B-130023, DEC. 26, 1956

B-130023: Dec 26, 1956

Additional Materials:

Contact:

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

 

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

GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 7. THE PARTITIONS WILL REMAIN THE PROPERTY OF THE LESSOR. OR APPROXIMATELY TWO MONTHS AFTER THE LEASE HAD BEEN SIGNED AND ONLY THIRTEEN (13) DAYS BEFORE THE SPACE WAS SCHEDULED FOR OCCUPANCY BY THE GOVERNMENT DID WE RECEIVE ANY NOTIFICATION FROM THE LESSOR RELATIVE TO ANY CHANGE IN THE PARTITIONING TO BE INSTALLED. AS THESE PARTITIONS WILL BE THE PROPERTY OF THE LESSOR. THE LESSOR IS RECEIVING FULL BENEFIT FOR ANY ADDITIONAL COST BECAUSE OF THE PURCHASING OF AS YOU STATE A SUPERIOR PRODUCT. AS THE FINAL PROPOSAL WAS ACCEPTABLE TO THE GOVERNMENT. ALL PRIOR AGREEMENTS WERE REDUCED TO WRITING IN THE FORM OF THE LEASE WHEREIN THE EXACT ITEMS REQUIRED OF THE LESSOR WERE STATED AND THE TOTAL COST TO THE GOVERNMENT STIPULATED.

B-130023, DEC. 26, 1956

TO HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 7, 1956, WITH ENCLOSURES, REQUESTING OUR VIEWS RELATIVE TO A REQUEST BY THE LESSOR FOR AN AMENDMENT INCREASING THE AMOUNT OF RENT PAYABLE UNDER LEASE GS 04B-3589, DATED APRIL 24, 1956, FOR FLOOR SPACE IN THE AMERICAN LIBERTY INSURANCE COMPANY BUILDING, BIRMINGHAM, ALABAMA.

BY THE TERMS OF THE LEASE, THE LESSOR AGREED TO CONSTRUCT AT NO ADDITIONAL EXPENSE TO THE GOVERNMENT AND AS PART OF THE RENTAL CONSIDERATION CERTAIN PARTITIONS, INCLUDING METAL ONES OF ,MARTIN-PARRY MANUFACTURE OR EQUAL.' THE LESSOR ADVISED THE CONTRACTING OFFICER THAT ITS ACTUAL COST FOR THE PARTITIONS WOULD BE $8,832.71 AND THE LEASE RECITES THE GOVERNMENT'S AGREEMENT TO PAY THAT AMOUNT IN PRORATED MONTHLY PAYMENTS OF $245.35 OVER THE ORIGINAL THREE YEAR PERIOD OF THE LEASE, IN ADDITION TO THE RENTAL OF $32,740 PER ANNUM. THE LEASE ALSO PROVIDES THAT WHEN THE GOVERNMENT VACATES THE PREMISES, THE PARTITIONS WILL REMAIN THE PROPERTY OF THE LESSOR. THE LESSOR REQUESTS THAT THE FIGURE OF $8,832.71 IN PARAGRAPH 22 OF THE LEASE BE CHANGED TO $10,441.75 AND THE MONTHLY PAYMENTS OVER THE ORIGINAL THREE YEAR PERIOD BE PRORATED ON THE BASIS OF THE HIGHER AMOUNT BECAUSE OF THE INCREASED COST TO IT OF THE PARTITIONING. THE INCREASED COST RESULTED FROM THE INABILITY OF THE LESSOR'S SUPPLIER TO FURNISH THE MARTIN-PARRY PARTITIONING AND THE SUBSTITUTION OF HIGHER-PRICED PARTITIONING FROM THE E. F. HAUSERMAN COMPANY IN ORDER TO READY THE PREMISES FOR OCCUPANCY AT THE AGREED TIME.

IN HIS LETTER OF SEPTEMBER 28, 1956, DENYING THE LESSOR'S REQUEST, THE CONTRACTING OFFICER RELATED THE DETAILS OF THE NEGOTIATIONS LEADING TO EXECUTION OF THE LEASE ON APRIL 24 AND STATED, IN PERTINENT PART, AS FOLLOWS:

"NOT UNTIL JULY 18, 1956, OR APPROXIMATELY TWO MONTHS AFTER THE LEASE HAD BEEN SIGNED AND ONLY THIRTEEN (13) DAYS BEFORE THE SPACE WAS SCHEDULED FOR OCCUPANCY BY THE GOVERNMENT DID WE RECEIVE ANY NOTIFICATION FROM THE LESSOR RELATIVE TO ANY CHANGE IN THE PARTITIONING TO BE INSTALLED, THEREFORE, ANY SHORT NOTICE REQUIRED FOR THE PURPOSE OF THE HAUSERMAN PARTITIONING IN LIEU OF THAT ORIGINALLY CONTEMPLATED CANNOT BE CONTRIBUTED TO THE GOVERNMENT. WE DO NOT QUESTION THE QUALITY OF THE HAUSERMAN PRODUCTS OR THAT THE PRICE THE LESSOR PAID FOR THE PARTITIONING AS INSTALLED DOES NOT REPRESENT THEIR FAIR MARKET VALUE. AS THESE PARTITIONS WILL BE THE PROPERTY OF THE LESSOR, THE LESSOR IS RECEIVING FULL BENEFIT FOR ANY ADDITIONAL COST BECAUSE OF THE PURCHASING OF AS YOU STATE A SUPERIOR PRODUCT.

"THE LEASE CONCLUDED A LONG SERIES OF NEGOTIATIONS DURING WHICH TIME THE LESSOR SECURED PRICES ON WHICH TO BASE A FIRM QUOTATION TO THE GOVERNMENT. AS THE FINAL PROPOSAL WAS ACCEPTABLE TO THE GOVERNMENT, ALL PRIOR AGREEMENTS WERE REDUCED TO WRITING IN THE FORM OF THE LEASE WHEREIN THE EXACT ITEMS REQUIRED OF THE LESSOR WERE STATED AND THE TOTAL COST TO THE GOVERNMENT STIPULATED.

"AS STATED ABOVE, AFTER REDRAFTING MAKING CERTAIN MINOR CHANGES DESIRED BY THE LESSOR, IT WAS ACCEPTED BY BOTH PARTIES. WE REGRET THAT THE COST TO THE LESSOR EXCEEDED THE AMOUNT AS AGREED TO BETWEEN THE LESSOR AND THE GOVERNMENT, BUT FEEL THAT THE GOVERNMENT HAS NO LEGAL OR MORAL OBLIGATION THEREFOR.'

THERE IS NOTHING IN THE LEASE WHICH MAY REASONABLY BE CONSTRUED AS A QUALIFICATION OF THE LESSOR'S FIRM OBLIGATION TO INSTALL THE PARTITIONS AT THE PRICE STIPULATED THEREIN OR AS IMPOSING ANY OBLIGATION UPON THE GOVERNMENT TO PAY THE LESSOR'S INCREASED COSTS THEREFOR, REGARDLESS OF THE UNFORESEEN CAUSES NECESSITATING THE SUBSTITUTION OF MORE EXPENSIVE MATERIAL.

IT IS A WELL-SETTLED PRINCIPLE OF LAW THAT VALID CONTRACTS ARE TO BE ENFORCED AND PERFORMED AS WRITTEN, AND THE FACT THAT INTERVENING OR UNFORESEEN CAUSES RENDER PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE OR EVEN OCCASION A LOSS, IS NOT SUFFICIENT TO ENTITLE A CONTRACTOR TO COMPENSATION IN ADDITION TO THAT PROVIDED IN THE CONTRACT. COLUMBUS RAILWAY, POWER AND LIGHT COMPANY V. COLUMBUS, 249 U.S. 399, 412; BLAUNER CONSTRUCTION COMPANY V. UNITED STATES, 94 C. CLS. 503, 511; PENN BRIDGE COMPANY V. UNITED STATES, 59 ID. 892; FARMER'S FERTILIZER COMPANY V. LILLIE, 18 F.2D 197.

ACCORDINGLY, INASMUCH AS THE LESSOR HAS DONE ONLY THAT WHICH IT WAS EXPRESSLY OBLIGATED TO DO UNDER THE TERMS OF THE LEASE, WE CONCUR IN YOUR VIEW THAT NO LEGAL BASIS EXISTS FOR AMENDING THE LEASE TO PROVIDE AN INCREASE IN THE RENTAL THEREIN PROVIDED.