B-143015, MAY 31, 1960

B-143015: May 31, 1960

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AT APPROXIMATELY THE SAME TIME THERE WAS ESTABLISHED BY JUDICIAL DECREE THE IGNACIO SANITATION DISTRICT TO PROVIDE SANITARY SEWERAGE GATHERING AND DISPOSAL FACILITIES FOR THE DISTRICT INHABITANTS. UPON DISCUSSIONS BETWEEN OFFICIALS OF THE BUREAU AND THE DISTRICT IT WAS DETERMINED TO BE TO THE ADVANTAGE OF BOTH ENTITIES TO ESTABLISH A SINGLE SEWERAGE SYSTEM. IN NEGOTIATIONS IT WAS CONTEMPLATED THAT THE SYSTEM WOULD BE CONSTRUCTED BY THE SANITATION DISTRICT AND THAT A PERCENTAGE OF THE COST BASED ON THE PROPORTION OF ANTICIPATED USE WOULD BE BORNE BY THE BIA IN THE FORM OF A SERVICE CONNECTION CHARGE. BECAUSE OF THE UNCERTAINTY AS TO THE FINAL TOTAL COST INHERENT IN SUCH AN ARRANGEMENT IT WAS DEEMED EXPEDIENT BY APPROPRIATE OFFICIALS OF THE BUREAU TO FIX THE BUREAU'S PARTICIPATION AT A SPECIFIED DOLLAR AMOUNT THUS PROTECTING THE GOVERNMENT AGAINST POSSIBLE INCREASES IN THE ULTIMATE COST OF THE FACILITY OVER THAT ESTIMATED BY THE ARCHITECT ENGINEERS.

B-143015, MAY 31, 1960

TO SECRETARY OF THE INTERIOR:

WE REFER TO A LETTER OF MAY 26, 1960, WITH ENCLOSURES, SIGNED BY THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING OUR DECISION WITH RESPECT TO THE OBLIGATION OF THE GOVERNMENT TO PAY TO THE IGNACIO SANITATION DISTRICT, IGNACIO, COLORADO, THE CONNECTION CHARGE OF $29,384 STIPULATED IN A CONTRACT BETWEEN THE SANITATION DISTRICT AND THE BUREAU OF INDIAN AFFAIRS.

THE BUREAU HAD UNDER CONSIDERATION THE ESTABLISHMENT OF SANITARY SEWERAGE FACILITIES AND SERVICES FOR THE CONSOLIDATED UTE AGENCY, LOCATED ON THE EDGE OF THE TOWN OF IGNACIO, COLORADO. AT APPROXIMATELY THE SAME TIME THERE WAS ESTABLISHED BY JUDICIAL DECREE THE IGNACIO SANITATION DISTRICT TO PROVIDE SANITARY SEWERAGE GATHERING AND DISPOSAL FACILITIES FOR THE DISTRICT INHABITANTS. UPON DISCUSSIONS BETWEEN OFFICIALS OF THE BUREAU AND THE DISTRICT IT WAS DETERMINED TO BE TO THE ADVANTAGE OF BOTH ENTITIES TO ESTABLISH A SINGLE SEWERAGE SYSTEM. IN NEGOTIATIONS IT WAS CONTEMPLATED THAT THE SYSTEM WOULD BE CONSTRUCTED BY THE SANITATION DISTRICT AND THAT A PERCENTAGE OF THE COST BASED ON THE PROPORTION OF ANTICIPATED USE WOULD BE BORNE BY THE BIA IN THE FORM OF A SERVICE CONNECTION CHARGE. BECAUSE OF THE UNCERTAINTY AS TO THE FINAL TOTAL COST INHERENT IN SUCH AN ARRANGEMENT IT WAS DEEMED EXPEDIENT BY APPROPRIATE OFFICIALS OF THE BUREAU TO FIX THE BUREAU'S PARTICIPATION AT A SPECIFIED DOLLAR AMOUNT THUS PROTECTING THE GOVERNMENT AGAINST POSSIBLE INCREASES IN THE ULTIMATE COST OF THE FACILITY OVER THAT ESTIMATED BY THE ARCHITECT ENGINEERS. THIS WAS ACCEPTABLE TO THE DISTRICT AND A CONTRACT WAS ENTERED INTO BETWEEN THE DISTRICT AND THE BUREAU DATED JUNE 23, 1959, WHEREBY THE SERVICE CONNECTION CHARGE TO BE PAID BY THE BUREAU WAS SET AT $29,384, WHICH WAS THE AMOUNT ESTABLISHED BY APPLICATION OF THE PERCENTAGE PREVIOUSLY CONSIDERED AGAINST THE TOTAL COST OF THE FACILITY AS ESTIMATED BY THE ARCHITECT ENGINEERS. THE CONTRACT ALSO PROVIDED THAT IT WOULD BE NULL AND VOID UNLESS THE FACILITIES WERE COMPLETED IN A SATISFACTORY OPERATING CONDITION ON OR BEFORE JANUARY 1, 1960,"OR ANY SUCH EXTENDED DATE AS MAY BE GRANTED PRIOR TO SAID DATE.'

SUBSEQUENT TO THE EXECUTION OF THE AGREEMENT THE DISTRICT SOLICITED BIDS FOR THE CONSTRUCTION OF THE FACILITY. A CONTRACT WAS AWARDED TO THE LOW ACCEPTABLE BIDDER AFTER OPENING ON NOVEMBER 9, 1959, AT A TOTAL COST SIGNIFICANTLY LESS THAN THE ESTIMATE OF THE ARCHITECT ENGINEER. BECAUSE OF THE DELAY IN AWARDING THE CONTRACT, THE BUREAU WAS REQUESTED, AFTER BID OPENING, TO AGREE TO AN EXTENSION IN THE TIME OF COMPLETION TO MAY 1, 1960, AND DID SO BY SUPPLEMENTAL AGREEMENT NO. 1, DATED DECEMBER 10, 1959. ALTHOUGH THE BIDS HAD BEEN OPENED AND THE AMOUNT OF THE LOW ACCEPTABLE BID WAS KNOWN AT THE TIME NEGOTIATIONS FOR SUCH EXTENSION WERE ENTERED INTO, THERE IS NO INDICATION THAT THIS INFORMATION WAS MADE AVAILABLE TO OFFICIALS OF THE BUREAU. THE QUESTION PRESENTED IS WHETHER IN THE LIGHT OF THE FOREGOING, THE CONNECTION CHARGE STIPULATED BY THE TERMS OF THE CONTRACT MAY BE PAID BY THE BUREAU OF INDIAN AFFAIRS.

THERE IS NO QUESTION THAT THE AGREEMENT BY THE BUREAU AND THE SANITATION DISTRICT ACCURATELY REFLECTS THE INTENTION OF THE PARTIES. WHILE IT IS TRUE THAT SUCH INTENTION WAS PREDICATED UPON THE HONEST BELIEF ON BOTH SIDES THAT THE TOTAL COST OF THE PROJECT WOULD BE AN AMOUNT FAR IN EXCESS OF THE ACTUAL COST, THERE IS NO BASIS FOR A CONCLUSION THAT THE AGREEMENT MAY BE REFORMED OR RESCINDED. IT IS WELL RECOGNIZED THAT WHERE, BECAUSE OF A MISTAKE AS TO AN EXISTING SITUATION, THE PARTIES MAKE A WRITTEN INSTRUMENT WHICH ACCURATELY EXPRESSES THEIR INTENTION BUT WHICH THEY OTHERWISE WOULD NOT HAVE AGREED TO BUT FOR THE MISTAKE, SUCH WRITING CANNOT BE REFORMED INTO ONE WHICH MIGHT HAVE BEEN MADE BUT IN FACT NEVER WAS MADE. 5 WILLISTON (REVISED EDITION) SECTION 1549. SEE ALSO, MARYLAND CASUALTY COMPANY V. UNITED STATES, 169 F.2D 102; POWER SERVICE CORPORATION V. JOSLIN, 175 F.2D 698; RUSSELL V. SHELL PETROLEUM CORPORATION, 66 F.2D 864. THE BUREAU IN THIS INSTANCE BY CONVERTING THE ORIGINAL PERCENTAGE PLAN TO AN ABSOLUTE FIGURE LIMITED THE MAXIMUM AMOUNT OF ITS LIABILITY JUST AS MUCH AS IT CUT ITSELF OFF FROM THE POSSIBILITY OF A LOWER COST. SINCE THE DISTRICT ACCEPTED THE RISK OF ANY INCREASE IT APPEARS LEGALLY ENTITLED TO THE BENEFIT OF ANY DECREASE.

THE ONLY OTHER QUESTION WHICH NEED BE CONSIDERED WITH RESPECT TO THE MATTER IS WHETHER THERE WAS ANY OBLIGATION ON THE PART OF THE DISTRICT OFFICIALS AT THE TIME REQUEST WAS MADE FOR AN EXTENSION IN THE DATE OF COMPLETION TO BRING TO THE ATTENTION OF THE REPRESENTATIVES OF THE BUREAU ITS KNOWLEDGE THAT THE ACTUAL CONSTRUCTION COST WOULD BE WELL BELOW THAT ANTICIPATED. WE THINK THERE IS LITTLE QUESTION THAT IN VIEW OF THE CIRCUMSTANCES AN EXTENSION OF TIME WAS APPROPRIATE AND IN THE BEST INTERESTS OF BOTH PARTIES. HOWEVER, IT APPEARS THAT THE NEED FOR THE EXTENSION MIGHT HAVE BEEN TAKEN ADVANTAGE OF BY THE GOVERNMENT TO AVOID THE COSTS OF PARTICIPATION AGREED UPON BECAUSE OF ITS UNWILLINGNESS TO PROCEED ON THE ORIGINAL PRO-RATA SHARING OF COSTS BASIS. WITHOUT CONSIDERING THE PROPRIETY OF SUCH ACTION WE WILL ASSUME FOR THE MOMENT THAT IF THE BID PRICES ACTUALLY RECEIVED HAD BEEN PECULIARLY WITHIN THE KNOWLEDGE OF THE DISTRICT, THE FAILURE TO MAKE THAT INFORMATION AVAILABLE TO THE REPRESENTATIVES OF THE BUREAU AT THE TIME THEY COULD HAVE TAKEN ADVANTAGE THEREOF BY REFUSING AN EXTENSION IN THE TIME OF COMPLETION MIGHT BE CONSIDERED LEGALLY TANTAMOUNT TO A DELIBERATE MISREPRESENTATION JUSTIFYING REFORMATION. IN THIS INSTANCE, HOWEVER, THE BIDS WERE BY THE TERMS OF THE INVITATION REQUIRED TO BE PUBLICLY OPENED AND READ. ASSUME, THEREFORE, THAT THE BID PRICES WERE PUBLIC KNOWLEDGE. IN FACT, IT APPEARS FROM THE SUBMISSION THAT THE TIME AND MANNER OF BID OPENING WERE BROUGHT TO THE ATTENTION OF THE BUREAU OFFICIALS WELL IN ADVANCE OF BID OPENING, PRESUMABLY ON THE ASSUMPTION THAT THEY WOULD AVAIL THEMSELVES OF THE OPPORTUNITY TO BE PRESENT. THE DISTRICT THEREFORE CANNOT BE SAID TO HAVE WITHHELD INFORMATION FROM THE BUREAU WHICH IT HAD A DUTY TO DISCLOSE.

IN ACCORDANCE WITH THE FOREGOING IT IS OUR VIEW THAT THERE HAS BEEN PRESENTED NO BASIS UPON WHICH PAYMENT TO THE DISTRICT BY THE BUREAU IN ACCORDANCE WITH THE REFERENCED CONTRACT CAN BE CONSIDERED IMPROPER.