B-133632, SEP. 5, 1957

B-133632: Sep 5, 1957

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UNITED STATES INFORMATION AGENCY: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 29. FINAL SCRIPT AND PHOTOGRAPHY FOR WHICH ARE TO BE PERFORMED IN PAKISTAN. WHILE CONTRACT PERSONNEL WERE REQUIRED TO COMMENCE WORK IN KARACHI ABOUT JULY 1. FURTHER INFORMAL NEGOTIATIONS WERE HAD WITH THE CONTRACTOR DURING THE PERIOD AUGUST 2-7. AMENDMENT NO. 1 TO THE CONTRACT WAS EXECUTED WHEREBY THE CONTRACT PRICE WAS ESTABLISHED AS $106. - WERE INADVERTENTLY OMITTED FROM YOUR TABULATION OF COSTS. THESE ITEMS WERE REQUIRED BY THE CONTRACT AND WERE PERFORMED AND PAID FOR BY THE CONTRACTOR PRIOR TO AUGUST 7. IN YOUR LETTER IT IS FURTHER STATED: "THIS MUTUAL OMISSION CAME ABOUT IN THE FOLLOWING MANNER: AS A MATTER OF AGENCY PRACTICE (BOTH FOR ECONOMY AND OPERATIONAL REASONS) KNOWN TO THIS CONTRACTOR.

B-133632, SEP. 5, 1957

TO MR. EDMUND L. CARTER, CONTRACTING OFFICER, UNITED STATES INFORMATION AGENCY:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 29, 1957, REQUESTING OUR OPINION AS TO THE PROPRIETY OF AMENDING CONTRACT NO. IA-3919, EFFECTIVE JUNE 18, 1958, WITH G.M. PRODUCTIONS, TO RECTIFY AN ALLEGED MUTUAL MISTAKE IN THE COMPUTATION OF THE CONTRACT PRICE.

THE TERMS OF THE CONTRACT REQUIRE THE CONTRACTOR TO FURNISH THE PERSONNEL AND SERVICES FOR A MOTION PICTURE PRODUCTION OPERATION, FINAL SCRIPT AND PHOTOGRAPHY FOR WHICH ARE TO BE PERFORMED IN PAKISTAN. WHILE CONTRACT PERSONNEL WERE REQUIRED TO COMMENCE WORK IN KARACHI ABOUT JULY 1, 1957, FURTHER INFORMAL NEGOTIATIONS WERE HAD WITH THE CONTRACTOR DURING THE PERIOD AUGUST 2-7, 1957, TO FINALIZE THE TECHNICAL PROVISIONS, RESULTING IN AN ADJUSTMENT OF THE CONTRACT PRICE, AND ON AUGUST 7, 1957, AMENDMENT NO. 1 TO THE CONTRACT WAS EXECUTED WHEREBY THE CONTRACT PRICE WAS ESTABLISHED AS $106,473.

YOU STATE THAT IN THE COURSE OF THE LATTER NEGOTIATIONS TWO ITEMS OF COST --- TRANSPORTATION EXPENSES AND PER DIEM FOR TWO OF THE CONTRACTOR'S EMPLOYEES, TOTALING $6,423--- WERE INADVERTENTLY OMITTED FROM YOUR TABULATION OF COSTS. THESE ITEMS WERE REQUIRED BY THE CONTRACT AND WERE PERFORMED AND PAID FOR BY THE CONTRACTOR PRIOR TO AUGUST 7. IN YOUR LETTER IT IS FURTHER STATED:

"THIS MUTUAL OMISSION CAME ABOUT IN THE FOLLOWING MANNER: AS A MATTER OF AGENCY PRACTICE (BOTH FOR ECONOMY AND OPERATIONAL REASONS) KNOWN TO THIS CONTRACTOR, EXCLUSIVE OF THE CONTRACT PRICE, USUALLY THE AGENCY DIRECTLY PAYS FOR THE TRANSPORTATION AND PER DIEM OF CONTRACTOR PERSONNEL ASSIGNED OVERSEAS ON FILM PRODUCTION JOBS--- EXCLUSIVE OF THE FIRST 30-DAYS' PER DIEM WHICH THE CONTRACTOR ADVANCES TO THE INDIVIDUALS CONCERNED. IN JUNE, THE CONTRACTOR'S PRESIDENT CAME TO THE NEGOTIATION CONFERENCES IN WASHINGTON WITH ITEMIZED ESTIMATES BASED UPON THIS PRACTICE (EXCLUDING PERSONNEL TRANSPORTATION COST AND ALL PER DIEM FOR THEM EXCEPT THE FIRST $900.). AT THE CONCLUSION OF THE PRINCIPAL NEGOTIATION ON JUNE 13, THE CONTRACTOR ASKED THAT THE PERSONNEL TRANSPORTATION ITEM BE INCLUDED IN THE CONTRACT PRICE (BUT WITHOUT MARK-UP FOR ADMINISTRATION, OVERHEAD OR PROFIT), BECAUSE OF A SPECIAL FAMILY PROBLEM INVOLVING ONE OF THE EMPLOYEES; THE AGENCY'S REPRESENTATIVES ACQUIESCED AND THE FIGURE WAS OBTAINED FROM THE AIRLINES SO THAT THE CONTRACT PAGE IN QUESTION COULD BE RETYPED BEFORE THE FINAL SESSION ON JUNE 14. IN AUGUST, POSSIBLY AS A MATTER OF HABIT, THE CONTRACTOR'S PRESIDENT AGAIN BROUGHT TYPED ESTIMATES TO WASHINGTON (AS A BASIS FOR NEGOTIATION) WHICH OMITTED PERSONNEL TRANSPORTATION COSTS; HOWEVER, HIS ESTIMATES ALSO OMITTED THE $900. FOR "PER DIEM," PRESUMABLY BECAUSE IT WAS A "PAST" EXPENSE. THE PRICE NEGOTIATION THEN HELD WAS PUT ON AN"AB INITIO" BASIS, DISREGARDING ALL THE JUNE ESTIMATES OF COST (AS WELL AS ACTUAL EXPENDITURES MADE), AND NO ONE NOTICED THE ABSENCE OF THE TWO COST ITEMS NOT IN QUESTION.'

ON THE BASIS OF THE FOREGOING, IT IS PROPOSED TO EXECUTE AMENDMENT NO. 2 OF THE CONTRACT WHICH WILL SET FORTH CLEARLY THE AGREEMENT OF THE PARTIES AS TO THE NEGOTIATED CONTRACT PRICE.

IN OUR OPINION, THE PROPOSED MODIFICATION IS JUSTIFIED. A WRITTEN AGREEMENT NOT CONFORMING TO THE ACTUAL INTENTION OF THE PARTIES MAY BE REFORMED TO ACCORD WITH THEIR ACTUAL INTENT. WHERE, BY REASON OF MUTUAL MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS. SEE 36 COMP. GEN. 507, 509, 30 ID. 220; 26 ID. 899; 20 ID. 533, AND CASES THERE CITED. ACCORDINGLY, YOU ARE ADVISED THAT THE EXECUTION OF AMENDMENT NO. 2 TO CONFORM THE CONTRACT TO THE ACTUAL INTENTION OF THE PARTIES IS PROPER.