under which the claim of duress was asserted.

APPEARANCES: William F. Haug, Attorney at Law, Jennings, Strouss & Salmon, Phoenix, Ariz., for the appellant; Ralph O. Canaday, Department Counsel, Denver, Colo., for the Government.

OPINION BY MR. McGRAW INTERIOR BOARD OF CONTRACT APPEALS

The appellant, Bish Contracting Company, Inc., entered into a contract with the National Park Service, under date of May 7, 1970, for the construction of roads, parking and walks in the Business Center, South Rim, Grand Canyon National Park, Arizona. The contract amount, as increased by change orders, was $393,372.25.1

Resolution of this dispute requires the Board to determine the effect to be given to Change Order No. 3. Contending that because of economic duress it was coerced into accepting the terms of the Change Order, the appellant seeks to have it declared null and void. Appellant also requests an equitable adjustment of $11,730.552 under Clause 34(a) of the General Provisions.

1 Exhibit F. Except as otherwise indicated, all references to exhibits are to those contained in the appeal file.

2 Affidavit of Russell Bish, dated July 12, 1972. This was one of the documents added to the existing record at the request of appellant's counsel. See extensive excerpt therefrom in Appendix.

3 "34. CHANGE ORDERS:

"(a) Additional costs. In conformance with Clause 57, 58 and 10 of these General Provisions the cost of any change ordered in writing by the Contracting Officer which results

The Government contends that Change Order No. 3 was issued as a result of arms' length bargaining between the parties and that appellant is bound thereby. It further asserts that appellant may not prevail for lack of having made a timely claim for adjustment under Clause 57 (e) of the General Provisions.

in an increase in the contract price will be determined by one or the other of the following methods, at the election of the Contracting Officer:

"(1) On the basis of a stated lump sum price, or other consideration fixed and agreed upon by negotiation between the Contracting Officer and the Contractor in advance, or if this procedure is impracticable because of the nature of the work or for any other reason.

"(2) On the basis of the actual necessary cost as determined by the Contracting Officer, plus a fixed fee to cover general supervisory and office expense and profit. The fixed fee shall not exceed fifteen percent of the actual necessary costs. The actual necessary cost will include all reasonable expenditures for material, labor, and supplies furnished by the Contractor and a reasonable allowance for the use of his plant and equipment where required, but will in no case include any allowance for general superintendence, office expense, or other general expense not directly attributable to the extra work. In addition to the foregoing the following will be allowed: the actual payment by the Contractor for workman's compensation and public liability insurance; performance and payment bonds (if any); and all unemployment and other social security contributions (if any) made by the Contractor pursuant to Federal or State statutes, when such additional payments are necessitated by such extra work.

"An appropriate extension of the working time, if such be necessary, also will be fixed and agreed upon, and stated in the written order."

457. CHANGES:

"(e) If the Contractor intends to assert a claim for an equitable adjustment under this clause, he must, within 30 days after receipt of a written change order*** submit to the Contracting Officer a written statement setting forth the general nature and monetary extent of such claim, unless this period is extended by the Government. *****

Motion to Dismiss

The Government has twice moved to dismiss this appeal on the grounds that appellant is seeking to reform Change Order No. 3. By Order dated May 22, 1972, the Board denied the motion noting that on a motion to dismiss the question of the Board's jurisdiction is determined on the basis of appellant's claim and not by the nature of the Government's defense. The Government has renewed its motion to dismiss in its Memorandum Brief, dated August 28, 1972. The Board's authority to consider and decide the validity of certain actions taken under a contract and challenged on the ground of economic duress is considered to be well established by settled administrative practice; the motion is therefore again denied. The contract provided for work on the "Main Road" portion to be delayed until after Labor Day, 1970, because of heavy tourist traffic during the summer months. By letter dated September 17, 1970, Mr. David O'Kane, the Project Supervisor, instructed appellant "[g]rade, base, [and] prime all roads and begin paving by October 15, weather permitting." The actual surfacing began on October 21 and was completed, except for the application of the bituminous seal coat, on November 17, 1970. The Government instructed the appel

7

5

to

See Airmotive Engineering Corporation, ASBCA No. 15235 (July 13, 1971), 71-2 BCA par. 8988 at 41,755 (concurring opinion). Exhibit G (Addendum No. 1).

7 Exhibit "A", attached to appellant's Complaint.

lant to delay the application of the seal coat until warm weather conditions existed in the early summer.

8

During the winter months several areas of the unsealed pavement eroded. The areas in question were

portions of the main road in front of the Administration Building and the road in front of Babbitt's Store. On May 13, 1971, a meeting was held between representatives of the National Park Service and the appellant to discuss the pavement failure. According to a Government summary of the meeting,10 Mr. Speer, the subcontractor, indicated his willingness to "overlay anything that the NPS asked" but felt he should be paid for such additional work because the pavement failure was not due to "faulty work." Mr. Bish said that the contractor would file a claim if it had to pay for the repair, as the fault was not workmanship but conditions. The parties discussed probable reasons for the pavement failure and agreed to call upon experts to ascertain definitively the causes of the erosion. The

appellant and its expert concluded 11 that the primary cause of the erosion was the failure to apply a seal coat immediately after the pavement was laid. As the result of a meeting with the contractor in May or early June of 1971, the Government determined that responsibility for failure of the payment lay princi

Exhibit "F"", Findings of Fact. Exhibit B-1 and Exhibit F, Map. 10 Exhibit B-1.

11 Affidavit of John B. Hauskins, dated July 11, 1972. The affidavit was added to the existing record at the request of appellant's counsel.

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* *

pally with Government and that the contractor should be compensated for required remedial work. 12 A second meeting took place on "approximately June 9, 1971." 13 Mr. David O'Kane, Mr. Donald Purse, and Mr. Ed Bleyhl 14 of the National Park Service met with Mr. Bish in his construction trailer. Appellant says that the "purpose of this visit was to discuss [the eroded portions] of ** which the pavement needed an additional overlay paving." 15 According to the Government, this meeting produced the agreement that provided the basis for Change Order No. 3.16 The affidavits of three of the four participants in the June 9 meeting have been added to the record by the parties." According to Mr. Bish's affidavit,18 Mr. Purse said he was going to order him (Bish) to do the overlay paving and that if he was to be paid he would have to accept Purse's offer of doing the overlay work at the original contract unit prices. Mr. Bish states that at the same time he was told by Mr. Purse that his only other alternative would be to do the work at his own expense and later

submit a claim. The affidavit further asserts that Mr. Bish did not have the money to complete the overlay paving at his own expense; that this fact was known to the Government; and that he therefore accepted Mr. Purse's proposal that the contractor perform the repair work at the contract unit prices.

In addition to denying that he had any knowledge of the contractor's financial status at the time of the June 9 meeting, Mr. Purse states:

***During the course of the meeting it was agreed that the work required would be accomplished at the contract unit prices for the three elements of work involved. The Contractor appeared to accept the agreed prices readily and seemed satisfied that the overlay work would be done on that basis. I did not at any time tell Mr. Bish that he would be directed to do the overlay work at his expense if he did not agree to contract unit prices.19

Mr. O'Kane's affidavit gives the following account of what transpired:

*** during the course of this meeting Mr. Purse asked Mr. Bish to do the paving overlay at the contract price inasmuch as the Government had paid for a pavement which had failed for reasons not necessarily the fault of the prime contractor. * * * Mr. Bish very reluctantly agreed to accept the contract bid price for paving after conferring by phone with sub-contractor Speer, stating he would lose money on the operation and felt himself caught in a situation primarily caused by the weather. Mr. O'Kane also states that Mr. Bish "may also have mentioned he

19 Note 12, supra.

20 Note 12, supra.

Change Order No. 3 was issued on June 14, 1971, and accepted by the appellant on June 16, 1971.22 It incorporated substantially the terms of appellant's June 9 letter. It provided for a net increase of $13,740 and 20 additional calendar days (to August 22, 1971) to complete the work.

On August 31, 1971, appellant for the first time objected to Change Order No. 3, which had been issued six weeks before. Mr. Bish wrote the contracting officer in part as follows:

At the time that this change was negotiated, we were under extreme pressure to resolve the problem of the eroded pavement and to commence work on the solution prior to the start of the summer rains which would have seriously aggrevated [sic] the problem. We agreed with you to do this added work at the original contract unit prices knowing that at best we could only break even financially. It is obvious now that we agreed too hastily to your terms for we

21 Exhibit B-4. The prices were set out as follows:

"600 tons (Est) Plant Mix @ $20.00/ton= $12,000. 36 tons (Est) 85-100 Asphalt @$35.00/ton=$1,260." In this letter the contractor also said that if required, a tack coat could be applied "at the contract unit price for Seal Coat, namely $100.00/ton." 22 Exhibit F.

lost nearly $8900.00 doing this added work.23

Referring to what he characterizes as extenuating circumstances, the contractor asserts that the Change Order should be renegotiated.

On December 16, 1971, the contracting officer issued a "final determination and finding of fact" in which he rejected appellant's claim. The finding states:

All of the facts now evident as to the causes and responsibility for the paving failure were known to both parties prior to signing the change order. It had been mutually agreed to on the site during a meeting between the Contracting Officer and the Contractor with the advice and assistance of interested parties on both sides. The prices used were those bid by the Contractor for the original job and at the time seemed equitable to both parties. ****

The contractor appealed from this findings and decision by letter dated December 22, 1971. The appeal has been submitted to the Board on the record without a hearing.

Decision

The appellant contends that since it was not responsible for the erosion which necessitated the work covered by Change Order No. 3, the appellant had no obligation "to agree

23 Exhibit B-5. This exhibit and Mr. Bish's affidavit of July 12, 1972 (See Appendix) both indicate that the "extreme pressure" resulted from Mr. Bish's fear that the start of the summer rains would seriously aggravate the problem of the eroded pavement.

24 Exhibit A-1.

25 Exhibit A-2.

taken and tested by Federal Highway Engineers in May 1971. Their tests results verify that the cause of [pavement] failure was emulsification. A private testing company, Sergent, Hauskins and Beckwith of Phoenix, was retained by the Contractor to do matching testing and their results generally confirm that of the FHA. It was generally agreed by all parties that the pavement would not have failed if moisture could have been excluded from the surface material by the addition of the seal coat. Since this condition was not foreseen, it becomes a mutual problem of the Government and the Contractor. The Contractor has offered to do the work for a price considered acceptable and without increasing the Unit Prices bid on the original contract to cover his extra move-in moveout costs and it would be impractical for another to furnish the manpower and equipment to accomplish the work for the same or a lesser price. ***

The work should be accomplished very quickly as the summer rains are due to start within a month.

This document indicates that the Government recognizes some re

29 Appellant's Brief, p. 12.

27 Exhibit F. A copy of the "inhouse" findings was not furnished to the appellant or its counsel until September 5, 1972.

28 Affidavit of Mr. Bish, dated September 11, 1972. (Exhibit No. 2 to the Special Reply Memorandum of appellant.)

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sponsibility for the pavement failures. Except for Mr. Bish's affidavit 30 there is nothing in the record to indicate that appellant's motivation in signing Change Order No. 3 stemmed from a mistaken belief as to where the responsibility lay for the failure of the pavement. The fact that appellant's work was not faulty firmed prior to the signing of Change Order No. 3 by appellant's investigator, John B. Hauskins.32 The appellant has failed to show that it was prejudiced by the Government's failure to send it a copy of the "inhouse" findings prior to the time Change Order No. 3 was executed.

was con

The appellant also argues that its agreement to do the overlay paving at a loss is evidence of the involuntariness of the agreement.33 Eco

20 A clearer recognition of Government responsibility is contained in the affidavit of the contracting officer (Note 12, supra, and accompanying text). In view of this recognition, we have not required the Government to furnish the daily inspection reports covering the period during which the bituminous paving was laid. While the letter from appellant's counsel of July 17, 1972, indicates that such reports would be important to show the alverse weather conditions which existed at the job site and contributed to the lack of compaction, we note that this was before appellant's counsel was furnished a copy of the "Inhouse" findings which is viewed as clearly establishing Government responsibility for the pavement failures (notes 27 and 28, supra). 30 Note 28, supra,

This was the position taken by both the Contractor and the Subcontractor in the meeting with the Contracting Officer on May 13, 1971 (note 10, supra).