A-66231, OCTOBER 21, 1935, 15 COMP. GEN. 312

A-66231: Oct 21, 1935

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CONTRACTS - ELECTRIC CURRENT - MODIFICATION IN THE GOVERNMENT'S INTEREST THERE IS NO LEGAL OBJECTION TO MODIFICATION OF A CONTRACT FOR FURNISHING ELECTRIC CURRENT TO THE GOVERNMENT BY THE SUBSTITUTION OF RATES TO BE CHARGED THEREUNDER. THIS CONTRACT IS BASED ON THE COMPANY'S SCHEDULE NO. 7 AS TO RATE CHARGES. WHICH SCHEDULE IS MADE AVAILABLE TO INDUSTRIAL USERS WHERE THE CONTRACT CALLS FOR 50 KW OR MORE. THIS SCHEDULE DOES NOT SUPERSEDE SCHEDULE NO. 7 BUT IS AN OPTIONAL SCHEDULE. AN ANALYSIS HAS BEEN MADE OF THE EFFECT THIS SCHEDULE WOULD HAVE IF MADE EFFECTIVE FOR ELECTRIC CURRENT FURNISHED THE MARINE CORPS AT QUANTICO ON THE BASIS OF THE ELECTRIC CURRENT FURNISHED DURING THE MONTH OF JULY OF THIS YEAR.

A-66231, OCTOBER 21, 1935, 15 COMP. GEN. 312

CONTRACTS - ELECTRIC CURRENT - MODIFICATION IN THE GOVERNMENT'S INTEREST THERE IS NO LEGAL OBJECTION TO MODIFICATION OF A CONTRACT FOR FURNISHING ELECTRIC CURRENT TO THE GOVERNMENT BY THE SUBSTITUTION OF RATES TO BE CHARGED THEREUNDER, IF THE APPLICATION OF THE SUBSTITUTED RATES RESULTS IN A SAVING TO THE GOVERNMENT OF ANY CONSIDERABLE AMOUNT.

COMPTROLLER GENERAL MCCARL TO BRIGADIER GENERAL HUGH MATTHEWS, UNITED STATES MARINE CORPS, OCTOBER 21, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 7, 1935, AS FOLLOWS:

THE MARINE CORPS HAS A CONTRACT WITH THE VIRGINIA ELECTRIC AND POWER COMPANY FOR FURNISHING ELECTRIC CURRENT FOR THE MARINE BARRACKS, QUANTICO, VA., CONTRACT NOM-15932, DATED 12 MAY, 1933, AMENDED 13 FEBRUARY, 1934, AND RENEWED 16 MAY, 1934, AND 25 JUNE, 1935. THIS CONTRACT IS BASED ON THE COMPANY'S SCHEDULE NO. 7 AS TO RATE CHARGES.

THE VIRGINIA ELECTRIC AND POWER COMPANY HAS PROMULGATED A NEW INDUSTRIAL SERVICE RATE, SCHEDULE NO. 9, COPY INCLOSED, WHICH SCHEDULE IS MADE AVAILABLE TO INDUSTRIAL USERS WHERE THE CONTRACT CALLS FOR 50 KW OR MORE. THIS SCHEDULE DOES NOT SUPERSEDE SCHEDULE NO. 7 BUT IS AN OPTIONAL SCHEDULE. AN ANALYSIS HAS BEEN MADE OF THE EFFECT THIS SCHEDULE WOULD HAVE IF MADE EFFECTIVE FOR ELECTRIC CURRENT FURNISHED THE MARINE CORPS AT QUANTICO ON THE BASIS OF THE ELECTRIC CURRENT FURNISHED DURING THE MONTH OF JULY OF THIS YEAR, AS PER ATTACHED SHEET SHOWING THE BREAK-DOWN OF THE SEVERAL UNIT CHARGES, AND IT SHOWS THAT THE MARINE CORPS WOULD HAVE HAD A SAVING OF $551.11 DURING THIS MONTH HAD THE NEW SCHEDULE NO. 9 BEEN THE BASIS FOR RATE CHARGES.

IN VIEW OF THE PROVISIONS OF PARAGRAPH XI OF SCHEDULE 9, INFORMATION IS REQUESTED AS TO WHETHER THE MARINE CORPS CAN MODIFY CONTRACT NOM 15932 TO PROVIDE FOR BILLING FOR ELECTRIC CURRENT UNDER THE CONTRACT TO BE IN ACCORDANCE WITH SCHEDULE 9 IN LIEU OF SCHEDULE 7, SUBJECT TO THE PRICE OF COAL. THE ADDITIONAL CHARGE, SHOULD COAL GO ABOVE THE PRICE OF $4.00, IS NEVER AS MUCH AS THE SAVINGS EFFECTED BY OTHER PARAGRAPHS. BESIDES, $4.00 IS AN AVERAGE PRICE FOR COAL IN THE DISTRICT IN WHICH THE POWER PLANTS ARE LOCATED. INDUSTRIAL SERVICE RATE SCHEDULE NO. 9 BECAME EFFECTIVE 1 OCTOBER, 1935, AND IN ORDER THAT THE GOVERNMENT MAY RECEIVE THE BENEFIT OF THE REDUCTIONS BY USING THIS RATE, AN EARLY REPLY IS REQUESTED.

THE GENERAL RULE IS THAT A CONTRACT WITH THE UNITED STATES MAY NOT BE MODIFIED EXCEPT IN THE GOVERNMENT'S INTEREST. SEE UNITED STATES V. AMERICAN SALES CO., 27 FED./2D) 389, AFFIRMED 32 ID. 141, AND CERTIORARI DENIED 280 U.S. 574. SEE ALSO BAUSCH AND LOMB OPTICAL CO., CASE 78 CT.CLS. 584, 607. HOWEVER, THIS RULE WOULD NOT BE CONTRAVENED BY WHAT IS PROPOSED, THAT IS, WITH THE CONSENT OF THE OTHER PARTY TO THE CONTRACT, TO MODIFY THE CONTRACT SO AS TO REDUCE THE COMPENSATION TO BE PAID FOR THE SERVICE TO BE FURNISHED THEREUNDER.

IF, AS A MATTER OF FACT, THE PROPOSED MODIFICATION OF THE CONTRACT OF MAY 12, 1933, AS RENEWED, TO SUBSTITUTE THE NEW SCHEDULE 9 FOR ITS OLD SCHEDULE NO. 7 AS TO RATE CHARGES WILL RESULT IN A SAVING TO THE GOVERNMENT OF ANY CONSIDERABLE AMOUNT FOR THE ELECTRIC SERVICE REQUIRED AT THE MARINE CORPS BASE AT QUANTICO, THERE IS NO LEGAL OBJECTION TO SUCH MODIFICATION. IN FACT, IF SUCH MODIFICATION CAN BE EFFECTED, IT SHOULD BE MADE IN THE PUBLIC INTEREST.