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B-128644, AUG. 20, 1956

B-128644 Aug 20, 1956
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TO THE BRUNS OIL AND SERVICE COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JULY 6. A LETTER WAS RECEIVED ALSO FROM HONORABLE ROBERT HALS. THE CONTRACTING OFFICER WILL ISSUE A CHANGE NOTICE TO THE CONTRACT WITH RESPECT TO EACH SUCH CHANGE IN PRICE.'. THERE WAS NO AUTHORITY TO GRANT THE REQUESTED INCREASE FOR ANY PERIOD. THE CONTRACTING OFFICER'S ACTION IN REFUSING TO GRANT THE REQUESTED INCREASE WAS IN STRICT CONFORMITY WITH THE ABOVE-QUOTED PROVISIONS OF THE CONTRACT. YOU CAN READILY APPRECIATE THAT SUCH ACTION WOULD HAVE BEEN CONTRARY TO THE EXPRESS PROVISIONS OF THE CONTRACT AND WOULD HAVE CONSTITUTED AN ATTEMPT TO GIVE AWAY OR REMIT GRATUITOUSLY AN UNEQUIVOCAL CONTRACTUAL RIGHT WHICH HAD ACCRUED TO THE GOVERNMENT.

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B-128644, AUG. 20, 1956

TO THE BRUNS OIL AND SERVICE COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 6, 1956, RELATIVE TO YOUR CLAIM IN THE AMOUNT OF $157.70 REPRESENTING AN AMOUNT ALLEGED TO BE DUE BY REASON OF AN INCREASE IN THE PRICE OF FUEL OIL DELIVERED BY YOU UNDER CONTRACT NO. ASP-10850, DATED OCTOBER 13, 1954. A LETTER WAS RECEIVED ALSO FROM HONORABLE ROBERT HALS, REQUESTING CONSIDERATION OF THE CLAIM.

IN RESPONSE TO OUR REQUEST, THE ARMED SERVICES PETROLEUM PURCHASING AGENCY HAS FURNISHED A REPORT IN THE MATTER, INCLUDING PERTINENT PAPERS. THE CONTRACT ENTERED INTO BY THE ARMED SERVICES PETROLEUM PURCHASING AGENCY AND YOUR COMPANY PROVIDED FOR THE DELIVERY OF 100,000 GALLONS OF NO. 2 FUEL OIL TO FORT WILLIAMS, PORTLAND, MAINE, BY TANK WAGON DURING THE PERIOD NOVEMBER 1, 1954, TO APRIL 30, 1955, AT A PRICE OF $0.1018 PER GALLON SUBJECT TO PRICE ESCALATION UPWARD OR DOWNWARD AS SPECIFIED, SUCH ESCALATION TO BE BASED ON THE PRICE POSTED BY THE POCAHONTAS-CALSO OIL COMPANY REFERRED TO IN THE CONTRACT AS THE "REFERENCE PRICE.'

SECTION I (B) OF THE CONTRACT PROVIDES:

"THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER, ARMED SERVICES PETROLEUM PURCHASING AGENCY, WASHINGTON 25, D.C., OF ANY CHANGE IN THE "REFERENCE PRICE," BY TELEGRAM DATED (PREFERABLY CONFIRMED PROMPTLY BY LETTER), REGISTERED LETTER MAILED, OR UNREGISTERED LETTER RECEIVED, WITHIN FIVE (5) DAYS FROM THE DATE THEREOF.

"/I) IN THE EVENT THE CONTRACTOR FAILS SO TO NOTIFY THE CONTRACTING OFFICER, ANY UPWARD ADJUSTMENT IN THE UNIT PRICE/S) SHALL APPLY ONLY TO DELIVERIES MADE ON AND AFTER THE DATE OF RECEIPT BY THE CONTRACTING OFFICER OF A WRITTEN NOTIFICATION FROM THE CONTRACTOR OF SUCH CHANGE.

"/II) IN THE EVENT THE CONTRACTOR FAILS TO GIVE NOTICE OF A DECREASE, A DOWNWARD ADJUSTMENT IN UNIT PRICE/S) SHALL BE LATER EFFECTED AS TO ALL DELIVERIES MADE ON OR SUBSEQUENT TO THE DATE OF THE DECREASE.

"/III) UPON RECEIPT OF NOTICE OF SUCH CHANGE IN PRICE, THE CONTRACTING OFFICER WILL ISSUE A CHANGE NOTICE TO THE CONTRACT WITH RESPECT TO EACH SUCH CHANGE IN PRICE.'

BY LETTER DATED JUNE 9, 1955, RECEIVED BY THE ARMED SERVICES PETROLEUM PURCHASING AGENCY ON JUNE 22, 1955, YOU ADVISED THAT THE REFERENCE PRICE, AND THEREFORE YOUR PRICE, HAD INCREASED $0.006 PER GALLON EFFECTIVE DECEMBER 4, 1954, BUT THAT YOU HAD FAILED TO GET AUTHORIZATION FOR THE INCREASE AS REQUIRED BY THE CONTRACT. IN HIS REPLY DATED JUNE 23, 1955, THE CONTRACTING OFFICER ADVISED YOU THAT BECAUSE OF YOUR FAILURE TO GIVE NOTICE OF THE PRICE INCREASE IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT, THERE WAS NO AUTHORITY TO GRANT THE REQUESTED INCREASE FOR ANY PERIOD.

THE CONTRACTING OFFICER'S ACTION IN REFUSING TO GRANT THE REQUESTED INCREASE WAS IN STRICT CONFORMITY WITH THE ABOVE-QUOTED PROVISIONS OF THE CONTRACT. HAD THE CONTRACTING OFFICER ACTED OTHERWISE AND MADE THE INCREASE EFFECTIVE RETROACTIVELY TO DECEMBER 4, 1954, YOU CAN READILY APPRECIATE THAT SUCH ACTION WOULD HAVE BEEN CONTRARY TO THE EXPRESS PROVISIONS OF THE CONTRACT AND WOULD HAVE CONSTITUTED AN ATTEMPT TO GIVE AWAY OR REMIT GRATUITOUSLY AN UNEQUIVOCAL CONTRACTUAL RIGHT WHICH HAD ACCRUED TO THE GOVERNMENT. UPON THIS POINT, THE LAW IS CLEAR THAT NO OFFICER OR AGENT OF THE GOVERNMENT HAS THE AUTHORITY TO SURRENDER OR WAIVE A VESTED CONTRACTUAL RIGHT WITHOUT A COMPENSATING BENEFIT. BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.CLS. 584; PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 C.CLS. 327.

IN ITS INTERPRETATION OF SIMILAR PRICE ESCALATION CLAUSES, FREQUENTLY APPEARING IN GOVERNMENT SUPPLY CONTRACTS, THIS OFFICE HAS HELD CONSISTENTLY THAT STRICT COMPLIANCE WITH THE NOTIFICATION REQUIREMENTS OF THOSE CONTRACTS TO A "CONDITION PRECEDENT" TO THE CONSIDERATION OF CLAIMS ASSERTED THEREUNDER. SEE 22 COMP. GEN. 13; 17 ID. 744.

ACCORDINGLY, IN VIEW OF THE SPECIFIC TERMS OF THE CONTRACT AND THE ESTABLISHED LEGAL PRINCIPLES APPLICABLE THERETO, THERE IS NO AUTHORITY FOR PAYMENT OF THE REQUESTED INCREASE IN PRICE.

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