B-141561, FEB. 18, 1960

B-141561, FEB. 18, 1960

TO MR. DONALD J. CAMPBELL, AUTHORIZED CERTIFYING OFFICER, BUREAU OF MINES, HELIUM ACTIVITY:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 27, 1959, RECEIVED IN THIS OFFICE ON DECEMBER 23, REQUESTING OUR ADVICE WHETHER YOU MAY CERTIFY FOR PAYMENT INVOICE NO. 6274, DATED SEPTEMBER 15, 1959, IN THE AMOUNT OF $48,376.78, AND INVOICE NO. 6541, DATED NOVEMBER 16, 1959, IN THE AMOUNT OF $14,675.56, FROM THE FLUOR CORPORATION, LTD., OF LOS ANGELES, CALIFORNIA. YOU STATE THAT SUCH INVOICES REPRESENT THE TOTAL AMOUNT PURPORTED TO BE DUE THE FLUOR CORPORATION, LTD., UNDER A COST PLUS-A-FIXED -FEE CONTRACT, BY REASON OF SERVICES FURNISHED THE UNITED STATES BY THAT CORPORATION'S SUBCONTRACTOR, THE WM. A. SMITH CONSTRUCTION COMPANY, INC., IN CONSTRUCTING RAILROAD TRACKAGE AT THE KEYES HELIUM PLANT.

AN EXAMINATION OF THE RECORD INDICATES THAT PURSUANT TO THE FLUOR CORPORATION'S REQUEST FOR QUOTATIONS ISSUED ON NOVEMBER 6, 1958, THE WM. A. SMITH CONSTRUCTION COMPANY, INC., OF HOUSTON, TEXAS, THE LOW BIDDER, SUBMITTED ITS PROPOSAL OF NOVEMBER 28, 1958, WHICH PROPOSAL WAS AMENDED BY TELEGRAM ON DECEMBER 2, 1958, SUCH AMENDMENT BEING CONFIRMED BY LETTER DATED DECEMBER 5, 1958. THE BID AS AMENDED WAS SUBMITTED ON A LUMP SUM PRICE OF $67,000, TO BE ADJUSTED AT THE RATE OF $8.10 PER FOOT OF TRACK ACTUALLY INSTALLED, MORE OR LESS THAN 7,000 FEET. HOWEVER, THE SUBCONTRACT WAS WRITTEN ON THE BASIS OF UNIT PRICE ONLY AT $8.10 PER FOOT FOR THE ACTUAL LENGTH OF TRACK INSTALLED WHICH OBVIOUSLY DID NOT CONFORM TO THE BID PROPOSAL. THE FLUOR CORPORATION, LTD., HAS ACKNOWLEDGED THE ERROR, AND STATES THAT ARTICLE 21 OF THE ORIGINAL SUBCONTRACT SHOULD HAVE BEEN WRITTEN ON THE BASIS OF THE ABOVE LUMP SUM AMOUNT, AND THAT THE FIGURE OF $8.10 PER TRACK FOOT WAS TO BE USED ONLY IN THE EVENT OF AN ADDITION TO OR DELETION FROM THE ESTIMATED 7,000 FEET OF TRACK DESIGNATED AS THE ORIGINAL QUANTITY FOR THE WORK. THE GOVERNMENT'S APPROVAL OF THE AWARD LIKEWISE WAS BASED UPON THE UNDERSTANDING OF THE CONTRACTING OFFICER'S REPRESENTATIVE THAT THE SUBCONTRACT CONSIDERATION WAS A LUMP SUM PRICE OF $67,000, AS EVIDENCED BY THE SUMMARY OF QUOTATIONS DATED DECEMBER 2, 1958. IT IS UNDERSTOOD THAT THE WORK HAS BEEN COMPLETED BY THE SMITH COMPANY FOR WHICH PAYMENT HAS BEEN MADE BY THE FLUOR CORPORATION IN ACCORDANCE WITH THE TERMS OF AMENDMENT NO. 2, TO THE SUBCONTRACT, DATED AUGUST 31, 1959.

THE FACTS PRESENTED BY YOU, AS SUBSTANTIATED BY THE RECORD, CLEARLY ESTABLISH THAT THE DEFINITIVE SUBCONTRACT AS ENTERED INTO BY THE PARTIES CONTAINED A MUTUAL MISTAKE AS TO A MATERIAL FACT AND THAT, CONSEQUENTLY, SUCH SUBCONTRACT DID NOT EXPRESS THE TRUE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE BASIS UPON WHICH PAYMENT WOULD BE MADE. ACCORDINGLY, WE WILL INTERPOSE NO OBJECTION TO REIMBURSEMENT TO THE FLUOR CORPORATION FOR PAYMENTS MADE IN ACCORDANCE WITH THE SUBCONTRACT AS REFORMED BY AMENDMENT NO. 2.