B-141480, FEB. 16, 1960

B-141480, FEB. 16, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 28, 1960, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), WITH ENCLOSURES, CONCERNING THE REQUEST OF DIMOND AND THORMAN, ATTORNEYS FOR THE PEERLESS INDUCTION COMPANY, FOR REFORMATION OF CONTRACT NO. DA-20-113 ORD-25053 BECAUSE OF MUTUAL MISTAKE ALLEGEDLY MADE IN ITS EXECUTION.

INVITATION FOR BIDS NO. ORD-20-113-59-919, DATED FEBRUARY 25, 1959, REQUESTED BIDS FOR THE RECLAMATION OF 138,028 TRACK SHOE ASSEMBLIES (T91E3), AND PROVIDED FOR A SET-ASIDE OF AN ADDITIONAL 138,028 ASSEMBLIES FOR AWARD TO ELIGIBLE BIDDERS IN DISTRESSED LABOR AREAS. AMENDMENT NO. 2 TO THE INVITATION DELETED THE FOLLOWING "GOVERNMENT FURNISHED MATERIAL" CLAUSE:

"THE GOVERNMENT WILL FURNISH ALL T91E3 TRACK SHOE ASSEMBLIES TO BE RECEIVED UNDER THIS CONTRACT. IN THE EVENT THAT ANY OF THE SHOE ASSEMBLIES FURNISHED BY THE GOVERNMENT ARE DEFICIENT IN ANY RESPECT OTHER THAN THAT FOR WHICH WORK IS REQUIRED TO BE DONE UNDER THE TERMS OF THIS CONTRACT, THE CONTRACTOR SHALL NOTIFY THE GOVERNMENT INSPECTOR BEFORE COMMENCING TO RECLAIM THE DEFICIENT SHOE ASSEMBLY. ANY SHOE ASSEMBLIES REJECTED BY THE GOVERNMENT INSPECTOR SHALL BE REPLACED BY THE GOVERNMENT.'

IN LIEU THEREOF, THE AMENDMENT SUBSTITUTED A CLAUSE READING AS FOLLOWS:

"THE GOVERNMENT WILL FURNISH ALL T91E3 TRACK SHOE ASSEMBLIES TO BE RECLAIMED UNDER THIS CONTRACT. THE TRACK SHOE ASSEMBLIES TO BE FURNISHED BY THE GOVERNMENT FOR RECLAMATION IS CODE 1 TRACK RECLASSIFIED CODE 6 BY REASON OF RUBBER DETERIORATION. IN THE EVENT THAT ANY OF THE SHOE ASSEMBLIES OR COMPONENTS THEREOF FURNISHED BY THE GOVERNMENT ARE DEFICIENT IN ANY RESPECT, OTHER THAN THAT FOR WHICH WORK IS REQUIRED TO BE DONE UNDER THE TERMS OF THIS CONTRACT, THE CONTRACTOR SHALL NOTIFY THE GOVERNMENT INSPECTOR BEFORE COMMENCING TO RECLAIM THE DEFICIENT SHOE ASSEMBLY. ANY SHOE ASSEMBLIES REJECTED BY THE GOVERNMENT INSPECTOR AS BEING NON-RECLAIMABLE BECAUSE OF MAJOR DEFICIENCIES IN THE SHOE ASSEMBLY OR COMPONENTS THEREOF WILL BE REJECTED AND ADDITIONAL SHOE ASSEMBLIES WILL BE FURNISHED BY THE GOVERNMENT.'

AWARD OF THE NON-SET-ASIDE PORTION OF THE INVITATION WAS MADE TO THE STANDARD PRODUCTS COMPANY AND, SUBSEQUENT TO NEGOTIATIONS UNDER THE LABOR SURPLUS AREA SET-ASIDE PROVISIONS OF THE INVITATION, AWARD OF THE SET- ASIDE PORTION WAS MADE TO PEERLESS INDUCTION. THE PEERLESS INDUCTION CONTRACT CONTAINED ALL THE PROVISIONS OF THE STANDARD PRODUCTS CONTRACT EXCEPT THE SUBSTITUTED ,GOVERNMENT-FURNISHED MATERIAL" CLAUSE WHICH WAS INADVERTENTLY OMITTED BY CLERICAL ERROR.

IT IS REPORTED THAT THE SUBSTITUTE CLAUSE WAS MADE A PART OF THE INVITATION TO CLARIFY THE WORK TO BE DONE BY THE CONTRACTOR UNDER THE CONTRACTS TO BE EXECUTED, AND THAT IT WAS THE DESIRE OF THE PROCUREMENT OFFICE TO DEFINE THE CONDITION OF THE ASSEMBLIES TO BE DELIVERED TO THE CONTRACTOR AND TO PRECISELY SPELL OUT THE WORK TO BE DONE TO RECLAIM THE ASSEMBLIES.

ON THE BASIS OF THE EVIDENCE OF RECORD, IT IS CLEAR THAT THE SUBJECT CLAUSE WAS OMITTED THROUGH MUTUAL MISTAKE OF THE PARTIES TO THE CONTRACT. SUCH MISTAKE IS GROUND FOR REFORMING THE WRITTEN INSTRUMENT. 30 COMP. GEN. 220. THEREFORE, CONTRACT NO. DA-20-113-ORD 25053 SHOULD BE REFORMED TO INCLUDE THE "GOVERNMENT-FURNISHED MATERIAL" CLAUSE PROVIDED IN AMENDMENT NO. 2 TO THE INVITATION.

THERE REMAINS, HOWEVER, AN ADDITIONAL MATTER FOR CONSIDERATION WITH RESPECT TO THE OBLIGATION OF PEERLESS INDUCTION TO RECLAIM THE TRACK SHOE ASSEMBLIES FURNISHED BY THE GOVERNMENT UNDER THE CONTRACT. IT IS THE CONTENTION OF THE CONTRACTOR THAT SINCE THE ASSEMBLIES FURNISHED WERE IN A RUSTY CONDITION, IT IS ENTITLED TO AN EQUITABLE PRICE ADJUSTMENT BECAUSE THE ASSEMBLIES WERE NOT ,CODE NO. 1 TRACK RECLASSIFIED CODE NO. 6 BY REASON OF RUBBER DETERIORATION.' IT IS REPORTED THAT THE "GOVERNMENT- FURNISHED MATERIAL" CLAUSE DID NOT CONTEMPLATE THE RECLAMATION OF ASSEMBLIES WHEN ANY OF THE COMPONENTS THEREOF WERE DAMAGED OR REQUIRED TO BE REPLACED. RATHER, IT WAS THE OBLIGATION OF PEERLESS INDUCTION TO DISASSEMBLE, REMOVE THE RUBBER COMPONENTS, CLEAN, REASSEMBLE, PACKAGE AND PACK THE ASSEMBLIES FOR RETURN TO THE GOVERNMENT. THE PURCHASE DESCRIPTION OF THE CONTRACT (DAPD-236 DATED DECEMBER 15, 1958, AS AMENDED) REQUIRED IN PARAGRAPH 3.5.3 THAT:

"CLEANING.--- THE CLEANING OF ALL METAL COMPONENTS SHALL BE ACCOMPLISHED IN SUCH A MANNER THAT ALL CORROSION AND FOREIGN MATERIALS SHALL BE REMOVED TO ASSURE THAT CORRECT ADHESION REQUIREMENTS ARE MET AND DIMENSIONAL TOLERANCES ARE MAINTAINED.'

FURTHERMORE, THE FACT THAT THE EXISTENCE OF RUST PITS ON EXPOSED SURFACES OF METAL COMPONENTS IS NOT A CAUSE FOR REJECTION OF COMPONENTS (PARAGRAPH 3.3 (A) OF DAPD-236), DOES NOT, IN OUR OPINION, EXCUSE PEERLESS INDUCTION FROM REMOVING ALL CORROSION AND FOREIGN MATERIALS, INCLUDING RUST. ACCORDINGLY, WE CONCLUDE THAT ON THE PRESENT RECORD NO EQUITABLE PRICE ADJUSTMENT IS REQUIRED.