B-156883, JUN. 23, 1965

B-156883: Jun 23, 1965

Additional Materials:

Contact:

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

 

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

INDIA: REFERENCE IS MADE TO YOUR LETTER OF MAY 15. WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR $3. THESE PRICES WERE VOLUNTARILY REDUCED BY CABLEGRAM RECEIVED ON JUNE 27. THE AMENDED PROPOSAL WAS ACCEPTED ON A FIXED- PRICE BASIS AND CONTRACT NO. PH43-63-303 WAS ISSUED TO YOUR COMPANY ON JUNE 29. DELIVERY WAS TO BE ACCOMPLISHED IN QUANTITIES AND AT TIMES AS MAY BE ORDERED UNDER THE CONTRACT. YOUR CABLEGRAM WAS RECEIVED BY THE PUBLIC HEALTH SERVICE. DURING THE PERIOD OF CONTRACT PERFORMANCE THE AIR FREIGHT RATE TEMPORARILY WAS INCREASED FOR THE MONTHS OF APRIL AND MAY 1963 FROM $4.43 PER KILOGRAM TO $4.62 PER KILOGRAM. THE VOLUME WEIGHT WAS REDUCED TO 427 CUBIC INCHES PER KILOGRAM. YOU REPORT THAT THE CAGES IN WHICH THE MONKEYS WERE SHIPPED WERE IN ACCORDANCE WITH REGULATIONS APPROVED BY THE GOVERNMENT OF INDIA AS TO DIMENSIONS AND SPECIFICATIONS AND THAT IT WAS NOT UNTIL THE LATTER PART OF MAY 1963 THAT EFFORTS TO MODIFY THE CAGE DIMENSIONS WERE PERMITTED BY THAT GOVERNMENT SO AS TO REDUCE THE CUBIC VOLUME CONTENT OF EACH CAGE.

B-156883, JUN. 23, 1965

TO INDIAN FAUNA TRADERS, DELHI, INDIA:

REFERENCE IS MADE TO YOUR LETTER OF MAY 15, 1965, REQUESTING RECONSIDERATION OF OUR SETTLEMENT OF MARCH 17, 1965, WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR $3,391.07, REPRESENTING AN AIR FREIGHT RATE INCREASE INCURRED ON CERTAIN SHIPMENTS OF MACACUS RHESUS MONKEYS UNDER FIXED-PRICE CONTRACT NO. PH43-63-303, DATED JUNE 29, 1962, WITH THE UNITED STATES DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE.

IN RESPONSE TO SOLICITATIONS FOR PROPOSALS FROM THREE INDIAN SOURCES AND TWO DOMESTIC FIRMS FOR DELIVERY F.O.B. THE NATIONAL INSTITUTES OF HEALTH (NIH), BETHESDA, MARYLAND, AND F.O.B. UNITED STATES PUBLIC HEALTH SERVICE, COMMUNICABLE DISEASE CENTER (CDC), ATLANTA, GEORGIA, FOR AN ESTIMATED QUANTITY OF 8,000 AND 600 MACACUS RHESUS MONKEYS, RESPECTIVELY, YOUR COMPANY SUBMITTED THE LOWEST PRICE PER MONKEY, $24.95 F.O.B. NIH AND $25.30 F.O.B. CDC. THESE PRICES WERE VOLUNTARILY REDUCED BY CABLEGRAM RECEIVED ON JUNE 27, 1962, TO $24.50 EACH F.O.B. NIH AND $24.95 EACH F.O.B. CDC DUE TO A DECREASE IN FREIGHT RATES BY OVERSEAS AIRLINES EFFECTIVE JULY 1, 1962. THE AMENDED PROPOSAL WAS ACCEPTED ON A FIXED- PRICE BASIS AND CONTRACT NO. PH43-63-303 WAS ISSUED TO YOUR COMPANY ON JUNE 29, 1962. DELIVERY WAS TO BE ACCOMPLISHED IN QUANTITIES AND AT TIMES AS MAY BE ORDERED UNDER THE CONTRACT.

ON MARCH 16, 1963, YOUR CABLEGRAM WAS RECEIVED BY THE PUBLIC HEALTH SERVICE, REQUESTING ACCEPTANCE OF AN INCREASE IN PRICE OF $4.65 PER MONKEY EFFECTIVE APRIL 1, 1963, BASED ON APPROVED INCREASED FREIGHT CHARGES BY OVERSEAS AIRLINES, PURSUANT TO AGREEMENT ADOPTED BY THE TRAFFIC CONFERENCES OF THE INTERNATIONAL AIR TRANSPORT ASSOCIATION RELATING TO CARGO RATES. THUS, DURING THE PERIOD OF CONTRACT PERFORMANCE THE AIR FREIGHT RATE TEMPORARILY WAS INCREASED FOR THE MONTHS OF APRIL AND MAY 1963 FROM $4.43 PER KILOGRAM TO $4.62 PER KILOGRAM. ADDITIONALLY, THE AIRLINES PRIOR TO APRIL 1, 1963, CALCULATED VOLUME WEIGHT AT THE RATE OF 550 CUBIC INCHES PER KILOGRAM. AFTER MARCH 31, 1963, THE VOLUME WEIGHT WAS REDUCED TO 427 CUBIC INCHES PER KILOGRAM, THUS IN EFFECT AUGMENTING THE INCREASE IN THE FREIGHT RATES EFFECTIVE APRIL 1, 1963.

YOU REPORT THAT THE CAGES IN WHICH THE MONKEYS WERE SHIPPED WERE IN ACCORDANCE WITH REGULATIONS APPROVED BY THE GOVERNMENT OF INDIA AS TO DIMENSIONS AND SPECIFICATIONS AND THAT IT WAS NOT UNTIL THE LATTER PART OF MAY 1963 THAT EFFORTS TO MODIFY THE CAGE DIMENSIONS WERE PERMITTED BY THAT GOVERNMENT SO AS TO REDUCE THE CUBIC VOLUME CONTENT OF EACH CAGE, THUS RESULTING IN A SLIGHT SAVINGS IN FREIGHT COSTS. ALTOGETHER YOU REPORT SHIPPING DURING THE MONTHS OF APRIL, MAY AND JUNE 1963, 1,000 MONKEYS TO NIH AND 220 MONKEYS TO CDC AT A NET INCREASE IN FREIGHT RATES OF $3,391.07 IN EXCESS OF THAT CALCULATED AT THE TIME THE CONTRACT WAS EXECUTED. THE CLAIM FOR THE AMOUNT OF THE FREIGHT RATE INCREASE WAS DISALLOWED IN THE SETTLEMENT FOR THE REASON THAT THE CONTRACT CONTAINED NO PROVISION FOR ANY ADJUSTMENT IN THE AGREED PRICE IN THE EVENT OF AN INCREASE OR DECREASE IN THE FREIGHT RATES.

WITH REGARD TO THE STATEMENTS CONTAINED IN YOUR LETTER THAT SINCE THE REDUCTION OFFERED BY YOU IN YOUR ORIGINAL PRICE DUE TO THE DECREASE IN THE FREIGHT CHARGES WAS ACCEPTED, YOU FEEL YOUR CLAIM FOR THE INCREASED FREIGHT CHARGES SHOULD ALSO BE CONSIDERED FAVORABLY, IT MAY BE STATED THAT YOUR ACTION IN THE MATTER WAS PURELY A VOLUNTARY ACT ON YOUR PART TAKEN IN CONNECTION WITH YOUR PROPOSAL. WHERE A BIDDER IS ALREADY LOW AND OFFERS OR REQUESTS A DECREASE IN HIS BID OR PROPOSAL IT MAY BE ACCEPTED WITHOUT FURTHER QUESTION. ALECK LEITMAN V. UNITED STATES, 104 CT.CL. 324.

UNDER THE CONTRACT THE GOVERNMENT BECAME VESTED WITH CERTAIN RIGHTS AND THE COURTS HAVE HELD THAT ONCE A CONTRACTUAL RIGHT HAS BECOME VESTED IN THE UNITED STATES, AS IN THIS CASE, TO DEMAND PERFORMANCE A VALID AND OTHERWISE LEGAL CONTRACT FOR THE MUTUAL CONSIDERATION THEREIN SPECIFIED, THERE EXISTS NO AUTHORITY IN OUR OFFICE OR IN ANY OTHER EXECUTIVE OR ADMINISTRATIVE AGENCY OF THE GOVERNMENT GRATUITOUSLY TO WAIVE OR SURRENDER SUCH RIGHT. SEE ROYAL INDEMNITY CO. V. UNITED STATES, 313 U.S. 289, 294; CHRISTIE V. UNITED STATES, 237 ID. 234; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.CL. 584, 607; PENN BRIDGE COMPANY V. UNITED STATES, 59 CT.CL. 892. IN EFFECT, YOUR LETTER NOW REQUESTS THAT THE CONTRACT BE REFORMED OR MODIFIED TO INCREASE THE COMPENSATION THEREIN PROVIDED FOR. HOWEVER, REFORMATION IS PROPER ONLY WHERE THE CONTRACT DOES NOT EMBODY THE ACTUAL TERMS INTENDED BY THE PARTIES THERETO. IN THIS CASE IT APPEARS THAT YOUR PROPOSAL WAS EXACTLY AS INTENDED AT THE TIME IT WAS SUBMITTED, ALTHOUGH IT LATER MAY HAVE PROVED TO BE LESS PROFITABLE.

IT IS A WELL-ESTABLISHED PRINCIPLE OF LAW THAT VALID CONTRACTS ARE TO BE ENFORCED AND PERFORMED AS WRITTEN AND THE FACT THAT SUPERVENING OR UNFORESEEN EVENTS MAKE PERFORMANCE MORE BURDENSOM OR LESS PROFITABLE, OR EVEN OCCASION LOSS, IS NOT SUFFICIENT TO EXCUSE PERFORMANCE OR TO ENTITLE A CONTRACTOR TO ADDITIONAL COMPENSATION. SEE CARL G. ROLIN V. UNITED STATES, 142 CT.CL. 73, AND CASES CITED. SINCE THE CONTRACT HERE INVOLVED MADE NO PROVISION FOR ANY ADJUSTMENT IN CASE OF INCREASED COSTS OF PERFORMANCE, THE STATED PRINCIPLE OF LAW CLEARLY IS FOR APPLICATION AND YOU WERE BOUND TO PERFORM THE CONTRACT IN ACCORDANCE WITH ITS TERMS AT THE COMPENSATION STIPULATED.

ACCORDINGLY, THERE BEING NO LEGAL BASIS TO ALLOW THE ADDITIONAL COMPENSATION REQUESTED BY YOU, THE SETTLEMENT OF MARCH 17, 1965, DISALLOWING YOUR CLAIM, IS SUSTAINED.