B-159934, MAY 8, 1969

B-159934, MAY 8, 1969

TO CONTINENTAL CONSOLIDATED CORPORATION:

WE REFER TO YOUR LETTER DATED FEBRUARY 20, 1969, IN EFFECT PRESENTING A CLAIM FOR CONSIDERATION BY OUR OFFICE, AND ATTACKING THE FINALITY OF A DECISION BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA) WHICH DENIED IT. THE CLAIM ASSERTED WAS FOR AN EQUITABLE ADJUSTMENT INCIDENT TO A CHANGED CONDITION ENCOUNTERED IN THE PERFORMANCE BY YOU OF DEPARTMENT OF THE ARMY CONTRACT DA-25-066-ENG 9594, NORAD PHASE II FACILITIES, CHEYENNE MOUNTAIN, COLORADO. THE ASBCA DECISION IS NO. 10114, DATED APRIL 19, 1966, AND THE BOARD'S RECORD MADE AVAILABLE TO OUR OFFICE INCLUDES A DECISION DATED FEBRUARY 21, 1968, IN WHICH THE BOARD AFFIRMED ITS EARLIER DECISION.

THE RECORD SHOWS THAT THE CONTRACT WAS AWARDED TO YOU ON FEBRUARY 27, 1963, IN THE LUMP SUM OF $6,969,000. THERE WERE SIX SEPARATE COMPLETION SCHEDULES, EACH OF WHICH CARRIED LIQUIDATED DAMAGE PROVISIONS. THE TWO SCHEDULES WITH WHICH YOUR CLAIM IS CONCERNED EACH REQUIRED PERFORMANCE OF WORK WITHIN 220 DAYS IN ACCESS TUNNELS AND RESERVOIRS AND IN VARIOUS CHAMBERS AND BETWEEN CERTAIN CHAMBERS. PERTINENT TO YOUR CLAIM IS THE FOLLOWING PROVISION IN SECTION 1 - EXCAVATION IN UNDERGROUND AREAS, PARAGRAPH 1-10:

"1-10 CLEANING OF RESERVOIRS: THE FUEL OIL, DOMESTIC AND INDUSTRIAL RESERVOIRS EXCAVATED UNDER A PREVIOUS CONTRACT HAVE BEEN USED AS A DRILL WATER SUMP FOR WORK UNDER THAT CONTRACT. UNDER THIS CONTRACT, THE CONTRACTOR SHALL REMOVE AND DISPOSE OF THE WATER THEREIN AS SPECIFIED IN PART II, SPECIAL CONDITIONS. THE CONTRACTOR SHALL ALSO REMOVE FROM THE RESERVOIRS, ALL LOOSE ROCK AND OTHER MATERIALS THAT HAVE ACCUMULATED THEREIN OR RESULTED FROM HIS OPERATIONS. IN ADDITION, THE CONTRACTOR SHALL REMOVE ALL FINES FROM THE RESERVOIRS BY FLUSHING THE WALLS, ARCH AND FLOORS WITH WATER UNDER PRESSURE (MIN. 50 P.S.I. AT THE NOZZLE) IN A STREET-WASHING TYPE OPERATION. WASHING OPERATION SHALL CONTINUE UNTIL THE PUMP DISCHARGE IS CLEAR.'

STANDARD FORM 23-A, GENERAL PROVISIONS (CONSTRUCTION CONTRACT), WHICH WAS INCORPORATED IN THE CONTRACT TERMS, INCLUDED A CHANGES CLAUSE COVERING CHANGES WITHIN THE SCOPE OF THE CONTRACT AND A CHANGED CONDITIONS CLAUSE WHICH PROVIDED FOR EQUITABLE ADJUSTMENT UNDER CERTAIN CONDITIONS IN THE EVENT OF ENCOUNTER DURING PERFORMANCE OF (A) SUBSURFACE OR LATENT PHYSICAL CONDITIONS AT THE SITE DIFFERING MATERIALLY FROM THOSE INDICATED IN THE CONTRACT OR (B) UNKNOWN PHYSICAL CONDITIONS AT THE SITE, OF AN UNUSUAL NATURE, DIFFERING FROM THOSE ORDINARILY ENCOUNTERED AND GENERALLY RECOGNIZED AS INHERING IN WORK OF THE CHARACTER PROVIDED FOR IN THE CONTRACT.

BY LETTER DATED APRIL 16, 1963, YOU NOTIFIED THE CONTRACTING OFFICER THAT THE CLEANING OF THE RESERVOIRS WAS AN INSURMOUNTABLE PROBLEM IN VIEW OF (1) EXCESSIVE MATERIAL LEFT IN PLACE BY OTHERS, (2) OVERBREAKING OF ROCK LIME FAR GREATER THAN SHOWN ON THE CONTRACT DRAWINGS, AND (3) SUBSURFACE AND PHYSICAL CONDITIONS DIFFERING FROM THOSE INDICATED IN THE CONTRACT, AND YOU REQUESTED CLARIFICATION OF WHAT WAS EXPECTED OF YOU TO COMPLETE THE CLEANING OF THE RESERVOIR AREA. IN A LETTER DATED APRIL 24, 1963, THE AREA ENGINEER, ACTING AS THE CONTRACTING OFFICER'S REPRESENTATIVE, ADVISED YOU THAT THE INTENT OF PARAGRAPH 1-10 QUOTED ABOVE WAS TO REQUIRE THE REMOVAL OF ALL MATERIALS LYING ON THE INVERT OF THE RESERVOIR, TO AND INCLUDING ALL FINES, BUT THAT AN ACCEPTABLE DEGREE OF CLEANLINESS COULD BE ATTAINED WITH CERTAIN RELAXATIONS OF SUCH REQUIREMENTS. THE LETTER CAUTIONED, HOWEVER, THAT THE RELAXATION OF THE REQUIREMENTS, AS SET FORTH IN THE LETTER, WAS AUTHORIZED "PURELY IN ORDER TO OVERCOME DELAYS CAUSED BY YOUR FAILURE TO PLAN, ORGANIZE, SUPERVISE, MAN AND EQUIP THIS PHASE OF WORK PROPERLY.'

BY LETTER DATED JULY 12, 1963, YOU REQUESTED FROM THE GOVERNMENT AN EQUITABLE ADJUSTMENT IN THE AMOUNT OF $238,095, AND 63 DAYS EXTENSION OF PERFORMANCE TIME, IN ACCORDANCE WITH CERTAIN SCHEDULES AND EXHIBITS SUBMITTED BY YOU AND IDENTIFIED AS YOUR CLAIM NO. 1. THE CLAIM STATED THAT THE COSTS HAD BEEN SUSTAINED BY YOU AS THE RESULT OF EXCESSIVE MATERIAL LEFT IN THE RESERVOIRS BY OTHERS AND OTHER CONDITIONS DIFFERING FROM THOSE ANTICIPATED, AND WERE PRINCIPALLY FOR ADDITIONAL EXCAVATION IN THE RESERVOIRS AND RELATED QUANTITIES THAT EXCEEDED THE REQUIREMENTS IN THE CONTRACT.

BY LETTER DATED SEPTEMBER 26, 1963, THE AREA ENGINEER NOTIFIED YOU THAT IT HAD BEEN DETERMINED THAT YOUR CLAIM WAS PARTIALLY VALID AND THAT AN EQUITABLE ADJUSTMENT WAS JUSTIFIED FOR THE WORK PERFORMED IN THE RESERVOIR AREAS WHICH COULD NOT HAVE BEEN REASONABLY REQUIRED UNDER THE TERMS AND CONDITIONS OF THE CONTRACT. ACCORDINGLY, YOU WERE REQUESTED TO FURNISH FURTHER DETAIL FOR THE PURPOSE OF NEGOTIATING AN EQUITABLE ADJUSTMENT, INCLUDING YOUR COST EXPERIENCE. IT WAS STATED, HOWEVER, THAT "IT MUST BE RECOGNIZED THAT ACTUAL COST EXPERIENCE IS NOT COMPLETELY INDICATIVE OF THE REASONABLE COST OF PERFORMANCE, BUT THE AVAILABILITY OF THIS INFORMATION TO THIS OFFICE SHOULD IMPROVE NEGOTIATIONS.'

ON NOVEMBER 12, 1963, THE AREA ENGINEER RECEIVED YOUR LETTER OF NOVEMBER 8 ENCLOSING A STATEMENT OF ACTUAL COST IN THE AMOUNT OF $186,710.75 AND REQUESTING A TIME EXTENSION OF 70 DAYS FOR THE TOTAL RESERVOIR AREA. LETTER DATED DECEMBER 11, 1963, WHICH REFERRED TO A CONVERSATION BETWEEN THREE OF YOUR REPRESENTATIVES AND TWO GOVERNMENT REPRESENTATIVES, YOU REQUESTED TIME EXTENSIONS FOR THE TWO SCHEDULES INVOLVED, IN THE ONE CASE TO FEBRUARY 1, 1964, AND IN THE OTHER CASE TO FEBRUARY 17, 1964, AND YOU SPECIFICALLY STATED THAT IN CONSIDERATION (OF THE GRANT) OF SUCH REQUESTS, YOU FORFEITED ALL TIME UP TO THE DATE OF YOUR LETTER ON CLAIMS SUBMITTED OR GENERATED AND ON MODIFICATIONS ISSUED TO DATE.

ON DECEMBER 26, 1963, YOUR REPRESENTATIVES MET IN THE OFFICE OF THE AREA ENGINEER WITH REPRESENTATIVES OF THE GOVERNMENT TO NEGOTIATE A PRICE ADJUSTMENT FOR THE ADDITIONAL WORK AND TIME INVOLVED IN THE WORK IN QUESTION. DURING SUCH MEETING, ACCORDING TO THE CONTRACTING OFFICER, A MUTUAL AGREEMENT WAS REACHED THAT THE FINAL PRICE SETTLEMENT FOR ALL ADDITIONAL WORK INVOLVED IN CLEANING THE RESERVOIRS WOULD BE A $106,000 INCREASE IN THE CONTRACT PRICE AND THAT AN EXTENSION OF TIME FOR PERFORMANCE OF THE WORK INVOLVED WOULD BE ADJUSTED BY A SEPARATE MODIFICATION.

MODIFICATION NO. 17, ISSUED JANUARY 10, 1964, AND ACCEPTED BY YOU WITHOUT RESERVATION, REFERRED TO THE CHANGED CONDITIONS CLAUSE OF THE CONTRACT, STATED THAT YOU WERE TO BE REIMBURSED FOR ALL REASONABLE AND ADDITIONAL COSTS INCURRED FROM DEMUCKING AND CLEANING THE RESERVOIRS AND THE FUEL OIL STORAGE AREA, AS DIRECTED, AND INCREASED THE CONTRACT PRICE BY THE LUMP SUM OF $106,000 FOR SUCH PURPOSE. THE MODIFICATION FURTHER PROVIDED THAT THE TIME FOR COMPLETION OF THE TWO SCHEDULES AFFECTED BY THE CHANGED CONDITION ENCOUNTERED WOULD BE EXTENDED BY MODIFICATION NO. 34.

MODIFICATION NO. 34, ISSUED JANUARY 13, 1964, WHICH YOU LIKEWISE ACCEPTED WITHOUT RESERVATION, STATED THAT THE DELAY IN THE PERFORMANCE OF WORK UNDER THE CONTRACT WAS DUE TO CAUSES BEYOND YOUR CONTROL AND WITHOUT YOUR FAULT OR NEGLIGENCE, GRANTED 107 DAYS ADDITIONAL TIME IN CONNECTION WITH MODIFICATION NO. 17, AND SPECIFICALLY STATED THAT THE TIME SO ALLOWED WAS IN ACCORDANCE WITH, AND FULFILLED THE CONDITIONS CITED IN, YOUR LETTER OF DECEMBER 11, 1963.

SHORTLY AFTER THE EXECUTION OF THESE MODIFICATIONS YOU UNDERTOOK THE COMPLETION OF THE CLEANING AND STERILIZATION OF THE RESERVOIR, AND ON MARCH 11 AND 12, 1964, YOU ADDRESSED LETTERS TO THE AREA ENGINEER IN WHICH YOU COMPLAINED THAT YOU WERE UNABLE TO ACCOMPLISH THE DESIRED RESULTS WITH RESPECT TO THE CLEANING OPERATION. FURTHER, YOU STATED THAT INCIDENT TO MODIFICATION NO. 17 YOU HAD GIVEN THE GOVERNMENT FULL CREDIT FOR ALL MONIES INCLUDED IN YOUR ORIGINAL CONTRACT FOR CLEANING OF THE RESERVOIRS AND FUEL OIL STORAGE AREA; YOU CLAIMED THAT YOU HAD INCURRED A TIME LAPSE OF ACTIVITY IN THE RESERVOIR AREA FOLLOWING THE EXECUTION OF THE MODIFICATION DUE TO LACK OF ACCESSIBILITY TO THE AREA AND COMMENCEMENT BY YOU OF WORK OF A HIGHER PRIORITY IN ORDER TO EXPEDITE TIMELY COMPLETION OF THE CONTRACT; YOU REQUESTED ANOTHER EXTENSION OF TIME; AND YOU STATED THAT "WHEN FINAL CLEANING AND ACCEPTANCE OF THESE AREAS HAVE BEEN MADE AND TOTAL COSTS ARE KNOWN, THEY WILL BE SUBMITTED TO YOUR OFFICE FOR MODIFICATION OF THIS CONTRACT.'

BY LETTER DATED MARCH 17, 1964, THE AREA ENGINEER INFORMED YOU THAT YOUR ACCEPTANCE AND EXECUTION OF MODIFICATION NO. 17 CONSTITUTED A COMPLETE ACCORD AND SATISFACTION FOR THE EFFECTS OF THE CHANGED CONDITIONS AND THAT YOU THEREFORE HAD NO LEGAL BASIS UPON WHICH TO CLAIM ADDITIONAL MONIES UNDER THE MODIFICATION. AS TO THE LAPSE OF ACTIVITY IN THE RESERVOIR AREA, YOU WERE INFORMED THAT THE AREA ENGINEER DID NOT CONCUR WITH YOUR STATEMENTS INASMUCH AS REPRESENTATIVES OF THE CONTRACTING ACTIVITY HAD REPEATEDLY APPRISED YOUR MANAGEMENT PERSONNEL OF THE APPARENT DILATORY ATTITUDE TOWARDS COMPLETION OF THE WORK IN THE RESERVOIR AREA AND THAT IN THE OPINION OF THE AREA ENGINEER IT APPEARED THAT YOUR MANAGEMENT HAD ELECTED TO POSTPONE THE WORK FOR SOME UNKNOWN REASON WITH ATTENDANT WORSENING OF THE ACCESSIBILITY PROBLEM. FURTHER, YOU WERE SPECIFICALLY ADVISED THAT THE COMPLETION OF THE CLEANING WAS A CONTRACT REQUIREMENT; THAT MODIFICATION NO. 17 HAD COMPENSATED YOU FOR THE CHANGED CONDITION ESTABLISHED IN YOUR CLAIM NO. ; AND THAT YOUR REQUEST FOR A TIME EXTENSION FOR THE COMPLETION OF THE CLEANING WAS WITHOUT MERIT, ALL JUSTIFIABLE TIME DUE TO THE CHANGED CONDITION HAVING BEEN ALLOWED BY MODIFICATION NO. 34. BY LETTER DATED MARCH 19, 1964, YOU ADVISED THE AREA ENGINEER OF YOUR DISAGREEMENT WITH THE GOVERNMENT'S POSITION THAT YOU DID NOT HAVE A LEGAL BASIS FOR A CLAIM IN THE RESERVOIR AREA. YOU ASSERTED THAT MODIFICATION NO. 17 WAS NOT INTENDED BY EITHER YOU OR THE GOVERNMENT AS A FINAL SETTLEMENT; THAT DURING THE NEGOTIATIONS WHICH LED TO THE MODIFICATION YOU WERE OF THE OPINION THAT THE CLEANING OPERATION IN THE RESERVOIR AREA HAD BEEN COMPLETED; AND THAT ANY SUBSEQUENT CLEANING WAS TO BE AT THE EXPENSE OF THE GOVERNMENT.

BY LETTER DATED JUNE 5, 1964, THE CONTRACTING OFFICER NOTIFIED YOU OF HIS DECISION DENYING YOUR NEW CLAIM ASSERTED IN YOUR MARCH 1964 LETTERS FOR ADDITIONAL EXPENSES UNDER THE CHANGED CONDITIONS CLAUSE. THE BASIS FOR DENIAL WAS THAT MODIFICATION NO. 17 CONSTITUTED AN ACCORD AND SATISFACTION OF ALL DEMANDS BY YOU ARISING OUT OF THE CONDITIONS ENCOUNTERED IN THE INDUSTRIAL AND DOMESTIC RESERVOIRS AND THE FUEL OIL STORAGE AREA. THE DECISION ALSO MADE REFERENCE TO THE MEETING OF DECEMBER 26, 1963, MENTIONED ABOVE, AND TO THE MUTUAL AGREEMENT REACHED AT THAT TIME BY YOU AND THE GOVERNMENT REGARDING A FINAL PRICE SETTLEMENT OF $106,000 INCREASE IN THE CONTRACT PRICE FOR ALL ADDITIONAL WORK INVOLVED IN CLEANING THE RESERVOIRS.

IN YOUR APPEAL FROM THAT DECISION, FILED WITH THE SECRETARY OF THE ARMY ON JUNE 19, 1964, YOU ASSERTED THAT NEITHER MODIFICATION NO. 17 NOR MODIFICATION NO. 34 COVERED OR AFFECTED YOUR NEW CLAIM (CLAIM NO. 64) FOR AN EQUITABLE ADJUSTMENT COVERING ADDITIONAL COSTS AND TIME LOST AFTER THE DATES OF THE MODIFICATIONS. THE ADDITIONAL COSTS, YOU STATED, WERE INCURRED AFTER THE COSTS COVERED BY YOUR FIRST CLAIM AND WERE CAUSED BY A CONTINUANCE OF THE SAME CHANGED CONDITION IN FURTHER PERFORMANCE OF THE CONTRACT.

BY LETTER OF AUGUST 25, 1964, YOU FORWARDED TO THE CONTRACTING OFFICER A FORMAL CLAIM, DESIGNATED AS CLAIM 64 - SUPPLEMENT NO. 1, IN WHICH YOU REQUESTED A CONTRACT MODIFICATION IN THE AMOUNT OF $54,620.13 AND 319 DAYS FOR ONE SCHEDULE AND 200 DAYS FOR THE OTHER SCHEDULE. YOU STATED THAT THE COSTS COVERED BY THE CLAIM WERE ALL INCURRED AFTER AUGUST 19, 1963, AND A BREAKDOWN OF LABOR COSTS SHOWED SERVICES COMMENCING WITH THE WEEK ENDING AUGUST 27, 1963, AND TERMINATING WITH THE WEEK ENDING JUNE 9, 1964. SERVICES WERE LISTED FOR THE PERIOD OCTOBER 23, 1963, TO JANUARY 21, 1964.

YOUR COMPLAINT FILED WITH THE BOARD ON SEPTEMBER 14, 1964, EMPHASIZED THAT THE AREA ENGINEER, IN HIS LETTER OF SEPTEMBER 26, 1963, REGARDING THE EQUITABLE ADJUSTMENT, SPOKE OF WORK PERFORMED AND THAT MODIFICATION NO. 17 REFERRED TO COSTS INCURRED, AND YOU THEREFORE ASSERTED THAT THE USE OF THE PAST TENSE IN THESE DOCUMENTS INDICATED THAT THE PARTIES DID NOT CONTEMPLATE SPECULATIVE OR FUTURE COSTS IN SETTLING YOUR CLAIM NO. 1 AND THAT THE ACCORD AND SATISFACTION RELATED ONLY TO PAST COSTS AND LOST TIME FOR WHICH CLAIM HAD BEEN MADE. YOU STATED THAT THE WORK COVERED BY CLAIM NO. 64 WAS IN ADDITION TO THE WORK COVERED BY CLAIM NO. 1 AND HAD BEEN REQUIRED OF YOU AFTER MODIFICATIONS NO. 17 AND 34 HAD BEEN EXECUTED. THIS CONNECTION, YOU ASSERTED THAT BY AUGUST 19, 1963, ALL THE RESERVOIRS HAD BEEN CLEANED TO THE DEGREE CONSIDERED ACCEPTABLE IN THE AREA ENGINEER'S LETTER OF APRIL 24, 1963, AND THAT ACCEPTANCE OF THE CLEANING OPERATION HAD BEEN INDICATED BY THE AREA OFFICE. IN ITS DECISION OF APRIL 19, 1966, THE BOARD FOUND THAT NEITHER YOU NOR THE GOVERNMENT HAD RELIED ON ACTUAL COSTS IN SETTLING YOUR CLAIM NO. 1 FOR $106,000. REFERRING TO YOUR CONTENTION REGARDING THE SIGNIFICANCE OF THE USE OF THE TERM "INCURRED" IN RELATION TO COSTS IN MODIFICATION NO. 17 AND IN THE AREA ENGINEER'S LETTER OF SEPTEMBER 26, 1963, THE BOARD POINTED OUT THAT THE AREA ENGINEER'S LETTER REQUESTED THE COST DATA FOR THE PURPOSE OF NEGOTIATION, NOT FOR SETTLEMENT ON YOUR ACCOUNTS OF COST ALONE. "MOREOVER," THE BOARD OBSERVED,"THE -CHANGED CONDITIONS' CLAUSE, LIKE OTHER CLAUSES, PROVIDING AN EQUITABLE ADJUSTMENT, CONTEMPLATES A MODIFICATION PRICED PROSPECTIVELY TO THE EXTENT POSSIBLE.'

AS TO THE AMOUNT OF THE SETTLEMENT, THE BOARD TOOK NOTE OF THE FACT THAT THE FIGURE OF $106,000 COMPARED FAVORABLY WITH THE GOVERNMENT ESTIMATE OF $108,026.88 AND WAS MUCH LOWER THAN THE AMOUNT OF $238,095 WHICH YOU HAD CLAIMED TO HAVE SUSTAINED IN YOUR LETTER OF JULY 12, 1963, AND THE AMOUNT OF ACTUAL EXPENSES ($186,710.75) WHICH YOU SUBSEQUENTLY CLAIMED. ACCORDINGLY, THE BOARD STATED, NEITHER SIDE BARGAINED TO AGREEMENT ON "ACTUAL COSTS" OR ANYBODY'S ESTIMATE. IN THIS CONNECTION, THE BOARD REFERRED TO TESTIMONY BY YOUR VICE PRESIDENT AND SOLE NEGOTIATOR OF THE MODIFICATIONS THAT THE DIFFERENCE WAS "HORSETRADED" (I.E., THE GOVERNMENT OFFERED $90,000, YOU RETREATED TO $111,000, AND "WE HORSE-TRADED THE DIFFERENCE").

IN ADDITION, THE DECISION REFERRED TO ARGUMENTS ADVANCED BY YOU THAT PAYMENT OF THE FULL AMOUNT OF THE SETTLEMENT UNDER MODIFICATION NO. 17 IMMEDIATELY AFTER ITS EXECUTION WAS CONSTRUCTIVE ACKNOWLEDGMENT THAT ALL CLEANING HAD BEEN COMPLETED BY THE CUT-OFF DATE OF AUGUST 19, 1963, AND THAT SUCH PAYMENT ALSO CONSTITUTED DE FACTO GOVERNMENT ACCEPTANCE OF THE RESERVOIRS AS CLEAN INASMUCH AS IT WOULD BE IRREGULAR, IF NOT ILLEGAL, TO PAY IN ADVANCE OF THE PERFORMANCE OF WORK. IN THIS REGARD, THE BOARD CITED TESTIMONY BY THE AREA ENGINEER TO THE EFFECT THAT THE GOVERNMENT WAS TRYING TO BE FAIR AND FAST IN REACHING A SETTLEMENT WITH YOU TO RELIEVE YOUR FINANCIAL DISTRESS AND THAT, AS IN OTHER FINANCIAL TRANSACTIONS, THE AREA ENGINEER WAS ACTING UNDER INSTRUCTIONS OF THE CONTRACTING OFFICER TO BE AS LIBERAL AS POSSIBLE IN QUICKLY PROCESSING PROGRESS PAYMENTS AND CLAIM ESTIMATES IN ORDER TO PUT FUNDS INTO YOUR HANDS, AND THE BOARD STATED THAT SUCH EXPLANATION BORE SPECIFICALLY ON THE ARGUMENTS MADE BY YOU. IN ADDITION, THE BOARD CONCLUDED THAT NEITHER THE PHYSICAL EVIDENCE, NOR YOUR ACTIONS NOR THE REQUIREMENTS OF THE CONTRACT SUSTAINED AN INFERENCE THAT CLEANING WAS COMPLETE BECAUSE IT WAS PAID FOR IN FULL AND AT ONCE.

ON THE RELATED CHARGES BY YOU THAT THE WORK HAD BEEN COMPLETED BY AUGUST 19, 1963, AND THAT YOU HAD BEEN REQUIRED TO PERFORM ADDITIONAL WORK EXCEEDING THE RELAXED SPECIFICATIONS AFTER THE EXECUTION OF THE MODIFICATIONS NO. 17 AND 34, THE BOARD NOTED THAT ACCORDING TO YOUR FORMAL CLAIM OF AUGUST 25, 1964, YOU HAD EXPENDED 698 MAN-HOURS DURING THE PERIOD AUGUST 27 TO OCTOBER 22, 1963, IN CLEANING AND FLUSHING THE RESERVOIRS WITHOUT DIRECTIONS FROM THE GOVERNMENT TO DO SO, AND THE BOARD THEREFORE CONCLUDED THAT SUCH ACTIONS WERE INCONSISTENT WITH YOUR POSITION THAT THE RESERVOIRS HAD BEEN CLEANED AS PER SPECIFICATION ON AUGUST 19, 1963, AND HAD BEEN ACCEPTED (BY THE GOVERNMENT). FURTHER, THE BOARD CONCLUDED THAT IT WAS PHYSICALLY AND CONTRACTUALLY IMPOSSIBLE FOR YOU TO HAVE CLEANED THE RESERVOIRS PRIOR TO THE ISSUANCE AND PAYMENT OF MODIFICATION NO. 17 SINCE THE CONTRACT WORK WAS ONLY 50 PERCENT COMPLETED AND THE CLEANING OF THE DOMESTIC RESERVOIR HAD TO AWAIT THE CONSTRUCTION BY OTHERS OF THE WATER SUPPLY FACILITY, WHICH HAD NOT THEN COMMENCED. IN CONNECTION WITH THIS ISSUE, THE BOARD REFERRED TO TESTIMONY BY YOUR PROJECT MANAGER ADMITTING THERE WAS MORE CLEANING TO BE DONE AFTER AUGUST 19, 1963, AND THAT ON YOUR OWN VOLITION YOU RETURNED TO THE RESERVOIRS TO DO IT.

THE BOARD ALSO MADE MENTION OF THE FACT THAT YOUR CPM (CRITICAL PATH METHOD) COMPUTER PRINTOUT FOR NOVEMBER 30, 1963, THREE AND ONE HALF MONTHS AFTER THE CLAIMED CUT-OFF DATE, SHOWS THAT YOU RESERVED THE AMOUNT OF $11,603 IN YOUR BUDGET TO "FLUSH OUT ALL RESERVOIRS," TOGETHER WITH THE ADDITIONAL FACT THAT THE GOVERNMENT ESTIMATE SHOWED 24.7 PERCENT OF THE TOTAL ESTIMATED CLEANING WORK, AD VALOREM, REMAINING TO BE PERFORMED. THE GOVERNMENT ESTIMATE, THE BOARD NOTED, HAD BEEN PRODUCED AT YOUR REQUEST AND HAD BEEN INTRODUCED INTO EVIDENCE AT YOUR INSTANCE. SUCH FACTORS, THE BOARD FOUND, DEMONSTRATED CONCLUSIVELY THAT BOTH YOU AND THE GOVERNMENT KNEW THAT FINAL CLEANING WAS UNFINISHED AND THAT FINAL ACCEPTANCE OF THE RESERVOIR AS CLEANED WAS NEITHER SOUGHT (BY YOU) NOR GRANTED (BY THE GOVERNMENT).

THE BOARD EMPHASIZED THAT IT WAS NOT CONCERNED ON YOUR APPEAL WITH WHETHER THE EQUITABLE ADJUSTMENT REACHED BY NEGOTIATION WAS A GOOD OR A BAD BARGAIN BUT WITH WHETHER THE PERFORMANCE OF ADDITIONAL CLEANING WAS INCLUDED IN THE BARGAIN. THE BOARD FOUND THAT IT WAS AND THAT SUCH WAS THE INTENT OF THE PARTIES AT THE CONSUMMATION OF MODIFICATION NO. 17. THIS CONNECTION, THE BOARD STATED,"COURTS WILL NOT LEND THEMSELVES TO STRIKING DOWN A CONTRACT OTHERWISE VALID SIMPLY BECAUSE THE VICISSITUDES OF TIME PROVE IT TO BE A BAD BARGAIN FOR ONE OF THE PARTIES. BRAZEAL V BOKELMAN, 270 F.2D 943.'

AS TO YOUR CHARGE THAT YOU HAD BEEN REQUIRED TO EXCEED THE RELAXED CLEANING REQUIREMENTS IN 1964, THE BOARD TOOK COGNIZANCE OF THE EVIDENCE OF RECORD THAT UNTIL THE AREA ENGINEER BROUGHT HIS LETTER OF APRIL 24, 1963, RELAXING THE CLEANING REQUIREMENT TO THE ATTENTION OF YOUR REPRESENTATIVES ON A VISIT BY THE AREA ENGINEER TO THE WORK SITE ON MARCH 11, 1964, YOUR PROJECT MANAGER AND FIELD SUPERINTENDENT, WHO WERE NOT AWARE OF THE LETTER, HAD CONDUCTED THE CLEANING OPERATIONS IN ACCORDANCE WITH THEIR OWN INTERPRETATION OF THE SPECIFICATIONS. ACCORDINGLY, THE BOARD HELD, IF YOU EXCEEDED THE RELAXED REQUIREMENTS PRIOR TO MARCH 11, 1964, IT WAS NOT THE GOVERNMENT'S DOING, AND IF YOU EXCEEDED THE SAME REQUIREMENTS AFTER THE LETTER OF APRIL 24, 1963, WAS BROUGHT TO THE ATTENTION OF YOUR PROJECT MANAGER AND FIELD SUPERINTENDENT, SUCH ACTION ON YOUR PART WAS VOLUNTARY.

FOR THE REASONS STATED, THE BOARD HELD THAT THE CHANGED CONDITIONS CLAIM WAS BARRED BY ACCORD AND SATISFACTION OF SETTLEMENTS IN MODIFICATIONS NO. 17 AND 34. FURTHER, THE BOARD DENIED THE CHANGES CLAIM FOR FAILURE OF PROOF THAT THE GOVERNMENT WANTED OR ORDERED A CHANGE.

BY LETTER DATED APRIL 5, 1967, YOUR ATTORNEYS FILED WITH THE BOARD A REQUEST FOR RECONSIDERATION OF ITS DECISION OF APRIL 22, 1966. THE SUPPORTING BRIEF CONTENDED THAT THE GOVERNMENT DID NOT CONVEY TO YOU NOTICE OF THE GOVERNMENT'S INTENT TO SETTLE THE RESERVOIR CLEANING CLAIM PROSPECTIVELY AS WELL AS RETROSPECTIVELY; THAT THERE WAS NO MEETING OF THE MINDS OF THE PARTIES ON THIS ISSUE WHEN MODIFICATIONS NO. 17 AND 34 WERE NEGOTIATED; AND THAT THE BURDEN OF PROOF IN THE MATTER RESTS WITH THE GOVERNMENT, NOT YOU. SPECIFICALLY, IT WAS CHARGED THAT MUCKING HAD BEEN COMPLETED BEFORE THE MODIFICATIONS WERE NEGOTIATED, AND THE MUCKING PERFORMED AFTER FEBRUARY 1, 1964, WAS NOT COVERED BY THE SETTLEMENT.

THE BOARD'S DECISION OF FEBRUARY 21, 1968, QUOTED FROM MODIFICATIONS NO. 17 AND 34 LANGUAGE WHICH STATED THAT THE CHANGES COVERED BY THE PRICE INCREASE OF $106,000 INCLUDED ALL REASONABLE AND ADDITIONAL COSTS FOR DEMUCKING AS WELL AS CLEANING AND THAT THE EXTENSION OF TIME FOR A TOTAL OF 107 DAYS COVERED SUCH WORK. THE DECISION READS, IN PART, AS FOLLOWS:

"ON EXAMINATION OF ALL EXTRINSIC EVIDENCE AS TO THE CONTRACTUAL INTENT, THE BOARD FOUND NOTHING TO DEFEAT THE EXPLICIT PURPOSE OF THE $106,000 FOR THE ENTIRE -JOB- OF DEMUCKING AND CLEANING RESERVOIRS, AND THE EXTENSION OF TIME BY 107 DAYS FOR -ALL WORK-, PAST AND PROSPECTIVE, UNDER SCHEDULES SC-1A (A) AND (C), WHICH INCLUDES THE RESERVOIR CLEANING.

"APPELLANT'S EFFORT TO AVOID THE AGREEMENTS, WHICH IT EXECUTED WITHOUT LIMITATION OR RESERVATION, BY RENEWED CLAIMS FOR AN ADDITIONAL AMOUNT OF $54,620.13 AND 319 DAYS ADDITIONAL TIME, IS -AN ATTEMPT TO POUR NEW WINE INTO THE OLD BOTTLE.- ATKINSON V BERNARD, INC., 355 F.2D 229.

"ON RECONSIDERATION THE ORIGINAL DECISION OF DENIAL IS AFFIRMED.'

IN CONSIDERING YOUR CLAIM WE ARE BOUND BY THE FACTUAL DETERMINATIONS WHICH HAVE BEEN MADE ADMINISTRATIVELY PURSUANT TO THE DISPUTES CLAUSE IN YOUR CONTRACT, UNLESS SUCH DETERMINATIONS ARE FRAUDULENT OR CAPRICIOUS, OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. 41 U.S.C. 321. UPON REVIEW OF THE RECORD BEFORE THE BOARD, WHICH IS ALL THAT CAN BE CONSIDERED UNDER THE RULE LAID DOWN IN UNITED STATES V BIANCHI AND COMPANY, INC., 373 U.S. 709, WE ARE UNABLE TO CONCLUDE THAT THE FACTUAL FINDINGS BY THE BOARD WERE NOT BASED ON SUBSTANTIAL EVIDENCE OR THAT THE BOARD ACTED ARBITRARILY OR CAPRICIOUSLY.

THE ISSUE OF WHETHER THE SETTLEMENT REPRESENTED BY MODIFICATIONS NO. 17 AND 34 WAS RETROSPECTIVE ONLY, AS YOU CONTEND, OR BOTH RETROSPECTIVE AND PROSPECTIVE, AS THE GOVERNMENT CONTENDS, CALLS FOR INTERPRETATION OF THE LANGUAGE OF THE MODIFICATIONS AND CONSIDERATION OF OTHER EVIDENCE TO ASCERTAIN THE INTENT OF THE PARTIES AT THE TIME THE MODIFICATIONS WERE EXECUTED, AND THEREFORE INVOLVES TO SOME EXTENT A QUESTION OF LAW ON WHICH THE BOARD'S DECISION IS NOT BINDING. HOWEVER, WE BELIEVE THAT THE RECORD WARRANTS OUR CONCURRENCE WITH THE BOARD'S CONCLUSION THAT THE MODIFICATIONS WERE INTENDED TO COVER ALL EXTRA WORK OCCASIONED BY THE CHANGED CONDITION, INCLUDING THE WORK THEN CONTEMPLATED TO COMPLETE THE CLEANING. EVEN THOUGH YOU PRESENTED TESTIMONY INDICATING THAT THE WORK PERFORMED AFTER THE MODIFICATION WAS SUBSTANTIALLY IN EXCESS OF WHAT WAS ANTICIPATED, WE COULD NOT CONSIDER THAT AS REQUIRING THE LEGAL CONCLUSION THAT THE ADDITIONAL WORK WOULD CALL FOR ANY FURTHER EQUITABLE ADJUSTMENT.

WITH RESPECT O YOUR CLAIM UNDER THE CHANGES CLAUSE, RECOVERY WOULD BE NECESSARILY DEPENDENT ON EVIDENCE THAT THE GOVERNMENT HAD ORDERED YOU TO PERFORM MORE CLEANING WORK THAN WAS REQUIRED BY THE CONTRACT. AS STATED ABOVE, THE BOARD FOUND THAT NO PROOF HAD BEEN FURNISHED THAT THE GOVERNMENT HAD REQUIRED ANY SUCH EXTRA WORK, AND WE BELIEVE THAT THE RECORD AS DISCUSSED ABOVE SUPPORTS THIS FINDING. ACCORDINGLY, WE SEE NO LEGAL BASIS TO QUESTION THE BOARD'S DECISION ON THE CHANGES ISSUE.