by the plaintiff because of changes, and costs for replacing the road because of its failure to comply with specifications.
The contract was for the concrete paving of about 735 linear feet of gravel road, plus the construction of concrete culverts and ramps at the named facility. It was to have been started April 15, 1959 and completed August 13, 1959, but was not actually started until May 21 and finished January 12,1960, some 158 days late.
The plaintiff's costs exceeded his $31,720 contract price by at least $13,531, and without doubt much more which he claimed but failed to prove. For the most part, plaintiff's losses were occasioned by errors in bidding, which produced an unrealistically low bid, and by neglect and mistakes in his performance of the contract.
The plaintiff's representative made a cursory inspection of the site prior to preparing a bid, examined the single contract drawing, and failed to notice (as a careful inspection would have revealed) that a quantity of fill would be required in order to grade the existing gravel road to required elevations. He blames the defendant's drawing for this oversight. In actuality the drawing was adequate for its purposes, although it did riot give detailed elevations of the existing gravel roadway so that bidders could compute without ground measurements the quantities of fill required. The omitted elevation data were available from the contracting officer if asked for, but the plaintiff made no request. Having made no complaint during contract performance of this alleged omission in the drawing, the plaintiff's complaint arrives too late at this juncture, for he had the opportunity to avoid error in the bidding period but failed to take reasonable precautions.
" The plaintiff also underestimated the quantity and composition of concrete required by $11,341.26, including a labor cost of $3,318.56. He based his bid on a four-bag mix (four bags per cubic yard of concrete), while a 5.2-bag mix was required in order to obtain the strength requirement specified-in the contract. The contract did not specifically call for a 5.2-bag mix in those terms, but resort to a standard engineering manual would have readily disclosed to an experienced contractor that such a mix was necessary to obtain the desired strength.
The disparity between plaintiff's bid of $31,720 and the next lowest bid of $45,888 (other bids ranged up to'$87,410) caused the contracting officer to discuss with plaintiff the possible inaccuracy of his bid, but on plaintiff's assurance that no error had occurred the contract was awarded to him on March 30,1959. The plaintiff says that he had anticipated large economies through using an efficient concrete paver, but was prevented from so doing by the defendant's actions. Not only is the plaintiff's evidence inconclusive that he actually intended to acquire such a device for use, but also he never complained during contract performance of frustrated intentions to use a concrete paver and there is reason to believe that the nature of the job would not have permitted such a method of paving.
Throughout performance, plaintiff consistently made technical errors in interpreting the directions of the contract drawings. Frequently, in setting stakes and placing forms for the pouring of concreté sections, he deviated from the specified elevations and was required to make corrections by defendant's construction representative. On several occasions the grading elevations were changed at plaintiff's request to spare him' the cost of fill to bring certain sections of the road up to grade. The changing of elevations in one part of the road produced a chain reaction requiring grade alterations in contiguous sections so that the greater part of the road was built at elevations departing from the contract drawing.
Mr. Alden L. Howard, defendant's construction representative, served in the dual role of resident engineer and chief inspector for defendant (see finding 31). On his initiative and because he felt it necessary to insure plaintiff's compliance with the plans and specifications, defendant's representative gave specific and detailed orders to plaintiff's personnel and exercised complete control and domination over all parts of the contract performance. Such action led to considerable friction with plaintiff, because it required plaintiff to re-do much of the work and, consequently, increased the cost and delayed the completion of the project. Mr. Howard was greatly concerned that the completed road have adequate drainage. On many occasions after he had furnished plaintiff with specified elevations and plaintiff's workmen had spent most of a day in erecting forms for pouring the concrete, Mr. Howard ordered the workmen to lower, raise, or otherwise change concrete forms as designated by him. Thus, it became necessary for plaintiff to relocate the whole set of forms from the subgrade to the top finish. In some instances, Mr. Howard used a level or other instrument to ascertain whether the forms were at the proper contract elevation but, in other cases, he relied on his judgment and vision in directing the positioning of the forms.
In the final claim he submitted to the contracting officer, plaintiff requested compensation in the sum of $6,622.84 for extra labor and other costs alleged to have been incurred as a result of improper directives issued by defendant's representative. In his second amended petition, plaintiff alleges that the costs of doing the work and the time required for completion of the project were increased because of defendant's unwarranted interference with plaintiff's performance.
We have determined that defendant's domination and control of the work was a breach of the contract. However, we have found' that most of the losses claimed by plaintiff resulted from his errors in bidding and his inefficient performance. Plaintiff is not entitled to recover for defendant's unwarranted interference with plaintiff's performance, because of plaintiff's failure to produce satisfactory proof that will enable us to determine, with reasonable accuracy, the extent of the claimed losses and delays that were due to defendant's breach of the contract. Wunderlich Contracting Company v. United States, 173 Ct. Cl. 180, 351 P. 2d 956 (1965) and cases cited therein.
Other errors occurred. The plaintiff misplaced a culvert, misinterpreted the locations of culverts and ditches although the contract drawing was not, as claimed, obscure as to this, excavated an access road and made it impassable in violation of the contract and was required to replace the excavation at considerable cost to him, placed excessive fill in certain locations at unneeded cost, and frequently neglected proper supervision of bis workmen, all of which contributed to the cost of the job and delay in its performance.
A month prior to completion of the contract the plaintiff filed a claim for changes in the amount of $25,573.77 with the Chief of the Supply Division of the Smithsonian Institution, who may be regarded as the contracting officer in the case, although the contract was actually signed by the Secretary, the head of the Smithsonian Institution. The claim was allowed in the amount of $1,136.99, and the plaintiff invoked his rights under the standard disputes clause of the contract by appealing and demanding a hearing before a "Board of Competent People". The Secretary of the agency acknowledged the appeal by advising plaintiff that he had appointed a special board of review to "hear your case and make appropriate recommendations to me for equitable settlement", naming three persons to compose the board, including two of his subordinate officials.
The board of review thus appointed conducted a hearing attended by both sides to the controversy and entertained testimony and documentary evidence. The absence of a transcript of testimony suggests that none was made. On April 19, 1960, the board rendered its report. The agency refused to furnish the plaintiff a copy of the report until proceedings were initiated in this court because it was considered to be "an administrative communication addressed to the Secretary pursuant to the board's appointment to hear the case and make recommendations to the Secretary for equitable settlement", and thus not appropriate to be made available to the claimant.
The board's report considered the plaintiff's claim in considerable detail and recommended that, subject to informal discussions with the General Accounting Office to verify legal support for the conclusions, the plaintiff be reimbursed his net direct costs less a small charge for his underestimation of concrete requirements, all of which was subject to further auditing to establish such net direct costs. From the contents of the report it is clear that the board considered evidence which has not been presented to the court, including some which it procured on its own initiative in an informal manner. It cannot be ascertained just what evidence the board considered that was not available to tbe court, or vice versa. It is also clear, however, that a vital body of evidence adduced to the court but not to the board related to major defects in the completed road, for despite the board's conclusion that "[w]e understand that there is no complaint on SI [Smithsonian Institution] side as to the achieved result", pretrial investigations conducted by the defendant in preparation for trial in this court disclosed serious defects to be described in discussing the defendant's counterclaim.
On July 8, 1960, the Secretary of the Smithsonian Institution advised plaintiff that his claim was approved in the amount of $1,136.99 which, together with $1,586 admittedly due as a contract balance, was to be submitted to the agency in voucher form for payment. Instead, the plaintiff filed his petition in this court.
The administrative proceeding leaves much to be desired. However laudable was the effort to entertain the plaintiff's claim and to arrive at a just result, the procedure followed was so deficient technically that the Wunderlich Act (68 Stat. 81, 41 TJ.S.C. § 321, 322) is not applicable. Thus, if the Secretary of the Smithsonian Institution should be considered as the contracting officer because he signed the contract for the agency, it would be improper for him to wear a second hat as head of the department under the disputes clause, for no man can review his own decision with the requisite degree of quasi-judicial detachment and impartiality. Further, before a hearing record compiled by the designee of 'the head of a contract agency can be properly reviewed by a court for testing against the statutory standards, its metes and bounds must be identifiable and available to the reviewing tribunal. Where, as here, no transcript of the agency proceedings was taken and no way is apparent to ascertain the precise corpus of evidence, documentary or otherwise, which led the board to its conclusion, the reviewing court is powerless to measure the soundness of the decision against an unknown quantum of facts. Again, if the head of an agency designates a board as his alter ego to decide factual disputes in contract claims under the disputes clause, the result of the board's deliberations must be made fully available to the claimant in the form of its decision and not refused the claimant as it was. Finally, it is clear that the Secretary did not empower the board to decide the issues raised in plaintiff's appeal. The Secretary was merely asking for the board's advice, leaving himself free to make the final decision. We are thus left with the contracting officer's decision which was affirmed by the head of the department in an'order which does not show what the Secretary considered in making his determination. Under all these circumstances, we hold that the trial commissioner properly admitted de novo evidence in the trial of this action.
In his claim for damages, plaintiff employed a total cost basis, styled as quantum meruit. He has listed costs of $75,984.34, added $11,397.65 for overhead at the rate of 15 percent and $8,738.20 for profit at 10 percent, and deducted $30,134 for payments made under the contract, producing a net claim figure of $65,986.19. The defendant's audit of the itemized costs verified only $45,251.83 of them, and rejected a remaining $30,732.51 as not sufficiently shown in the plaintiff's records. The largest item in the amounts excluded is $22,280 for the use value of company-owned equipment. As to this the plaintiff neglected to comply with pretrial instructions relative to production of supporting data for pretrial verification, and when the material was offered at trial it was admitted only as an offer of proof, too late for consideration. Other parts of the total $30,732.51 in rejected cost claims were not proven at trial either because their appearance on plaintiff's damage schedule does not by itself amount to probative evidence in the absence of anything else, or because suppliers' discounts earned by plaintiff are not allowable as costs of performance, or because an allocation of home office overhead to the contract in suit is of no probative value if no basis for the allocation is shown. Even so, proof that the plaintiff's costs thus diminished exceeded his payments under the contract would not in the usual case give rise to his right to recover the difference.
Having concluded that plaintiff is not entitled to recover except for the balance of $2,722.99 admittedly due on the contract, we shall now consider three counterclaims which have been asserted by defendant against plaintiff and the third-party defendant, Great American Insurance Company, which, was the surety on plaintiff's performance bond to the extent of $15,860.
JTRST COUNTERCLAIM — EXTRA SALARY PAID TO DEFENDANT'S CONSTRUCTION REPRESENTATIVE
The parties stipulated that from the original contract completion date of July 28,1959, to its actual completion on January 12,1960, defendant paid its construction representative, Mr. Howard, the sum of $3,454.66 for 766 hours spent on the job. Plaintiff denies liability for any portion of the salary, but defendant claims the right to recover that amount by virtue of the provisions of the Termination for Default article of the contract which read in part as follows:
If the Government does not terminate the right of the Contractor to proceed, as provided in paragraph (a) hereof, the Contractor shall continue the work, in which event he and his sureties shall be liable to the Government, in the amount set forth in the specifications or accompanying papers, for fixed, agreed, and liquidated damages for each calendar day of delay until the work is completed or accepted, or if liquidated damages are not so fixed, any actual damages occasioned by such delay. (Para. 5 (b) of the General Provisions of Plaintiff's Contract.)
Since no liquidated damages were specified, the above-quoted article gave defendant the option to terminate plaintiff's contract for failure to complete it within the time provided, or to permit him to continue the work and hold bim and his surety liable for any actual damages occasioned by. the contractor's delay. But there is nothing in the language of the contract which authorized defendant's representative to supervise the work to the extent of exercising complete control and domination over the performance of the contract. Despite his conviction as to the necessity therefor, such acts by defendant's representative constituted a breach of defendant's implied obligation not to hinder plaintiff in the discharge of his obligations nor to increase his cost of performance. The rule is well expressed in the concurring opinion of Judge Jones in Bateson-Stolte, Inc. v. United States, 145 Ct. Cl. 387, 394, 172 F. Supp. 454, 458 (1959) :
It has been held for generations that a party to a contract may not interfere with performance by the party to be charged and still enforce the letter of the contract.
See also Anvil Mining Company v. Humble, 153 U.S. 540 (1894) and Metropolitan Paving Co. v. United States, 163 Ct. Cl. 420, 325 F. 2d 241 (1963).
In apparent recognition of the facts regarding its excessive supervision, the defendant made no complaint to plaintiff about the delay in the completion of the contract. It was accepted as complete without any notice or mention that defendant would claim damages for delay.
Since it breached the contract by interfering with the contractor's performance and delaying completion to an extent not shown by the evidence, defendant is precluded from recovering anything on its first counterclaim.
SECOND counterclaim — SAVINGS REALIZED BT PLAINTIFF THROUGH CHANGES IN THE CONTRACT
Changes to the contract were effected with much informality and without complying with those provisions of the Changes article, which state that when changes cause an increase or decrease in the amount due under the contract or the time required for its performance, an equitable adjustment shall be made and the contract modified in writing accordingly. The standard change order form was not employed. Documentary authorization for the changes consisted of a simple purchase order which, in some cases, resulted from an oral agreement between the contractor and the defendant's representative and, in others, resulted from an acceptance of plaintiff's proposals.
It was not until after this suit was instituted that plaintiff learned that defendant claimed the right to recover the savings realized by plaintiff through changes in the contract. Five minor changes were made at defendant's request, one of which saved plaintiff $280. Seven changes were made at plaintiff's request (finding 26). Collectively, all of the changes netted plaintiff a savings of $3,982 and at least 142 hours of labor. In addition, the defendant issued purchase orders for three small additions to the contract and tendered plaintiff $1,136.99 for five of eight changes claimed by plaintiff in a larger amount (finding 29).
There can be no question that the savings realized by the contractor through the changes mentioned above were well known to the defendant by the time the contract was completed and long before the final administrative decision was; rendered. Defendant's evidence as to the amount of the contractor's savings consisted entirely of the expert testimony of defendant's construction representative, who made his. computations from data that were available to him at the time the contract was performed. It was upon his recommendation that the contracting officer issued the purchase orders which authorized changes in the contract. It has many times been held that the purpose of the requirement that the contractor's claim for adjustment under the changes article be asserted in writing within 30 days from the date the notice of the change is received is to give the Government an opportunity to examine the supporting evidence while the claim is still fresh. When the contractor fails to submit a written claim within the time limit or to appeal from an adverse decision of the contracting officer, the contractor's claim for increased costs is generally barred. Irwin & Leighton v. United States, 104 Ct. Cl. 84 (1945). The language of the Changes article provides that when a change causes a; decrease in the amount due on the contract, "an equitable adjustment shall be made." We think that this provision imposes upon the contracting officer the duty to make such an adjustment within a reasonable time, so as to afford the contractor an opportunity to appeal from an unreasonable or arbitrary decision while the facts supporting the claim are readily available and before the contractor's position is prejudiced by final settlement with his subcontractors, suppliers, and other creditors. It is undisputed that the final decision by the head of the department in this case was. rendered on July 8, 1962, without prior advice or suggestion to plaintiff that the savings would be deducted from the amount due under the contract or charged against him. By the Government's acquiescence and silence, plaintiff was led to believe that no claim would be asserted for the savings. Under these circumstances we hold that the failure of the contracting officer to make an equitable adjustment, within a reasonable time after it was apparent that savings. bad been realized and in time for tbe contractor to appeal any dispute on tbe matter to tbe bead of the department, constituted a waiver by the Government of any entitlement to tbe claimed savings. As this court stated in Branch Banking and Trust Company v. United States, 120 Ct. Cl. 72, 88, 98 F. Supp. 757 (1951), cert. denied 342 U.S. 893, when tbe Government is acting in its proprietary capacity, it may be estopped by an act of waiver in the same manner as a private contractor. Such a result is justified by tbe plain language of tbe contract and accords with tbe principles of fair dealing.
Although tbe defendant contends otherwise, we have found no court decision which, after considering a similar factual situation, stands for a contrary proposition.
In Appeal of Randall Construction Co., WDBCA 675, 2 CCF 1117 (1944), tbe Board of Contract Appeals held that tbe contracting officer's delay of more than one year after the work was completed before issuing a modification reducing tbe contract price, was unreasonable, particularly since it appeared that the contractor bad settled with bis subcontractors and tbe delay bad induced tbe belief that no price adjustment was contemplated.
In Topkis Brothers Company v. United States, 155 Ct. Cl. 648, 297 F. 2d 536 (1961), upon which defendant relies, defendant was permitted at tbe trial, without objection by plaintiff, to amend its answer by asserting a claim for savings realized through a deviation in the contract specifications, although the contracting officer had not issued a modification to the contract. Upon the basis of plaintiff's failure to obj ect and without discussing the legal question presented here, the court allowed the counterclaim. Here the plaintiff has from the beginning objected strenuously to the counterclaim on the ground that it was asserted too late.
Salem Products Corp. v. United States, 298 F. 2d 808 (2d Cir. 1962), which defendant also cites, illustrates the proper procedure which should be followed by the Government in establishing a claim for savings realized by the contractor through changes made in the contract. There the contracting officer issued a change order which permitted the contractor to use an alternative method of performance, provided the change could be accomplished at no additional cost to the Government. Thereafter, a review of the completed work revealed that the contractor had realized a savings as a result of the deviation, and the contracting officer issued a change order adjusting the price downward in ample time for the plaintiff to appeal the resulting dispute to the Armed Services Board of Contract Appeals. The absence of such timely action by the Government in this case clearly distinguishes it from the holding in Salem Products.
Defendant is not entitled to recover on its second counterclaim.
THIRD COUNTERCLAIM — USES PAID TO INSPECTION ENGINEERS
In preparation for trial, the defendant paid $2',250 to a firm of inspection engineers to make core borings in each section of the concrete roadway in suit and to test two of the cores taken. The results of the core borings, described in findings 19 and 20, revealed that the roadway failed to comply with specifications as to wire reinforcement and thickness of the concrete. These deficiencies were not capable of detection after the pouring of the concrete, because they were within .the concrete itself and were thus hidden defects that were not readily observable on visual examination. Nor was the Smithsonian Institution's board of review aware of this condition at the time it issued its report alluded to earlier. Paragraph 9(c) of the General Provisions of the contract provides in pertinent part as follows:
Should it be considered necessary or advisable by the Government at any time before final acceptance of the entire work to make an examination of work already completed, by removing or tearing out same, the Contractor shall on request promptly furnish all necessary facilities, labor, and material. If such work is found to be defective or nonconforming in any material respect, due to fault of the Contractor or his subcontractors, he shall defray all the expenses of such examination and of satisfactory reconstruction. [^Emphasis supplied.]
Here the cost of the Government inspection was incurred subsequent to final acceptance of the contract as complete. By the plain terms of the contract, drafted by the Govern- meat and, therefore, to be construed against it, the inspection costs in question cannot be recaptured by the Government because they were not incurred before final acceptance. This part of defendant's third counterclaim must be disallowed.
THIRD COUNTERCLAIM — EXPENSE OP REMOVING AND RECONSTRUCTING THE ROADWAY
In this part of its third counterclaim, defendant seeks to recover $53,773.50 for the cost of removing and reconstructing the entire roadway or $8,962.20 (representing one-sixth of the cost of removing and reconstructing the entire road) for the replacement of 20 sections that are cracking and spalling because of improperly formed expansion joints covered by false expansion joints. The defects present in the roadway fall into three categories:
(.1) Those which were visible at the time the contract was completed and accepted;
(2) those whose existence could only be detected by the passing of time or by means of core borings, and
(3) those caused by defendant's faulty design.
The road was visibly rough and out of alignment in many sections, a readily observable condition and therefore a patent defect for which the Government is not entitled to recover, since it accepted final performance embracing such perceptible flaws. Over a considerable portion of the roadway a longitudinal crack meanders down the center of the road; this damage was caused by defendant's errors in designing the road.
Latently defective were those sections of the roadway in which plaintiff failed to install the required amount of wire mesh, sections in which the thickness of the concrete fell below the tolerance acceptable under the specifications, and sections in which the expansion joints between the road sections were improperly constructed and covered with a "dummy" joint. For these shortcomings, the Government claims payment under Paragraph 9(d) of the General Provisions of the contract, reading as follows:
Inspection of material and finished articles to be incorporated in the work at the site shall be made at the place of production, manufacture, or shipment, when ever the quantity justifies it, unless otherwise stated in •the specifications; and such inspection and written or other formal acceptance, unless otherwise stated in the specifications, shall be final, except as regards latent defects, departures from specific requirements of the contract, damage or loss in transit, fraud, or such gross mistakes as amount to fraud. Nothing contained in this paragraph (d) shall in any way restrict the Government's rights under any warranty or guarantee. [Emphasis supplied.]
Plaintiff argues that the term "latent defects" applies to finished articles and materials delivered under supply contracts rather than to work performed under construction contracts. The fact that the term has arisen infrequently in a construction contract context does not affect the vitality of the above-quoted provision. It is well settled that such a covenant avoids the preclusive effect of final acceptance when latent defects are involved. Bar Ray Products, Inc. v. United States, 162 Ct. Cl. 836 (1963) and same case, 167 Ct. Cl. 139, 340 F. 2d 433 (1964); United States v. Hamden Co-Operative Creamery Co., 297 F. 2d 130 (2d Cir. 1961), afirming 185 F. Supp. 541 (E.D.N.Y. 1960).
McQuagge v. United States, 197 F. Supp. 460 (W.D.La.1961), upon which plaintiff relies, is not in point. In that case, the court specifically stated that it "was not dealing here with latent defects, fraud, or misrepresentations."
It does not follow, however, that defendant prevails on the counterclaim. On the contrary, other circumstances militate against such a conclusion. In actions brought upon contracts in this court, we have stated that plaintiff must shoulder the burden of "establishing the fundamental facts of liability, causation, and resultant injury" relating to the claim for which he seeks recovery. Wunderlich Contracting Co. v. United States, supra. That requirement applies with equal efficacy to counterclaims brought by the Government. Of., J. D. Hedin Construction Co. v. United States, 171 Ct. Cl. 70, 347 F. 2d 235 (1965); Litchfield Manufacturing Corp. v. United States, 167 Ct. Cl. 604, 338 F. 2d 94, 97 (1964). The record shows that the roadway had collective imperfections that fall within the three categories which we have described above. All that the Government has attempted to prove is that it would cost $53,773.50 to replace the entire roadway, or $8,962.20 to replace 20 sections or one-sixth thereof. There is no way to approximate the amount of the claimed replacement costs that are due to plaintiff's failure to observe the contract provisions separately from replace-' ment costs that are required because of patent defects and defendant's faulty design. The rule announced in the cases cited above is particularly applicable in situations where, as here, the damages claimed are due in unproven part to factors for which the party against whom recovery is sought is not responsible. Commerce International Co., Inc. v. United States, 167 Ct. Cl. 529, 338 F. 2d 81 (1964). Since defendant's evidence does not provide any basis for making a reasonably accurate determination of the amount that defendant has been damaged as a result of latent defects in the roadway that are attributable to plaintiff's failure to comply with the contract, defendant is not entitled to recover on this portion of its third counterclaim.
CONCLUSION
Plaintiff is entitled to recover the sum of $2,722.99, the balance admittedly due on the contract. Defendant is not entitled to recover on its counterclaims and they are hereby dismissed.
findings of fact
The court, haying considered the evidence, the report of Trial Commissioner C. Murray Bernhardt, and the briefs and argument of counsel, makes findings of fact as follows:
1. The plaintiff. The plaintiff, Joseph H. Eoberts, is an individual engaged in the business of concrete paving and other construction work. His main office is located at E.F.D. No. 7, Frederick, Maryland. At the time of his contract with defendant, plaintiff's principal experience in the field of concrete paving was the construction of driveways and other small residential jobs. However, plaintiff had done some roadway paving in Takoma Park, Maryland.
2. Third-party defendant. The Great American Insurance Company, New York, New York, is a third-party defendant to the counterclaims asserted by the United States against the plaintiff. The Great American Insurance Company is surety on a performance bond for Joseph H. Roberts, the plaintiff herein. By its bond, the Great American Insurance Company bound itself to pay to the United States a penal sum of $15,860, if plaintiff failed to perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of Contract SI-379.
3. The contract. On March 30, 1959, the plaintiff contracted with the Smithsonian Institution (executed for the latter by its Secretary, the head of that particular agency) to pave with reinforced concrete a gravel road approximately 735 feet long at the National Air Museum Storage Facility at Silver Hill (near Suitland), Maryland, for $31,720. The contract also included clearing, grading to specified elevations, and constructing concrete drainage culverts and ramps serving a series of small warehouse buildings facing the road. The plaintiff was to furnish all labor, material and equipment. The road was designed to take heavy loads, such as solid tire vehicles and trucks carrying airplane engines. The work was to be commenced April 15, 1959, and to be completed August 13, 1959, 120 days later. The plaintiff commenced the work May 21, 1959, and completed the contract January 12, 1960, 153 days in excess of requirements.
PlaiNtief's Bid
4. Mr. Downs. Plaintiff's bid was prepared by Mr. Kenneth R. Downs, who was also plaintiff's job superintendent in charge of all supervision and survey work for the contract. Mr. Downs has a high school diploma. He is not a registered surveyor or engineer. He previously worked for the Maryland State Road Commission and thereby acquired practical knowledge of roadbuilding.
5. Error m cement mix proportions. In preparing plaintiff's bid, Mr. Downs used a formula for a four-bag mix, that is, four bags of cement per cubic yard of finished concrete. However, the specifications did not call for a four-bag mix, but stated that the "mix shall consist of 2.5 cubic feet of fine aggregate and 3.5 feet coarse aggregate per cubic foot of cement." Contrary to Mr. Downs' impression, this proportion is known in the trade as being a 5.2-bag mix, namely, a mix requiring 5.2 bags of cement per cubic yard of finished concrete. The specifications did not spell out the exact quantity of cement to be used in the mix, but did specify the strength requirement, from which a competent engineer could easily compute the amount of cement required in the mix by reference to standard engineering manuals.
6. Error in computing concrete Quantities. In his bid, plaintiff estimated the total amount of concrete required for the job to be 806 cubic yards. The actual amount of concrete computable from the plans and specifications for paving under the contract was 1,291 cubic yards. Plaintiff thus underestimated the amount of concrete required under the contract by some 485 cubic yards. In performing the contract the plaintiff actually used 1,844 cubic yards of concrete.
7. Cost of errors as to concrete. Due to the errors described above in computing both the quantity and the composition of concrete to be used, and accordingly in computing the unit cost thereof, the plaintiff underestimated the cost of the concrete to be used to complete the job by $8,022.70 in comparison with the quantity actually used. Plaintiff's underestimate of the concrete requirements caused him to underestimate his labor cost for laying the concrete by an estimated $3,818.56 (based on a unit labor cost derived from plaintiff's bid estimate worksheet). In sum, plaintiff's underestimate of his concrete requirements resulted in his expending approximately $11,341.26 more than he had allowed in the estimate underlying his bid.
8-. Prébid site inspection.
(a) Paragraph 3 of the Special Conditions of the contract, entitled "Inspection of Site", provided as follows:
Arrangements for inspection of the site can be made by contacting Mr. A. L. Howard, Sr., Construction Representative of the Smithsonian Institution, telephone NAtional 8-1810, Extension 461.
(b) Paragraph 2 of the General Conditions of the contract, entitled "Visit to Site", provided as follows:
Bidders shall visit the site and fully inform themselves as to the manner and conditions under which the work will be done. Failure to take this precaution will not relieve the Successful Bidder from furnishing all ma- teriaí and labor necessary to complete tlie contract without additional cost to' the Government.
(c) Prior to preparing plaintiff's bid on the job, Mr. Downs inspected the site. At that time he was in possession of the single contract drawing covering the entire job, including the paving and drainage work. The drawing showed the existing elevations of the gravel road at four places. It also showed at least 21 elevations existing adjacent to the roadway to be constructed, including elevations in some ten places where the proposed concrete roadway was to adjoin existing concrete surfaces. The drawing also showed in detail the required elevations for the proposed concrete paving of the roadway. Without a detailed showing on the drawing or elsewhere of the exact elevations of the existing gravel road the plaintiff would have been required to make an independent survey of the elevations of the gravel road in order to determine the quantities of excavation and fill to be required to conform the finished concrete road to elevations required by the contract. Mr. Howard, who was the def end-ent's construction representative in charge of the job, had a map showing the elevations of the existing gravel road, and would have furnished it to Mr. Downs on request, but was not asked for such data. Mr. Howard was temporarily absent from the site at the time Mr. Downs visited the area to make his prebid site inspection. There is no indication that Mr. Downs had arranged beforehand with the defendant to have Mr. Howard present at the jobsite at that time as paragraph 3 of the Special Conditions (quoted above in paragraph (a)) provided, or that such arrangements were made subsequently. Mr. Downs concluded (erroneously, as he conceded at trial) that the gravel road merely required ordinary grading and that it was at the approximate levels required for the finished concrete road, with only a minor amount of excavation or fill. The contract drawing did not indicate the availability of a borrow pit, 'an omission which Mr. Downs misconstrued to infer that no fill was required. Mr. Downs' inspection of the site was cursory, consisting only of a brief walk around the area. He made no computation of excavation or fill, and took no readings to establish the exact elevations of the existing gravel road. He made no notes with respect to drainage problems, 'but did observe numerous potholes in. the existing gravel road.
9. Questioned ac&wraey of plaintiff's bid. Plaintiff's bid of $31,720 for tbe contract was $14,168 lower than the next lowest bid. Other ¡bids ranged up to $87,410. Plaintiff was asked to discuss with the Chief of the Supply Division of the Smithsonian Institution the accuracy of his bid. At this conference the plaintiff assured the Chief of the Supply Division that his bid was accurate, that nothing had been omitted, and that he could do the work for the price quoted. Accordingly, he was awarded Contract SI-379 on March 30, 1959.
10. Intention to me concrete paver. T3ie plaintiff contended at trial that he had originally intended to use a concrete paver to pour the concrete continuously in a highly efficient maimer, but that the type of close supervision and direction exercised by Mr. Howard, the defendant's construction representative, made it impossible for plaintiff to utilize the paver operation and forced him to employ a inore expensive and slower ready-mix concrete operation. The concrete paver is a device which prepares the concrete at the site from a dry mix. The concrete is extruded from a revolving drum into a bucket, which traverses a 25' boom and dumps the concrete at any desired point within its reach. The paver runs on caterpillar tracks along the side of the road area to be paved, and permits long stretches of prepared road to be paved almost continuously, within the cubic capacity of the particular machine. Undoubtedly, such a method of placing concrete paving is more efficient and less costly than the method actually employed by plaintiff. The plaintiff's evidence that it had actually contracted to purchase such a machine, or even that it had seriously intended to do so, is inconclusive. At any rate it did not purchase or use a concrete paver. The worksheet on which plaintiff's bid was predicated indicates alternative intentions to purchase ready-mix concrete from a supplier or to use concrete batched in plaintiff's own trucks, the latter being somewhat less expensive than the former. Neither of these alternatives involves the use of a concrete paver. Plaintiff's estimate that it would take about five weeks to pour tlie concrete conflicts with its evidence that a concrete paver could have performed the concrete pouring of the road and other structures in one week of continuous (presumably one shift) operation. Moreover, a paver could not be used to continuously pour two adjoining 20-foot road sections because the contract required the placement of forms along each expansion joint. If the plaintiff had delivered a concrete paver to the jobsite it could not have been used efficiently because of the numerous alterations made in connection with setting of road grades, which would have made it impossible to prepare and pour long sections continuously, the principal justification for use of a paver. Finally, the record is devoid of any indication that at any time during the period of contract performance the plaintiff complained that it had intended to use a concrete paver and had been prevented from doing so.
PlAINTTEF'S PERFORMANCE
11. Delay in starting. Plaintiff was to proceed with the work on or about April 15,1959, but did not start work until May 21, 1959, some 36 days late. Plaintiff failed to order dowel gaskets for the expansion joints until May 29, 1959, with expected delivery in three to seven days. Because of delivery delays the dowel gaskets could not be promised until June 22. As of June 12 the lack of dowel gaskets threatened to interfere seriously with normal construction operations. It is not shown to what extent, if any, this situation delayed the contractor, but it would have been more prudent for plaintiff to have scheduled his materials at an earlier date in order to avoid the possibility of delays.
12. Record of progress. The following schedule depicts the plaintiff's periodic percentage of completion in each of four categories of the contract from June 6 to September 11, 1959:
By November 30, 1959, all but 5 percent of the contract had been completed. It was fully completed on January 12, 1960.
13. The high point problem. The road project in suit was designed by Mr. Alden Lane Howard, Sr., a civil engineer employed by the Smithsonian Institution who was the defendant's construction representative on the site. Mr. Howard graduated in civil engineering at the University of Michigan. He has had approximately 25 years of experience in designing, constructing, and estimating the cost of concrete buildings and other types of concrete structures. The road was so designed as to correct the problem of drainage. The original drawing provided a high point elevation of 23.50 feet. In May or June 1959 the plaintiff realized that a large amount of dirt fill would be needed to bring the curved gravel road (extending 350 feet from Building 12 to the high point in front of the entrance gate) up to the required elevation of 23.50 feet, and requested a change in the specification to lower the high point elevation from 23.50 to 22.62 feet. The request was granted.
14. Fill cost saving to plaintiff. This change in contract specifications decreased the work under the contract by eliminating approximately 515 cubic yards of fill, for a total saving to plaintiff of an estimated $1,080. The change in the elevation of the high point involved changes in elevation of two other points in the road. In September 1959 after the area had been paved, it was discovered that the finished concrete at the high point was at elevation 21.80 instead of 22.62 feet, or 9% inches too low. This decreased the fill requirements by another 324 cubic yards which, at an estimated cost of $2.10 per yard, saved the plaintiff about $680.
15. Errors in culverts and ditches.
(a) The drawings, plans and specifications called for a 12-inch concrete culvert to be placed under each of nine ramps connecting the roadway to buildings facing on the roadway. The plaintiff installed one of the culverts at an elevation above the roadway, and consequently it would not perform its drainage function. The correction cost the plaintiff approximately $80. In area 5e the culvert was installed three feet from the roadway instead of the five feet required by the drawing, and correction of this mistake cost the plaintiff approximately $180.
(b)' The plaintiff contends that the contract drawing depicted ambiguously the precise location of the culverts and drainage ditches with reference to the roadway, as well as the construction details of the culvert. Without ambiguity the drawing shows the culverts and ditches to be 20 feet and 5 feet, respectively, from the edge of the roadway where they occur. Nor is the detail drawing of the culvert'construction ambiguous. The plaintiff was apparently under the erroneous impression that the ditches were to contain the culverts, but the drawings clearly indicate that they were not so designed.
16. Temporary inaccessibility of road. Paragraph 4 of the Special Conditions of the contract made it "the responsibility of the Contractor to maintain this road [i.e., the gravel road from the main gate to the work areas] in usable condition during the period of 'his operations." The road in question was excavated and rendered impassable while concrete was being poured on the curved road in the vicinity of Building 12. The plaintiff was required to replace the dirt and gravel on the access road, at a cost to him of approximately $1,982.30.
17. Excessive fill. Plaintiff constructed the roadbed in . front of Buildings 1 through 5 eight inches too high, thus causing himself excessive fillwork at a cost of $470.40. Plaintiff also constructed the high point in front of Building 1 too 'high, thus causing himself excess fillwork at a cost of $201.60.
18. Inadequate supervision. On frequent occasions the plaintiff's supervisory personnel were absent from the job, Whiph was detrimental to the quality of the work and time of its performance.
19. Concrete 'reinforcing wire. Paragraph 2.14 of the specification required that two layers of ten-gauge wire reinforcing material, six-inches by six-inches, be placed approximately two inches and six inches, respectively, below the top surface of the eight-inch concrete paving. Core borings taken in each of the 112 sections of the completed roadway during the pendency of this suit established the rebuttable (but not rebutted) presumption that in three of the 112 sections of the roadway the plaintiff had installed no wire' reinforcing material at all, and in 19 sections only one layer of such material had been installed. The conclusion is inescapable that the omission of the wire reinforcing material was due to carelessness. In the remaining sections of the concrete containing two layers of wire reinforcing material, the positioning of the layers varied widely from the approximate elevations required by the specifications.. It is impossible to adhere closely to such elevations. The absence of wire reinforcing material as described above, and the erroneous positioning of the material in those sections where it was installed, impaired the strength of the concrete paving, reduced its load-carrying capacity, and promoted cracking.
20. Variations in Conorete thickness. The specifications required a uniform eight-inch thick concrete roadway. The 20-foot concrete slabs installed by plaintiff varied in depth from 5% inches to 11% inches. Standard tolerance in' the trade for this type of roadway is one-fourth of an inch variation from the specified thickness. Based on the cores taken from 112 sections, 39 were within the standard tolerance of thickness, 18 were below tolerance, and 55 were above tolerance. (Analyses of cores 1 and 112 were not supplied for the record, so in this summary the results of these two cores are deemed to be in compliance with specifications relating to thickness and wire reinforcement.)
21. Defecime expansion joints. In at least 20 sections of concrete roadway, adjacent to the expansion joints, there is abnormal cracking and disintegration of the concrete. This cracking and spalling of the concrete is caused by the improper placement of the expansion joint material between the 20-foot concrete slabs. In order to function properly, expansion joint material must be absolutely vertical. When plaintiff installed this expansion joint material in at least six sections which were examined, he failed to stake it properly and in finishing the concrete, he knocked the expansion joint material out-of-line. As can be seen in Defendant's Exhibit 19, in the six sections referred to plaintiff cut a "dummy groove", that is, a false joint. This false joint would simulate a properly installed joint on the surface, but would soon crack as it received some compression and changes in temperature. While the concrete was still new, it would be impossible to tell that the expansion joint material was not properly placed below this false joint. This expansion joint defect, therefore, was not readily observable at the time of final inspection.
22. Roughness of finished road. Another example of the inferior work performed by plaintiff on this job was the difference in elevation between adjoining slabs of concrete. In some cases, there was a difference in elevation of five inches in a five-foot section of concrete. These variations in elevation between slabs of concrete, together with other surface defects, caused the roadway to be extremely rough. Tests performed on the road by an expert from the Structural Research Division of the Bureau of Public Roads revealed that the road had a relative roughness index at various points of 267, 219, and 325, Whereas the roughness index for the average highspeed highway is 95. It can be seen, therefore, that the roadway, as constructed by plaintiff, is two to three times rougher than the standard for highspeed highway construction. Most highspeed roads are resurfaced when they reach a roughness index of between 165 and 190. This indicates that this road is now unserviceable by highspeed highway standards, but it must be borne in mind that it is a service road and not a 'highspeed highway.
23. Summary of defeats chargeable to flamtiff. Analysis of the core borings made in each of the 112 sections of paved roadway constructed by the plaintiff, and the examination of 20 defective expansion joint areas, reveals that at least 40 sections out of 112 sections (or 35 percent) are currently defective either because they are below the required thickness of eight inches (including a one-fourth inch tolerance), or because they had no reinforcing wire at all or only one layer of reinforcing wire, or have undergone abnormal cracking and disintegration around the expansion joints. In addition, the roughness of the road due to irregularity in elevations of the sections has been described in finding 22. The installation of reinforcing wire at incorrect elevations has been described in finding 19. Collectively, these defects in workmanship fall far short of required performance under the contract, and materially shorten the life expectancy and serviceability of the road.
The evidence does not show which of the 72 sections of the road, having the proper thickness and the specified quantity of reinforcing wire, may be out of alignment (finding 22 supra), or are affected by the meandering longitudinal crack (finding 24 infra). Therefore, the evidence does not show whether the entire road would have to be removed and replaced in order to obtain a road complying with the contract requirements or whether the defects could be cured by removal and replacement of only parts of the road. At least 40 sections would require such replacement, but the evidence does not show which of the 40 sections are out of alignment or which are also defective because of the longitudinal crack that was caused by defendant's defective design.
24. Defect chargeable to defendant. Over a considerable portion of the roadway a longitudinal crack meanders down the center of the road. This is attributable to the failure of the defendant to include in the design a longitudinal expansion joint down the center of the road. The road was 18 feet wide and provision of a longitudinal expansion joint was advisable.
25. Changes requested by defendant. During the course of plaintiff's contract, there were five contract changes to the original contract drawing and specifications requested by the Smithsonian Institution.
(a) The first of these contract changes was the shifting of 100 feet of wooden forms, a maximum of five feet at one end. The cost of moving these forms was $65. The work took approximately five hours.
(b) The second contract change was the shifting of the diagonal road five feet at one end. This change in the contract was requested by the Smithsonian Institution in order to clear an underground electric service cable. The shifting of the road was made on the drawing prior to the commence ment of any work by plaintiff. Accordingly, no cost to plaintiff was involved in this change.
' (c) The third contract change was the lowering of forms at two points along Road A. This change in the contract was requested by the Smithsonian Institution in order to divert water from the apron in' front of Building I. The cost of the work was $1.50, and the time involved was one-half hour.
(d) The fourth contract change was the lowering of forms at two points along Road B. This change in the contract was requested by the Smithsonian Institution in order to divert water from the apron in front of Building 7. The cost of the work was $1.50, and the time involved was one-half hour.
(é) The fifth and final contract change was the elimination from the contract of 70 feet of 12-inch culvert installation. This contract change was requested by the Smithsonian Institution to decrease the cost of labor and material. The change effected a saving of $280 to the plaintiff, plus a saving of time.
26. Changes reguested ~by plaintiff. There were eight contract changes to the original plans, drawing and specifications requested by the plaintiff.
(a) The first change was the substitution of asphalt expansion joints in place of cork. This change was requested by the plaintiff to reduce his costs under the contract. As a result of this change, plaintiff saved $801 in material costs. Since this was only a material change, no saving of time was involved.
(b) The second change requested by the plaintiff was the substitution of asphalt joints in place of wood forms. Specification 2.22 requires forms to be used to support the expansion joint material. Plaintiff requested this change to reduce the cost of his form installation. The change was granted by the Smithsonian Institution and saved plaintiff approximately $126 in labor charges.
(c) At the request of the plaintiff, the Smithsonian Institution deleted 14 inches of road excavation (311 cubic yards) in Areas 5b, 5d, 5f and 5g. This deletion was requested by the contractor in order to reduce his road excava tion requirement. This change effected a saving to plaintiff of $326. No estimate, of the amount of time saved by the plaintiff was made.
(d) The fourth change was the deletion of six inches (239 cubic yards) of road gravel fill requirement. Paragraph 1.5 of the Specifications provides as follows:
Gravel Fill. After the roadway has been graded as provided in Paragraph 1.4 above, bankrun gravel shall be distributed over the roadways and thoroughly compacted by rolling and tamping into a 6-inch layer to serve as the 'base for the concrete paving.
This requirement was deleted in Areas 5b, 5d, 5f and 5g at a saving to the plaintiff of $502. No estimate of the amount of time saved by the plaintiff was made.
(e) Drawing NAM-59-3 requires three-foot long dowel bars. At the request of plaintiff, this requirement was changed to allow plaintiff to use two-foot long dowel bars in place of three-foot long dowel bars. The change effected a saving to plaintiff of $105. This change also saved plaintiff an unestimated amount of time because the placing of the three-foot long dowel bars is more delicate and time-consuming than the installation of the two-foot long dowel bars.
(f) Drawing NAM-59-3, Section C-C, calls for a drainage ditch adjacent to the concrete roadway, two feet by two feet by two feet. Plaintiff requested a contract change to allow this ditch to remain in the rough trough shape as constructed by his machine-grading operation, thus eliminating the handshaping work of trimming the ditches, as specified. The trimming work, thus eliminated, saved plaintiff about $150 in labor charges (100 hours).
(g) The seventh contract change requested by the plaintiff was the elimination from the contract of the large amount of fill (about 515 cubic yards) and fillwork required on the curved road in the area of Building 12. Elimination of this fill and fillwork, plus the decrease of 324 cubic yards in the fill in September 1959 (finding 14), saved plaintiff $1,760 and some time.
(h) The final contract change requested by the plaintiff was the elimination of additional work necessary to correct his error in constructing the roadbed in front of Buildings 1 through 6 eight inches too high. This error was accepted by the Smithsonian Institution to eliminate any more additional work for the plaintiff.
27. Net savings to plaintiff (hue to ohcmges. The net saving' to plaintiff due to changes described in findings 25 and 26 was $8,982, plus a saving in time of at least 142 man hours. Changes to the contract were effected with much informality and without compliance with those provisions of Article 8 of the contract (see finding 28 infra) which state that if the changes cause an increase or decrease in the amount due under the contract or in the time required for its performance, an equitable adjustment shall be made and the contract modified accordingly. The standard change order form customarily employed in Government construction contracts was never used. In some instances, changes resulted from an oral agreement between the contractor and defendant's construction representative and were formalized only by the issuance of a purchase order by the Chief of the Supply Division of the Smithsonian Institution. The purchase order contained only a brief notation of. the work to be performed, plus a statement of the amount approved therefor., In other instances, such purchase orders were preceded by written proposals submitted by the contractor. It was not until long after the contract had been completed and a final decision made as to the amount due plaintiff that he was-advised that the changes mentioned above had resulted in a saving of money and time to him and that the defendant claimed the right to recover the amount saved. In the proposals for changes submitted by plaintiff, no requests were made to extend the term of the contract. The contract was never modified to provide for any increase or decrease in the time required for its performance.
28. Authorisation for changes. The changes enumerated in findings 25 and 26 were within the scope of the basic contract, Article 3 of which provided the following:
3. CHANGES
The Contracting Officer may at any time, by a written, order, and without notice to the sureties, make changes-, in the drawings and/or specifications of this contract and within the general scope thereof. If such changes cause an increase or decrease in the amount due under this contract, or in the time required for its performance, an equitable adjustment shall be made and the contract shall be modified in writing accordingly. Any claim of the Contractor for adjustment under this clause must be asserted in writing within 30 days from the date of receipt by the Contractor of the notification of change: Provided, however, That the Contracting Officer, if he determines that the facts justify such action, may receive and consider, and adjust any such claim asserted at any time prior to the date of final settlement of the contract. If the parties fail to 'agree upon the adjustment to be made the dispute shall be determined as provided in Clause 6 hereof. But nothing provided in this clause Shall excuse the Contractor from proceeding with the prosecution of the work as changed. Except as otherwise herein provided, no charge for any extra work or material will be allowed.
29. Additional contracts to plaintiff, (a) During the course of plaintiff's contract performance and starting subsequent to the original completion date of the basic contract, three purchase orders were issued for small amounts of additional work not contemplated by the contract. They were:
(1)' The first of these was Purchase Order 44755, dated September 9, 1959, for the removal and the replacement of the entrance ramp in front of Building 3 at a cost of $225.
(2) On October 7,1959, plaintiff submitted a proposal to the Smithsonian Institution for the construction of a reinforced concrete slab for the gasoline pump island adjacent to the roadway. Pursuant to plaintiff's proposal, the Smithsonian Institution issued Purchase Order 45157, dated October 19,1959, in the amount of $250 to cover this work.
(3) On November 4, 1959, plaintiff submitted a proposal for the removal of two trees located between Buildings 1 and 2. Pursuant to plaintiff's proposal, the Smithsonian Institution issued Purchase Order 45436, dated November 18,1959, in the amount of $145.
(b) On December 14, 1959, plaintiff submitted a claim under the contract for $23,573.77 for additional work which plaintiff says he was required to perform at the direction of defendant's construction representative. Included in the claim were four items covering additional paving, furnishing and placing of additional expansion joints, excavation for and installation of conduits across roadway, and a claim for damages by tbe Washington Gas Light Company. Also included in the claim was a fifth item in the amount of $13,200 for additional side ditch and culvert excavation. On February 12, 1,960, the Smithsonian Institution issued Purchase Order 46285 by which it approved a payment in the amount of $1,136.9© which represented an allowance of the amount claimed for the first four items and an allowance of $497.06 against the $13,200 claimed for additional ditch and culvert excavation.
(c) Plaintiff's claim of December 14, 1959, also included an item of $6,622.84 for losses sustained — principally extra labor — by the contractor as a result of alleged changes and revisions in the contract and specifications that resulted from orders and directives issued by defendant's construction representative. The claim was denied in full.
Plaintiff's Contentions
30. Misleading plans and specifications. One of plaintiff's two major contentions, set forth principally in his requested findings, Nos. 7, 8, 9 and 26, is that the plans and specifications were misleading because they failed to provide certain elevation data relating to the existing gravel road. The facts surrounding this contention are provided in finding 8, supra. While it is true, as plaintiff alleges, that Mr. Howard, the defendant's construction representative, had the elevation data in' his possession but did not include it in the contract drawing, that Mr. Howard conceded that the inclusion of such data in the contract drawing would have been helpful to bidders in computing quantities of fill and excavation, and that the omission of the data increased plaintiff's difficulties in computing fill requirements, it is also true that plaintiff did not request such data from Mr. Howard, or make his own measurements to determine fill requirements, or realize from his visual examination of the road in context with elevations of adjacent areas which were shown on the drawing that substantial fill requirements existed.
31. Interference by Mr. Howard. Defendant's construction representative, Mr. Howard, had designed the project and throughout the performance of the work acted both as a resident engineer and as the chief inspector for defendant. He supervised plaintiff's place of stakes for the road construction ; he checked the placing of strings across the stakes to mark the positioning of forms for the pouring of concrete slabs, and he inspected and frequently had plaintiff change the location of concrete forms. During much of the contract, performance period and especially after September 1959, he was engaged in .controversies with plaintiff and plaintiff's personnel on the positioning and elevation of the concrete forms for the roadway. At plaintiff's request, he lowered the high point of the road and this made it necessary to adjust other elevations leading from the high point. On his own initiative and because he felt it necessary to insure plaintiff's compliance with the plans and specifications, Mr. Howard gave specific and detailed orders to plaintiff's personnel and exercised complete control and domination over all parts of the contract performance.
On many days after Mr. Howard had furnished plaintiff with the specified elevations and plaintiff's workmen had spent most of a day in erecting the forms, he ordered plaintiff's employees to lower, raise, or otherwise change designated forms. As a result, it was necessary for plaintiff to relocate the whole set of forms involved from the subgrade to the top finish. In some such instances, Mr. Howard used a level or other instrument to determine whether the forms were at the correct contract elevation; in other instances, he used his judgment and his vision in order to direct the placing of forms in positions he deemed necessary for adequate drainage — a factor with which he was greatly concerned. The moving and repositioning of the forms in accordance with Mr. Howard's orders increased plaintiff's labor costs and delayed the completion of the contract. Although plaintiff has failed to establish the amount of damages he incurred as a result of Mr. Howard's unwarranted interference with the performance of the work, it is a fair inference from the record that the completion of the contract was delayed to an unascertainable extent by such unwarranted interference.
ADMINISTRATIVE PROCEDURES
32.Plamtiff's claim. On December 14, 1959, tbe plaintiff filed with the Chief of the Supply Division, Smithsonian Institution, his claim in the amount of $23,573.77 for changes, consisting of nine separate items, plus an unpaid balance of $1,586 on purchase order 42099, as shown in the following-summary :
No. 1 Mix design of the concrete_$1, S20.00
No. 2 Additional paving- 222. 50
No. 3 Furnishing and placing additional expansion joints_ 243.75
No. 4 Additional side ditch and culvert excavation_ 13,200.00
No. 5 Excavation for and installation of conduits across roadway_ 60.00
No. 6 Tree removal adjacent to roadway- 195. 00
No. 7 Claim for damages by Washington Gas Light Company_ 113. 68
No. 8 Purchase of performance bond for Maryland State Roads Commission_ 10. 00
No. 9 Charges for losses suffered as a result of changes and revisions to the contract- 6, 622.84
Unpaid balance of purchase order 42099_ 1, 586.00
Total_ 23, 573. 77
33. Action on claim. On February 12, 1960, the Chief of the Supply Division of the Smithsonian Institution allowed claim items 2, 3, 5 and 7 in full, allowed $497.06 on item 4, and denied the remaining items, tendering a purchase order for the total allowance of $1,136.99. Reasons were given for the allowances and disallowances.
34. Appeal from denial of claim. On March 1, 1960, the plaintiff wrote to the Chief of the Supply Division demanding a hearing before a "Board of Competent People" and invoking its right of appeal, pursuant to Article 6 of the General Provisions of the contract, the "Disputes" clause, which provided in pertinent part that—
the Contractor may appeal [the adverse decision of the contracting officer on any dispute concerning a question of fact] by mailing or otherwise furnishing to the Contracting Officer a written appeal addressed to the head of the department, and the decision of the head of the department or his duly authorized representatives for the hearings of such appeals shall, unless determined by a court of competent jurisdiction to have been fraudulent, arbitrary, capricious, or so grossly erroneous as necessarily to imply bad faith, be final and conclusive:
*!« *í»
On March 18, 1960, Dr. Leonard Carmichael, Secretary of the Smithsonian Institution and "head of the department" concerned (he had executed the contract in suit), wrote to plaintiff acknowledging the appeal and advising that he had appointed a special board of review to "hear your case and make appropriate recommendations to me for equitable settlement", naming three persons to compose the board.
35. Hearing by the board of remeto. The Board was composed of three members and conducted hearings on March 31 and April 7, 1960. At the first hearing the plaintiff's case was presented by Messrs. Roberts (the plaintiff) and Downs, with plaintiff's attorney being present. There is no indication that testimony at the hearings was transcribed; at least no transcript of the hearings was presented in evidence, and it is, therefore, concluded that the hearings were not transcribed.
36. Findings and recommendations of the board of review. The board of review rendered its report under date of April 19,1960, consisting of 11 pages plus six exhibits. The report was divided into six parts, denominated A through E, as follows:
(a) Part A, entitled "Preliminary", recites the efforts made by the Smithsonian Institution to verify the plaintiff's ability to perform after his low bid invited a careful investigation. The board did not rely solely on evidence presented to it at the hearings, but apparently made independent inquiries of its own, and concluded that the plaintiff was a satisfactory contractor with a good record of performance in other contracts, but required careful supervision to ensure completion within the contract period.
(b) Part B of the report deals with the plaintiff's explanation of the delay in completion of the contract. In brief, it states that the plaintiff's original plan to use a mechanical concrete mixer and layer had to be abandoned, that he took 32 weeks to complete the job instead of the 10 weeks he had planned, and that he nsed 197 cubic yards of concrete more than he had estimated, some of which excess was attributable to changes made by the defendant in the layout of the forms.
(e) Part C deals with items 1,4,6,8 and 9 of the plaintiff's claim (listed in finding 32, supra). It finds in general that Mr. Howard supervised the job closely and continuously, and made innumerable changes without issuing written change orders. It finds as to item 1 of the claim, relating to the mix design for the concrete (the subject of finding 5, supra, in this report) that the specification was unclear and the plaintiff was genuinely mistaken but was not entitled to be paid $1,320 for the extra quantity of cement which he was required to use in the mix. As to item 6 for the removal of a tree, the board recommended payment of $195 because the contract drawing did not note the particular tree, although it noted others to be removed as part of the contract. (Note: In his requested findings the plaintiff does not specify this particular item as being part of his present claim, although it is probably included without identification as part of the plaintiff's claim for damages on a total cost basis. The only evidence before the court is the provision of the specifications requiring the contractor to remove and dispose of trees, brush, etc., "within the areas involved in his work" at no additional expense to the Government. There is no evidence from the plaintiff that the tree in question was not within the area involved in the plaintiff's work.) The board recommended dis-allowance of the plaintiff's claim for item 8, a $10 fee paid to the Maryland State Roads Commission for a bond, because paragraph 11 of the General Provisions of the contract made the cost of permits and licenses the contractor's responsibility. As to the plaintiff's claim under item 4 for $13,200 for additional side ditch and culvert excavation, the board report states that the plaintiff had contended a 400 percent increase in volume of earth work had been performed, that the contract drawing was not adequate for the contractor to compute the quantities of excavation involved in the side ditches and culverts, and that the amount of excavation per formed by the plaintiff could not be determined. The board report analyzes the situation with reference to certain aspects of the excavation on the 'basis of facts which are not available in the record in an assimilable form and which were not presented in sufficient detail in the trial before the court to permit an appraisal of the board's views. The board report concludes with the statement that the plaintiff's claim for item 4 work would be considered in connection with his claim for $6,622.84 under item 9, entitled "charges for losses suffered as a result of changes and revisions to the contract". In its discussion of item 9 the board concluded that the plaintiff was "seeking to obtain reimbursement of his costs in excess of his bid-price" and proceeded to discuss the claim from that point of view. The board then found that the plaintiff had expended a net $16,135 in direct costs of performing the contract over the direct costs involved in its estimate, and it increased this figure to $20,650 by adding an "appropriate percentage allowance" for supervision, overhead and profit. This, in the board's opinion, constituted a fair sum for items 4 and 9 in plaintiff's claim.
(d) In Part E of its report the board reached six major conclusions, viz:
1. The contract drawing was inadequate for bidding purposes, and the contractor was foolish to attempt to 'bid without further clarification, but could not be held responsible as a legal matter for this failure because the plans and specifications were defective.
2. The plaintiff's costs and time of performance were substantially increased due mostly to a major change in the "modus operandi", presumably at the direction of Mr. Howard. The defendant's failure to protest the plaintiff's failure to meet the original contract date was •construed to mean that the plaintiff's performance was satisfactory at that time.
3; The plaintiff had planned to purchase a concrete laying and finishing machine.
4. The plan and specifications left room for interpretations and differences of opinion as to requirements, thus resulting in delays and submission of all doubts for decision to Mr. Howard.
5. The contract was finally completed satisfactorily but in a manner disagreeing with the original plan in all except one area. The plaintiff "was subjected to an unwarranted degree of supervision, made necessary, in part, by the lack of clarity in the original plans, to an extent which modified the intent of the original contract".
6. The contractor was "ingenuous" in failing to obtain written orders covering changes, but "acted in good faith in proceeding with the job with [as] much speed as was practicable under the circumstances."
Under "Becommendations" the board report concluded as follows:
Recommendations
We would prefer to recommend that an independent party survey the completed work and prepare an estimate of the value of the work performed. Since no survey of the site, giving the original contours, is available, we believe that considerable expense would be incurred to establish useful comparative data, from which the additional grading and excavation can be computed. We, therefore, recommend as follows:
1. That the contractor's expenditures be formally audited and his total direct costs established.
2. That subject to 8, below, he be reimbursed his direct costs less $1,428 representing the amount of the contractor's own underestimating of the concrete requirements, plus such allowance for supervision, overhead and profit as will keep the total sum below the price of the next highest bidder.
3. That the circumstances of this case be discussed informally with G.A.O. before actual payment to verify the existence of precedents which will protect the contracting officer in his acceptance of these recommendations.
Because of the absence of a transcript of testimony and lack of knowledge of precisely what documentary evidence the board of review considered in preparing its report and recommendations, it cannot be determined to what extent it considered evidence which was not submitted to the court in the course of trial or, conversely, what evidence the court may have had before it at trial which was not before the board for consideration. One important category of evidence which was before the court and not before the board was the analysis of core borings of each of 112 sections of concrete paving, upon which boring data findings 19 and 20 were predicated. That this omission in the board record was possibly critical is seen from the board's comment at page 10 of the report that "We understand that there is no complaint on SI [Smithsonian Institution] side as to the achieved result." It is also unlikely that, in so concluding, the board was aware of other defects in the completed road such as its roughness (finding 22) and its defective expansion joints (finding 21). It is possible that as to certain items of the plaintiff's claim the board was furnished more adequate evidence than was the court, for the trial record of the court would not be sufficient to reach certain conclusions which were reached by the board.
37. Decision by head of department. On July 8,1960, the Secretary of the Smithsonian Institution advised plaintiff by letter that the latter's claim for additional compensation was approved in the amount of $1,136.99 in accordance with the ruling of February 12, 1960 (finding 33, supra), and requested plaintiff to submit invoices for final payment in that amount and in the amount of $1,586 admittedly due as a contract balance. Plaintiff did not submit such vouchers for payment. Thereafter, plaintiff requested that he be furnished a copy of the report and recommendations of the board of review described in finding 36, but the defendant refused to grant the request because it considered the report to be "an administrative communication addressed to the Secretary pursuant to the board's appointment to hear the case and make recommendations to the Secretary for equitable settlement", and thus not appropriate to be made available to plaintiff.
PlaiNtiit's Damages
38. As claimed. Plaintiff seeks damages on a quantum meruit theory, computed on a total cost basis of his actual direct and indirect costs as reduced by payments received from the defendant under the contract. The plaintiff produced a schedule of its costs which was audited by the defendant against plaintiff's books and records pursuant to Eule 28 (b) of the 1957 rules. The plaintiff's schedule listed total costs of $75,984.34 incurred in the performance of the contract, added $11,397.65 for overhead at the rate of 15 percent and $8,738.20 for profit at the rate of 10 percent, and thus 'made a total claim of $96,120.19 against which it deducted $30,131 for payments made under the contract, for a net claim •of $65,986.19. The defendant verified that $45,251.83 of the total expenses of $75,984.34 claimed by plaintiff were shown in plaintiff's books and records, but reserved the right to challenge the accuracy of entries in the plaintiff's books and records as being applicable to contract performance.
39. As proved. The defendant failed to verify $30,732.51 of plaintiff's claimed costs in the process of auditing his schedule of costs. The exclusions were as follows:
Item 3, income to J. H. Roberts in the amount of $1,945, was rejected by defendant because it represented profit to the plaintiff which should be included in the profit allowance applied against total expenses, since it was not shown that the plaintiff himself performed any work on the contract. In his requested findings the plaintiff does not cite any probative part of the record to support the item. He relies instead on his schedule of costs, which does not constitute proof.
Item 4, cost of concrete in the amount of $327.68, representing discounts earned by plaintiff from 'his supplier in purchasing $17,162.58 of cement, was rejected by defendant's audit report. In his requested findings the plaintiff does not refute the discount contention, and that portion of the cost is concluded to be not proven as a cost of performance. Otherwise, the proof satisfactorily establishes the plaintiff's net cost of concrete in performance of the contract in the amount of $16,834.50, which amount was verified by the defendant as shown in the plaintiff's books and records, although not conceded to relate to contract performance.
Item 10, dowel baskets, etc., in his requested findings the plaintiff conceded the correctness of the defendant's exclusion of $1,493.03.
Item 13, company-owned equipment in the claimed amount of $22,280, was totally excluded by defendant in its audit report because the plaintiff's books contained no information relative to equipment rental charges. The plaintiff failed to comply with pretrial instructions relative to the production of data prior to trial in support of this item of costs. When the plaintiff attempted to mend this omission at trial by the production of proof the commissioner refused to admit such evidence except as an offer of proof. The plaintiff's offer of proof is physically in the trial record but no finding will be made thereon for the reasons given above. A failure of proof is found.
Item 14, cost of $230 for moving company-owned equipment to site, was rejected by defendant's audit report because it did not appear in the plaintiff's books and records, and strict proof was demanded. In his requested finding the plaintiff refers only to the claim having been made and rejected, and cites no part of the trial record in support of the item. A failure of proof is found.
Item 15, $2,816, cost of transporting men from Frederick, Maryland, to the jobsite, is rejected by defendant's audit report because it could not be verified in plaintiff's books and records. In his requested finding the plaintiff refers only to the rejection of the claim by the defendant and cites no part of the trial record in support of the claim. A failure of proof is found.
Item 1Y, allocation of home office overhead in the amount of $1,640.80, is rejected by the defendant's audit report because, although the cost of operating the plaintiff's home office averaged $293 per month, the plaintiff did not establish that 70 percent oí tbis cost was a fair allocation to the contract in snit. No evidence was provided as to the plaintiff's other contract work being performed contemporaneously, so no 'basis for an allocation of overhead costs was available. In his requested findings the plaintiff fails to cite any specific part of the trial record in support of this item. A failure of proof is found.
Finally, as to plaintiff's claim of $11,397.65 for overhead (computed at 15 percent of his total claimed expenses) and $8,738.20 for profit (computed at 10 percent of his total claimed expenses), the defendant's audit report rejected the items because they did not appear on any books and records, and strict proof was demanded. In his requested findings the plaintiff fails to cite any specific part of the trial record in Support of these items. A failure of proof is found as to the overhead, but it is concluded on the basis of the court's experience in the area of Government contracts that an allowance of six percent on proven costs as a profit margin is fair and reasonable, even in the absence of proof.
40. Recapitulation of costs. The plaintiff expended at least $45,251.83 in the performance of the contract in suit, has been paid $30,134 under the contract, and is due $1,586 under the contract. A profit of $2,715.11 on proven costs, computed at the rate of six percent, is fair and reasonable. Undoubtedly, the plaintiff's actual costs exceeded the total reported, but they have not been proven with the requisite degree of evidence.
CoTTNTEKOLAIMS
41. Mr. Howard's salary during delay period. The parties stipulated that, from July 28, 1959 ( the original contract completion date) to January 12,1960 (the actual completion date), Mr. Howard spent 766 hours on the job and was paid therefor by the defendant the sum of $3,454.66, computed at an hourly rate of $4.51.
The defendant did not, at any time during the contract performance, make any complaint to plaintiff about the delay in the completion of the contract, nor did it advise him that defendant was claiming that plaintiff was respan- sible for extra costs for the delay. The evidence does not establish how much of the delay in the completion of the contract is attributable to plaintiff and how much was caused by Mr. Howard's unwarranted interference with plaintiff's work.
42. Savings to plaintiff due to changes. During the course of contract performance, the net savings to plaintiff due to changes (findings 25 and 26 supra) resulted in decreasing plaintiff's cost of performance by $3,982. At no time during performance of the contract was plaintiff advised by the defendant that these cost savings would be deducted from his payments under the contract or charged against him in any way. The changes did not detract from the utility of the completed road.
43. Cost of core borings and analyses.
(a) Paragraph 9(c) of the General Provisions of the contract provided as follows:
(e) Should it be considered necessary or advisable by the Government at any time before final acceptance of the entire work to make an examination of work already completed, by removing or tearing out same, the Contractor shall on request promptly furnish all necessary facilities, labor, and material. If such work is found to be defective or nonconforming in any material respect, due to fault of the Contractor or his subcontractors, he shall defray all the expenses of such examination and of satisfactory reconstruction. If, however, such work is found to meet the requirements of the contract, the actual direct cost of labor and material necessarily involved in the examination and replacement, plus 15 -percent, shall be allowed the Contractor and he shall, in addition, if completion of the work has been delayed thereby, be granted a suitable extension of time on account of the additional work involved.
(b) In preparation for trial the defendant paid $2,250 to a firm of inspection engineers to make core borings in each section of the concrete roadway in suit, and to test two of the cores taken. The results of the core borings, described in findings 19 and 20, supra, revealed that the roadway failed to comply with specifications as to wire reinforcement and thickness of the concrete. These deficiencies were not capa ble of detection after the pouring of the concrete because they were within the concrete itself, and were thus latent defects that were not readily observable on visual inspection. The defects were not known by the board of review appointed by the Smithsonian Institution as described in finding 36, sufra.
44. Replacement of defective road.
(a) As related in finding 23, supra, at least 40' of the 112' sections of completed concrete road are defective and the only feasible correction is their removal and replacement with concrete sections complying with specifications. The defendant submitted evidence tending to establish that it would cost $7,380 to remove the entire roadway constructed by plaintiff and $41,505 to replace the entire roadway, plus $4,888.50 for-engineering and inspection, or a total of $53,773.50. There is no evidence as to the approximate cost of repairing the crack which meanders down a considerable part of the center of the road and which was due to the defendant's faulty-design (see finding 24, supra).
(b) It would cost about $8,962.20 to replace the 20 sections of concrete roadway found (finding 21, supra) to be cracking and spalling because of improperly formed expansion joints covered by false expansion joints.
(c) The evidence does not provide any basis for making a reasonably accurate approximation of the amount that, defendant has been damaged as a result of latent defects, in-the road that are solely attributable to plaintiff's failure, to comply with the provisions of the contract.
45. As shown in findings 32 and 33, there is a balance of $2,722.99 due plaintiff on the contract.
CONCLUSION OF 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 entitled to recover the sum of $2,722.99 and judgment is entered for plaintiff in that amount. The court further concludes that defendant is entitled to recover nothing on its counterclaims and they are hereby dismissed.
Although our results differ in some respects, the court acknowledges the assistance it has derived from the opinion and findings of fact of Commissioner C. Murray Bernhardt. We have borrowed much of his opinion and adopted most of his findings of fact.
See discussion under Defendant's First Counterclaim.
The ready-mix operation required the truck to back down between the forms In each section and discharge Its load, which then increased the cost of hand labor for spreading and tended to disturb the forms.
Of tie 39 sections -within the standard tolerance of required thickness, six had only one layer of wire reinforcement. Of the 18 sections below the tolerance in thickness, four had only one layer of wire. Of the 55 sections above the tolerance in thickness, three had no wire at all, and 13 had only one layer of wire. Curiously, in nine of the 112 sections the plaintiff had installed three layers of reinforcing wire, and in one section he installed four layers. The deficiencies and excesses in reinforcing wire suggest carelessness rather than intent.
Although the contract does not fix the Identity of the contracting officer in this case, the Chief of the Supply Division may be regarded as such.
Rule 67 (c) prescribes the form and contents of requested findings. Each statement of fact requested to be found must be supported by citations to the pages or parts of the record relied upon to establish such fact.