B-157167, JUL. 20, 1965

B-157167: Jul 20, 1965

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UNITED STATES ATOMIC ENERGY COMMISSION: REFERENCE IS MADE TO A LETTER DATED JUNE 30. IT IS REPORTED THAT THE SUBJECT CONTRACT WAS ENTERED INTO ON JANUARY 10. MODIFICATION 56 WAS NEGOTIATED WITH THE CONTRACTOR TO CHANGE. THE PERTINENT PART OF THE REPORT CONCERNING THE NEGOTIATION OF MODIFICATION NO. 56 FOLLOWS: "THE NEGOTIATIONS FOR MODIFICATION NO. 56 WERE CONDUCTED BY GEORGE UDELL. DURING THE NEGOTIATIONS IT WAS AGREED THAT AS PROVIDED IN THE MODIFICATION OF THE CONTRACT THEN IN EFFECT. SINCE THE COST OF PERFORMING SUCH WORK AT ALBUQUERQUE TO ENGINES FLOWN BETWEEN 250 HOURS OR MORE BUT LESS THAN 1020 HOURS WAS ALREADY PROVIDED FOR IN THE CONTRACTOR'S RATES FOR OPERATION OF THE GOVERNMENT-OWNED AIRCRAFT.

B-157167, JUL. 20, 1965

TO CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO A LETTER DATED JUNE 30, 1965, AND ENCLOSURES, FROM JOHN V. VINCIGUERRA, GENERAL MANAGER, UNITED STATES ATOMIC ENERGY COMMISSION (AEC), REQUESTING OUR DECISION ON THE LEGALITY OF A PROPOSED MODIFICATION TO CONTRACT NO. AT/29-1/-GEN-97.

IT IS REPORTED THAT THE SUBJECT CONTRACT WAS ENTERED INTO ON JANUARY 10, 1948, WITH CARCO AIR SERVICE, INC., AND, AS AMENDED BY MODIFICATIONS 1 THROUGH 56, CALLS FOR AIR TRANSPORTATION SERVICES INVOLVING THE OPERATION OF BOTH GOVERNMENT-OWNED AND CONTRACTOR-OWNED AIRPLANES ON AN ,AS REQUIRED" BASIS. MODIFICATION 56 WAS NEGOTIATED WITH THE CONTRACTOR TO CHANGE, AMONG OTHER THINGS, AEC'S RESPONSIBILITY FOR PAYMENT OF CERTAIN COSTS IN CONNECTION WITH EMERGENCY ENGINE CHANGES OF GOVERNMENT-OWNED AIRCRAFT MADE AT PLACES OTHER THAN THE CONTRACTOR'SHOME BASE OF ALBUQUERQUE, NEW MEXICO. THE PERTINENT PART OF THE REPORT CONCERNING THE NEGOTIATION OF MODIFICATION NO. 56 FOLLOWS:

"THE NEGOTIATIONS FOR MODIFICATION NO. 56 WERE CONDUCTED BY GEORGE UDELL, DIRECTOR, CONTRACTS AND SUPPLY DIVISION OF THE COMMISSION'S ALBUQUERQUE OPERATIONS OFFICE, AS CONTRACTING OFFICER, AND CLARK M. CARR, PRESIDENT OF CARCO AIR SERVICE, INC. DURING THE NEGOTIATIONS IT WAS AGREED THAT AS PROVIDED IN THE MODIFICATION OF THE CONTRACT THEN IN EFFECT, THE COMMISSION WOULD PAY FOR THE CONTRACTOR'S REASONABLE COSTS FOR PERFORMING EMERGENCY ENGINE CHANGES UNDER (III) (B) AND (C) QUOTED ABOVE--- EMERGENCY ENGINE CHANGES WHEN ENGINES HAD BEEN FLOWN LESS THAN 250 HOURS OR 1020 HOURS OR MORE. HOWEVER, WITH RESPECT TO AN ENGINE WHICH HAD FLOWN FOR 250 HOURS OR MORE BUT LESS THAN 1020 HOURS, MODIFICATION NO. 55 PROVIDED THAT THE COSTS OF PERFORMING THE ENGINE CHANGE WOULD BE BORNE BY THE CONTRACTOR IF PERFORMED IN ALBUQUERQUE, THE CONTRACTOR'S HOME BASE, BUT BORNE BY THE COMMISSION IF PERFORMED AWAY FROM THAT LOCATION. SINCE THE COST OF PERFORMING SUCH WORK AT ALBUQUERQUE TO ENGINES FLOWN BETWEEN 250 HOURS OR MORE BUT LESS THAN 1020 HOURS WAS ALREADY PROVIDED FOR IN THE CONTRACTOR'S RATES FOR OPERATION OF THE GOVERNMENT-OWNED AIRCRAFT, MR. UDELL AND MR. CARR AGREED THAT IT WAS INEQUITABLE FOR THE GOVERNMENT TO HAVE TO PAY FOR THESE COSTS AGAIN IN THE LATTER SITUATION, MERELY BECAUSE EMERGENCY CONDITIONS REQUIRED THE CHANGES TO BE MADE ELSEWHERE FROM ALBUQUERQUE. THEY AGREED THAT IN THAT CASE IT WOULD BE MORE EQUITABLE FOR THE COMMISSION TO PAY FOR ONLY THE ADDED COSTS TO THE CONTRACTOR OF PERFORMING THE WORK AWAY FROM THE CONTRACTOR'S MAINTENANCE BASE. (SEE AFFIDAVITS OF MR. UDELL AND MR. CARR, ATTACHMENTS NOS. 3 AND 4).

"IN ORDER TO MAKE CLEAR THE UNDERSTANDING THAT THESE ADDED COSTS WOULD NOT INCLUDE THE REGULAR SALARY OR WAGES OF THE CONTRACTOR'S PERSONNEL, THE DRAFTER OF MODIFICATION NO. 56 INCLUDED LANGUAGE EXPRESSLY PROVIDING THAT THE REASONABLE COSTS INCURRED BY THE CONTRACTOR FOR PERFORMING EMERGENCY ENGINE CHANGES AND CHARGEABLE TO THE COMMISSION "IN NO EVENT SHALL INCLUDE THE SALARY OR WAGES OF PERSONNEL IN THE CONTRACTOR'S REGULAR EMPLOY.' DUE TO A MISUNDERSTANDING BY THE DRAFTER, HOWEVER, THIS LIMITING LANGUAGE WAS MADE APPLICABLE NOT ONLY TO THE ONE SITUATION WHICH THE PARTIES HAD IN MIND--- EMERGENCY CHANGES TO ENGINES FLOWN 250 HOURS OR MORE BUT LESS THAN 1020 HOURS REQUIRED TO BE MADE AWAY FROM ALBUQUERQUE--- BUT WAS EXTENDED TO ALL CASES WHEN EMERGENCY ENGINE CHANGES WERE REQUIRED TO BE MADE. * *

MODIFICATION NO. 56 WAS SIGNED BY MR. UDELL AND MR. CARR, IT IS REPORTED, WITHOUT REALIZING THAT IT DID NOT EXPRESS THE TERMS AGREED TO IN THEIR NEGOTIATIONS. IT IS, THEREFORE, PROPOSED TO CORRECT THE APPLICABLE PROVISION OF THE CONTRACT BY MODIFICATION NO. 57, SO AS TO EXPRESS THE ACTUAL AGREEMENT INTENDED BY THE PARTIES THERETO.

GENERALLY, TO BE EFFECTIVE AND BINDING AS A MODIFICATION, THE INSTRUMENT MUST POSSESS ALL THE REQUISITES OF A VALID AND BINDING CONTRACT. SEE 41 COMP. GEN. 514, 520, AND AUTHORITIES CITED. IN DETERMINING THE VALIDITY AND ENFORCEABILITY OF A CONTRACT, IT IS THE MUTUAL INTENT OF THE PARTIES WHICH PRIMARILY GOVERNS. WHERE SUCH MUTUALITY IS LACKING THERE IS NOT A VALID AND ENFORCEABLE CONTRACT AND IT MAY EITHER BE RESCINDED OR REFORMED. SEE 12 AM.JUR. CONTRACTS, SEC. 126, AND 17 C.J.S., CONTRACTS, SEC. 144. REFORMATION IS THE PROPER REMEDY WHERE THE CONTRACT, AS REDUCED TO WRITING, DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, AND IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS. 20 COMP. GEN. 533; 30 ID. 220.

SINCE IT APPEARS THAT MODIFICATION NO. 56 DID NOT EMBODY THE ACTUAL AGREEMENT AND INTENTIONS OF THE PARTIES THERETO, REFORMATION IS JUSTIFIED UNDER THE ABOVE PRINCIPLES. ACCORDINGLY, OUR OFFICE WILL NOT OBJECT TO EXECUTION OF AN ADDITIONAL MODIFICATION AMENDING THE CONTRACT SO AS TO EXPRESS THE ORIGINAL INTENT OF MESSRS. UDELL AND CARR AS SET OUT ABOVE.