MARCH 15, 1924, 3 COMP. GEN. 636

MARCH 15, 1924, 3 COMP. GEN. 636

CONTRACTS, LIQUIDATED DAMAGES - COMPLETION OF CONTRACT BY SURETY A SURETY WHO TOOK OVER AND COMPLETED A CONTRACT UPON WHICH THE PRINCIPAL HAD DEFAULTED, AND LIQUIDATED DAMAGES WERE ASSESSED FOR DELAY IN COMPLETION OF CONTRACT, IS SUBROGATED TO THE RIGHTS OF THE CONTRACTOR AND ENTITLED TO RECEIVE ANY REFUND COVERING AN OVERDEDUCTION OF LIQUIDATED DAMAGES, UPON A SHOWING THAT THE SUM EXPENDED IN COMPLETING THE CONTRACT EXCEEDED THE AMOUNT RECEIVED FROM THE GOVERNMENT THEREFOR.

DECISION BY COMPTROLLER GENERAL MCCARL, MARCH 15, 1924:

THE FIDELITY AND DEPOSIT CO. OF MARYLAND APPLIED MAY 18, 1923, FOR REVIEW OF SETTLEMENT NO. W-823855, DATED NOVEMBER 7, 1922, DISALLOWING ITS CLAIM FOR $35,259 FOR REFUND OF THE AMOUNT DEDUCTED AS LIQUIDATED DAMAGES FROM FINAL PAYMENT MADE UNDER CONTRACTS DATED MARCH 31, 1920, AND JUNE 26, 1920, WITH THE RANGELY CONSTRUCTION CO.

THE CONTRACTS REFERRED TO ARE AS FOLLOWS:

CONTRACT FOR CONSTRUCTION OF ADMINISTRATION BUILDING, QUARTERS, ETC., AIR COAST DEFENSE STATION, STATEN ISLAND, N.Y., DATED MARCH 31, 1920 (TO BE COMPLETED IN 240 WORKING DAYS FROM APRIL 12, 1920), AMOUNT $437,604. THE CONTRACTOR WAS BONDED BY THE FIDELITY AND DEPOSIT CO. FOR $218,802 UNDER THIS CONTRACT.

CONTRACT FOR CONSTRUCTION OF OFFICERS' QUARTERS, INFIRMARY AND MISCELLANEOUS LANDSCAPE WORK, AIR COAST DEFENSE STATION, NEW DORP, STATEN ISLAND, DATED JUNE 26, 1920 (ORIGINAL TIME FOR COMPLETION FEBRUARY 28, 1921), AMOUNT $376,772. A SUPPLEMENTAL AGREEMENT DATED JANUARY 7, 1921, EXTENDED THE TIME FOR COMPLETION TO APRIL 15, 1921. THE CONTRACTOR WAS BONDED BY THE FIDELITY AND DEPOSIT CO. FOR $188,386 UNDER THIS CONTRACT. THE PROVISIONS OF THE CONTRACTS UNDER WHICH THE DEDUCTION WAS MADE FOR WHICH REIMBURSEMENT IS SOUGHT AND WHICH ARE THE SAME IN BOTH CONTRACTS ARE AS FOLLOWS:

8. IN CASE OF THE FAILURE OF SAID CONTRACTOR TO COMPLY WITH THE STIPULATIONS OF THIS CONTRACT ACCORDING TO THE TRUE INTENT AND MEANING THEREOF (INCLUDING THE REQUIREMENT FOR PROGRESS OF PERFORMANCE TO THE SATISFACTION OF THE OFFICER IN CHARGE, OR HIGHER AUTHORITY), THEN THE CONTRACTING OFFICER, OR HIS SUCCESSOR, SHALL HAVE THE RIGHT TO COMPLETE THE WORK IN SUCH MANNER AS HE SHALL DEEM BEST FOR THE INTERESTS OF THE PUBLIC SERVICE, EITHER BY DAY'S LABOR AND OPEN MARKET PURCHASE OF THE NECESSARY MATERIALS, OR BY CONTRACT, OR BOTH, AND TO USE FOR THAT PURPOSE THE CONTRACTOR'S MATERIALS AND APPLIANCES ON THE RESERVATION OR AT THE PLACE WHERE THE WORK IS BEING PERFORMED, AND ANY EXCESS OF COST RESULTING FROM SUCH FAILURE, INCLUDING ANY CHARGES ON ACCOUNT OF DELAY, SHALL BE CHARGED TO THE CONTRACTOR. IN EVENT, HOWEVER, OF THE GRANTING OF ADDITIONAL TIME FOR PERFORMANCE, THE COST OF INSPECTION AND OTHER EXPENSES AND DAMAGES (INCLUDING ANY LOSS OR DAMAGE TO THE WORK UNDER CONSTRUCTION BY FIRE OR OTHER CAUSES) TO THE UNITED STATES FROM AND AFTER THE DATE ORIGINALLY FIXED FOR COMPLETION UNTIL THE WORK SHALL HAVE BEEN SATISFACTORILY ACCOMPLISHED, EXCEPT IN SO FAR AS THE SAME MAY ARISE FROM DELAYS FOR WHICH THE UNITED STATES IS RESPONSIBLE, AS DETERMINED IN EACH OF THE PARTICULARS BY THE OFFICER IN CHARGE, OR HIGHER AUTHORITY, SHALL BE CHARGED TO THE CONTRACTOR AND MAY BE DEDUCTED FROM ANY MONEY DUE OR TO BECOME DUE SAID CONTRACTOR FROM THE UNITED STATES: PROVIDED, THAT WHERE ADDITIONAL TIME HAS BEEN GRANTED THE UNITED STATES SHALL ALSO HAVE THE RIGHT TO CAUSE THE REMAINING PART OF THE CONTRACT, OR ANY PORTION THEREOF, TO BE TAKEN FROM THE CONTRACTOR WHENEVER, IN THE OPINION OF THE OFFICER IN CHARGE, REASONABLE AND SATISFACTORY PROGRESS IS NOT BEING MADE, AND TO SECURE COMPLETION AT THE EXPENSE OF THE CONTRACTOR, INCLUDING CHARGES AS ABOVE ON ACCOUNT OF DELAY.

9. THAT THERE SHALL BE NO TRANSFER OF THIS CONTRACT OR OF ANY INTEREST THEREIN BY THE CONTRACTOR TO ANY OTHER PARTY, AND IN CASE OF THE VIOLATION OF THIS PROVISION THE UNITED STATES, RESERVING ALL RIGHTS OF ACTION FOR ANY BREACH OF THIS CONTRACT BY THE CONTRACTOR, MAY REFUSE TO CARRY OUT THIS CONTRACT WITH EITHER THE TRANSFEROR OR THE TRANSFEREE.

1B. AND IT IS EXPRESSLY AGREED THAT THE COST OF INSPECTION AND OTHER EXPENSES TO THE UNITED STATES, CONTEMPLATED UNDER ARTICLE 8 OF THIS CONTRACT, SHALL BE FIXED AT ONE HUNDRED AND FIFTY ($150.00) DOLLARS FOR EVERY WORKING DAY GRANTED BY THE UNITED STATES TO THE CONTRACTOR AS TIME OF PERFORMANCE IN EXCESS OF THE (200 IN CONTRACT OF JUNE 26 AND 240 IN CONTRACT OF MARCH 31) WORKING DAYS HEREINBEFORE STIPULATED, COMPUTED AND AGREED UPON BY THE PARTIES HERETO AS THE ACTUAL COST OF INSPECTION AND OTHER EXPENSES THE UNITED STATES WILL BE COMPELLED TO INCUR BY REASON OF FAILURE ON THE PART OF THE CONTRACTOR TO COMPLETE WITHIN THE STIPULATED * * * WORKING DAYS.

1C. AND IT IS EXPRESSLY AGREED THAT THE SUM OF ONE HUNDRED AND FIFTY ($150) DOLLARS MENTIONED IN PARAGRAPH 1B HEREOF, SHALL BE IN NO WISE BAR THE UNITED STATES FROM WITHHOLDING FROM THE CONTRACTOR SUCH ADDITIONAL SUM OR SUMS AS MAY BE SHOWN BY THE UNITED STATES TO BE ACTUAL DAMAGES SUSTAINED BY THE UNITED STATES, ARISING FROM OBLIGATIONS INCURRED BY THE UNITED STATES AFTER THE SIGNING OF THIS CONTRACT, RELYING ON ITS COMPLETION WITHIN THE AFORESAID * * * WORKING DAYS.

THE CONTRACTOR WAS NOTIFIED ON JANUARY 27, 1921, THAT THE PROGRESS BEING MADE ON THE WORK WAS UNSATISFACTORY, AND ON MARCH 15 IT WAS AGAIN NOTIFIED OF THE UNSATISFACTORY CONDITION OF THE WORK AND ADVISED THAT THE BONDING COMPANY WOULD BE ADVISED OF THE PROBABILITY THAT THE WORK WOULD NOT BE COMPLETED WITHIN THE TIME SPECIFIED. ON MARCH 16, 1921, A CONFERENCE BETWEEN THE CONSTRUCTING QUARTERMASTER AND A REPRESENTATIVE OF THE BONDING COMPANY WAS HAD AND THE SITUATION WAS PLACED BEFORE THE FIDELITY AND DEPOSIT CO.'S REPRESENTATIVE. IT WAS FOUND THAT THE REMAINING PAYMENTS DUE UNDER THE CONTRACT WOULD NOT BE SUFFICIENT TO COVER THE COST OF THE COMPLETION OF THE WORK AND THE BONDING COMPANY'S REPRESENTATIVE WAS RELUCTANT TO ADVANCE MONEY TO THE CONTRACTOR TO AID IT IN CARRYING OUT THE WORK UNLESS ASSURANCE WAS GIVEN THAT NO LIQUIDATED DAMAGES FOR DELAY IN COMPLETING THE WORK WOULD BE ASSESSED. HE WAS INFORMED THAT THE CONTRACTOR HAD FAILED TO OBTAIN EXTENSION OF TIME FOR COMPLETING THE CONTRACTS AND THAT BY REASON OF THIS FACT THE TIME FOR COMPLETION HAD ACTUALLY EXPIRED AND THAT UNDER THE REGULATIONS OF THE WAR DEPARTMENT THE CONSTRUCTING QUARTERMASTER HAD NO AUTHORITY TO EXTEND THE TIME FOR COMPLETION, AND HE WAS FURTHER ADVISED THAT NO OFFICER OF THE GOVERNMENT HAD POWER TO ENTER INTO A FORMAL AGREEMENT TO WAIVE DAMAGES FOR DELAY STIPULATED FOR IN A CONTRACT. THE CONSTRUCTING QUARTERMASTER STATED, HOWEVER, THAT HE WOULD RECOMMEND THAT SUCH DAMAGES BE WAIVED AND THAT HE BELIEVED THAT HIS RECOMMENDATION WOULD BE GIVEN FAVORABLE CONSIDERATION BY THE QUARTERMASTER GENERAL.

THE BONDING COMPANY CLAIMS IT ACTED ON THIS ASSURANCE AND UNDERTOOK TO SUPERVISE THE WORK, AND ADVANCED CERTAIN MONEY TO THE CONTRACTOR TO MEET SOME OF ITS BILLS. IN ADVISING THE CONSTRUCTING QUARTERMASTER OF THEIR DECISION TO TAKE THIS COURSE THE BONDING COMPANY REQUESTED THAT THE CONTRACT WITH THE RANGELY CO. BE ASSIGNED TO IT. IN REPLY TO THIS REQUEST IT WAS INFORMED THAT THE CONTRACTS COULD NOT BE LEGALLY ASSIGNED, SUCH ASSIGNMENT BEING PROHIBITED BOTH BY THE TERMS OF THE CONTRACT ITSELF AND BY STATUTE.

ON MAY 27, 1921, THE ATTENTION OF THE CONTRACTOR WAS AGAIN CALLED TO ITS DEFAULT AND IT WAS GIVEN THREE DAYS IN WHICH TO SHOW BETTER PROGRESS UNDER PENALTY OF HAVING THE CONTRACT TAKEN OUT OF ITS HANDS. ON THE SAME DATE THE CONTRACTOR REPLIED WAIVING THE THREE DAYS NOTICE AND CONSENTING TO THE GOVERNMENT'S PROCEEDING TO COMPLETE THE WORK AS PROVIDED IN THE CONTRACT.

THE FIDELITY AND DEPOSIT CO. WAS IMMEDIATELY NOTIFIED OF THE ACTION OF THE CONTRACTOR AND WAS CALLED UPON TO EXERCISE ITS OPTION AND TO ADVISE THE CONSTRUCTING QUARTERMASTER IMMEDIATELY WHETHER IT DESIRED TO ENTER UPON AND COMPLETE THE CONTRACTS OR WHETHER IT WAS DESIRED THAT THE GOVERNMENT SHOULD COMPLETE THEM, CHARGING THE COST OF COMPLETION AGAINST THE UNPAID BALANCE DUE THE CONTRACTOR, AND SUCH EXCESSIVE COST AS MIGHT BE ENTAILED OVER AND ABOVE SUCH BALANCE TO THE BONDING COMPANY. TO THIS NOTICE AND REQUEST THE BONDING COMPANY REPLIED AS FOLLOWS:

WE ARE IN RECEIPT OF YOUR LETTER OF MAY 27, NOTIFYING US THAT THE RANGELY CONSTRUCTION COMPANY HAS BEEN DECLARED IN DEFAULT ON THE TWO CONTRACTS WHICH IT HAS WITH THE UNITED STATES GOVERNMENT FOR CERTAIN WORK AT THE AIR COAST DEFENSE STATION, NEW DORP, STATEN ISLAND, AND CALLING UPON THIS COMPANY TO EXERCISE ITS OPTION TO COME IN AND COMPLETE THE TWO SAID CONTRACTS.

THE FIDELITY AND DEPOSIT COMPANY OF MARYLAND DESIRES TO AND DOES HEREBY ELECT TO COMPLETE THE TWO SAID CONTRACTS, IT BEING UNDERSTOOD THAT THE FIDELITY COMPANY SHALL BE ENTITLED TO ALL OF THE RIGHTS WHICH THE CONTRACTOR WOULD HAVE HAD IF IT HAD NOT BEEN DECLARED IN DEFAULT, AND SHALL BE ENTITLED TO RECEIVE IN ITS OWN NAME ALL MONEYS HEREAFTER TO BE PAID ON THE SAID CONTRACTS.

ON JUNE 25, 1921, THE CONSTRUCTING QUARTERMASTER REPORTED THAT THE WORK WOULD BE COMPLETED BY THE BONDING COMPANY ON JUNE 30, 1921, AND RECOMMENDED THAT ONLY A CERTAIN SUM WHICH IN HIS OPINION WOULD COVER THE COST OF ACTUAL EXPENSE AND DAMAGE DUE TO THE DELAY, INSTEAD OF THE SUM STIPULATED IN THE CONTRACT, BE DEDUCTED FROM THE FINAL PAYMENTS. THE WAR DEPARTMENT DID NOT FOLLOW HIS RECOMMENDATION BUT FROM THE FINAL PAYMENTS MADE DEDUCTIONS AS FOLLOWS:

CHART CONTRACT DATED MARCH 31, 1920 ----------------------------- $19,650 CONTRACT DATED JUNE 24, 1920 ------------------------------ $15,600

THERE IS NO QUESTION THAT THE SUMS DEDUCTED REPRESENTED THE AMOUNT DUE AS LIQUIDATED DAMAGES IN ACCORDANCE WITH THE CONTRACT PROVISIONS, BUT THE CLAIMANT ASKS REMISSION OF THE ENTIRE AMOUNT DEDUCTED ON THE GROUND THAT--

1. IT SHOULD HAVE BEEN ALLOWED TO TAKE OVER THE WORK EARLIER IN 1921.

2. THAT ASSURANCE WAS GIVEN BY THE CONSTRUCTING QUARTERMASTER THAT NO LIQUIDATION DAMAGES WOULD BE ASSESSED.

3. THAT THE DELAY IN COMPLETION WAS THE FAULT OF THE UNITED STATES AND NOT OF THE CONTRACTOR.

AS TO THE FIRST CONTENTION, THE SURETY APPEARS TO HAVE HAD KNOWLEDGE OF THE MANNER OF PERFORMANCE OF THE WORK AND TO HAVE TAKEN PART IN THE EFFORTS TO EXPEDITE IT. THE SURETY PRESUMABLY ALSO HAD ITS REPRESENTATIVE PERIODICALLY VISIT THE OPERATION TO KEEP INFORMED AS TO THE CONTRACT WORK. THERE APPEARS NOTHING IN THE CONTENTION MADE TO NEGATIVE THE RIGHT OF THE GOVERNMENT TO LIQUIDATED DAMAGES FOR THE DELAY.

NOR DID THE ASSURANCE GIVEN BY THE CONSTRUCTING QUARTERMASTER OBLIGATE THE GOVERNMENT TO WAIVE THE LIQUIDATED DAMAGES WHICH ACCRUED UNDER THE CONTRACTS. THE QUARTERMASTER HAD NO AUTHORITY TO WAIVE SUCH DAMAGES AND THE CLAIMANT WAS EXPRESSLY NOTIFIED THAT NEITHER HE NOR ANY OTHER OFFICER OF THE GOVERNMENT COULD ENTER INTO AN AGREEMENT TO DEPRIVE THE UNITED STATES OF ITS CONTRACTUAL RIGHTS.

THE DELAYS FOR WHICH THE UNITED STATES IS ALLEGED TO HAVE BEEN RESPONSIBLE ARE STATED BY CLAIMANT AS FOLLOWS:

A. EMBARGOES ON RAILROADS CAUSING DELAY IN RECEIPT OF MATERIAL.

B. INTERFERENCE BY OTHER GOVERNMENT CONTRACTORS ON PREMISES.

C. CHANGE IN CONSTRUCTING QUARTERMASTERS WHILE WORK WAS IN PROGRESS.

D. INABILITY TO SECURE TERRA COTTA AS STIPULATED IN SPECIFICATIONS AND DELAY IN CHANGE OF SPECIFICATIONS TO ALLOW USE OF BRICK.

E. LOCATION OF RADIO MASTS DELAYED.

F. FAULTY PLASTER SPECIFICATIONS.

G. LABOR TROUBLES AND STRIKES.

H. INABILITY TO SECURE THE USE OF PART OF STABLES FOR HOUSING MEN.

IT IS STATED IN THE BRIEF FILED BY THE ATTORNEYS FOR THE CLAIMANT THAT---

THERE WAS MORE TIME LOST IN DELAYS CAUSED BY GOVERNMENT CONTROL OF R.R. AND CHANGING OF COMMANDING OFFICERS IN CHARGE (ITEMS A AND C) THAN WE WERE BEHIND IN THE WORK.

IT IS ALSO ALLEGED THAT DETAILED PLANS WERE DELAYED ON ALL BUILDINGS AND THAT THE LOCATION OF BUILDINGS WAS CHANGED FROM ORIGINAL PLAN, CAUSING DELAYS.

IN WHAT RESPECT GOVERNMENT CONTROL OF RAILROADS AFFECTED THE CONTRACT IS NOT CLEAR. THE GOVERNMENT CONTROL OF RAILROADS EXPIRED FEBRUARY 29, 1920. THE CONTRACTS WERE ENTERED INTO IN MARCH AND JUNE, 1920. IN ANY EVENT THE GOVERNMENT WAS NOT RESPONSIBLE FOR THE DELAY CAUSED BY RAILROAD EMBARGOES, THERE BEING NO PROVISION IN THE CONTRACT AUTHORIZING EXTENSION OF TIME FOR DELAYS OF THIS CHARACTER.

NOR WAS THE GOVERNMENT OBLIGATED TO KEEP THE SAME OFFICER AT THE WORK. FROM THE RECORD IT APPEARS THAT NOT ONLY WAS THERE A CONSTRUCTING QUARTERMASTER ON DUTY ALL THE TIME BUT ALSO A SUPERINTENDENT OF CONSTRUCTION, INSPECTOR, AND OTHER GOVERNMENT EMPLOYEES. THE CONTRACTOR WAS ADVISED THAT THE SUPERINTENDENT OF CONSTRUCTION WAS IN CHARGE AND THAT ORDERS WOULD BE ISSUED THROUGH HIM. THE CONTRACT, AND THE PLANS AND SPECIFICATIONS WHICH WERE MADE A PART THEREOF, SHOWED THE WORK TO BE PERFORMED AND THE RECORD SHOWS THAT ALL PLANS, DETAILS, AND SPECIFICATIONS WERE DELIVERED TO THE CONTRACTOR AT THE TIME THE CONTRACT WAS SIGNED. THE RECORD FAILS TO SHOW THAT THE LOCATIONS OF ANY BUILDINGS WERE CHANGED NOR DOES THE CLAIMANT STATE SPECIFICALLY THE NUMBER AND DESCRIPTION OF ANY SUCH BUILDINGS.

THE ALLEGED INTERFERENCE BY OTHER GOVERNMENT CONTRACTORS (ITEMS B AND H) WAS THE REFUSAL OF SMITH, HAUSER, AND MCISAAC TO SURRENDER THE STABLES AND SHEDS WHICH THE CONTRACTOR DESIRED TO USE FOR STORAGE PURPOSES AND FOR HOUSING ITS MEN, AND IT IS ALSO ALLEGED THAT THE CONTRACTOR WAS REFUSED PERMISSION TO USE THE ROADS ON THE PROJECT. THE CONTRACT DID NOT REQUIRE THE GOVERNMENT TO GIVE THE CONTRACTOR THE USE OF SUCH STABLES AND SHEDS. HOWEVER, AS SOON AS PRACTICABLE IT WAS ALLOWED THE USE OF CERTAIN BUILDINGS MERELY AS A MATTER OF ACCOMMODATION. THE GOVERNMENT WAS UNDER NO OBLIGATION TO PROVIDE HOUSING AND STORAGE ROOM FOR THE CONTRACTOR. THE QUARTERMASTER GENERAL REPORTS THAT THE CONTRACTOR WAS NOT REFUSED THE USE OF THE ROADS, BUT THAT THE CONTRACTOR WHO CONSTRUCTED THE ROADS DID REFUSE TO PERMIT THEIR USE UNTIL THEY HAD BEEN COMPLETED AND ACCEPTED. AS SOON AS THEY WERE ACCEPTED BY THE GOVERNMENT THE CONTRACTOR WAS PERMITTED TO USE THEM. THE CONDITIONS AND CIRCUMSTANCES WITH RESPECT TO ROADS WERE, OR SHOULD HAVE BEEN, KNOWN TO THE CONTRACTOR AT THE TIME THE CONTRACTS WERE ENTERED INTO.

THE CLAIMANT ALLEGES THAT THE CONTRACTOR, BEING UNABLE TO SECURE TERRA COTTA, WAS PERMITTED TO USE BRICK WHICH COST A GREAT DEAL MORE THAN THE TERRA COTTA WOULD HAVE COST, AND CLAIMS AN ALLOWANCE OF ADDITIONAL COST FOR THIS REASON. BY LETTER DATED MAY 20, 1920, THE RANGELY CONSTRUCTION CO. ADVISED THAT IF ALLOWED TO USE BRICK INSTEAD OF THE TERRA COTTA SPECIFIED IT WOULD STAND THE ADDITIONAL COST. THE GOVERNMENT IS NOT RESPONSIBLE FOR DELAY CAUSED BY A CHANGE IN SPECIFICATIONS MADE AT THE REQUEST OF THE CONTRACTOR.

THE UNSATISFACTORY RESULT OF THE PLASTER WAS NOT DUE TO FAULTY SPECIFICATIONS (ITEM F). THE SPECIFICATIONS CALLED FOR A SANDED FINISH, USING EITHER PATENT OR LIME PLASTER. THE CONTRACTOR USED A PATENT PLASTER, WHICH DID NOT GIVE SATISFACTORY RESULTS. THE GOVERNMENT DID NOT REQUIRE THE CONTRACTOR TO PLASTER THE BUILDINGS IN ANY DIFFERENT MANNER THAN THAT CALLED FOR IN THE SPECIFICATIONS, BUT DID REQUIRE THE SANDED FINISH AS STIPULATED BY THE SPECIFICATIONS.

THERE IS NO PROVISION IN THE CONTRACT FOR AN EXTENSION OF TIME FOR DELAYS CAUSED BY STRIKES AND LABOR TROUBLES (ITEM G).

THE CLAIMANT ALLEGES THAT THERE WAS DELAY IN SELECTING THE SITE FOR THE LOCATION OF THE RADIO MASTS (ITEM E). WHILE THIS APPEARS TO BE ERRONEOUS, IT DOES APPEAR FROM THE RECORD THAT THE COMPLETION OF THE WORK WAS DELAYED 49 DAYS DUE TO THE FAILURE OF THE GOVERNMENT TO FURNISH THE MASTS IN TIME AND THEREFORE THE CLAIMANT WAS ENTITLED TO AN EXTENSION OF TIME ON CONTRACT DATED JUNE 26, 1920, ON THIS ACCOUNT.

THE RECORDS OF THE WAR DEPARTMENT SHOW THAT THE DIFFICULTIES EXPERIENCED BY THE RANGELY CONSTRUCTION CO. IN FINANCING THE WORK WERE LARGELY RESPONSIBLE FOR THE DELAY IN COMPLETING THESE CONTRACTS. BUT BE THAT AS IT MAY, THE ONLY DELAY FOR WHICH THE UNITED STATES WAS RESPONSIBLE WAS THAT OF 49 DAYS CAUSED BY THE FAILURE TO FURNISH THE RADIO MASTS, AND LIQUIDATED DAMAGES WERE PROPERLY ASSESSED FOR ALL OTHER DELAYS.

SINCE THE DEDUCTION MADE INCLUDED THE DELAY OF 49 DAYS FOR WHICH THE UNITED STATES WAS RESPONSIBLE THERE WAS AN OVERDEDUCTION OF LIQUIDATED DAMAGES AMOUNTING TO $7,350.

THE CLAIM OF THE FIDELITY AND DEPOSIT CO. TO THIS AMOUNT IS ASSERTED ON THE GROUND THAT IN CARRYING OUT THE CONTRACT OF ITS PRINCIPAL IT BECAME SUBROGATED TO ITS RIGHTS, AND EVIDENCE IS SUBMITTED SHOWING THAT IN COMPLETING THE WORK IT DISBURSED $62,762.79 MORE THAN IT RECEIVED IN CURRENT PAYMENTS FROM THE GOVERNMENT.

IT HAS BEEN HELD THAT THE ACCOUNTING OFFICERS OF THE TREASURY IN THE SETTLEMENT OF A CLAIM PROPERLY BEFORE THEM MAY RECOGNIZE A SURETY'S RIGHT OF SUBROGATION AND DIRECT PAYMENT ACCORDINGLY. 26 COMP. DEC., 467.

UPON REVIEW THERE IS CERTIFIED AS DUE THE FIDELITY AND DEPOSIT CO. THE SUM OF $7,350. THE DISALLOWANCE OF THE REMAINDER OF THE CLAIM IS SUSTAINED.