Full opinion text
LARAMORE, Judge. Plaintiff, a prime contractor with the Corps of Engineers, seeks to recover damages it incurred because of a work stoppage of 38 days brought about by picket lines established by certain labor unions around the Plattsburgh Air Force Base, Plattsburgh, New York, the work site of the contract here in issue. Plaintiff contends that the Government is liable for damages under either Article GC-10 of the contract, Article GC-ll of the contract, or because of an alleged breach of the contract by defendant. The alleged breach is that the Government was responsible for the work stoppage because it utilized civilian personnel in the operation of two boilers in the central heating plant while two additional boilers were being constructed by plaintiff’s subcontractor. Both plaintiff and defendant rely on the facts as recited by the Armed Services Board of Contract Appeals in its decision of March 16, 1960. The Board’s recital of facts is long and elaborate, but since neither side seem to agree on what was stated by the Board, said facts are hereinafter set forth in detail as the facts upon which plaintiff and defendant base their respective motions for summary judgment. “Appellant’s two contracts were part of the program for the construction of Plattsburgh Air Force Base, which is located on the shore of Lake Champlain near Plattsburgh, New York, about 26 miles from the Canadian border. The ‘old’ part of the Air Base on the lake side of U. S. Highway No. 9 had formerly been Army Barracks, but at the end of World War II it had been made available for civilian use, and it was being occupied by Champlain College when this site was selected for a Base of the Strategic Air Command in the early 1950’s. From several standpoints it was a Base of unusual importance, and its construction at the earliest possible date was considered of the utmost importance to national defense. The construction program for the Air Base included the renovation of the old facilities and the construction of many new facilities on the other side of Route 9. This appeal relates to the new construction part of the Base only. Plans called for the construction of the Base, the manufacture of bombers and the training of Air Force personnel simultaneously and for the activation of the Base in the summer of 1955, such activation to be piecemeal as the various new facilities became completed to the point where they were usable. “The Army Corps of Engineers was designated as the ‘construction agency’ to construct Plattsburgh Air Force Base for the Strategic Air Command (SAC) of the Air Force as ‘using agency’. Contracts for the construction of the Base were awarded and administered by the crops of Engineers through its New York District, which came under the jurisdiction of the North Atlantic Division. The District Engineer, New York District, was the contracting officer for the contracts, and he was assisted in the administration of the contracts by the Resident Engineer and his staff at Plattsburgh. The project was financed with Air Force construction funds that were allocated to the Corps of Engineers by the Air Force. The Air Force had an Air Force Installations Representative (AFIR) who spent more than 60 percent of his time on the project during the construction of the Base, and there was constant liaison between the Corps of Engineers as construction agency and the Air Force as using agency. Before completion of the construction program the Base was activated and came under the command of a Base Commander. The Air Force chain of command was from the Base Commander through Headquarters, Eighth Air Force, Westover Air Force Base, Massachusetts, to Headquarters, United States Air Force (Hq., USAF) in Washington, D.C. On some matters relating to the construction program there was direct communication between the AFIR and the office of the Assistant Chief of Staff, Installations, USAF, in Washington. “The basic policies and fundamental concepts of responsibilities under which the Corps of Engineers performed construction for the Air Force are set out in a joint Army-Navy-Air Force regulation entitled ‘Construction, Air Force contract Construction’ numbered AR 415-11 and AFR 88-3. Such regulation makes the Air Force responsible for ‘surveillance’ of the construction work, which includes on-the-site observation or inquiry by the AFIR without duplication of the functions of inspection and contract administration which are the responsibilities of the construction agent. “Air Force Regulation 88-9 dated 31 August 1954, as amended on 6 December 1954, entitled ‘New Construction, Transfer and Acceptance of Facilities Constructed for the Air Force’, established the Air Force policy, procedures and responsibilities in the transfer and acceptance of real estate facilities constructed for the Air Force. Pertinent provisions of such regulation are as follows: “ ‘4. Transfer Document. Department of the Army ENG Form 290, “Transfer of Construction,” 1 April 1952, is authorized and will be used in all instances for the transfer of facilities constructed for the Air Force. * * * “ ‘5. Types of Acceptance. The extent of acceptance of facilities by the Air Force will be governed by the conditions attendant to the transfer. Determinations as to the extent of acceptance involved and appropriate procedures to be followed will be based on the following classifications: “ ‘a. Accountability Acceptance. Accountability acceptance establishes complete ownership of the facilities by the Air Force and custody by the using agency under Air Force jurisdiction. Facilities will be accepted for Air Force accountability when determination has been made that the construction is in accordance with the contract plans and specifications and construction deficiencies, observed during the transfer inspection and listed on the ENG Form 290, have been corrected or a certification placed on the form by the construction agency, or the contractor when the work is performed under an Air Force contract, acknowledging the validity of the deficiencies and assuring correction as an integral part of the contract. Accountability acceptance will be evidenced by the signature of the appropriate installations commander and installations engineer on the ENG Form 290. “ ‘b. Conditional Acceptance. When a satisfactory agreement cannot be reached with the construction agency as to the validity and correction of deficiencies considered to be a part of the construction contract, the AFIR will determine whether the facilities will be accepted by the using agency on a conditional basis. Upon reaching a satisfactory agreement the facilities will be accepted for accountability of the Air Force as outlined in “a” above. “ ‘c. Beneficial occupancy. Beneficial occupancy constitutes a use of facilities, or portions of facilities, by Air Force personnel after the facilities have been completed to the point where they are capable of accommodating their assigned mission but not completed to the level required by the plans and specifications. Air Force policies, procedures in the negotiation of agreements, and responsibilities relative to beneficial occupancy use of facilities are contained in AFR 85-17/ “It will be noted that paragraph 5c, AFR 88-9, refers to AFR 85-17 for policies and procedure on ‘beneficial occupancy/ The latter regulation dated 30 July 1952 and amended 1 April 1953 is entitled ‘Installations — General, Beneficial Occupancy’. Pertinent provisions are as follows: “ ‘2. Policy. The extent to which Air Force personnel and organizations are assigned to use real estate and real property facilities under beneficial occupancy agreements will be held to a minimum and will be governed by the following prime considerations: “ ‘a. Urgency of the need for the real estate and facilities in the continuance or support of the using command. “ ‘b. Capability of facilities to meet shelter and operational requirements. “ ‘c. The degree of caretaking and protection responsibilities which must be assumed by the Air Force. “ ‘3. Definitions. For the purpose of this Regulation, the following definitions of beneficial occupancy will apply. ***** “ ‘b. New Construction. Occupancy for use of real property facilities prior to physical completion or formal acceptance of the facilities from the construction agency or contractor by the Air Force. (NOTE: Newly constructed facilities used under beneficial occupancy agreements usually provide only minimum shelter and operational needs which will be progressively completed to the requirement level of the plans and specifications before being formally accepted by the Air Force.) “ ‘4. Procedure. Occupancy and use of real estate and real property facilities by Air Force personnel and organizations prior to conclusion of agreements, acquisition proceedings, or completion of construction will be subject to the following actions: * * * * * ; “ ‘b. New Construction. The date on which Air Force personnel or organizations may occupy and use any real property facilities, or portions of facilities, prior to completion of construction will be determined jointly by the major air commander who will assume jurisdiction of the facilities when formally accepted by the Department of the Air Force, the chief of the construction agency or his authorized representative, and the appropriate Air Force installations representative. “ ‘5. Agreements. The major air commander who will assume jurisdiction of real estate and real property facilities, which are under negotiation for lease or acquisition, will establish by agreement with the Chief of Engineers, Department of the Army, or his authorized representative, the conditions under which Air Force personnel and organizations are to be assigned for beneficial occupancy pending formal acceptance by the Air Force upon completion of negotiated agreements or acquisition proceedings. Similar agreements will be made with the chief of the construction agency or his authorized representative, or the contractor when construction is performed by the major air command, for beneficial occupancy of real property facilities being constructed for the Air Force. The major air command concerned will be responsible for coordinating the availability of funds, personnel, supplies, equipment, and the facilities in determining an occupancy and use date. “ ‘6. Prohibitions. The following prohibitions pertain to beneficial occupancy and use of real estate and real property facilities by Air Force personnel and organizations: ***** “ ‘b. Construction. Newly constructed facilities will not be formally accepted from a construction agency or from the contractor for Air Force accountability until the facilities have been inspected by Air Force representatives as provided by AFR 85-5, and “‘(1) Approved for full compliance with the terms and requirements of the contract, or “ ‘(2) An agreement has been made which legally binds the contractor to complete the facilities and/or correct the deficiencies, noted at the time of beneficial occupancy, to comply fully with the terms and requirements of the contract without additional charge to the Government. “ ‘c. Use of Funds and Resources. Funds and resources specifically authorized for construction will not be augmented by any other appropriated funds or resources of the Air Force for work which is to be performed by the construction agency and contractor as a part of the construction contract, or which is over and above the standards established by the construction directive. Likewise, funds and resources specifically authorized for rehabilitation and alteration of leased facilities will not be augmented by any other appropriated funds or resources of the Air Force.’ “The first Plattsburgh Air Force Base contract awarded to appellant was Contract No. DA 30-075-ENG-6009 dated 22 January 1954 for 167 items of building and utility construction at a total contract price of $8,705,448. Item 8 was the construction of a Base Maintenance Shop at a price of $450,000. “Item 10 was the construction of a Central Heating Plant at a price of $1,000,000. The Central Heating Plant was to provide heat for all the new buildings being constructed at the Base, including the buildings being constructed by other contractors as well as the buildings constructed by appellant. It was a modern type of high pressure circulating hot water system whereby water under high pressure was heated to 375® F by boilers in a central plant and circulated to the various buildings to provide radiant heating by means of pipes in the floors. A principal part of the central heating system was the boilers which were fired by fuel oil. The system included also the oil burners, feed water system, water softening equipment, pumps, valves, other auxiliaries, and the distribution system. One feature of the system was the automatic controls to be operated electrically. The central heating plant covered by appellant’s contract included two boilers which were to be housed in a building to be constructed by appellant having sufficient space for four boilers, as it was contemplated that the heating plant would be expanded as additional buildings were constructed. “Contract No. 6009 specified various completion dates for the items to be constructed thereunder, ranging from 181 days to 615 days after receipt of Notice to Proceed. It provided for completion of the Central Heating Plant within 585 days after Notice to Proceed, which established the original completion date of the Central Heating Plant as 9 September 1955. “Contract No. 6009 contains the standard provisions customarily included in lump sum military construction contracts, including the standard ‘Changes,’ ‘Termination for Default — Damages for Delay — Time Extensions,’ ‘Disputes,’ ‘Materials and Workmanship,’ ‘Permits and Responsibility for Work, Etc.,’ ‘Notice to the Government of Labor Disputes,’ ‘GC-8. Protection of Material and Work,’ and ‘GC-9 Protection of Existing Structures, Utilities, Work and Vegetation.’ The two clauses of the contract on which appellant bases its claim are quoted as follows: “‘GC-10 POSSESSION PRIOR TO COMPLETION: The Government shall have the right to take possession of or use any completed or partially completed part of the work. Such possession or use shall not be deemed an acceptance of any work not completed in accordance with the contract. If such prior possession or use by the Government delays the progress of the work or causes additional expense to the Contractor, an equitable adjustment in the contract price and/or the time of completion will be made and the contract will be modified in writing according * * “ ‘GC-11. SUSPENSION OF WORK: The Contracting Officer may order the Contractor to suspend all or any part of the work for such period of time as may be determined by him to be necessary or desirable for the convenience of the Government, unless such suspension unreasonably delays the progress of the work and causes additional expense or loss to the Contractor, no increase in contract price will be allowed. In the case of suspension of all or any part of the work for an unreasonable length of time causing additional expense or loss not due to the fault or negligence of the Contractor, the Contracting Officer shall make an equitable adjustment in the contract price and modify the contract accordingly. An equitable extension of time for the completion of the work in the event of any such suspension will be allowed for the Contractor, provided however, that the suspension was not due to the fault or negligence of the Contractor. Provided, further, that no suspension will be ordered or adjustments made under this paragraph for delays arising as the result of changes ordered or as the result of changed conditions encountered under the respective articles relating to Changes and Changed Conditions or as the result of any delays for such an extension of time as may be granted under the Delays-Damages Article of this contract.’ “At the same time that appellant was performing Contract No. 6009 other contractors were constructing buildings at Plattsburgh Air Force Base which were a part of the same construction program as Contract No. 6009, and the Central Heating Plant being constructed by appellant was designed to provide heat for the buildings being constructed by other contractors as a part of the same construction program. Among the buildings being constructed by other contractors were dormitories and mess halls for the accommodation of troops. Before the Base could be activated and troops brought in, the dormitories and mess halls had to be ready for use and provided with heat from the Central Heating Plant. “Contract No. DA 30-075-ENG-6581, the other contract involved in this appeal, is dated 31 January 1955 and provides for the construction of additional buildings and utilities at a contract price of $5,208,298.85. Unlike Contract No. 6009 which was a part of the Air Force FY 1953 construction program, Contract No. 6581 was a part of the Air Force FY 1955 construction program and cited FY 1955 funds for payment. It contained the same standard provisions as Contract No. 6009. “The additional buildings to be constructed under the FY 1955 program required an addition of two boilers to the Central Heating Plant to provide heat for the increment of buildings, and in view of the urgency of the project, it was necessary that work on the two additional boilers be started before the work on the original heating plant was completed. Ordinarily the two additional boilers would have been covered by a new contract placed by advertising for bids, but since boilers 3 and 4 had to be started before boilers 1 and 2 were completed and it was not feasible to have two contractors working simultaneously on the same heating plant, the contracting officer obtained authority to contract for the two additional boilers by negotiating a modification of Contract No. 6009. The two boilers were added to the work under such contract by Modification No. 9 dated 12 April 1955 increasing the price in the amount of $599,875 and extending the completion date of the heating plant 90 days, but without any change in the completion date of boilers 1 and 2. “In the construction of a large project it is customary for the Corps of Engineers to enter into construction contracts with general contractors who is turn subcontract portions of the work to specialty contractors. The building and construction industry has the tradition of being highly organized by the building trades unions which are among the strongest in the American labor movement. Although the construction industry is essentially local in character, the local unions are organized into nationals and internationals, and the national unions in the AFL-CIO are banded together at the national level in a building and construction trades department. The construction contractors likewise are organized into a variety of national associations. Since the construction industry is highly organized on a national basis on both sides, the result is that, although collective bargaining agreements are negotiated locally and apply only to the particular area, such agreements have a standardized form with standard “boilerplate” clauses. A construction contractor or subcontractor does not have access to the local pool of skilled union labor unless it enters into or becomes a party to a standard form of local collective bargaining agreement with the various union locals which represent the various crafts from which it draws labor. “The building trades unions are strong in New York State, and all the construction contractors and subcontractors performing work at the Plattsburgh Air Force Base site employed exclusively union labor. Qualified non-union labor was not available in the area. The Government Trial Attorney makes the point that appellant did not inform the Government of either the existence or the terms of any labor agreement applicable to appellant or its subcontractor. Such a contention ignores the fact that the Corps of Engineers was thoroughly sophisticated in the labor practices and labor relations problems of the construction industry. Although the Corps of Engineers followed the policy of attempting to insulate itself from any direct dealings with the labor unions by requiring that all such dealings be between the union and the contractor, it had labor relations advisers who interested themselves in the problem when an actual or potential labor dispute threatened to delay performance of a contract. One of the standard provisions of construction contracts, including appellant’s contracts, is the ‘Notice to the Government of Labor Disputes’ clause which requires that the contractor notify the contracting officer whenever an actual or potential labor dispute threatens to delay timely performance of the contract. It was unnecessary for appellant to give the contracting officer specific information as to the existence and terms of the applicable standard form collective bargaining agreements when the Corps of Engineers was already so well acquainted with the labor practices of the industry. “Appellant subcontracted the construction of the Central Heating Plant to Frederick Raff Company, Inc., (hereinafter referred to as ‘Raff’), which was a firm skilled and experienced in the construction of heating plants with automatic equipment. Raff became a party or participant in standard form collective bargaining agreements with the union locals representing the various crafts of labor required for the construction of the heating plant, including the electricians’, the operating engineers’ and the plumbers’ and steamfitters’ unions. “An example of such a collective bargaining agreement is the agreement between ‘the Plumbing and Heating Contractors in the city of Plattsburg, N. Y./ as Party of the First Part, and ‘Local #497 Affiliated with the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada,’ as Party of the Second Part. Although Raff did not affix its signature to the written document, it accepted and became a party to or participant in the agreement. Pertinent provisions of the agreement are as follows: “ ‘Preamble “ ‘Whereas, the Party of the First Part is engaged in the Plumbing and Heating and Pipe Fitting work in the Jurisdiction of the Party of the Second Part and in the performance of such work require the service of competent and qualified Journeymen of the United Association and, “ ‘Whereas, the Party of the Second Part is affiliated with the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, of the American Federation of Labor, and has in its. membership throughout the United States and Canada, Journeymen competent and qualified to perform work coming within its Jurisdiction of work, and “ ‘Whereas, the Parties hereto desire to establish uniform hours of' Labor and uniform working conditions for the Journeymen and Apprentices of the Party of the Second-Part, as a National guide or form under which they are to be employed by the Party of the First Part, and further, to encourage closer cooperation and better understanding between employer and employee of the Plumbing, Heating and Pipe Fitting Industry to the end that a satisfactory continuous and harmonious labor relationship will exist between,, both Parties to this agreement. ***** “ ‘Article 1, Scope “ ‘A — * * It is the duty of the Parties to this Agreement to enforce the conditions set forth hereunder and any violation will be subject to discipline through the Joint Arbitration Board or Umpire hereinafter provided for. “ ‘B — Local members of the Party of the First Part hereby Agrees to “Run a UNION SHOP” under wages and working conditions as hereinafter outlined. “ ‘C — In order to avoid jurisdictional controversies with other Trades, the Party of the Second Part will insist that the Party of the First Part procure and embrace in their job contracts and specifications all of the piping, fixtures, appurtenances and appliances that are necessary to make a complete Plumbing or Pipe Fitting installation, coming under the United Association jurisdiction of work. “ ‘D — It is further agreed that the Party of the First Part will include in their contracts maintenance of all temporary heating of all installations until the job has been finally completed. That hours of labor on temporary heat will be as follows: During the working day, mechanics on the job will maintain temporary heat. At nite one mechanic will work from 6:00 PM until midnight then another mechanic from midnight until 6:00 AM. These hours shall be worked at straight time. On Saturday and Sunday the following time schedule will be kept in reference to the maintenance of temporary heat: One mechanic will work from 8:00 AM Saturday to 4:00 PM, then another mechanic will work from 8:00 PM. Saturday until 4:00 AM Sunday. Another mechanic shall then work from 8:00 AM Sunday until 4:00 AM Monday. This is a total of 46 hours a week for temporary heat maintenance which may be worked at straight time. All hours above 46 per week must be paid at double time. “ ‘Article V — Assignment of men “ ‘It is understood that the Party of the First Part will use members of the Party of the Second Part on all work coming under the jurisdiction of the United Association of Journeymen Plumbers and Steam Fitters of the United States and Canada, subject to the following1 regulations: * # # * * “ ‘1. Inasmuch as the Labor-Management Relations Act, 1947, has denied the right of the Union effectively to discipline a member who is an employee of a Company for violation of the Union’s constitution and by-laws, and has removed the Union’s right, even if said member was declared not to be in good standing because of misconduct, to require the Company to suspend or discharge such employee, thus effectively hampering the Union’s ability to carry out the Provisions of this agreement. “ ‘2. IT IS STIPULATED AND AGREED that the Union, its officers, agents and members shall not be held, liable in any manner whatsoever for any strike, slowdown, work stoppage or any other form of action which results in delay or stoppage of work or production; nor will the Union be held liable for the unauthorized acts or activities of its officers, agents or members. The union, however, will use its best efforts to prevent same. “ ‘3. The Company may, subject to the grievance procedure herein provided, discipline or discharge any employee with respect to such work stoppage if he is at fault, and this shall constitute the Company’s sole and exclusive remedy for such action. “ ‘4. This clause is the essence of the contract and one of the main considerations motivating [sic] the Union in entering into this agreement, and, in the event the Company or any of its representatives files any action in law or in equity for any of the things therein stipulated or induces or encourages any other person, association or corporation to do the same, this agreement may be terminated by the Union upon notice in writing to the company, irrespective of any term or condition, written or implied in this agreement. “ ‘5. The Company further agrees to execute through its proper officers any release of claim or right of action or actions promptly upon request of the Union for the things provided for in this section.’ “Before proceeding further, it should be pointed out that this appeal involves a bitter dispute with the labor unions in which neither the Government nor appellant has defended the position of the unions, and this Board does not have the benefit of having heard the union’s side of the controversy. No representative of a union testified at the hearings before the Engineers Board or this Board, ¡and it is doubtful that any of the witnesses could be considered friendly to the unions. While the Board is required to decide the facts involved in the dispute between the Government and appellant on the basis of the evidence in the record, the Board’s decision, of course, is not binding on the unions who were not parties to or represented in this appeal. The Board has no reason to believe that representatives of the unions could have supplied any testimony that would have been helpful to the Board in reaching a correct decision on this issue in this appeal. However, the Board feels constrained to exercise caution in making findings derogatory to the union or expressing any opinion that the unions violated the law, when the nature of the proceeding is such that the unions have not had an opportunity to defend themselves. “Plans for the activation of Plattsburgh Air Force Base were firmed up in the summer of 1955, when it was determined -that troops would start arriving in September, and beneficial occupancy dates (BODs) were established for the dormitories and mess halls then under construction. It was necessary that the heating plant be operable by that time to provide heat for the new dormitories and mess halls, and appellant was called on to work ‘around the clock’ to get the boilers operable by the established occupancy dates. Although the original completion date for the first two boilers was 9 September 1955, there had been delay in completion due to various changes in specifications, as a result of which the completion date of the Central Heating Plant, including boilers 1 and 2, had been extended by Modifications Nos. 4, 5 and 6 for 97 days or until 15 December 1955 .for the original heating plant and 15 March 1956 for boilers S and 4. Furthermore, proceed orders (‘NYB orders’) had been issued involving additional changes and delays in completion but had not yet formalized as change orders. In particular, there had been a change in the instrumentation for the automatic controls, which resulted in delay in delivery of the revised instruments. It was decided to start operating the first two boilers manually before completion, using operating personnel to be furnished by the Subcontractor who was constructing the heating plant. Although an operating agreement might have been entered into with another contractor, it was considered preferable that the operation of the boilers be under the control of the same contractor that was handling the construction. “The contracting officer’s representative dealt directly with Raff in negotiating an operating agreement. Raff’s idea was to submit a lump sum price for the operating agreement, but the contracting officer’s representative asked for a proposal based on a unit price per week, as the duration of the operating agreement was unknown. The contracting offleer’s representative testified that he asked the subcontractor to submit a proposal on a weekly price basis and asked that the price breakdown be based on operating for 300 days, as in his opinion this would tend to result in a lower price per week than a shorter operating period. However, he did not make any representation whatsoever as to how long the operating agreement would run. Raff’s vice-president who handled the negotiations for Raff testified that he got the impression from what was said by Government representatives that the operating agreement would run for about a year and that an operating agreement for a shorter period was being prepared because of the nonavailability at that time of sufficient funds to cover the operations for the full period contemplated. We find that the Government representatives did not make any representation as to how long the operating agreement would remain in effect, other than what may have been inferred by the Raff representative from the Government’s request for a price breakdown based on a 300-day operation. Indeed, it seems unlikely that the contracting officer and the Government representatives who participated in the negotiation of the operating agreement knew any more about how long the operating agreement would run than did appellant or Raff. “On 11 August 1955 Raff submitted a proposal to operate the Central Heating Plant at a price of $5,800 per week ‘until such time as the United States Air Force definitely takes over the operation,’ stating further: " ‘We also agree in this proposal to train any and all personnel which the United States Air Force may require to be trained for future operation of the Central Heating Plant after they have assumed the responsibility of operation.’ “On 8 September 1955 the contracting officer issued the contractor a proceed order, designated NYB-58, which referred to the Raff proposal of 11 August 1955, inclosing copies of the specifications for the operation of the heating plant, and stated: “ ‘In accordance with Article 3, “Changes” of the contract, you are hereby directed to proceed with the operation and maintenance of the Central High Temperature Hot Water Heating Plant and Distribution System on a weekly basis commencing with the satisfactory start-up date of plant operations, and in accordance with above Specifications for Supplemental Agreement. * •» * * * “ ‘ * * * Plant operation and maintenance under this directive shall continue for an indefinite period and until such time as terminated by the Contracting Officer.’ “The operating agreement was formalized as Contract Modification No. 23 dated 8 September 1955, but executed in February 1956, providing for the operation of the heating plant for an estimated period of 10 weeks at a price of $6,380 per week, which was shown for purpose of allotment of appropriated funds as an increase in the contract price of $63,800. Air Force construction funds could not be used for the operation of the heating plant, and the $63,800 allotted by Modification No. 23 for the operation of the heating plant were Air Force ‘Maintenance and Operations’ (M &0) funds and represented the entire amount of funds allocated by the Air Force to the Corps of Engineers for the operation of the heating plant. The price of $6,380 per week represented the Raff price of $5,800 per week plus a 10% markup for the prime contractor. “Pertinent provisions of the specifications forming a part of Modification No. 23 are as follows: “ ‘These Specifications are for the operation and maintenance of Central High Temperature Hot Water Heating Plant and Distribution System, including the Utility Rooms in order to provide necessary heating facilities to the various buildings in accordance with the provisions of Contract No. DA-30-075-Eng-6009 with T. C. Bateson Construction Co. “‘1. GENERAL: It is the intent of this specification to secure the provision of all materials and labor necessary for the work outlined below: ‘“(a) The operation and maintenance of the Central High Temperature Hot Water Heating Plant and Distribution System, on a weekly basis, twenty four hours a day operation 7 days a week, shall commence with a satisfactory start-up date of plant operations and shall continue for a period of approximately ten weeks or until such time as terminated by the Contracting Officer. ***** “‘3. TYPE OF PLANT: ‘“(a) The Central Heating Plant consists of four (4) hot water, high pressure oil-fired boilers with all necessary auxiliaries and controls. At least one (1) boiler shall have been completed and ready for operation. Three (3) other boilers are in the process of construction with the installation of necessary auxiliaries. ***** “ ‘15. OPERATION AND MAINTENANCE: ***** “ ‘(a) Operation of Plant: “‘(2) The boiler, or boilers, completed at the time this contract commences will be put in operation to supply the buildings with high temperature, high pressure hot water for the normal building requirements. The other boilers presently under construction, after testing and “boil out” procedures have been completed, will also be placed in operation in order to furnish heat for the requirements of the building serviced by the distribution system. ***** “ ‘b. OPERATION AND MAINTENANCE: “ ‘(1) The Contractor shall, under this contract, operate and maintain the distribution systems now installed and any extension thereof which may be completed during the period of this contract. Specifically, the contractor’s responsibility shall originate at the Plant end of the Distribution Systems and terminate at the low pressure inlet and outlet connections on the steam and hot water converters in the various buildings connected to, or to be connected to, the High Temperature Distribution Systems. In those buildings which are heated directly by high temperature hot water the Contractor’s responsibility shall terminate at a point immediately inside the building but shall include the stop valves and automatic by-pass valves. The responsibility for the operation and maintenance of the low pressure piping, pumps, valves, regulating devices, radiators, utilization equipment, and all other appurtenances beyond the steam and hot water converters, and the piping and equipment beyond the automatic by-pass valves in those buildings without converters will rest with the Government after such facilities have been duely [sic] tested and operated as required under the terms of the construction contract now in force. “ ‘21. TRAINING OF GOVERNMENT PERSONNEL: The Contractor shall train personnel of the Government for the express purpose of substituting such personnel in the various job categories required to fully operate and maintain the Plant and High Pressure Distribution Systems.’ “At the time Raff started performance under the operating agreement only one of the boilers was in operable condition. None of the automatic controls had been installed, and electric service was by a temporary hook-up. Raff operated the heating plant with personnel who were members of the electrician’s operating engineers’ and plumbers’ and steamfitters’ unions. At that time there was no established contract completion date on either boilers 1 and 2 or boilers 3 and 4. “About 1200 Air Force troops arrived during September and started occupying the new facilities. After spending about a week in drying out refractories, Raff started operating the first boiler in providing heat for the newly occupied buildings on 26 September. When the second boiler was completed to the stage where it was operable, Raff started operating it also in providing heat for the new buildings occupied by Air Force personnel. Raff operated boilers 1 and 2 in providing heat for six dormitories and two mess halls that had been constructed by another contractor and had been taken over for beneficial occupancy by the Air Force. In no instance were the boilers operated to provide heat for any buildings under construction by appellant or any other contractor. The workmen employed by Raff to operate the heating plant were obtained from the same hiring hall and members of the same unions as workmen employed by Raff in the construction of the heating plant. “The Air Force recruited civil service personnel for the operation of the heating plant which were to be trained by appellant pursuant to the operating agreement. The training program started on 16 October. The Air Force complained that the training of civil service personnel was not proceeding satisfactorily, as a result of which it was improved, and by 15 December the civil service personnel were adequately trained and qualified to take over the operation of the heating plant. “The operating agreement could not be continued in effect for longer than ten weeks without an allocation of additional M&O funds from the Air Force, and it was readily apparent that the heating plant, inclusive of boilers 3 and 4, would not be completed by that time. Rumors began to spread, and the unions became uneasy as to what would happen when funds for the operation of the heating plant were used up. On 24 October the Air Force Installations Engineer at Plattsburgh advised the Resident Engineer that the operating agreement would not be extended. As a result of the agitation over what might happen if the Air Force took over the operation of the first two boilers with civil service personnel before completion of the entire heating plant, labor relations advisers from the New York District and the North Atlantic Division visited Plattsburgh on 3 and 4 November and had talks with the union representatives. “Following this visit, there was a conference at the New York District on 7 November which was attended by Air Force officials from Plattsburgh and SAC Headquarters, as well as the labor relations advisers and other Corps of Engineers officials. The New York District labor relations advisers gave the opinion that the unions would not “stand for” the Air Force taking over the operation of the first two boilers with civil service operators before boilers 3 and 4 in the same building were completed. Later on the same day Army Engineers and Ail' Force representatives had a meeting with the vice-president of Raff. In response to inquiries he expressed the opinion that, boilers 1 and 2 could be completed and civil service operating personnel trained by the end of 15 December. “As an outgrowth of the 7 November conference the New York District Engineer wrote a letter dated 15 November 1955 addressed through channels to the Officer in Charge, USAF Installations Representative Office, North Atlantic Division, New York, New York, stating: “ ‘1. At a meeting held in this office on 7 November 1955 with representatives from Plattsburgh AFB, Hq. SAC, and North Atlantic Division, Corps of Engineers, the following data was given the Air Force to-provide information on which to. base its decisions concerning the operation of the Central Heating Plant: “ ‘a. The first two boilers in the Central Heating Plant will be completed by 15 December 1955. The second two boilers are scheduled for completion on 30 March 1956. “ ‘b. The cost of operating the Central Heating Plant under the present arrangement is $6,380.00 per week plus the minimum amount that must be added for Government costs which is $185.00 making a total of $6,565.00 per week. The money presently available for this work, $69,600.00, will cover the cost of operating the aforementioned plant until 9 December 1955. An additional $6,565.00 will be required to continue the operation until 15 December 1955. If it is decided that the present contractor shall maintain the Central Heating Plant and the HTHW distribution system until the completion of all four boilers scheduled for 30 March 1955, [sic] then additional funds in the amount of $105,040.00 will be needed, which amount includes no contingencies. “ ‘c. The Labor Specialists of this office and the North Atlantic Division have contacted the International Representatives of the Unions involved in the operation of the Central Heating Plant and have been informed by them, that they will insist upon operating the Central Heating Plant with construction mechanics until all four boilers have been completed. Operation of the plant by Civil Service personnel upon completion of the first two boilers will lead to strike involving the entire Base. “ ‘2. In review of the above facts there are only two prudent courses which this office can suggest to the Air Force: “ ‘a. The first is to attempt to convince the Unions involved to reverse the stand that they presently take concerning the employment of Civil Service personnel in the Central Heating Plant after acceptance of the first two boilers. Since every possible effort has been made at this level to persuade the Unions to accept the operation of the first two boilers by the Air Force, it is recommended that any further contact with the Unions be made at the very highest possible level. “ ‘b. The other suggested course of action is the obvious one which would require the authorization of the expenditure of additional funds in the amount of $105,040.00 plus contingencies, to operate the Plant until the four boilers are completed.’ “The District Engineer did not receive any reply to his 15 November letter except telephone advice that the Air Force would not make funds available for the operation of the heating plant by the contractor beyond 15 December. “Aside from the above-quoted letter of 15 November the contracting officer did not at any time ask for funds to continue the operating agreement beyond 15 December. Obviously the contracting officer could not extend the operating agreement beyond that date without funds that could be used for such purpose, and obviously the heating plant had to continue in operation after 15 December to provide heat for the newly occupied buildings. Without making any specific request for funds for contractor operation after 15 December, the 15 November letter stated in effect that additional funds would be required for contractor operation after 15 December and that operation of the heating plant by civil service personnel would lead to a “strike” involving the entire Base unless the unions were persuaded to change their position, and that, since every possible effort had been made at the contracting officer level to persuade the unions to accept operation by Air Force civil service personnel, any further contact with the unions should be made ‘at the very highest level.’ “The AFIR testified that the District Engineer asked for additional money to operate the heating plant and that this ‘information’ was passed on through SAC to Hq., USAF. The District Engineer testified that he did not ask for any more money than what was required to operate to 15 December. Apparently the AFIR had reference to the 15 November letter when he said that the District asked for additional funds, as the record does not show anything else in the nature of a request for funds. “The decision for the Air Force to take over boilers 1 and 2 for operation with civil service personnel was made by the Air Force at a higher level than the Base Commander of the AFIR. Major General Lee B. Washbourne, Assistant Chief of Staff, Installations, USAF, played a major part in this decision. Appellant requested that the Government have General Washbourne present to testify at the hearing of the appeal, but General Washbourne has retired from the military service and could not be made available as a witness. However, the Government offered in evidence three memoranda prepared and signed by General Washbourne, and these memoranda were admitted in evidence without objection by appellant. Due to the rotation of military personnel, the only individual in Hq., USAF who participated in the decision that could be made available as a witness was Chester J. Cooper, who testified as to his participation and on the basis of information received by him in Washington through official communications. “On 2 December the Office of the Assistant Chief of Staff, Installations, US AF, received a report on the operation of the heating plant which indicated that certain Air Force officials ‘had changed their minds about the effects of a strike at Plattsburgh, and now desired to give in to the threat of the strike.’ General Washbourne was strongly opposed to any such change in the plans to take over the operation of the heating plant on 15 December, but reported the matter to the Vice Chief of Staff, USAF. On the same day he dispatched a teletype message (TWX) to SAC Hqrs., which apparently ‘recommended’ that the operation of the heating plant with civil service personnel proceed according to plan. This TW X was coodinated with various interested offices of Hqrs., USAF, and was ‘cleared’ by the Vice Chief of Staff at 4 :,06 p. m. on 2 December. A Memorandum for Record concerning the TWX stated that on 28 November an officer in the Directorate of Procurement and Production and a labor relations adviser expressed the opinion to Mr. Chester J. Cooper that ‘in view of the facts that (1) the two boilers will become Air Force property on or about 15th of December, 1955, and (2) at which time the contractor and his employees have no further connection with these boilers, their work being completed, policy requirements to employ private contractor’s employees for this work no longer exists. “Some of the considerations which influenced the decision of the Assistant Chief of Staff, Installations, and his staff are indicated by the following excerpts from the testimony of Chester J. Cooper, a consultant on heating and fuels in the Office of the Assistant Chief of Staff, Installations : “ ‘A. My understanding was that the plant was in temporary operational condition, was being operated by the contractor, simultaneously training our Civil Service personnel to prepare them to take over on the 15th of December, as we normally do. We operated our own bases with Civil Service, and it was so planned at that time. ****** “ ‘A. Well, we felt that the cost of operating that plant, I do not remember the figures now, but I believe it was somewhere probably around $6,000, roughly. Normally these plants — by contract operations, the majority of them will run somewhere between, I would say, $80,-000 a year and $100,000 a year, and that would mean that dividing that by 52, it would probably mean roughly $2,000 a week, and this ran much higher. We thought it was quite high at the time. ****** “ ‘Q. Mr. Cooper, I notice here in Government’s Exhibit B, that the words “of the newly completed Base Heating Plant” in the third line of paragraph 1 — now, you all weren’t under the impression in Headquarters, were you, that these two boilers were completed and had their electrical connections and everything installed ? “ ‘A. No. I think we realized it was not totally completed, however I will say this, that when a plant is ready to be turned over to us for operation, although a plant may not be completed, we accept it under what we call our Form 290, and if the plant is not completed at that time we note the deficiencies on the Form 290 and we usually always take them over with the deficiencies, and we operate the plant with those deficiencies, and the contractor continues his work or comes in later and corrects the deficiencies or completes them at a later date. This was an operable plant, we would say — not totally completed, per se. “ ‘Q. Let’s examine that a minute. It was operable, but didn’t it require a good deal greater number of operators to operate it than it would, had it been complete with its electrical controls? “ ‘A. There is a diversity of opinions on that. Now my opinion is that although a plant is not totally instrumentized or not fully automatic, that we can operate it manually without greater personnel. * *' “Government representatives considered the cost of operation on the heating plant by the contractor as grossly excessive. In addition to the salaries of the civil service trainees, it was costing the Government $6,380 per week, compared to what was felt to be the normal cost of operation of such a plant of only about $2,000 per week. “On 7 December General Washbourne personally visited Plattsburgh and inspected the progress of construction and acquainted himself with the operation of the heating plant. He noted that there had been slippage in BODs for facilities required for the activation of flying elements, due to a serious labor shortage- and labor difficulties. “On 8 December General Washbourneheld a conference at Plattsburgh at. which time the operation of the heating-plant was discussed. This conference-was attended by the Base Commander, the Wing Commander, the AFIR, the-Resident Engineer and representatives of SAC and Eighth Air Force. A chart-on the wall in the Base Commander’s office showed the completion date of the-heating plant as 15 December, and it was-indicated at the conference that such completion date would be met. General Washbourne’s ‘trip report’ contains the-following statement concerning the heating plant: “ ‘A special effort has been made to place the central heating plant in operation with the initial two boilers, by 15 December. This plant has-been producing heat with lash-up-controls since early September, and no discomfort is being experienced due to continuing work on the second', set of boilers; however, a weekly operation charge of $6,300 to the contractor for operating the uncompleted plant is causing a severe drain, on the M&O funds available to SAC. The resident engineer stated that, the effort required for the contractor to turn this plant over to the station commander by 15 December would1, unavoidably drain skilled labor from-the five other critical buildings. whose BODs are critical to wing-activation. Having received assurances from the contractor that-this 15 December date would be met-on the heating plant, I hestitated to-change his request in order to protect the dates on the other buildings. Although the station commander has-Civil Service employees ready to-operate the plant beginning 15 December, he has been advised by the contractor that the local labor union-will strike that and other essential construction unless the operation of the plant is continued by contract, until completion of the supplemental contract for additional boilers. The local labor unions have repeatedly demonstrated their ability to shut down construction work at Plattsburgh whenever they decide to do so. The building is structurally complete, and when the initial boiler •contract is completed on 15 December, it would be logical for the Air Force to accept the building and operate the plant, while at the same time permitting the contractor to work in a roped-off portion of the •completed building on the second set •of boilers. This would terminate an apparently unreasonable contract operating cost, but would quite likely trigger off a work stoppage on other essential buildings.’ “On 8 December the contracting officer sent the contractor a telegram stating: “ ‘Confirming telephone conversation of 7 December 1955, you are notified that an inspection of the Central Heating Plant at Plattsburgh AFB leads this office to believe that the working force In this building is insufficient to complete the unfinished work on Boilers Numbers one and two by the contract ■completion date of 15 December 1955. You are therefore directed to •immediately review this situation .and to increase as necessary your working force and the working forces of your subcontractors, and to supervise these forces so as to assure ■completion of Boilers Numbers 1 and 2 including painting and clean up of the Boiler House containing Boilers Numbers 1 and 2.’ “The Base Commander had the Resi■dent Engineer arrange a meeting which was conducted by the Base Commander in his office on 15 December starting at •9:00 a. m. The meeting was attended by representatives of the local unions, the •contractor and the subcontractor, as well .as representatives of the Air Force and the Army Engineers. The purpose of the meeting was to make one last effort to avoid a strike. The Base Commander led off the meeting with a 45-minute talk explaining the importance of the completion of the Base and making a patriotic appeal to the union representatives not to deter national defense. He then attempted to impress on the unions that the Air Force had every right to take over the operation of the first two boilers upon their completion, emphasizing that the contract called for the completion of the first two boilers by 15 December, that it was an Air Force facility, that people had been trained to take over the operation of the first two boilers, and that the Air Force was going to take over as it had a right to do. Conceming his appeal to the union representatives, the Base Commander testified: “ ‘A. * * * I did most of my addressing to the kingpin of the labor union agents, a Mr. Floyd Donah, and his grievance was that his personnel, the plumbing and steamfitters union, could not possibly operate under the same roof with non-unionized Government civilian employees. I told him that these civilian employees would not be indulging in any construction whatsoever, that their only job was to operate the central heating plant. This did not sway him one iota.’ “The Base Commander stated that he did not have funds to continue the operation of the boilers by contract and that it was not possible to obtain the funds in the time available. Raff’s vice president attempted to meet this argument by offering to operate the boilers for a few days without charge until funds could be obtained. “The representatives of the electricians’, operating engineers’, and plumbers’ and steamfitters’ unions took the firm position that their men would not work with non-union men. The position of other union representatives was that their men would not cross picket lines. “The Base Commander announced that he had instructions from higher authority to take over the operation of the boilers at midnight. When it became clear to the Base Commander that the unions would not back down and that there was going to be a strike, he asked that there be no violence and that Government property be protected. “The meeting broke up at 11:20 a. m., and shortly thereafter SAC Hq. and Assistant Chief of Staff, Installations, were informed that the meeting had been unsuccessful and that the labor leaders had advised the Base that a complete walkout would be placed in effect early Friday, 16 December. Prior to 15 December the Air Force and the Army Engineers had made plans as to the action to be taken in the event of a strike, which included the protection of property on the Base by means of military police. On the afternoon of 15 December officers were alerted with a view to moving the SAC wing temporarily from Plattsburgh to Pine-castle Air Force Base, Florida, when the strike started. “Appellant’s General Superintendent was present at the 15 December meeting and expressed his opposition to the stand taken by the unions. After the meeting he told the Resident Engineer that the contractor could not be responsible for any resultant strike damage, and later in the day he phoned the contracting officer and asked that the heating plant contract be terminated. On the same day appellant’s superintendent sent the contracting officer a telegram and a letter stating that appellant would not be responsible for any damages caused by the operation of the heating plant by Government civil service employees and would not be responsible for any damages due to the anticipated “walkout of all our construction workers.” “On 15 December the contracting officer dispatched a telegram to appellant stating: “ ‘REFERENCE CHANGE NUMBER NY B58 CONTRACT 6009 YOUR RESPONSIBILITY TO OPERATE BOILER PLANT WILL CEASE AS OF TIME THIS OPERATION IS ASSUMED BY PLATTSBURGH AIR FORCE BASE REPRESENTATIVES AS DETERMINED BY COLONEL DUERSON MY REPRESENTATIVE AT PLATTSBURGH AIR FORCE BASE.’ “Immediately prior to and on 15 December 1955 appellant, through its subcontractor, was still working on the Central Heating Plant. Counsel for appellant and the Government have stipulated' that boilers 1 and 2 were ‘substantially-completed’ at that time. “The Air Force took over the Central Heating Plant from the Corps of Engineers between 11:00 and 12:00 p. m. on 15 December. There was a joint inspection of the facility, and the official transfer of the facility was accomplished by the execution of an Engineer Form 290 which described the transferred facility as ‘Construction of Central Heating Plant including Boilers 1 and 2’ and ‘Building No. 2658.’ The Base Commander and the Installations Engineer-signed the Form accepting the construction as in accordance with specifications,, etc. ‘except for deficiencies listed on the-back of the sheet.’ On the back of the-Form were listed 54 deficiencies. The-following are some of the more important, listed deficiencies pertaining to completeness: Various tests not made; flow motors, fuel oil storage system, zone pipi