Section 5. Proceeding with the Contract as Changed ELECTRONIC INDUSTRIES, INC. ASBCA No. 10881 (1967) This is an appeal from a default termination based on a finding that the uncured failure of the contractor to make progress endangered contract performance. The contract contained the customary "Default" article as set forth in Standard Form 32, June 1964 Edition. The contract also contained the last sentence of which we deem of controlling significance in this case. Such sentence reads as follows: "However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed." This contract was awarded on February 19, 1965 and called for delivery of 123 units of Item 1 (an installation kit) and 115 units of Item 2 (another type of installation kit) for a total price of $6,622.05 on a staggered basis from March through June 1965. Originally this procurement was under cognizance of Frankford Arsenal, Philadelphia, Pennsylvania. On April 5, 1965, the Arsenal sent the contractor a change order (by telegram) but included the following sentences: THE CHANGES ARE TO BE PHASED INTO PRODUCTION WITHOUT INTERFERING WITH DELIVERIES COSTS ARE TO BE NEGOTI- " Just what connotation should be placed on the aforequoted language is perhaps uncertain. The contractor interpreted this as a stop work order. The matter is of no operative significance because of subsequent events. On April 16, 1965, cognizance of this procurement was transferred to the Army St. Louis Procurement District and the contractor was so notified in writing. There was some interchange of correspondence and telephone communications concerning costing. Apparently the contractor was not happy with the changes. In a letter to the contracting officer dated April 20, 1965, the contractor for the first time indicated to the St. Louis District that the contractor regarded Frankford's telegram of April 5, 1965 as a stop work order. The contract administrator called the contractor on April 22, 1965, and advised the contractor it was in error when it regarded the April 5, 1965 telegram as a stop work order. The contractor was informed it would receive a change order shortly and that it should continue working and incorporate the changes which were mandatory and that costs would be adjusted later. The contractor received Modification No. 1 to the contract on April 27, 1965. This was a complete technical change order signed by the St. Louis District contracting officer. The contractor had stopped work when it had received the April 5, 1965 telegram for Frankford. On April 30, 1965, the St. Louis District which now had cognizance of the procurement telephoned the contractor and required why it was not working on the contract. The contractor apparently took the position that it had negotiated the contract with the Frankford Arsenal from which it had a telegram telling it not to proceed until change order costs were agreed upon. The contractor's attention was called to the mandatory unequivocal Change Order (Mod. 1) it had received from the St. Louis contracting officer. On May 2, 1965, by telegram the contractor said, without giving cost data, that it was doubling the price of Item 1 and tripling the price of Item 2. In view of the contractor's insistence that its performance was stopped by the Frankford Arsenal on April 5, 1965, the contracting officer sent a telegram to the contractor on May 6, 1965 stating clearly that the April 5, 1965 telegram was not a stop order. At a conference in the contractor's office on May 11, 1965, the contractor confirmed that it had performed no work since the April 5, 1965 telegram and that it would do nothing until that telegram was rescinded and the costs of Modification No. 1 were agreed upon. By letter of May 12, 1965, the contractor reiterated its position as to the significance of the April 5, 1965 telegram and we find the following paragraphs in such letter: "Inasmuch as the changes requested which are mandatory involve additional costs, until these costs are negotiated and agreed upon and authorization is furnished Electronic Industries, Inc., they cannot be implemented into any production on the above referenced contract. "Further reference is made to SLPD telegram dated May 7, 1965 wherein your command states the effectivity of Modification No. 1. All of the units prior to these specified have been produced and shipped and, therefore, an automatic stop work is in effect. Electronic Industries, Inc. is not bound contractually to continue production implementing these changes without this negotiation, and since these changes are mandatory, we can go no further until this matter is resolved." There was apparently some urgency related to this procurement and on May 19, 1965 a ten day "cure" letter under the "Default" article was sent to the contractor citing its failure to make progress in performance (in this case actual refusal to perform). By letter of May 28, 1965, the contractor replied: "We therefore ask that the power you have vested in you be used to its best advantage and some action be taken immediately. Our legal personnel have informed me that under the terms and conditions of the contract and the present status of your paper work, we are not obligated to continue on the contract. "We must have either an approval of the new unit prices as set forth or authorization to proceed on a time and materials basis. You are the fourth person with whom we have had contact concerning this contract of your office and do hope and pray that you will be able to get this matter off of dead center. "Request is hereby made that you notify the writer within 10 days of your approval.' " As of June 11, 1965, the contractor had delivered 11 units of Item No. 1 and 12 units of Item No. 2. On that date the contracting officer issued a default termination notice citing overdue deliveries and the fact that the contractor had quit work and made no effort to resume operations. We are not clear as to what delivery schedule extension, if any, was reasonably required by Modification No. 1. Even though an appropriate extension would place the contractor in a non-default status insofar as deliveries were concerned, the refusal of the contractor to continue performance furnished the contracting officer with a completely adequate basis for the default termination. The appeal is accordingly denied. Section 6. Differing Site Conditions NORTHEAST CONSTRUCTION COMPANY ASBCA No. 11049 (1967) This appeal presents a claim by appellant that rock which it encountered and removed in excavating was a changed condition for which it is entitled to an equitable adjustment of $56,450.63. The contracting officer denied the claim finding that appellant's notice of the alleged changed condition was untimely and that the Government was thereby prejudiced. He has not decided whether or not the rock was a changed condition. Appellant contends the notice was timely and that the Government was not prejudiced. The Changed Conditions article in the contract (on Standard Form 23-A, April 1961 Edition) reads as follows: "The Contractor shall promptly, and before such period of time before the date of final payment under the II The contract was awarded on December 31, 1962, in the amount of $635,000, and was to be completed within 380 days after receipt of notice to proceed. The work concerned in this appeal started in late April or early May of 1963. It consisted of the grading of an area which was an existing parking lot, partially black topped but mostly surfaced with gravel, on which there were two buildings and some existing structures to be removed. The area was to be lowered approximately five feet. The work was done by a subcontractor. Soon after the subcontractor started to grade it struck layers of large stones and boulders. These would be struck after the second or third pass of the scraper. The stones and boulders could not be easily removed with earth moving machinery. Appellant sent the following letter dated May 9, 1963 to the resident engineer: "In the course of construction of the referenced project we have frequently encountered rock layers and boulders of size and hardness that preclude cutting or removal by power-driven tools! Such occasions create serious delays in our construction progress. "We respectfully request that we be given your permission to use dynamite charges of minimum size necessary to remove rock obstructions that impede progress in construction of the project. Maximum care and precaution will be used in handling and activating these charges. "We will appreciate receiving your considered reply at an early date. Thank you for your attention and cooperation." The resident engineer replied by letter dated May 20, 1963 as follows: "Reference is made to your Contract No. DA-23- "Inclosed is a copy of the blasting procedure Neither appellant nor the subcontractor blasted. The subcontractor removed the stones and boulders using rippers and end loaders. The record does not show when the last of the stones and boulders were removed. It does show that all of the work under the contract was accepted as complete as of April 2, 1964. Appellant's first claim letter with respect to the stones and boulders was dated August 20, 1964. It referred to the 9 and 20 May 1963 letters; stated that thereafter great amounts of hard stone and rock was encountered within and without areas bordered by building foundations; that this impeded construction of underground footings, foundations, conduit systems, lines, sewers, vehicle lifts, and gasoline system; that approximately 3500 cubic yards of rock and stone were removed; and claimed $61,985 therefor. The resident engineer was advised by the contracting office that a claim had been made by appellant for rock excavation. He was asked if rock had been encountered; and, if so, where it was encountered, how much was encountered, and how it had been removed. The resident engineer and the inspectors on the site had not kept any records with respect to rock removed. The resident engineer conveyed the contracting officer's request to an inspector who was familiar with the excavation done. That inspector, upon the basis of his memory as to what had happened, replied by memorandum dated November 16, 1964, that (1) boulder type rock had been encountered in grading the southeast area of the project, that it amounted to approximately 1670 cubic yards, and that it was removed by rippers and dozers, (2) that approximately two cubic yards of rock were encountered in building excavations at the bottom of piers for three buildings, and (3) that approximately 78 cubic yards of rocky material was encountered in the storm sewer line and was removed by jack hammer and backhoe. Appellant discussed the claim with the contracting officer and others on February 3, 1965. Thereafter, on August 30, 1965, the contracting officer denied the claim finding that appellant's first notice of the claimed changed condition was its letter of August 20, 1964, that the lack of notice seriously prejudiced the Government in that its opportunity to investigate the actual conditions and compare them with those indicated in the contract was no longer available, and that there was now no way to determine accurately the portion of the total excavation that was rock. He stated specifically that he made no decision as to whether or not a changed condition had been encountered. III The Board finds that prior to August 20, 1964, appellant did not advise the Government, in writing or otherwise, that it had encountered or allegedly encountered changed conditions. And the Board finds that prior to August 20, 1964 the Government had no constructive notice or knowledge that a changed condition or possible changed condition had been encountered. Appellant's letter of May 9, 1963 did not constitute a notice that a changed condition had been encountered. It is true that no particular form and no particular wording is required in a notice that a changed condition has been encountered, The notice need not cite or paraphrase the changed conditions article. But it must in some way be sufficient to convey the |