B-151068, APRIL 8, 1963, 42 COMP. GEN. 562

B-151068: Apr 8, 1963

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THE CONTRACTS ARE NOT EXISTING CONTRACTS WITHIN THE SCOPE OF SECTION 204 OF THE WORK HOURS ACT OF 1962. THE PROVISIONS OF THE ACT ARE FOR INCLUSION IN ANY RENEWALS OR EXTENSIONS OF THE CONTRACTS EFFECTED BY MUTUAL AGREEMENT OF THE PARTIES. WITH THE EXCEPTION OF AN EXISTING CONTRACT THAT IS RENEWED OR EXTENDED BY THE EXERCISE OF A RIGHT OR OPTION RESERVED BY THE GOVERNMENT TO RENEW OR EXTEND THE CONTRACT PURSUANT TO THE TERMS FIXED UNDER THE CONTRACT AND WITHOUT REFERENCE TO THE CONTRACTOR FOR HIS CONSENT. OUR VIEWS HAVE BEEN REQUESTED ON WHETHER CERTAIN COST-TYPE CONTRACTS WHEN RENEWED OR EXTENDED BY THE COMMISSION SHOULD BE REGARDED AS EXISTING CONTRACTS WITHIN THE PURVIEW OF SECTION 204 OF THE WORK HOURS ACT OF 1962.

B-151068, APRIL 8, 1963, 42 COMP. GEN. 562

CONTRACTS - RENEWALS - WORK HOURS ACT OF 1962 APPLICABILITY WHENEVER THE MODIFICATION OR AMENDMENT OF CONTRACTS SO CHANGES THE RELATIONSHIP OF THE PARTIES AS TO REQUIRE THE AGREEMENT OF BOTH, THE CONTRACTS ARE NOT EXISTING CONTRACTS WITHIN THE SCOPE OF SECTION 204 OF THE WORK HOURS ACT OF 1962, 40 U.S.C. 327 NOTE, AND THE PROVISIONS OF THE ACT ARE FOR INCLUSION IN ANY RENEWALS OR EXTENSIONS OF THE CONTRACTS EFFECTED BY MUTUAL AGREEMENT OF THE PARTIES, WITH THE EXCEPTION OF AN EXISTING CONTRACT THAT IS RENEWED OR EXTENDED BY THE EXERCISE OF A RIGHT OR OPTION RESERVED BY THE GOVERNMENT TO RENEW OR EXTEND THE CONTRACT PURSUANT TO THE TERMS FIXED UNDER THE CONTRACT AND WITHOUT REFERENCE TO THE CONTRACTOR FOR HIS CONSENT.

TO THE CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION, APRIL 8, 1963:

BY LETTER OF MARCH 13, 1963, SIGNED BY THE DIRECTOR, DIVISION OF CONTRACTS, OUR VIEWS HAVE BEEN REQUESTED ON WHETHER CERTAIN COST-TYPE CONTRACTS WHEN RENEWED OR EXTENDED BY THE COMMISSION SHOULD BE REGARDED AS EXISTING CONTRACTS WITHIN THE PURVIEW OF SECTION 204 OF THE WORK HOURS ACT OF 1962, PUBLIC LAW 87-581, 76 STAT. 357, 40 U.S.C. 327 NOTE.

SECTION 204 PROVIDES THAT THE ACT SHALL NOT AFFECT ANY CONTRACT EXISTING ON ITS EFFECTIVE DATE. WE UNDERSTAND THAT MANY OF THE CONTRACTS WHICH ARE THE CONCERN OF THE LETTER OF MARCH 13 HAVE BEEN IN EFFECT FOR A NUMBER OF YEARS. HOWEVER, THEY ARE PERIODICALLY EXTENDED OR RENEWED ON SUCH TERMS AS TO REQUIRE THE MUTUAL AGREEMENT OF THE PARTIES.

IT IS OUR POSITION THAT FOR PURPOSES OF THE WORK HOURS ACT A NEW CONTRACT IS CREATED NOTWITHSTANDING ANY PREVIOUS CONTRACTUAL RELATIONSHIP WHENEVER A CONTRACT MODIFICATION OR AMENDMENT SO CHANGES THE RELATIONSHIP AS TO REQUIRE AGREEMENT OF BOTH PARTIES. FROM THE DESCRIPTION CONTAINED IN THE LETTER OF MARCH 13 WE CONCLUDE THAT THE CONTRACTS IN QUESTION WOULD NOT UNDER THAT CRITERION BE REGARDED AS EXISTING CONTRACTS WITHIN THE SCOPE OF SECTION 204, AND THAT THE PROVISIONS REQUIRED BY THE WORK HOURS ACT ARE PROPERLY FOR INCLUSION IN ANY RENEWALS OR EXTENSIONS THEREOF EFFECTED BY MUTUAL AGREEMENT OF THE PARTIES.

HOWEVER, THE CONCLUSION HEREIN STATED IS NOT TO BE UNDERSTOOD AS APPLICABLE TO A RENEWAL OR EXTENSION OF AN EXISTING CONTRACT BY THE EXERCISE OF A RIGHT OR OPTION RESERVED BY THE GOVERNMENT THEREIN TO RENEW OR EXTEND SUCH CONTRACT UPON TERMS FULLY FIXED THEREBY, WITHOUT REFERENCE TO THE CONTRACTOR'S CONSENT TO SUCH RENEWAL OR EXTENSION.