B-141020, NOV. 12, 1959

B-141020: Nov 12, 1959

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FEDERAL AVIATION AGENCY: REFERENCE IS MADE TO A LETTER DATED OCTOBER 16. THE ADMINISTRATION STATED IN PART: "OUR AIR NAVIGATION FACILITY ON LANAI IS A PERMANENT INSTALLATION. THE LOAD IS RELATIVELY CONSTANT. THIS IS APPROXIMATELY DOUBLE THE EXISTING LOAD. PROVIDED WE ARE ASSURED OF A RELIABLE SERVICE. THE COMPANY WROTE THAT NO CONTRIBUTION WOULD BE REQUIRED SINCE THE UNDERGROUND CABLE WOULD SERVE BOTH THE ADMINISTRATION FACILITIES AND A PINEAPPLE PLANTATION PROJECT WHICH WAS BEING DEVELOPED. REQUIRE A LONGER CONTRACT WHERE THE INSTALLATION IS OF LARGE SIZE OR IS AFFECTED BY SPECIAL CONDITIONS.'. ON PAGE 2 OF THE CONTRACT IS THE FOLLOWING PROVISION: "THIS CONTRACT IS TO REMAIN IN FORCE UNTIL FURTHER NOTICE SUBJECT TO A TERMINATION PRIVILEGE BY EITHER PARTY UPON SIXTY DAYS' NOTICE IN WRITING AND WITH THE UNDERSTANDING THAT THE CONTRACT DOES NOT OBLIGATE OR PURPORT TO OBLIGATE GOVERNMENTAL EXPENDITURE OF FUNDS NOT APPROPRIATED.'.

B-141020, NOV. 12, 1959

TO HONORABLE E. R. QUESADA, ADMINISTRATOR, FEDERAL AVIATION AGENCY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 16, 1959, AND ITS ENCLOSURES, FROM THE ASSISTANT ADMINISTRATOR FOR MANAGEMENT SERVICES, REQUESTING A DECISION AS TO WHETHER CONTRACT NO. C6CA-331A WITH THE MAUI ELECTRIC COMPANY, LTD., OF THE STATE OF HAWAII MAY BE REFORMED OR OTHER RELIEF GRANTED TO THE CONTRACTOR.

IT APPEARS THAT THE CIVIL AERONAUTICS ADMINISTRATION, REGION SIX, OPERATED AND MAINTAINED A VOR (ELECTRONIC NAVIGATIONAL AID TO AIRCRAFT) FACILITY ON THE ISLAND OF LANAI, TERRITORY OF HAWAII, FURNISHING ITS OWN COURSE OF ELECTRICAL POWER. ON SEPTEMBER 1, 1955, THE ADMINISTRATION WROTE TO THE MAUI ELECTRIC COMPANY, LTD., WHICH HAD ESTABLISHED OPERATIONS ON LANAI, RELATIVE TO PURCHASING ELECTRIC POWER. BY A LETTER DATED DECEMBER 8, 1955, THE COMPANY INQUIRED AS TO THE PERMANENCY OF THE FACILITY, THE PROSPECT OF FUTURE LOAD INCREASE AND THE WILLINGNESS OF THE ADMINISTRATION TO MAKE A NONREFUNDABLE CONTRIBUTION UP TO $1,500 REPRESENTING THE DIFFERENCE IN COST BETWEEN AN UNDERGROUND CABLE (NECESSITATED BY LOCAL CONDITIONS) AND AN OVERHEAD LINE.

IN ITS REPLY DATED DECEMBER 19, 1955, THE ADMINISTRATION STATED IN PART:

"OUR AIR NAVIGATION FACILITY ON LANAI IS A PERMANENT INSTALLATION. THE LOAD IS RELATIVELY CONSTANT. HOWEVER, TO PROVIDE FOR POSSIBLE FUTURE CHANGES, PLANNING SHOULD BE BASED UPON 20 EVA. THIS IS APPROXIMATELY DOUBLE THE EXISTING LOAD.

"WE WOULD BE WILLING, PROVIDED WE ARE ASSURED OF A RELIABLE SERVICE, TO MAKE A NON-REFUNDABLE CONTRIBUTION TO THE COST OF PROVIDING SERVICE.'

IN LETTERS DATED MAY 7 AND JULY 11, 1956, THE COMPANY WROTE THAT NO CONTRIBUTION WOULD BE REQUIRED SINCE THE UNDERGROUND CABLE WOULD SERVE BOTH THE ADMINISTRATION FACILITIES AND A PINEAPPLE PLANTATION PROJECT WHICH WAS BEING DEVELOPED.

CONTRACT NO. S6CA-331A, DATED JULY 16, 1956, REQUIRED THE CONTRACTOR TO FURNISH ELECTRIC POWER TO THE FACILITY AT LANAI AT RATES IN ACCORDANCE WITH SCHEDULE P-1. SCHEDULE P-1 INCLUDES A PROVISIONAS FOLLOWS:

"TERM OF CONTRACT.

"NOT LESS THAN ONE YEAR AND THEREAFTER UNTIL CANCELLED BY SIX MONTHS' WRITTEN NOTICE GIVEN BY EITHER PARTY. THE COMPANY MAY, HOWEVER, REQUIRE A LONGER CONTRACT WHERE THE INSTALLATION IS OF LARGE SIZE OR IS AFFECTED BY SPECIAL CONDITIONS.'

ON PAGE 2 OF THE CONTRACT IS THE FOLLOWING PROVISION:

"THIS CONTRACT IS TO REMAIN IN FORCE UNTIL FURTHER NOTICE SUBJECT TO A TERMINATION PRIVILEGE BY EITHER PARTY UPON SIXTY DAYS' NOTICE IN WRITING AND WITH THE UNDERSTANDING THAT THE CONTRACT DOES NOT OBLIGATE OR PURPORT TO OBLIGATE GOVERNMENTAL EXPENDITURE OF FUNDS NOT APPROPRIATED.'

IT IS STATED IN THE FINDING OF FACT THAT SERVICE UNDER THE CONTRACT WAS BEGUN NOVEMBER 30, 1956. EFFECTIVE DECEMBER 31, 1958, CIVIL AERONAUTICS ADMINISTRATION WAS SUCCEEDED BY YOUR AGENCY. A CONTRACT FOR CONSTRUCTION OF A NEW FACILITY IN A DIFFERENT LOCATION WAS EXECUTED IN JUNE 1959 AND THE ORIGINAL FACILITY IS TO BE DECOMMISSIONED UPON ACTIVATION OF THE NEW FACILITY AT A DATE ESTIMATED TO BE MARCH 1960. THE CONTRACTOR HAS REQUESTED A TERMINATION PAYMENT OF $5,177.93 (SUBSEQUENTLY REDUCED TO $4,359.93) FOR DISCONTINUANCE OF SERVICE AT THE ORIGINAL SITE, SUCH AMOUNT BEING STATED TO BE CAPITAL COSTS INCURRED IN CONSTRUCTING AN UNDERGROUND LINE TO SERVE THE ORIGINAL FACILITY.

IN THE FINDING OF FACT IT IS STATED FURTHER:

"THE COMPLETE INSTALLATION COST WAS BORNE BY THE COMPANY,APPARENTLY ONLY AFTER IT WAS ASSURED THAT THE FACILITY WOULD BE PERMANENT AND THE INSTALLATION COST COULD BE AMORTIZED OVER A LONG RANGE PERIOD. HOWEVER, THE COMPARATIVE SHORT TENURE OF SERVICE PROHIBITS AMORTIZATION AND IT APPEARS THE COMPANY WILL SUFFER A FINANCIAL LOSS BY TERMINATION OF SERVICE.'

UNDER CERTAIN CIRCUMSTANCES, A WRITTEN AGREEMENT NOT CONFORMING TO THE ACTUAL INTENTION OF THE PARTIES MAY BE REFORMED TO ACCORD WITH SUCH INTENTION. 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; 20 ID. 533; 30 ID. 220, 221 AND CASES THERE CITED. IN THE INSTANT MATTER, HOWEVER, THERE IS NOT FOUND ANY SHOWING OF A MUTUAL MISTAKE OR ANY AMBIGUITY IN THE LANGUAGE OF THE CONTRACT. THE CONTRACT SPECIFICALLY PROVIDED FOR ITS TERMINATION BY THE GIVING OF PROPER NOTICE BUT MADE NO PROVISION FOR A TERMINATION PAYMENT. APPARENTLY, THE CONTRACT EXPRESSED THE INTENTION OF THE PARTIES AT THE TIME OF SIGNING. IT IS NOTED THAT ANY CLAIM BASED ON THE COST OF THE UNDERGROUND CABLE--- ON WHICH THE REQUEST FOR REFORMATION IS BASED--- APPEARS TO HAVE BEEN ABANDONED BY THE CONTRACTOR IN ITS LETTERS OF MAY 7 AND JULY 11, 1956, ABOVE MENTIONED.

FOR THE REASONS ABOVE SET FORTH, THERE APPEARS NO BASIS FOR MODIFICATION OF THE CONTRACT OR ALLOWANCE OF ANY PORTION OF THE CONTRACTOR'S CLAIM.

THE CONTRACTOR'S LETTER OF SEPTEMBER 23, 1959, AND THE MEMORANDUM DATED OCTOBER 7, 1959, FROM THE REGIONAL ADMINISTRATOR ARE RETURNED HEREWITH.