B-157241, AUG. 27, 1965

B-157241: Aug 27, 1965

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TO THE SECRETARY OF AGRICULTURE: REFERENCE IS MADE TO LETTER OF JULY 13. THE CONTRACT WAS AWARDED ON JUNE 25. IN ADDITION TO THE PRICE THAT IS TO BE PAID FOR THE TIMBER. THE CONTRACTOR IS REQUIRED BY THE CONTRACT TO CONSTRUCT 8.2 MILES OF ROADS AT AN ESTIMATED COST OF $17. THE ORIGINAL TERMINATION DATE FOR THE CONTRACT WAS DECEMBER 31. THERE WAS NO CUTTING BY THAT DATE. BEFORE THE CONTRACT EXPIRED IT WAS EXTENDED FOR THREE YEARS UNTIL DECEMBER 31. THE CONTRACTOR COMPLAINED THAT THE ROAD REQUIREMENT WAS EXCESSIVE. AN AGREEMENT WAS REACHED THAT THE ROAD CONSTRUCTION SHOULD BE REDUCED TO 3.2 MILES. IT IS ESTIMATED THAT THERE WILL BE A SAVINGS OF ABOUT $7. INDICATES YOUR DEPARTMENT IS PREPARED TO ISSUE THE MODIFICATION WITHOUT ANY ADJUSTMENT IN PRICE.

B-157241, AUG. 27, 1965

TO THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO LETTER OF JULY 13, 1965, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION REGARDING MODIFICATION OF TIMBER SALE CONTRACT 12-11-074-369 WITH STEED LOGGING COMPANY.

AFTER ADVERTISING FOR BIDS, THE CONTRACT WAS AWARDED ON JUNE 25, 1962, TO THE SOLE BIDDER, STEED LOGGING COMPANY, AT ITS BID PRICE OF $9.56 PER M BOARD FEET, AN AMOUNT $0.26 IN EXCESS OF THE APPRAISED PRICE. IN ADDITION TO THE PRICE THAT IS TO BE PAID FOR THE TIMBER, THE CONTRACTOR IS REQUIRED BY THE CONTRACT TO CONSTRUCT 8.2 MILES OF ROADS AT AN ESTIMATED COST OF $17,496, AMORTIZED AT $3.24 PER M BOARD FEET FOR THE 5.4 MILLION BOARD FEET ESTIMATED IN THE CONTRACT. THE ORIGINAL TERMINATION DATE FOR THE CONTRACT WAS DECEMBER 31, 1964, BUT THERE WAS NO CUTTING BY THAT DATE. BEFORE THE CONTRACT EXPIRED IT WAS EXTENDED FOR THREE YEARS UNTIL DECEMBER 31, 1967, AS PROVIDED BY THE CONTRACT.

AFTER AWARD OF THE CONTRACT, THE CONTRACTOR COMPLAINED THAT THE ROAD REQUIREMENT WAS EXCESSIVE. THE FOREST SERVICE INVESTIGATED THE SITUATION AND AGREED WITH THE CONTRACTOR. AN AGREEMENT WAS REACHED THAT THE ROAD CONSTRUCTION SHOULD BE REDUCED TO 3.2 MILES. AS A RESULT OF THIS REVISION, IT IS ESTIMATED THAT THERE WILL BE A SAVINGS OF ABOUT $7,900 WHICH HAS BEEN AVERAGED OUT TO $1.46 PER M BOARD FEET. THEREFORE, THE FOREST SERVICE PROPOSED A MODIFICATION OF THE CONTRACT TO 3.2 MILES WITH AN INCREASE IN THE $9.56 STUMPAGE RATE BY $1.46 PER M BOARD FEET. THE CONTRACTOR, HOWEVER, HAS INDICATED RELUCTANCE TO PROVIDE ANY PRICE CONCESSION FOR THE MODIFICATION.

THE LETTER OF JULY 13, INDICATES YOUR DEPARTMENT IS PREPARED TO ISSUE THE MODIFICATION WITHOUT ANY ADJUSTMENT IN PRICE. THE BASIS FOR SUCH ACTION IS THAT IT IS BELIEVED THAT THE ORIGINAL ROAD CONSTRUCTION REQUIREMENT EXCEEDS THE "PRUDENT OPERATOR CONCEPT," I.E., THAT THE CONSTRUCTION OF THE ROADS IS PROHIBITED FROM EXCEEDING WHAT THE PURCHASER NEEDS AS A PRUDENT OPERATOR FOR REMOVING THE TIMBER FROM THE SALE AREA. IT IS STATED THAT IT IS BELIEVED THAT BECAUSE OF THE ERROR IN THE CONTRACT PROVIDING FOR ROAD CONSTRUCTION BEYOND WHAT WAS AUTHORIZED AT THE TIME THE CONTRACT WAS AWARDED, SUCCESS IN COLLECTING ANY DAMAGES FOR NONPERFORMANCE OF THE CONTRACT IS CONSIDERED DOUBTFUL AND PERMITTING THE CONTRACTOR TO PROCEED UNDER THE REVISED ROAD PLAN WITHOUT RATE ADJUSTMENT IS CONSIDERED ADVANTAGEOUS BECAUSE IN A READVERTISEMENT THE APPRAISED PRICE FOR THE TIMBER WOULD HAVE TO BE LOWER BECAUSE OF A CHANGE IN MARKETING CONDITIONS.

THE ESTABLISHED RULE IS THAT WITHOUT COMPENSATING BENEFIT TO THE UNITED STATES, AGENTS AND OFFICERS OF THE UNITED STATES HAVE NO AUTHORITY TO MODIFY OR AMEND EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE CONTRACT RIGHTS VESTED IN THE GOVERNMENT. 15 COMP. GEN. 25; 18 ID. 114, 116; 19 ID. 48; 22 ID. 260; 35 ID 56 AND 40 ID. 684. WHILE IT IS INDICATED THAT THE FOREST SERVICE HAS NOW BEEN PERSUADED TO REDUCE THE AMOUNT OF ROAD CONSTRUCTION AS A RESULT OF THE CONTRACTOR'S COMPLAINT AFTER AWARD, IT IS NOT APPARENT THAT, AT THE TIME THE SALE TIMBER WAS APPRAISED AND THE CONTRACT ENTERED INTO, THE FOREST SERVICE CONSIDERED THE ROAD CONSTRUCTION WORK OTHER THAN NECESSARY WITHIN THE "PRUDENT OPERATOR CONCEPT.' THE ORIGINAL JUDGMENT OF THE FOREST SERVICE WOULD THEREFORE APPEAR TO HAVE BEEN MADE IN GOOD FAITH. IN THE CIRCUMSTANCES, WE DO NOT FEEL THAT THE GOVERNMENT WOULD BE JEOPARDIZED IN A SUIT FOR NONPERFORMANCE.

IN VIEW OF THE FOREGOING, WE BELIEVE IT WOULD BE IMPROPER TO ISSUE A MODIFICATION IN THE ROAD CONSTRUCTION WORK WITHOUT ALSO PROVIDING FOR AN INCREASE IN THE STUMPAGE RATES.