Laburnum Construction Corp. v. United States

Delivered the opinion of the court:

This is an action for breach of a contract for the installation of approximately 10,000 feet of high pressure steam line at'the United States Naval Base in Norfolk, Virginia. The specifications called for the construction of a 16-inch pipeline above the ground connecting an existing steam line outside the Base with a steam plant at the South Annex area within the Base. The pipe was to be supported by concrete pedestals which in turn would rest upon wooden piles driven into the ground except for a few short underground stretches where the- line' connected with existing steam lines or went beneath roads.

Plaintiff, the low bidder, was awarded the contract on April 19, 1957, and was authorized to proceed on April 24. By the terms of the contract, the work was to be completed on February 18,1958, 300 days after it was started. Actually, however, the work was not completed until October 20,1958, 544 days from the authorized starting date and, since the work had not been inspected and a few odd jobs remained to be done, plaintiff did not completely quit the site until November 12, 1958.

Plaintiff alleges that defendant’s unreasonable delays, resulting from errors in the specifications and tardiness in correcting those errors, constitute a breach of the contract. Plaintiff says that, but for these delays, it could have completed the work, as set forth in the specifications on which it bid, in 210 days. It claims damages for its costs and loss of profits incurred during the excess of 334 days over 210 days, with a deduction of 56 days of delay which it admits were not the fault of defendant. In the alternative, plaintiff claims that the changes made by defendant were so extensive as to constitute a fundamental alteration of the scope of the contract and, hence, a breach of it.

The Trial Commissioner to whom the case was referred concluded that plaintiff’s prognosis of a 210-day work schedule was unrealistically optimistic, and that it could not have reasonably expected to complete the work in less than 300 days. He calculated the period of delay from the completion date specified in the contract and found that plaintiff’s work had been delayed during the construction period from February 18, 1958 to October 20, 1958. The Commissioner concluded that one-half of this eight-month period was consumed by circumstances beyond the control of either party, and that the remaining four months of delay were caused by the defendant and were unreasonable in the circumstances. He further found that plaintiff had prosecuted the work as diligently as possible, and that none of the delay was chargeable to it. The Trial Commissioner calculated plaintiff’s damages by computing its net loss on the entire contract (direct costs minus the price paid) and allowed plaintiff one-half of this amount.

Neither party is satisfied with the result reached by the Commissioner. Plaintiff contends that the period of delay should be calculated from November 30,1957, 210 days after it began work, and that defendant is liable for more than 80% of the delay during the remaining time it was on the job. Defendant says that any delay it caused was reasonable and that, in any event, recovery should be limited to costs that were incurred during the last few weeks of performance, when plaintiff had only a few men and virtually no equipment at the site. In addition, both parties quarrel with the method used to compute the damages.

We have concluded that the Trial Commissioner was right in finding that the defendant caused unreasonable delay. However, we think the delay was somewhat longer than four months, as found by the Commissioner, and we cannot agree with the Commissioner’s method of computing the damages.

At the outset of the work the plaintiff had hired a firm of surveyors and engineers to stake out the route the steam line would take and to compute the alignment and grade of the pedestals that were to support the pipe in accordance with the specifications. But as soon as the surveyors began work it became evident that errors abounded in defendant’s specifications.

Near the eastern terminus, where the line was to join an existing steam line, the surveyors discovered that, in order to follow the routing set out in defendant’s plans, 84 feet of pipe in addition to the quantity called for in the specifications would be needed. It required a week of conferences between plaintiff’s surveyor, plaintiff’s foreman and defendant’s representatives before defendant authorized inclusion of the missing footage and consequent respacing of the pedestals. During that time, defendant directed the surveyors to abandon that part of the line and to proceed to another area.

At another point, the drawings called for the pipeline to skirt a trash dump and to run between the dump and a tidal basin. The plaintiff found, upon surveying this route, that the area between the dump and the basin was a swamp in which the piles could not be sunk. On June 3, 1957, having been advised of this difficulty, the defendant’s inspector told the surveyors to do no more work in this area pending a relocation of the line. It was not until July 8, 1957 that plaintiff was told to move the line away from the water and out of the swamp. That decision ran the line through a large pile of trash and debris in the dump. The plaintiff could not drive piling until this obstruction was removed, and it was defendant’s obligation to remove it. Removal of the trash and debris from the route should not, according to the evidence, have taken more than a few hours. Yet defendant did not remove a sufficient quantity to permit plaintiff to lay the line until September 10,1957.

The two instances mentioned in the 'above paragraphs seriously delayed the entire project, for the reasons explained below.

When plaintiff’s surveyors came to the western terminus of the line in the South Annex area, they discovered numerous errors in the specifications. The specifications placed the line over an existing concrete road, and it appeared that the supports, if installed as specified, would have protruded from the steps of a building. Also in this area, the plans led the line under a high tension wire (where the line could not be installed) and directly across an access road. After these mistakes were discovered, defendant decided to re-design the entire South Annex area. The surveyors pointed out these errors on May 21, 1957. Defendant produced a sketch of the new design on June 11, 1957 and requested plaintiff to supply cost estimates on the proposed changes. Although plaintiff gave its estimate of the cost to make the changes on July 5, defendant did not authorize plaintiff to proceed with the surveying of the new location until October 8, 1957, four and one-half months after the defects were first brought to defendant’s attention.

These defects in the plans also seriously delayed the entire project. Defendant says that since plaintiff was working from the eastern end of the line towards the western terminus, where the South Annex was located, the work there was to be done last anyway, and, hence, plaintiff was not delayed by the re-design of the South Annex. This contention ignores the fact that the work was planned to be done in stages and that each stage was to run the entire length of the line. First, plaintiff was to do the surveying, then the piledriving, then the construction of the pedestals, next the installation of the steel pipe, and finally the insulation and finishing work. As each stage was completed, plaintiff could release the subcontractor responsible for that stage and remove the skilled workmen particularly concerned with it from the payroll. When defendant prevented plaintiff from doing any work at all on a certain segment of the line, therefore, it completely dislocated plaintiff’s work schedule and increased the time and expense of completing the job.

As a result of the changes necessary to correct errors in the plans, the surveyors did not complete their work until October 14, 1957, more than four months after they had started. They could not work throughout this period, but had to wait to see where defendant would place the route; out of the four months they were on the job, they spent only 22 days in the field, some of which were consumed laying out a portion of the line that they had previously gone over, where defendant had altered the route. Meanwhile, plaintiff was able to accomplish some work that did not involve laying the line above ground. The underground stretches, at points where the line went under roadways and connected with the existing steam line, were finished first. As a result, not all of the time during which the surveyors awaited design changes was lost. After a while, though, only the overland portion of the line remained to be done, and this necessarily awaited the work of the surveyors.

The spacing of the uprights was a critical matter that could not be fully resolved until the survey and staking out was completed. The plans specified that they be located at intervals of 35 feet. When one segment of the line was moved, therefore, the result was a respacing of the pedestals all along the line. Since the surveyors had to mark the locations where the posts were to be situated, relocation of the line compelled them to re-do any staking previously accomplished in the vicinity of the change. Virtually all productive work had to be suspended, after the underground work was done, until the surveyors had finished. During this time, defendant insisted, on pain of invoking the liquidated damages provision, that plaintiff and its work force remain on the site awaiting completion of the survey.

The final major cause of delay was the faulty design of the supports for a double action expansion joint in the pipeline. The purpose of this mechanism was to take up expansion of the pipe when hot steam at high pressure was driven through it. Although the joint was installed on January 10, 1958, it was first tested on March 4. At that test, the uprights which supported it gave way slightly, because of inherent design deficiency, causing the joint to “bind”. The joint would not operate properly unless the uprights remained rigidly perpendicular when the steam was turned on. As a result of the test, two of the uprights were cracked by the failure of the joint to take up the line’s expansion pressure, and had to be replaced. After this malfunction, the joint was removed for inspection. The inspection failed to show any defects in it, and defendant ordered it replaced. Defendant did not get around to testing it again with high pressure steam until July 23, 1958, when it failed again. At defendant’s orders, the joint was removed and returned to the manufacturer, who was unable to find any fault with it. In September it was re-installed, but again failed to work.

AJ1 during this time, plaintiff insisted that the difficulty lay not with the joint that it had supplied, but with defendant’s design for its installation. On one occasion, plaintiff welded rigid steel support bars between the uprights to prevent them from bending out of the perpendicular. The joint operated satisfactorily with the supports thus held rigid. But this was only a temporary expedient as both parties recognized: the line could not be left in this fashion, for the support bars would eventually give way. Defendant was loathe to resort to an expansion loop in lieu of the joint at this point because the loop would take up space upon which defendant planned to erect a building.

On September 26,1958, over six and one-half months after the joint first failed to work, defendant requested a cost estimate on replacing it with an expansion loop. Plaintiff submitted the estimate six days later and was told to proceed with the change on October 8.

Plaintiff alleged that there were numerous other government-caused delays. The Trial Commissioner found that some of these delays were not chargeable to the Government, some were not unreasonable and that others were de minimis. For instance, plaintiff pointed to its delay in the receipt of steel. It was offered the steel pipe it needed by the wholesaler during the Spring of 1957, but refused delivery because the job was not ready for the installation of pipe, and it would have been inconvenient to stockpile it at the site at that time, and then have to transport it to the point of use at a later date. When the need for pipe subsequently arose, plaintiff had difficulty in obtaining a sufficient quantity from the mill, and it did not all arrive until November, two months after the job was ready for it. The Trial Commissioner felt that in the circumstances, the Government should not be charged with this delay. Eesponsibility therefor is not free from doubt, but it occurred, in part at least, during the period of delay for which we find the defendant is responsible for other reasons, as hereafter set out, and, by and large, we think the Commissioner’s conclusion was correct. A short delay occurred when plaintiff, in constructing a manhole, discovered that the plans placed the top of the manhole below the level of the ground, and that the manhole would be buried when the project was finished. The proper height was attained, however, simply by pouring an added foot of concrete into the wall of the manhole; no changes in the equipment installed therein were necessary. The Commissioner treated this error in the plans as too minor to be a legitimate source of complaint.

An example of Government-caused delay that the Commissioner found was tolerable in its duration was the difficulty encountered in passing the steam line under a railroad trestle. The contractor had planned to cut into the trestle to support the line — it assumed that the plans permitted this — but the railroad company refused to permit the trestle to be cut. Fortunately, the defendant had someone on the scene with the ability and authority to solve the problem, and the line was supported in a different fashion. We concur with the Commissioner and adopt his conclusions with respect to these and the other instances of what plaintiff claims were unreasonable Government-caused delay.

Defendant issued three formal change orders on the contract. The first was dated February 24, 1958; it decreased the contract price by $800 and covered, inter alia, the omitted 84 feet of pipe and the changes at the South Annex. Another change order, issued May 13, 1958, increased the price by $6,795. The third order was issued on December 4, 1958, after the contract had been performed; it increased the price by $6,955 and covered the replacement of the expansion joint with an expansion loop. In addition, plaintiff was granted extensions of time sufficient to cover the time required to complete the work. The net effect of the change orders was to increase the contract price to $457,950. Plaintiff has received this sum from defendant.

On May 12, 1958, plaintiff advised defendant’s Officer in Charge of Construction that it was claiming an additional sum sufficient to give it a 5% “profit and overhead fee” over and above its increased costs on the entire contract. Defendant’s reply denied liability for any damages. On January 15, 1959, plaintiff requested a final decision of the Contracting Officer on its claim for additional compensation of approximately $46,000. The claim was denied, and plaintiff appealed to the Armed Services Board of Contract Appeals. On August 10, 1959, the Board, on motion of defendant’s counsel, dismissed the appeal for lack of jurisdiction.

On these facts, plaintiff maintains that any Government-caused delay was a breach of contract for which it ought to recover. Defendant says that the changes article permitted it to delay the contractor while it made changes in the specifications, and that, under that clause, plaintiff is entitled to receive only an extension of time and an equitable adjustment of the price to cover the increase in time and costs, plus a reasonable profit incident to the making of the change.

We think the critical factor in this case is that all of the delay to which plaintiff was subjected came about because the specifications were deficient. Were this not the case, defendant’s contention would be correct: plaintiff would have no right to complain if the defendant’s exercise of its reserved right to make changes set its work schedule awry. See J. A. Ross & Co. v. United States, 126 Ct. Cl. 323, 115 F. Supp. 187 (1953). At least this would be so if defendant had acted with due alacrity. See Anthony P. Miller, Inc. v. United States, 111 Ct. Cl. 252, 77 F. Supp. 209 (1948). In this case, however, plaintiff had contracted to do the work in accordance with the specifications defendant had prepared, and defendant was, therefore, under a duty not to render the project more expensive than it would have been if the contractor could have complied with the plans. In United States v. Spearin, 248 U.S. 132 (1918), the Supreme Court held that, in a case where the specifications prescribe the character, dimensions and location of the construction work, the Government implicitly warrants that the contractor, if he complies with the specifications, will be able to complete the project within the contemplated period of time. This warranty is akin to the condition implied in every construction contract that neither party will do anything to hinder the performance of the other party. See J. A. Ross & Co. v. United States, supra; George A. Fuller Co. v. United States, 108 Ct. Cl. 70, 69 F. Supp. 409 (1947). If faulty specifications prevent or delay completion of the contract, the contractor is entitled to recover damages for the defendant’s breach of its implied warranty. United States v. Spearin, supra; Warren Bros. Roads Co. v. United States, 123 Ct. Cl. 48,105 F. Supp. 826 (1952). Those damages extend to the costs incurred by reason of the idleness resulting from the mistakes in the plans. The defendant cannot, by errors in the specifications, cause delay in plaintiff’s completion of the work and then compensate plaintiff merely by extending its performance time and by payment of any added direct cost occasioned by changes to correct those errors.

Defendant relies on the rule of the Rice Blair and Foley cases in which the Supreme Court relieved the Government of liability for the cost of the contractor’s idleness during periods of delay. In those cases, however, the delay was caused by contractors or other factors outside the Government’s control, and the Court so found. This exculpatory rule is not applicable to a situation in which unreasonable delays were the result of defendant’s failure to promulgate properly drawn specifications or otherwise the fault of the Government. We have made this distinction before (see, e.g., Kehm Corp. v. United States, 119 Ct. Cl. 454, 93 F. Supp. 620 (1950)), and we adhere to it now.

In this case, it is clear that the delays occurred within two rather well-defined periods: (a) Between May 8, 1957 and October 14, 1957, when errors found by the surveyors had to be rectified and defendant neglected to remove the trash pile that blocked plaintiff’s work; (b) In the interval from September 8, 1958, when defendant knew or should have known, that its design for the installation of the expansion joint was faulty, to October 8,1958, when defendant authorized plaintiff to replace the joint with a loop. These two periods total a little more than six months of delay. The Commissioner, having used the 300-day work period provided in the contract as a base for calculation, found that the total delay was eight months. We agree with the Commissioner that the delay should be calculated from the end of 300 days, rather than from the end of the 210-day construction period that plaintiff anticipated. We also agree that the total delay was eight months. We conclude, however, that of the eight months’ total delay, only two months can be ascribed to the fault of the plaintiff and to other factors beyond the control of the defendant.

We think that defendant is liable for the remaining six months of delay. The parties agree that 16 days were lost to inclement weather and that employees of an insulating subcontractor were on strike for 30 days. Plaintiff admits that it is responsible for a delay of ten days in starting work after receipt of notice to proceed. Plaintiff is also chargeable with a portion of the six-day period it took to submit its cost estimates on elimination of the expansion joint. Of the 244 days of delay, therefore, only approximately 60 days were not the result of defendant’s erroneous specifications. The balance, 184 days of delay, were caused by these mistakes. We, therefore, conclude that defendant is liable for plaintiff’s costs over the six-month period enumerated above.

The Commissioner calculated plaintiff’s damages by deducting from its overall direct costs the contract price that had been paid to it. He considered the difference (which represents plaintiff’s net loss on the project) as the cost of all delay and allowed plaintiff one-half of this sum, or $21,602.72, as the costs incurred during the period of delay for which defendant is liable. The use of this method of computing the damages, however, assumes that plaintiff would have broken even in the absence of any delay. The evidence does not bear out this assumption. In any event, the method used by the Commissioner is fundamentally erroneous in that it denies any profit to the construction contractor merely because the Government has violated its duty not to cause delay by erroneous specifications. Cf. River Construction Corp. v. United States, 159 Ct. Cl. 254 (1962). The proper measure of damages in a case such as this is to permit the plaintiff to recover its costs during the periods of delay. We realize that the periods of delay overlapped to a certain extent, and that, while plaintiff waited for defendant to make up its mind on correcting errors in the plans, it did a certain amount of productive work. Of course, plaintiff cannot recover more than once for a single period of delay, even though it had a number of causes. The amount of productive work accomplished during this period must also be taken into account. Thus, it is not possible, in a case such as this, to calculate exactly the costs allocable to the periods of delay. Plaintiff did not attempt such an allocation of its costs but presented data to show its expenses over the entire performance period.

Plaintiff says that it should be allowed an overall profit of 5% of such costs. In this case, where the work called for by the contract has been completed, plaintiff must take its profit in the contract price. Bostwick-Batterson Co. v. United States, 151 Ct. Cl. 560, 238 F. 2d 956 (1960); Torres v. United States, 126 Ct. Cl. 76, 112 F. Supp. 363 (1953); Wyant v. United States, 46 Ct. Cl. 205 (1911). Plaintiff, therefore, should recover only its costs resulting from the complete or partial idleness of its work force during the periods of delay, including an allowance for its indirect costs. The burden of allocating costs to the particular periods involved is upon the plaintiff. If the sum of these costs, plus the contract price, including the equitable adjustments to which the parties have agreed, gives plaintiff a profit on the project as a whole, it should receive the benefit of its bargain. On the other hand, the contractor cannot, because of such delay, be assured of a profit on the whole job by adding a profit to its damages. It has not been deprived of any anticipated profit. It is entitled to recover only its loss incurred on account of the delay. This is a long established rule. The allowance of so-called profit on the costs incurred during the delay would violate the statutory prohibition against cost-plus-percentage-of-cost procurement (10 U.S.C. § 2306) and would be manifestly unfair to defendant.

Plaintiff’s alternative ground is postulated upon the theory that the various changes, taken cumulatively, constituted a cardinal alteration of the contract and were, therefore, outside the permissible limits of the changes article. This contention may be dealt with briefly. As we said in Saddler v. United States, 152 Ct. Cl. 557, 287 F. 2d 411 (1961), there is no exact formula for deciding when a change is unauthorized by the contract and therefore a breach of it. We do not, in any event, think that the changes defendant made here fundamentally altered the nature of the bargain between the parties. While a great proportion of the total length of the steam line was relocated, the line, as built, remained in the same general area and followed the same general route as the one on which plaintiff bid. The changes did not greatly alter the amount of pipe to be installed, nor did they involve different terminals from those called for in the original specifications.

We conclude, therefore, that plaintiff is entitled to recover for six months of delay and we remand the case to the Commissioner for further proceedings to ascertain the amount of damages to be awarded to the plaintiff.

FINDINGS OP PACT

The court, having considered the evidence, the report of Trial Commissioner William E. Lay, and the briefs and argument of counsel, makes findings of fact as follows:

1. The plaintiff is a corporation, organized and existing under the laws of the Commonwealth of Virginia, having its principal place of business at 918 East Main Street, Richmond, Virginia.

2. On April 19, 1957, plaintiff entered into a written contract with the defendant, whereby plaintiff agreed to complete by February 18, 1958, a steam line to the South Annex, U.S. Naval Base, Norfolk, Virginia, in accordance with Contract No. NBy-3506 and all specifications, schedules, and drawings which were made a part of said contract.

By the terms of the contract, the work was to be started by the plaintiff on April 24, 1957, and completed by February 18,1958.

3. The work was completed for all practical purposes on October 20, 1958. It was accepted on behalf of the defendant at that time although some inspection work and a few odd jobs remained to. be done. Plaintiff had completed these last few chores by November 12, 1958.

4. The plaintiff sues for breach of contract by reason of delays to the job, which it says were caused by the defendant’s delays resulting from errors in the specifications which it says prevented the earlier completion of the work.

By its second cause of action, it seeks damages in the alternative, claiming that the changes in the work were so numerous and extensive that they constituted “a fundamental or cardinal change * * *” which was unjustified and constituted a breach of the contract.

5. The work called for by contract NBy-3506 consisted of the installation of approximately 10,000 feet of 16-inch steel pipe from a point just north of Gate No. 3, along Taus-sig Boulevard, crossing under Taussig Boulevard and the Virginia Railroad Bridge in an existing flume, along the edge of a swampy area parallel to the flume, to and under the belt line railroad bridge, along the edge of a dump area and swampy area, into the South Annex area, and to the steam plant at the South Annex, where the 16-inch line was to be connected into a 12-inch line.

This pipe was in the main supported by concrete supports for practically the entire distance, which required the driving of much underground piling as a foundation. There were some seven manholes, with the necessary connections, located at various points along the line.

6. The contract price was $445,000. This figure was arrived at as a result of competitive bidding, the plaintiff being the low bidder. The next highest bid was $448,000, and the high bid was $464,497.

7. The general provisions of the contract stated, in part, as follows:

2. SPECIFICATIONS AND DRAWINGS

The Contractor shall keep on the work a copy of the drawings and specifications and shall at all times give the Contracting Officer access thereto. Anything mentioned in the specifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both. In case of difference between drawings and specifications, the specifications shall govern. In any case of discrepancy either in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the Contracting Officer, who shall promptly make a determination in writing. Any adjustment by the Contractor without this determination shall be at his own risk and expense. The Contracting Officer shall furnish from time to time such detail drawings and other information as he may consider necessary, unless otherwise provided.

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.

4. CHANGED CONDITIONS

The Contractor shall promptly, and before such conditions are disturbed, notify the Contracting Officer in writing of: (1) subsurf ace or latent physical conditions at the site differing materially from those indicated in this contract, or (2) unknown physical conditions at the site, of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in this contract. The Contracting Officer shall promptly investigate the conditions, and if he finds that such conditions do so materially differ and cause an increase or decrease in the cost of, or the time required for, performance of this contract, an equitable adjustment shall be made and the contract modified in writing accordingly. Any claim of the Contractor for adjustment hereunder shall not be allowed unless he has given notice as above required; provided that the Contracting Officer may, if he determines the facts so justify, consider and adjust any such claim asserted before 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. * % * * *

8. MATERIALS AND WORKMANSHIP

Unless otherwise specifically provided for in the specifications, all equipment, materials, and articles incorporated in the work covered by this contract are to be new and of the most suitable grade of their respective kinds for the purpose and all workmanship shall be first class. * * *

9. INSPECTION

(a) Except as otherwise provided in paragraph (d) hereof all material and workmanship, if not otherwise designated by the specifications, shall be subject to inspection, examination, and test by the Contracting Officer at any and all times during manufacture and/or construction and at any and all places where such manufacture and/or construction are carried on. The Government shall have the right to reject defective material and workmanship or require its correction. Rejected workmanship shall be satisfactorily corrected and rejected material shall be satisfactorily replaced with proper material without charge therefor, and the Contractor shall promptly segregate and remove the rejected material from the premises. If the Contractor fails to proceed at once with the replacement of rejected material and/or the correction of defective workmanship the Government may, by contract or otherwise, replace such material and/ or correct such workmanship and charge the cost thereof to the Contractor, or may terminate the right of the Contractor to proceed * * *.

(b) The Contractor shall furnish promptly without additional charge, all reasonable facilities, labor, and materials necessary for the safe and convenient inspection and test that may be required by the Contracting Officer. All inspection and tests by the Government shall be performed in such manner as not unnecessarily to delay the work. Special, full size, and performance tests shall be as described in the specifications. The Contractor shall be charged with any additional cost of inspection when material and workmanship are not ready at the time inspection is requested by the Contractor.

(c) 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.

* * $ * *

27. GOVERNMENT REPRESENTATIVES

(a) The work will be under the general direction of the Contracting Officer, who shall designate an officer of the Civil Engineer Corps, United States Navy, or other officer or representative of the Government, as Officer in Charge of Construction, hereinafter referred to as the “Officer in Charge,” who except in connection with Clause 6 shall be the authorized representative of the Contracting Officer and under the direction of the Contracting Officer have complete charge of the work, and shall exercise full supervision and general direction of the work, so far as it affects the interest of the Government.

(b) The provisions in this Clause or elsewhere in this contract regarding supervision, approval or direction by the Contracting Officer or the Officer in Charge or action taken pursuant thereto are not intended to and shall not relieve the Contractor of responsibility for the accomplishment of the work either as regards sufficiency or the time of performance, except as expressly otherwise provided herein.

28. PERFORMANCE OF THE WORK

(a) Site Conditions. — Information respecting the site of the work given in drawings or specifications has been obtained by Government representatives and is believed to be reasonably correct, but the Government does not warrant either the completeness or accuracy of such information, and it is the responsibility of the Contractor to verify all such information; provided that, in case of the changed conditions described in Clause 4, this contract may be modified when, in the manner, and to the extent provided in Clause 4.

(b) Space at Site. — The Contractor shall be allowed reasonable space at the site of the work and access thereto and shall confine his operations to the space assigned. The work shall be done without interference with the ordinary use of streets, berthing places, fairways, and passages and the Contractor shall cooperate with other contractors of the Government and Government employees as may be required by the circumstances or directed by the Contracting Officer. * * *

(c) Protective Measures. — The Contractor shall protect the materials and work from deterioration and damage during construction and shall store and secure inflammable material from fire, remove oily rags, waste, and refuse * * *. He shall provide and maintain all temporary walkways, roadways, trench covers, barricades, colored lights, danger signals, and other devices necessary to provide for safety and traffic.

(d) Accident Prevention. — In order to provide safety controls for protection to the life and health of employees and other persons; for prevention of damage to property, materials, supplies, and equipment; and for avoidance of work interruptions in the performance of this contract; the contractor will comply with all pertinent provisions of the publication “Safety Requirements” (Revised 1951) prepared by the Department of the Army, Corps of Engineers, U.S. Army, and published by the U.S. Government Printing Office, and as may be amended, and will also take, or cause to be taken, such additional measures as the Officer in Charge of Construction may determine to be reasonably necessary for the purpose.

* * * * *

If the Contractor fails or refuses to comply promptly, the Officer in Charge of Construction may issue an order stopping all or part of the work until satisfactory corrective action has been taken. No part of the time lost due to any such stop order shall be made the subject of claim for extension of time or for excess costs or damages to the contractor. The Contractor will be responsible for insuring that his subcontractors comply with the provisions of this Article.

(e) Temporary Buildings. — The Contractor shall erect at his own expense and remove as required by Clause 42 such temporary storage sheds and offices as are necessary for the work. Such structures shall be subject to the approval of the Contracting Officer.

29. specifications and drawings

Clause 2 is amended by adding the following paragraphs :

(b) Omissions and Misdescriptions. — Omissions from the drawings or specifications or the misdescription of details of work which are manifestly necessary to carry out the intent of the drawings and specifications, or which are customarily performed, shall not relieve the Contractor from performing such omitted or mis-described details of work but they shall be performed as if fully and correctly set forth and described in the drawings and specifications.

(c) Checking of Drawings and Dimensions. — The Contractor shall check all drawings furnished him immediately upon their receipt and shall promptly notify the Contracting Officer of any discrepancies. Figures marked on drawings shall in general be followed in preference to scale measurements. Large scale drawings shall in general govern small scale drawings. The Contractor shall compare all drawings and verify the figures before laying out the work and will be responsible for any errors which might have been avoided thereby. When measurements are affected by conditions already established, the Contractor shall take measurements notwithstanding the giving of scale or figure dimensions in the drawings.

(d) Deviations. — Deviations from the drawings and the dimensions therein given, whether or not error is believed to exist, shall be made only after written authority is obtained from the Contracting Officer.

* * * * *

(f) Special Drawings. — Whenever required by the specifications, the Contractor shall make special or detailed drawings in amplification of the drawings referred to in this contract or in furtherance of the specifications before proceeding with the work. Such drawings shall be submitted to the Contracting Officer, in the form of prints in duplicate. * * *

*****

41. USE OE STRUCTURE BEFORE ACCEPTANCE

(a) The Government may, at any time, and from time to time, during the performance of the work, enter the structure for the purpose of installing any necessary work by Government labor or other contracts and for any other purpose in connection with the installation of facilities. In doing so the Government shall endeavor not to interfere with the Contractor and the Contractor shall not interfere with other work being done by or on behalf of the Government.

(b) If, prior to completion and final acceptance of all the work, the Government takes possession of any structure (whether completed or otherwise) comprising a portion of the work with the intent of retaining possession thereof (as distinguished from temporary possession contemplating return to the Contractor), then while the Government is in possession of the same the Contractor, notwithstanding the provisions of Clause 11, shall be relieved of the responsibility for loss or damage to structure other than that resulting from the Contractor’s fault or negligence. Such taking of possession by the Government shall not relieve the Contractor from any provisions of this contract respecting such structure, other than to the extent specified in the preceding sentence, nor constitute a final acceptance of such structure.

42. REMOVAL OF PLANT AND CLEANING UP

Upon the completion of the work, the Contractor shall remove all his plant, tools, materials, and other articles from the property of the Government. * * *

* '¡* * * *

44. SCHEDULE AND REPORTS OF PROGRESS

The Contractor, if so directed, shall furnish on a prescribed form a schedule of expected progress of the work under the contract, showing approximately the dates on which each part or division of the work is expected to be begun and finished. The Contractor shall also forward to the Contracting Officer, as soon as practicable after the first day of each month, a summary report of the progress of the various parts of the work under the contract in the mills or shops and in the field, stating the existing status, rate of progress, estimated time of completion, and cause of delay, if any.

Hi * ❖ #

57. DISPUTES

Clause 6 is deleted, and the following clause is substituted therefor:

Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Chief of the Bureau of Yards and Docks, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. Within 30 days from the date of receipt of such copy, the Contractor may appeal by mailing or otherwise furnishing to the Chief of the Bureau of Yards and Docks a written appeal addressed to the Secretary, and the decision of the Secretary or his duly authorized representative for the hearing of such appeals shall, unless determined by a court of competent jurisdiction to have been fraudulent or capricious or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence, be final and conclusive; provided that, if no such appeal is taken, the decision of the Chief of the Bureau of Yards and Docks shall be final and conclusive. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the decision of the Chief of the Bureau of Yards and Docks. The term “Chief of the Bureau of Yards and Docks” as used herein shall include his duly appointed successor or his representative specially designated for this purpose. * * *

$ $3: $ $

63. PRECEDENCE

In the event of conflict or inconsistency between any of the provisions of the various portions of this contract (the reconciliation of which is not otherwise provided for herein), precedence shall be given in the following order, the provisions of any particular portion prevailing over those of a subsequently listed portion:

(1) typewritten portions of the contract.

(2) the Specifications referred to in Standard Form 23 (including all addenda, and mechanical and technical — but not contractual aspects of incorporated provisions) as specifically amended herein, if amended.

(3) printed provisions of the contract form, including printed provisions of added slip sheets.

8. The Standard Form 21, bid form, submitted by the contractor under date of March 26,1957, on the reverse side, contains the following:

The undersigned agrees that if awarded the contract, he will commence the work immediately after the date of receipt of notice to proceed, and that he will complete the work within 300 calendar days after the date of receipt of notice to proceed.

9. Specifications to the contract, at Section 1, specified the following:

1.6 Time for completion. The entire work shall be completed within 300 calendar days after date of receipt of a notice of award or any other communication authorizing the contractor to proceed. ■

1.7 Damages for delay in accordance with Clause 5 of U.S. Standard Form No. 23A shall be at the rate of $175.00 per calendar day. The Government will take no action pursuant to Clause 5, Liquidated Damages, to terminate the right of the contractor to proceed or to assess liquidated or actual damages where the failure of the contractor to complete the work within the time specified elsewhere in this contract is due solely to the operation of the priorities and allocations system and is not otherwise caused by the fault or negligence of the contractor. It is understood and agreed that such delays will be considered an act caused by the Government and as such will be excusable within the meaning of Clause 5, and the contractor will be entitled to a time extension by reason thereof.

$ $ # * $

1.14 Drawings required of the contractor. Before commencing the installation of any of this work, the contractor shall submit for approval and in accordance with clause 29(f) of NAVDOCKS form no. 113 such drawings as may be required, including those showing pipe anchors, supports and guides.

*****

1.21 Methods and schedules of procedure. The work shall be executed in a manner and at such times that will cause the least practicable disturbance to the occupants of the buildings and the normal activities of the station. * * *

# ;J:

1.23 Examination of premises. Before submitting proposals, bidders are expected to visit and inspect the site of the work and satisfy themselves as to the physical conditions at the site; the general and local conditions, including availability of labor, the nature and extent of the work, the character and effect of existing adjoining and/or adjacent work; and other factors that can affect the cost of the performance of the contract to the extent that such information is reasonably obtainable.

$ $ $ $ $

1.32. Lines and grades required for execution of the work shall be established by the contractor.

*****

1.34 Government work and materiel. The Government will furnish no work or materials for this project.

*****

1.36 Priorities, allocations and allotments. The contractor agrees, in the procurement and use of materials required for the performance of this contract, to comply with the provisions of all applicable rules and regulations of the Business and Defense Services Administration, including Defense Materials System regulations.

*****

Section 2 of the specifications, regarding earthwork, includes the following:

2.2 Elevations and obstructions. Bids shall be based on the following:

2.2.1 that rock will not be encountered; and

2.2.2 that no pipes or other artificial obstructions, except those noted or indicated, will be encountered.

In case the actual conditions differ from those stated and/or shown, an adjustment in the contract price and/ or the time for completion of the work will be made in the same manner as provided by Clause 4 of Form Ho. 23A. * * *

Section 3 of the specifications governed the wood piling and described the requirements for the placing of such piling. Section 4 governed supports and manholes and governed the use of concrete and structural steel work and miscellaneous metal in connection therewith. Section 5 of the specifications covers piping and at subsection 5.6.1 states as follows:

5.6.1 Expansion joints shall be provided in steam lines as required and where indicated to provide for the expansion and contraction of the lines. Expansion joints shall be of the packless type, consisting of stainless steel expansion elements completely enclosed with galvanized metal jackets. * * * All expansion joints shall be suitable for 300-pound service and provided with 300-pound flanges * * *

Section 6 of the specifications describes the basis of bids and states as follows:

6.1 General requirements. Under the bidding items provided for that purpose, bidders shall state prices for each basis of bid given hereinafter. All requirements specified hereinbefore shall govern, unless stated otherwise under any of the following basis of bids.

6.2 Basis of hid for item I shall be the entire work complete in accordance with the requirements specified hereinbefore.

6.3 Basis of hid item II shall be the entire work complete in accordance with the requirements specified under “basis of bid for Item I” but omitting expansion joint in Line Sections H, I, J, K, L, and substituting therefor expansion loops as indicated for these sections. This shall include modification of line support spacing as indicated.

6.4 Basis of hid item III shall be the entire work complete in accordance with the requirements specified under “basis of bid for Item II”. but with the further omission of the relocation of the service road.

Section 7 governed the form of bids and at subpara-graph 7.2 specified that the bids should be submitted on the following items:

Item I. Price for the entire work, complete in accordance with the drawings and the specifications.

Item II. Price for the entire work, complete in accordance with the drawings and the specifications as defined in section “Basis for Bids” for Bid Item II.

Item III. Price for the entire work, complete in accordance with the drawings and specifications as defined under “Basis of Bids” for Bid Item III.

10. Although the plaintiff’s resident superintendent, Mr. Washburn, and its general superintendent, Mr. Meli, came to the job site 2 or 3 days earlier for discussions with the Navy officials concerning the start of the job, the plaintiff delivered an unassembled office to the site on May 1, 1957, and began its assembly on May 6th.

11. The plaintiff engaged the services of the firm of Armi-stead and Beck, civil engineers and land surveyors of long experience, to stake out the alignment and grade of the steam line pedestals. These pedestals were to be erected by the plaintiff to support the weight of the pipe, generally about 2 feet above the ground but, at intervals, much higher concrete pedestals were erected. The entire line required the driving of wood piling by pile drivers before the pedestals could be erected.

N. Merrill Beck, Jr., with a 3-man party, spent 22 days at work on the staking-out operation, beginning on May 8, 1957, and ending October 14, 1957. His work was not permitted to continue to completion from beginning to end because of many various interferences which were encountered in the field but which were not shown on the plans, each of which required that his work either stop while waiting for approval of changes from the Navy Department’s engineers or which caused him to stop working in one area and switch over to another. This required him to go over the same ground with the staking operation two or three times in several instances and made for a very inefficient start of the job through no fault of the plaintiff.

12. Typical of the delay caused to Beck’s survey party was his finding that at one point in the job, the portion between station 7+44 and station 26+65, 84 additional feet of pipe would be required beyond that shown on the plans. This required him to point out the discrepancy to Mr. Wash-bum,- the plaintiff’s superintendent, and to Mr. Mahon, the resident Navy inspector. It required conferences with Mahon’s superiors in the Public Works Office at the Base, lasting 1 y2 hours the first day and 4y2 hours 5 days later. Further checking in the field resulted in a direction to leave this portion of the job and to proceed to another until a decision could be reached. Seemingly, an addition of 84 feet is of little consequence, but, in this case, it required a re-spacing of the concrete pedestals which were called for by the plans at intervals of 35 feet. The period May 8th to May 15th was largely taken up with the above-described discrepancy.

On May 16th, Beck began work further along the pipe line and found that the plans called for the laying of pipe on an existing road. Instead of being given an “on-the-spot” authorization to move the line away from the road, he was told to abandon work on this portion and to proceed to another.

13. There were interferences encountered in the vicinity of a trash dump for a distance of about 1,800 feet. At this point the plans called for the line to run between the dump and a tidal basin. The surveyors discovered that the route was laid in a swamp where the piling could not be driven. This caused the Navy inspector, on June 3,1957, to direct that the survey party do no work in this area pending the receipt of additional instructions. On July 8, 1957, the plaintiff was instructed to proceed with the surveying in this area. The change led the line through a large pile of debris and trash. Though removal of this material should not have taken more than a few hours, defendant did not remove enough to allow plaintiff to lay the line until September 10,1957.

14. At the South Annex area, a great many interferences prevented the erection of the pipe line according to the plans. On May 21, 1957, the engineers started staking out the South Annex area between stations 75+94 and 90+25 and found that (a) 28 additional feet of pipe would be required beyond that shown on the plans, (b) the supports, if installed as called for on the plans, would have landed on some of the steps of the building and in the roadway, and would have completely blocked the roadway at several points, and (c) the steam line would have been located directly beneath high tension wires, thereby making it impossible to install the steam line. As the entire area had to be redesigned by the Government, the plaintiff was stopped by the defendant and had to abandon this portion of the work. On June 11, 1957, the Government requested the plaintiff to submit an estimate of the costs of making the changes indicated on a sketch which completely redesigned the entire area. On July 5, 1957, the plantiff submitted an estimate to the Government on making the requested changes. However, it was not until October 8, 1957, that the defendant, for the first time, authorized the plaintiff to proceed with the engineering portion of the work only, and plaintiff’s engineers staked out that portion of the job on October 8 and 9, 1957.

15. Plaintiff had to do the work in stages. First, the surveying was to be completed, then the piles were to be driven, the pedestals were to be laid atop the piles, next the pipe was to be placed atop the pedestals and then insulated. As each stage was completed, the workmen and subcontractors concerned with it could be released. A delay on any one segment of the line meant that all subsequent stages were held up pending completion of the one then in progress.

16. Although it is claimed that a delay was caused to the plaintiff because the elevation at manholes 3 and 4 were about 1 foot lower than shown on the plans, no delay of any kind has been demonstrated because the manholes were constructed as shown with the exception of the addition of 1 foot of concrete at the top before the covers were installed. This change had no effect on the installation of valves, joints, and pipe in the manholes.

17. All of the pile driving for the work was performed by a subcontractor who reported at the site with his equipment on August 2,1957, and began the work of pile driving on August 5,1957. There is little doubt that this work could and would have proceeded earlier if the staking-out operation could have proceeded to a conclusion from the beginning.

Pile driving was necessary along the entire length of the pipe line at each concrete support and manhole. The record shows that the pile driving subcontractor completed his work by November 29, 1957.

18. Delivery of the 16-inch pipe to the job first began on November 11, 1957, and deliveries were completed during the same month.

19. From June 25, 1957, until October 10, 1957, the Navy inspector’s daily report contains the entry, reading substantially “awaiting plans of change in design at South Annex.” The South Annex is one terminus of the line. The work plaintiff had to do there was completely stopped for a distance of about 1,500 feet at that end, until the plans were completed on October 10th.

20. At one point, plaintiff requested permission to quit the jobsite until the errors in the specifications were ironed out. Defendant’s Officer in Charge insisted that plaintiff remain on the site and threatened to invoke the liquidated damages clause if it left.

21. The actual laying of the pipe moved along rapidly once the supports and fittings, such as rollers and bracing for poles, were in place. The 16-inch pipe came in 40-foot lengths. Photographs in evidence as defendant’s exhibits 4-A through A-L show that by April 4, 1958, much of the pipe laying was completed.

22. A major cause of delay was the faulty design of the installation of a double action expansion joint at station 5+75. The function of the joint was to take up expansion of the pipeline when high pressure steam was driven through it. It would not operate properly unless the uprights which supported it remained rigidly perpendicular. When the steam was turned on, however, the uprights would bend slightly. A back pressure resulted and the uprights cracked. Plaintiff contended that the design was improper, and to prove its point, its employees welded steel bars between the uprights to hold them in the correct position. The joint operated properly when this was done. But the bars could not be left permanently attached to the uprights, for they too would break over a long period of use.

The joint was installed according to the plans on January 10,1958. On March 4,1958, a test was run with steam under pressure and the joint failed in that it did not take up the increased length of the pipe, causing two concrete poles on the anchor station to break. On March 10, the j oint was removed from the line and inspected at the site by the manufacturer’s representative. Visual inspection showed no defect in the joint. On March 19, it was again installed on the line. On the next day, the Navy could not furnish enough steam for a test of the joint. It was tested on March 21 with water in the line for the purpose of determining whether there were any leaks about the joint or its fittings. There were none. On July 23, another steam test was made and the joint went into a “bind”, which again broke the two concrete poles on the anchor station. These had, in the meantime, been replaced.

On July 29th and 30th, the factory representative of the manufacturer of the expansion joint again came to the site, and the joint was again removed from the line and sent back to the factory at Philadelphia. On September 8, 1958, the expansion joint was returned from the factory. It had been disassembled and checked for defects in manufacture and found to be without defect. Thereafter, it was again installed in the line. After the line was tested with steam about a week later, the expansion joint still did not function properly. Several conferences at the site with representatives of the plaintiff, the Navy and the manufacturer of the expansion joint resulted in a decision, about September 25, 1958, to change the design by substituting an expansion loop in the place of the joint at station 5+75. This was made the subject of a change in plans, dated September 26, 1958, which was transmitted to the plaintiff by letter of the same date, requesting an estimate of costs for accomplishing the change. The plaintiff, by letter of October 2, 1958, submitted its detailed cost estimate which, with labor and overhead, amounted to approximately $8,300. On October 8, 1958, the plaintiff was advised by letter that it was authorized to proceed with the change by removing the expansion joint and replacing it with an expansion loop.

23. The work included the insulation of the pipe for the entire length of the line. This work was performed by a subcontractor. From July 18 until August 18, 1958, the insulators were on strike and did no work on the job.

24. There were the usual delays to the work occasioned by inclement weather. The testimony shows that there were 16 days of inclement weather during the entire period of performance by the plaintiff.

25. Defendant issued three Change Orders on the subject job, as follows:

(a) Change Order A was issued on February 24, 1958, and decreased the contract price by $800, and extended the completion date by 60 calendar days. It authorized the following work:

a. Modify anchors at stations 47 and 53 as shown on Sketch SK-S7-57.

b. Revise steam line from existing station 78+75 to Power House SU-1 as shown on Y&D Dwg. 773262.

c. Revise steam line at section H to provide approximately 84 feet of additional steam line as shown on Sketch A dated 16 May 1957.

d. Omit two 16" block valves and flanges shown as numbers two and four.

e. Delete two hinged joints located in the south end of Building SU-1.

f. Use tees with saddle-type anchor bases welded in lieu of cross fittings as specified to provide anchorage in the manholes.

g. Provide for the use of the following Government-furnished material:

130 feet — 12" schedule 40 Black Steel

21 feet — 10" schedule 40 Black Steel Pipe

3 feet — 10" OS&Y, IB flanged gate valves— 250#

6 feet — 10" Slip-on, F&D flanges — 300#

h. Provide 3,994 linear feet of untreated pile in lieu of treated pile.

i. Delete 6,017 linear feet of treated pile.

j. Drive 140 linear feet of concrete cans to form composite piles.

(b) Change Order B was issued on May 13, 1958, and increased the contract price by $6,795, and provided that the time for completion was to be subject to future determination. It authorized the following additional work:

a. Provide changes to supporting structure under Vir-finian Railroad in accordance with Sketch No. SK-—48-58 of 8 April 1958.

b. Provide changes to supporting structure under Taus-sig Boulevard as indicated on Sketch No. SK-S-48-58.

c. Provide drip stations at South Annex Power Plant and in Manhole No. 2.

d. Relocate piping in South Annex Power Plant to avoid existing piping.

e. Raise top of Manhole No. 3 as indicated on Sketch No. SK-527-57 of 23 December 1957.

f. Change size and elevation of expansion loop leg at Manhole No. 6 to meet field conditions.

(c) Change Order C was issued December 4, 1958, and increased the contract price by $6,955, and extended the completion date by an additional 184 calendar days. It authorized the following additional work:

a. Provide removal of existing expansion joint and construction of an expansion loop in the 16" line in accordance with Sketch SK-M-113-58, dated 26 September 1958. Increase $6,800.00

b. Remove, change the direction of the blow-off line and install four (4) drip stations on the 16" line along Tamsig Boulevard. Increase $155.00

Therefore, by virtue of these three Change Orders, defendant increased the contract price to $457,950, and on December 4, 1958, extended the completion date 244 calendar days retroactively to October 20,1958.

26. Typical of the manner in which a change in design was instituted and thereafter authorized is the exchange of correspondence concerning the change from the expansion joint to the expansion loop. The detailed cost estimate totaling $8,291.49, which was an enclosure to the plantiff’s October 2nd letter has been omitted.

The Navy’s letter of September 26, 1958, to the plaintiff’s Richmond, Virginia, office, is as follows:

It is proposed to modify the subject contract in accordance with Y&D Drawing SK-M-113-58 of 26 September 1958 “Steam Line to South Annex Installation of Expansion Loop at Station 5+75.”

Kindly prepare an estimate of cost to perform the work. Also, it is requested that you furnish an estimate of the time required to accomplish the changes.

This is not an authority to proceed, final approval will be withheld until your estimate has been reviewed and approved.

The plaintiff’s letter of October 2, 1958, to the Resident Officer in Charge of Construction, Norfolk, reads as follows (the detailed cost estimate, totaling $8,291.49, referred to therein is not being quoted):

We are in receipt of letter dated September 26, 1958, from Ensign R. C. Lonick requesting quotation on change in Steam Line in accordance with Drawing SKM-113-58 dated September 26, 1958, showing Station Location 5+75.

We enclose herewith the original and four copies of our quotation broken down showing the cost of making this change.

We have also included in this breakdown the cost of labor and materials covering delays in connection with the Navy Department making change from Expansion Joint to Expansion Loop.

Also included in this breakdown is a statement showing the cost of labor by days and hours of each trade worked in connection with the delays.

*****

The following is a Schedule of Completion After Receipt of Order to Proceed

PIPE In stock in Richmond City.

16" 90° Ells In stock in Chicago, Ill. Delivery about 7 days after placing order.

Adjustable Rollers and Saddle. In stock at factory — Delivery about 5 days.

Insulation About 30 days delivery after placing order, but steam can be turned on as soon as we complete our work, and the insulation work can be done while steam is on the pipe line.

We will be able to complete this project in about two weeks after we receive order to proceed.

The Navy’s letter to the plaintiff’s Richmond office of October 8,1958, reads as follows:

You are hereby authorized to proceed with the following changed work, at an increase in the contract price not to exceed $6,000.00, subject to review of the estimate:

Provide steam line expansion loop in accordance with Sketch No. SK-113-58, of 26 September 1958.

The formal change order with a firm adjustment in the contract price and the contract time for completion will be issued upon approval of the estimate.

27. As to each of the items where the design was changed, it is to be noted that before the change was authorized, the plaintiff was notified at its Richmond, Virginia, office concerning the change. It. was told that it was not yet authorized to proceed with the change until the plaintiff submitted its cost estimate and that estimate was reviewed and approved by the Navy representatives. The authorization to proceed with the performance of the changed work very often was made many months after the change in design was decided upon and the plaintiff informed thereof.

28. On May 12,1958, the plaintiff sent the following letter to the Navy’s Resident Officer in Charge of Construction:

The subject job is now being held up awaiting approval on changes from design. The changes listed below will give you an idea of the adverse conditions under which we have had to operate, and substantiate why this job at the time is being operated at a loss by our Company:

1. Changes in design on line and support from Station 78+75 to Power House. Stop Order issued May, 1957. Proceed Authority given on December 27, 1957, a delay of seven months.

2. Design changes in Power House piping. Stop Order given March 26,1958, and verbal approval given two weeks later, but to this date no written authority has been received. However, we have this work completed now.

3. Design changes on Flume Piping. Stop Order given April 10, 1958. We still do not have authority to proceed.

The above three items alone constitute an eight and one-half months delay.

You will note from bidding data that we were only $1,600.00 low on this job, indicating the estimate on work was correct. We feel that our field organization has handled this job efficiently and we are certain that your field representative will verify same.

At this time we wish to present our claim for a five percent (5%) profit and overhead fee for the entire cost of this job when completed. We will be glad to discuss this matter with you at your convenience, and, present for your review the complete record for above job.

After haying reviewed the records and job, we feel that you will agree this claim is justified and that the percentage asked for is a fair one.

Please give this matter your consideration, and let us have your comments on same.

29. On July 2, 1958, the Navy replied to the May 12th letter quoted in the preceding finding to the effect that claims for damages for delay were not in the purview of the contract.

30. On January 15, 1959, the plaintiff sent a letter to the Navy Department, which was considered as a request for a final decision of the contracting officer on a claim for additional compensation of about $46,000 under the contract in suit. On February 25, 1959, the claim was rejected by the Director, Contracts Division, Bureau of Yards and Docks, Navy Department, as a claim for damages for delay.

31. On February 26, 1959, the plaintiff appealed to the Armed Services Board of Contract Appeals, which appeal was denied on the ground of lack of jurisdiction upon motion of the Navy Department’s counsel on August 10, 1959.

32. The performance of the work by the plaintiff was conducted as efficiently as possible under the circumstances, considering all of the delays which were encountered in the performance of the work from whatever cause. The Navy’s Eesident Officer in Charge of Construction considered his on-the-job inspector, Mr. Mahon, to be “one of the best inspectors we had.” Mr. Dunn, Mahon’s chief inspector, who frequently came to the job when trouble arose, was described as competent and extremely cooperative. Mahon testified in response to a question about plaintiff’s performance that it was carried on efficiently and that the plaintiff did good work. Mr. Dunn testified “* * * I do know this, and I’ll say this: that their supervision on the job was efficient, 100 percent. Mr. Washburn was an efficient supervisor, very efficient. * * *”

33. The plaintiff’s proof of damages is premised on its estimate that it could have performed the entire job in 210 days if it had not been delayed by the defendant in the prosecution of the work. The evidence as a whole shows that this estimate was unrealistically optimistic. The evidence indicates that, absent any delay, plaintiff would have finished the work in the 300-day period allowed by the contract. Since the work was in fact completed after 544 days, the total delay is approximately eight months. Approximately two months of this delay were the result of factors not the fault of defendant. Bad weather delayed the work for 16 days, and a strike caused an additional 30 days of delay. Plaintiff delayed in starting the work for ten days, and it is also responsible for four of the six days it took to submit its cost estimate on replacement of the expansion joint with a loop. Defendant is chargeable with the remaining six months of delay.

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 for six months of delay, and we remand the case to the Commissioner for further proceedings to ascertain the amount of damages to be awarded to plaintiff.

In accordance with the opinion of the court and a memorandum report of the commissioner as to the amount due thereunder, it was ordered on February 14,1964, that judgment be entered for the plaintiff for $40,920.79.

Plaintiff’s bid was $445,000. The next highest bid was $448,000, and the high bid was $464,497.

Plaintiff now admits that it is responsible for a ten-day, delay in starting work.

Section 2 of the specifications provided, in part:

“2.2 Elevations and obstructions. Bids shall be based on the following: *****

“2.2.2 that no pipes or other artificial obstructions, except those noted or indicated, will be encountered.”

Sections 1.6 and 1.7 of the specifications made the contractor liable for liquidated damages of $175 per day for each day In excess of 300 that It took to complete the work. Defendant's retroactive extension of the completion date eventually waived any liability under this clause.

At oral argument, defendant for the first time asserted that the Armed Services Board of Contract Appeals misconstrued its jurisdiction, and that under the authority of United States v. Carlo Bianchi, Inc., 373 U.S. 709 (1963), we must suspend proceedings to permit plaintiff to return to the Board and again urge it to grant a hearing in this case. All else aside, we think defendant’s contention is made too late. See Stein Bros. Mfg. Co. v. United States, 162 Ct. Cl. 802, 337 F. 2d 861 (1963) ; WPC Enterprises v. United States, 163 Ct. Cl. 1, 323 F. 2d 874 (1963).

Clause 3 of the general provisions of the contract provided, in pertinent part, as follows:

“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 claim asserted at any time prior to the date of final settlement of the contract. * * * 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.”

United States v. Rice, 317 U.S. 61 (1942).

United States v. Blair, 321 U.S. 730 (1944).

United States v. Foley Co., 329 U.S. 64 (1946).

In computing plaintiff’s costs, tlie Commissioner (presumably through inadvertence) neglected to allow anything for the fair rental value of the equipment plaintiff had at the job-site. We have held that such an allowance, with a 50% discount for the absence of wear and tear, is properly includable in. plaintiff’s recoverable costs. Warren Bros. Roads Co. v. United States supra; Brand Investment Co. v. United States, 102 Ct. Cl. 40, 58 F. Supp. 749 (1944), cert. denied, 324 U.S. 850 (1945).