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February 7, 1973

mination that 12 were acceptable not distinguish between the two conwith the understanding that any ditions. We note Mr. Rippon's testiprogression of the relatively minor mony that the Bureau did not acscaling would again be cause for cept flaking pipe because “we their rejection, Exh. 23), the im

wanted to see if we got a progresmediate review of rejected flaking sive failure as it stood out there in or scaling pipe did not take place. the yard" (Tr. 1755). The contractThe Government asserts, and the ing officer found that interior scalcontracting officer found, that this ing was a latent defect the evidence review was postponed at Cen-Vi- of or the ultimate extent of which Ro's request pending demonstration most frequently could not be deterof the Centriline Process for the re- mined immediately after manufacpair of scaling or flaking pipe.150 ture but only after an extended peCen-Vi-Ro denies requesting a delay riod of storage in the yard (par. 48, in the Bureau's consideration of re- Findings of Fact). We also note the jected pipe and asserts that it had statements attributed to Messrs. never intended to repair any but a Crane and Rippon at the July 24, small quantity of the badly flaking 1965, meeting that the Bureau pipes by the Centriline Process (pp. would reexamine previously re26 and 27, Notice of Appeal). The jected pipe with minor scaling and/ project engineer testified that the or surface cracking. In addition, Bureau took a second look at re- Mr. Ryland of the Bureau's Denver jected pipes with scaling interiors Office is quoted as stating that Buat the time Cen-Vi-Ro wanted them reau inspectors had been instructed to look, that is after demonstration to be conservative in the acceptance of the Centriline Process (Tr. of pipe with minor scaling or 2068). However, somewhat incon- cracked interiors because of the possistently he also stated that the Bu- sibility of the cracking or scaling reau agreed to review scaling pipes progressing further and that it was after the deterioration had stopped obvious from the present inspection (Tr. 2010).

there had been little if any, further We find that the terms flaking development in many of the pipe or scaling were used by the Bureau sections (Notes on Meeting of to describe two types of pipe in- July 24, 1965, note 46, supra). The teriors: cracking and actual flaking resident engineer testified that the and that the Bureau frequently did instructions to be conservative in

the acceptance of pipe with flaky 150 The Centriline Process, which involved the interiors had been given him by the removal of weak material by a high velocity

project engineer and that conservajet of water and installation of a thin mortar Uning was demonstrated during the week of tive to him meant "not to accept" July 19, 1965 (Tr. 752, 1915 ; Inspectors Daily

(Tr. 1956). Reports, dated July 19, 20, and 22, 1965, Notes on Meeting of July 24, 1965, note 46, The Board finds that the Bureau's supra). The process was considered unacceptable by the Bureau.

concern that the scaling would pro

151

gress (i.e., that cracking would de- flaking but had minor interior survelop into flaking) precluded im- face cracking and that these pipes mediate acceptance of the pipe re- were rejected because of the Bujected for cracking or flaking reau's concern the cracking would and that the Centriline Process was develop into flaking which did not, intended for repair of only those in fact, occur. The resident engineer pipes with actual flaking 152 While testified that some of the pipes rethe Government emphasizes that jected during the May 15 inventory Cen-Vi-Ro was told on several oc- were subsequently accepted because casions to locate pipes they consid- the scaling had not progressed to ered could be reclaimed and that the the point it was detrimental to the Burean would look at these pipes pipe (Tr. 1916). It is clear that the (Brief, pp. 57, 58) the project engi- Bureau reversed its position as to neer testified this did not involve the acceptability of much of this pipes with flaky interiors (Tr. pipe.153 As noted ante, 1,920 of the

. 2018).

pipes previously rejected for scalWe find that approximately 1,579 ing or flaking (the Summary of of the pipes rejected for scaling or Pipe Units Reclaimed, Exh. 146, flaking during the May 15 inven- puts the figure at 1,919) were actory had previously been accepted. cepted during the reclaim program. Although an explanatory note writ- While the project engineer exten at the time states that the scal- pressed the opinion that the reing or flaking had developed since claimed pipe did not comply with the pipes were accepted, there can the specifications (Tr. 2023), and be no doubt that the interiors on a the extent of repairs, if any, to these majority of these pipes could not pipes prior to their acceptance or properly be regarded as scaling or reacceptance is not clear, we think February 7, 1973 The project engineer testified that contracting officer found that 252 of scaling pipes were accepted after these were rejected because of scalCen-Vi-Ro developed an

it significant that 1,013 of the pipes 151 Mr. Borden's testimony makes it clear that the Bureau had decided prior to the previously rejected for scaling were meeting of July 24, 1965, to accept pipes with minor flaking if the flaking did not

accepted in September 1965 (Exh. progress (Tr. 1707, 1708).

146). This indicates that it is highly 152 We think it significant that letters concerning the Centriline Process written by Cen

unlikely that any substantial reVi-Ro to Raymond International, Inc. (letters

pairs were effected to these pipes.15 of June 4 and 25, 1965, Cen-Vi-Ro Correspondence) refer only to pipes rejected for flaky interiors while at approximately the same time 153 Notes of Meeting of July 24, 1965, note Mr. Hubbard is quoted as saying he intended 46, supra. See also Hubbard letter of August 9. trying to convince the project engineer that 1967, and Kiesel letter of July 26, 1965 (note pipes with moon shaped cracks were acceptable 142. supra), the latter of which states that (Inspectors Daily Report, dated June 24, Messrs. Rippon and Ryland of the Bureau's 1965). Cen-Vi-Ro was clearly aware of the Denver office agreed that “crescent shrinkage two types of interior pipe conditions. We recog- cracks" were acceptable as long as there is no nize that the statement to the effect that if flaking. Cen-Vi-Ro could sell Centrilining to the Bu- 164 An Inspectors Daily Report dated July 22, reau, it stood to recover nearly 1,800 sections 1965, signed by the chief plant inspector, states of pipe (letter of July 12, 1965, Cen-Vi-Ro that Messrs. Crane, Ryland and Rippon examÇorrespondence) is some evidence that the ined minor flaking 54-inch pipe (number not Centriline Process was intended to apply to stated) and states the writer's conclusion that all pipes rejected for cracking or scaling.. these pipes would be acceptable without reThe breakdown of pipes expairs. An Inspectors Daily Report, dated amined by Dr. Davis (Exh. 2 of August 3, 1965, reflects the examination of

developed an epoxy ing or flaking interiors (par. 50, method of repair and the resident Findings of Fact). Our count of the engineer indicated that a majority Final Inventory of Rejected Pipe of these pipes required some repair (Exh. 152) indicates 110 final rejec(Tr. 2019, 1957). The resident en- tions for bad interiors and 243 final gineer further stated that pipes rejections for scaling or flaky intewith flaking could not be used with- riors.155 It appears that 49 of 55 reout repair (Tr. 1913).

jections for scaling and bad inteThe resident engineer's testimony riors manufactured up to and inthat a majority of these pipes re- cluding December 31, 1964, were for quired some repair must be viewed bad interiors rather than flaking or in the light of Mr. Herrera's state- scaling interiors (Exh. 152). It ment that every pipe, perfect as it

further appears that four out of may be, needs some repair which he thirteen final rejections for scaling referred to as manicuring (Tr. 735).

or flaking and bad interiors manuMr. Peckworth stated that in many factured in January 1965 were for [concrete) pipe plants every piece bad interiors and that eighteen of of pipe is repaired in some particu- 106 final rejections for these reasons lar and that 90 percent of the [con- manufactured in February 1965 crete) pipe that comes out of some

were for bad interiors. There were yards has some repair (Tr. 259,

131 final rejections for scaling or 260). The contracting officer found flaking and bad interiors manufacthat 620 54-inch pipes (A25, B25

tured in March 1965 of which nine and AB50) were found acceptable were rejected for bad interiors. after the extent of scaling had been Based on the foregoing, the Board determined (par. 53, Findings of finds that the peak months for the Fact).

production of pipes with flaking or The Comparison of Rejected Pipe scaling interiors were late February Remaining in Pipe Yard on June

and March 1965. This finding is con20, 1966, to Total Production (Exh.

firmed by a chart prepared by ap5Q) reflects a total of 352 rejections pellant which compares the producfor scaling and bad interiors. There

tion of small diameter pipe and bad is no breakdown of the number of

interiors (Exh. 2 of Notice of Appipes rejected for each reason. The peal, Exh. 6).

Deposition) indicates that he ex142 54AB50 and 54B25 pipe and states that 111 54AB50 and seven 54B25 pipes were

amined 31 pipes rejected for bad either O.K. as is or with minor cleanup and/or epoxy repair. It appears that repair 16 Again based on the assumption that where of 54-Inch reclaim pipes did not commence multiple reasons for rejection are stated, the until September 1, 1965 (Inspector's Daily first represents the primary reason for rejecReport of even date).

tion:

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interiors of which eleven were con

and should have been accepted (Nosidered acceptable with repairs and tice of Appeal, pp. 23–27). Accordtwenty were considered to be prop- ingly, we conclude that to the extent erly rejected. He apparently made the Government permitted the reno distinction between pipes re- pair of pipes with actual flaking, it jected for scaling or flaking inte- did so as a matter of grace rather riors and those rejected for bad in- than of contractual right. This teriors since the list of identified holding makes it unnecessary to pipes he considered acceptable consider the question of Cen-Vi(Exh. 154) includes two pipes re- Ro's alleged failure to take known jected for flaky interiors and four corrective action to reduce or elimirejected for bad interiors. Although nate flaking interiors. it is clear that the Bureau treated bad interiors and scaling or flaking

Decision interiors as separate causes for re

The specifications as we have seen jection, the record is not clear as to the types of conditions constituting crazing but only that deemed ex

do not prohibit all interior surface bad interiors or what were the

cessive. Among the definitions of causes of this defect or defects. In

"craze" is "to shatter” and in the its letter of June 10, 1965 (note 143, field of pottery “craze” is defined as supra), Cen-Vi-Ro referred to the

"minute cracks on the surface of the repair of localized scaling that oc

glaze." 156

Obviously, "excessive casionally occurs as provided in the contract specifications. The refere crazing” is a matter of judgment. ence is to the Concrete Manual and Construing specifications with simi

lar general language we have reapparently to the provisions (Section 137. (e), Preparation of Imper- garded the conduct of the parties fections for Repair) providing for prior to the dispute as of primary the removal of unsound or imper- that the Bureau did not regard in

importance.157 Here we have found fect concrete. However, we think that this pro

terior surface cracking and even vision is applicable only to the re

some flaking as a cause for rejec

tion when these conditions were pair of normally repairable defects

first observed. We have also found as listed in the Manual and may not be construed as authorizing the re

that although cracking degenerated pair of defects not so listed. While into actual flaking on some of the Cen-Vi-Ro asserts that most flak- pipes, it was the Bureau's concern ing was of a minor nature and easily

that this degeneration might occur repairable, it cites no provision of

on all pipes that led to the rejection the Concrete Manual authorizing

of 2,240 pipe units for scaling dur. such repairs and it is clear that the ing the May 15 inventory of which primary thrust of this aspect of its 156 Webster's New International Dictionary, claim is that most of the pipes com

157 Compec. (a Joint Venture), IBCA-573-6plied with contract requirements 66 (note 43, supra).

2nd Edition.

February 7, 1973 approximately 1,579 had previously ground. We have determined that it been accepted. Bureau personnel at is unlikely that any substantial rethe time characterized the interiors pairs were effected to 1,013 of these of many of the pipes rejected for pipes which were reaccepted in scaling as “minor interior surface September of 1965. We concludo cracking” and reversed their posi- that these pipes should not have tion as to the acceptability of these been rejected. pipes when it became evident the The appeal as to scaling or cracking was not progressive. We flaking pipe is sustained as to disthink it evident that conforming ruption costs associated with the materials may not properly be re- interim wrongful rejection of 1,013 jected out of concern that the ma- pipes and is otherwise denied. The terials may degenerate into an amount of the equitable adjustment unacceptable status at an unspeci- will be determined in a subsequent fied future date.153

portion of this opinion. The next question is the number of such pipe which were improperly

Claim for Surplus Cages rejected. The contracting officer

By letter, dated May 10, 1966 found that 620 pipes (54A25, B25

(Exh. 5J), Cen-Vi-Ro submitted a and AB50) rejected during the

claim in the amount of $52,591.05 Vay 15 inventory were accepted

for 364 51AB50 surplus cages. The after the extent of scaling had been

letter alleged that 24 54A25, 185 determined. We have treated simi

54B25 and 670 54AB50 pipes were lar findings of the contracting offi- rejected during the May 15 invencer as evidentiary admissions where

tory. The Government's tabulation not rebutted.159 However, we need

(Exh. 60) confirms that 879 54-inch not predicate our decision on that pipes of the listed classes were re

jected for all causes during the 158 Or as stated by Cen-Vi-Ro, “The Government has a right to reject a pipe unit because

May 15 inventory. The letter stated of an alleged latent defect but if the Govern- that appellant began the manufacment's judgment proves to be wrong (and there is no rejectable defect, latent or other

ture of replacement steel cages on wise), then the Government must bear the June 8, 1965, for 54AB50 pipes burden of its error." Notice of Appeal, p. 24. Cf. Mann Chemical Laboratories, Inc. v. United

(which cages could also be used for States, 182 F. Supp. 40 (D.C. Mass., 1960), 54A25 and 54B25 classes of pipe), (Government's delay in accepting water purification tablets until an independent analysis

and that the Bureau's acceptance of revealed that brown spots on tablets were not

over 400 of these pipes after manudetrimental held reasonable and not a breach of contract.) The distinguishing factor is that facture of replacement cages had the brown spots were a foreign condition while the instant contract did not prohibit all

been completed resulted in a surplus crazing but only that deemed excessive. of 364 54AB50 cages.160 As we have

159 Roy L. Matchett, IBCA-826–2–70 (Feb. ruary 26, 1971), 71-1 BCA par. 8722; Steenberg Construction Company, IBCA 520-10-15 160 Photos of wasted reinforcing steel and (May 8, 1972), 79 I.D. 158, 211, 72–1 BCA par. completed cages appear on p. 46, Volume III, 9459 at 43, 967.

Exh. 40.

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