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the defects. The evidence having estab- the subsequent rejection of the pipes was lished the cause of a particular defect improper even though the initial acceptand that the defect occurred in signifi- ance was not the final acceptance concant numbers of pipes over a substantial templated by the contract and period of time, the refusal to permit such though it is a general rule that the burdefects to be repaired did not constitute den is on the seller to prove that goods a change to the contract. The Govern- rejected prior to acceptance conform to ment's refusal to permit certain other contract requirements. The Board holds repairs which the evidence established that the initial acceptance, in the abwas based on concern for the integrity sence of evidence to the contrary, estabof any repair generally rather than the lished that the pipes conformed to the contractor's continuing failure to take requirements of the contract. known corrective action did constitute a

Contracts: Construction and Operachange to the contract.

tion: Changes and Extras—Contracts: Contracts: Construction and Opera- Disputes and Remedies: Burden of tion: Changes and Extras—Contracts:

Proof Disputes and Remedies: Burden of

Where the Government refused to allow Proof

repairs to certain defects permitted by Where the Concrete Manual placed limi- the Concrete Manual prior to conducting tations on the repairable area of certain hydrostatic tests on the pipes and it apdefects and did not limit the repairable peared that at least some of the pipes area of certain other defects but the evi- would have passed the test and been dence established that all such defects acceptable if repairs in accordance with were not repairable without regard to the Concrete Manual had been allowed, magnitude and extent, and the evidence the Government by its actions has made established that repairs normally per

the evidence unavailable and the Board mitted by the Concrete Manual were not

utilizes a "jury verdict" approach to de allowed, but evidence of the extent of de- termine the number of pipes which could fects on rejected pipes was lacking, the have been repaired under the Concrete Board holds that the contractor has failed Manual and made acceptable. to carry its burden of proof that pipes

Contracts: Construction and Operawere improperly rejected. As to identified pipes which appellant's expert wit

tion: Changes and Extras—Contracts: ness testified were repa able in accord- Disputes and Remedies: Equitable ance with the Concrete Manual, the Adjustments Board holds that appellant has established prima facie that the pipes were

Where the Government required hydroimproperly rejected.

static tests of pipes in excess of those

specified by the contracts, the Board rules Contracts: Disputes and Remedies: that the contractor's entitlement to comBurden of Proof-Contracts: Per- pensation for such tests could properly formance or Default: Acceptance of

turn on the results of the tests inasmuch

as the Inspection and Acceptance Clause Performance—Contracts: Performance

of the General Provisions (Standard or Default: Inspection

Form 23-A, April 1961 Edition) allows Where substantial quantities of pipes the Government at any time before final which had been accepted were rejected on acceptance of the entire work to request a subsequent inspection, and the evi- the removal of completed work at the dence did not establish that the pipes contractor's expense if the work does not did not conform to contract requirements, conform to contract requirements and for February 7, 1973

permissible internal diameters of the pipe. On the merits the latter claim was denied, since Government responsibility for this payment had not been established. Contracts: Construction and Operation: Changes and Extras-Contracts: Disputes and Remedies: Jurisdiction

A Government motion to dismiss as beyond the jurisdiction of the Board a claim arising out of severe and arbitrary inspection was denied, the Board holding that such a claim was not readily distinguishable from claims based upon the imposition of excessive standards of workmanship which claims are clearly cognizable by the Board as constructive changes. A contractor's claim for lost profits in such circumstances was dismissed as beyond the jurisdiction of the Board since the concept of an equitable adjustment' excludes anticipated or unearned profits on work not accomplished.

Contracts: Construction and Operation: Changes and Extras—Contracts: Disputes and Remedies: Equitable Adjustments

A contractor's claim for interest as part of an equitable adjustment was denied where there was no evidence of specific loan transactions or of payments of interest in the record.

an equitable adjustment to the contractor
if the work does conform to the contract.

Contracts: Construction and Opera-
tion: Changes and Extras–Contracts:
Disputes and Remedies: Equitable
Adjustments
Where the evidence failed to support the
contractor's claim as to the amount of
extra repair work and testing required by
the Government and the quantity of pipe
which was improperly rejected and there
was substantial evidence that the con-
tractor had underbid the work and that a
significant portion of the contractor's
costs in addition to its estimates was due
to factors such as unproven or unsuitable
machinery and equipment, improper
maintenance and inexperienced and un-
skilled labor, justification for the total
cost method of computing an equitable
adjustment has not been established. The
Board holds that the equitable adjust-
ment due the contractor may properly be
computed on the basis of summaries of
costs from appellant's books and records,
overruling a Government objection to
such cost presentation made for the first
time on brief that the books and records
from which the summaries were prepared
were not available at the hearing, since
the record revealed that appellant had
repeatedly offered to make its records
available for audit by the Government
prior to the hearing.
Contracts: Construction and Opera-
tion: Changes and Extras—Contracts:
Disputes and Remedies: Jurisdiction

The Board denied the Government's mo-
tions to dismiss as beyond the jurisdic-
tion of the Board, the contractor's claims
to be compensated for inefficiency result-
ing from the interim wrongful rejection
of substantial quantities of pipes and for
reimbursement of a sum paid to its sub-
contractor because of the unavailability
of pipe for laying which was allegedly
attributable to the Government's incor-
rect interpretation of the contract as to

APPEARANCES: H. A. Federa, Secretary and Counsel, Cen-Vi-Ro of Texas, Inc., c/o Raymond International, Inc., Houston Texas for the appellant; Henry J. Strand and David J. Askin, Department Counsel, Denver, Colorado, for the Government. OPINION BY

BY MR. NISSEN INTERIOR BOARD OF CONTRACT APPEALS

These appeals involve claims for constructive changes, which as initially asserted and excepted from

the releases (Exhibits 5A and 81A) (principally 54-, 60-, 66- and 72total $3,297,385.05." We have previ- inch in diameter), and subconously ruled on appellant's motion to tracted laying of the pipe and all expunge certain exhibits from the other work to R. H. Fulton. appeal file. In a prophetic state- Contract No. 14-06-D-5244 ment Government counsel asserted (Exh. 79) was awarded to R. H. that the appeals raised "such sub- Fulton 5 on August 13, 1964. The stantial questions of fact that it is or contract called for completion of will be virtually impossible to re- earthwork, concrete pipe and strucsolve them adequately.” (Second tures of a portion of the Main AqueStatement of Position, p. 4.) An ex- duct (Lubbock to Lamesa), Southtended hearing and prolonged study west Aqueduct, totaling approxiof the record have convinced us of mately 140 miles of pipeline, and the accuracy of that assertion. Pumping Plants Nos. 8, 9, 10 and

Contract No. 14-06-D-5028 11 in accordance with Specifications (Exh. 1) was awarded to Cen-Vi. DC-6130 for an estimated price of Ro of Texas, Inc., on November 12, $8,785,519.02. In conformance with 1963. The contract incorporated the practice of the parties, the conSpecifications DC-6000 (pertinent tracts will be referred to in this portions of which are attached as opinion by their specification Appendix "A") and called for the numbers. completion of the earthwork, con- At the time of award of the first crete pipe and structures of a por- contract (DC-6000), Cen-Vi-Ro

( -, tion (approximately 90 miles) of had no facilities for the manufacthe Main Aqueduct of the Canadian ture of pipe in the Panhandle of River Project 4 for an estimated Texas area (Tr. 1982). Cen-Vi-Ro price of $12,464,227. Cen-Vi-Ro un- commenced construction of a plant, dertook to manufacture the pipe referred to as the north plant, for

the manufacture of reinforced coni Claims totaling $134,750 ($120,314 of

crete pressure pipe (RCP) at Plainwhich was applicable to DC-6000), constituting the estimated costs of disposing of

view, Texas, in December 1963 and disputed rejects, were withdrawn at the hear

substantially completed it in May of ing (Tr. 987, 993). 2 IBCA-718-5-68

IBCA-755-12-68

1964.6 The plant consisted essenti(May 28, 1970), 77 I.D. 106, 70-1 BCA par. ally of equipment for the mixing 8297.

3 The name Cen-Vi-Ro is derived from the 5 While the notice of appeal under this concentrifugation, vibration, and rotation method tract (Exh. 82) was from Cen-Vi-Ro in the of producing concrete pipe (Tr. 18). Cen-Vi-Ro name of R. H. Fulton, the parties have conof Texas, Inc., is a wholly-owned subsidiary sistently referred to the appeals as those of of Raymond International, Inc., and

Cen-Vi-Ro in reliance upon a power of attorformed for the express purpose of bidding on ney from R. H. Fulton, dated November 24, the Canadian River Project (Tr. 5).

1967 (Exh. 76). 4 The Canadian River Project involved the 6 Tr. 1214, 1215. The first steel reinforcing construction of a total of 322 miles of pipe. cage was manufactured on May 25, 1964, and line, pumping plants and related facilities for the first concrete pipe was spun on May 29, the furnishing of water to 11 cities in the Pan- 1964 (Tr. 1380, 1858; Inspectors Daily Rehandle of Texas (Tr. 1979). The contracts ports of May 25 and May 29, 1964, Exh. 44). involved in these appeals are the second and Reference to Inspectors Daily Reports will be third of four major contracts.

to Exhibit 44 unless otherwise indicated.

and

was

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February 7, 1973 (batching) of concrete and the static testing. The south plant for manufacture of steel reinforcement the manufacture of the smaller dicages, a 20-foot spinner for the ameter RCP (42-inch and below) manufacture of 66- and 72-inch was completed on or about Februdiameter pipe referred to as the ary 1, 1965, and the first NCP pipe "gyro” spinner, a 16-foot spinner core was manufactured on April 2, for the manufacture of 54- and 60- 1965.10 Wrapping, testing and coatinch diameter pipe sometimes called ing of NCP pipe cores commenced the pneumatic spinner, steam tun- on June 3, 1965 (Tr. 921; Inspecnels for curing the pipe, a stripping tors Daily Report of June 3, 1965, area where forms were removed

Exh. 100). from the pipe and facilities for hydrostatic tests (Tr. 1323–1327;

Early Production Plant Layout, Exh. 75 and Special

Cen-Vi-Ro experienced immediReport, dated May 21, 1965, Exh. .

ate difficulties with the manufac83).

ture of adequate quantities of acAfter receipt of a purchase order

ceptable reinforcement cages for (Exh. 81B) from R. H. Fulton for

RCP pipe (Tr. 317). These difficulapproximately 682,000 feet of con

ties principally concerned sizing, crete pipe in diameters ranging spacing of steel within permissible from 18 through 72 inches in ac

tolerances and workmanship.11 Mr. cordance with Specifications DC

Kenneth Thomas, chief of plant 6130, appellant began construction pipe inspection for the Bureau, tesof a facility for manufacture of 18

tified that cages were probably one through 42-inch pipe referred to as

of the greatest causes of delay in the south plant. In addition to mixing equipment, this facility con- Exhibits 75 and 83. A proposed construc

tion production schedule, dated August 7, 1964 sisted of a 16-foot spinner for the

(Exh. 81P reflects that 261,586 foot of pipe manufacture of 27- and 42-inch di- for DC-6130 was to be NCP (noncylinder pre

stress) pipe while the balance was to be RCP ameter pipe and a 12-foot spinner

pipe. RCP pipe was for heads not to exceed for the manufacture of 18-through 125 feet (paragraph 77.b., Specifications DC27-inch diameter pipe together with

6130). NCP concrete pipe consisted of a core

containing prestressed longitudinal reinforcing equipment for prestressing, coating, rods, wires or strands which was helically

wound with steel wire under high tension and wrapping pipe cores, steel rein

mortar encasement (Subparagraphs forcement fabrication and hydro- 79.e. and g., Specifications DC-6130).

10 Tr. 920, 921 ; Franklin memoranda dated

February 1 and March 3, 1965, Cen-Vi-Ro ? In the "gyro" spinner, the rotating force Correspondence, Exh. 120; Inspectors Daily was applied to the form by steel wheels track- Report of February 1, 1965, Exh, 100. Exhibit ing in rings which encircled the form at points 120 was obtained by the Government on disequidistant from the ends (Tr. 1330-1332, covery and stipulated into evidence (Tr. 689). 1836; Photos B, F and G attached to Govern- References to this exhibit hereinafter will be ment's Statement of Position, IBCA-718– to “Cen-Vi-Ro Correspondence." 5-68).

11 Tr. 1335-1347 ; see, among others, In> In this spinner the rotating force is applied spectors Daily Reports of June 19 and 22, to the form by rubber-tired drive wheels (see July 1, 8, 15, 20 and 31, August 3, 5, 6, 19, references note 7, supra).

24, and 31, 1964,

and

а

production (Tr. 1349). Mr. M. J. concrete pipe. In the words of CenFranklin, appellant's resident proj- Vi-Ro's expert witness, Mr. Howard ect manager until May of 1965, ad- Peckworth, "it is impossible for any mitted that cage manufacture prob- pipe man to build a perfect piece lems were partially attributable to of concrete) pipe." (Tr. 79, 210.) a machine that was not suitable (Tr. While Cen-Vi-Ro brought some 557, 58). While Cen-Vi-Ro contin- experienced personnel, i.e., machine ued to have problems with cages operators and supervisory personthroughout the period of pipe nel, from California (Tr. 348, 499), manufacture, these difficulties were it relied principally on the surlargely resolved by January 1965, rounding area for its supply of through the replacement of the fore- labor (Tr. 503-505). Mr. Franklin man for cage manufacture and the admitted that many of these people addition of a second mandrel-type were inexperienced in industrial, cage machine (Tr. 1342, 1345–1317). production or construction work Cen-Vi-Ro also experienced nu

and that he did have problems with merous difficulties in the manufac- inexperienced personnel (Tr. 511). ture of acceptable pipe. Among the

He also admitted that labor was a difficulties was so-called "gyro area"

contributing cause of defects and concrete in pipes manufactured on

that there was a substantial turnthe 20-foot spinning machine (Tr.

over in the work force, but stated 472, 1847). This concrete had a dif- that Cen-Vi-Ro paid prevailing

ferent color or texture and appeared

wages and denied that this turnover on the pipes at points where the was attributable to low pay.12 There gyro rings encircled the forms on

is evidence that Cen-Vi-Ro's manwhich the pipes were made (Tr. 98, agement attributed its difficulties, at 1847). The Bureau took the position least, in part, to inexperienced and that this concrete was unconsoli- unqualified labor (Tr. 521, 788; dated or porous and did not comply Murray memorandum, dated July 8, with the specifications. Other diffi

1965, Cen-Vi-Ro Correspondence; culties encountered by Cen-Vi-Ro

Travel Report of R. C. Borden, included fallouts-segments of con

dated June 9, 1965, Exh. 23; Notes crete pulling or falling away from on Meeting of July 24, 1965, Exh. the reinforcing steel (Tr. 1366, 1854, 24). See also undated statement of 1858); rocky bells-exposed aggre

12 Tr. 519, 520, 521. Mr. Mike Herrera, progates in bell areas (Tr. 579, 1364;

duction manager, from July 10, 1965, until Exh. 5M, p. 34); longitudinal and the completion of pipe production in June of

1966, confirmed that there was a high turncircumferential cracks (Tr. 1875- over of personnel and that it was excessive 1877; Exh. 69); unconsolidated con

at the start of the job (Tr. 789). Although

Mr. Herrera was not assigned permanently crete in barrel and spigot areas and to the Cen-V'i-Ro plant until May of 1965 the

record reflects that he made frequent, excracking and flaking interiors. It

tended visits to the plant as an adviser and should be emphasized that there is was present in June, July, Angust, September

and October, 1964 and in February 1965 (Tr. no such thing as "zero defects” in

690, 755 ; Inspectors Daily Reports).

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