CASES DECIDED IN THE COURT OF CLAIMS March 3, 1941, to June 1, 1941. INCLUSIVE, UNDER THE ACT OF JUNE 25, 1938, TO RECOVER INCREASED COSTS IN CONNECTION WITH GOVERNMENT CONTRACTS RESULTING FROM THE ENACTMENT OF THE NATIONAL INDUSTRIAL RECOVERY ACT* GRAYS FERRY BRICK CO. (INC.) v. THE UNITED STATES [No. 44005. Decided March 3, 1941. Defendant's motion for new trial overruled June 2, 1941.] On the Proofs Extra labor costs under National Industrial Recovery Act.-Under the provisions of the Act of June 25, 1938, it is held that plaintiff is entitled to recover for the increase in labor costs in manufacturing brick for use on Government contract for the construction of the Philadelphia post office, such increase in labor costs under the National Industrial Recovery Act to be based on the plaintiff's average labor costs for a period of 6 months from January to June, 1933. Same; loss of possible profit not recoverable.-The Act of June 25, 1938, does not authorize recovery for a loss of possible profit on material manufactured prior to enactment of the National Industrial Recovery Act, which material might otherwise have been disposed of. Pollock v. United States, 91 C. Cls. 257 cited. Same; additional employees; inefficiency of extra labor.-Where in order to comply with the provisions of the National Industrial Recovery Act it was necessary for plaintiff, in supplying material on a Government contract, to employ an extra foreman; and where it was necessary also for plaintiff in order to comply with said act to employ an extra shift, entailing increased costs by reason of the inefficiency of new and inexperienced labor so employed, it is held that plaintiff is entitled to recover. *See vol. 92, pp. xxiii-xxix. Reporter's Statement of the Case The Reporter's statement of the case: Mr. Prentice E. Edrington for the plaintiff. 93 C. Cls. Mr. Edward L. Metzler, with whom was Mr. Assistant Attorney General Francis M. Shea, for the defendant. Mr. J. H. Reddy was on the brief. Plaintiff instituted this suit under the act of June 25, 1938, which conferred upon this court jurisdiction to hear, determine, and enter judgment upon claims of government contractors whose costs of performance were increased as a result of the National Industrial Recovery Act of June 16, 1933; and section 1 thereof authorized the court to consider and render judgment upon claims of materialmen who furnished materials to a subcontractor engaged by a prime contractor. The court, having made the foregoing introductory statement, entered special findings of fact as follows: 1. Plaintiff, a Pennsylvania corporation with principal office and place of business at Philadelphia, is and was at all times hereinafter mentioned engaged in the manufacture of sand lime brick. August 31, 1932, defendant entered into a contract with Starrett Brothers & Ekin, Inc., under which that company agreed to furnish all labor and material necessary to construct a post office building in Philadelphia. On October 5, 1932, John B. Kelly, Inc., entered into a contract with the prime contractor to furnish and erect all brick and hollow tile work in the building to be constructed for the defendant. December 8, 1932, John B. Kelly, Inc., the subcontractor, made an agreement with plaintiff ordering 2,500,000 sand lime bricks at an agreed price of $9.50 a thousand to be delivered, as needed and called for, to Kelly for use in the construction of the Federal Post Office Building. This order was accepted by plaintiff in order to help keep its plants running, thus saving possible losses from inaction, although little or no profit was expected to be derived by plaintiff from the contract with Kelly. The bricks were manufactured and delivered as and when demanded or called for by Kelly. Plaintiff's contract with that company was completed in February 1934. 713 Reporter's Statement of the Case 2. The National Industrial Recovery Act was approved June 16, 1933, 48 Stat. 195, and, on July 28 of that year, plaintiff signed the President's Reemployment Agreement pursuant to that act. At the time this agreement was signed plaintiff's plant was not being operated and it had no men on its pay roll. The National Industrial Recovery Act Code of Fair Competition applicable to the business engaged in by plaintiff did not become effective until after plaintiff's contract with Kelly had been completed. During the performance of its contract with Kelly, plaintiff manufactured and delivered 1,768,656 bricks, of which number 374,750 were manufactured by plaintiff prior to May 1933 and prior to the time it signed the President's Reemployment Agreement; the remainder, 1,393,906 bricks, was called for, manufactured, and delivered after plaintiff signed the Reemployment Agreement. Plaintiff complied in every way with the provisions of such agree.nent. Prior to the signing of the Reemployment Agreement, plaintiff's direct labor cost for the manufacture of bricks for the six-months' period from January to June 1933, inclusive, was $1.7694 a thousand, based on 406,000 bricks manufactured during operation of the plant in the months of January, March, and April 1933. The average direct labor cost for a period of one year prior to July 1, 1933, was $2.35 a thousand bricks. The 427,000 bricks manufactured in the last six months of 1932 were produced to fill such orders as had been received from time to time during that period, and plaintiff operated its plant during that period only two or three days in each month. The operation by plaintiff of its plant for the six-months' period, January to June 1933, inclusive, was more comparable to the operation of its plant in the manufacture and furnishing of materials for use on the government contract for the period July 28, 1933, to the completion of the contract in February 1934, after the signing of the President's Reemployment Agreement, than was the operation of the plant over a one-year period prior to the signing of this agreement, which period included the last six months of 1932. Plaintiff's direct labor cost for manufacturing brick during the fall of 1933 and the winter of 1933-1934, after it signed 323387-41-vol. 93- -47 Reporter's Statement of the Case 93 C. Cls. the President's Reemployment Agreement, was $3.12 a thousand. 3. The increased direct labor cost of $1.3580 over the prior cost of $1.7694 a thousand bricks for the six-months' period prior to the signing by plaintiff of the President's Reemployment Agreement, when applied to 1,393,906 bricks manufactured at the increased rate, amounts to $1,892.92. If the prior cost per thousand bricks is averaged over a period of one year prior to July 1, 1933, the increased direct labor cost subsequent to signing of the Reemployment Agreement is $0.7734 a thousand, instead of $1.3580, which, when applied to the 1,393,906 bricks manufactured at such increased rate of $0.7734 amounts to $1,078.05. Plaintiff's direct labor cost for manufacturing and delivering brick for use in the Philadelphia Post Office, after the signing and compliance with the President's Reemployment Agreement, is admitted to be $3.1274 a thousand. During the period April 18 to April 29, 1933, plaintiff manufactured 193,000 bricks which were delivered for use in the Post Office Building, and the direct labor cost for manufacturing these bricks was $1.76 a thousand. Plaintiff's daily production report shows no delay or manufacturing difficulties during manufacture of these brick. 4. According to plaintiff's daily production report it experienced some delay in manufacturing brick in January and February 1934 due to the freezing of materials and temporary breakdown of machinery. Plaintiff's daily production reports for the months of October, November, and December 1934 are not available, but the delays caused by frozen materials and breakdown are not shown to have increased plaintiff's costs due to the custom in the industry of laying off employees at such times. If there were any added costs attributable to delays they are included in the direct labor average cost of $3.12 a thousand bricks manufactured from October 1933 to completion of the contract in February 1934. These same winter costs are also included in the cost of manufacturing bricks in the months of January to March 1933, inclusive, prior to signing of the Reemployment Agreement. This item of plaintiff's claim is based upon the increased cost of direct labor and no claim is made 713 Reporter's Statement of the Case for broken bricks or overhead. During the months of May to September 1933, inclusive, John B. Kelly, Inc., made no calls on plaintiff for delivery of bricks and no bricks were manufactured during this period, during which plaintiff's plant was closed. The manufacture of sand lime brick is more economical during the summer season than during the winter season due to freezing of sand and other materials. 5. From and after the signing of the President's Reemployment Agreement plaintiff reduced its total weekly hours of work from 70, and in rush periods of 84 hours a week, to the maximum required by such Reemployment Agreement, but found it was unable to fulfill the requirements of the contract for delivery of brick for use in the Philadelphia Post Office Building and was compelled to operate a double shift for five weeks or more during the fall of 1933 after the signing of the Reemployment Agreement in order to produce brick in quantities sufficient to meet the demands and calls of the subcontractor, John B. Kelly, Inc. During such period it was also necessary to, and plaintiff did, employ an extra foreman at a wage resulting in an increased cost of $262.57. Plaintiff was required to, and did, engage a night shift which required the training and breaking in of additional new men. It could not locally secure additional trained personnel required to provide the additional night shift; however, it did secure from other brick plants certain trained brick laborers, but they were unaccustomed to the operation of plaintiff's machines and it was necessary for them to go through a certain period of training in order to familiarize themselves with the operation of plaintiff's plant. In addition to the increase in wages of its workmen, plaintiff suffered increased costs due to losses in efficiency of the new laborers and certain damage to machinery due to such inefficiency and inexperience of the new employees. Because of curtailment in hours of work under the National Industrial Recovery Act and the President's Reemployment Agreement, it was necessary for plaintiff to employ 25 additional men in furnishing bricks for use on the Philadelphia Post Office, and at least twenty of these men were inexperienced and had to go through a period of training. The |