B-125746, DEC. 9, 1955

B-125746: Dec 9, 1955

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ON THE GROUND THAT AT THE TIME THE CONTRACT WAS NEGOTIATED YOU WERE UNABLE TO FIX A REALISTIC PRICE BECAUSE: 1. "EFFECTIVE COMPETITION WAS NOT AVAILABLE TO INDICATE REASONABLENESS OF PRICE DUE TO LACK OF EXPERIENCE IN THE MANUFACTURE OF THIS PARTICULAR WEAPON IN SPITE OF CERTAIN COMPETITIONS.' 2. "THERE WERE PRACTICALLY NO DATA TO INDICATE REASONABLENESS OF PRICE.'. YOU ALSO CITE IN JUSTIFICATION OF YOUR REQUEST THAT YOUR COMPANY IS SUFFERING A LOSS UNDER THE CONTRACT AND THAT THE PRICES UNDER THE CONTRACT. ARE SIGNIFICANTLY LOWER THAN THE PRICES PREVAILING IN THE UNITED STATES. WE HAVE NO ALTERNATIVE BUT TO ADVISE YOU THAT WE HAVE NO POWER OR RIGHT TO ALTER YOUR CONTRACT OR TO AUTHORIZE PAYMENT OF ANY AMOUNT IN EXCESS OF THE PRICE FIXED BY IT OR IN ACCORDANCE WITH ITS TERMS.

B-125746, DEC. 9, 1955

TO THE JAPAN STEEL WORKS, LTD.:

YOUR LETTER OF SEPTEMBER 14, 1955, YOUR REFERENCE NO. 1947, REQUESTS AN UPWARD PRICE REVISION ON CONTRACT NO. DA-92-557-FEC-16485, BEYOND THE TEN PERCENT UPWARD REVISION PERMITTED UNDER THE PRICE REDETERMINATION ARTICLE OF THE CONTRACT, ON THE GROUND THAT AT THE TIME THE CONTRACT WAS NEGOTIATED YOU WERE UNABLE TO FIX A REALISTIC PRICE BECAUSE:

1. "EFFECTIVE COMPETITION WAS NOT AVAILABLE TO INDICATE REASONABLENESS OF PRICE DUE TO LACK OF EXPERIENCE IN THE MANUFACTURE OF THIS PARTICULAR WEAPON IN SPITE OF CERTAIN COMPETITIONS.'

2. "THERE WERE PRACTICALLY NO DATA TO INDICATE REASONABLENESS OF PRICE.'

YOU ALSO CITE IN JUSTIFICATION OF YOUR REQUEST THAT YOUR COMPANY IS SUFFERING A LOSS UNDER THE CONTRACT AND THAT THE PRICES UNDER THE CONTRACT, INCLUDING THE REQUESTED INCREASE, ARE SIGNIFICANTLY LOWER THAN THE PRICES PREVAILING IN THE UNITED STATES.

WE HAVE NO ALTERNATIVE BUT TO ADVISE YOU THAT WE HAVE NO POWER OR RIGHT TO ALTER YOUR CONTRACT OR TO AUTHORIZE PAYMENT OF ANY AMOUNT IN EXCESS OF THE PRICE FIXED BY IT OR IN ACCORDANCE WITH ITS TERMS. AS STATED IN OUR DECISION OF FEBRUARY 1, 1951, B-99825, IN A SIMILAR CASE:

"* * * HOWEVER, IT IS NOT WITHIN THE JURISDICTION OF THE GENERAL ACCOUNTING OFFICE, UPON THE REQUEST OF A GOVERNMENT CONTRACTOR, TO AMEND A CONTRACT OR TO AUTHORIZE THE CONTRACTOR TO BILL THE (UNITED STATES) GOVERNMENT AT A PRICE IN EXCESS OF THAT SPECIFIED IN THE CONTRACT. THE ESTABLISHED RULE IS THAT WHERE A CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION OR PRICE TO BE PAID, SUCH STIPULATION IS CONCLUSIVE ON THE PARTIES AND MEASURES THE AMOUNT OF RECOVERY FOR PERFORMANCE. SEE BRAWLEY V. UNITED STATES, 96 U.S. 168, AND SIMPSON V. UNITED STATES, 172 U.S. 372. ALSO, THE LAW IS WELL SETTLED THAT A (UNITED STATES) GOVERNMENT CONTRACT MAY NOT BE MODIFIED OR AMENDED, EXCEPT IN THE INTEREST OF THE UNITED STATES, AND THAT THE GOVERNMENT'S LIABILITY AS FIXED IN A CONTRACT MAY NOT BE INCREASED BY A SUPPLEMENTAL AGREEMENT WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT. CHRISTIE V. UNITED STATES, 237 U.S. 234; SHIPMAN V. DISTRICT OF COLUMBIA, 18 C.CLS. 291; J. J. PREIS AND CO. V. UNITED STATES, 58 C.CLS. 81. ALSO, SEE YALE AND TOWN MFG. CO. V. UNITED STATES, 67 C.CLS. 618.'

IF ANY LEGAL BASIS FOR RELIEVING YOU OF ANY PART OF YOUR LOSSES COULD BE FOUND, ACTION TO THAT END WOULD HAVE TO BE INITIATED BY THE DEPARTMENT OF THE ARMY, AS THE AGENCY IN CHARGE OF THE ADMINISTRATION OF THE CONTRACT.