B-145118, OCT. 3, 1962

B-145118, OCT. 3, 1962

TO LANDRETH TIMBER COMPANY, INC:

REFERENCE IS MADE TO YOUR CLAIM FOR REFUND OF THE SUM OF $62,981.81 COVERING A PORTION OF THE PURCHASE PRICE OF $167,785 PAID FOR TIMBER PURCHASED UNDER DEPARTMENT OF THE INTERIOR, BUREAU OF LAND MANAGEMENT,CONTRACT NO. 14-11-001/16/-19, DATED MARCH 13, 1956, WITH YOUR COMPANY.

THE CONTRACT PRICE WAS COMPUTED ON THE BASIS OF ESTIMATED QUANTITIES OF MERCHANTABLE LUMBER OBTAINABLE FROM LOGGING THE MARKED TREES IN CERTAIN AREAS OF GOVERNMENT FOREST LANDS SITUATED IN OKANOGAN COUNTY, WASHINGTON. THE ESTIMATED YIELD WAS 4,989,000 BOARD FEET CONSISTING OF 3,575,000 BOARD FEET OF PONDEROSA PINE, 495,000 BOARD FEET OF WESTERN LARCH AND 919,000 BOARD FEET OF DOUGLAS FIR, THE UNIT PRICES USED IN ARRIVING AT THE TOTAL CONTRACT PRICE WERE AS FOLLOWS: $41 PER THOUSAND BOARD FEET OF PONDEROSA PINE AND $15 PER THOUSAND BOARD FEET OF BOTH WESTERN LARCH AND DOUGLAS FIR. THE CONTRACT CONTAINS A PROVISION THAT THE PURCHASER SHALL BE LIABLE FOR THE FULL PURCHASE PRICE NAMED IN THE CONTRACT, EXCEPT AS IT MAY BE CHANGED IN REAPPRAISAL, EVEN THOUGH THE QUANTITY OF MATERIAL ACTUALLY SEVERED, EXTRACTED, OR REMOVED, OR DESIGNATED FOR TAKING IS LESS THAN THE STATED ESTIMATED QUANTITY.

BY LETTER DATED JANUARY 24, 1961, TO THE DIRECTOR OF THE BUREAU OF LAND MANAGEMENT, YOU SUBMITTED A CLAIM FOR $62,691.81, OF WHICH THE SUM OF $58,423.81 REPRESENTS ALLEGED SHORTAGES TOTALING 1,752,650 BOARD FEET IN THE GOVERNMENT'S VOLUME ESTIMATES MULTIPLIED BY THE UNIT PRICES USED IN COMPUTING THE TOTAL CONTRACT PRICE, AND OF WHICH THE SUM OF $4,268 REPRESENTS ALLEGEDLY UNRECOVERED ROAD COSTS ASSOCIATED WITH THE ALLEGED SHORTAGES IN THE ESTIMATED QUANTITIES. IT WAS ALLEGED THAT THE GOVERNMENT'S ESTIMATES WERE APPROXIMATELY 35.1 PERCENT UNDER ACTUAL YIELDS; THAT IT WAS NOT POSSIBLE TO MAKE A FULL INSPECTION OF THE TIMBER MARKED FOR SALE PRIOR TO BIDDING BECAUSE OF WEATHER CONDITIONS; THAT THE PARTIES TO THE CONTRACT DID NOT INTEND THAT THE SALE WOULD BE FOR A LUMP- SUM PRICE, PARTICULARLY IF THERE SHOULD BE MORE THAN NOMINAL DISCREPANCIES BETWEEN THE ADVERTISED QUANTITIES AND THE ACTUAL YIELDS; THAT ABOUT 2,000,000 BOARD FEET OF TIMBER WERE REMOVED FROM THE SALE AREA IN 1956 BUT, DUE TO FINANCIAL AND OTHER REASONS, LOGGING OPERATIONS WERE NOT RESUMED UNTIL 1960; AND THAT THE DISCREPANCIES IN THE GOVERNMENT'S ESTIMATES WERE SO GREAT AS TO PLACE YOUR COMPANY IN A POSITION OF EXTREME HARDSHIP.

THE CLAIM WAS DENIED BY THE BUREAU OF LAND MANAGEMENT ON APRIL 6, 1961, AND A FINAL ADMINISTRATIVE DECISION DENYING THE CLAIM WAS RENDERED ON OCTOBER 19, 1961, BY THE DEPUTY SOLICITOR, DEPARTMENT OF THE INTERIOR, WHICH SET FORTH THAT THE TERMS OF THE CONTRACT ARE SUCH AS TO REQUIRE THE CONCLUSION THAT THE PARTIES AGREED ON A LUMP-SUM PRICE NOT SUBJECT TO ADJUSTMENT FOR DIFFERENCES BETWEEN ESTIMATED QUANTITIES AND ACTUAL YIELDS. WE SUBSEQUENTLY AGREED TO MAKE AN INVESTIGATION OF THE MATTER TO DETERMINE WHETHER THE FACTS OF THE CASE WARRANT FAVORABLE ACTION BY OUR OFFICE UNDER THE ACT OF APRIL 10, 1928, 31 U.S.C. 236, WHICH AUTHORIZES US TO SUBMIT A REPORT AND RECOMMENDATION TO THE CONGRESS ON ANY CLAIM AGAINST THE UNITED STATES NOT SUBJECT TO LAWFUL ADJUSTMENT BY THE USE OF AN APPROPRIATION THERETOFORE MADE BUT CONTAINING IN OUR JUDGMENT SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS.

OUR INVESTIGATION HAS DISCLOSED THE PROBABILITY THAT YOU HAD A REASONABLE OPPORTUNITY TO MAKE A FULL INSPECTION BY CRUISING THE TIMBER OFFERED FOR SALE BEFORE BIDDING BUT THAT YOU RELIED UPON THE CRUISE REPORTS OF THE BUREAU OF LAND MANAGEMENT SHOWING ESTIMATED VOLUMES OF THE THREE SPECIES OF TIMBER IN THE VARIOUS SECTIONS OF THE SALE AREA. THERE WAS ONLY ONE OTHER BIDDER AND OUR REPRESENTATIVE WAS ASSURED BY THAT BIDDER THAT IT WAS POSSIBLE TO CRUISE THE TIMBER IN THE ENTIRE SALE AREA BETWEEN THE TIME OF RECEIPT OF THE GOVERNMENT'S ADVANCED TIMBER SALE NOTICE DATED OCTOBER 6, 1955, AND ABOUT NOVEMBER 2, 1955. THE WINTER OF 1955-1956 APPEARS TO HAVE BEEN ONE OF HEAVY SNOWFALL IN THE GENERAL AREA, BUT IT WAS REPORTED BY THE WASHINGTON STATE SUPERVISOR OF THE BUREAU OF LAND MANAGEMENT THAT THERE WAS VERY LITTLE ACCUMULATION OF SNOW IN THE SALE AREA DURING THE FALL OF 1955 UNTIL NOVEMBER 2, 1955. THE OTHER BIDDER ALSO RELIED TO A CONSIDERABLE DEGREE UPON THE ACCURACY OF THE GOVERNMENT'S VOLUME ESTIMATES. HOWEVER, THAT BIDDER PERFORMED A SAMPLE CRUISE AND MADE A GENERAL INSPECTION OF THE TIMBER IN THE ENTIRE SALE AREA.

WE WERE UNABLE TO CORROBORATE THE ALLEGED VOLUME SHORTAGE OF 1,752,650 BOARD FEET. OUR INVESTIGATION DISCLOSED THAT THE MANAGEMENT CONTROLS OF YOUR COMPANY WERE NOT ADEQUATE TO PERMIT A DETERMINATION THAT ALL LOGS REMOVED FROM THE SALE AREA REACHED YOUR VARIOUS SCALING LOCATIONS AND WHETHER ALL OF THE LOG SCALE TICKETS FOR THE SALE WERE PRESENTED FOR OUR AUDIT. AFTER CORRECTIONS MADE FOR OBVIOUS ERRORS, THE LOG SCALE TICKET VOLUMES TOTALED 870,970 BOARD FEET MORE THAN YOU HAD ALLEGED WERE RECOVERED FROM THE SALE AREA. THE DIFFERENCE OF 881,680 BOARD FEET INCLUDED IN THE ALLEGED SHORTAGE OF 1,752,650 BOARD FEET CONSISTS PRIMARILY OF DEDUCTIONS FROM THE RECORDED LOG SCALE VOLUMES, THE APPROPRIATENESS OF WHICH YOUR COMPANY WAS UNABLE TO SUBSTANTIATE TO OUR SATISFACTION.

IN ORDER TO FURTHER SUBSTANTIATE THE CLAIM OF SHORTAGE, YOU HAD A SCALER IN THE EMPLOY OF THE WESTERN PINE ASSOCIATION (WPA), OF WHICH YOU ARE A MEMBER, MAKE A CHECK SCALE OF FELLED TIMBER IN SECTION 18 AND 19 OF THE SALE AREA. IT WAS CONTENDED THAT THIS CHECK SCALER FOUND THE NET VOLUME OF THE FELLED TIMBER TO BE 38 PERCENT LESS THAN THE GOVERNMENT'S ESTIMATED NET VOLUME FOR THESE TWO SECTIONS, AND THAT THIS FINDING SUPPORTS THE ALLEGED VOLUME SHORTAGE FOR THE ENTIRE SALE.

OUR EXAMINATION DISCLOSED THAT THE WPA CHECK SCALER'S REPORT INDICATED A 20-PERCENT SHORTAGE IN SECTIONS 18 AND 19, AND THAT THE TIMBER IN THESE TWO SECTIONS, WHICH CONTAINED ONLY 5 PERCENT OF THE ESTIMATED VOLUME INCLUDED IN THE SALE, WAS NOT REPRESENTATIVE OF THE ENTIRE SALE AREA. OUR EXAMINATION OF THE WPA CHECK SCALER'S RECORDS FURTHER DISCLOSED THAT THE CHECK SCALER'S ASSUMPTION THAT THE VOLUME SHORTAGE HE FOUND WAS ATTRIBUTABLE TO GOVERNMENT OVERESTIMATES OF TREE HEIGHTS AND DIAMETERS WAS IN ERROR. BY LETTER DATED JUNE 6, 1962, THE WPA CHECK SCALER CONCURRED WITH OUR FINDING.

WE EXAMINED THE BUREAU OF LAND MANAGEMENT'S CRUISE RECORDS AND PROCEDURES FOR THIS SALE. WE FOUND NO EVIDENCE INDICATING THAT THE CRUISE PROCEDURES ON THE SALE WERE SIGNIFICANTLY DIFFERENT FROM THOSE USED BY THE BUREAU OF LAND MANAGEMENT ON OTHER SALES, OR THAT THESE PROCEDURES CAUSED A SIGNIFICANT OVERESTIMATE.

SINCE ALL OF THE AVAILABLE EVIDENCE OF THE CASE INDICATES THAT THE CLAIM OF SHORTAGE BETWEEN ACTUAL AND ESTIMATED YIELDS CANNOT BE CONCLUSIVELY ESTABLISHED, WE CONCLUDE THAT IT WOULD NOT BE PROPER FOR US TO SUBMIT A REPORT AND RECOMMENDATION FOR EQUITABLE RELIEF IN THE MATTER TO THE CONGRESS UNDER THE ACT OF APRIL 10, 1928, 31 U.S.C. 236.

ACCORDINGLY, AND FOR THE REASON THAT, AS FOUND BY THE DEPUTY SOLICITOR, DEPARTMENT OF THE INTERIOR, THERE EXISTS NO LEGAL OBLIGATION ON THE PART OF THE GOVERNMENT TO MAKE ANY ADJUSTMENT IN THE CONTRACT PRICE, WE ARE CONSIDERING THE CASE AS CLOSED.