Page images

92 C. Cls. Reporter's Statement of the Case The court made special findings of fact as follows:

1. The Stapleton Construction Company, Inc., was a corporation organized in 1932 under the laws of the State of New York. Thos. G. Sperling & Co., Inc., is a corporation organized in 1926 under the laws of the State of New York. In March 1933, Thos. G. Sperling & Co., Inc., acquired the entire capital stock of Stapleton Construction Company, Inc.

The Stapleton Construction Company, Inc., and Thos. G. Sperling & Co., Inc., each submitted separate bids for the construction and alteration of the Marine Hospital at Stapleton, Staten Island, New York. It became necessary for the Stapleton Construction Company, Inc., to secure additional financial backing and negotiations were opened with Mr. Thos. G. Sperling which resulted, in the early part of 1933, in the acquisition by Thos. G. Sperling & Co., Inc., of the entire ownership and control of the Stapleton Construction Company, Inc. Thos. G. Sperling requested the Treasury Department to award the contract to the Stapleton Construction Company, Inc., assuring the Treasury Department that Thos. G. Sperling & Co., Inc., would guarantee the satisfactory performance of the contract. On September 11, 1933, the contract was awarded to the Stapleton Construction Company, Inc., for the sum of $1,957,426. A copy of the contract with the specifications is attached to the petition and by reference is made a part hereof.

2. When the bids were opened the plaintiff's bid was found to be the lowest and was accepted. This bid was approximately $127,000 lower than the bid of Thos. G. Sperling & Co., Inc., by reason of the fact that plaintiff had awarded subcontracts for the plumbing, heating, and electrical work at prices which were about $126,000 lower than the estimated costs used by Thos. G. Sperling & Co., Inc. The subcontractors subsequently performed this work at the subcontract prices. The period during which the contract was to be performed was generally one of rising costs in respect to work and materials. 3. The contract provided :

ARTICLE 1. Statement of work.—The contractor shall furnish all labor and materials, and perform all work


Reporter's Statement of the Case required for the construction of certain buildings, etc., at the United States Marine Hospital, Stapleton, Staten Island, New York, including Alternates A (all work in connection with the Third Floor, Rear Wing, Main Building) and B (for all work in connection with the Fourth Floor, Rear Wing, Main Building), for the consideration of one million nine hundred fifty-seven thousand four hundred twenty-six dollars $1.957,426.00) in strict accordance with the specifications, schedules, and drawings, all of which are made a part hereof and designated as follows: Specifications for construction (except elevators) of buildings, approaches etc., of the United States Marine Hospital at Stapleton, Staten Island, New York, N. Y., dated January 21, 1933, the addenda therein, the addenda thereto dated February 11, 1933, and February 14, 1933, said contractor's letter (undated) agreeing that this contract shall be subject to all the conditions required by the National Industrial Recovery Act of June 16, 1933, and the Executive Order of the President dated August 19, 1933, and the drawings listed on page 2a of this contract.

The work shall be commenced as soon as practicable after the date of receipt of notice to proceed, and shall be completed within five hundred (500) calendar days

after the date of receipt of notice to proceed. On September 18, 1933, plaintiff received notice to proceed under the contract, which determined January 30, 1935, as the completion date. Plaintiff actually completed the contract on June 15, 1936, which was 1,002 days after it received notice to proceed.

4. Article 3 of the contract provided that the contracting officer might make changes within the general scope of the drawings and specifications and that an equitable adjustment should be made as to any increase or decrease in the amount due under the contract by reason of such changes, and that the time for performance of the work should likewise be adjusted. This article contemplated only reasonable changes within the general scope of the drawings and specifications, but, even as to such changes, the contract provided for equitable adjustment and payment of the increase in costs directly resulting therefrom. Article 4 of the contract provided as follows:

Changed conditions. Should the contractor encoun. ter, or the Government discover, during the progress of the work, subsurface and (or) latent conditions at

92 C. Cls. Reporter's Statement of the Case the site materially differing from those shown on the drawings or indicated in the specifications, the attention of the contracting officer shall be called immediately to such conditions before they are disturbed. The contracting officer shall thereupon promptly investigate the conditions, and if he finds that they materially differ from those shown on the drawings or as indicated in the specifications, he shall at once, with the written approval of the head of the department or his representative, make such changes in the drawings and (or) specifications as he may find necessary, and any increase or decrease of cost and (or) difference in time resulting from such changes shall be adjusted

as provided in Article 3 of this contract. 5. The site on which the marine hospital buildings were to be erected consisted of approximately eighteen (18) acres. During the entire progress under this contract a hospital was maintained on the site. The contract in suit provided for the construction of a main seven-story hospital building; a three-story nurses' home; a four-story male attendants' building; four two-family houses for junior medical officers; the remodeling of an existing boiler plant and kitchen building; the demolition of buildings on the site, which were supplanted by the new buildings; and the construction of concrete roads. The exterior walls of the new building were to be brick, and the interior walls were to consist chiefly of structural steel, reinforced concrete floors, and plastered walls.

6. Prior to receipt by plaintiff on September 18, 1933, of defendant's notice to proceed, plaintiff prepared its anticipated progress schedules. It expected to diligently prosecute its work to its completion within the 500-day period, but it was impossible to prosecute the work in an orderly manner according to its progress schedules due to the fact, as hereinafter shown, the defendant's contract plans covering the foundations for these buildings were insufficient and the plaintiff was required to perform additional work not contemplated by the original contract. In its performance of the original contract work, aside from its profit on pile foundation work at the nurses' home and the main building, plaintiff sustained a net loss of $172,480.39. This net loss necessitated financial aid, which was furnished by


Reporter's Statement of the Case Thos. G. Sperling & Co., Inc., in order to complete the work called for by the contract.

Plaintiff had planned to finish the minor buildings along with the construction of the main hospital building. The construction of the main building constituted the major portion of the entire contract. Plaintiff had scheduled its completion for November 1934, and completed it on December 11, 1935. Final completion under the contract was in large measure dependent upon the time the main building was finished, as certain contract work was to be performed after the main building was in operation.

All the work called for by the contract was subcontracted by plaintiff, which subcontracts were estimated at a total of $1,875,714. This last sum included $27,000 for general conditions, and $29,361 for surety-bond premium. The contract price of $1,957,426 exceeded the total estimated subcontracts by $81,712. This sum of $81,712 was left to cover overhead, profit, and other contingencies.

7. The plaintiff, through a subcontractor, commenced excavating for foundations, on notice to proceed, but it was soon discovered that the soil conditions at the nurses' home and the main building sites were such that foundations prescribed by the contract drawings consisting of ordinary reenforced concrete footings resting on the soil were insufficient to sustain the weight to be put upon them. Tests made by the plaintiff indicated clearly the need of pile foundations for these buildings. The defendant's officials were at first unwilling to make a change and ordered plaintiff to proceed with the work, which plaintiff did, and considerable work was performed in accordance with the original plans.

During the period between October 6, 1933, and October 14, 1933, the plaintiff dug test pits to ascertain if the soil at a lower level was better suited to sustain the load of the buildings. Plaintiff also applied test loads on two different bottoms to determine if the soil would withstand the load of the buildings without settlement. Further experiments were made both by the plaintiff and the defendant, and the plaintiff continued to urge upon defendant the use of pile foundations. Finally, after plaintiff had installed a 92 C. Cis. Reporter's Statement of the Case considerable quantity of concrete and a substantial part of the wood forms for the footings and reenforcing rods, the defendant ordered the work discontinued, and after further investigation, asked plaintiff for a bid for concrete pile foundations in accordance with new specifications. February 5, 1934, the Assistant Secretary of the Treasury advised the plaintiff that its bid was accepted as an addition to the original contract. Plaintiff performed this work, was paid the contract price for it. and made a profit of $14.215.82.

The plaintiff promptly proceeded with the work necessary to install pile foundations for the nurses' home and the main building. The work heretofore done on the foundations had to be ripped out leaving the site in an unworkable state and plaintiff had to remove about 18.000 cubic yards of soil from the excavated site in addition to that required under the original contract, the concrete footings had to be extended to a greater depth, and much other work had to be performed.

There were other delays besides that caused by the change in the foundation plans. Some of these delays were unavoidable and not the fault of either party, and on account of them, especially on account of the delay due to the change of design of the foundations, the defendant granted an extension of 383 days for the period from September 25. 1933, to October 14, 1934. This did not include 65 days afterwards granted on account of delay in releasing the old laundry building.

No liquidated damages were assessed against plaintiff.

8. A Special Agent of the Federal Bureau of Investigation made an investigation of the items claimed in plaintiff's petition and his report thereon was introduced in evidence by defendant. The agent particularly investigated the matter of delay and overhead. After considering this report and all the other evidence pertaining to the matter of cost of delay, and total expenses of overhead, the court finds that plaintiff incurred additional costs and expenses in the total sum of $177,908.14 in the performance of the original contract work because of the delay of 268 working days due to the faulty design of the original plans for the founda

« PreviousContinue »