B-134723, MARCH 24, 1958, 37 COMP. GEN. 622

B-134723: Mar 24, 1958

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SALES - PRICE ADJUSTMENT FOR LOSSES - AUCTION AND SEALED BID PROCEDURE CRUDE OIL SALES CONTRACTS WHICH WERE AWARDED TO SEVERAL INDEPENDENT REFINERS AND WHICH HAVE BECOME UNPROFITABLE BECAUSE OF THE CHANGE IN THE MARKET SITUATION MAY NOT BE MODIFIED GRATUITOUSLY WHEN THE HEAD OF THE CONTRACTING AGENCY. DETERMINED THAT THERE IS NOT SUFFICIENT BASIS TO CONSIDER THAT SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE. THAT OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO MODIFY CONTRACTS WITHOUT CONSIDERATION AND THAT SUPERVENING EVENTS WHICH RENDER CONTRACT PERFORMANCE LESS PROFITABLE DO NOT JUSTIFY EXCUSING PERFORMANCE OR ADJUSTING THE PRICE. ARE FOR APPLICATION. WHICH PROVIDES THAT AFTER THE SEALED BIDS ARE OPENED THE PROSPECTIVE BIDDERS MAY INCREASE THEIR BID PRICES.

B-134723, MARCH 24, 1958, 37 COMP. GEN. 622

SALES - PRICE ADJUSTMENT FOR LOSSES - AUCTION AND SEALED BID PROCEDURE CRUDE OIL SALES CONTRACTS WHICH WERE AWARDED TO SEVERAL INDEPENDENT REFINERS AND WHICH HAVE BECOME UNPROFITABLE BECAUSE OF THE CHANGE IN THE MARKET SITUATION MAY NOT BE MODIFIED GRATUITOUSLY WHEN THE HEAD OF THE CONTRACTING AGENCY, UNDER TITLE II OF THE FIRST WAR POWERS ACT, 50 U.S.C. 611, DETERMINED THAT THERE IS NOT SUFFICIENT BASIS TO CONSIDER THAT SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE; THEREFORE, THE ESTABLISHED RULES OF LAW, THAT OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO MODIFY CONTRACTS WITHOUT CONSIDERATION AND THAT SUPERVENING EVENTS WHICH RENDER CONTRACT PERFORMANCE LESS PROFITABLE DO NOT JUSTIFY EXCUSING PERFORMANCE OR ADJUSTING THE PRICE, ARE FOR APPLICATION. A SEALED BID AND AN AUCTION BID PROCEDURE UNDER A SALES INVITATION, WHICH PROVIDES THAT AFTER THE SEALED BIDS ARE OPENED THE PROSPECTIVE BIDDERS MAY INCREASE THEIR BID PRICES, ARE NOT MUTUALLY EXCLUSIVE SO AS TO RENDER IMPROPER AN AWARD WHICH WAS MADE ON THE BASIS OF AN INCREASE PROPOSED BY THE BIDDER IN THE AUCTION-TYPE PROCEEDING AFTER ALL SEALED BIDS WERE OPENED. AN ALL OR NONE BID UNDER A SALES INVITATION WHICH SPECIFICALLY AUTHORIZED BIDS ON ONE OR MORE OF FOUR INDIVIDUAL LOTS OR ON THE ENTIRE OFFERING IS RESPONSIVE TO THE INVITATION. UNDER A SEALED BID AND AUCTION-TYPE SALE OF CRUDE OIL, A BID WHICH OFFERED A PRICE ONE CENT OVER THE MINIMUM MARKET PRICE AND WHICH WAS INTERPRETED AS A BID FOR THE MARKET PRICE, PLUS A ONE CENT BONUS, MAY NOT BE OBJECTED TO BECAUSE THE BONUS WAS ALLEGEDLY CALCULATED TOO HIGH, SINCE THE INVITATION PERMITTED BIDDERS TO INCREASE THEIR PRICES AFTER OPENING, AND THE BIDDER BY NOT OBJECTING AT THE AUCTION MAY BE REGARDED AS HAVING CONSENTED TO THE BONUS.

TO THE INDEPENDENT REFINERS' ASSOCIATION OF CALIFORNIA, INC., MARCH 24, 1958:

REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 18, 1957, AND SUBSEQUENT CORRESPONDENCE, REQUESTING RELIEF FOR THREE ASSOCIATION MEMBERS, DOUGLAS OIL CO. OF CALIFORNIA, MOHAWK PETROLEUM CORPORATION, AND ROTHSCHILD OIL COMPANY, FROM THEIR OBLIGATIONS UNDER CRUDE OIL SALES CONTRACTS AWARDED TO THEM UNDER INVITATION 20, DATED JANUARY 16, 1957.

IN 1956, THE INDEPENDENT REFINERS OF CALIFORNIA WERE ALLEGEDLY IN DESPERATE NEED OF CRUDE OIL. AS A RESULT, OFFICIALS OF THE DEPARTMENT OF THE NAVY WERE CONTRACTED WITH THE VIEW TO ACQUIRING FROM THE GOVERNMENT THE CRUDE OIL PRODUCED FROM THE SHALLOW OIL ZONE AT THE ELK HILLS NAVAL PETROLEUM RESERVE NUMBERED 1. SINCE NONE OF THE INDEPENDENTS HAD SUFFICIENT CAPACITY TO TAKE THE TOTAL PRODUCTION, IT WAS SUGGESTED TO THE DEPARTMENT OFFICIALS THAT THE PRODUCTION BE SPLIT INTO FOUR LOTS.

INVITATION 20, DATED JANUARY 16, 1957, WHICH SOLICITED BIDS FOR THE PURCHASE OF THE SHALLOW ZONE CRUDE OIL PRODUCED AT ELK HILLS, INSOFAR AS PERTINENT, PROVIDED:

3. THE PUBLIC SALE WILL TAKE PLACE IN THE OFFICE OF THE INSPECTOR, NAVAL PETROLEUM RESERVES IN CALIFORNIA, NAVAL PETROLEUM RESERVE NO. 1, KERN COUNTY, CALIFORNIA, AT 11:00 A.M. ( PACIFIC STANDARD TIME) ON FEBRUARY 5, 1957. THE SECRETARY OF THE NAVY WILL RECEIVE SEALED BIDS AND STATEMENTS DESCRIBING THE BIDDERS' QUALIFICATIONS * * *. THE BIDS AND STATEMENTS WILL BE PUBLICLY OPENED AND READ ALOUD AT SAID TIME AND PLACE * * *. A BIDDER WHO HAS COMPLIED WITH THE PROVISIONS OF THE INVITATION FOR BIDS MAY FORTHWITH, AFTER ALL BIDS HAVE BEEN READ, INCREASE THE BID PRICE OR PRICES, AND SUCH INCREASE OR INCREASES SHALL BE IMMEDIATELY INCORPORATED IN HIS BID BY WRITTEN AMENDMENT THERETO SIGNED BY THE BIDDER. NO CHANGE WILL BE PERMITTED WHICH WILL HAVE THE EFFECT OF LOWERING ANY PRICE BID.

4. (A) THE CRUDE OIL OFFERED FOR SALE CONSISTS OF FOUR (4) SEPARATE LOTS COMPRISING TOGETHER ALL SUCH CRUDE OIL AVAILABLE FOR SALE BY NAVY FROM SAID SHALLOW OIL ZONE * * *.

(B) (1) LOT NO. 1 SHALL CONSIST OF TEN PERCENTUM (10 PERCENT) OF THE TOTAL CRUDE OIL AVAILABLE FOR SALE BY NAVY * * *.

(2) LOT NO. 2 SHALL CONSIST OF FIFTEEN PERCENTUM (15 PERCENT) OF THE TOTAL CRUDE OIL AVAILABLE FOR SALE BY NAVY * * *.

(3) LOT NO. 3 SHALL CONSIST OF TWENTY-FIVE PERCENTUM (25 PERCENT) OF THE TOTAL CRUDE OIL AVAILABLE FOR SALE BY NAVY * * *.

(4) LOT NO. 4 SHALL CONSIST OF FIFTY PERCENTUM (50 PERCENT) OF THE TOTAL CRUDE OIL AVAILABLE FOR SALE BY NAVY * * *.

(C) BIDS MAY BE SUBMITTED ON ANY ONE OR MORE OF LOTS NOS. 1, 2, 3, AND 4 ABOVE OR ON THE ENTIRE OFFERING.

5.

(B) * * * A SEPARATE BID, TOGETHER WITH A SEPARATE STATEMENT AND BID DEPOSIT, MUST BE SUBMITTED FOR EACH LOT BID UPON * * *.

(C) BIDS MUST BE BASED ON THE MARKET PRICE OR PRICES. IN ADDITION THERETO, BIDDERS ARE INVITED TO OFFER A BONUS ON A CENT PER BARREL BASIS.

(D) THE TERM "MARKET PRICE" MEANS THE AVERAGE PRICE PER BARREL OF ALL THE PRICES WHICH ARE REGULARLY POSTED OR PUBLISHED BY THE PRINCIPAL PURCHASERS POSTING OR PUBLISHING PRICES FOR CRUDE OIL * * *.

9. EACH BID FOR EACH LOT SHALL BE ACCOMPANIED BY A SEPARATE BID DEPOSIT * * * IN THE AMOUNT OF TWENTY-FIVE HUNDRED DOLLARS ($2,500) * * *

ON FEBRUARY 5, 1957, PURSUANT TO THE TERMS OF THE SUBJECT INVITATION, BIDS WERE OPENED PUBLICLY AND READ ALOUD. THEN THE FLOOR WAS OPENED TO AN AUCTION-TYPE PROCEEDING WHEREIN THE BIDDERS WERE PERMITTED TO INCREASE THEIR INITIAL BID PRICES. IMMEDIATELY AFTER THE CONCLUSION OF THE SALE, EACH BIDDER WAS REQUIRED TO AMEND ITS BID TO ENTER THE LAST PRICE IT BID. THE BIDDING ENDED IN A TIE IN THAT THE AVERAGE OF THE BIDS OF ROTHSCHILD OIL COMPANY ON LOT NOS. 1 AND 2, MOHAWK PETROLEUM CORPORATION ON LOT NO. 3, AND DOUGLAS OIL CO. ON LOT NO. 4 EQUALED THE BID OF STANDARD OIL COMPANY ON THE ENTIRE OFFERING. THE DEPARTMENT OF THE NAVY RESERVED THE RIGHT TO TAKE THE BIDS UNDER CONSIDERATION AND TO MAKE AN AWARD WITHIN 60 DAYS OF THE DATE OF BIDDING.

THE INDEPENDENTS WERE CONCERNED OVER THE POSSIBILITY THAT THE OIL MIGHT NOT BE SOLD TO THEM. THEY REQUESTED VARIOUS GOVERNMENT SOURCES TO RECOMMEND TO THE DEPARTMENT OF THE NAVY THAT THE AWARD BE MADE TO THEM. BECAUSE, AMONG OTHER THINGS, IT WAS CONSIDERED IN THE PUBLIC INTEREST TO AID SMALL BUSINESS, THE CONTRACTS WERE AWARDED TO THE SUBJECT INDEPENDENTS, SUBJECT TO FURTHER GOVERNMENTAL APPROVAL.

PURSUANT TO 10 U.S.C. 7431, THE COMMITTEES ON ARMED SERVICES OF THE SENATE AND THE HOUSE OF REPRESENTATIVES WERE CONSULTED. THE COMMITTEES APPROVED THE AWARD. A COPY OF THE NOTICE OF SALE, THE INVITATION FOR BIDS, THE MINUTES OF SALE AND THE CONTRACTS WERE FORWARDED TO THE ATTORNEY GENERAL. HE WAS REQUESTED TO PASS UPON THE LEGALITY OF THE CONTRACTS. THE ACTING ATTORNEY GENERAL RESPONDED THAT THE CONTRACTS WERE AUTHORIZED BY LAW. ON MAY 6, 1957, THE PRESIDENT APPROVED THE CONTRACTS, WHICH TOOK EFFECT AS OF JULY 8, 1957.

SHORTLY AFTER THE CONTRACTS WERE EXECUTED, THE SUEZ SITUATION WAS RESOLVED AND AN OVER-SUPPLY OF CHEAPLY PRODUCED FOREIGN CRUDE OIL ALLEGEDLY FLOODED THE UNITED STATES OIL MARKET WITH A DRASTIC RESULTANT CHANGE IN THE CRUDE OIL SITUATION IN CALIFORNIA. IN NOVEMBER 1957, DOUGLAS OIL CO. REQUESTED THE SECRETARY OF THE NAVY TO TERMINATE ITS CONTRACT UNDER THE EXTRAORDINARY POWERS VESTED IN HIM UNDER TITLE II OF THE FIRST WAR POWERS ACT, 50 U.S.C. 611, OR UNDER CONTRACT ARTICLE IV (D), WHICH PROVIDES FOR TERMINATION WITHOUT LIABILITY FOR DEFAULT DUE TO CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. DOUGLAS OIL CO. WAS ADVISED THAT THE CONTRACT COULD NOT BE TERMINATED WITHOUT CONSIDERATION. DOUGLAS OIL CO. THEN DEFAULTED IN ITS PERFORMANCE. MOHAWK PETROLEUM CORPORATION AND ROTHSCHILD OIL COMPANY ALSO REQUESTED THE TERMINATION OF THEIR CONTRACTS WITHOUT CONSIDERATION. THEY WERE NOTIFIED THAT THERE WAS NO LEGAL BASIS FOR TERMINATION. BOTH CONTINUED TO PERFORM IN ACCORDANCE WITH THE TERMS OF THE CONTRACT.

NOW IN YOUR REQUEST FOR RELIEF FOR THE SUBJECT PURCHASERS YOU CONTEND THAT THE CONTRACTS ARE VOID, BECAUSE (1) AFTER THE SEALED BIDS WERE OPENED, THE SALE WAS CONDUCTED LIKE AN AUCTION; (2) THE BID OF STANDARD OIL COMPANY FOR THE ENTIRE OFFERING WAS NOT PRESCRIBED IN THE INVITATION FOR BIDS; (3) THE BID OF UNION OIL COMPANY WAS INTERPRETED AS MARKET PRICE PLUS ONE CENT PER BARREL BONUS; AND (4) EACH ORAL BID MADE PRIOR TO THE FINAL ORAL BID WAS NOT INCORPORATED BY WRITTEN AMENDMENT INTO THE ORIGINAL BID. IN THE ALTERNATIVE, YOU PROPOSE THAT, IN THE INTEREST OF NATIONAL DEFENSE, THE SUBJECT CONTRACTS BE MODIFIED RETROACTIVE TO JULY 8, 1957, TO ELIMINATE THE BONUSES.

THE SECRETARY OF THE NAVY IS AUTHORIZED TO SELL "AT PUBLIC SALE" THE CRUDE OIL PRODUCED FROM THE NAVAL PETROLEUM RESERVE NUMBERED 1. 10 U.S.C. 7430 (B). AN AUCTION BY ORAL BIDDING CONSTITUTES A ,PUBLIC SALE.' THE SELLER AT AUCTION CAN SET THE GROUND RULES FOR THE AUCTION. SECTION 3 OF THE SALES INVITATION CONTEMPLATED THAT BIDS MIGHT BE INCREASED AFTER THE SEALED BIDS WERE OPENED AND READ. THEREFORE, PROSPECTIVE PURCHASERS WERE AWARE THAT THE SEALED BID PRICES MIGHT NOT BE THE FINAL BID PRICES. ACCORDINGLY, IN THIS INSTANCE, THE SEALED BID PROCEDURE AND THE AUCTION BID PROCEDURE WERE NOT MUTUALLY EXCLUSIVE OF EACH OTHER.

IN REGARD TO THE BID OF STANDARD OIL COMPANY, YOUR PRINCIPAL GROUND OF COMPLAINT IS THAT THE COMPANY SUBMITTED AN ORIGINAL BID FOR THE ENTIRE QUANTITY AND DURING THE AUCTION PROCEEDINGS, THE COMPANY WOULD EITHER EQUAL OR BETTER THE AVERAGE OF THE BIDS MADE BY THE INDEPENDENTS ON THE VARIOUS LOTS. HOWEVER, SECTION 4 (C) OF THE INVITATION SPECIFICALLY AUTHORIZED BIDS ON ONE OR MORE OF THE FOUR INDIVIDUAL LOTS "OR ON THE ENTIRE OFFERING.' ACCORDINGLY, THE BIDS OF STANDARD OIL COMPANY FOR THE ENTIRE QUANTITY WERE RESPONSIVE TO THE INVITATION.

A BID ON THE ENTIRE OFFERING CONSTITUTES AN "ALL OR NONE" BID. IN 35 COMP. GEN. 383, 385, WE SAID:

* * * IT HAS ALWAYS BEEN HELD THAT "ALL OR NONE" BIDS SUBMITTED IN RESPONSE TO INVITATION FOR BIDS FOR DEFINITE QUANTITIES ARE FOR CONSIDERATION EVEN IF THERE IS NO PROVISION THEREFOR IN THE INVITATION FOR BIDS. SEE B-124981, DATED AUGUST 18, 1955; B-66858, DATED JUNE 16, 1947; AND A-97645, DATED APRIL 6, 1939. * * *

THEREFORE, UNLESS THE INVITATION HAD EXPRESSLY PROHIBITED BIDS ON AN "ALL OR NONE" BASIS, THE STANDARD OIL COMPANY BID WOULD HAVE BEEN FOR CONSIDERATION IN ANY EVENT.

IN REGARD TO THE BID OF UNION OIL COMPANY, YOU CONTEND THAT IT WAS IMPROPER FOR THE NAVY OFFICIALS CONDUCTING THE SALE TO ESTABLISH THE MARKET PRICE FOR THE CRUDE OIL AT $2.91 BY AVERAGING THE MARKET PRICES OF THE PRINCIPAL PURCHASERS POSTING OR PUBLISHING PRICES FOR A SAMPLE GRAVITY OF OIL SELECTED BY THE NAVY OFFICIALS AND TO INTERPRET THE COMPANY'S POSTED PRICE OF $2.92 FOR THE SAME GRAVITY AS A BID OF MARKET PRICE PLUS A ONE CENT BONUS. HOWEVER, THE SELLER AT AUCTION HAS THE PRIVILEGE OF FIXING THE MINIMUM PRICE BELOW WHICH NO SALE SHALL BE MADE. SECTION 5 (C) OF THE INVITATION REQUIRED THAT THE BIDS BE BASED AT MARKET PRICE, AT LEAST. UNION OIL COMPANY RESPONDED WITH A SEALED BID OF MARKET PRICE OR ITS POSTED PRICE, WHICHEVER WAS HIGHER. THAT BID MET THE MINIMUM REQUIREMENT. THE INVITATION PERMITTED THE BIDDERS TO INCREASE THEIR BIDS AFTER OPENING; THEREFORE, EVEN IF IT WERE DETERMINED THAT THE BONUS WAS ESTABLISHED TOO HIGH, AS CONTENDED, UNION DID NOT OBJECT AND ITS SILENCE COULD BE INTERPRETED AS CONSENT TO THE INCREASE OVER THE MARKET PRICE BID. IN ANY EVENT, THAT BID WAS SUPERSEDED BY HIGHER BIDS DURING THE COURSE OF THE AUCTION.

IN REGARD TO YOU FOURTH CONTENTION, IT IS REPORTED ADMINISTRATIVELY THAT IN SECTION 3 OF THE INVITATION THE WORDS "INCREASE OR INCREASES" WERE INTENDED TO REFER TO INSTANCES IN WHICH A BIDDER MIGHT INCREASE HIS BID BY A SUCCESSION OF INTERMEDIATE INCREASES ON MORE THAN ONE LOT AND IT SEEMS CLEAR THAT THE SAID SECTION IS SUBJECT TO THE INTERPRETATION THAT ONLY THE LAST BID OF EACH BIDDER WAS REQUIRED TO BE INCORPORATED BY WRITTEN AMENDMENT TO THE ORIGINAL BID.

IN SUPPORT OF YOUR REQUEST FOR MODIFICATION, YOU CONTEND THAT DOUGLAS OIL CO. WILL HAVE TO BE TERMINATED FOR DEFAULT AND, IF IT IS, THE DEPARTMENT OF THE NAVY, BECAUSE OF NO READY OIL MARKET, AS EVIDENCED BY A RECENT UNSUCCESSFUL SOLICITATION BY THE DEPARTMENT FOR PURCHASERS AT MARKET PRICE AND UNSUCCESSFUL ATTEMPTS BY THE COMPANY TO SELL AT LESS THAN MARKET, WILL BE FORCED TO "SHUT IN" PRODUCTION AT THE ELK HILLS RESERVE, WITH THE RESULT THAT THE OIL IN THE SHALLOW OIL ZONE WILL BE DESTROYED BY THE ENCROACHMENT OF SALT WATER. THEREFORE, YOU STATE THAT IT WOULD BE IN THE INTEREST OF NATIONAL DEFENSE TO KEEP THE WELLS IN OPERATION AND IN THE PUBLIC INTEREST TO MODIFY THE CONTRACTS. YOUR PROPOSAL WAS REFERRED TO THE DEPARTMENT OF THE NAVY, WHICH RESPONDED BY LETTER DATED FEBRUARY 27, 1958, AS FOLLOWS:

IT IS TRUE THAT THE INITIAL SOLICITATION FOR BIDS BY THE NAVY DEPARTMENT, WHICH WAS RESTRICTED TO MINIMUM BIDS OF MARKET PRICE, WAS NOT SUCCESSFUL. AS A MATTER OF POLICY, IT WAS CONSIDERED DESIRABLE TO ENDEAVOR TO DISPOSE OF THE OIL INITIALLY AT A PRICE NOT BELOW THE MARKET PRICE IN THE AREA. IN ADDITION, THE EFFORT TO DISPOSE OF THE OIL AT MARKET PRICE OR ABOVE WAS MADE IN ORDER TO MITIGATE AS FAR AS POSSIBLE THE DAMAGES SUFFERED BY THE UNITED STATES AS A RESULT OF THE PROSPECTIVE DEFAULT OF THE DOUGLAS OIL CO. OF CALIFORNIA. THE UNITED STATES IS, HOWEVER, UNDER NO LEGAL OBLIGATION TO RESTRICT ITS MARKET TO THOSE COMPANIES WILLING TO BID AT OR ABOVE THE MARKET PRICE. PETROLEUM IS A COMMODITY FOR WHICH THERE IS A CONTINUING AND HUGH DEMAND, AND THERE IS NO DOUBT THAT THE SHALLOW OIL ZONE CRUDE CAN BE DISPOSED OF BY OFFERING IT AT A PRICE ATTRACTIVE TO POTENTIAL PURCHASERS.

IN ADDITION TO THE INCONTESTABLE LEGAL RIGHT OF THE UNITED STATES TO KEEP THE WELLS IN OPERATION AND THEREBY AVOID DAMAGE TO THE RESERVOIR, THERE IS AN ADDITIONAL COURSE OF ACTION AVAILABLE UNDER 10 U.S.C. 7430. IN THIS SECTION, THE CONGRESS HAS CONFERRED UPON THE DEPARTMENT OF THE NAVY STATUTORY AUTHORITY TO DISPOSE OF PRODUCTION FROM THE NAVAL PETROLEUM RESERVES BY EXCHANGE. THIS COULD TAKE THE FORM OF AN EXCHANGE OF SHALLOW ZONE CRUDE OIL FOR OTHER CRUDE OIL OR REFINED PRODUCTS.

THUS, THERE ARE SEVERAL AVENUES OPEN TO THE DEPARTMENT OF THE NAVY WHICH CAN PREVENT THE CLOSING IN OF THE SHALLOW OIL ZONE. THESE POSSIBLE COURSES OF ACTION ARE NOW UNDER INTENSIVE CONSIDERATION BY THE DEPARTMENT OF THE NAVY.

IT IS THE OPINION OF THE DEPARTMENT OF THE NAVY THAT THE CONTENTION OF THE THREE INDEPENDENT REFINERS THAT THE NAVY WILL BE FORCED TO SHUT IN PRODUCTION AT NAVAL PETROLEUM RESERVE NO. 1 UNLESS THE PRESENT CONTRACTS ARE MODIFIED IS CONTRARY TO THE FACTS OF THE ACTUAL SITUATION. ACCORDINGLY, THERE IS NO SUFFICIENT BASIS FOR A DETERMINATION THAT IT WOULD FACILITATE THE NATIONAL DEFENSE TO SURRENDER GRATUITOUSLY THE CONTRACTUAL RIGHTS OF THE UNITED STATES CONCERNED IN THIS MATTER. THIS BEING THE CASE AND SINCE ACTION UNDER TITLE II OF THE FIRST WAR POWERS ACT MUST BE BASED UPON A DETERMINATION BY THE HEAD OF THE CONTRACTING AGENCY CONCERNED THAT IT WILL FACILITATE THE NATIONAL DEFENSE, THE SPECIAL AUTHORITY CONFERRED BY THAT ACT TO AMEND CONTRACTS WITHOUT CONSIDERATION PROPERLY MAY NOT BE APPLIED HERE. RATHER, THERE WOULD APPEAR TO BE FOR APPLICATION THE GENERAL RULE THAT OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO AMEND OR TO MODIFY EXISTING CONTRACTS UNLESS A COMPENSATING BENEFIT OR CONSIDERATION RESULTS TO THE UNITED STATES. SEE J. J. PREIS AND CO. V. UNITED STATES, 58 C.1CLS. 81, 87 AND VULCANITE CEMENT CO. V. UNITED STATES, 74 C.1CLS. 692, 705. IT IS A WELL-ESTABLISHED RULE OF LAW ALSO THAT SUPERVENING EVENTS OR UNFORESEEN CAUSES WHICH RENDER CONTRACT PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASION A LOSS, ARE NOT SUFFICIENT TO EXCUSE PERFORMANCE OR TO ENTITLE A CONTRACTOR TO AN ADJUSTMENT IN THE CONTRACT PRICE. SEE CHOUTEAU V. UNITED STATES, 95 U.S. 61, 68, AND DAY V. UNITED STATES, 245 U.S. 159, 161.

THE APPLICATION OF THESE RULES REQUIRES THE CONCLUSION THAT THE INDEPENDENTS LEGALLY MAY NOT BE RELIEVED FROM THEIR OBLIGATIONS UNDER THEIR CONTRACTS.