B-161615, JUN. 22, 1965

B-161615, JUN. 22, 1965

TO THE REGIONAL FORESTER, FOREST SERVICE:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 22, 1967, WITH ENCLOSURES, REQUESTING AS CONTRACTING OFFICER OUR DECISION ON A PROPOSED MODIFICATION OF TIMBER SALES CONTRACT NO. 10-197 WITH HUMBOLDT FIR,INC., FOR THE SALE OF AN ESTIMATED VOLUME OF 12,500 M BOARD FEET OF TIMBER.

YOUR LETTER SETS FORTH THAT IN DECEMBER 1964 AND JANUARY 1965 EXTREMELY HEAVY STORMS CAUSED SEVERE DAMAGE IN NORTHERN CALIFORNIA AND THE PACIFIC NORTHWEST. IN ADDITION TO DAMAGE TO PHYSICAL IMPROVEMENTS, THERE WAS CONSIDERABLE DAMAGE TO FOREST SERVICE TIMBER GROWING IN SOME AREAS. HENCE, THE FOREST SERVICE WAS LEFT WITH THE PROBLEM OF SALVAGING MILLIONS OF FEET OF WASHED-OUT AND WINDTHROWN TREES.

HUMBOLDT FIR, INC., WAS THE HIGH BIDDER ON WHAT IS KNOWN AS THE NOTICE BLOW DOWN SALVAGE SALE. CONTRACT NO. 10-197 WAS AWARDED TO THIS FIRM ON AUGUST 17, 1965, AS THE HIGHEST BIDDER. THE CONTRACT COVERED A SALE AREA OF 9,700 ACRES, MORE OR LESS, WITH AN ESTIMATED 12,500 M BOARD FEET OF LIVE AND RECENTLY DEAD (SOUND SAPWOOD) TIMBER, PRINCIPALLY DOUGLAS FIR, PLUS AN UNESTIMATED QUANTITY OF OLDER DEAD (UNSOUND SAPWOOD) TIMBER. TERMINATION DATE OF THIS CONTRACT WAS JULY 1, 1966. WHEN IT BECAME EVIDENT THAT A CONTRACT EXTENSION WOULD BE NECESSARY, A RATE REDETERMINATION WAS MADE AND THE CONTRACT WAS SUBSEQUENTLY EXTENDED TO JULY 1, 1967. AS OF THE CLOSE OF THE 1966 LOGGING SEASON, HUMBOLDT HAD CUT AND REMOVED 27,179.5 M BOARD FEET AND THERE REMAINS AN ESTIMATED 10,000 TO 15,000 M BOARD FEET OF UNSOUND SAPWOOD TIMBER YET TO BE CUT AND REMOVED.

BECAUSE OF THE DIFFICULTIES INVOLVED IN MAKING AN ACCURATE ESTIMATE OF WIND AND FLOOD THROWN TIMBER AND THE URGENCY OF THE TIMBER SALVAGE JOB, AN EXTREMELY POOR ESTIMATE WAS MADE BY THE FOREST SERVICE. YOU ADVISE THAT IT IS NOW EVIDENT THAT THE TIMBER SALE CONTRACT MUST BE EXTENDED ANOTHER YEAR IN ORDER TO SALVAGE THE BALANCE OF THE DOWN TIMBER. HUMBOLDT IS WILLING TO COMPLETE THE SALVAGE SALE PROVIDED THE CONTRACT IS MODIFIED TO ELIMINATE THE FOLLOWING CONTRACT ROVISIONS:

"PROVISO AT THE END OF CONTRACT CLAUSE 2A, SECTION 3A

"PROVIDED, THAT IF THIS CONTRACT IS EXTENDED BEYOND JUNE 30, 1966, ALL LOGS SCALED AS OLDER DEAD (UNSOUND SAPWOOD) TIMBER SHALL BE PAID FOR AT THE ESTABLISHED RATES FOR STUMPAGE AND REQUIRED DEPOSITS FOR LIVE AND RECENTLY DEAD (SOUND SAPWOOD) TIMBER AND QUARTERLY CALENDAR ADJUSTMENT SHALL BE APPLICABLE.

"CLAUSE ADDED IN JUNE 30, 1966 CONTRACT MODIFICATION

"THE "METHOD OF SCALING" IS MODIFIED TO THE EXTENT THAT WHEN IN THE OPINION OF THE FOREST SERVICE SCALER SCALING THE LOGS A NORMALLY DEDUCTIBLE DEFECT CAUSED BY INSECTS OR FUNGI HAD ITS EFFECTIVE ORIGIN ON OR AFTER JULY 1, 1966, NO DEDUCTION IN SCALE SHALL BE MADE THEREFOR," WITH REFERENCE TO THE FOREGOING, YOU ADVISE THAT BOTH OF THESE CLAUSES WERE INSERTED FOR THE PURPOSE OF STIMULATING THE REMOVAL OF THE TIMBER ESTIMATED TO BE CUT, AND THAT THIS WAS BEFORE THE REALIZATION THAT THERE WAS SUCH A GROSS MISCALCULATION OF TIMBER VOLUME.

YOU STATE THAT, UNDER THE CIRCUMSTANCES, THE REQUEST OF HUMBOLDT IS REASONABLE AND THAT IT WOULD BE INEQUITABLE TO INSIST THAT THE REMAINING TIMBER BE REMOVED UNDER THE PRESENT CONTRACT TERMS, IF INDEED, YOU ARE IN A LEGAL POSITION TO DO SO. ACCORDINGLY, YOU REQUEST OUR CONCURRENCE IN MODIFYING THE SUBJECT TIMBER SALE CONTRACT BY ELIMINATING THE TWO CLAUSES QUOTED ABOVE. THIS WOULD HAVE THE EFFECT OF PERMITTING PAYMENT BY HUMBOLDT FOR THE REMAINING OLDER DEAD (UNSOUND SAPWOOD) TIMBER AT THE NORMAL PRICES FOR UNSOUND SAPWOOD MATERIAL WITH NORMAL DEFECT DEDUCTION RATHER THAN AT THE CONTRACT STUMPAGE RATES FOR LIVE AND RECENTLY DEAD (SOUND SAPWOOD) TIMBER.

PURSUANT TO SECTION 5 OF THE CONTRACT ENTITLED PERIOD OF CONTRACT AND CUTTING SCHEDULE, THE FOREST SERVICE IS AUTHORIZED TO EXTEND THE CONTRACT PERIOD AND OUR OFFICE WOULD HAVE NO OBJECTION TO EXTENDING THE CONTRACT PERIOD FOR ANOTHER YEAR. HOWEVER, IT IS A WELL ESTABLISHED RULE THAT WITHOUT COMPENSATING BENEFIT TO THE UNITED STATES, AGENTS OFFICERS OF THE UNITED STATES HAVE NO AUTHORITY TO MODIFY OR AMEND EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE CONTRACT RIGHTS THAT HAVE VESTED IN THE GOVERNMENT. UNITED STATES V. AMERICAN SALES CORPORATION, 27 F2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED, 280 U.S. 574; PACIFIC HARDWARD AND STEEL CO. V. UNITED STATES, 49 CT.CL. 327; BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 778 CT.CL. 584, 41 COMP. GEN. 169, 172. ACCORDINGLY, WE BELIEVE THAT THE TWO CLAUSES QUOTED ABOVE MAY NOT BE ELIMINATED FROM THE CONTRACT FOR THE BENEFIT OF HUMBOLDT IN THE ABSENCE OF A COMPENSATING BENEFIT TO THE UNITED STATES.

WITH RESPECT TO YOUR STATEMENT THAT IT WOULD BE INEQUITABLE TO REQUIRE THAT THE REMAINING TIMBER BE REMOVED UNDER PRESENT CONTRACT TERMS, WE NOTE THAT SECTION 2A-6 OF THE GENERAL TERMS OF THE CONTRACT PROVIDES THAT THE ESTIMATED QUANTITIES OF TIMBER ARE NOT TO BE CONSTRUED AS GUARANTEES OR LIMITATIONS OF THE QUANTITIES TO BE DESIGNATED FOR CUTTING UNDER THE TERMS OF THE CONTRACT. THE PROSPECTUS WHICH WAS ISSUED TO FURNISH SUFFICIENT INFORMATION, IN ADDITION TO THAT CONTAINED IN THE PUBLISHED ADVERTISEMENT, TO ENABLE PROSPECTIVE BIDDERS TO DECIDE WHETHER FURTHER INVESTIGATION OF THE USE IS WARRANTED, STATED THAT THE VOLUME AND QUALITY OF TIMBER ARE BASED ON ,ROUGH ESTIMATES" AND THAT BIDDERS "ARE URGED TO MAKE THEIR OWN VOLUME AND QUALITY ERMINATIONS.' ALTHOUGH THE ACTUAL AMOUNT OF TIMBER CONTAINED IN THE SALE AREA SUBSTANTIALLY EXCEEDED THE ESTIMATED QUANTITY, WE FIND NO LEGAL BASIS FOR MODIFYING THE CONTRACT AS REQUESTED UNDER THE CIRCUMSTANCES PRESENTED. SEE BROCK, ET AL V. UNITED STATES, 84 CT.C. 453. BIDDERS WERE AWARE OF THE DIFFICULTIES INVOLVED IN MAKING AN ACCURATE ESTIMATE OF WIND AND FLOOD THROWN TIMBER AND THEY WERE WARNED TO MAKE THEIR OWN VOLUME DETERMINATIONS BEFORE BIDDING. ALSO, THERE IS NO EVIDENCE IN THE RECORD BEFORE US THAT THE FOREST SERVICE ACTED IN BAD FAITH IN ESTIMATING THE VOLUME OF TIMBER CONTAINED IN THE SALE AREA.

ACCORDINGLY, AND ON THE RECORD BEFORE US, THE CONTRACT MAY NOT BE MODIFIED BY ELIMINATING THE TWO CLAUSES IN QUESTION. CF. RUSSELL AND PUGH LUMBER COMPANY V. UNITED STATES, 290 F.2D 938.