B-158463, APR. 1, 1969

B-158463, APR. 1, 1969

TO TENNEY, BENTLEY, HOWELL, ASKOW AND LEWIS:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 30, 1969, ON BEHALF OF THE HARZA ENGINEERING COMPANY, REQUESTING RECONSIDERATION OF ITS CLAIM FOR ADDITIONAL COMPENSATION IN THE AMOUNT OF $16,500, BASED ON SERVICES IT WAS REQUIRED TO PERFORM OVER AND ABOVE THOSE CONTEMPLATED IN REVIEWING MANUFACTURER'S SHOP DRAWINGS UNDER MODIFICATION NO. 4 TO CONTRACT NO. DA-41-443-CIVENG-60-100 (NEGOTIATED).

THE CLAIM IS ASSERTED ON THE BASIS OF TWO ESSENTIAL MISTAKES OF FACT THAT EXISTED AT THE TIME MODIFICATION NO. 4 WAS NEGOTIATED. THIS CLAIM WAS ORIGINALLY CONSIDERED AND DENIED BY OUR OFFICE IN DECISION B 158463, MARCH 10, 1966, WHICH WAS AFFIRMED BY DECISION OF AUGUST 7, 1968. WE DENIED THE CLAIM BECAUSE THERE HAD NOT BEEN PRESENTED SUFFICIENT EVIDENCE TO SHOW THAT IT WAS THE INTENT OF THE CONTRACTING PARTIES, BEFORE OR AT THE TIME THE MODIFICATION WAS SIGNED, TO PROVIDE FOR PAYMENT BASED ON THE ACTUAL NUMBER OF DRAWINGS CHECKED.

THE FACTS AND APPLICABLE PRINCIPLES OF LAW WERE FULLY SET FORTH IN OUR DECISION OF MARCH 10, 1966, AND WILL NOT BE REPEATED HERE. ALTHOUGH THE FACTS IN THIS CASE ARE NOT IN DISPUTE, YOU STATE THAT IT APPEARS TO YOU THAT THE DECISION IN THE CASE OF NATIONAL PRESTO INDUSTRIES, INC. VS UNITED STATES, 338 F.2D 99 (1964), IS PARTICULARLY APPLICABLE TO THIS CLAIM.

IN THE PRESTO CASE, THE GOVERNMENT ACTIVELY PARTICIPATED IN THE PRECONTRACT NEGOTIATIONS WHEREIN THE PARTIES MUTUALLY AGREED TO THE EXCLUSION OF CERTAIN EQUIPMENT LATER FOUND TO BE INDISPENSABLE TO SATISFACTORY PRODUCTION. THE EXPENSES WHICH THE CONTRACTOR SUSTAINED, ATTRIBUTABLE DIRECTLY TO THE UNANTICIPATED PROBLEMS RESULTING FROM THE ABSENCE OF THE NECESSARY TURNING EQUIPMENT, WERE RELIEVED, IN PART, THROUGH THE COURT'S APPLICATION OF THE MUTUAL MISTAKE CONCEPT. REACHING THAT RESULT, THE COURT NOTED THAT THE CONTRACTOR'S COMMITMENT TO A FIXED-PRICE CONTRACT STRONGLY SUGGESTED THAT IT HAD ASSUMED ALL THE UNCOVERED RISKS INHERENT IN ITS PROMISED PERFORMANCE. THIS OBSTACLE WAS OVERCOME ONLY BECAUSE A REVIEW OF THE PARTIES' DEALINGS AS A WHOLE CONVINCINGLY DEMONSTRATED THE MUTUAL INTENTION RESPECTING THE NEED FOR TURNING EQUIPMENT.

THE PRESENT CLAIM INVOLVES A SITUATION WHEREBY HARZA AGREED TO FURNISH FOR A FIRM-FIXED PRICE ALL THE SERVICES REQUIRED TO CHECK DETAILED SHOP DRAWINGS ON 11 SPECIFIED FEATURES OF THE ELECTRICAL WORK TO BE INSTALLED AT SAM RAYBURN DAM. MODIFICATION NO. 4 GAVE NO INDICATION OF THE NUMBER OF DRAWINGS TO BE CHECKED NOR DID IT CONTAIN A COST ESTIMATE. THE RECORD BEFORE US INDICATES THAT THE CONTRACTING OFFICER DID NOT INTEND TO CONTRACT ON THE BASIS OF THE ACTUAL NUMBER OF DRAWINGS. WE DO NOT FIND IN THE PRESENT FACTUAL SITUATION THE ELEMENTS ESSENTIAL TO REFORMATION OF A CONTRACT. A WRITTEN INSTRUMENT MAY BE REFORMED ONLY WHEN THE PARTIES HAVE IN FACT REACHED AN ACTUAL AGREEMENT AS TO WHAT THE CONTRACT BETWEEN THEM IS, AND FOR SOME REASON THAT AGREEMENT IS NOT CORRECTLY STATED IN THE WRITTEN INSTRUMENT. HERE, BOTH PARTIES WERE IN AGREEMENT AS TO THE WORK TO BE PERFORMED FOR THE FIXED PRICE. THE CONTRACT AS WRITTEN EXPRESSES THIS AGREEMENT.

IT MAY BE TRUE THAT BOTH PARTIES BELIEVED THAT ABOUT 325 DRAWINGS WOULD HAVE TO BE CHECKED AND THAT HARZA ACTUALLY EXAMINED 575 DRAWINGS. THE AGREEMENT, HOWEVER, WAS TO PERFORM ALL REQUIRED SERVICES FOR A FIXED PRICE, NOT TO CHECK 325 DRAWINGS. IN THE PRESTO CASE, THE COURT STATED AT PAGE 111-112 AS FOLLOWS:

"TO DO JUSTICE HERE WE NEED GO NO FURTHER THAN FORMULATE AND APPLY A RULE FOR CASES OF MUTUAL MISTAKE IN WHICH THE CONTRACT, PROPERLY CONSTRUED, ALLOCATES THE SPECIFIC RISK TO NEITHER PARY -- AND THE SIDE FROM WHOM RELIEF IS SOUGHT RECEIVED A BENEFIT FROM THE EXTRA WORK OF THE TYPE IT CONTEMPLATED OBTAINING FROM THE CONTRACT, AND WOULD HAVE BEEN WILLING, IF IT HAD KNOWN THE TRUE FACTS FROM THE BEGINNING, TO BEAR A SUBSTANTIAL PART OF THE ADDITIONAL EXPENSES.'

THE PRESENT CLAIM DOES NOT INVOLVE A SITUATION IN WHICH THE MODIFICATION, PROPERLY CONSTRUED, ALLOCATED THE SPECIFIC RISK TO NEITHER PARTY. THE RECORD BEFORE US FAILS TO SHOW THAT IT WAS THE INTENT OF THE CONTRACTING PARTIES, BEFORE OR AT THE TIME THE MODIFICATION WAS SIGNED, TO PROVIDE FOR PAYMENT BASED ON THE ACTUAL NUMBER OF DRAWINGS CHECKED.

HARZA AGREED TO PERFORM THE WORK FOR A FIXED SUM AND THERE WAS NO PROVISION IN THE CONTRACT FOR THE PAYMENT OF ANY ADDITIONAL SUM IF THE COST OF DOING THE WORK TURNED OUT TO BE MUCH GREATER THAN HAD BEEN EXPECTED. UNDER THESE CIRCUMSTANCES, WE BELIEVE THAT HARZA, AND NOT THE GOVERNMENT, ASSUMED THE RISK; THEREFORE THE RULE ADOPTED BY THE COURT IN THE PRESTO CASE IS NOT APPLICABLE TO THE FACTS HERE INVOLVED. RATHER, THERE IS FOR APPLICATION THE RULE ENUNCIATED BY THE COURT OF CLAIMS IN FLIPPIN MATERIALS CO. V UNITED STATES, 312 F.2D 408, 415, WHERE THE COURT HELD:

"* * * A MUTUAL MISTAKE AS TO A FACT OR FACTOR, EVEN A MATERIAL ONE, WILL NOT SUPPORT RELIEF IF THE CONTRACT PUTS THE RISK OF SUCH A MISTAKE ON THE PARTY ASKING REFORMATION (UNITED STATES V HATHAWAY,242 F.2D 897 (C.A.9, 1957), OR NORMALLY IF THE OTHER PARTY, THOUGH MADE AWARE OF THE CORRECT FACTS, WOULD NOT HAVE AGREED AT THE OUTSET TO THE CHANGE NOW SOUGHT * *

YOUR LETTER OF JANUARY 30, 1969, DOES NOT FURNISH ANY ADDITIONAL FACTS NOT CONSIDERED AT THE TIME OF OUR PRIOR DECISIONS. ACCORDINGLY, WE PERCEIVE NO LEGAL BASIS UPON WHICH TO ALLOW THE CLAIM AND OUR DECISION OF AUGUST 7, 1968, IS AFFIRMED.