B-126382, DEC. 28, 1955

B-126382: Dec 28, 1955

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE HONORABLE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO A LETTER DATED DECEMBER 16. INQUIRING AS TO WHETHER WE WOULD HAVE ANY LEGAL OBJECTION TO THE NEGOTIATION OF A NEW CONTRACT WITH THE CITY OF ROME. OUR VIEWS ARE ALSO REQUESTED ON THE QUESTION OF GIVING RETROACTIVE EFFECT TO JANUARY 1. IT IS REPORTED THAT A CURRENT CONTRACT. THE CONTRACT IS RENEWABLE ANNUALLY AND IS STILL IN EFFECT. THE WATER CONTRACT WAS EXECUTED BY THE CITY PURSUANT TO ITS RESOLUTION OF APRIL 24. THE LETTER FURTHER REPORTS THAT YOUR DEPARTMENT FEELS THERE ARE CIRCUMSTANCES IN THIS INSTANCE WHICH WOULD WARRANT CANCELLATION OF THE WATER CONTRACT AND IS WILLING TO NEGOTIATE A NEW CONTRACT PROVIDING FOR PAYMENT BY THE GOVERNMENT FOR WATER AND SEWAGE SERVICE TO THE BASE IN THE SAME MANNER AND AT RATES APPLICABLE TO LIKE USERS SIMILARLY SITUATED IN THE CITY.

B-126382, DEC. 28, 1955

TO THE HONORABLE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 16, 1955, AND ENCLOSURES, FROM THE DEPUTY FOR PROCUREMENT AND PRODUCTION, INQUIRING AS TO WHETHER WE WOULD HAVE ANY LEGAL OBJECTION TO THE NEGOTIATION OF A NEW CONTRACT WITH THE CITY OF ROME, NEW YORK, A MUNICIPAL CORPORATION, FOR FURNISHING POTABLE WATER AND SEWAGE DISPOSAL SERVICES TO THE GRIFFISS AIR FORCE BASE, ROME, NEW YORK. OUR VIEWS ARE ALSO REQUESTED ON THE QUESTION OF GIVING RETROACTIVE EFFECT TO JANUARY 1, 1955, TO SUCH CONTRACT.

IT IS REPORTED THAT A CURRENT CONTRACT, AF30/602/-968, DATED DECEMBER 10, 1953, WITH THE CITY, PROVIDES FOR A PAYMENT OF $6,500 PER YEAR FOR SEWAGE SERVICES. THE CONTRACT IS RENEWABLE ANNUALLY AND IS STILL IN EFFECT. HOWEVER, THE CITY OF ROME HAS BEEN FURNISHING WATER FROM ITS MUNICIPAL WATER SYSTEM TO GRIFFISS AIR FORCE BASE, FORMERLY AN ARMY AIR CORPS SUPPLY DEPOT, FOR 14 YEARS, WITHOUT CHARGE, PURSUANT TO THE PROVISIONS OF CONTRACT W-321-ENG-314, DATED SEPTEMBER 18, 1941. THE WATER CONTRACT WAS EXECUTED BY THE CITY PURSUANT TO ITS RESOLUTION OF APRIL 24, 1941, AS AN INDUCEMENT TO THE GOVERNMENT TO LOCATE ITS FACILITIES WITHIN THE CITY LIMITS AND PROVIDES FOR FURNISHING STATED QUANTITIES OF POTABLE WATER WITHOUT COST TO THE GOVERNMENT FOR AS LONG A PERIOD AS THE GOVERNMENT OPERATES ITS FACILITIES FOR GOVERNMENT PURPOSES.

THE LETTER FURTHER REPORTS THAT YOUR DEPARTMENT FEELS THERE ARE CIRCUMSTANCES IN THIS INSTANCE WHICH WOULD WARRANT CANCELLATION OF THE WATER CONTRACT AND IS WILLING TO NEGOTIATE A NEW CONTRACT PROVIDING FOR PAYMENT BY THE GOVERNMENT FOR WATER AND SEWAGE SERVICE TO THE BASE IN THE SAME MANNER AND AT RATES APPLICABLE TO LIKE USERS SIMILARLY SITUATED IN THE CITY. AT PRESENT, THE CITY SEWAGE CHARGES ARE 25 PERCENTUM OF THE WATER CHARGES, BASED UPON WATER USAGE, WHICH IS NOT OBJECTIONABLE. SEE B- 32265, MARCH 27, 1943. UNDER PREVAILING WATER RATES AND AT THE BASE'S PRESENT RATE OF CONSUMPTION OF WATER, THE NEW CONTRACT--- WHICH WILL MAKE UNNECESSARY A RENEWAL OF THE SEWAGE CONTRACT--- WOULD RESULT IN AN INCREASED COST TO THE GOVERNMENT OF APPROXIMATELY $9,500 ANNUALLY. HOWEVER, WHILE THE CURRENT SEWAGE C CONTRACT WOULD TERMINATE AT THE END OF ANY YEAR, IF NOT RENEWED, THE QUESTION ARISES AS TO WHETHER THE "FREE- WATER" CONTRACT MAY BE CANCELLED.

INASMUCH AS THE WATER CONTRACT PROVIDES FOR FURNISHING BY THE CITY OF FREE WATER "FOR AS LONG A PERIOD AS THE GOVERNMENT OPERATES SAID * * * (BASE) * * * FOR GOVERNMENT PURPOSES" AND WE HAVE BEEN INFORMALLY ADVISED THAT THE GRIFFISS AIR FORCE BASE, AMONG OTHERS, HAS BEEN DESIGNATED ,PERMANENT" AS OF DECEMBER 24, 1952, BY GENERAL ORDER NO. 27, DATED MARCH 30, 1955, IT MUST BE CONCLUDED THAT THE WATER CONTRACT IS FOR AN UNLIMITED PERIOD OF TIME.

AS STATED IN OUR DECISION OF FEBRUARY 24, 1955, B-15556, 34 COMP. GEN. 398, IT IS A WELL-ESTABLISHED RULE OF LAW THAT CONTRACTS OF A MUNICIPAL CORPORATION MADE TO CONTINUE FOR AN UNLIMITED TIME, IF CONSTRUED TO CONTINUE IN PERPETUO, ARE INVALID. SEE BOISE CITY, IDAHO V. BOISE ARTESIAN HOT AND COLD WATER CO., 185 F. 705 (CERTIORARI DENIED 220 U.S. 616), AND OTHER COURT CASES CITED. A MUNICIPAL CONTRACT FOR AN INDEFINITE TIME HAS BEEN CONSTRUED AS CONTINUING IN FORCE FOR A REASONABLE TIME ONLY, AND HAS BEEN SUSTAINED ON THAT BASIS. CITY OF BARRE V. PERRY AND SCRIBNER, 73 A. 574. SEE, ALSO, B 123801, DECEMBER 7, 1955.

IN VIEW OF THE FACT THAT THE CITY HAD FURNISHED FREE WATER TO THE BASE FOR MORE THAN 13 YEARS, THERE IS NO APPARENT JUSTIFICATION FOR CONCLUDING THAT A "REASONABLE TIME" PERIOD HAD NOT BEEN FULFILLED AS OF JANUARY 1, 1955, OR THAT THE CITY WAS THEREAFTER CONTRACTUALLY BOUND TO CONTINUE FURNISHING FREE WATER.

WITH RESPECT TO THE EFFECTIVE DATE OF THE PROPOSED NEW CONTRACT, THE SEWER CONTRACT IS STILL IN EFFECT--- PRESUMABLY BY VIRTUE OF ITS RENEWAL FOR THE CALENDAR YEAR 1955--- AND THERE IS NO AUTHORITY FOR THE RETROACTIVE APPLICATION TO JANUARY 1, 1955, OF A CONTRACT COVERING BOTH WATER AND SEWER CHARGES. HOWEVER, IN THE ABSENCE OF A CONTRACT APPLICABLE TO FURNISHING WATER FROM JANUARY 1, 1955, IT APPEARS THAT THE GOVERNMENT PROPERLY MAY PAY FOR WATER ON A QUANTUM MERUIT BASIS AND THAT THE CITY'S PUBLISHED WATER RATES MAY BE ACCEPTED AS A PROPER MEASURE OF THE VALUE OF THE SERVICES. IN THIS CONNECTION, IT IS NOTED THAT THE COMMON COUNCIL OF THE CITY, BY ORDINANCE NO. 1892, DATED OCTOBER 27, 1954, RESCINDED ITS ORDINANCE NO. 1808, ADOPTED JUNE 24, 1954, WHICH IMPOSED AN ADDITIONAL AMOUNT ON WATER USERS SIMILARLY SITUATED WITH THE BASE AND THAT THE RESCISSION APPARENTLY WAS AT THE INSISTENCE OF THE REPRESENTATIVES OF THE AIR FORCE AS A PREREQUISITE TO NEGOTIATION OF A NEW CONTRACT. THE FIRST CITY BILLING FOR WATER APPARENTLY WAS AS OF JANUARY 1, 1955.

ACCORDINGLY, WE WILL INTERPOSE NO LEGAL OBJECTION TO THE NEGOTIATION OF A NEW CONTRACT FOR WATER AND SEWER SERVICES EFFECTIVE AS OF JANUARY 1, 1956, OR TO THE PAYMENT FOR WATER FURNISHED DURING THE CALENDAR YEAR 1955 ON A QUANTUM MERUIT BASIS.