A-27641, JUNE 19, 1929, 8 COMP. GEN. 654

A-27641: Jun 19, 1929

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CONTRACTS - OPTIONS FOR RENEWAL - WATER SUPPLY WHERE THE UNITED STATES REQUIRES THE INSTALLATION OF WATER MAINS BY A CITY WHICH IS UNWILLING TO DO SO UNLESS THE GOVERNMENT WILL AGREE TO ENTER INTO A CONTRACT FOR THE WATER AT A CERTAIN PRICE. SUCH A CONTRACT MAY BE ENTERED INTO PROVIDED THERE ARE SUFFICIENT FUNDS KEPT AVAILABLE TO PAY THE STIPULATED AMOUNT AT THE END OF ANY FISCAL YEAR SHOULD THE OPTION NOT BE EXERCISED. WAS TWO DEEP WELLS. THAT THE SUPPLY OF WATER THEREFROM APPEARS TO BE GRADUALLY DIMINISHING AND IS NOT SUFFICIENT TO MEET THE PRESENT AND ANTICIPATED NEEDS OF THE HOSPITAL. THAT THE ALTERNATIVE SOURCES OF SUPPLY ARE THE SHAWSHEEN RIVER. 000 GALLONS OF WATER AND IS LIABLE TO CONTAMINATION AND DIMINUTION DURING PERIODS OF DROUGHT.

A-27641, JUNE 19, 1929, 8 COMP. GEN. 654

CONTRACTS - OPTIONS FOR RENEWAL - WATER SUPPLY WHERE THE UNITED STATES REQUIRES THE INSTALLATION OF WATER MAINS BY A CITY WHICH IS UNWILLING TO DO SO UNLESS THE GOVERNMENT WILL AGREE TO ENTER INTO A CONTRACT FOR THE WATER AT A CERTAIN PRICE, WITH AN OPTION FOR RENEWAL AT THE END OF EACH YEAR FOR A 24-YEAR PERIOD, OR PAY A STIPULATED SUM AT THE END OF EACH YEAR SHOULD THE OPTION NOT BE EXERCISED BY THE GOVERNMENT, SUCH A CONTRACT MAY BE ENTERED INTO PROVIDED THERE ARE SUFFICIENT FUNDS KEPT AVAILABLE TO PAY THE STIPULATED AMOUNT AT THE END OF ANY FISCAL YEAR SHOULD THE OPTION NOT BE EXERCISED.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, JUNE 19, 1929:

THERE HAS BEEN RECEIVED YOUR LETTER, DATED JUNE 12, 1929, TO THE EFFECT THAT THE ONLY AVAILABLE WATER SUPPLY AT THE UNITED STATES VETERANS' HOSPITAL, BEDFORD, MASS., WAS TWO DEEP WELLS; THAT THE SUPPLY OF WATER THEREFROM APPEARS TO BE GRADUALLY DIMINISHING AND IS NOT SUFFICIENT TO MEET THE PRESENT AND ANTICIPATED NEEDS OF THE HOSPITAL; THAT THE ALTERNATIVE SOURCES OF SUPPLY ARE THE SHAWSHEEN RIVER, FROM WHICH THE TOWN OF BEDFORD TAKES APPROXIMATELY 50,000 GALLONS OF WATER AND IS LIABLE TO CONTAMINATION AND DIMINUTION DURING PERIODS OF DROUGHT, AND THE METROPOLITAN DISTRICT WATER SUPPLY FROM WHICH THE TOWN OF LEXINGTON SECURES ITS WATER; AND THAT THE LEGISLATURE OF MASSACHUSETTS HAD AUTHORIZED THE TOWN OF LEXINGTON TO EXTEND ITS WATER SYSTEM TO THE BEDFORD HOSPITAL, A DISTANCE OF APPROXIMATELY 6 MILES. YOU REQUEST DECISION WHETHER A PROPOSAL SUBMITTED BY THE BOARD OF SELECTMEN OF THE TOWN OF LEXINGTON MAY BE ACCEPTED.

THE PROPOSAL IS, IN PERTINENT PART, AS FOLLOWS:

IT IS PROPOSED THAT THE TOWN OF LEXINGTON (HEREINAFTER CALLED "THE TOWN") SHALL ENTER INTO A CONTRACT IN WRITING WITH THE UNITED STATES VETERANS' BUREAU FOR A PERIOD OF ONE YEAR, TO SELL WATER TO THE SAID VETERANS' BUREAU FOR THE PURPOSE OF SUPPLYING THE VETERANS' BUREAU HOSPITAL IN BEDFORD, MASSACHUSETTS, AT A PRICE OF TWENTY-FOUR CENTS PER ONE HUNDRED CUBIC FEET, PLUS AN ADDITIONAL CHARGE PER ONE HUNDRED CUBIC FEET EQUAL TO ANY INCREASE IN FUTURE YEARS IN THE RATIO BETWEEN THE AMOUNT APPORTIONED ON AND CHARGED TO THE SAID TOWN OF LEXINGTON BY THE METROPOLITAN DISTRICT COMMISSION OF MASSACHUSETTS, UNDER MASSACHUSETTS GENERAL LAWS, CHAPTER 92, SECTION 26, AND ACTS IN AMENDMENT THEREOF, AND IN ADDITION THERETO, AND THE TOTAL NUMBER OF CUBIC FEET OF WATER DELIVERED BY THE SAID COMMISSION TO THE SAID TOWN IN ANY YEAR OVER THE RATIO BETWEEN THE SAME ITEMS AS THEY EXISTED FOR THE YEAR 1928, AND ALSO PLUS ANY ADDITIONAL AMOUNT THAT MAY BE APPORTIONED ON OR CHARGED TO THE SAID TOWN OF LEXINGTON IN ANY YEAR UNDER SECTION 3 OF CHAPTER 323 OF THE ACTS AND RESOLVES OF MASSACHUSETTS OF 1927.

AT THE OPTION OF THE GOVERNMENT THIS CONTRACT MAY BE RENEWED FROM YEAR TO YEAR FOR A PERIOD OF TWENTY-FIVE YEARS AFTER THE COMMENCEMENT DATE AS SHOWN HEREON, UPON NOTICE IN WRITING TO THE TOWN AT LEAST THIRTY (30) DAYS PRIOR TO THE EXPIRATION DATE OF SAID CONTRACT.

IT IS AGREED BY BOTH PARTIES HERETO THAT BEFORE THE TOWN WILL BE ABLE TO FURNISH SERVICE CONTEMPLATED UNDER THIS AGREEMENT, IT WILL BE NECESSARY FOR THE TOWN TO MAKE CERTAIN INSTALLATIONS OF EQUIPMENT, WHICH WILL BE USED PRIMARILY FOR THE DELIVERY OF SERVICE TO THE GOVERNMENT, AND THAT SUCH INSTALLATIONS WILL BE A LOSS TO THE TOWN SHOULD THE GOVERNMENT FAIL TO UTILIZE THE SERVICE CONTEMPLATED HEREIN AND IT HAS BEEN DETERMINED BY BOTH PARTIES THAT THE MINIMUM COST OF THIS INSTALLATION IS $200,000.00, EXCLUSIVE OF THE COST OF THE WATER LINE IN THE TOWN OF BEDFORD, MASSACHUSETTS. IT IS FURTHER UNDERSTOOD AND AGREED THAT IN CONSIDERATION OF SAID INSTALLATION, WHICH IS PRIMARILY FOR THE PURPOSE OF FURNISHING SERVICE TO THE GOVERNMENT, SHOULD THE SAID VETERANS' BUREAU FAIL TO RENEW THIS CONTRACT FOR ANY SUCCEEDING FISCAL YEAR, THERE SHALL BECOME DUE AND PAYABLE TO THE TOWN THE AMOUNT AND FOR THE RESPECTIVE FISCAL YEAR, AS FOLLOWS:

TABLE FISCAL YEAR JULY 1, 1929, TO JUNE 30, 1930--- $150,000.00 FISCAL YEAR JULY 1, 1930, TO JUNE 30, 1931--- 144,000.00. FISCAL YEAR JULY 1, 1931, TO JUNE 30, 1932--- 138,000.00. FISCAL YEAR JULY 1, 1932, TO JUNE 30, 1933--- 132,000.00. FISCAL YEAR JULY 1, 1933, TO JUNE 30, 1934---

126,000.00. FISCAL YEAR JULY 1, 1934, TO JUNE 30, 1935--- 120,000.00. FISCAL YEAR JULY 1, 1935, TO JUNE 30, 1936--- 114,000.00 FISCAL YEAR JULY 1, 1936, TO JUNE 30, 1937--- 108,000.00. FISCAL YEAR JULY 1, 1937, TO JUNE 30, 1938--- 102,000.00. FISCAL YEAR JULY 1, 1938, TO JUNE 30, 1939-- - 96,000.00. FISCAL YEAR JULY 1, 1939, TO JUNE 30, 1940--- 90,000.00. FISCAL YEAR JULY 1, 1940, TO JUNE 30, 1941--- 84,000.00. FISCAL YEAR JULY 1, 1941, TO JUNE 30, 1942-- 78,000.00. FISCAL YEAR JULY 1, 1942, TO JUNE 30, 1943--- 72,000.00. FISCAL YEAR JULY 1, 1943, TO JUNE 30, 1944--- 66,000.00. FISCAL YEAR JULY 1, 1944, TO JUNE 30, 1945--- 60,000.00. FISCAL YEAR JULY 1, 1945, TO JUNE 30, 1946--- 54,000.00. FISCAL YEAR JULY 1, 1946, TO JUNE 30, 1947--- 48,000.00. FISCAL YEAR JULY 1, 1947, TO JUNE 30, 1948--- 42,000.00. FISCAL YEAR JULY 1, 1948, TO JUNE 30, 1949--- 36,000.00. FISCAL YEAR JULY 1, 1949, TO JUNE 30, 1950--- 30,000.00. FISCAL YEAR JULY 1, 1950, TO JUNE 30, 1951--- 24,000.00. FISCAL YEAR JULY 1, 1951, TO JUNE 30, 1952--- 18,000.00. FISCAL YEAR JULY 1, 1952, TO JUNE 30, 1953-- 12,000.00. FISCAL YEAR JULY 1, 1953, TO JUNE 30, 1954--- 6,000.00. FISCAL YEAR JULY 1, 1954, TO JUNE 30, 1955--- 0.

WHENEVER THE TOTAL REVENUE RECEIVED BY THE TOWN OF LEXINGTON FROM WATER CONSUMERS IN LEXINGTON SERVED DIRECTLY BY THE PROPOSED NEW PIPE LINE WHO ARE NOT NOW CONSUMERS FROM THE TOWN OF LEXINGTON SHALL EQUAL THE PAYMENTS WHICH THE SAID TOWN SHALL BE BOUND TO MAKE THAT YEAR FOR SERIAL PRINCIPAL AND INTEREST PAYMENTS ON BONDS ISSUED TO PAY FOR THE CONSTRUCTION OF THE SAID LINE PLUS A REASONABLE CHARGE FOR DEPRECIATION AND MAINTENANCE, THE SAID BASIC RATE OF 24 CENTS PER HUNDRED CUBIC FEET SHALL BE REDUCED TO THE LOWEST RATE THEN CHARGED BY THE SAID TOWN TO LIKE CONSUMERS IN ACCORDANCE WITH ITS PUBLISHED RATES, DULY AUTHORIZED.

THE SAID CONTRACT SHALL ALSO PROVIDE THAT THE SAID UNITED STATES VETERANS' BUREAU SHALL GUARANTEE TO THE SAID TOWN OF LEXINGTON AN AVERAGE CONSUMPTION OF AT LEAST EIGHTEEN THOUSAND CUBIC FEET PER DAY FOR ANY FISCAL YEAR DURING THE LIFE OF SAID CONTRACT AND ANY EXTENSION OR RENEWAL THEREOF.

THE CONSUMPTION OF WATER BY THE SAID VETERANS' BUREAU SHALL BE SUBJECT TO THE REASONABLE REGULATIONS AS TO WASTE AND CONSUMPTION BY USERS NOW OR HEREINAFTER MADE BY THE SAID METROPOLITAN DISTRICT COMMISSION.

THE TOWN OF LEXINGTON WILL LAY AND MAINTAIN AN 8-INCH WATER MAIN IN THE TOWN OF BEDFORD FOR THE EXCLUSIVE USE OF THE UNITED STATES VETERANS' BUREAU HOSPITAL, AS PROVIDED IN SAID CHAPTER 323 OF THE ACTS OF 1927, AND WILL INSTALL AT THE LEXINGTON-BEDFORD LINE A METER AND REGISTER AND BY- PASS AND NECESSARY VALVES TO THE APPROVAL OF THE SAID METROPOLITAN DISTRICT COMMISSION, AND IN CONSIDERATION THEREOF THE SAID VETERANS' BUREAU WILL PAY TO THE TOWN OF LEXINGTON A SERVICE CONNECTION CHARGE IN THE SUM OF $32,000.00, SAID AMOUNT TO BE PAID IN ONE LUMP SUM UPON COMPLETION OF THE WATER MAIN.

ALL WORK DONE IN THE SAID TOWN OF BEDFORD SHALL BE SUBJECT TO THE PRIOR APPROVAL AND TO THE DIRECTION OF THE SELECTMEN OF THE TOWN OF BEDFORD, MASS.

THE SAID CONTRACT SHALL PROVIDE THAT IT SHALL NOT TAKE EFFECT UNTIL IT IS APPROVED BY THE METROPOLITAN DISTRICT COMMISSION OF MASSACHUSETTS, AS REQUIRED BY SAID CHAPTER 323 OF THE ACTS OF 1927 OF MASSACHUSETTS.

NOTHING SHALL BE DONE HEREUNDER AFFECTING A STATE HIGHWAY UNLESS WITH THE PRIOR APPROVAL OF AND SUBJECT TO SUCH TERMS AND CONDITIONS AS MAY BE PRESCRIBED BY THE DEPARTMENT OF PUBLIC WORKS OF THE COMMONWEALTH OF MASSACHUSETTS.

THIS PROPOSAL IS MADE UPON THE FURTHER CONDITION THAT BEFORE THE EXECUTION OF THE CONTRACT REFERRED TO THEREIN THE VETERANS' BUREAU SHALL FURNISH TO THE SAID TOWN OF LEXINGTON A DECISION OF THE COMPTROLLER GENERAL OF THE UNITED STATES THAT THE SAID VETERANS' BUREAU HAS AUTHORITY UNDER THE LAWS OF THE UNITED STATES TO BIND THE UNITED STATES OF AMERICA BY ENTERING INTO SUCH CONTRACT.

THE PROPOSAL IN SUBSTANCE IS THAT THE TOWN SHALL CONSTRUCT THE NECESSARY WATER LINE TO SUPPLY THE HOSPITAL WITH THE WATER, THE COST OF WHICH IS ESTIMATED AT $200,000, IN CONSIDERATION OF WHICH IT WILL BE NECESSARY TO AGREE TO PAY THE COST OF SUCH INSTALLATION IN REDUCED AMOUNTS ANNUALLY SHOULD THE HOSPITAL DISCONTINUE TAKING WATER; ALSO, THAT THE HOSPITAL WILL PAY A CERTAIN RATE PER HUNDRED CUBIC FEET OF WATER USED, AND, IN ADDITION, A SERVICE CONNECTION CHARGE IN THE SUM OF $32,000. THE PROPOSAL TAKES INTO CONSIDERATION THE STATUTORY RESTRICTION UPON CONTRACTING UNDER APPROPRIATIONS ADEQUATE TO THEIR FULFILLMENT AND NOT IN EXCESS OF THE AMOUNT APPROPRIATED FOR THE FISCAL YEAR. THE PROPOSAL GIVES THE GOVERNMENT THE OPTION TO RENEW ANNUALLY, AND IT IS IN THAT CONNECTION THAT THERE IS PROVIDED THE ALTERNATIVE OBLIGATION TO MAKE A LUMP-SUM PAYMENT IN ACCORDANCE WITH THE DIMINISHING SCHEDULE, SUPRA, TO COVER THE COST OF INSTALLATION OF THE WATER LINE. IT IS OBVIOUS THAT THE SITUATION SOUGHT TO BE GUARDED AGAINST IS THAT THE TOWN BE PUT TO THE LARGE EXPENDITURE FOR CONSTRUCTING THE WATER LINE AND THEN WATER NOT BE USED.

THERE APPEARS NO LEGAL PROHIBITION TO ENTERING INTO THE AGREEMENT, PROVIDED THE APPROPRIATION UNDER WHICH EXPENDITURE FOR THE WATER MAY LAWFULLY BE MADE IS ADEQUATE TO PERMIT THE SETTING ASIDE OF A SUM SUFFICIENT TO MEET THE OBLIGATION WHICH WOULD ARISE UNDER THE AGREEMENT IN THE EVENT THE OPTION TO RENEW SHOULD NOT BE EXERCISED, IT BEING UNDERSTOOD THAT THE PROPOSED ARRANGEMENT IS BASED UPON THE NEEDS OF THE HOSPITAL FOR THE WATER, AND THAT THE TOWN CAN NOT BE REQUIRED TO FURNISH THE SAME WITHOUT BEING INSURED A PROPER RETURN ON ITS EXPENDITURE. HOWEVER, THE RESPONSIBILITY WILL BE UPON THE VETERANS' BUREAU TO SEE THAT THE APPROPRIATION FOR EACH SUCCESSIVE FISCAL YEAR FOR WHICH RENEWAL IS PROPOSED IS ADEQUATE TO ENABLE RESERVING THEREFROM THE AMOUNT THAT WOULD BE OBLIGATED TO BE PAID IN THE EVENT THE OPTION

TO RENEW SHOULD NOT BE EXERCISED FOR THE FOLLOWING FISCAL YEAR, AND TIMELY TO EXERCISE THE OPTION TO RENEW FOR EACH SUCCEEDING FISCAL YEAR FOR WHICH THE HOSPITAL SHALL REQUIRE THE WATER AND FUNDS SHALL BE AVAILABLE.