interpreting the specifications and requiring more cleaning prior to nesting than was called for by the specifications; that Mr. Ryan knew or was charged with knowledge of how the inspectors were requiring excess cleaning prior to nesting, but failed to take any effective action to correct the situation. On June 13 the resident inspector directed the contractor in writing to remove hydrocarbons by washing with trichlorethylene prior to nesting, which was clearly work not called for by the specifications. On June 18 he rescinded the specific direction to wash with trichlorethylene prior to nesting, but substituted a direction to remove "any excessive hydrocarbon deposits", which, as interpreted by him and the inspectors at Oakland acting under his supervision, meant the same thing as the previous specific direction to wash with trichlorethylene prior to nesting. Appellant's actual performance experience shows conclusively that subsequent to the resident inspector's June 18 modification of his directions, as well as prior there to, appellant could not obtain inspection approval without washing with trichlorethylene and other cleansing to remove hydrocarbons prior to nesting. Assuming, as argued by the Government, that the resident inspector had no authority to issue his 13 and 18 June directives, his directives as interpreted by him and his inspection staff were in legal effect ratified and confirmed by Mr. Ryan when he received knowledge of them and how they were being interpreted and failed to take effective action to correct the situation. We find that appellant is entitled to an equitable adjustment in price under the Changes clause for all the work it performed in degreasing and removing hydrocarbons prior to nesting except for the small amount of work necessary to spot remove tar, pitch and asphaltic deposits that would have left an objectional amount of residue after vapor degreasing. The appeal is sustained as to entitlement and is remanded for the parties to negotiate the amount of the price adjustment. WILLIAMS v. UNITED STATES 127 F. Supp. 617 (Ct. Cl. 1955), cert. denied, 349 U.S. 938 (1955) Reprinted at p. 87 Section 3. Scope of the Contract FREDERICK CONSTRUCTION COMPANY, INC. ASBCA Nos. 12108 and 12241 (1968) This is an appeal from a decision of the contracting officer, effectuating a unilateral partial convenience termination settlement. The contracting officer determined that the Government was entitled to a downward adjustment in contract price for deletion of an additive item of work in the amount stated therefor in the contract. Appellant contended that the price adjustment should be effectuated under the Changes article of the contract and should be based on the cost of the item to appellant. Rejection of this contention was followed by these appeals. In regard to the appeal from the contracting officer's final decision, appellant contends that the deletion of additive item No. 3 should be treated as a change rather than as a partial termination for the convenience of the Government. This contention is contrary to the position most frequently held by contractors in the past, but upheld by this Board in its earlier decisions. Nolan Brothers, Incorporated, ASBCA No. 4378, 58-2 BCA ¶ 1910; see Kakos Nursery, Inc., ADBCA No. 10989, 66-2 BCA 1 5733. In accord: Doughboy Industries, Inc., FAACAP 67-3, 66-2 BCA ¶ 5712. For, where the Government wishes to reduce the number of units of supplies to be furnished, eliminate an item of work, or otherwise reduce the quantity of work to be performed, it proceeds properly to this end under the convenience termination article. Such an action is entirely different from a complex specification change which will not be split into a termination action as to deleted components and a new procurement as to additional components required in lieu of those deleted. Compare T. Barry Kingman Construction, ASBCA No. 4745, 60-2 BCA ¶ 2826, where this proposition was argued by appellant and implicitly rejected. Loc. cit., supra, at p. 14,645. Nor is the Government, prior to an agreement reached by the parties, bound by its initial action. It is free to change its course or to correct an error therein. Reiner & Company v. United States, 163 Ct. C1. 381, 393 (1963); Nolan Brothers, Incorporated, supra. We have similarly held that a contractor may modify his position and correct an erroneous statement made in the course of negotiations, unless the Government was entitled to and did in fact rely thereon. Admiral Corporation, ASBCA No. 8634, 1964 BCA ¶ 4161. 3731, Only where the parties have voluntarily proceeded under the Changes article so far as to have reached a binding agreement will they not be allowed to retrace and correct their steps. Fred A. Arnold, ASBCA No. 7761, 1962 BCA 1 3508; Seaboard Security Company, ASBCA No. 6716, 1962 BCA 3407; cf. Pacific Industries, Inc., ASBCA No. 4920, 1963 BCA M. F. recon. den., 1964 BCA 4397; J. J. Fritch, General Contractor, Inc., ASBCA No. 5253, 1962 BCA 3298. However, not only did the parties here not execute settlement agreements which were beyond reopening, as in Arnold and other decisions cited above, but they had reached a complete impasse. Hence, these decisions do not support appellant's position here. GENERAL CONTRACTING AND CONSTRUCTION 84 Ct. Cl. 570 (1937) WILLIAMS, Judge, delivered the opinion of the court: The plaintiff and the defendant, represented by L.H. Tripp, Chief of the Construction Division of the U.S. Veterans' Bureau, entered into a contract on August 20, 1930, whereby plaintiff agreed to furnish all labor and materials, and perform all work required, for constructing and finishing complete, at U.S. Veterans' Hospital, Somerset Hills, New Jersey, certain buildings, connecting corridors, and roads, walks, grading, and drainage in connection with these buildings, also plumbing, heating, and electrical work; outside sewers, water, steam, and electric distribution systems, and to provide a new water tube boiler and mechanical stoker in the present Boiler House, Building No. 14, for the consideration of $911,376. The work was to be performed in accordance with the specifications, schedules, and drawings furnished by the defendant, all of which were made a part of the contract. On September 18, 1930, plaintiff received a letter from the Acting Director of the Veterans' Bureau stating that upon reconsideration it had been decided to omit from the present construction program the Nurses' Quarters, Building No. 17, together with the work pertaining to that building as described in Alternate (c) under Item I of plaintiff's proposal, and advised plaintiff that a formal change order would be issued when the execution of the form of contract had been completed. On September 19 plaintiff was notified by the Chief, Construction Division, U.S. Veterans' Bureau, to proceed with the construction of the buildings and utilities contemplated by the contract of August 20, 1930, excepting Nurses' Quarters, Building No. 17. Plaintiff was also notified at the time that its surety bond had been approved and placed on file with the Bureau record of the contract. On January 13, 1931, the contracting officer issued a formal change order under Article 3 of the contract eliminating from the contract Nurses' Quarters, Building No. 17, and by reason of such change decreased the contract price by $99.520. Plaintiff had previously, in acknowledging receipt of the defendant's letter of September 19, 1930, directing it to proceed with the work under the contract "excepting Nurses' Quarters, Building No. 17", stated that the acknowledgement was made "without prejudice to any of the contractor's rights by reason of the change." Now, upon receipt of the formal change order omitting Building No. 17 from the contract and deducting $99,520 from the contract price by reason of such change, plaintiff, within the time in which it was permitted to do so under Article 3 of the contract, protested the deduction of $99.520 from the contract price because of the omission of Building No. 17 and filed with its protest voluminous proof tending to show that the deduction of that amount was excessive and inequitable, resulting in loss and damage to it, claim for which was made. The Director of the Veterans' Bureau in acknowledging receipt of plaintiff's protest and claim for loss and damages by it by reason of the change order stated; "Since the Bureau had issued a change order making a deduction of $99,520 which it considered an equitable adjustment of this matter as contemplated in Article 3 of the contract, any claim you desire to make in connection therewith is one properly for consideration by the General Accounting Office." Prior to the time plaintiff received notice on September 19, 1930, to proceed with the work under the contract, "excepting Nurses' Quarters, Building No. 17," it had received from subcontractors prices for the furnishing of those items of materials necessary to the work not handled by itself. The unit prices for these materials proposed by the subcontractors were based on the amount of such materials required for the completion of the contract as a whole. Upon the elimination of Building No. 17 plaintiff took up with its subcontractors negotiations for contracts covering the materials required for the work, omitting Building No. 17, and found that its subcontractors in the main would not enter into the contracts for the materials to be furnished by them at the unit prices quoted in their proposals. Plaintiff was therefore required to enter into contracts with its subcontractors for the materials to be furnished by them at higher prices than the unit prices offered by them for the materials necessary for the completion of the contract as a whole. The Commissioner of the court, to whom the case was referred for the taking of proof and reporting of facts, heard testimony offered by plaintiff in respect to the loss and damage sustained by it because of its inability to procure from subcontractors reduction of their proposed contract prices to an amount commensurate with the sum ($99,520) deducted by the Government from plaintiff's contract because of the elimination of Building No. 17 and because of loss of profits and overhead. The Commissioner found and reported to the court that plaintiff had suffered damages to the extent of $20,773. The defendant offered no proof in respect to the alleged loss and damage caused plaintiff by the elimination of Building No. 17, and took no exception to the report of the Commissioner fixing the amount of such damage at $20,773. We find, upon a careful review of the evidence heard by the Commissioner of the court, that plaintiff's loss as fixed by him is amply supported by the proof, and have made a finding of fact that because of the elimination of Building No. 17 from the contract plaintiff sustained loss and damage to the extent of $20,773. The defendant does not challenge the finding that plaintiff has sustained loss and damage to the extent of $20,773 because of the elimination of Building No. 17, but rests its case entirely on the assumption that the elimination of Building No. 17 was a change in the drawings and specifications of the contract within the meaning of Article 3 of the contract, and that the decision of the Director of the Veterans' Bureau that a deduction of $99,520 from the contract price, the amount fixed by the contracting officer in the change order, was an equitable adjustment of the matter, is final and conclusive under Article 15 of the contract. Article 3 of the contract provides: - Changes. The contracting officer may at any time, Article 15 of the contract provides: Disputes. Except as otherwise specifically provided Article 3 of the contract is a standard form used by the Government in all construction contracts. Its purpose is to enable the contracting officer to make any change in drawings and specifications he may find necessary or desirable as work under the contract progresses. It has reference, we think, entirely to structural changes like the substitution of one kind of material for another, changes in architectural design, the addition to or subtraction from work required by the specifications, etc. Certainly the authority vested in the contracting officer by this article of the contract to make "changes in the drawings and (or) specifications of this contract and within the general scope thereof" did not vest him with authority to eliminate entirely from the contract Building No. 17. If he could eliminate one building from the contract under the guise of making changes in the drawings and specifications he could likewise eliminate two or any number of buildings and thus entirely change the contract. The elimination of Building No. 17 from the work to be performed under the contract without the consent of plaintiff was a plain breach of the contract by the defendant. |