B-143754, SEP. 21, 1960

B-143754, SEP. 21, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 10, 1960, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS) REQUESTING A DECISION AS TO WHETHER CONTRACTS NOS. DA-36-109-CIVENG-59-108, 136 AND 199 WITH THE AMERICAN DREDGING COMPANY MAY BE REFORMED BECAUSE OF AN ALLEGED MUTUAL MISTAKE OF THE PARTIES TO THESE CONTRACTS.

ON AUGUST 18, 1958, THE U.S. ARMY ENGINEER DISTRICT, PHILADELPHIA, INVITED BIDS FOR PERFORMING THE WORK OF REMOVAL AND SATISFACTORY DISPOSAL OF AN ESTIMATED 217,600 CUBIC YARDS (PLACE MEASUREMENT) OF UNCLASSIFIED CHANNEL EXCAVATION IN DELAWARE RIVER, PHILADELPHIA, TO TRENTON, NEW JERSEY, STA. 45/000 TO STA. 47/000 (SECTION R-1B). UNDER THE TECHNICAL PROVISIONS OF THE INVITATION (TP-6 MEASUREMENT AND PAYMENT), IT WAS PROVIDED THAT:

"IN CASE A COMPARISON OF THE BOTTOM SURFACES SHOWN BY SOUNDINGS OF THE SURVEY SHOWN ON THE DRAWINGS AND OF THE LAST SURVEY MADE BEFORE DREDGING INDICATES SHOALING IN ANY AREAS TO BE EXCAVATED UNDER THIS CONTRACT, SUCH SHOALING SHALL BE SEPARATELY MEASURED AND PAID FOR AT A UNIT PRICE OF $1.00 PER CUBIC YARD PLACE MEASUREMENT, WHICH PRICE AND PAYMENT SHALL BE FULL COMPENSATION FOR ALL COSTS IN CONNECTION THEREWITH.'

ADDENDUM NO. 2 DATED SEPTEMBER 3, 1958, DELETED THE PROVISIONS OF PARAGRAPH TP-6 IN ITS ENTIRETY AND SUBSTITUTED A NEW PARAGRAPH TP-6, AND SUBDIVIDED THE PARAGRAPH WITH SUB-CAPTIONED LETTERS "A" TO "F.' SUBPARAGRAPH "F" IS AS FOLLOWS:

"IN CASE A COMPARISON OF THE BOTTOM SURFACES SHOWN BY SOUNDINGS OF THE SURVEY SHOWN ON THE DRAWINGS AND OF THE LAST SURVEY MADE BEFORE DREDGING INDICATES SHOALING IN ANY SECTION TO BE EXCAVATED UNDER THIS CONTRACT, AS SET FORTH IN PARAGRAPH SW-2 "SECTIONS," SUCH SHOALING SHALL BE PAID FOR AT A UNIT PRICE OF $1.00 PER CUBIC YARD PLACE MEASUREMENT, WHICH PRICE AND PAYMENT SHALL BE FULL COMPENSATION FOR ALL COSTS IN CONNECTION THEREWITH.'

WITH RESPECT TO THE STATEMENT OF WORK TO BE PERFORMED, PARAGRAPH SW 2 PROVIDES AS FOLLOWS:

"FOR PURPOSES OF ACCEPTANCE THE WORK TO BE DONE IS DIVIDED INTO SECTIONS OF FULL CHANNEL WIDTH AND 500 FEET LONG:

TABLE

SECTION NO. STATION TO STATION

1 45/000 TO 45/500

2 45/500 TO 46/000

3 46/000 TO 46/500

4 46/500 TO 47/000"

THE LOWEST BIDDER WAS UNDER THE INVITATION WAS THE AMERICAN DREDGING COMPANY. ITS BID WAS IN THE AMOUNT OF $4.72 PER CUBIC YARD OR AN ESTIMATED AMOUNT OF $1,027,072. THE RESULTING CONTRACT NUMBERED DA-36 109 -CIVENG-59-108 WAS DATED OCTOBER 10, 1958.

ON SUBSEQUENT INVITATIONS ISSUED BY THE SAME PROCUREMENT OFFICE, THE AMERICAN DREDGING COMPANY WAS AWARDED TWO CONTRACTS NUMBERED DA-36 109- CIVENG-59-136 AND 199, FOR THE PERFORMANCE OF WORK OF UNCLASSIFIED EXCAVATION. EACH CONTRACT CONTAINED THE SAME PARAGRAPHS AS TO MEASUREMENTS AND PAYMENTS (TP-6) AS IN THE EARLIER CONTRACT AND CONTAINED A SIMILAR PARAGRAPH AS TO STATEMENTS OF THE WORK. IN ALL THREE CONTRACTS THERE IS A PROVISION (SECTION SC-5I) WITH REGARD TO PARTIAL PAYMENTS, AS FOLLOWS:

"MONTHLY PARTIAL PAYMENTS WILL BE MADE ON ESTIMATES OF SUCH MATERIAL AS HAS BEEN EXCAVATED, DRILLED AND BLASTED AND DEPOSITED IN ACCORDANCE WITH THE SPECIFICATIONS AND NOT INCLUDED IN ANY PRIOR ESTIMATE, AS FOLLOWS: "

IN EACH CASE PREDREDGING SURVEYS WERE MADE BEFORE THE WORK WAS BEGUN. HIS REPORT OF MARCH 10, 1960, THE SUCCESSOR CONTRACTING OFFICER SETS UP A TABLE TO SHOW THE ADVERTISED ESTIMATED QUANTITIES OF DREDGING AS COMPARED WITH THE PREDREDGING QUANTITIES, AS FOLLOWS:

TABLE

ADVERTISED CONTRACT PREDREDGING

CONTRACT NO. ESTIMATED QUANTITIES QUANTITIES DA-36 109-CIVENG-59-108 217,600 C.Y. 209,885.05 C.Y.

(SECTION R-1B)DA-36-109-CIVENG-59-136 404,000 C.Y. 406,969.1 C.Y.

(SECTION R-5) DA-36-109-CIVENG-59-199 590,000 C.Y. 578,259.1 C.Y.

(SECTION R-2)

THE ADVERTISED ESTIMATED QUANTITY SURVEY IS MADE FOR THE PURPOSE OF OBTAINING BIDS ON THE ESTIMATED QUANTITY OF WORK. PAYMENT IS MADE IN EACH CASE BY A COMPARISON OF THE PREDREDGING SURVEY WITH THE AFTER DREDGING SURVEY, IN ACCORDANCE WITH PARAGRAPH TP-6A OF EACH CONTRACT, AS FOLLOWS:

"THE TOTAL AMOUNT OF MATERIAL REMOVED AND TO BE PAID FOR UNDER THE CONTRACT WILL BE MEASURED BY THE CUBIC YARD IN PLACE BY COMPUTING THE VOLUME BETWEEN THE BOTTOM SURFACE SHOWN BY SOUNDINGS OF THE LAST SURVEY MADE BEFORE DREDGING AND THE BOTTOM SURFACE SHOWN BY THE SOUNDINGS OF A SURVEY MADE AS SOON AS PRACTICABLE AFTER THE WORK SPECIFIED IN EACH SECTION IN PARAGRAPH SW-2 "SECTIONS" HAS BEEN COMPLETED AND INCLUDED WITHIN THE LIMITS OF THE OVERDEPTH AND SIDE SLOPES DESCRIBED IN PARAGRAPH TP-5 LESS ANY DEDUCTIONS THAT MAY BE REQUIRED FOR MISPLACED MATERIAL DESCRIBED IN PARAGRAPH TP-4.'

PAYMENTS UNDER EACH CONTRACT HAVE BEEN MADE MONTHLY AND AT PRESENT ONE CONTRACT HAS BEEN COMPLETED WHILE THE OTHERS HAVE NOT BEEN COMPLETED. NOVEMBER 1959, THE CONTRACTOR CALLED THE CONTRACTING OFFICER'S ATTENTION TO THE FACT THAT PARAGRAPH TP-6F IN ALL THREE CONTRACTS CAUSED AN INEQUITY TO THE CONTRACTOR. IN AN UNDATED LETTER, RECEIVED BY THE CONTRACTING OFFICER ON FEBRUARY 4, 1960, THE CONTRACTOR REQUESTED THAT THE THREE CONTRACTS BE REFORMED.

THE CONTRACTOR CLAIMS THAT IN CALCULATING A UNIT COMPOSITE PRICE FOR ALL THE DIFFERENT TYPES OF MATERIAL TO BE REMOVED UNDER EACH OF THE CONTRACTS, IT HAD TO BASE ITS BID PRICE UPON AN AVERAGE COST PER YARD FOR THE DIFFERENT TYPES OF MATERIAL TO BE REMOVED AND THAT THE UNIT PRICE THAT IT BID DEPENDED UPON THE QUANTITIES OF THE DIFFERENT TYPES OF MATERIAL WHICH WERE AVAILABLE UNDER THE CONTRACT. ALSO, IT CLAIMS THAT THE UNCLASSIFIED MATERIAL WHICH HAD TO BE REMOVED INCLUDED A SUBSTANTIAL QUANTITY OF ROCK AND THAT THE FINAL BID PRICE WAS BASED ON THE PRESUMPTION THAT 43 PERCENT OF THE MATERIAL REQUIRED TO BE REMOVED WAS ROCK.

THE CONTRACTOR CONTENDS THAT IN ITS USUAL MEANING, SHOALING CONTEMPLATES ADDITIONAL MATERIAL OVER AND ABOVE THE SPECIFICATION TOTAL QUANTITIES AND THAT WHEN THE GOVERNMENT INTERPRETED THE PROVISIONS OF TP-6F OF THE CONTRACTS SO AS TO PAY THE CONTRACTOR $1 PER CUBIC YARD FOR SHOALING ON A "SECTION BY SECTION" BASIS, RATHER THAN ON THE ENTIRE CONTRACT AREA, IT DID NOT REFLECT THE INTENTION OF EITHER THE GOVERNMENT OR OF THE CONTRACTOR WHEN IT SUBMITTED ITS BID. IT IS FURTHER CONTENDED THAT THE MEANING OF PARAGRAPH TP-6F, WHICH SPECIFICALLY INCORPORATED THE PROVISIONS OF PARAGRAPH SW-2 BY REFERENCE, WAS TO DIVIDE THE CONTRACTS INTO SMALL SECTIONS ONLY FOR THE PURPOSE OF ACCEPTANCE OF THE WORK AND IN ORDER TO FACILITATE COMPLETION AND CALCULATION OF THE PROGRESS PAYMENTS.

THE CONTRACTOR HAS SUBMITTED EXHIBITS WHICH SHOW THAT PAYMENT FOR SHOALING ON A SECTIONAL BASIS RATHER THAN ON AN OVER-ALL CONTRACT BASIS WOULD RESULT IN IT RECEIVING LESS THAN ORIGINAL ESTIMATED CONTRACT PRICE BASED ON THE ADVERTISED QUANTITY. ALSO, SINCE THERE WAS NO PROVISION WITH REGARD TO SCOURING FROM ONE SECTION OF THE CONTRACT WORK AND THE DEPOSIT OF THE SAME MATERIAL IN ANOTHER SECTION OF THE CONTRACT WORK, THE CONTRACTOR MUST REMOVE THAT SAME MATERIAL FROM ANOTHER SECTION AT THE SHOALING RATE OF $1 PER CUBIC YARD AND LOSE THE DREDGING PRICE OF $3.72 PER CUBIC YARD--- THE PRICE UNDER CONTRACT NO. DA-36-109-CIVENG-59-108--- WITH NO REDUCTION IN THE DREDGING EFFORT WHATSOEVER.

REPRESENTATIVES OF THE GOVERNMENT HAVE INDICATED THAT THEY ARE IN AGREEMENT WITH THE CONTRACTOR THAT IT WAS NOT THE INTENTION OF PARAGRAPH TP-6F TO APPLY THE SHOALING RATE OF $1 PER CUBIC YARD TO FINAL PAYMENT UNDER THE CONTRACT, SECTION BY SECTION. A STATEMENT DATED DECEMBER 4, 1959, AND SIGNED BY THREE GOVERNMENT REPRESENTATIVES ACCOMPANIES THE REQUEST FOR DECISION. THESE REPRESENTATIVES ATTENDED THE MEETINGS WHICH CONSIDERED THE ADVISABILITY OF INSERTING IN THE UNCLASSIFIED MATERIAL DREDING CONTRACTS OF THE UPPER DELAWARE RIVER A CLAUSE TO PROVIDE A FIXED PRICE FOR MATERIAL ENTERING INTO THE CONTRACT AREA FROM OTHER SOURCES. THEIR SIN WAS TO DETERMINE WHAT WAS A REASONABLE PRICE TO APPLY TO THE REMOVAL OF NEW ADDITIONAL SHOAL MATERIAL. AT ALL TIMES THIS SHOALING WAS CONSIDERED TO BE A NET ACCUMULATION OVER THE QUANTITY SET FORTH IN THE BIDDING DOCUMENT. THE FULL INTENT AND PURPOSE OF THE CLAUSE WAS TO PROTECT THE GOVERNMENT FROM BEING OBLIGED TO PAY THE COMPOSITE BID PRICE FOR A SUBSTANTIAL NET AMOUNT OF MATERIAL SHOALING INTO THE DREDGING AREA AFTER THE SOUNDINGS FOR BIDDING PURPOSES WERE TAKEN. THIS COMPOSITE BID PRICE MUST HAVE CONSIDERED THE DIFFICULT DREDGING ALONG WITH THE SOFT DREDGING AND IT WOULD HAVE BEEN INEQUITABLE TO THE GOVERNMENT TO PAY THE DREDING PRICE FOR SHOALED MATERIAL FROM OUTSIDE THE CONTRACT AREA. IT IS STATED THAT IT WAS NEVER INTENDED THAT THE SHOALING CLAUSE WOULD APPLY WHERE MATERIAL IN ONE SECTION OF THE DREDGING AREA WAS SCOURED AND REDEPOSITED IN ANOTHER SECTION OF THE SAME CONTRACT DREDGING AREA.

IN VIEW OF THE FOREGOING IT APPEARS THAT THE CONTRACTS AS WRITTEN DO NOT REFLECT THE ACTUAL CONTRACT ON WHICH THE PARTIES HAD PREVIOUSLY AGREED BY REASON OF A MUTUAL MISTAKE IN INCLUDING LANGUAGE IN THE CONTRACTS WHICH, IF FOLLOWED LITERALLY, WOULD PRECLUDE THE CONTRACTOR FROM RECEIVING PAYMENT AT ITS BID PRICES FOR A PORTION OF THE WORK. SUCH A MISTAKE FORMS THE USUAL BASIS FOR REFORMING A WRITTEN INSTRUMENT. 20 COMP. GEN. 533. SINCE FINAL PAYMENT HAS NOT BEEN MADE UNDER ANY OF THE CONTRACTS HERE INVOLVED, THE CONTRACTS MAY BE REFORMED AS SUGGESTED BY THE SUCCESSOR CONTRACTING OFFICER IN PARAGRAPHS 27 AND 28 OF HIS REPORT OF MARCH 10, 1960, BY PROVIDING THAT SHOALING IS TO BE PAID AT $1 PER CUBIC YARD IN CASE A COMPARISON OF THE BOTTOM SURFACES SHOWN BY SOUNDINGS OF THE SURVEY SHOWN ON THE DRAWINGS AND OF THE LAST SURVEY BEFORE DREDGING INDICATES SHOALING IN THE ENTIRE CONTRACT AREA.