B-131250, APR. 23, 1957

B-131250: Apr 23, 1957

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO YOUR DEPARTMENT'S LETTER OF MARCH 27. IN EFFECT REQUESTING A DECISION AS TO WHETHER THERE IS AUTHORIZED THE REFORMATION OF CONTRACT NO. THE COUNTY IS TO CONVEY THE TRACT OF 1. 820 ACRES TO THE UNITED STATES AND IS TO FURNISH ALL SERVICES. FOR ALL OF WHICH THE UNITED STATES IS TO PAY THE COUNTY THE SUM OF $447. THAT THE RELOCATION CANNOT BE ACCOMPLISHED UNLESS THE REQUESTED INCREASE IN THE CONTRACT PRICE IS GRANTED. STATES THAT THE ADDITIONAL COST CLAIMED BY THE COUNTY IS SUBSTANTIATED. 000 WAS BASED ON THE COUNTY'S ESTIMATE OF THE COST. IT IS REPORTED THAT MUCH OF THE DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE ACTUAL COST RESULTS FROM THE FACT THAT THE TWO HOUSES MUST BE REMOVED FROM THE NEW LOCATION OF THE CIVIL AIRPORTAL THOUGH SUCH REMOVAL WAS NOT DEEMED NECESSARY BY EITHER THE COUNTY OR THE GOVERNMENT AT THE TIME OF THE ORIGINAL ESTIMATE.

B-131250, APR. 23, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR DEPARTMENT'S LETTER OF MARCH 27, 1957, WITH ITS ENCLOSURES, IN EFFECT REQUESTING A DECISION AS TO WHETHER THERE IS AUTHORIZED THE REFORMATION OF CONTRACT NO. DA-20-064-ENG-1944 WITH THE COUNTY OF MARQUETTE, MICHIGAN, SO AS TO INCREASE THE CONTRACT PRICE FROM $447,000 TO $498,900.

THE CONTRACT PROVIDES FOR THE REMOVAL AND RELOCATION OF THE MARQUETTE COUNTY CIVIL AIRPORT FROM A TRACT OF LAND (1,820 ACRES) OWNED BY THE COUNTY AND LEASED TO THE UNITED STATES FOR THE DEVELOPMENT OF THE K. I. SAWYER AIR FORCE BASE TO ANOTHER TRACE (640 ACRES) ALSO OWNED BY THE COUNTY, THE RELOCATION TO BE ACCOMPLISHED BY JUNE 29, 1957. UNDER THE TERMS OF THE CONTRACT, THE COUNTY IS TO CONVEY THE TRACT OF 1,820 ACRES TO THE UNITED STATES AND IS TO FURNISH ALL SERVICES, LABOR, MATERIALS, TOOLS AND EQUIPMENT NECESSARY TO RELOCATE THE CIVIL AIRPORT, FOR ALL OF WHICH THE UNITED STATES IS TO PAY THE COUNTY THE SUM OF $447,000. IN ITS LETTER DATED OCTOBER 11, 1956, THE COUNTY HAS REQUESTED THAT THE CONTRACT PRICE BE INCREASED BY $51,900, STATING THAT IT HAD INCURRED OR BECOME OBLIGATED FOR EXPENSES IN THE AMOUNT OF $443,350IN CONNECTION WITH THE RELOCATION, EXCLUDING BETTERMENTS, THAT IT HAS NO FUNDS AVAILABLE FOR THE REMAINING WORK, AND THAT THE RELOCATION CANNOT BE ACCOMPLISHED UNLESS THE REQUESTED INCREASE IN THE CONTRACT PRICE IS GRANTED. IN FIRST ENDORSEMENT OF NOVEMBER 1, 1956, THE DISTRICT ENGINEER, DETROIT DISTRICT, STATES THAT THE ADDITIONAL COST CLAIMED BY THE COUNTY IS SUBSTANTIATED.

THE CORPS OF ENGINEERS ESTIMATED THE COST OF THE RELOCATION AS $555,300 BASED ON SPECIFICATIONS AND REQUIREMENTS SOMEWHAT MORE RIGID AND EXPENSIVE THAN THOSE USED BY THE COUNTY IN THE RELOCATION. THE CONTRACT PRICE OF $447,000 WAS BASED ON THE COUNTY'S ESTIMATE OF THE COST, BUT THE ACTUAL COST HAS PROVED TO BE $498,900 ON THE BASIS OF CONTRACTS ACTUALLY LET FOR MOST OF THE WORK AND FIRM ESTIMATES ON THE REMAINDER. IT IS REPORTED THAT MUCH OF THE DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE ACTUAL COST RESULTS FROM THE FACT THAT THE TWO HOUSES MUST BE REMOVED FROM THE NEW LOCATION OF THE CIVIL AIRPORTAL THOUGH SUCH REMOVAL WAS NOT DEEMED NECESSARY BY EITHER THE COUNTY OR THE GOVERNMENT AT THE TIME OF THE ORIGINAL ESTIMATE. IT IS REPORTED FURTHER THAT THE ESTIMATE WAS MADE WITHOUT ADEQUATE INFORMATION BECAUSE OF THE FACT THAT THE COUNTY HAD NO FUNDS AVAILABLE FOR MAKING SURVEYS AND PREPARING DETAILED ESTIMATES OF COST AND NO SUCH FINDS WERE MADE AVAILABLE BY THE GOVERNMENT. IN FIRST ENDORSEMENT OF NOVEMBER 1, 1956, ABOVE REFERRED TO, AFTER SETTING OUT A TABULATION SHOWING THE ITEMS IN THE COUNTY'S ORIGINAL ESTIMATE IN COMPARISON WITH THE ITEMS OF ACTUAL RELOCATION COST, THE DISTRICT ENGINEER STATES:

"FROM THE ABOVE TABULATION, IT CAN BE SEEN THAT THE ORIGINAL PROPOSAL WAS SUBSTANTIALLY DEFICIENT ON MANY ITEMS. THE REASON FOR THE DEFICIENT PROPOSAL AND SUBSEQUENT CONTRACT AMOUNT IS UNDOUBTEDLY DUE TO THE FACT THAT FUNDS WERE NOT AVAILABLE PRIOR TO ENTERING INTO A CONTRACT TO MAKE A THOROUGH INVESTIGATION, STUDY AND ESTIMATE OF THE RELOCATION REQUIREMENTS AND COSTS. LAND COSTS EXCEEDED THE PROPOSAL ESTIMATE BY APPROXIMATELY $23,000. THIS WAS PARTIALLY DUE TO THE FACT THAT IT WAS NECESSARY TO PURCHASE AND DEMOLISH TWO DWELLINGS ON THE SITE. * * * THE RELOCATION OF BUILDINGS AND ADMINISTRATION FACILITIES WAS OMITTED FROM THE ORIGINAL PROPOSAL. THE COUNTY HAS ADVERTISED AND OPENED BIDS ON A NEW ADMINISTRATION BUILDING; HOWEVER, FUNDS ARE NOT AVAILABLE TO PROCEED WITH THE CONTRACT. * * *"

IN YOUR DEPARTMENT'S LETTER OF MARCH 27, 1957, IT IS STATED:

"IT WAS THE UNDERSTANDING OF ALL PARTIES TO THIS CONTRACT THAT THE CONTRACT PRICE WOULD COVER ALL COSTS FOR PROVIDING A SUBSTITUTE AIRPORT FACILITY SINCE THE RELOCATION WAS UNDERTAKEN FOR THE ACCOMMODATION OF A GOVERNMENT PROJECT AND NO ELEMENT OF PROFIT WAS INVOLVED. THE NEGOTIATIONS WERE CONDUCTED WITHOUT A DETAILED SURVEY, DUE TO LACK OF FUNDS AT THE TIME, AND WERE OVERSHADOWED BY THE FUNDS THEN AVAILABLE TO THE DISTRICT ENGINEER FOR PERFORMANCE OF THE WORK. ALTHOUGH THE COUNTY CAN PERFORM THE WORK FOR CONSIDERABLY LESS THAN THE GOVERNMENT ESTIMATE, IT CANNOT PERFORM IT FOR THE CONTRACT PRICE.'

IT APPEARS OBVIOUS FROM THE FACTS AND CIRCUMSTANCES OF THE MATTER, AS WELL AS FROM THE SPECIFIC STATEMENTS OF REPRESENTATIVES OF THE COUNTY AND OF THE GOVERNMENT, THAT THE UNDERSTANDING AND INTENTION OF ALL PARTIES TO THE CONTRACT AT ALL TIMES WAS THAT THE RELOCATION OF THE CIVIL AIRPORT, EXCLUDING BETTERMENTS, SHOULD BE ACCOMPLISHED WITHOUT COST TO THE COUNTY. IT APPEARS THAT THE RELOCATION OF THE CIVIL AIRPORT IS FOR THE BENEFIT OF THE GOVERNMENT, AND WAS UNDERTAKEN BY THE COUNTY SOLELY FOR THE ACCOMMODATION OF THE GOVERNMENT, THAT THERE IS NO ELEMENT OF PROFIT OR OTHER ADVANTAGE ACCRUING TO THE BENEFIT OF THE COUNTY AND THAT IT WAS THE UNDERSTANDING THAT THE CONTRACT PRICE WOULD COVER ALL LEGITIMATE COSTS ARISING OUT OF THE RELOCATION.

MOREOVER, IT WOULD SEEM THAT A CONTRACT IMPOSING ON THE COUNTY ANY PORTION OF THE COST OF THE RELOCATION, EXCLUDING BETTERMENTS, WELL MIGHT BE REGARDED AS UNCONSCIONABLE IN VIEW OF THE FACT THAT THE COUNTY AGREES TO CONVEY TO THE UNITED STATES WITHOUT COST THE TRACT OF 1,820 ACRES FOR THE DEVELOPMENT OF THE K. I. SAWYER AIR FORCE BASE AND THAT THE TOTAL COST TO THE GOVERNMENT, INCLUDING THE REQUESTED INCREASE, WOULD BE SUBSTANTIALLY LOWER THAN THE GOVERNMENT ESTIMATE OF THE COST OF RELOCATING THE CIVIL AIRPORT.

THE CONCLUSIONS ABOVE INDICATED ARE FURTHER SUPPORTED BY THE FACTS THAT THE COUNTY APPARENTLY HAS HAD NO FUNDS AVAILABLE FOR THE RELOCATION EXCEPTING THOSE TO BE FURNISHED BY THE GOVERNMENT AND THAT IT IS FOR THE BENEFIT OF THE GOVERNMENT THAT THE REQUESTED INCREASE IN THE CONTRACT PRICE BE GRANTED IN ORDER TO EXPEDITE THE COMPLETION OF THE CONTRACT WORK.

FOR THE REASONS ABOVE SET OUT, WE OFFER NO OBJECTION TO MODIFICATION OF THE CONTRACT AS PROPOSED. APPROPRIATE REFERENCE TO THIS DECISION SHOULD ACCOMPANY THE MODIFICATION.