B-136797, AUG. 7, 1958

B-136797: Aug 7, 1958

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THE MATTER WAS REFERRED HERE FOR CONSIDERATION AND DECISION BY SECOND INDORSEMENT DATED JULY 8. IN PARAGRAPH C OF ARTICLE V IT IS PROVIDED THAT REIMBURSEMENT WOULD BE MADE IN ACCORDANCE WITH ITEM IV OF EXHIBIT "B" FOR SERVICES OF PERSONNEL OVER AND ABOVE PERSONNEL REQUIRED IN THE OPERATION OF THE EXISTING LINE. "FOR WHICH THE NORTHERN PACIFIC IS TO BE REIMBURSED BY THE GOVERNMENT. " AND STATES: "THE NORTHERN PACIFIC IS TO BE REIMBURSED BY THE GOVERNMENT FOR WAGES PAID ALL EMPLOYEES RECEIVING HOURLY COMPUTED WAGES. THAT NO PROVISION WAS MADE FOR ANY INCREASE IN COMPENSATION OR PAYROLL ADDITIVE. ALTHOUGH SINCE THE CONTRACT BECAME EFFECTIVE THERE HAVE BEEN THREE INDUSTRY-WIDE WAGE INCREASES AND TWO INCREASES IN UNEMPLOYMENT INSURANCE TAX WHICH INCLUDED THE SALARIES AND PAYROLL ADDITIVES PAID TO PERSONNEL LISTED IN ITEM IV OF EXHIBIT "B.'.

B-136797, AUG. 7, 1958

TO THE SECRETARY OF THE ARMY:

THE NORTHERN PACIFIC RAILWAY COMPANY HAS BY LETTER DATED DECEMBER 10, 1957, ADDRESSED TO OUR OFFICE, THROUGH THE DISTRICT ENGINEER, CORPS OF ENGINEERS, U.S. ARMY, SEATTLE, WASHINGTON, REQUESTED REFORMATION OF CONTRACT NO. DA 45-108-ENG-3261, ENTERED INTO ON OCTOBER 25, 1955, FOR THE RELOCATION OF A PORTION OF THE COMPANY'S FACILITIES IN KING COUNTY, WASHINGTON, NECESSITATED BY CONSTRUCTION OF THE EAGLE GORGE RESERVOIR, GREEN RIVER, WASHINGTON. THE MATTER WAS REFERRED HERE FOR CONSIDERATION AND DECISION BY SECOND INDORSEMENT DATED JULY 8, 1958, FROM THE OFFICE OF THE CHIEF OF ENGINEERS.

THE CONTRACT PROVIDES FOR JOINT OPERATIONS OF THE GOVERNMENT AND THE RAILWAY COMPANY IN THE RELOCATION WORK, AND THAT THE GOVERNMENT AGREES TO ASSUME AND PAY TO THE RAILWAY ALL EXPENSE INCURRED BY THE RAILWAY ON THE PROJECT. ARTICLE V OF THE CONTRACT LISTS VARIOUS ITEMS OF ALLOWABLE DIRECT AND OVERHEAD EXPENSE WHICH WOULD BE FOR REIMBURSEMENT TO THE RAILWAY. IN PARAGRAPH C OF ARTICLE V IT IS PROVIDED THAT REIMBURSEMENT WOULD BE MADE IN ACCORDANCE WITH ITEM IV OF EXHIBIT "B" FOR SERVICES OF PERSONNEL OVER AND ABOVE PERSONNEL REQUIRED IN THE OPERATION OF THE EXISTING LINE, REQUIRED FOR PROTECTION OF RAILWAY TRAFFIC AND FACILITIES DURING THE CONSTRUCTION PERIOD, AND FOR SERVICES OF PERSONNEL NECESSARY TO REPRESENT THE RAILWAY ON THE PORTIONS OF WORK PERFORMED BY THE GOVERNMENT OR ITS CONTRACTORS.

ITEM NO. IV OF EXHIBIT "B" SETS FORTH THE SALARIES, INCLUDING ALL COMPENSATION AND LIVING EXPENSES, OF THE RAILWAY'S MONTHLY RATED EMPLOYEES,"FOR WHICH THE NORTHERN PACIFIC IS TO BE REIMBURSED BY THE GOVERNMENT," AND STATES:

"THE NORTHERN PACIFIC IS TO BE REIMBURSED BY THE GOVERNMENT FOR WAGES PAID ALL EMPLOYEES RECEIVING HOURLY COMPUTED WAGES, IN ACCORDANCE WITH ACTUAL PAYROLL EXPENDITURE, (INCLUDING TRAVEL TIME) * * *.'

WITH RESPECT TO THE RAILWAY'S MONTHLY RATED EMPLOYEES, NORTHERN PACIFIC STATES IN ITS LETTER OF DECEMBER 10, 1957, THAT NO PROVISION WAS MADE FOR ANY INCREASE IN COMPENSATION OR PAYROLL ADDITIVE, ALTHOUGH SINCE THE CONTRACT BECAME EFFECTIVE THERE HAVE BEEN THREE INDUSTRY-WIDE WAGE INCREASES AND TWO INCREASES IN UNEMPLOYMENT INSURANCE TAX WHICH INCLUDED THE SALARIES AND PAYROLL ADDITIVES PAID TO PERSONNEL LISTED IN ITEM IV OF EXHIBIT "B.' THE RAILWAY CONTENDS THAT THE FAILURE TO PROVIDE FOR RECOGNITION OF INCREASE IN THE RATES OF PAY FOR SALARIED EMPLOYEES LISTED IN ITEM IV WAS AN OVERSIGHT ON THE PART OF BOTH PARTIES TO THE CONTRACT, AND REFERS TO THE FACT THAT THE ENTIRE TENOR OF THE CONTRACT IS TO THE EFFECT THAT THE RAILWAY COMPANY IS TO BE PROVIDED WITH A LINE OF RAILROAD AND APPURTENANCES TO TAKE THE PLACE OF THE RELOCATED LINE, WITHOUT COST OR PROFIT TO THE RAILWAY COMPANY.

THE QUESTION AS TO WHETHER REIMBURSEMENT WAS AUTHORIZED UNDER THE CONTRACT PROVISIONS FOR INCREASES IN RATES PAID TO THE RAILWAY'S SALARIED EMPLOYEES WAS CONSIDERED IN PREVIOUS CORRESPONDENCE BETWEEN NORTHERN PACIFIC AND THE CONTRACTING OFFICER. THE CONTRACTING OFFICER DETERMINED THAT--- IN VIEW OF THE DIRECT AND SPECIFIC REFERENCE IN ARTICLE VC OF THE CONTRACT TO THE SALARY AND WAGE RATES GIVEN IN ITEM IV OF EXHIBIT "B"--- HE WAS OBLIGED TO CONCLUDE THAT HE WAS WITHOUT AUTHORITY TO ALLOW THE INCREASES IN WAGE RATES FOR SALARIED EMPLOYEES AS A PART OF THE COST WHICH THE GOVERNMENT WAS REQUIRED TO CONSIDER IN MAKING PAYMENTS TO THE RAILWAY.

IN HIS REPORT DATED JANUARY 24, 1958, TO THE DIVISION ENGINEER, THE CONTRACTING OFFICER (DISTRICT ENGINEER) STATES THAT NEGOTIATIONS LEADING TO THE EXECUTION OF THE CONTRACT WERE CONDUCTED ON THE PRINCIPLE OF REIMBURSEMENT TO THE RAILWAY COMPANY IN FULL FOR ALL OUTLAYS NECESSITATED BY THE PROPOSED RELOCATION; THAT THIS WOULD INCLUDE SALARIES AND PAYROLL ADDITIVES DISBURSED IN ACCORDANCE WITH ITS CURRENT POLICY AND PRACTICE, AND THAT IT WAS THE INTENTION OF THE PARTIES THAT THE CONTRACT SHOULD SO PROVIDE.

HIS IMPLIED RECOMMENDATION THAT THE CONTRACT SHOULD BE REFORMED IN VIEW OF THE INADVERTENCE IN OMITTING A PROVISION FOR ANY ADJUSTMENT IN THE SPECIFIED SALARIES OF THE RAILWAY'S HOURLY RATED EMPLOYEES HAS BEEN CONCURRED IN BY THE ACTING DIVISION ENGINEER AND THE CHIEF OF ENGINEERS.

ON THE RECORD PRESENTLY BEFORE OUR OFFICE, IT IS APPARENT THAT THE CONTRACT, AS REDUCED TO WRITING, DOES NOT EXPRESS THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE OBLIGATION OF THE GOVERNMENT TO REIMBURSE THE RAILWAY FOR EXPENSES INCURRED IN PERFORMING ITS PART OF THE RELOCATION WORK. THE MISTAKE WHICH WAS MADE IS OF A TYPE WHICH USUALLY FORMS THE BASIS FOR REFORMING A WRITTEN INSTRUMENT IF IT CAN BE ESTABLISHED CLEARLY WHAT THE CONTRACT WAS OR WOULD HAVE BEEN BUT FOR THE MISTAKE. SEE 20 COMP. GEN. 533, 537, 538.

ACCORDINGLY, YOU ARE ADVISED THAT WE WOULD HAVE NO OBJECTION TO THE EXECUTION OF AN APPROPRIATE CONTRACT AMENDMENT WHICH WOULD, AS HAS BEEN REQUESTED BY THE RAILWAY, AUTHORIZE REIMBURSEMENT TO BE MADE FOR THE ACTUAL SALARIES PAID TO THE EMPLOYEES ON THE PROJECT AS LISTED IN ITEM IV OF EXHIBIT "B" FROM THE TIME THE CONTRACT TOOK EFFECT UNTIL IT IS FULLY PERFORMED.

THE NORTHERN PACIFIC RAILWAY COMPANY, ENGINEERING DEPARTMENT, ST. PAUL, MINNESOTA, IS BEING FURNISHED A COPY OF THIS DECISION.