3d Session No. 3059 ROCHE, CONNELL & LAUB CONSTRUCTION CO. OCTOBER 17, 1940.-Committed to the Committee of the Whole House and ordered to be printed Mr. WINTER, from the Committee on Claims, submitted the following REPORT [To accompany H. R. 6622] The Committee on Claims, to whom was referred the bill (H. R. 6622) for the relief of Roche, Connell & Laub Construction Co., having considered the same, report favorably thereon with amendments and recommend that the bill as amended to pass. The amendments are as follows: Page 1, line 3, after the word "of" insert "the". Page 1, line 7, strike out the amount "$13,594.65" and insert "$12,201.67". Page 1, lines 7 and 8, strike out the words "approved by the Secretary of the Treasury," and insert "certified by the Comptroller General of the United States." The bill as amended authorizes and directs the Secretary of the Treasury to pay out of any money in the Treasury not otherwise appropriated. to Roche, Connell & Laub Construction Co., such amount not in excess of $12,516.44 as may be certified by the Comptroller General, but exclusive of any allowance for profit in full settlement of all claims against the United States for repairs made by said company to the new post-office building at Portsmouth, Ohio, as result of flood damages to said building beginning January 21, 1937, while such building was under construction, in accordance with contract No. T1-PW-2273, dated June 18, 1935. STATEMENT OF FACTS This claim arises from repairs made to the United States post office at Portsmouth, Ohio, by the claimant company necessitated by damages to the building caused by the inundation of the Ohio floodwaters of January 1937. The claimant company entered into a contract, No. T1-PW-2273, with the United States Government through the Treasury Department. Said contract provided for the furnishing of all labor and materials and the performance of all work required for completion of the construction of the Post Office Building, Portsmouth, Ohio, in strict accordance with certain specifications, schedules, and drawings made a part thereof. The contract was in consideration of the amount of $190,000. It was stipulated in article 2 that "upon completion of the contract, the work shall be delivered complete and undamaged," and in article 10 thereof that "the contractor shall, without additional expense to the Government, be responsible for the proper care and protection of all materials until completion and final accept ance. * * * Article 16 (c) provided as follows: All material and work covered by partial payments made shall thereupon become the sole property of the Government, but this provision shall not be constructed as relieving the contractor from the sole responsibility for the care and protection of materials and work upon which payments have been made or the restoration of any damaged work, or as a waiver of the right of the Government to require the fulfillment of all of the terms of the contract. The building was completed to an extent permitting occupancy by the Post Office Department on September 5, 1936, and occupancy began on that date. However, the final inspection of the general construction work and of mechanical equipment which had been made on September 2, 1936, resulted in the discovery of 70 defective or incomplete mechanical items requiring correction, and 20 defective construction items. Following this inspection, on September 9, the contractor was furnished with a list of these discrepancies. As stated, the Post Office Department had already taken occupancy on September 5, before the submission of the defects and omissions to the claimant company. On October 1, 1936, the construction engineer who represented the Government at this project was transferred to Jackson, Ga., and on that date he reported to the district engineer that many of the defects and omissions had been corrected or supplied, leaving a small balance which could be easily checked by the custodian. Subsequently, the custodian from time to time advised the district engineer of the correction of various defects. In On or about January 18, 1937, another inspection of the building was made, at which time it was discovered that five of the defects and omissions found in the previous inspection were still incorrect. addition, it was found that four other minor details not previously reported were required to be corrected before the building could be considered complete in accordance with the plans and specifications. On January 21, 1937, very shortly after the last inspection of January 18, 1937, the city of Portsmouth was inundated by an unprecedented flood of the Ohio River, and considerable damage was caused to the building in question. This flood occurred before the items of correction were completed, although it is a matter of record that they were of slight importance, and of small monetary value, and could have been corrected in a few days. It seems that the report of the last inspection of January 18, 1937, was not presented to the claimant company until February 2, 1937, which was after the flood. Under the technical terms of the claimant company's contract, the building was held to not have been complete at the time of the flood, although the Comptroller General in making such decision admitted that the defects and omissions could be considered slight, although the Government was occupying the building. Consequently, the contractor proceeded to repair the damage caused by the flood and upon completion thereof presented a claim for $14,139.17 as reimbursement for the cost of making such repairs. In making such claim, the claimant company referred to the fact that it had notified the Government on November 2, and December 21, 1936, that the building had been completed and that it thereupon became the duty of the Government to ascertain such fact promptly, and that if such had been done the defects and omissions could have been corrected prior to the occurrence of the flood. The claimant company further submitted that if the building had been occupied and substantially completed as of December 21, 1936, such facts should be held as constituting an acceptance thereof by the Government as of that date, in which event, the damage having occurred subsequent thereto, responsibility for restoration of the building would rest on the Government. Nevertheless, as before stated, the Comptroller General held that the terms of the contract had been met, and therefore payment could not be made for the additional repairs caused by the flood. It is here mentioned again that the items of incompletion were admittedly slight and inconsequential, and as further proof thereof, the Government was occupying the building at the time of the flood. Your committee is of the opinion, therefore, that the claimant company should not be held responsible for the repair work done as a result of an act of God, especially in view of all the circumstances as heretofore outlined. The repairs had to be made, and had the slight items of incompletion been corrected prior to the flood, the contract would have been considered complete, and the Government would have been required to enter into a new contract for the repair work which is the subject of this claim. The Comptroller General, in his report to your committee, points out that by letter dated June 2, 1938, the contractor agreed to reduce its claim to $12,201.67, if such amount were paid without the necessity of suit. Under normal circumstances in considering a claim growing out of a contract entered into with the Government, your committee would recommend that the claimants enter suit in the Court of Claims. In this instance, however, it is the opinion of your committee that direct settlement should be awarded by Congress, there being no dispute about the amount involved, nor the work performed, and the claimant company up to this time has suffered a monetary loss due to an act of God, and certain technicalities in the provisions of the contract. Neither the Federal Works Agency nor the Comptroller General has offered any objection to the enactment of such legislation, and accordingly your committee recommends passage of the bill which has been amended to comply with the suggestions of the Comptroller General. Appended hereto are the reports of the Federal Works Agency and the Comptroller General, together with a brief submitted by the claimant company. Hon. AMBROSE J. KENNEDY, FEDERAL WORKS AGENCY, Chairman, Committee on Claims, House of Representatives. DEAR MR. CHAIRMAN: Reference is made to your letter of June 21, 1939, addressed to the Secretary of the Treasury, transmitting three copies of bill H. R. 6622, for the relief of Roche, Connell & Laub Construction Co., and requesting a complete administrative report on this proposed legislation. The construction contract which gave rise to this claim was entered into on behalf of the United States by the Director of Procurement of the Treasury Department. Pursuant to Reorganization Plan No. I under Reorganization Act of 1939, made effective July 1, 1939, by Public Resolution No. 20 (76th Cong., 1st sess.), all of the functions of the Public Buildings Branch, Procurement Division, Treasury Department, were transferred to the Federal Works Agency. Accordingly your request has been referred to this Agency for a report. As recited in H. R. 6622, this claim arises from repairs made to the United States post office at Portsmouth, Ohio, by the claimant necessitated by damage to the building caused by the inundation of the Ohio floodwaters of January 1937. It appears from the official files of this Agency that on June 18, 1935, contract No. Tlpw-2273 was awarded by the Treasury Department, through the Director of Procurement, to Roche, Connell & Laub Construction Co., in the amount of $190,000, for the furnishing of all labor and materials and the performance of all work required for the completion of the construction of the post office at Portsmouth, Ohio, in accordance with specification therefor dated October 31, 1934, and certain addenda thereto. This contract was executed on a Government standard form, containing the usual provisions in articles 2, 10, and 16 (c) of the contract relative to the responsibility of the contractor for the proper protection of the work until completion and final acceptance and the delivery of the building at that time "complete and undamaged". The building was completed to an extent permitting occupancy by the Post Office Department September 5, 1936, and occupancy began on that date. Final inspection of the general construction work and of mechanical equipment had been made September 2, 1936, and August 28, 1936, respectively, and the contractor was shortly thereafter furnished lists containing 20 defective construction items and 70 defective or incomplete mechanical items requiring correction. The construction engineer who represented the Government at the Portsmouth project was transferred to Jackson, Ga., as of October 1, 1936, and on that date he reported to the district engineer that many of the defects and omissions had been corrected or supplied, leaving a small balance which could easily be checked by the custodian. The custodian from time to time advised the district engineer of the correction of various defects, but a mechanical inspector found on a visit to the building January 18, 1937, that there were several mechanical defects and omissions still to be corrected. These items, which, according to the records of this Agency, remained incomplete at the time when waters of the unprecedented flood of the Ohio River entered the lower portion of the building in the latter part of January, 1937, were of slight importance, of small monetary value, and could have been corrected in a few days. The district engineer, in reporting these items February 2, 1937, also called attention to 4 additional items of a minor nature found to exist January 18, 1937, and requiring correction by the contractor prior to final settlement. It appears that most of these defects arose in connection with the performance of work by the subcontractors of the general contractor and that prior to the time of the flood the general contractor understood that all defects and omissions had in fact been corrected. On December 21, 1936, it addressed a letter to the Procurement Division pointing out that work had been "practically completed" since September and that certain stack louvers, apparently regarded as the last item, were now in place. Final settlement of the contract was requested but no immediate answer was made to this letter. January 21, 1937, the contractor requested payment of $20,000 of the balance of approximately $21,500 then remaining due under the contract. The contractor was advised February 25, 1937, that in view of the defects and omissions not completed at the time of the flood, there existed considerable question as to whether it would be responsible for the damage done to the building by the flood waters and that it would be necessary to submit the question of this responsibility to the Comptroller General for decision. Since the then estimated cost of repairs was $7,000, partial payment in the amount of $10,000 was actually made pursuant to a further letter addressed to the contractor February 26, 1937. In response to the letter of February 25, 1937, the contractor referred to its understanding that the contract had been completed November 2, 1936 (except for the stack louvers, which were installed in December), and stated it was surprised that there was a question as to its responsibility in connection with the flood damage. In this letter of March 4, 1937, the contractor contended that the work was accepted within the meaning of the contract when the Government was informed that the work was complete and made no objections. The Comptroller General had held ((1936) 15 Comp. Gen. 876) that a building constructed under a contract similar to that involved in the Portsmouth, Ohio, post office project had been accepted by the Government within the meaning of the contract although there was no formal indication of such acceptance. In that case, however, the facts showed that the contractor had entirely completed all work required by the contract, including the correction of all items properly included in the list of defects and omissions. In view of the doubt that existed as to whether that decision might be considered applicable to the situation here involved, it was decided to submit the question to the Comptroller General for decision. Accordingly, the Treasury Department submitted to the General Accounting Office under date of April 23, 1937, a report of the facts and circumstances, substantially as set out above, together with copies of all pertinent papers, and requested to be advised as to whether the contract required the restoration of the damaged work by the contractor. In a decision by letter dated May 5, 1937, the Acting Comptroller General advised the Secretary of the Treasury that the contractor would be required to repair the damage suffered, and stated: "While the defects and omissions in this case may have been slight, nevertheless they existed at the time of the flood and the building could not have been accepted by the United States as having been completed in accordance with the terms of the contract." On the facts stated above, it is believed that this opinion is probably correct in view of the following provisions of the contract: "ARTICLE 2. * * * Upon the completion of the contract the work shall be delivered completed and undamaged." "ARTICLE 10. The contractor * * * shall be responsible for the proper care and protection of all materials delivered and work performed until completion and final acceptance." ARTICLE 16 (c). All material and work covered by partial payments made shall thereupon become the sole property of the Government, but this provision shall not be construed as relieving the contractor from the sole responsibility for the care and protection of materials and work upon which payments have been made or the restoration of any damaged work, or as a waiver of the right of the Government to require the fulfillment of all of the terms of the contract." By letters of May 27, June 22, June 26, July 1, July 14, and July 23, 1937, the contractor submitted further statements in support of his contention that the work had been completed and accepted at the time of the flood and asked for a reconsideration of the decision of the Acting Comptroller General. These letters not only argued the legal questions involved, but contended that the prior decision of May 5, 1937, was based upon an erroneous statement of facts. In response thereto, and in reply to a letter from the Acting Comptroller General of July 1, 1937, the Treasury Department completely reconsidered the case and submitted a supplemental report, dated November 10, 1937, to the Acting Comptroller General. Based on additional reports secured from the Government employees concerned, it was found in substance that the facts as previously presented to the Comptroller General were correct and that at the time of the flood all defects and omissions had not been corrected by the contractor. A copy of the report of November 10, 1937, is enclosed herewith and it presents in detail the facts up to that date. Meanwhile, the contractor had proceeded to repair the damage as demanded by the Government and, apparently, it is now proposed to reimburse the contractor for the cost of making such repairs by the enactment of H. R. 6622. The repairs were satisfactorily completed about December 20, 1937, and by letter of June 24, 1938, the building was accepted by the Director of Procurement. On March 2, 1938, the contractor through its attorneys submitted a claim in the amount of $14,201.67 on the theory that it was not legally liable to repair the damages to the building and that, therefore, the repair work performed was extra work performed on order of the United States. A supplemental affidavit was forwarded March 10, 1938. The reasonableness of the contractor's claim was considered by the Treasury Department and a report of April 28, 1938, submitted H. Repts., 76-3, vol. 6 -60 |