B-160396, DEC. 28, 1966

B-160396: Dec 28, 1966

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BUREAU OF LAND MANAGEMENT: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 4. CALICOPTERS WAS AWARDED CONTRACT NO. 14-11-0001-3215 BY THE BUREAU OF LAND MANAGEMENT. THE CONTRACTOR WAS ADVISED THAT THE REMAINING PORTION OF THE CONTRACT COMPRISING APPROXIMATELY 5. 700 ACRES WAS CANCELLED AS PER ORAL ADVICE GIVEN ON MAY 26. CANCELLATION WAS NECESSITATED BY CONDITIONS MAKING EFFICIENT DESTRUCTION OF SAGEBRUSH UNLIKELY. CANCELLATION OF CONTRACT EFFICIENT KILLS OF BRUSH OR OTHER UNDESIRABLE VEGETATION CAN BE OBTAINED ONLY WHEN CONDITIONS ARE IDEAL. BECAUSE THESE CONDITIONS HAVE A NARROW TOLERANCE. THE GOVERNMENT MUST NECESSARILY RESERVE THE RIGHT TO CANCEL A CONTRACT IN WHOLE OR IN PART IF IT SHOULD BE DETERMINED THAT CONDITIONS ARE NOT SUITABLE FOR HERBICIDE TREATMENT OF A PROJECT AREA.

B-160396, DEC. 28, 1966

TO CERTIFYING OFFICER, UNITED STATES DEPARTMENT OF THE INTERIOR, BUREAU OF LAND MANAGEMENT:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 4, 1966, WITH ENCLOSURES, REQUESTING OUR DECISION ON THE PROPRIETY OF PAYING THE ATTACHED VOUCHER IN FAVOR OF THE BANK OF STOCKTON, ASSIGNEE OF CALICOPTERS, INC., IN THE AMOUNT OF $1,984.21.

CALICOPTERS WAS AWARDED CONTRACT NO. 14-11-0001-3215 BY THE BUREAU OF LAND MANAGEMENT, PORTLAND SERVICE CENTER, ON APRIL 6, 1966, FOR AERIAL SPRAYING OF HERBICIDE OVER APPROXIMATELY 82,985 ACRES AT A PRICE OF $161,820.75. BY LETTER DATED MAY 27, 1966, THE CONTRACTOR WAS ADVISED THAT THE REMAINING PORTION OF THE CONTRACT COMPRISING APPROXIMATELY 5,700 ACRES WAS CANCELLED AS PER ORAL ADVICE GIVEN ON MAY 26. CANCELLATION WAS NECESSITATED BY CONDITIONS MAKING EFFICIENT DESTRUCTION OF SAGEBRUSH UNLIKELY.

THE CONTRACT INCLUDES THE FOLLOWING PROVISION WITH RESPECT TO CANCELLATION.

"8. CANCELLATION OF CONTRACT

EFFICIENT KILLS OF BRUSH OR OTHER UNDESIRABLE VEGETATION CAN BE OBTAINED ONLY WHEN CONDITIONS ARE IDEAL. BECAUSE THESE CONDITIONS HAVE A NARROW TOLERANCE, THE GOVERNMENT MUST NECESSARILY RESERVE THE RIGHT TO CANCEL A CONTRACT IN WHOLE OR IN PART IF IT SHOULD BE DETERMINED THAT CONDITIONS ARE NOT SUITABLE FOR HERBICIDE TREATMENT OF A PROJECT AREA, THE CONTRACTOR WILL BE ADVISED IN WRITING IMMEDIATELY UPON SUCH DETERMINATION. UPON RECEIPT OF A NOTICE OF CONTRACT CANCELLATION, IN WHOLE OR IN PART, THE CONTRACTOR SHALL TAKE IMMEDIATE STEPS TO CANCEL ANY RELATED COMMITMENTS HE MAY HAVE MADE TO SUPPLIERS OR SUBCONTRACTORS. ANY CLAIMS MADE AGAINST THE GOVERNMENT BECAUSE OF CONTRACT CANCELLATION UNDER PROVISIONS OF THIS PARAGRAPH WILL BE NEGOTIATED WITH THE CONTRACTING OFFICER SOLELY ON THE BASIS OF ACTUAL "OUT-OF-POCKET" EXPENSES INCURRED. NO CLAIM WILL BE CONSIDERED FOR LOSS OF PROFIT OR OTHER INTANGIBLE FACTOR. CLAUSE NO. 47 OF THE GENERAL PROVISIONS IS SUPPLEMENTED ACCORDINGLY.'

IN CONNECTION WITH THE CANCELLED PORTION OF THE CONTRACT, THE CONTRACTOR HAS SUBMITTED A CLAIM FOR $1,984.21 FOR "OUT-OF-POCKET EXPENSES INCURRED" FOR MOBILIZATION AND DEMOBILIZATION OF PERSONNEL AND EQUIPMENT, AMORTIZATION AND OTHER FIXED COSTS OF EQUIPMENT, AND FOR GENERAL AND ADMINISTRATIVE EXPENSES. THE LETTER SUBMITTING THE CLAIM INCLUDES AN EXPLANATION OF HOW THE AMOUNT OF THE CLAIM WAS COMPUTED. IT IS THE CONTRACTING OFFICER'S OPINION THAT THE FACTORS COMPRISING THE CLAIM ARE "INTANGIBLE" FACTORS AND THEREFOR PRECLUDED FROM CONSIDERATION BY THE TERMS OF THE ABOVE-QUOTED CANCELLATION PROVISION OF THE CONTRACT.

BY THE TERMS OF CLAUSE 8 THE GOVERNMENT RESERVED THE RIGHTS TO CANCEL THE CONTRACT IN WHOLE OR IN PART UNDER CONDITIONS STATED THEREIN. ADDITION, THIS CLAUSE PROVIDES FOR NEGOTIATION BY THE CONTRACTING OFFICER OF ANY CLAIMS MADE BY THE CONTRACTOR AS A RESULT OF CANCELLATION, AND FURTHER PROVIDES THAT SUCH NEGOTIATIONS SHALL BE LIMITED TO "ACTUAL "OUT- OF-POCKET" EXPENSES INCURRED.' ALTHOUGH PRECLUDING CONSIDERATION OF ANY CLAIM FOR "LOSS OF PROFIT OR OTHER INTANGIBLE FACTOR," WE DO NOT BELIEVE THIS PROVISION SHOULD BE CONSTRUED AS LIMITING CONSIDERATION OF A CLAIM FOR EXPENSES ACTUALLY INCURRED FOR WORK DONE AND FOR PREPARATIONS MADE FOR THE CANCELLED PORTION OF THE CONTRACT.

IT IS THEREFORE OUR OPINION THAT THE CLAIM OF THE CONTRACTOR SHOULD BE RETURNED TO THE CONTRACTING OFFICER FOR NEGOTIATION OF A SETTLEMENT WITH THE CONTRACTOR IN ACCORDANCE WITH THE FOREGOING, AND THAT CONSIDERATION BE GIVEN TO THE EXPENSES CLAIMED BY THE CONTRACTOR TO THE EXTENT THAT THEY ARE VERIFIED BY ACCOUNTING PERSONNEL AS HAVING BEEN INCURRED. SEE 44 COMP. GEN. 466.