A-59030, DECEMBER 15, 1934, 14 COMP. GEN. 468

A-59030: Dec 15, 1934

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A WAIVER OF LIQUIDATED DAMAGES CHARGEABLE UNDER A GOVERNMENT CONTRACT IS NOT WITHIN ADMINISTRATIVE DISCRETION. WAS AWARDED CONTRACT I-1-SH-3 "FOR DRILLING SIXTY (60) WATER WELLS. " IS ENCLOSED HEREWITH. ON THE SAME DATE NOTICE OF AWARD WAS MAILED TO THE COMPANY. " IS ENCLOSED HEREWITH. THE SPECIFICATIONS WHICH ARE PART OF THE CONTRACT REQUIRE COMPLETION WITHIN 12 CALENDAR WEEKS AFTER NOTIFICATION OF AWARD. TWELVE WEEKS HAVE ELAPSED BUT PERFORMANCE HAS NOT BEEN COMPLETED. " IS ENCLOSED HEREWITH. FEDERAL SUBSISTENCE HOMESTEADS CORPORATION HAS DISCOVERED THAT THE DEPTH TO WHICH THE WELLS MUST BE DRILLED IS GREATER THAN HAD BEEN CONTEMPLATED ORIGINALLY. THE COST OF DRILLING UNDER THE OUTSTANDING CONTRACT IS DETERMINED BY THE DEPTH OF THE WELLS.

A-59030, DECEMBER 15, 1934, 14 COMP. GEN. 468

CONTRACTS - WAIVER OF LIQUIDATED DAMAGES - MODIFICATION NO GOVERNMENTAL AGENT HAVING AUTHORITY TO WAIVE A VESTED RIGHT OF THE GOVERNMENT, A WAIVER OF LIQUIDATED DAMAGES CHARGEABLE UNDER A GOVERNMENT CONTRACT IS NOT WITHIN ADMINISTRATIVE DISCRETION. NO OFFICER OR AGENT OF THE GOVERNMENT HAS AUTHORITY TO MODIFY A GOVERNMENT CONTRACT EXCEPT IN THE INTEREST OF THE UNITED STATES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, DECEMBER 15, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF NOVEMBER 28, 1934, AS FOLLOWS:

ON JUNE 25, 1934, THE VIRGINIA MACHINERY AND WELL COMPANY, INCORPORATED, WAS AWARDED CONTRACT I-1-SH-3 "FOR DRILLING SIXTY (60) WATER WELLS, FURNISHING AND SETTING CASING COMPLETE, $2.00 PER FOOT.' A COPY OF THAT CONTRACT, MARKED "EXHIBIT A," IS ENCLOSED HEREWITH. ON THE SAME DATE NOTICE OF AWARD WAS MAILED TO THE COMPANY. A COPY OF THE LETTER OF NOTIFICATION, MARKED "EXHIBIT B," IS ENCLOSED HEREWITH.

THE SPECIFICATIONS WHICH ARE PART OF THE CONTRACT REQUIRE COMPLETION WITHIN 12 CALENDAR WEEKS AFTER NOTIFICATION OF AWARD. TWELVE WEEKS HAVE ELAPSED BUT PERFORMANCE HAS NOT BEEN COMPLETED. UNDER DATE OF OCTOBER 18 THE CONTRACTOR MADE FORMAL REQUEST FOR AN EXTENSION OF TIME. A COPY OF THIS REQUEST, MARKED "EXHIBIT C," IS ENCLOSED HEREWITH.

PENDING CONSIDERATION OF THIS REQUEST, FEDERAL SUBSISTENCE HOMESTEADS CORPORATION HAS DISCOVERED THAT THE DEPTH TO WHICH THE WELLS MUST BE DRILLED IS GREATER THAN HAD BEEN CONTEMPLATED ORIGINALLY. THE COST OF DRILLING UNDER THE OUTSTANDING CONTRACT IS DETERMINED BY THE DEPTH OF THE WELLS. THUS, THE COST OF THE OPERATION CONTRACTED FOR WILL UNBALANCE THE BUDGET OF THE HOMESTEAD PROJECT IN QUESTION.

THE ENGINEERS ON THE PROJECT HAVE NOW SUBMITTED A PLAN WHEREBY THE NUMBER OF WELLS CAN BE CUT FROM 60 TO 39. THE VIRGINIA MACHINERY AND WELL COMPANY, INCORPORATED WILL AGREE TO APPROPRIATE MODIFICATION OF THE CONTRACT PROVIDED THE PENALTY FOR FAILURE TO COMPLETE DRILLING WITHIN THE SPECIFIED TIME IS WAIVED. THE CONSTRUCTION SECTION OF FEDERAL SUBSISTENCE HOMESTEADS CORPORATION CONSIDERS THE REDUCTION OF THE NUMBER OF WELLS DESIRABLE AND STATES THAT THE GOVERNMENT HAS NOT BEEN DAMAGED IN ANY WAY BY THE FAILURE OF THE CONTRACTOR TO COMPLETE PERFORMANCE WITHIN THE AGREED TIME.

IN THIS SITUATION MAY I REQUEST YOUR OPINION UPON THE TWO FOLLOWING QUESTIONS:

1. IS A WAIVER OF LIQUIDATED DAMAGES UNDER CONTRACT I-1-SH-3 WITHIN ADMINISTRATIVE DISCRETION?

2. MAY THE PARTIES TO THE CONTRACT, BY MUTUAL AGREEMENT, REDUCE THE REQUIRED NUMBER OF WELLS FROM 60 TO 39?

SINCE THE FUTURE COURSE OF WORK NOW IN PROGRESS IS INVOLVED IN THIS SUBMISSION, YOUR DECISION IS REQUESTED AT THE EARLIEST CONVENIENT DATE.

A WAIVER OF LIQUIDATED DAMAGES UNDER CONTRACT I-1-SH-3 IS NOT WITHIN ADMINISTRATIVE DISCRETION. UPON FAILURE OF THE CONTRACTOR TO PERFORM THE WORK COVERED BY THE CONTRACT WITHIN THE CONTRACT PERIOD AND SUCH ADDITION THERETO AS MAY BE ALLOWED UNDER THE FACTS AND THE TERMS OF THE CONTRACT, THE RIGHT TO CHARGE SUCH CONTRACTOR WITH LIQUIDATED DAMAGES AS PROVIDED BY THE CONTRACT BECAME VESTED IN THE GOVERNMENT. NO GOVERNMENTAL AGENT HAS AUTHORITY TO WAIVE A VESTED RIGHT OF THE GOVERNMENT. PACIFIC HARDWARE CO. V. UNITED STATES, 49 CT.CLS. 327, 335. IT MAY BE, HOWEVER, THAT UNDER THE FACTS AS FINALLY ASCERTAINED AND REPORTED TO THIS OFFICE, AND THE LAW APPLICABLE THERETO, PORTIONS OF THE DELAY IN COMPLETION MAY BE FOUND TO BE LEGALLY EXCUSABLE, BUT SUFFICIENT FACTS HAVE NOT BEEN SUBMITTED TO PERMIT OF ANY PRESENT DETERMINATION RESPECTING THIS PHASE OF THE PROBLEM.

THE PARTIES TO THE CONTRACT, BY MUTUAL AGREEMENT, MAY REDUCE THE AMOUNT OF WORK IF SUCH ACTION IS IN THE INTEREST OF THE GOVERNMENT. IF THE NEEDS OF THE GOVERNMENT IN THIS INSTANCE WILL BE SUPPLIED BY 39 WELLS, IT WOULD APPEAR TO BE IN THE INTEREST OF THE UNITED STATES TO AGREE TO A REDUCTION IN THE NUMBER OF WELLS TO BE DRILLED UNDER THE CONTRACT. BUT IF 60 WELLS ARE REQUIRED TO SUPPLY THE NEED OF THE GOVERNMENT AND THE REMAINDER ARE TO BE DRILLED LATER UNDER ANOTHER CONTRACT AND POSSIBLY AT AN INCREASED COST, A MODIFICATION OF THIS CONTRACT BY REDUCING THE NUMBER OF WELLS WOULD NOT, OF COURSE, BE IN THE INTEREST OF THE UNITED STATES AND NO OFFICER OR AGENT OF THE GOVERNMENT HAS AUTHORITY TO MODIFY A CONTRACT EXCEPT IN THE INTERESTS OF THE UNITED STATES.