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type contract which will recognize the true cost to the contractor, subcontractors, and suppliers that has been brought on by the experimental nature of the missile and the wartime construction conditions.
FORM OF CONTRACT
Our contract at the Plattsburgh Missile Complex is being executed under essentially the standard Government fixed-price contract. This type of contract is not consistent or compatible with the wellrecognized urgent requirement for a deterrent weapon system. Neither is it applicable when the scope of the contract is being constantly increased by new missile developments, successful experiments, and by forced compression of the available construction time. The emergency, concurrent, and wartime character of the program has been recognized in the cost-reimbursable type contracts negotiated with all other major participants in the program. Each new development concerning the missile affects our fixed-price contract by compressing more and more work into the contract time with no extension of completion date, and by more instructions to increase manpower, equipment, overhead, and to work three shifts 7 days a week without prompt or adequate reimbursement of cost.
All of the above conditions have been further complicated at Plattsburgh by changed physical conditions at many of the sites, as well as delays due to inadequate precontract preliminary work by the Government. Yet, the only recognition in our contract in these conditions is a provision which allows the contracting officer to pay the contractor in lieu of granting additional contract time. This provision has proven ineffective because the contracting officer has consistently refused to make any determination regarding time while using his full authority to require accelerated work and accelerated cost to the contractor with no commitment regarding reimbursement. In so doing the contracting officer has changed the basic contract by refusing to recognize the time tested provisions therein that offered protection to the contractor.
CONSTRUCTION PROGRESS SCHEDULE
The Corps of Engineers anticipated that excusable delays would occur, but they could not foresee what events would lead to these interruptions. Unfortunately, the bidding documents did not have any provision to cover this situation in advance nor, under the standard form of Government construction contract, would such a provision be possible.
The contracting officer, using the authority vested in him, met the conflicting requirements in an ingenious manner. He simply refused to accept
from the contractor a progress schedule which did not provide time safety factors to cover unforeseeable and excusable time delays.
During the first 3 months of operations a total of eight complete progress schedules were submitted, the last of these being a schedule prepared as directed by the contracting officer and with the dates advanced far enough to provide the time safety factors that the contracting officer demanded. Thus, in order to obtain the acceleration he needed for a time contingency factor, the contracting officer arbitrarily ignored and changed the provisions of the contract. Our protests on this unilateral action were ignored.
We had originally planned to operate in an integrated manner four spreads of principal equipment to accomplish, in concurrent sequence, the contract dates over the 12-week period required by the specifications. The schedule directed by the contracting officer required us to work 12 spreads of equipment and forced us to spend three times as much as was necessary for equipment. Our original plan had several advantages which included maximum and efficient use of equipment, increased productivity that comes from a repetitive operation, and the efficient use of highly qualified supervision. The order to work all sites at the same time in effect amounted to an acceleration of the entire construction program in order to insure that unforeseeable but excusable delays would not extend the end completion date of the contract and, subsequently, the operational date of the missile launching sites.
The contracting officer, through his directed and accelerated schedule, attempted to insure that the operational date would be accomplished but in so doing he has forced the contractor to expend the terrific sums to pay the costs that arise from this directed wasteful and uneconomic use of men and equipment.
The 7-day workweek and the 24-hour day is one of the remedies that the contracting officer directed to overcome excusable delays. Actually, when continued for more than 1 week, the 7-day workweek results in substantial overall loss in production. This is a universally recognized axiom in the industry which is supported by studies of the U.S. Labor Department. However, the job records are the best demonstration.
On October 14, 1960, the contracting officer's authorized representative directed a 7-day, 24-hour operation. By his own report at that time the overall project was ahead of schedule. The contractor protested this directive and requested reimbursement for the added expense to be accrued for overtime premiums, lack of equipment maintenance due to constant use, productivity decrease due to fatigue, and absenteeism that is prevalent on a 7-day workweek.
By the end of the year the delaying effect of the 7-day, 24-hour operation was readily apparent. On December 30 the area engineer was advised, “While we are still studying this, our tentative conclusion is that this requirement results in a 30-percent loss in overall productivity.” And this must be taken into account keeping in mind the fact the overtime pay which was being paid at this time, the premium pay, resulted in approximately 2 days' extra pay per week for each man on the job.
The refusal to consider time extensions, the direction of construction methods, and the directions of the workweek effectively transferred the management of the project from the contractor to the Government. The contractor was required, however, to continue to pay all of the resulting excessive costs.
CHANGED SUBSURFACE CONDITIONS
Almost immediately after the commencement of operations it became evident that the information furnished us relative to existing subsurface conditions was inadequate. Apparently the urgency of the missile program did not allow the time for any but the most sketchy subsurface exploration. At 7 of the 12 sites at Plattsburgh we have encountered unforeseen sursurface conditions that have increased the time required for completion over and above the contingencies, as referred to above, allowed and have greatly increased our construction expense.
The fourth site started has not yet “bottomed out” and our best estimate is that 10 more weeks will be required for excavation making the total time required 36 weeks. The normal silo has been excavated in 9 weeks, which is essentially the time provided in the contract, yet to date the contracting officer has not issued the determination required by the contract as to whether or not a changed subsurface condition exists.
At another site we are attempting to excavate the silo through 60 feet of quicksand with some large boulders which combine to thwart normal excavation methods. This silo will require a total of 34 to 37 weeks compared with the normal 9 weeks, and again the contracting officer has not determined whether or not the subsurface conditions differ from those contemplated in the contract.
The other silos have all “bottomed out,” and all are either concreted or being concreted, yet on half of these we have experienced excusable delays, but we have had no decisions from the contracting officer. In all the history of our combined companies this is the first time where we have encountered changed conditions on a project that the contracting officer has not promptly investigated the conditions and rendered his decision.
As of February 1, 1961, the Government has seen fit to issue 46 separate specifications to_our contract, involving hundreds and hundreds of work items. These range in size from a $140,000 credit to the Government to one which may approximate $6 million of added cost to the Government. For the most part we are directed to proceed with the work covered by the modification with agreement as to price to be reached as soon as estimates are prepared and prices developed. Actually, because of the intransigent attitude of the Government negotiators and the narrow limits within which they are permitted to negotiate, it has been impossible to agree on price except on the Government's terms.
We have learned that these estimates must be approved by SATAF of the Air Force, by BMD of the Air Materiel Command, by CEBMCO of the Army, and by others. The contracting officer's judgment is also limited by orders and directives from his superiors. Under the terms of the contract we are entitled to fair and impartial judgment by the contracting officer which cannot be obtained under existing circumstances.
Very few persons outside of Cape Canaveral and the Vandenburg Air Force Base have any prior experience in this exotic type of construction. Thus, it is difficult to know what detrimental reaction à change in the fuel piping will have on the structural steel installation, the electrical installations or the cryogenic installations, all of which are highly interrelated. We do not know, nor does anyone yet have the experience to anticipate, the added man-hours and equipment hours which will be necessary just to regain the time lost by the modification, principally because we cannot foresee the disruptive effect the modification will have on installations not directly affected by that modification. The result is that no settlement is reached and the contractor must finance the modification.
These continued modifications and modifications of modifications have not only caused a major increase in the scope of the contract but have drastically changed the character of the work in that a planned sequential operation is being forced into a confused catch-as-catch-can scramble to get the job done. The result is the contractor is using his own funds in financing an experimental, emergency, wartime program as it is developed and is being abandoned by the Government and left to his own devices to effect recovery.
The construction industry has a right to expect from Federal agencies complete construction drawings that are examples of the best the engineering profession can produce. Design changes are infrequent and when they occur normally affect only minor details.
The missile program contract drawings have been issued in slipshod fashion with numerous inaccuracies, inconsistencies, omissions, and other errors. In fact, of the 502 contract drawings, 274 have been revised and there have been a total of 516 revisions. In addition, we have received over 200 pages of memorandums correcting errors and providing clarifications and numerous official letters directing changes in the drawings.
We, to do the job, require for our forces, our subcontractors and their subcontractors and for material suppliers more than 50 copies of each contract drawing. After these are distributed to the workmen and engineers who will use them, we are asked by the contracting officer to make a correction by letter. This is impossible, but the Government refuses to issue new drawings with the corrections included. This irresponsible form of recognizing errors and corrections is most unsatisfactory and hazardous, placing the contractor in a position where he can never be sure that the work he is doing is in accordance with the approved plans. The progressive effect of this design-as-you-build program is that the work is delayed, component parts must be refabricated, working drawings must be redone and the construction plans constantly reoriented. All the costs must come out of the contractor's pocket until he can prove to the contracting officer or higher authority that these costs are specifically due to design changes.
The assigned contracts which have been negotiated by the corps with other contractors were intended to be turned over to us during the course of the work. We have been attempting to obtain copies of the actual negotiated contracts and other necessary data in con
nection therewith since July 1960. So far, we have only been partially successful. We have learned, however, that some of the onsite contracts that were to have been assigned to us have been so modified and altered in their scope and conditions as to leave little resemblance to the contract models that were made available to us at the time of bid.
The experimental nature of the program is everywhere evident in the vagaries and looseness of the provisions as we have learned them so far. We appear faced with another mountain of unforeseeable cost which would be added to our already unbearable burden on the day that we are forced to accept these assignments. This would appear to be another example of an instance where the general contractor who had little real knowledge of the subject of these assigned contracts is being forced to pay for omissions, errors, inconsistencies, and conflicts over which he had no knowledge or control.
Joint occupancy is at the moment just a word which we have learned to fear. Here again is another example of the contractor being burdened with absolutely unforeseeable costs and hazards brought about by the joint occupancy of one site by several contractors, all attempting to implement "an experimental program on an emergency basis.''
Our apprehension on this score is increased by the knowledge that many of these other contractors will be working on cost-reimbursement types of contract and would thus be reimbursed their actual cost whereas, for our part, whatever unforeseeable expense we may be put to in this connection can only be collected after years of dispute.
The factors enumerated above clearly demonstrate the inconsistency of attempting to accomplish an experimental program under emergency wartime conditions by the route of a fixed-price contract. In order to achieve the objectives of the program, the corps has in effect disregarded our contract by forcing us to abandon our own schedule of operations and follow their directives, by applying wartime methods to accomplish this experimental program, and by major increases in the scope of the work. At the same time unforeseeable site conditions have affected the progress and the cost of the work and the corps has not lived up to their obligations to the contractor in the handling of these matters.
The subcontractors, suppliers, and the prime contractors are literally financing the Government in this effort.
Speaking for the subcontractors, the component suppliers and ourselves, our out-of-pocket expense has reached enormous proportions. The second and third tier suppliers are at the same time being burdened with additional unforeseeable and unjust expenditures.
Many of our subcontractors have advised us that they are finding the financial burden more than they can carry and that unless im