RAYMOND CONSTRUCTORS OF AFRICA, LTD. v. THE UNITED
STATES
No. 175-65
UNITED STATES COURT OF CLAIMS
188 Ct. Cl. 147; 411 F.2d 1227; 1969 U.S. Ct. Cl. LEXIS 31
June 20, 1969, Decided
SYLLABUS: [***1]
ON THE PROOFS
Contracts; delays; extra costs; foreign aid program. --
Plaintiff corporation contracted with the Sudanese Government to construct a
demonstration road in the Republic of Sudan as part of the United States
foreign aid program, and about the same time entered into a letter of
understanding with the International Cooperation Administration in which was
set out the extent of ICA's obligation in financing the contract. Plaintiff
subcontracted the performance of earthwork items under its prime contract.
Of six original claims, three were abandoned and the remaining are for extra
costs incurred because of extra work beyond that specified in the contract
in (1) being required to add and blend coarser materials to the aggregate
base material for the road; (2) having to blend and mix the borrow materials
used as the subbase for the aggregate base; and (3) extra work and expense
incurred because of defendant's alleged failure to furnish, at the proper
time, the equipment which it had agreed to provide plaintiff. It is
held
that plaintiff is not entitled to recover on (1) and (2) and that it is
entitled to a "jury verdict" amounting to $ 7,440 representing the
proportion [***2] of the cost of overall delays which is
attributable to defendant's delay in procuring equipment and delivering it
to the Sudanese Government.
Contracts; interpretation; road base; requirements of. --
Where a road building contract contained a provisions that "desired
gradations [in the aggregate base for the road] will be produced by
selection and blending," the contractor is not entitled to additional
compensation for extra costs incurred when it was required to add coarser
materials from another source to the "pitrun aggregate" and
mechanically blend them, such requirement not being negatived, either
expressly or impliedly, by a change in the contract added at the request of
the contractor to the effect that the aggregate base was to consist of
"unsieved machine loaded aggregate placed and compacted on prepared
roadbed in accordance with Article 200-1.1" of FP-57, the Standard
Specifications for Federal Road Projects promulgated by the United States
Bureau of Public Roads.
Contracts; subcontract; waiver by subcontractor of damages for
delay. --
Plaintiff and the Republic of Sudan contracted to construct a road in the
Sudan and plaintiff also entered into a letter [***3] of
agreement concerning the same project with the International Cooperation
Administration as part of the United States foreign aid program. Where a
subcontractor agreed to waive all damages by reason of being hindered or
delayed in performance by the prime contractor or the Sudanese Government,
and the prime contractor neither paid nor was obligated to pay the
subcontractor for extra costs occasioned the latter by the failure of the
Sudanese Government to furnish equipment, there is no basis for recovery in
a suit by the prime contractor against the United States Government to
recover the subcontractor's additional costs.
Contracts; damages; jury verdict. --
Where responsibility for delay damages to a contractor is attributable in
unascertainable proportions to the defendant's delay in delivering equipment
to the foreign government, to the foreign government's delay in furnishing
the equipment to the contractor, and to the subcontractor's shortcomings, it
is feasible to determine the extent of defendant's liability on the basis of
a "jury verdict" by dividing the known extra costs into three
equal parts.
Contracts; extra costs; contract limitations on maximum payments;
[***4]
effect of limitations where cost due to
Government fault. --
Where in connection with a contract between plaintiff and the Republic of
the Sudan to construct a road in Sudan the United States agrees with Sudan
to pay a portion of the cost to cover
inter alia the furnishing of
equipment by the United States, and the United States gives plaintiff a
letter of understanding fixing a dollar limit on its financing obligation,
such letter of understanding in its context of surrounding circumstances
implies an obligation to make direct payment to plaintiff for all additional
contract costs incurred because of the Government's fault, even though the
dollar limit of the Government's obligation under the letter of
understanding is thereby exceeded.
COUNSEL: Thomas S. Jackson, for plaintiff;
Austin
P. Frum, attorney of record.
Jackson, Gray & Laskey, of
counsel.
Steven L. Cohen, with whom was
Assistant Attorney General
William D. Ruckelshaus, for defendant.
R. W. Koskinen, of
counsel.
JUDGES: Cowen,
Chief Judge, Laramore, Durfee,
Davis, Collins, Skelton, and Nichols,
Judges.
OPINIONBY: PER CURIAM *
* This opinion incorporates, with some changes in the portion headed
"Equipment", the opinion of Trial Commissioner Mastin G. White.
[***5]
OPINION: [*149] [**1228] The
plaintiff presented in the petition six claims growing out of the
construction by the plaintiff of a demonstration road in the Sudan.
Three of the six claims that were originally set out in the petition have
been abandoned by the plaintiff. Therefore, only three claims remain in the
case for disposition by the court.
[*150] It is our opinion that the plaintiff is entitled to
recover on one of the remaining claims, but not on the other two.
Introduction
The plaintiff is a corporation organized and existing under the laws of
Liberia. It is a wholly owned subsidiary of Raymond International, Inc., a
corporation organized and existing under the laws of New Jersey. During the
period that is involved in the present case, both the plaintiff and its
parent corporation maintained their home offices in New York City.
During the period 1959-1962, the defendant's International Cooperation
Administration (now the Agency for International Development), in
furtherance of the defendant's foreign aid program, maintained in The
Republic of the Sudan a mission that was known as the United States
Operations Mission and was frequently referred to as "the [***6]
USOM." This mission, which operated under the general supervision of
the defendant's embassy at Khartoum, the capital of the Sudan, was headed by
a director, who was stationed in Khartoum. The USOM handled the technical,
financial, and other assistance that was provided by the defendant to the
Sudanese government.
Sometime prior to April 1959, the United States Operations Mission proposed
to officials of The Republic of the Sudan that a demonstration road project
be constructed in the Sudan, with financial assistance from the defendant.
At that time, there were no modern highways in the Sudan. It was proposed by
the USOM to the Sudanese government that the demonstration road be
constructed as a modern blacktop highway in the vicinity of Khartoum, for
the purpose of demonstrating what was involved in the construction of a
modern highway, what it would cost, and the benefits that would be derived
from it. It was also believed by personnel of the USOM that the construction
of a segment of a modern road as a demonstration highway would educate the
Sudanese in contracting for, administering, and financing a road project,
and also in the engineering aspects of road-building to some [***7]
extent.
The government of The Republic of the Sudan approved the proposal relative
to the construction of a demonstration [*151] road project. With
the concurrence of the United States Operations Mission, the Sudanese
government decided that the demonstration road would start at Khartoum North
and go approximately 21 kilometers in a northerly direction to Khogalab. The
latter is situated in a rather large agricultural area near the Nile River,
downstream from the confluence of the Blue Nile and the White Nile.
On or about June 25, 1959, the defendant and the government of The Republic
of the Sudan entered into an agreement (usually referred to as "the
project agreement") relative to the construction of a demonstration
road approximately 21 kilometers in length from Khartoum North to Khogalab.
The project agreement was subsequently revised several times. In its final
form, the project agreement not only covered the construction [**1229]
of the demonstration road from Khartoum North to Khogalab, but it also
provided for the extension of the road to Kabbashi Village, approximately 8
1/2 kilometers beyond Khogalab. Total financing equivalent to $ 1,460,000
was provided [***8] for, of which total the Sudanese government
was to furnish the equivalent of $ 900,000 in Sudanese pounds (LS 313,200).
The remainder of the financing, $ 560,000, was to be provided by the
defendant in United States dollars, $ 310,000 being made available for
"contract services" and $ 250,000 being made available for
"commodities." The "commodities" were to consist of
major items of construction equipment that would be procured by the
defendant and delivered at Port Sudan to the Sudanese government, which, in
turn, was to make such construction equipment available for use in the
construction of the demonstation road by the contractor selected for the
job. The ownership of the equipment was to be vested in and retained by the
Sudanese government.
The Sudanese Ministry of Works issued an invitation for competitive tenders
or bids with respect to the construction of the demonstration road, the
plaintiff and other construction companies submitted such tenders, and the
plaintiff was selected as the successful low bidder. The plaintiff's tender
was accepted on or about October 27, 1959; and a formal contract was entered
into between the plaintiff and the government of The Republic of [***9]
the Sudan on or about [*152] November 11, 1959. The contract
provided for the performance by the plaintiff of the various items of work
involved in the construction of the demonstration road, stating as to each
item the estimated quantity, the unit price, and the estimated total price
for the item. The original contract gave the estimated contract price for
all items as the equivalent of $ 750,455, and provided that the maximum
amount to be paid in United States dollars was $ 175,000, with the remainder
of the estimated contract price to be paid in Sudanese pounds.
After the project agreement between the defendant and the Sudanese
government was revised, as previously indicated, for the purpose of
extending the demonstration road for an additional distance of approximately
8 1/2 kilometers beyond Khogalab to Kabbashi Village, the plaintiff and the
Sudanese government entered into a supplemental contract providing for the 8
1/2-kilometer extension of the demonstration road. This supplemental
contract enlarged the estimated quantities previously set out in the
contract; and it increased the estimated contract price to the equivalent of
$ 1,158,091.57, increased the maximum amount [***10] to be paid
in United States dollars to $ 310,000, and increased the amount that was to
be paid in Sudanese pounds. The unit prices stated in the original contract
were not changed by the supplemental contract.
The plaintiff made a subcontract with the Sudanese Construction Company for
the performance by the latter of the earthwork items under the prime
contract between the plaintiff and the Sudanese government.
At about the time when the plaintiff entered into the contract with the
Sudanese government for the construction of the demonstration road, the
plaintiff also entered into a letter of understanding with the International
Cooperation Administration. This document referred to a request from the
Sudanese government that the ICA finance the dollar payments under the
contract for the construction of the demonstration road, and further stated
in part as follows:
ICA requires, as conditions or prerequisites to its financing, agreement
by you [i.e., the plaintiff] to certain conditions as follows:
[*153] 1. Conformity -- You will fully and completely
perform said Contract in accordance with its terms and comply in all
respects with the terms and conditions of this [***11] Letter
of Understanding.
2. Maximum Dollar Obligation -- It is understood that ICA's
maximum [**1230] obligation in financing the Contract shall
not exceed 175,000 U.S. dollars, unless ICA shall, by written notice to
you at the above address, agree to increase its maximum obligation
hereunder.
* * *
5. Non-Dollar Costs -- It is understood that no nondollar costs
under the Contract will be financed by ICA.
Subsequently, after arrangements were made for the extension of the
demonstration road for approximately 8 1/2 kilometers beyond Khogalab to
Kabbashi Village, paragraph numbered 2 of the letter of understanding
between the plaintiff and the International Cooperation Administration was
amended "to increase ICA's maximum obligation in financing the Contract
* * * from $ 175,000 to $ 310,000."
Aggregate Base
One of the claims asserted by the plaintiff in the present action is based
upon the allegation that the cost of constructing the demonstration road in
the Sudan was increased because personnel of the defendant violated an
"agreement with the plaintiff that only unsieved and mechanically
loaded 'pit run' aggregate material need be used" in constructing the
[***12] base of the demonstration road.
Pit-run aggregate is aggregate just as it is dug out of a pit or borrow
area. It is excavated mechanically, and it is loaded on a vehicle and
delivered to the job site for use in the construction process, without being
screened or sieved by hand labor.
The evidence in the record shows that personnel of the defendant's Bureau of
Public Roads was assigned to, and formed part of, the United States
Operations Mission in the Sudan. The top person in this category was Herman
Gaines. He was the principal official of the USOM with respect to highway
matters, although he served under the administrative supervision of the
Director of the USOM.
The evidence also shows that the specifications for the [*154]
proposed demonstration road, and the other contract documents which the
Sudanese Ministry of Works furnished to the plaintiff and other prospective
bidders as part of the invitation for tenders, were prepared in the office
of Herman Gaines and by personnel of the defendant, in conjunction with the
Sudanese Ministry of Works. The specifications and other contract documents
were modeled principally on documentary material customarily used by the
defendant's [***13] Bureau of Public Roads.
One of the items of work referred to in the invitation for tenders was
designated as "Aggregate Base," with an estimated quantity of
75,000 cubic meters.
In August 1959, B. B. Talley, a retired brigadier general of the U.S. Army,
who at that time was president of the plaintiff and vice president of the
plaintiff's parent corporation, visited the Sudan during the course of a
business trip abroad. General Talley had previously heard of the proposal
for the construction of a demonstration road in the Sudan. On the occasion
of the August 1959 visit to the Sudan, General Talley was permitted to
examine the plans for the proposed demonstration road; he went over part of
the prospective route in a jeep with one of Herman Gaines' assistants; and
he discussed with personnel of the defendant the subject of the materials
that were to be used in the construction of the demonstration road. General
Talley was shown certain borrow areas that had been designated by Sudanese
officials, acting on the advice of personnel of the defendant's Bureau of
Public Roads, as sources of aggregate to be used in constructing the base of
the demonstration road. He looked at some of the [***14]
material in such designated areas, but he did not make any engineering
tests. General Talley noted that the aggregate material in the designated
borrow areas which he examined was primarily a desert sand, and was quite
fine. This caused General Talley some [**1231] concern, because
it was his opinion that the material contained an excess of
"fines" and was deficient in coarse material.
General Talley was aware that a road base made of aggregate containing an
excess of fines would provide shoulders to the road that would not stand up
under usage. He was [*155] also aware that the borrow areas
which he examined would not provide a sufficient amount of aggregate for the
base of the entire demonstration road.
On or about September 21, 1959, the plaintiff received an invitation for
tenders or bids on the proposed contract for the construction of the
demonstration road in the Sudan. The invitation stated that the deadline for
the submission of tenders was noon on October 27, 1959. They were to be
submitted to the Sudanese Ministry of Works in Khartoum.
After receiving the invitation for tenders referred to in the preceding
paragraph, the plaintiff began the preparation of [***15] its
estimate of the costs that would be involved in the construction of the
demonstration road, and the preparation of a tender to be submitted on the
proposed contract. This work was completed by October 20, 1959. General
Talley went to Khartoum a few days later for the purpose of submitting the
plaintiff's tender. He arrived in Khartoum on Sunday, October 25, 1959.
After arriving in Khartoum, General Talley called Herman Gaines on the
telephone and made an appointment to see him the next day, October 26, 1959.
On the morning of October 26, General Talley went to see Herman Gaines; and
they discussed the specifications for the demonstration road project.
General Talley asked Mr. Gaines for a clarification of,
inter alia,
the specifications with respect to aggregate and overhaul.
As previously indicated, General Talley in August 1959 had looked at some of
the borrow areas that were designated as sources of aggregate to be used in
constructing the base of the demonstration road; and he had noted that the
material in those borrow areas seemed to contain an excess of fines and to
be deficient in coarse material. In connection with the submission of the
plaintiff's tender, [***16] General Talley wanted to find out
whether it would be necessary to utilize hand labor for the purpose of
screening or sieving such material in order to eliminate the excess of
fines, or whether it was intended under the proposed contract that pit-run
aggregate would be used. In response to an inquiry, Herman Gaines informed
General Talley at the conference on October 26, 1959, that it was intended
under the proposed contract [*156] that pit-run aggregate would
be used in the construction of the road base, without screening or sieving
it.
As General Talley was aware that the borrow areas for aggregate which he had
examined in August 1959 did not contain enough aggregate for the
construction of the entire road base, and that it would be necessary to
obtain part of the aggregate from somewhere else, he wanted to find out
whether the contractor would be paid for any overhaul of aggregate (i.e.,
haulage for any distance greater than 1,000 feet). General Talley mentioned
this subject to Herman Gaines at the conference on October 26, 1959; and Mr.
Gaines informed General Talley that the contractor would be paid for any
overhaul of aggregate for the road base.
As a result of General [***17] Talley's conference with Herman
Gaines on October 26, 1959, General Talley modified the bid that had been
prepared on behalf of the plaintiff relative to the aggregate base item. On
the basis of the understanding that pit-run aggregate would be used for the
road base, thus eliminating the factor of hand labor for screening or
sieving the aggregate, and that the contractor would be paid for any
overhaul of aggregate, General Talley reduced the plaintiff's bid on the
aggregate base item from a unit price of $ 3.78 per cubic meter, as
theretofore tentatively fixed by the plaintiff, to a unit price of 37 cents
per cubic meter. Furthermore, in order that the bid might conform to his
understanding [**1232] that no screening or sieving of the
aggregate to be used in the construction of the road base would be required,
General Talley placed a handwritten asterisk next to the item relative to
the aggregate base on the bid, with the asterisk referring to a handwritten
note added by General Talley on the back of the same sheet and stating as
follows: "Unseived [sic] machine loaded aggregate placed and compacted
on prepared roadbed in accordance with Article 200-1.1."
The article cited [***18] by General Talley in the handwritten
note which he added to the plaintiff's bid was contained in FP-57, the
Standard Specifications for Federal Road Projects, promulgated by the
defendant's Bureau of Public Roads. The contract papers accompanying the
invitation for tenders indicated that this article was to be incorporated by
[*157] reference in the contract for the construction of the
demonstration road.
When the plaintiff's tender was subsequently accepted and the plaintiff
entered into the contract with the Sudanese government for the construction
of the demonstration road, the note which General Talley had added to the
plaintiff's bid on the aggregate base item became a part of the contract.
The personnel of the defendant's Bureau of Public Roads in the Sudan,
forming part of the United States Operations Mission, was organized to work
with the Sudanese officials in connection with the construction of the
demonstration road, and to advise them and instruct them regarding methods
of operation. The objective was for the Sudanese officials to handle the
administration of the project, and for the personnel of the Bureau of Public
Roads to act in the role of consultants. Thus, [***19] it was
customary for all written directives to the plaintiff (or its subcontractor)
to be issued by the Sudanese resident engineer, but with respect to all
matters of consequence, he acted after consultation with, and on the advice
of, personnel of the Bureau of Public Roads. Also, in the actual
administration of the project, some directives to the plaintiff (or its
subcontractor) regarding important matters were issued orally in the first
instance by personnel of the Bureau of Public Roads, and were then confirmed
in writing by the Sudanese resident engineer.
The Sudanese Construction Company, which was the plaintiff's subcontractor
for the performance of the earthwork items under the prime contract, began
laying the aggregate base sometime between October 1 and October 15, 1960.
The aggregate for the road base was excavated mechanically from designated
areas; it was loaded on vehicles and delivered to the job site; and it was
dumped on the roadway for incorporation in the road base, without being
screened or sieved. However, in those instances where the aggregate from a
particular borrow area would not, if used alone, make a suitable road base
because of an excess of fines, the [***20] plaintiff (or its
subcontractor) was required, after such aggregate was dumped on the roadway,
to add to it and blend in with it coarser material from another source, so
that the blended aggregate would provide a suitable road base in accordance
[*158] with FP-57. The addition and blending of the coarser
material were accomplished by the use of machinery.
Instructions for the addition and blending of aggregate, as indicated in the
preceding paragraph, were issued to the plaintiff (or its subcontractor) by
the Sudanese resident engineer. However, the latter official acted upon the
advice of personnel of the defendant's Bureau of Public Roads.
The plaintiff's project manager complained about the requirement with
respect to the addition and blending of aggregate; and on November 15, 1960,
he notified the Sudanese resident engineer that "Under the
circumstances we must advise that we shall place a claim for the extra costs
incurred in performing this item in the manner instructed by you * *
*."
[**1233] The primary question in connection with the plaintiff's
claim relative to the aggregate base is whether the requirement concerning
the addition and blending of aggregate, [***21] as previously
described, was inconsistent with and violated General Tally's note, as
incorporated in the contract, to the effect that the aggregate base was to
consist of "Unseived [sic] machine loaded aggregate placed and
compacted on prepared roadbed in accordance with Article 200-1.1" of
FP-57. It is our conclusion that this primary question should be answered in
the negative.
The evidence indicates clearly that the note quoted in the preceding
paragraph was added by General Talley to the plaintiff's bid on the
aggregate base item in order to make sure that the plaintiff would not be
required to utilize hand labor for the purpose of screening or sieving
aggregate for the road base, but, instead, that the plaintiff would be
permitted to use for the road base aggregate just as it was after being
mechanically excavated from designated borrow areas. In the actual
construction process, the plaintiff (or its subcontractor) was permitted to
do just what General Talley sought to ensure, i.e., to excavate the
aggregate mechanically from designated borrow areas, load it on vehicles,
deliver it to the job site, and dump it on the roadway for incorporation in
the road base, without being [***22] screened or sieved.
The possibility of having to blend mechanically aggregate from different
sources in order to achieve a suitable road base meeting the requirements of
FP-57 was not raised [*159] by General Talley during his
conference with Herman Gaines on October 26, 1959; and such a possibility
was not negatived, either expressly or impliedly, by the handwritten note
which General Talley added to the plaintiff's bid on the aggregate base
item. That note merely specified that the aggregate base was to consist of
"Unseived [sic] machine loaded" material, and such material was
actually used.
Furthermore, the blending of aggregate in the road base was seemingly
contemplated by a special provision in the contract between the plaintiff
and the Sudanese government, which stated in part as follows:
* * * It is intended that the completed base shall conform to one of the
grading schedules in table 200-1 but minor deviations will be permitted if
quality is otherwise satisfactory. It is intended that desired
gradations will be produced by selection and blending. [Emphasis
supplied.]
Thus, it is not surprising that when the plaintiff's project manager wrote
to the [***23] plaintiff's home office in New York City
concerning the requirement that aggregate from different sources be blended
in order to achieve a satisfactory road base, the reply from the plaintiff's
home office stated in part as follows:
* * * In checking our files the only qualification to our bid reads as
follows: "Aggregate base is understood to be unseived [sic], machine
loaded aggregate, placed and compacted on prepared roadbed in accordance
with Article 200-1.1". There is an amendment to Section 10b in
Aggregate Base Specification which definitely calls for the material to be
blended by the contractor at his own expense. If it is possible to open
negotiations for further payment on this item, you are authorized to
negotiate.
It must be concluded, therefore, that the evidence in the record does not
sustain the allegation in the petition to the effect that personnel of the
defendant violated an "agreement with the plaintiff that only unsieved
and mechanically loaded 'pit run' aggregate material need be used" in
constructing the base of the demonstration road.
The conclusion stated in the preceding paragraph makes it unnecessary to
consider any of the subsidiary questions [***24] [*160]
that would otherwise be involved in the plaintiff's claim relative to the
aggregate base.
[**1234]
Borrow Course
Another claim presented by the plaintiff in the present litigation is based
upon the allegation that personnel of the defendant required the plaintiff
"To blend, disc, harrow and rework the borrow materials,
notwithstanding that defendant had designated certain 'borrow pits' and
agreed that the material from the said borrow pits would be acceptable for
use on the said road."
The plaintiff did not point out clearly in the petition, or through its
witnesses at the trial, just how the quoted requirement with respect to the
borrow material violated any agreement between the plaintiff and the
defendant or the plaintiff's contract with the Sudanese government.
The original contract between the plaintiff and the Sudanese government
called for the placement by the plaintiff of an estimated quantity of
330,000 cubic meters of "Borrow Excavation (Case 1)" at a unit
price of 33 cents per cubic meter. The estimated quantity was later
increased when arrangements were made to extend the demonstration road for
an additional distance of 8 1/2 kilometers. The work [***25] of
placing the borrow course was to be done in accordance with FP-57, the
Standard Specifications for Federal Road Projects, promulgated by the
defendant's Bureau of Public Roads.
The borrow course of a roadway is the subbase for the aggregate base. It is
usually constructed of whatever type of local earth that is available, such
as sand or clay, but it should have a sufficiently low plasticity index to
provide a stable subbase when the completed road is subjected to the passage
of heavy vehicles or wet weather, and it should be of such a consistency as
to be capable of compaction prior to the placement of the aggregate base
upon it.
The borrow course for the initial 21-kilometer section of the demonstration
road was laid by the plaintiff's subcontractor, the Sudanese Construction
Company. The subcontractor began this work sometime before February 29,
1960, and completed the borrow course for the initial 21-kilometer section
of the road in February 1961. The borrow course for the [*161] 8
1/2-kilometer extension of the demonstration road was laid by the plaintiff
in conjunction with the subcontractor.
The material for the borrow course was taken from borrow pits designated
[***26] by the Sudanese resident engineer, acting on the advice
of personnel of the defendant's Bureau of Public Roads. Some of the borrow
thus obtained was a very plastic clay material from alluvial deposits along
the Nile River; and as such material was dumped on the roadway for use on
the borrow course, the plaintiff (or its subcontractor) was required by the
Sudanese resident engineer -- acting upon the advice of personnel of the
defendant's Bureau of Public Roads -- to add some sand to the clay for the
purpose of lowering the plasticity index, to blend the sand and clay
together mechanically, and then to water and compact the blended material.
On the other hand, some of the designated borrow areas consisted of sand;
and in those situations, after the sand was dumped on the roadway for use in
the borrow course, the plaintiff (or its subcontractor) was required to add
some clay to the sand in order to make it more compactable, to blend the
sand and clay together mechanically, and then to water and compact the
blended materials.
The evidence in the record does not prove that the Sudanese resident
engineer, or the personnel of the defendant's Bureau of Public Roads, went
beyond the requirements [***27] of the contract between the
plaintiff and the Sudanese government, or violated any agreement between the
plaintiff and the defendant, in requiring the plaintiff (or its
subcontractor) to blend mechanically borrow materials from different sources
in order to achieve a borrow course which was capable of being compacted and
would provide a stable subbase for the aggregate base, and thus meet the
requirements of FP-57.
It necessarily follows that the plaintiff is not entitled to recover on its
claim relative to the borrow course.
[**1235]
Equipment
As previously indicated in the introductory portion of this opinion, the
project agreement, as revised, between the defendant and the Sudanese
government provided that the defendant would procure the major items of
construction [*162] equipment which would be needed in the
construction of the demonstration road and would deliver them to the
Sudanese government at Port Sudan; that the ownership of such equipment was
to be vested in and retained by the Sudanese government; and that the
Sudanese government would make the construction equipment available to the
contractor selected for the job.
Also, the contract that was subsequently [***28] entered into
between the Sudanese government and the plaintiff for the construction of
the demonstration road included an "equipment and rental list"
describing 42 pieces of equipment that were to be furnished by the Sudanese
government to the plaintiff for use in the performance of the work under the
contract, and specifying the hourly rental rates in Sudanese pounds that
were to be paid by the plaintiff for the several pieces of equipment. The
equipment was to be operated and maintained at the expense of the plaintiff.
It should also be mentioned in this connection that the subcontract between
the plaintiff and the Sudanese Construction Company, covering the
performance by the latter of the earthwork items under the prime contract,
contemplated that the earth-moving equipment which the Sudanese government
was to furnish the plaintiff would, in turn, be furnished by the plaintiff
to the subcontractor, and that such equipment would be operated and
maintained at the expense of the subcontractor.
These several documents included, of course, an implied requirement that the
equipment should be made available when it was reasonably needed for the
construction of the demonstration road. [***29] However, this
requirement was not fulfilled.
The evidence in the record indicates that there was a great deal of delay in
the delivery of government-furnished earthmoving equipment to the job site
for use by the subcontractor in the construction of the demonstration road.
The first piece of such equipment was made available on December 29, 1959;
other pieces of equipment were made available in January, February, May, and
June of 1960; and the last piece of such equipment was not made available
until [*163] October 20, 1960, which was about a year after the
commencement of the work.
While awaiting the delayed delivery of the earth-moving equipment provided
for under the project agreement, the prime contract, and the subcontract,
the subcontractor improvised by renting other equipment, either from the
Sudanese Ministry of Works or from other sources in the Sudan. Equipment was
rented by the Ministry of Works to the subcontractor on a day-to-day basis,
so that it could be taken back by the Ministry when needed on other work or
could be returned by the subcontractor when not needed on the project. Some
of the equipment thus obtained by the subcontractor was old, and was more
[***30] expensive to operate and maintain than new equipment
would have been.
The evidence in the record clearly warrants a general finding to the effect
that the subcontractor incurred additional expenses because of the delay in
receiving government-furnished earth-moving equipment. However, no actual
cost figures from the subcontractor's books and records were presented at
the trial, and there is no way of determining with reasonable accuracy the
amount of the subcontractor's additional expenses attributable to the delay
in receiving government-furnished equipment.
Furthermore, no evidence was presented to establish that the plaintiff has
made any extra payment to the subcontractor, or is obligated to make any
extra payment to the subcontractor, because of the additional expenses
incurred by the subcontractor due to the late [**1236] delivery
of government-furnished equipment. The lack of such evidence is doubtless
due to the circumstance that the subcontract contained an exculpatory
provision expressly stating that:
Subcontractor shall not be entitled to, and hereby waives, any and all
damages which it may suffer by reason of Raymond or Owner [Sudanese
government] hindering [***31] or delaying Subcontractor in the
performance of the work, or any portion thereof, from any cause
whatsoever.
In order for any recovery to be allowed in the present action on account of
the extra expenses incurred by the subcontractor due to the delay in the
delivery of government-furnished [*164] equipment, it would be
necessary for the evidence to be consistent with a valid claim by the
subcontractor against the plaintiff under the subcontract. In the absence of
that link, there is no basis upon which to impose on the defendant in the
present action responsibility for the extra expenses incurred by the
subcontractor due to the late delivery of government-furnished equipment.
The evidence in the record shows that the plaintiff was delayed a total of
142 days in completing the work under the contract for the construction of
the demonstration road, and that the plaintiff's own expenses, in the form
of indirect costs, were increased to the extent of $ 22,319.57 as a result
of such delay. The plaintiff originally attributed the entire 142 days, and
all of its extra expenses, to the defendant's delay in delivering equipment
that was needed for the performance of the work under [***32]
the contract.
However, the evidence shows that although the delay in the delivery of
government-furnished equipment to the job site was partially due to delay on
the part of the defendant in procuring such equipment and delivering it to
the Sudanese government at Port Sudan, there was also delay on the part of
the Sudanese government in transporting the equipment from Port Sudan to the
job site.
Furthermore, the evidence shows that the overall delay in completing the
work under the contract was not only attributable to the late delivery of
government-furnished equipment to the job site, but was also partially due
to the subcontractor's inexperience, inefficiency, and failure to use
available equipment to maximum advantage.
Actually, there is no basis in the record on which a precise allocation of
responsibility for the overall delay in completing the work under the
contract can be made as between the defendant's delay in procuring equipment
and delivering it to the Sudanese government at Port Sudan, the Sudanese
government's delay in transporting equipment from Port Sudan to the job
site, and the subcontractor's shortcomings. In such a situation, it seems
that the only feasible [***33] thing to do is to make a finding
in the nature of a jury verdict that the defendant's delay in procuring
equipment and delivering it to the Sudanese government at Port Sudan was
responsible for [*165] one-third of the overall delay in the
completion of the work under the contract and, hence, for one-third of the
extra indirect expenses that were incurred by the plaintiff because of such
overall delay, or $ 7,440.
In this connection, the defendant says that its commitment with respect to
the furnishing of equipment was made to the Sudanese government in the
project agreement, as revised, and that the plaintiff was not a party to
such agreement. However, there was, in addition, a direct contractual tie
between defendant and plaintiff. The letter of understanding with the
International Cooperation Administration (referred to at the beginning of
this opinion) constituted a contract directly between the two parties now
before us. The Government argues that, so far as the United States was
concerned, that agreement was strictly limited to a promise by the defendant
to pay a portion of the contract price in dollars. But taken in context and
with [**1237] the surrounding circumstances, [***34]
we think that there was also implied in the letter of understanding an
undertaking (directly to the plaintiff) on the part of the Federal
Government to perform those things, bearing on plaintiff's work, which the
defendant had told the Sudanese government and the plaintiff that it would
do. Not only did the International Cooperation Administration solicit the
plaintiff's interest in the work (finding 11), but the formal invitation for
bids characterized "the proposed project" as "a joint effort
by the Ministry of Works, an agency of the Government of the Republic of the
Sudan, and the International Cooperation Administration (ICA), an agency of
the Government of the United States of America". Defendant's employees
and representatives were intimately connected with the entire course of the
project and often dealt directly with plaintiff's representatives. The
letter of understanding provided that the United States would pay its share
directly to the plaintiff, and the plaintiff's contract with the Sudanese
government provided for an appeal of disputes "which will directly
affect the amount of U.S. dollar payments under the contract" to the
Director, ICA. In these circumstances, [***35] the case is very
different from
D. R. Smalley & Sons, Inc. v.
United States,
178 Ct. Cl. 593, 598, 372 F. 2d 505, 508,
cert. denied, 389 U.S.
835 (1967), in which the "defendant did not [*166] sign the
contracts with the plaintiff and there were no negotiations or
communications whatsoever between them". Here, in contrast, there was a
written agreement directly between plaintiff and defendant, and in context
that written agreement should be read as impliedly binding the Government to
the plaintiff to perform what the Government had squarely told plaintiff (as
well as the Sudanese government) that it would perform.
The defendant then argues that, in any case, the plaintiff's recovery is
subject to the limitation in the contract between the plaintiff and the
Sudanese government that "the total of U.S. dollar payments to the
Contractor
in no event shall exceed $ 310,000.00" (emphasis
supplied), and to the limitations in the letter of understanding that
"It is understood that ICA's maximum obligation in financing the
Contract shall not exceed 310,000 U.S. dollars, unless ICA shall, by written
notice to you * * *, agree to increase its maximum obligation
hereunder", [***36] and that "It is understood that no
non-dollar costs under the Contract will be financed by ICA." n1 We
have held, however, that maximum limitations of this type "do not
ordinarily control where the contractors suffer additional costs because of
the Government's fault".
Scherr & McDermott, Inc. v.
United States, 175 Ct. Cl. 440, 450, 360 F. 2d 966, 971 (1966) (also
involving a direct contract with ICA). To the same effect are
Anthony P.
Miller, Inc. v.
United States, 172 Ct. Cl. 60, 348 F. 2d 475
(1965), and
Ross Construction Corp. v.
United States, 183
Ct. Cl. 694, 392 F. 2d 984 (1968). The inclusion, in this instance, of the
words "in no event" in the project agreement (but not, it may be
noted, in the letter of understanding) does not persuade us that the maximum
limitation was intended to apply even though the overrun was directly due to
the Government's failure to perform. n2 As in our prior decisions on this
point, we refuse to attribute to the contracting parties "an intention
that would produce an impractical, unjust, and unworkable result unless the
intention appears clearly on the face of the [*167] [contract]
or in the supporting record." [***37]
Anthony P.
Miller, Inc. v.
United States, supra, 172 Ct. Cl. at 68, 348
F. 2d at 480;
Ross Constr. Corp. v.
United States, supra,
183 Ct. Cl. at 698, 392 F. 2d at 986. [**1238] Accordingly,
plaintiff is entitled to recover the entire sum of $ 7,440, which we have
found is the amount of damage attributable to the defendant. n3 Judgment
will be entered for that sum.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - -
- -
n1 There is no evidence that ICA ever agreed in writing (or otherwise) to
increase its maximum obligation beyond $ 310,000.
n2 The contract limitation in
Scherr & McDermott, supra, also
contained the phrase "in no event", 175 Ct. Cl. at 443, 360 F. 2d
at 967.
n3 Before the trial commissioner, but not before the judges, defendant
argued that the plaintiff's claim is barred by 28 U.S.C. § 1502 (1964),
providing that this court "shall not have jurisdiction of any claim
against the United States growing out of or dependent upon any treaty
entered into with foreign nations". We need not, and do not, consider
this defense, both because defendant has failed to preserve it before the
judges and because we place our holding, not on the project agreement
between the United States and the Sudanese government, but on the letter of
understanding directly between plaintiff and defendant. In that respect (as
in others) this case is like
Scherr & McDermott, Inc. v.
United States. supra.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - -
- - [***38]
Findings of Fact
The court, having considered the evidence, the report of Trial Commissioner
Mastin G. White, and the briefs and arguments of counsel, makes findings of
fact as follows:
General
1. (a) The plaintiff is a corporation organized and
existing under the laws of Liberia. It is a wholly owned subsidiary of
Raymond International, Inc., a corporation organized and existing under the
laws of New Jersey.
(b) During the period that is involved in the present case, both the
plaintiff and its parent corporation maintained their headquarters or home
offices in New York, New York.
2. (a) During the period 1959-1962, the defendant's
International Cooperation Administration, in furtherance of the defendant's
foreign aid program, maintained in The Republic of the Sudan a mission that
was known as the United States Operations Mission and was frequently
referred to as "USOM." This mission, which operated under the
general supervision of the defendant's embassy at Khartoum, was headed by a
director, who was stationed in Khartoum. The USOM handled the technical,
financial, and other assistance that was provided by the defendant to the
Sudanese government.
[*168] [***39] (b) Herman Gaines, an employee of the
defendant's Bureau of Public Roads, was assigned to the United States
Operations Mission in the Sudan. He was the principal official of the
mission with respect to highway matters. Mr. Gaines served under the
administrative supervision of the Director of the USOM.
3. (a) Sometime prior to April 1959, the United States
Operations Mission proposed to officials of The Republic of the Sudan that a
demonstration road project be constructed in the Sudan, with financial
assistance from the defendant. The idea of a demonstration road project
originated in the USOM; and the idea was developed in a general way by
Herman Gaines and other USOM personnel before the project was proposed to
the Sudanese government.
(b) At the time referred to in paragraph (a) of this finding, there were no
modern highways in the Sudan. It was proposed by the USOM to the Sudanese
government that the demonstration road be constructed as a modern blacktop
highway in the vicinity of Khartoum, the capital of the Sudan, so that the
road would become known to the government officials and other residents of
Khartoum, and would demonstrate to them what was involved in the
construction [***40] of a modern highway, what it would cost,
and what benefits were to be derived from it. It was also thought by
personnel of the USOM that the construction of a segment of a modern road as
a demonstration highway would educate the Sudanese in contracting for,
administering, and financing a road project, and also in the engineering
aspects of road-building to some extent.
(c) The proposal by the United States Operations Mission to the Sudanese
government contemplated that the specific location for the demonstration
road would be selected by the Sudanese government, with the concurrence of
the USOM.
(d) At the time when the proposal was made by the United States Operations
Mission for the construction of a demonstration road project, it was
expected by the USOM that the road would cost less than half a million
dollars.
4. (a) The government of The Republic of the Sudan [*169]
approved the proposal referred to in finding 3 with respect to the
construction of a demonstration road project.
(b) With the concurrence of the United States Operations Mission, the
Sudanese government decided that the demonstration road would start at
Khartoum North and go approximately 21 kilometers [***41] in a
northerly direction to Khogalab. The latter is situated in a rather large
agricultural area near the Nile River, downstream from the confluence of the
Blue Nile and the White Nile. The Sudanese government contemplated that
farmers living in the agricultural area would use the demonstration road to
bring agricultural products into Khartoum, and thus the road would tap an
important agricultural area. Also, it was thought by the Sudanese officials
that the demonstration road would ultimately become a segment of a highway
from Khartoum to Port Sudan, and thus would be part of a modern highway
system for the Sudan.
5. While on a business trip to Khartoum in April 1959, B.
B. Talley, a retired brigadier general of the U.S. Army, who at that time
was president of the plaintiff and vice president of the plaintiff's parent
corporation, learned of the proposal for the construction of a demonstration
road project in the Sudan. He received this information from the Director of
the United States Operations Mission in the Sudan.
6. General Talley visited Khartoum again in May 1959. At
that time, he obtained further information regarding the proposed
demonstration road. He [***42] learned that the road would be a
modern black-top road; and he was informed (erroneously, as it later turned
out) that invitations for tenders or bids with respect to the construction
of the road would probably be issued late in June 1959.
7. (a) On or about June 25, 1959, the defendant, in
furtherance of its foreign aid program, entered into an agreement with the
government of The Republic of the Sudan. The agreement was signed for the
defendant by the Director, USOM, and for the Sudan by the Commissioner for
development, Ministry of Finance and Economics.
(b) The agreement referred to in paragraph (a) of this finding (hereinafter
usually called "the project agreement") provided that the parties
thereto would cause to be constructed [*170] a demonstration
road project approximately 21 kilometers in length from Khartoum North to
the Khogalab School, in the Sudan.
(c) The project agreement contained the following provisions (among others):
Project Description and Explanation
The G.O.S./USOM [Government of the Sudan/United States Operations Mission]
operating under project 75-31-004 is creating a Sudanese Road Organization
within the Ministry of Works. This [***43] organization is to
prepare as part of its initial duties comprehensive road construction
proposals for consideration of the G.O.S. Development authorities. These
proposals will embody detailed quantities and cost estimates for the
recommended roads of various types throughout the country. Since the Sudan
has no prior consequential experience in modern road construction having
no major resident contractors who have had previous opportunity to
contract for construction against plans and designs requiring modern
construction techniques, it has been determined to contract on a
demonstration basis for the construction of a section of road to be built
to standards which will provide construction data for use in the
formulation of the aforementioned comprehensive construction proposals.
This demonstration project shall in addition to provision of construction
data, induce an interest on the part of U.S. and local firms to create the
competence within the Sudan which would be able to construct highways
using modern techniques. The staff under project 75-31-004 will be
responsible for detailed construction plans and will provide engineering
supervision to the construction to be undertaken [***44] by
contract.
* * *
The financing and attendant arrangements for this construction are as
follows:
| Total Financing |
$ 1,460,000 |
| U.S. Dollar Financing |
560,000 |
| Contract Services |
560,000 |
* * *
* * * It is understood that this contract will be between the G.O.S.
Ministry of Works and the Construction Firm. Contract is subject to
initial review and clearance by USOM/S and ICA/W in accordance with the
procedures concerning use of ICA funds for Contract Services. * * *
[*171] Sudanese Pound Financing LS 313,200 = $ 900,000
The direct Sudanese Pound Financing shall for the initial increment be
wholly supplied from Special Account (Counterpart) funds. * * *
This amount shall be earmarked for release by the G.O.S. to the Ministry
of Works to meet the Sudanese Pound payment requirements as may be
specified under contract for the road construction outlined under U.S.
Dollar Financing above.
* * * All Counterpart release requests must bear the approval of the
Project Director and Senior USOM Representative then submitted to the
G.O.S. Development Branch and USOM Representative then submitted to the
G.O.S. Development Branch and USOM for final approval [***45]
and issuance under the signature of the Ministry of Finance and USOM
Director/Controller of the Counterpart Release Authorization form.
* * *
B. The Department of Roads shall appoint a Project Director to have
operational responsibility for the entire project; or, in instances where
the project has two or more sub-projects, the Department may appoint or
cause to be appointed Sub-Project Directors. The Project Director of
Sub-Directors will, in addition to operation responsibilities, be the
contact point in the Government of Sudan for the Senior USOM Technical
Representative assigned to assist in execution of the Project.
8. The specifications for the proposed demonstration road,
and the other contract documents that were to be mailed out with the
invitation for tenders or bids, were prepared in the office of Herman Gaines
and by personnel of the defendant, in conjunction with the Ministry of Works
of the Sudan. The specifications and the other contract documents were
modeled principally on documentary material customarily used by the
defendant's Bureau of Public Roads.
9. (a) General Talley was in the Sudan again in August
1959. At that time, the route for the [***46] proposed
demonstration road had been selected; and General Talley went over part of
the route in a jeep with one of Herman Gaines' assistants. Due to recent
rains and the muddy condition of the road, they could not go all the way.
(b) On the occasion of the August 1959 visit, General [*172]
Talley was permitted to examine the plans for the proposed demonstration
road.
(c) During his August 1959 visit to the Sudan, General Talley discussed with
personnel of the defendant the matter of the materials that were to be used
in the construction of the demonstration road. He was shown certain borrow
areas that had been designated by Sudanese officials, acting on the advice
of personnel of the defendant's Bureau of Public Roads, as sources of
aggregate that would be used in constructing the base of the demonstration
road. He looked at some of the material in such designated areas, but he did
not make any engineering tests. He noted that the aggregate material in the
designated borrow areas which he examined was primarily a desert sand, and
was quite fine. This caused General Talley some concern, because it was his
opinion that the material contained an excess of "fines" and was
[***47] deficient in coarse material.
(d) General Talley was aware that a road base made of aggregate containing
an excess of fines would provide shoulders to the road that would not stand
up under usage.
(e) General Talley was also aware that the borrow areas which he examined
would not provide a sufficient amount of aggregate for the base of the
entire demonstration road.
10. (a) Revision No. 1 to the project agreement (see
finding 7) was dated August 31, 1959. It reduced the direct dollar
financing, earmarked for "contract services," from $ 560,000 to $
210,000, a reduction of $ 350,000; but it provided for the direct dollar
financing of "commodities" to the extent of $ 350,000.
(b) Revision No. 1 provided in part as follows:
This revision reduces U.S. dollar funds originally earmarked for Contract
Services and provides for purchase of construction equipment to be used by
the contractor as ICA/W has advised that equipment should be procured and
owned by GOS and made available to the contractor. The unit price estimate
has been revised to reflect advantage to the contractor of having
construction equipment furnished by GOS. Equipment will be furnished to
the contractor free [***48] of any rental charge. Operating
and maintenance costs will be the responsibility of the contractor, but
operation and maintenance will be supervised by GOS engineers and
equipment specialists.
[*173] * * *
The financing and attendant arrangements for this construction are as
follows:
| Total Financing |
$ 1,460,000 |
| U.S. Dollar Financing |
560,000 |
| Commodities |
350,000 |
This amount is the estimated U.S. dollar acquisition cost on a C&F
Port Sudan basis of construction equipment which shall be subsequently
determined by the Project Director and Senior USOM Representative * * *.
* * * Procurement * * * will be by U.S. Bureau of Public Roads.
Specification details will be prepared by U.S. Bureau of Public Roads. * *
* All commodities will be consigned to the Ministry of Works, Government
of Sudan, and title to all commodities will be vested in that agency.
The purpose of this procurement being to provide the construction firm to
be contracted under this project with the major items of construction
equipment required for the Khartoum North-Khogalab Road, it is understood
that the equipment so procured shall be turned over to the contractor and
retained for [***49] his use as long as needed in execution of
this project. * * *
* * *
* * * The estimated unit prices are intended to reflect the advantage to
the contractor of having major items of equipment furnished as is being
provided under this project estimated at $ 360,000 in cost.
* * *
L. The construction firm employed under this contract shall be required to
consider itself as a part of the program to foster the economic
development of Sudan and their operations shall be so conducted as to be
sensitive to this responsibility.
(c) The estimated unit prices were reduced substantially by reason of the
provision for the furnishing of construction equipment to the prospective
contractor. For example, the estimated unit price for the item of
"Borrow Excavation, Case 1" was reduced from 60 cents per cubic
meter to 45 cents per cubic meter; and the estimated unit price for the item
of "Aggregate Base" was reduced from $ 1 per cubic meter to 75
cents per cubic meter. The total estimated cost was reduced from $ 1,460,000
to $ 1,110,000.
11. Under the date of September 4, 1959, the headquarters
of the International Cooperation Administration in Washington, [*174]
D.C., sent a [***50] form letter to the plaintiff's parent
corporation in New York City and to other construction companies. The form
letter stated in part as follows:
The Ministry of Works of the Government of the Sudan proposes in the near
future to issue invitations for bids to selected U.S. and Sudanese
contractors for the construction of a demonstration highway in the Sudan.
Pursuant to agreements entered into between the Ministry and the
International Cooperation Administration (ICA), certain of the costs of
the contract are to be financed by ICA. This letter is addressed to you to
determine your interest in submitting a bid on the project.
The project is for the construction of a road of approximately 21
kilometers from the end of pavement in Khartoum North to Khogalab School.
* * *
* * *
The work will be performed pursuant to a unit price contract to be entered
into between the successful bidder and the Ministry of Works, Government
of the Sudan. The contractor will be furnished certain road building
equipment at a value of approximately $ 350,000.00 which is being
purchased by the Government of the Sudan for this purpose and which is to
be returned to the Government upon construction [***51] of the
project. Contractor will be expected to provide an effective maintenance
program in order that the equipment when returned to the Government have
the maximum remaining life. The list of the equipment to be provided will
also be available for inspection at the places noted above.
Payments for the work will be made monthly on the basis of progress
estimates of completed units of work. If the contract is awarded to a U.S.
firm, payments will be made in Sudanese pounds and U.S. dollars in the
pound-to-dollar proportion established by its tender, not to exceed the
maximum dollar amount stated in its tender. However, the total of U.S.
dollar payments to the contractor in no event shall exceed $ 210,000.00.
12. The plaintiff replied to the inquiry mentioned in
finding 11, and indicated that it was interested in submitting a tender.
13. The project agreement, as modified by Revision No. 1
(see findings 7 and 10), was further modified by Revision No. 2, which was
issued on September 12, 1959. This revision reduced the direct U.S. dollar
financing for the purchase [*175] of road-building equipment
from $ 350,000 to $ 250,000, but it also provided that additional [***52]
items of equipment would be purchased in the Sudan with counterpart funds
not to exceed the equivalent of $ 165,000. This revision did not
substantially reduce the details of such procurement, other than the source
of the funds, and such procurement remained under the control of the
defendant's Bureau of Public Roads.
14. (a) On or about September 21, 1959, the plaintiff
received an invitation for tenders or bids in connection with the
construction of the proposed demonstration road in the Sudan. The
invitation, which was issued by the Sudanese Ministry of Works, included a
bill of estimated quantities, a schedule of estimated prices, a list of
equipment to be made available to the successful bidder, general conditions
and special provisions of the proposed contract, and other documents and
specifications relating to the demonstration road project.
(b) The invitation stated that the deadline for the submission of tenders
was noon on October 27, 1959. They were to be submitted to the Sudanese
Ministry of Works in Khartoum.
(c) The invitation further provided in part as follows:
The proposed project will be a joint effort by the Ministry of Works, an
agency of the Government [***53] of the Republic of the Sudan,
and the International Cooperation Administration (ICA), an agency of the
Government of the United States of America. * * *
* * *
All borrow pits for embankment and all base material pits and all rights
of way for haul roads and all work areas will be funished by Government at
no cost to the contractor. The contractor will construct and maintain haul
roads to material pits.
The Ministry of Works will furnish to the contractor for his use on the
project certain road building equipment. The contractor will be charged a
monthly rental in Sudanese pounds for the equipment at rates established
by the Ministry of Works. The contractor will be expected to provide an
effective maintenance program in order that the equipment, when returned
to the Ministry, shall have a maximum remaining useful life. A list of
equipment and rental rates are attached hereto.
15. After receiving the invitation for tenders referred to
in finding 14, the plaintiff began the preparation of its own [*176]
estimate of the costs that would be involved in the construction of the
demonstration road, and the preparation of a tender to be submitted on the
proposed contract. [***54] This work was concluded by October
20, 1959. General Talley went to Khartoum a few days later for the purpose
of submitting the plaintiff's tender. He arrived in Khartoum on Sunday,
October 25, 1959.
16. (a) After arriving in Khartoum on October 25, 1959,
General Talley called Herman Gaines and made an appointment to see him the
next day, October 26.
(b) On the morning of October 26, 1959, General Talley went to see Herman
Gaines, and they discussed the specifications for the demonstration road
project. General Talley asked Mr. Gaines for a clarification of,
inter
alia, the specifications with respect to aggregate and overhaul.
(c) As indicated in finding 9(c), General Talley had previously examined
some of the borrow areas designated for the procuring of aggregate to be
used in constructing the base of the demonstration road, and he had noted
that the material in such borrow areas contained an excess of fines and was
deficient in coarse material. In connection with the submission of the
plaintiff's tender, General Talley wanted to find out whether it would be
necessary to utilize hand labor for the purpose of screening or sieving such
material in order to eliminate [***55] the excessive fines, or
whether it was intended under the proposed contract that pit-run aggregate
would be used. Pit-run aggregate is aggregate just as it is dug out of a
pit. It is excavated mechanically, and is loaded on a vehicle and delivered
to the job site for use in the construction process, without being screened
or sieved by hand labor. Herman Gaines informed General Talley at the
conference on October 26, 1959 that it was intended under the proposed
contract that pit-run aggregate would be used in the construction of the
road base, without screening or sieving it.
(d) As General Talley was aware that the borrow areas for aggregate which he
had examined did not contain enough material for the construction of the
entire road base, and that it would be necessary to obtain part of the
aggregate from somewhere else, he wanted to find out whether the contractor
would be paid for any overhaul of aggregate (i.e., haulage [*177]
for any distance greater than 1,000 feet). He mentioned this subject to
Herman Gaines at the conference on October 26, 1959. Mr. Gaines informed
General Talley that the contractor would be paid for any overhaul of
aggregate for the road base. [***56]
17. As a result of General Talley's conference with Herman
Gaines on October 26, 1959, General Talley modified the bid that had been
prepared on behalf of the plaintiff relative to the aggregate base. On the
basis of the understanding that pit-run aggregate would be used for the road
base, thus eliminating the factor of hand labor for screening or sieving the
aggregate, and that the contractor would be paid for any overhaul of
aggregate, General Talley reduced the plaintiff's bid on the aggregate base
item from a unit price of $ 3.78 per cubic meter, as theretofore tentatively
fixed by the plaintiff, to a unit price of 37 cents per cubic meter.
Furthermore, in order that the bid might conform to his understanding that
no screening or sieving of the aggregate to be used in the construction of
the road base would be required, General Talley placed a handwritten
asterisk next to the item relative to the aggregate base on the bid, with
the asterisk referring to a handwritten note added by General Talley on the
back of the same sheet and stating as follows: "Unseived [sic] machine
loaded aggregate placed and compacted on prepared roadbed in accordance with
Article 200-1.1" (of [***57] FP-57, the Standard
Specifications for Federal Road Projects, promulgated by the defendant's
Bureau of Public Roads).
18. General Talley timely submitted a tender or bid on
behalf of the plaintiff to an official of the Sudanese Ministry of Works on
October 27, 1959.
19. After the tenders on the contract for the construction
of the proposed demonstration road were submitted by the plaintiff and other
persons, the plaintiff was selected as the successful bidder. The selection
was made jointly by the Sudanese Director of Works and Herman Gaines, acting
for the Director of the United States Operations Mission. The selection was
based solely on the factor that the plaintiff submitted the lowest bid.
[*178]
20. The plaintiff's tender was accepted
on or about October 27, 1959.
21. A letter of understanding was entered into between the
plaintiff and the International Cooperation Administration under the date of
November 2, 1959. It provided in part as follows:
The Ministry of Works, an agency of the Government of Sudan, in accordance
with separate arrangements between it and the International Cooperation
Administration has requested ICA to finance certain [***58]
dollar amounts payable to you under a Contract between Ministry and
Contractors designated as Contract No. GOS-PWD-1-59/60 ICAc-1319.
"Interpretation of Terms" set forth in Paragraph I, Clause 1, of
the General Conditions for Contract No. GOS-PWD-1-59/60, ICAc-1319,
applies to this letter.
ICA requires, as conditions or prerequisites to its financing, agreement
by you to certain conditions as follows:
1. Conformity -- You will fully and completely perform said
Contract in accordance with its terms and comply in all respects with the
terms and conditions of this Letter of Understanding.
2. Maximum Dollar Obligation -- It is understood that ICA's
maximum obligation in financing the Contract shall not exceed 175,000 U.S.
dollars, unless ICA shall, by written notice to you at the above address,
agree to increase its maximum obligation hereunder.
3. Payment -- For work performed and payable under the Contract
payment of U.S. dollars shall be made by the Director, USOM, upon
submission of properly executed voucher SF-1034, in original and three
copies supported by a signed copy of the Certificate described in
Paragraph 49(B) of the Contract, evidencing approval by the Director.
[***59]
* * *
5. Non-Dollar Costs -- It is understood that no nondollar costs
under the Contract will be financed by ICA.
22. On or about November 11, 1959, the plaintiff entered
into a contract with the government of The Republic of the Sudan for the
construction of the demonstration road. The contract was numbered
GOS-PWD-1-59/60, ICAc-1319.
[*179]
23. The plaintiff's contract with the
Sudanese government provided in part as follows:
This deed is made the 11th day of November 1959 between The Ministry of
Works of the Government of the Sudan (hereafter referred to as the
"Ministry") as represented by its Director and Raymond
Constructors of Africa, Ltd. (hereinafter called "Contractors")
a corporation organized and existing under the laws of Liberia, having its
principal office at 80 Broad Street, Monrovia, Liberia.
Witnesseth
Whereas, Ministry desires to have a demonstration road from Khartoum North
to Khogalab School in the Khartoum Province of the Sudan constructed;
Whereas, the International Cooperation Administration, an agency of the
Government of the United States, has agreed with the Government of the
Sudan to provide certain assistance in connection [***60] with
said road; and
Whereas, the Contractors represent that they are qualified, willing and
able to construct said road; and
Whereas, previous to the execution of this Deed the Contractors have
examined the plans, drawings and specifications and related materials
describing said road; and
Whereas, previous to the execution of this Deed the Contractors have
visited and examined the sites of the work and have satisfied themselves
as to any and all conditions and circumstances pertinent to the
construction by them of said road * * *.
* * *
Now therefore, in consideration of the premises, the Contractors do hereby
agree to construct and maintain the aforesaid road and do all other things
necessary thereto in strict accordance with the following documents, * * *
for and in consideration of the payment provided for in said documents.
The following changes were made in the contract before it was signed by
the parties hereto:
None.
Aggregate base is understood to be unseived [sic] machine loaded
aggregate, placed and compacted on prepared roadbed in accordance with
Article 200-1.1.
* * *
[*180]
| Bill of Quantities and
Schedule of Prices |
|
|
Estimated |
|
Unit |
Estimated |
| Item |
Quantity |
Unit |
Price * |
Total |
|
|
|
|
Price * |
| Common Excavation |
30,000 |
Cu. Meter |
0.28 |
8,400.00 |
| Borrow Excavation (Case 1) |
330,000 |
Cu. Meter |
0.33 |
108,900.00 |
| * * * |
| Overhaul on excavated material |
2,100,000 |
Cu. Meter |
0.09 |
189,000.00 |
|
|
Kilometer. |
| Water (embankment & base) |
50,000 |
1,000 Imp. Gal. |
2.55 |
127,500.00 |
|
|
Units. |
| Rolling (embankment & base) |
5,000 |
hours |
4.60 |
23,000.00 |
| Aggregate Base n1 |
75,000 |
Cu. Meter |
0.37 |
27,750.00 |
| * * * |
| Estimated Contract
Price * |
|
|
|
$ 750,455.-- |
[***61]
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - -
- -
* Note:
All prices shall be stated in either Sudanese pounds or
U.S. Dollars.
| Maximum Amount to be paid in U.S. Dollars |
$ 175,000.00 |
| Balance to be paid in Sudanese Pounds |
LS 575,455.00 |
| (Estimated Contract Price Less Maximum Dollar
Amount) |
n1 This item had a handwritten asterisk beside it; and on the back of the
sheet there was another handwritten asterisk and the following handwritten
note after it:
Note
Unseived [sic] machine loaded aggregate placed and compacted on prepared
roadbed in accordance with Article 200-1.1.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - -
- -
24. Paragraph 56 of the general conditions of the contract
between the plaintiff and the Sudanese government provided in part as
follows:
56. Disputes
(A) Any dispute arising under the Contract shall be submitted to the
Director of the Ministry of Works and the Director, USOM. The Contractors
shall be granted a reasonable opportunity to make oral and written
presentations of their positions to the said Directors [sic], who shall
thereafter promptly [***62] render their decision in writing
to the Contractors. The decision of the said Directors shall be final and
conclusive unless an appeal is taken therefrom as hereinafter provided.
(B) Within thirty (30) days after the said Directors have rendered their
decision, the Contractors may file a written appeal (with copies to the
said Directors) stating their position with respect to the despute [sic]
and the basis for their dissatisfaction with the decision rendered. As to
disputes the resolution of which will not directly effect [sic] the amount
of U.S. dollar payments under the contract, the appeal shall be made to a
Board of Arbitrators consisting of three (3) members, one of whom shall be
designated by the Director, another by the Contractors and the third by
the members so designated by the Director and the Contractors. As to
disputes the resolution of which will directly effect [sic] [*181]
the amount of U.S. dollar payments under the contract, the appeal shall be
made to the Director, ICA, in Washington, D.C. On any such appeal, the
parties shall be afforded an opportunity to be head [sic] and to give
evidence. Pending final decision on any appeal hereunder, the Contractor
[***63] shall proceed diligently with the work and in
accordance with the decision of the said Director.
(C) In the event of any such appeal, the Board or Director, ICA, as the
case may be, shall have full power to open up, review and revise any
decision, opinion, direction, certificate of caluation [sic] involved in
the dispute, and neither party shall be limited in the proceedings to the
evidence or arguments put before the said Directors for the purpose of
obtaining their devision [sic] so appealed from. The decision of the Board
or Director, ICA, as the case may be, shall be final and binding on the
parties.
25. Addendum No. 1 to general conditions of the contract
between the plaintiff and the Sudanese government provided in part as
follows:
Paragraph 47(A): Add a second subparagraph as follows:
"If the Contractor is a Sudanese firm, payments will be made wholly
in Sudanese pounds, except that if the Contractor has incurred proven
foreign exchange costs, approved in advance by the Engineer, he shall be
entitled to receive payment for completed work in U.S. dollars in an
amount not to exceed the lesser of (a) such proven foreign exchange costs
or (b) the maximum [***64] dollars amount stated in this [sic]
Tender. If the Contractor is a U.S. firm, payments will be made in
Sudanese pounds and U.S. dollars in the pound-to-dollar proportion
established by his Tender, not to exceed the maximum dollar amount stated
in his Tender. Regardless of whether the Contractor is a Sudanese or U.S.
firm, however, the total of U.S. dollar payments to the Contractor in no
event shall exceed $ 310,000.00. Where conversion between pounds and
dollars is required, it shall be made at the official rate of exchange
prevailing in Khartoum at the time of payment to the Contractor."
26. (a) The special provisions of the contract between the
plaintiff and the Sudanese government stated in part as follows:
[*182] 10. Aggregate Base
Section 200 of FP-57 is incorporated herein with the following revision:
* * *
(B) Article 200-2.3, subparagraphs 1 and 6 -- references to table 200-1
are deleted and the following added, "nature of material and grading
requirements will be furnished by the Engineer as the work
progresses."
(b) Addendum No. 1 to the special provisions stated in part as follows:
Item 10(B): Add, "It is intended that the completed [***65]
base shall conform to one of the grading schedules in table 200-1 but
minor deviations will be permitted if quality is otherwise satisfactory.
It is intended that desired gradations will be produced by selection and
blending."
(c) The contract between the plaintiff and the Sudanese government included
an "equipment and rental list" that described 42 pieces of
equipment that were to be furnished by the Sudanese government to the
plaintiff for use in the performance of the work under the contract, and
specified the hourly rental rates in Sudanese pounds that were to be paid by
the plaintiff to the Sudanese government for the several pieces of
equipment. The equipment was to be operated and maintained at the expense of
the plaintiff.
27. On December 9, 1959, an official of the plaintiff
explained how the plaintiff planned to carry out its obligation under its
contract with the Sudanese government as follows:
This week we received a tabulation of the sub-contract bids that have been
developed in Khartoum for the above project.
In the event we are not able to sub-let the remaining items, for prices
equal to or less than those we bid, the following summary has been made
[***66] indicating the status of the job as presently
indicated.
Sub-contracts have been arranged between the Sudanese Construction Company
for the earthwork items and the Sudan Diesel Company for the structural
items which aggregate approximately $ 500,000 out of our total bid of $
750,000.
The remaining items of supplying the aggregate base and the surface
treatment and asphalt items are still to be [*183] done by
Raymond in the event we are not able to subcontract any or all of these
items.
A revised estimate has been made on the basis that we will proceed with
the remaining items and concluding our arrangements with the
sub-contractors.
Raymond will also provide a minimum overhead during the 18-month period of
the job, however, to supervise the sub-contractors and take care of the
items of work under our direct supervision.
28. (a) The plaintiff's subcontract with Sudanese
Construction Company provided in part as follows:
6. Special Provisions: This subcontract covers the items of work
set out below, all as described in the General and Special Conditions and
Drawings of Contract No. GOS-PWD-1-59-60, ICAc-1319.
|
|
|
Estimated |
Unit |
Total |
| Item No. |
Particulars |
Quantity |
Price SL |
Price SL |
| 102/3/ |
Common Excavation |
30,000 M<3> |
.070 |
2,100.000 |
| 102/4) |
Borrow Excavation Case 1 |
330,000 M<3> |
.088 |
29,040.000 |
| 105/3/ |
Overhaul on Excavated Ma- |
2,100,000 M<3>/K |
.030 |
63,000.000 |
|
terial Embankment & Base. |
| 108/1) |
Water Embankment & Base |
50,000 |
.700 |
35,000.000 |
| 109/1/ |
Rolling Embankment & Base |
5,000 Hrs |
1.600 |
8,000.000 |
| 600 |
Fill Exist Well |
1 ea |
17.000 |
17.000 |
| 601 |
Dig & Line With Brick New |
1 ea |
220.000 |
220.000 |
|
Water Well. |
|
Total |
|
|
SL 137,377.000 |
[***67]
* * *
VII. Extension of time -- subcontractor's waiver of damages for delay: In
case of any delay caused by Raymond or the Owner, or any delay which is
beyond the reasonable control of Subcontractor, the cause of which was not
reasonably ascertainable by Subcontractor at the time this Subcontract was
entered into, written notice thereof and of the anticipated results shall
be given promptly to Raymond by Subcontractor. Failure to give such
written notice promptly shall be deemed sufficient reason for a denial of
an extension of time by Raymond. Raymond shall notify Subcontractor
promptly if, in its opinion, the cause of delay specified is such as to
not entitle Subcontractor to an extension of time. After such cause of
delay has ceased to exist, Subcontractor shall file with Raymond a
statement in writing of the actual delay resulting from such cause. If in
the opinion of Raymond, the cause of delay was beyond the reasonable
control of Subcontractor and was not reasonably ascertainable by
Subcontractor, at the time the Subcontract was entered into, the duration
of delay [*184] shall be determined by Raymond and the time of
performance of the work, the performance [***68] of which has
been delayed thereby, shall be extended, in writing, by Raymond.
Subcontractor shall not be entitled to, and hereby waives, any and all
damages which it may suffer by reason of Raymond or Owner hindering or
delaying Subcontractor in the performance of the work, or any portion
thereof, from any cause whatsoever.
(b) The plaintiff's subcontract with the Sudanese Construction Company
contemplated that the earth-moving equipment which the Sudanese Government
was to furnish the plaintiff would, in turn, be furnished by the plaintiff
to the subcontractor. The equipment was to be operated and maintained at the
expense of the subcontractor.
29. The personnel of the defendant's Bureau of Public Roads
in the Sudan, forming part of the United States Operations Mission, was
organized to work with the Sudanese officials in connection with the
construction of the demonstration road, and to advise them and instruct them
regarding methods of operation. The objective was for the Sudanese officials
to handle the administration of the project, and for the personnel of the
Bureau of Public Roads to act in the role of consultants. Thus, it was
customary for all written directives [***69] to the plaintiff
(or its subcontractor) to be issued by the Sudanese resident engineer, but
with respect to all matters of consequence, he acted after consultation
with, and on the advice of, personnel of the Bureau of Public Roads. Also,
in the actual administration of the project, some directives to the
plaintiff (or its subcontractor) regarding important matters were issued
orally in the first instance by personnel of the Bureau of Public Roads, and
were then confirmed in writing by the Sudanese resident engineer.
30. (a) On April 12, 1961, the project agreement, as
revised (see findings 7, 10, and 13), was further revised so as to provide
for the construction of the demonstration road for an additional distance of
approximately 8 1/2 kilometers from the Khogalab School to Kabbashi Village,
thus making the total demonstration road project about 29 1/2 kilometers in
length.
[*185] (b) As revised on April 12, 1961, the project agreement
provided that the financing of the demonstration road project by the
defendant in United States dollars would total $ 560,000, of which total $
310,000 would be for "Contract Services" and $ 250,000 would be
for "Commodities." The $ 250,000 [***70] figure for
"Commodities" was said to be "the approximate U.S. dollar
acquisition cost on a C & F Port Sudan basis of major items of
construction equipment * * *."
31. Under the date of May 10, 1961, paragraph numbered 2 of
the letter of understanding between the plaintiff and the International
Cooperation Administration (see finding 21) was amended "to increase
ICA's maximum obligation in financing the Contract, with Supplemental
Agreement, from $ 175,000 to $ 310,000."
32. On May 11, 1961, the plaintiff entered into a
supplemental contract with the government of The Republic of the Sudan (see
finding 22-26 relative to the original contract) providing for the 8
1/2-kilometer extension of the demonstration road. This supplemental
contract enlarged the estimated quantities previously set out in the
contract; it increased the estimated contract price to $ 1,158,091.57,
increased the maximum amount to be paid in United States dollars to $
310,000, and increased the balance to be paid in Sudanese pounds to $
848,091.57; it made certain other changes in the contract that are not
significant from the standpoint of the present litigation; and it then
provided that "all other [***71] conditions and provisions
of the contract remain the same." Thus, the unit price of 37 cents per
cubic meter for laying the aggregate base, as prescribed in the original
contract, remained in effect.
Aggregate Base
33. The plaintiff's subcontractor, Sudanese Construction
Company, began laying the aggregate base sometime between October 1 and
October 15, 1960.
34. On November 12, 1960, the Sudanese resident engineer
issued the following written instruction to the plaintiff on the subject of
"Aggregate Base":
Please add 10% from Sand which will be designated. After adding the Sand
blend the material uniformly.
[*186] Test will be Taken before Compaction to ensure uniform
blending. After the test result approval will be given for compaction.
35. On November 15, 1960, the plaintiff's project manager
responded to the instruction mentioned in finding 34, and stated in part as
follows:
Receipt of your written instruction is acknowledged. The work as directed
will be performed in accordance with the details outlined in your letter.
However, in accordance with the terms of the Contract as outlined in the
Disputes Clause thereof, we wish to state [***72] that this
work will be taken under protest since we do not believe that the
specifications and the Contract itself require us to perform work that is
outside the intent of the Contract, thus experiencing costs not
contemplated at the time we priced our tender.
* * *
Under the circumstances we must advise that we shall place a claim for the
extra costs incurred in performing this item in the manner instructed by
you in reference letter. It will take us some time to appraise the
additional costs involved but on doing so we shall forward our proposal to
you promptly.
36. The plaintiff's project manager made a report to the
plaintiff's home office in New York City concerning the requirement that
aggregate be blended. In its reply, the plaintiff's home office stated in
part as follows:
(1) Base Course -- In checking our files the only qualification
to our bid reads as follows: "Aggregate base is understood to be
unseived [sic], machine loaded aggregate, placed and compacted on prepared
roadbed in accordance with Article 200-1.1". There is an amendment to
Section 10b in Aggregate Base Specification which definitely calls for the
material to be blended by the contractor [***73] at his own
expense. If it is possible to open negotiations for further payment on
this item, you are authorized to negotiate.
37. In the construction of the demonstration road, the
plaintiff (or its subcontractor) was permitted to use pit-run aggregate for
the road base. The aggregate was excavated mechanically by the plaintiff (or
its subcontractor) from designated areas; it was loaded on vehicles and
delivered to the job site; and it was dumped on the roadway for
incorporation [*187] in the road base, without being screened or
sieved. However, in those instances where the aggregate from a particular
borrow area would not, if used alone, make a suitable road base because of
an excess of fines in such material, the plaintiff (or its subcontractor)
was required, after such aggregate was dumped on the roadway, to add to it
and blend in with it coarser material from another borrow area, so that the
blended aggregate would provide a suitable road base in accordance with
FP-57. The addition and blending of the coarser material was accomplished by
the use of machinery.
38. Instructions for the blending of aggregate, as
indicated in finding 37, were issued to the [***74] plaintiff
(or its subcontractor) by the Sudanese resident engineer. However, the
latter official acted upon the advice of personnel of the defendant's Bureau
of Public Roads.
39. On May 10, 1961, the plaintiff's project manager wrote
to the Sudanese Ministry of Works with regard to the aggregate base, as
follows:
The question regarding the gradation of the aggregate base has been
brought up by your Resident Engineer.
We are using material from the pits as designated by the Resident
Engineer. We are also blending non plastic materials from other sources,
as requested. Inasmuch as the control and designation of the pits is the
responsibility of the Resident Engineer, Raymond assumes no responsibility
for the gradation, properties, or qualities of this material.
The above is all in accordance with the specifications and is pointed out
at this time so that there will be no misunderstanding in the future.
Equipment
40. In a letter dated October 26, 1959 and addressed to the
plaintiff's parent corporation in New York City, the International
Cooperation Administration stated in part as follows:
We have been advised by our Mission in Khartoum that (a) equipment [***75]
items 18 through 23 on the "List of Equipment" are immediately
available, item 6 is delivered, and two caterpillar 619 scrapers (item 1)
have been ordered with delivery expected March 1; (b) equipment available
will permit bridge and culvert construction only from November 17 to the
time of arrival of other equipment; and (c) the contractors should limit
the size [*188] of the advance party to the foregoing
equipment available locally and plan immediate beginning of the bridge
construction.
41. In a communication which General Talley wrote in
Khartoum on October 28, 1959, and transmitted to the plaintiff's home office
in New York City, it was stated in part as follows:
b. Equipment -- Equipment Items 16 through 23 are here. Other
equipment will be slow in arriving. It will be possible to rent other
equipment locally, and possibly to get some work done on either
sub-contract, or purchase and hire. I can do nothing about this until I am
notified officially we have the job, but will get on it asap.
42. A communication dated October 31, 1959, from General
Talley to the plaintiff's home office in New York City said that items 16-23
from the list of equipment [***76] to be furnished were already
on hand; and that it would be from 4 to 6 months before the other equipment
would arrive from the United States.
43. A letter dated November 14, 1959, from the plaintiff to
the Sudanese Director of Works stated in part as follows:
Advice has been received that the delivery of items of equipment 1 through
15, with the exception of Item No. 6, Motor Grader, on the Equipment and
Rental List of this contract will be delayed materially -- perhaps beyond
1 March 1960.
We note at the same time that certain similar items of equipment have been
received recently by the PWD, and presently are parked in a local storage
yard.
So that we may proceed with the excavation and highway fill, albeit at a
reduced rate, it is requested that the following items of equipment from
that on hand be made available to us as a substitute for certain items of
equipment yet to come:
10 ea Trucks, dump, 4-cy, 22,000 G.V.W.
1 ea Motor Grader, 115 HP, (new).
1 ea Truck, Libricating [sic] Unit, Intl. R-200.
1 ea Truck, Flatbed, Intl. R-200.
1 ea Tractor, D-7, with angle dozer.
In addition to the foregoing, and essential to its operation, it is
requested that [***77] there be procured from local sources,
and furnished to us, the following item of equipment: 1 ea Traxcavator,
D-4, with end loading bucket.
[*189] The above listed items of equipment will form an
acceptably economic working unit. However; such a unit is not economical
with less than 10 dump trucks.
44. In a letter dated November 24, 1959, from the plaintiff
to the Sudanese Director of Works, the plaintiff stated in part as follows:
This is to advise that we have exhausted every reasonable possibility of
initiating common and borrow excavation, and the other items of
construction of the subject contract, except structures, in advance of the
arrival of the equipment scheduled to be furnished by the government under
the terms and conditions of this contract. In the meantime, we stand ready
to proceed with the construction of these items immediately the equipment
arrives.
We would respectfully advise further that only on 23 Nov 59 did we receive
a positive indication of the probable time of arrival of the bulk of this
equipment. From the information so obtained it appears that it will not
arrive until about 1 May 1960 -- a date far beyond anything foreseen at
the [***78] time of signing the contract. It is regretted that
we did not receive this information earlier.
My first indication of a material delay was contained in a cablegram
received from New York on 11 November. This cablegram stated that a letter
dated 26 October had been received from ICA-Washington advising us of a
delay in certain items of equipment. It was clearly impossible for this
information to have been forwarded to me in advance of the submission of
our bid.
* * *
The delay in the arrival of the equipment has occasioned additional costs
to us, and will materially delay the completion of the project. When the
full extent of these are known we shall advise you of them. In the
meantime, we would ask that you be assured of our earnest desire and
intent to execute this contract with the utmost dispatch consistent with
sound construction procedures and practices, and with due economy.
45. A cablegram dated November 30, 1959, from the Director
of the United States Operations Mission in the Sudan to the International
Cooperation Administration in Washington, D.C., stated in part as follows:
Contractor proceeding construction bridges. However, after canvassing all
[***79] possibilities locally, impossible [*190]
obtain equipment necessary for excavation, fills, et cetera. at
advantageous rates. Therefore Raymond has suspended all other activity and
has notified Director PWD by letter dated November 24 of his intention
postpone initiating borrow and common excavation until arrival ICA
procured equipment which he reckons will begin about 1 May. (Copy letter
being forwarded by pouch.)
* * *
In view despatch with which this project implemented to date, summary
suspension work will unquestionably prove irritating to GOS and
embarrassing USG. I wish to urge that every effort be made obtain January
shipping date to permit equipment arrival late February.
46. The earth-moving equipment needed for the demonstration
road project was obtained by the plaintiff's subcontractor, the Sudanese
Construction Company, either from the Sudanese Ministry of Works or from
other sources in the Sudan. Equipment was rented by the Ministry of Works on
a day-to-day basis, so that it could be taken back by the Ministry when
needed on other work or could be returned by the subcontractor when not
needed on the project. Some of the equipment thus procured was [***80]
old, and was more expensive to operate and maintain than new equipment would
have been.
47. In a monthly report dated June 9, 1960, and addressed
to the plaintiff's headquarters in New York City, the plaintiff's project
manager stated in part as follows:
Our subcontractors' activities were not brisk; they could have done
better. Supervision -- or rather lack of it -- kept the pace of work from
being excellent. On 12 May, we felt that we had been tolerant as long as
we could endure the experiments, changing locations of work, etc., by
people who did not understand the work in the first place, and announced
to all, including M.o.W. and I.C.A., that we were going to call the turns
from here in. Gaines immediately assigned a young engineer to the job --
to protect the Government's interest, we presume. Supervision continued
lax, but we filled in and by doing the planning were able to keep
earthwork going at an increased rate, but found it difficult to get the
bridge work to perk up. The heat seems to take the zip out of most people
-- and in the case of bridge work, [*191] there has never been
any enthusiasm, so it is difficult to pump any life into that outfit. *
[***81] * *
48. A letter dated July 15, 1960, from the plaintiff's
project manager to the Sudanese Construction Company stated in part as
follows:
Today, a scheduled non-work day, we found that our equipment was engaged
in construction of a feeder road, Sababi-Bager Land No. 20 Area, Km 0 +
942. The operations included grading material placed by others, discing,
and rolling with equipment assigned to us by the Ministry of Works.
* * *
We were therefore surprised at the non-contract work that was under way at
0800 this morning under the direct supervision of Mr. Scotton, especially
since no arrangements had been made for or advice given of such and [sic]
undertaking. When questioned, Mr. Scotton did not elaborate on how we were
to be paid for this work; his only comment being that the Ministry would
not charge rental for the equipment.
We must again remind you that Raymond Constructors holds the contract for
the Khartoum North-Khogalab Road, and all equipment furnished by the
Ministry of Works is assigned to us and made available to you for
performing work included in your sub-contract. Your employment of
equipment and effort today in noncontract work, when the effort [***82]
was sorely needed on contract work does not serve the Contractors'
interest. We would be very obliged if you would duly consider your
responsibility to us and hereafter moderate your actions accordingly.
49. A report by Herman Gaines dated August 18, 1960, stated
that progress had been delayed by the slow delivery of the equipment
purchased for the project; and that this was due in part to the procurement
process in the United States, but was due in large part to the slowness of
the movement from Port Sudan to Khartoum by the Sudan Railways.
50. A letter dated August 19, 1960, from the plaintiff's
project manager to the plaintiff's headquarters in New York City stated that
"This sub continues difficult to handle, fails to keep his job
organized, and does not give the work the personal attention it requires,
especially since his employed supervision is weak."
[*192]
51. A letter dated August 20, 1960, from
the plaintiff's project manager to the Sudanese Construction Company stated
in part as follows:
Recent experiences reflect the cumulative results of weaknesses in your
operation/maintenance of equipment, planning of work, and supervising it.
While [***83] we have pointed out to you informally over the
past months that permitting these weaknesses to continue would not be in
our mutual interest, we have not made an attempt to diligently record all
of our instructions or arrangements with you, and therefore do not have a
complete formal file background of past activities. However, we shall
hereafter record in writing all important matters and situations that
develop during the course of the work.
52. The following table shows when certain pieces of
equipment procured by the defendant arrived on the job:
|
| Item No. on |
|
Date Made A vailable |
| List of |
Description of Equipment * |
to Plaintiff |
| Equipment |
| 1 |
619 Scraper, 12 to 14 cy (3 units) |
2 units 2/23/60. |
|
|
1 unit 6/24/60. |
| 2 |
Tractor, 160 HP Pusher and Bulldozer |
6/8/60. |
| 3 |
Tractor, 130 HP, Front End Loader |
1/9/60. |
| 4 |
Tractor, 2 X 4, 75 HP (2 units) |
1 unit 6/24/60. |
| 5 |
Tracks, dump, 4 cubic yds (10 units) |
(Not received as of 8/18/60). |
| 6 |
Motor Grader, 115 HP |
12/29/59. |
| 7 |
Roller, pneumatic, 4 tired |
2/2/60. ** |
| 8 |
Trucks, tank, 2000 gal. (2 units) |
(Not received as of 8/18/60). |
| 9 |
Lubricating Unit -- 4 barrel |
1/2/60. |
| 12 |
Pump centrifugal, 4" |
1 unit 5/30/60 (1 unit not re- |
|
|
ceived as of 8/18/60). |
| 14 |
Roller, Tandem, 8-10 ton |
6/1960. |
| 16 |
Roller, Sheepfoot, 2 drum |
12/30/59.** |
| 18 |
Vickers Crawler Tractor |
1/25/60. |
[***84]
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - -
- -
* One unit unless otherwise specified.
** Used item substituted.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - -
- -
53. A letter dated February 10, 1961, from the plaintiff's
project manager to the plaintiff's headquarters office in New York City
stated in part as follows:
* * * The Sudanese Construction Co. is doing no better. They refuse to
accept any advice and as they do not know how to do this kind of work,
their job is a mess. We have tried to help them but they just listen,
agree, and then proceed to go back to their old ways. * * *
54. In a report prepared in February 1961 by the
plaintiff's project manager and sent to the plaintiff's home office in New
York City, it was indicated that he had recently met with [*193]
the Director of the United States Operations Mission in the Sudan and had
discussed the Sudanese Construction Company's lack of progress; and that he
had explained how the plaintiff had continually tried to assist the
subcontractor, but had actually gained nothing. An enclosure further
indicated that the subcontractor [***85] had repeatedly assured
the plaintiff that it would have no difficulty in hauling 1,000 cubic meters
daily, but that the maximum haulage had been only one-third of that amount;
and that it was the project manager's "firm belief" that this was
caused by lack of experienced supervisors and technicians. The enclosure
also indicated that it was the project manager's opinion that inasmuch as
the subcontractor was unable or unwilling to fulfill its contractual
obligations, corrective measures should be taken immediately.
55. In a letter dated February 15, 1961, from the
plaintiff's project manager to the acting chief of the Transportation
Division, United States Operations Mission, it was stated (among other
things) that "* * * the Subcontractor is unable or unwilling to fulfill
his contract obligations * * *."
56. In a letter dated February 18, 1961, the plaintiff's
project manager wrote a letter to the plaintiff's home office in New York
City, stating (among other things) that "There is ample equipment
available on the job to do whatever is required." The equipment was
listed and the statement was made that "The above is all government
furnished with the exception of one [***86] new Gallion grader
rented at the same rate."
57. On May 12, 1962, the plaintiff's project manager wrote
a letter to the plaintiff's parent corporation in New York City, stating in
part as follows:
The following report is being sent to keep you informed on the bad
situation existing on this project.
Hardly any progress to report, mainly due to complete failure of our
Sub-Contractor, Sudanese Construction Company hauling aggregate base on 8
1/2 kilometres extension. The past three weeks their production has
amounted to only 2000 M3 with a promise day today [sic] the yardage would
improve with additional hauling equipment. The last ten days they have
completely stopped hauling base and their equipment are now hauling for
the city outside of our project.
[*194] The Sub-Contractor has failed to complete the pay item
of the original contract, dig and line new water well in two years. On May
1st our personnel have taken this work over. The workmanship was very poor
on lining the well and was necessary to remove one third of brick lining
before the Resident Engineer will accept it.
58. In a letter dated June 9, 1962, and addressed to the
Sudanese resident [***87] engineer, the plaintiff's project
manager stated in part as follows:
In accordance with general conditions of the Contract Chapter VIII Page 28
paragraph 54 and Addendum #1 for the Khogalab Road project we hereby
request extensions of time to the contract completion date of February 28
1962 due to reasons beyond our control and other extenuating circumstances
as out-lined below.
Evidence is hereby produced to show that as a result of the failure by the
Government to provide the necessary Govt. owned equipment for use on the
construction of above mentioned projects as out lined in the contract
documents or proper other equipment in a reasonable length of time our
planned sequence of operations could not be adhered to and by this action
the start of the project was delayed and we were forced to improvise and
operate in an inefficient, unproductive and very costly manner detrimental
to Raymond and the proposed time schedule.
Numerous letter [sic] were written advising you of this state of affairs
commencing at the inception of the project November 26, 1959 and
continuously thereafter throughout the project. A detailed chart showing
delivery dates has been drawn up and readily [***88] points
out that the contract specified equipment was sporadically delivered from
December 29, 1959 to November 20, 1960 a period of approximately 11
months. The M.O.W. during this period rented Raymond whatever pieces of
equipment they had on hand and could spare however some of the equipment
was not the type that could be effectively or productively used in normal
good construction practice, at the time Raymond accepted these pieces of
equipment in the order that they could be released by the M.O.W. knowing
that a proper spread could not be formulated but in the best interests of
cooperation and good will and in order to keep the project going Raymond
used this equipment to the best of their ability and as directed.
* * *
[*195] Therefore in view of the above we hereby request an
extension of time to the contract completion date of accumulative time for
the entire period of 130 days.
59. A communication dated June 18, 1962, from the Sudanese
Ministry of Works to the plaintiff stated (among other things) that the
plaintiff did not receive all the equipment which had been specified in the
contract until October 20, 1960.
60. A letter dated May 23, 1962, from [***89]
the plaintiff's project manager to the Sudanese Construction Company stated
as follows:
This is to inform you for past 90 days I have repeatedly requested that
additional trucks to be used in the hauling of embankment and aggregate
base material on the 8.5 kilometer of the Khogalab Road extension.
The major reason for our slow progress is due to shortage of trucks that
you received duty free and have been observed working outside of Khogalab
Road project. The duty free privileges was granted with the understanding
that these units would be used only on the Khogalab Road until the
completion of the project.
Your attention is requested to the provisions of the contract, paragraph
41(4) entitled "Plant Temporary Works, Materials, etc.," which
specifically prohibit the removal of these trucks from the work without
the consent of the Resident Engineer.
At no time has this consent been requested or has permission to remove
these vehicles been granted.
Your attention has been drawn to the noncompliance with clause 41-A of the
contract.
You are therefore directed to comply with the provisions of the above
cited paragraph or we will have no alternative but to take legal action in
[***90] obtaining full use of the trucks mentioned above.
61. Change Order No. 1 was issued on behalf of the Sudanese
Director of Works. It was dated June 19, 1962, and was accepted by the
plaintiff on June 20, 1962. The change order stated that it had been
determined that the contractor was prevented from completing the
construction work within the time fixed by the contract, as supplemented,
for reasons beyond the contractor's control. The change order further stated
in part as follows:
(a) Per the provisions of Contract paragraph 54, as modified by Addendum
No. 1, the Ministry of Works [*196] was aware that delays in
the delivery of Government furnished equipment, as listed in the contract
documents, would be credited as an extension of contract time. It has
further been determined that all of this equipment was not delivered to
the Contractor until October 20th, 1960, a period of 328 days from the
commencement of the work; and that during this period, the Contractor's
forces were considered to be operating at an average of 66 2/3 % of
capacity. This has led to the determination that the Contractor is
entitled to an extension of contract time in the amount of [***91]
33 1/3 % of 328 days, i.e., 109 days.
Borrow Course
62. As indicated in finding 23, the original contract
between the plaintiff and the Sudanese government called for the placement
by the plaintiff of an estimated quantity of 330,000 cubic meters of
"Borrow Excavation (Case 1)" at a unit price of 33 cents per cubic
meter. This work was to be done in accordance with FP-57, the Standard
Specifications for Federal Road Projects, promulgated by the defendant's
Bureau of Public Roads.
63. The borrow course of a roadway is the subbase for the
aggregate base. It is usually constructed of whatever type of local earth
that is available, such as sand or clay, but it should have a sufficiently
low plasticity index so as to provide a stable subbase when the completed
road is subjected to the passage of heavy vehicles or wet weather, and it
should be of such a consistency as to be capable of compaction prior to the
placement of the aggregate base upon it.
64. (a) The borrow course for the initial 21-kilometer
section of the demonstration road was laid by the plaintiff's subcontractor,
the Sudanese Construction Company. The subcontractor began this work
sometime before [***92] February 29, 1960, and completed the
borrow course for the initial 21-kilometer section of the road in February
1961. The borrow course for the 8 1/2-kilometer extension of the
demonstration road was laid by the plaintiff in conjunction with the
subcontractor.
(b) The material for the borrow course was taken by the plaintiff (or its
subcontractor) from borrow pits designated by the Sudanese resident
engineer, acting on the advice of [*197] personnel of the
defendant's Bureau of Public Roads. Some of the borrow thus obtained was a
very plastic clay material from alluvial deposits along the Nile River; and
after such material was dumped on the roadway for use in the borrow course,
the plaintiff (or its subcontractor) was required by the Sudanese resident
engineer -- acting upon the advice of personnel of the defendant's Bureau of
Public Roads -- to add some sand to the clay for the purpose of lowering the
plasticity index, to blend the clay and sand together, and then to water and
compact the blended material. On the other hand, some of the designated
borrow areas consisted of sand; and in those situations, after the sand was
dumped on the roadway for use in the borrow course, [***93] the
plaintiff (or its subcontractor) was required to add some clay to the sand
in order to make it more compactable, to blend the sand and clay together,
and then to water and compact the blended material.
(c) The process of adding and blending borrow material, as described in
paragraph (b) of this finding, was accomplished by the use of machinery.
65. In response to complaints by the Sudanese Ministry of
Works about the way the subcontractor was performing the work, the
plaintiff's project manager wrote a letter to a Sudanese official on April
20, 1960, stating in part as follows:
As you know, our contract provides for us to borrow material for the
embankment by the open pit method from a pit designated by you. The pit
provides materials of a wide range of gradations and quality and when this
is placed in the embankment the layer to be watered and rolled is spotty
and requires a varying amount of water, making it almost impossible to
place the proper amount of water over the entire layer.
Every tank of water, every pass of the water truck, and every pass of the
rollers on all of the work performed to this date has been at the
direction of your representatives, which [***94] is the way it
should be since both the rolling and the watering are variable pay items
and we must have the Resident Engineer's approval before we can collect
payment for each of these two items.
Following receipt of your letter we have made a concentrated effort to
eliminate the conditions that you refer to therein. We have enlisted more
direct advice and approval from your staff; we have placed the best
qualified [*198] people on the direct supervision of these two
items; and we have been trying a number of different methods of performing
the work. The conditions have improved only slightly and are, as before
the date of your letter, still not satisfactory to us. We plan to continue
a number of experimental procedures in an attempt to produce work that is
first acceptable to us and secondly acceptable to you. We believe that our
conception of the standards of work are high, exceeding the minimum
specifications required by the contract. In short, we were not satisfied
with the quality of the work and we are not now satisfied with it. It is
and has been our desire to perform the watering and rolling most
expeditiously since this part of the work continually falls behind [***95]
our performance of the other items.
Any suggestions that you or any member of your staff may have will be
tried. Your patience and full understanding of the problems involved will
be appreciated.
66. On November 21, 1960, an official of the plaintiff who
had visited Khartoum during the period November 8-10, 1960, made a report to
the plaintiff's home office, stating in part as follows:
Still about 60,000 m<3> of embankment to place and payment has been
made for embankment whether finished or not. Hard to determine exactly how
much more is to be placed since apparently no effort made to bring
embankment anywhere close to grade. Staking of fills uncoordinated and no
effort made to transfer grade to offsets. Government has three parties
setting centerline and grades and can't keep ahead because stakes are not
taken care of. Necessary to reset blue tops 2 and 3 times with result that
errors cause subcontractor to come back to supposedly finished grade
several times. Inexperienced survey crews of government can't be blamed
too much. Work was disorganized from beginning since sub was permitted to
work any and every place he could get the biggest volume so he could get
[***96] big progress payment. No attempt was made to finish
grading close behind embankment completion. No attempt was made to keep
limited equipment confined to limited area to take advantage of
substituting workable equipment for broken down pieces.
67. The evidence in the record does not show that the
Sudanese resident engineer, or the personnel of the defendant's Bureau of
Public Roads, went beyond the requirements [*199] of the
contract in requiring the plaintiff (or its subcontractor) to blend borrow
materials from different pits in order to achieve a borrow course which was
capable of being compacted and which would provide a stable subbase for the
aggregate base, and thus meet the requirements of FP-57.
Administrative Proceedings
68. The demonstration road project in the Sudan was
completed on July 7, 1962, except for some clean-up work, which the
plaintiff did during the 3-month maintenance period following such
completion.
69. (a) In September 1962, the plaintiff, in accordance
with paragraph 56 of the general conditions of the plaintiff's contract with
the Sudanese government (see finding 24), submitted several claims to the
Director of the Sudanese [***97] Ministry of Works, and then to
the Director of the United States Operations Mission in the Sudan. Such
claims included the claims that are involved in the present action.
(b) The plaintiff's administrative claims referred to in paragraph (a) of
this finding were denied by the Director of the United States Operations
Mission in the Sudan. Thereupon, the plaintiff filed an appeal with the
Administrator of the Agency for International Development (successor to the
International Cooperation Administration).
(c) After the petition in the present action was filed with the court, the
Acting General Counsel of the Agency for International Development rendered
an opinion to the effect that the agency had no jurisdiction over the
plaintiff's claims in excess of $ 1,959.19 by reason of the $ 310,000
limitation contained in the letter of understanding between the plaintiff
and the International Cooperation Administration, as revised (see findings
21 and 31), and that the plaintiff "must proceed with such claims in
another forum."
Abandonment of Certain Claims
70. (a) The plaintiff's petition contained a claim for
extra work in the amount of $ 25,947, and a claim for delay in settlement
[***98] in the amount of $ 62,290. The plaintiff's brief
indicates that the plaintiff has abandoned those claims.
[*200] (b) The plaintiff's petition contained a claim for $
120,666 for moneys allegedly wrongfully withheld by the government of The
Republic of the Sudan. In its brief, the plaintiff states that this claim
was settled by the Sudanese government on July 10, 1965.
Damages
71. (a) The plaintiff's subcontractor, Sudanese
Construction Company, incurred additional expenses because of the delay in
receiving government-furnished equipment.
(b) No actual cost figures from the subcontractor's books and records were
presented at the trial, and it is not possible to determine with reasonable
accuracy the amount of the additional expenses incurred by the subcontractor
because of the delay in receiving government-furnished equipment.
72. No evidence was presented to establish that the
plaintiff has made any extra payment to its subcontractor, Sudanese
Construction Company, or is obligated to make any extra payment to the
subcontractor, because of the additional expenses incurred by the
subcontractor due to the late delivery of government-furnished equipment.
[***99]
73. (a) In completing the work under
the contract for the construction of the demonstration road, the plaintiff
was delayed a total of 142 days beyond the date fixed in the contract for
the completion of the work.
(b) The plaintiff's expenses in the form of indirect costs were increased to
the extent of $ 22,319.57 as a result of the 142-day delay in completing the
work under the contract, such indirect costs consisting of the following
items:
| Wages: |
| American personnel |
$ 11,737.82 |
| Sudanese office staff |
2,185.76 |
| Other Sudanese personnel |
3,322.60 |
| Other extra expenses |
4,049.09 |
| Total |
21,295.27 |
| Home office overhead and general expense, 4.81
percent |
1,024.30 |
74. The delay of 142 days in completing the work under the
contract for the construction of the demonstration road was due partially to
delay on the part of the defendant in procuring [*201] equipment
that was needed for the construction of the road and delivering it to the
Sudanese government at Port Sudan, it was due partially to delay on the part
of the Sudanese government in transporting the equipment from Port Sudan to
the job [***100] site, and it was due partially to the Sudanese
Construction Company's inexperience, inefficiency, and failure to use
available equipment to maximum advantage.
75. There is no basis in the record on which a precise
allocation of responsibility for the overall delay of 142 days in completing
the work under the contract can be made as between the defendant's delay in
procuring equipment and delivering it to the Sudanese government at Port
Sudan, the Sudanese government's delay in transporting equipment from Port
Sudan to the job site, and the shortcomings of the Sudanese Construction
Company.
76. It is determined, in the nature of a jury verdict, that
the defendant's delay in procuring equipment and delivering it to the
Sudanese government at Port Sudan was responsible for one-third of the
overall delay in the completion of the work under the contract and, hence,
for one-third of the extra indirect expenses that were incurred by the
plaintiff because of such overall delay, $ 7,440.
77. There is no evidence in the record indicating that the
International Cooperation Administration ever agreed in writing (or
otherwise) to increase its maximum obligation under the project [***101]
agreement and under the letter of understanding with the plaintiff beyond
the sum of $ 310,000.
78. The plaintiff has already been paid the sum of $
303,020.26 in U.S. dollars by the defendant in connection with the contract
for the construction of the demonstration road.
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 the plaintiff is
entitled to recover, and it is therefore adjudged and ordered that the
plaintiff recover of and from the United States the sum of seven thousand
four hundred and forty dollars ($ 7,440).