B-153379, MAR. 5, 1964

B-153379: Mar 5, 1964

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

UNITED STATES DEPARTMENT OF AGRICULTURE: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 23. WHOSE CONTRACT 40- 555 WAS TERMINATED FOR DEFAULT. IS ENTITLED TO BE PAID ON THE BASIS OF A PRORATED PORTION OF A GUARANTEE IN THE CONTRACT WARRANTING THAT THE GOVERNMENT WOULD REQUIRE A SPECIFIC NUMBER OF FLYING HOURS DURING A PERIOD OF TIME REFERRED TO AS THE "FIRE SEASON.'. UNITED WAS AWARDED A CONTRACT TO FURNISH HELICOPTER SERVICE DURING THE FIRE SEASON AT AN HOURLY RATE OUT OF BASES IN CALIFORNIA AT QUAKING ASPEN. OTHER PERTINENT PARTS OF THE CONTRACT ARE AS FOLLOWS: "SECTION III. - PAYMENT "3.1 GUARANTEE: "THE GUARANTEE IS FOR THE FIRE SEASON AND IS NOT A DAILY OR MONTHLY GUARANTEE AND WILL BE BASED ON THE LOWEST RATE SET FORTH ON THE BID SCHEDULE FOR THE BASE OF OPERATIONS ASSIGNED.

B-153379, MAR. 5, 1964

TO MR. H. C. AGER, AUTHORIZED CERTIFYING OFFICER, UNITED STATES DEPARTMENT OF AGRICULTURE:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 23, 1964, FILE 6540, REQUESTING A DECISION WHETHER UNITED HELICOPTERS, INC., WHOSE CONTRACT 40- 555 WAS TERMINATED FOR DEFAULT, IS ENTITLED TO BE PAID ON THE BASIS OF A PRORATED PORTION OF A GUARANTEE IN THE CONTRACT WARRANTING THAT THE GOVERNMENT WOULD REQUIRE A SPECIFIC NUMBER OF FLYING HOURS DURING A PERIOD OF TIME REFERRED TO AS THE "FIRE SEASON.'

UNITED WAS AWARDED A CONTRACT TO FURNISH HELICOPTER SERVICE DURING THE FIRE SEASON AT AN HOURLY RATE OUT OF BASES IN CALIFORNIA AT QUAKING ASPEN, HORSE MEADOW AND FENCE MEADOW. EXHIBIT "A" IN THE CONTRACT STIPULATES AFTER EACH OF THE FOREGOING LOCATIONS IN COLUMNS FOUR, FIVE AND SIX, RESPECTIVELY:

TABLE

ESTIMATED FIRE GUARANTEED FLYING

STANDBY HOURS SEASON HOURS FOR SEASON AN EIGHT-HOUR PERIOD DURING 6/1- 10/30 185 DAYLIGHT HOURS AS ORDERED BY THE CONTRACTING OFFICER'S REPRESENTATIVE AT EACH BASE. OTHER PERTINENT PARTS OF THE CONTRACT ARE AS FOLLOWS:

"SECTION III--- PAYMENT

"3.1 GUARANTEE:

"THE GUARANTEE IS FOR THE FIRE SEASON AND IS NOT A DAILY OR MONTHLY GUARANTEE AND WILL BE BASED ON THE LOWEST RATE SET FORTH ON THE BID SCHEDULE FOR THE BASE OF OPERATIONS ASSIGNED.

"ALL EARNINGS AND PAYMENTS SHALL APPLY AGAINST THE GUARANTEE EXCEPT:

B. STANDBY EARNINGS, AS PROVIDED IN ARTICLE 3.3, PARAGRAPH 4. (NOTE: ALL FLIGHT TIME WILL APPLY AGAINST THE GUARANTEE).

"THE GUARANTEE WILL BE PRO-RATED ON THE BASIS OF A 30-DAY MONTH FOR STANDBY FOR LESS THAN A FULL CALENDAR MONTH.

"THE GUARANTEE SHALL COMMENCE ON THE FIRST FULL CALENDAR DAY THE CONTRACT HELICOPTERS ARE ON LOCATION AT DESIGNATED BASE OF OPERATIONS AS ORDERED AND READY FOR FLIGHT, AND SHALL CONTINUE UNTIL END OF FIRE SEASON, OR UNTIL CANCELLED * * *.

"3.2 PAYMENTS UNDER THE GUARANTEE:

"AS A MEANS OF PROVIDING A MONTHLY PAYMENT TO CONTRACTORS THE FOLLOWING WILL APPLY:

A. AT THE END OF EACH CALENDAR MONTH PAYMENT WILL BE MADE FOR FLIGHT TIME.

B. IF FLIGHT TIME FOR A MONTH DOES NOT EQUAL OR EXCEED 20 HOURS, AN ADDITIONAL PAYMENT UNDER THE GUARANTEE SUFFICIENT TO BRING THE MONTHLY PAYMENT TO 20 HOURS WILL BE MADE,

PROVIDED

THAT NO PAYMENT SHALL BE MADE WHICH EXCEEDS THE CUMULATIVE PRO-RATA SHARE OF THE GUARANTEE, OR THE TOTAL FLIGHT TIME, WHICHEVER IS THE LARGER.

"3.3 OTHER EARNINGS AND PAYMENT:

"NO PAYMENT WILL BE MADE FOR STANDBY REQUIRED BY COLUMN 4 OF EXHIBIT A AS PAYMENT THEREFOR IS COVERED BY THE GUARANTEE.

"3.7 METHOD AND TIME OF PAYMENT:

"ANY UNFLOWN GUARANTEE NOT PREVIOUSLY PAID WILL BE INCLUDED AS PART OF FINAL PAYMENT AT END OF FIRE SEASON.'

THE GUARANTEE IN THE CONTRACT IS THAT IF THE CONTRACTOR PERFORMS FOR THE FIRE SEASON IT WILL BE COMPENSATED FOR AT LEAST A GUARANTEED NUMBER OF HOURS. IN THE EVENT A NUMBER OF HOURS OF FLYING EQUAL TO THE NUMBER OF HOURS GUARANTEED IS NOT PROVIDED DURING THE FIRE SEASON, THEN THE CONTRACT PROVIDES FOR PAYMENT FOR SUCH A NUMBER OF UNFLOWN HOURS AS WILL BRING THE TOTAL PAYMENT UP TO PAYMENT FOR THE GUARANTEED NUMBER OF HOURS. THERE IS NO CONFLICT OF TERMS IN THE CONTRACT SUCH AS WOULD INDICATE A VARIANCE AS TO WHETHER THE GUARANTEED TIME IS TO BE PRORATED OVER THE COURSE OF THE SEASON. WHILE AS A MEANS OF PROVIDING MONTHLY PAYMENT TO THE CONTRACTOR SOME PRORATION OF THE GUARANTEE IS AUTHORIZED, THE BEGINNING OF ARTICLE 3.1 IS EXPLICIT THAT NO PART OF THE GUARANTEE IS TO APPLY TO ANY SPECIFIC PART OF THE FIRE SEASON, I.E., TO ANYTHING LESS THAN THE ENTIRE SEASON. CONCEIVABLY, ALL OF THE FLYING COULD OCCUR AT THE BEGINNING OF THE SEASON, OR AT THE END, OR THE MIDDLE, OR IT MIGHT OCCUR IN RELATIVELY EQUAL INCREMENTS OVER THE MONTHS INCLUDED. THE MONTHLY PROVISION OF FUNDS TO THE CONTRACTOR DOES NOT APPEAR TO BE INTENDED AS AN APPORTIONMENT OF THE GUARANTEE. RATHER, THE MONTHLY PAYMENT SEEMS DESIGNED FOR THE PURPOSE OF PROVIDING THE CONTRACTOR WITH FUNDS FROM MONTH TO MONTH AS THE CONTRACT PROGRESSES.

IT WAS NOT GUARANTEED THAT THE CONTRACTOR WOULD RECEIVE ANY NUMBER OF HOURS OF FLIGHT TIME IF IT PERFORMED FOR LESS THAN THE ENTIRE CONTRACT PERIOD. THE CONTRACTOR, THEREFORE, IS NOT ENTITLED TO BE PAID FOR ANY MORE THAN THE ACTUAL TIME FLOWN UP UNTIL THE TIME OF TERMINATION BY REASON OF ITS OWN DEFAULT.