III. ADMINISTRATION

The original chain of command developed by the Government for administrating these contracts started with the area office at Ellsworth Air Force Base, thence to the district office in Omaha, and finally coordinated by the field office in Los Angeles. The architect, Daniel, Mann, Johnson & Mendenhall & Associates, maintained their office in Los Angeles. The Ballistic Missiles Division of the Air Force had a field office here, and items of design would have to be checked through them by the corps. The architects, of course, worked for the Air Force, with only the review and approval of shop drawings handled by them for the corps. Shop drawings would be submitted by the contractor to the architect in Los Angeles. The Omaha district administers the A. & E. contract for shop drawing review. Shock test data would be submitted by the contractor to the local corps office, who in turn would submit it to Omaha, who in turn would submit it to the architect. Any required change would flow from the Air Force and their associated contractors to the architect, to the district office, to the local office, for implementation.

More recently, the CEBMCO office has been activated in Los Angeles. This placed all Titan I projects, to a certain extent, under one Corps of Engineers office. The Air Materiel Command took over for the Ballistic Missiles Division in the Air Force. Of course, even though these may be steps in the right direction, the attendant confusion resulting from such a switchover definitely has had its effect on the administration of these projects. That the organization and channels for handling changes and other such items are still cumbersome can readily be seen from the fact that a change generated by Martin or one of their associated contractors must go from themselves to the Air Force, to the architect, back to the Air Force, to CEBMCO, to the local area office, and then to us. This, of course, uses up a considerable amount of time, as well as needless administrative burden. That this system is cumbersome can readily be noted by comparing the dates on revised drawings which this office receives in connection with modifications. The date shown on the drawing as to the time the change was physically incorporated into it is as much as 78 days earlier than the date of the modification we receive. Modification No. 34 was dated July 1, 1960, but received by us on December 23, 1960.

Some modifications are submitted without a notice to proceed. We have no alternative in this case, of course, but to proceed on the original contract work and completely ignore such change until the notice to proceed is received. This, of course, creates an adverse psychological effect with both the general contractor personnel and the subcontractors and suppliers. The architect and the corps constantly withhold action on our submittals, anticipating a change order, which will, of course, require a revision in the submittal. This practice is universally denied by these agencies; however, a very recent example of this is in a letter from the corps dated January 13, 1961, which says a C-D action on certain antenna silo drawings has been taken because of the changes in a forthcoming modification. We do not deny the savings to the Government for preventing the installation of work which must then be removed, but we certainly must seek relief for the delay caused thereby.

We must spend much time in needless administrative work over interpretations of the contract, replying to and defending our positions on controversial items and otherwise devote our energies to activities which do not enhance the job. A good example of this is in connection with the integrated work schedule, wherein we are required under contract to have joint occupancy with the Martin associated contractors. Certain occupancy requirements were presented to us. In conference we notified the Government of many of the items which were tantamount to final completion of our portion of the work ahead of schedule and which could not be met at the early dates they had requested. We again point this out in a letter to the Corps of Engineers after they have incorporated these requirements into a schedule we had previously signed. Then we are continually faced with letters from the corps alleging that we have agreed to these requirements and that we should schedule our work accordingly.

There should be a greater effort on the part of the contract administrators to cut through or eliminate any of the redtape attendant with this program. All minor and petty submittals are required; such as, in connection with even the smallest subcontractor doing nonpermanent work on the site, it is required that he submit a statement of experience and qualifications. Only in the top administrative positions do we find a real sense of urgency to get the job done, or to cut through any of the administrative inertia which seems to stymie us at our every step.

Even the field inspection of the work at the three different sites varies from location to location. One would normally think that when a problem had been resolved or a method approved at the lead site, then it would set the precedent and be regarded as the interpretation for the other two. Such is not the case. The Corps of Engineers' resident engineers at each site regard these areas as a kingdom of their own to be administered as they see fit. The "book" in its severest terms is preferred and used in contract to a reasonable and practical interpretation of good construction practices.

In its administrative role the Corps of Engineers has here assumed management prerogatives never before attempted nor released by the contractor. Under this concept of their duties, the Government inspectors attempt to run the job by a demand that every operation, every act, every material, every operational plan, have their prior approval. We must take the attitude of trying to get along, no matter what the consequences in time and money, thereby relinquishing the basic principle of fixed-price contracts.

IV. MODIFICATIONS TO THE ORIGINAL CONTRACT

As of this date, February 13, 1961, we have received 119 modifications to this contract. Following is a summary of the modifications and the estimated cost, a detailed tabulation follows at the end of this section.

In addition to the modifications listed above, the Government has also issued 53 supplements or revisions to such modifications. Considering the fact that each supplement or revision requires an equal amount of correspondence, consultation with affected subcontractors or suppliers, as well as a study of the impact on existing drawings and work in progress in order to avoid confusion or duplication, it can readily be seen that we actually have processed a total of 149 modifications or supplements or revisions thereto in the first 13 months of our contract. This tremendous amount of work on continually changing criteria during construction is completely foreign to the history of military construction work even during war periods. Again we cannot help but feel that we are actually engaged in the construction phase of a research and development program that was let as a firm lump-sum military construction contract by the Corps of Engineers, in whom historically resides a management and quality concept that we had every reason to consider and apply in the evaluation of the bid presented.

We were allowed an acceleration payment of some $697,000 to move up certain completion dates, which was beneficial to the progress of the job. This was an intelligent move by the Government, and entirely acceptable to us, even though the speedup of the project cost us several hundred thousand dollars in inefficiency and expediting costs over and above the modification amount.

We wish to forcefully bring out the fact that our work is on schedule irrespective of the many modifications, changes, delays, and diverted accelerated programs, and with the exception of the above-mentioned acceleration was acccomplished almost entirely at our expense and to our hurt and under conditions for which the Government is completely responsible. We have proceeded under directives to maintain the schedule but relief through settlement of claims and modifications has not been forthcoming.

As stated previously in this report 81 change order proposals have been formalized, 32 have been negotiated, and 40 of the current crop are awaiting attention because of the Government's inabiilty to "get to" them. Some of the proposals not yet acted upon are as much as 5 months old.

Of our 33 claims for time extension, none have been granted, and no finding of fact or decision has been forthcoming concerning them.

Early in the year we were provided with the now famous modification 3, relating to changes in the cleaning procedures and concept of all the items involved in the propellent loading system. This modification contained an impact so great that our own analysis indicated a change in the magnitude of some $7 million. Our figure was based upon a most pessimistic interpretation of the requirements that we had to contemplate and it was also based upon the worst of many confusing ideas as to what actually the modification covered.

We were directed to proceed under this modification not knowing exactly what it covered and not being able to find out through the contracting officer and his agents. The cleaning portion of the modification was subsequently withdrawn after a substantial commitment in cost and personnel, yet the practical effects of its have been contained in the many directives that have been issued by the contracting officer which contemplate that we will do this work and we will perform under the changed conditions at no change in cost. The contracting officer has refused consistently to grant us the relief that the cost and time situation demands.

It must be noted that the contract specifications contain many risks, not found in normal military construction contracts. For instance, we must warrant the operating capability of numerous pieces of equipment for approximately 1 year after beneficial occupancy of the facilities. Also, we must successfully test the functional ability of much equipment, which is unique, exotic in nature, and never before built under mass production, crash program construction methods. The degree of risk is not lessened by the fact that the prototype of this system built under laboratory conidtions and a cost-plus contract has malfunctioned. Because we are required to asure the surgical cleanliness of this system, the risk involved in accomplishing such tests is not imaginary.

There is no gainsaying the fact that in bidding the contracts we assumed certain risks. However, we never bargained that these risks might be magnified to an impossible degree and numerous other risks created by the issuance of multitudinous modifications. In this connection, it must be recognized the Government will not allow contingent expenditures as a cost against the modifications to compensate for these added risks.

Since it would be impossible to list all the risks and detail how they are magnified by these modifications, following are certain illuminating examples: Propellent loading system

There were many modifications to the contracts which specifically changed the design criteria for the propellent loading system. Additional valves were added, additional piping was added, expension joints were added, flexible hoses were added, various types of supports were added, gaskets on hand were changed, and installation and testing procedures changed. The combined modifications to the propellent loading system resulted in aggravating the complexity of an already much too complex system. Considering that our risks not only cover the functional costs of the system and many of its component parts, but also cover the cleanliness of the entire system, the increase in risk is no longer in direct mathematical proportion to the number of modifications, but more so, has increased by geometric progression, measured by change upon change. Pipe support changes

We have had numerous modifications involving the pipe supports in many locations in the project. The design criteria for these pipe supports are not evident from the contract drawings or specifications. The only method for securing approval of same has been for the vendor to submit a design upon design and when finally one is to the satisfaction of the architect, it is approved. The fabrication and delivery of these pipe supports has been delayed to the point where we have proceeded with the pipe installation on temporary hangers where possible.

This, of course, only serves to postpone more and more of the workload to the final days of the project.

Our time extension situation is beyond comprehension. We have even been accused of insincerity in presenting claims for time extension due to strikes, when the contract specifically permits extensions due to strikes. The other areas of delay are similary considered and no conclusive action is in evidence as to our many presentations in this regard.

We question the ability of the Government representatives to justly and broadly comprehend these change order matters and lay to them, a great amount of the administrative difficulties and hazards that have been experienced. As a practical result, we, to a considerable extent, are financing the Government in this operation. All of this which we say is with the full knowledge that changes to design are inherent to a "crash program” and are seldom the making of the Corps of Engineers.

At this stage in our contract, approximately 83 percent complete, the impact of changes is becoming desperate. Each day that passes compresses just that much the effort-measured in heart beats, that must be expended to complete. We have so little time!