B-126751, FEB. 9, 1956

B-126751: Feb 9, 1956

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SOUTHWESTERN POWER ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 17. REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO CERTIFY FOR PAYMENT INVOICE NO. 60-94416-A. THE CONTRACT WAS MADE SUBJECT TO ADJUSTMENT OF THE PRICE. ON THE DATE OF DELIVERY WHICH IS ON A PRIOR TO THE DELIVERY DATE SPECIFIED IN THE CONTRACT OR SUBSEQUENT THERETO IN CASES WHERE THE CONTRACT DELIVERY DATE HAS NOT BEEN EXTENDED BY THE CONTRACTING OFFICER. THE CONTRACTOR'S APPLICABLE ESTABLISHED PRICE FOR THE EQUIPMENT OR ANY COMPLETE UNIT THEREOF IS HIGHER OR LOWER THAN THE CONTRACTOR'S BID PRICE (DISREGARDING ANY ADJUSTMENT). THE CONTRACT PRICE WILL BE ADJUSTED UP OR DOWN BY SUCH AMOUNT OF INCREASE OR DECREASE.

B-126751, FEB. 9, 1956

TO MR. EDWARD MCCABE, JR., AUTHORIZED CERTIFYING OFFICER, SOUTHWESTERN POWER ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 17, 1956, REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO CERTIFY FOR PAYMENT INVOICE NO. 60-94416-A, DATED OCTOBER 11, 1955, IN THE AMOUNT OF $1,202.87, PRESENTED BY WESTINGHOUSE ELECTRIC CORPORATION.

THE INVOICE COVERS A PRICE INCREASE OF 10 PERCENT CLAIMED BY THE CORPORATION IN CONNECTION WITH CONTRACT NO. 14-02-001-639, DATED JUNE 15, 1953, UNDER WHICH THE CORPORATION AGREED TO FURNISH TWO CIRCUIT BREAKERS AND OTHER SUBSTATION EQUIPMENT TO THE SOUTHWESTERN POWER ADMINISTRATION FOR A MAXIMUM POSSIBLE COST OF $23,001.77. IT APPEARS THAT THE CONTRACTS HAS BEEN PERFORMED SATISFACTORILY AND PAYMENT MADE TO THE CONTRACTOR IN THE AMOUNT OF $19,587.25 IN FULL PAYMENT EXCEPTING THE AMOUNT CLAIMED ON THE SUBJECT INVOICE.

THE CONTRACT WAS MADE SUBJECT TO ADJUSTMENT OF THE PRICE--- NOT TO EXCEED 20 PERCENT OF THE BID PRICE AS TO LOT NO. 2 AND NOT TO EXCEED 10 PERCENT OF THE BID PRICE AS TO LOT NO. 4--- IN ACCORDANCE WITH PARAGRAPH 21 OF THE GENERAL PROVISIONS WHICH PROVIDES IN PART AS FOLLOWS:

"IF, ON THE DATE OF DELIVERY WHICH IS ON A PRIOR TO THE DELIVERY DATE SPECIFIED IN THE CONTRACT OR SUBSEQUENT THERETO IN CASES WHERE THE CONTRACT DELIVERY DATE HAS NOT BEEN EXTENDED BY THE CONTRACTING OFFICER, THE CONTRACTOR'S APPLICABLE ESTABLISHED PRICE FOR THE EQUIPMENT OR ANY COMPLETE UNIT THEREOF IS HIGHER OR LOWER THAN THE CONTRACTOR'S BID PRICE (DISREGARDING ANY ADJUSTMENT), THE CONTRACT PRICE WILL BE ADJUSTED UP OR DOWN BY SUCH AMOUNT OF INCREASE OR DECREASE, PROVIDED, HOWEVER, THAT THE PRICE PAID FOR THE EQUIPMENT SHALL NOT EXCEED THE BID PRICE BY MORE THAN THE MAXIMUM PERCENTAGE SET FORTH IN THE SCHEDULE, BUT IN NO EVENT SHALL SUCH PRICE EXCEED ANY MAXIMUM CEILING PRICE ESTABLISHED BY THE ECONOMIC STABILIZATION AGENCY, OR OTHER AUTHORIZED GOVERNMENT AGENCY, IN EFFECT AT TIME OF SHIPMENT, AND PROVIDED FURTHER, THAT THE CONTRACTING OFFICER HAS APPROVED IN WRITING ANY PROPOSED CHANGE IN THE PRICE OF ARTICLES TO BE DELIVERED UNDER THE CONTRACT IN ACCORDANCE WITH THE PROCEDURE SET FORTH HEREUNDER.

"THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER IN WRITING CONCERNING ANY PROPOSED CHANGE IN THE PRICE OF ARTICLES TO BE DELIVERED UNDER THE CONTRACT NOT LATER THAN THIRTY (30) DAYS SUBSEQUENT TO CHANGE IN PRICES, OR FIFTEEN (15) DAYS PRIOR TO THE DAY ON WHICH SHIPMENT IS TO BE MADE, WHICHEVER DATE IS EARLIER. IN THE EVENT THE PROPOSED ADJUSTMENT IN ANY CONTRACT UNIT PRICE IS ACCEPTABLE TO THE CONTRACTING OFFICER, HE SHALL IMMEDIATELY NOTIFY THE CONTRACTOR IN WRITING TO PROCEED WITH SHIPMENT. ANY PROPOSED ADJUSTMENT IN PRICE IS NOT ACCEPTABLE TO THE CONTRACTING OFFICER, THE GOVERNMENT MAY TERMINATE ANY PORTION OF THE CONTRACT WHICH HAS NOT BEEN PERFORMED BY GIVING WRITTEN NOTICE TO THE CONTRACTOR. WHERE THE CONTRACT IS TERMINATED BY THE GOVERNMENT IN ACCORDANCE WITH THE FOREGOING PROVISION, THE CONTRACTOR WILL BE PAID REASONABLE AND PROPER CANCELLATION CHARGES FOR ANY WORK DONE PRIOR TO TERMINATION OF THE CONTRACT.'

BY LETTER DATED JULY 14, 1953, THE CONTRACTOR NOTIFIED THE CONTRACTING OFFICER THAT THE PRICE ON SWITCHGEAR APPARATUS, INCLUDING CIRCUIT BREAKERS AND CABINETS (ITEMS NOS. AND 2, LOT NO. 2), HAD BEEN INCREASED APPROXIMATELY 10 PERCENT EFFECTIVE MAY 17, 1953; THAT THE PRICE ON LIGHTNING ARRESTERS (ITEM NO. 10, LOT NO. 4) HAD BEEN INCREASED APPROXIMATELY 15 PERCENT EFFECTIVE JUNE 1, 1953; AND THAT THE SAID ITEMS WOULD BE BILLED AT THE ORIGINAL CONTRACT PRICE PLUS 10 PERCENT. THE FINAL PARAGRAPH OF THE LETTER WAS AS FOLLOWS:

"WE WOULD APPRECIATE YOUR LETTING US KNOW WHETHER OR NOT IT WILL BE SATISFACTORY TO PROCEED WITH THIS CONTRACT ON THE BASIS OF THE PRICE CHANGES WE HAVE OUTLINED.'

THE CONTRACTOR STATED FURTHER IN LETTER DATED AUGUST 6, 1953:

"THE NEW PRICES BASED ON THE PRICE INCREASES LISTED ARE NOW OUR ESTABLISHED PRICES FOR THIS TYPE OF EQUIPMENT TO ALL PURCHASERS WHETHER PUBLIC OR PRIVATE.'

IN HIS REPLY DATED AUGUST 10, 1953, THE CONTRACTING OFFICER STATED:

"IN ACCORDANCE WITH THE PROVISIONS OF THE SUBJECT CONTRACT, AS SET FORTH IN PARAGRAPH 21, GENERAL PROVISIONS, YOU ARE HEREBY NOTIFIED TO PROCEED WITH SHIPMENT OF THE EQUIPMENT.'

THE CONTRACTOR'S INCREASE IN PRICE MAY HAVE BEEN RETROACTIVE AND THE NOTIFICATION TO THE CONTRACTING OFFICER PROBABLY WAS GIVEN TOO LATE TO COMPLY STRICTLY WITH THE 30-DAY REQUIREMENT OF THE CONTRACT. HOWEVER, IN VIEW OF THE COMPARATIVELY SMALL AMOUNT OF THE INCREASE IN PRICE AND THE FACTS THAT THE NOTICE WAS GIVEN LONG BEFORE THE CONTRACT COMPLETION DATE, THAT THE CONTRACT WAS SATISFACTORILY COMPLETED AFTER THE CONTRACTING OFFICER HAD IN EFFECT APPROVED THE PRICE INCREASE, THAT THE COST TO THE GOVERNMENT OF TERMINATING THE CONTRACT PRESUMABLY WOULD HAVE BEEN CONSIDERABLY MORE THAN THE REQUESTED PRICE INCREASE, AND THAT THE TOTAL CONTRACT PRICE, INCLUDING THE REQUESTED PRICE INCREASE, WILL BE SUBSTANTIALLY LESS THAN THE MAXIMUM POSSIBLE COST PROVIDED FOR IN THE CONTRACT, THE INVOICE SUBMITTED MAY BE CERTIFIED BY YOU WITHOUT OBJECTION BY THIS ..END :