B-169745, MAY 27, 1970

B-169745: May 27, 1970

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EXCEEDS DELEGATED AUTHORITY OF AUTHORIZING OFFICIAL TRANSACTION SHOULD BE RATIFIED BY AUTHORIZED GOVERNMENT OFFICIAL AND VOUCHER MAY BE PAID SINCE COST OF WORK OVER ESTIMATES WAS DUE TO UNEXPECTED DIFFICULTIES ENCOUNTERED IN WELL CASING OF THIRD WELL AND WORK WAS PERFORMED IN GOOD FAITH WITH BENEFIT TO GOVERNMENT. MORE CAREFUL ESTIMATES WILL BE PREPARED IN FUTURE. THE PURCHASE ORDER WAS NEGOTIATED PURSUANT TO THE OPEN MARKET PURCHASE AUTHORITY CONTAINED IN 41 U.S.C. 252 (C) (3) AND. IT APPEARS THAT WHEN WORK BEGAN ON THIS WELL THERE WAS NOTHING TO INDICATE THAT IT WOULD REQUIRE OTHER THAN ROUTINE MAINTENANCE AND THAT THERE WAS NO INTENTION TO EXCEED THE ESTIMATED HOURS OF WORK. IT WAS DISCOVERED THAT THE WELL CASING WAS BROKEN AT A DEPTH OF 356 FEET.

B-169745, MAY 27, 1970

CONTRACTS--INCREASED COSTS--ADDITIONAL WORK OR QUANTITIES--APPROVAL UNDER PURCHASE ORDER NEGOTIATED UNDER OPEN MARKET AUTHORITY IN 41 U.S.C. 252 (C) (3) ALTHOUGH PAYMENT OF VOUCHER FOR $182, COVERING EXTRA MAINTENANCE WORK ON WELLS, EXCEEDS DELEGATED AUTHORITY OF AUTHORIZING OFFICIAL TRANSACTION SHOULD BE RATIFIED BY AUTHORIZED GOVERNMENT OFFICIAL AND VOUCHER MAY BE PAID SINCE COST OF WORK OVER ESTIMATES WAS DUE TO UNEXPECTED DIFFICULTIES ENCOUNTERED IN WELL CASING OF THIRD WELL AND WORK WAS PERFORMED IN GOOD FAITH WITH BENEFIT TO GOVERNMENT; PAYMENT FOR ADDITIONAL WORK TO EXTENT OF PROCUREMENT AUTHORITY GRANTED HAS BEEN MADE; AND MORE CAREFUL ESTIMATES WILL BE PREPARED IN FUTURE.

TO MRS. HANNEBRINK:

BY LETTER, WITH ENCLOSURES, DATED MAY 4, 1970, YOU REQUESTED OUR DECISION WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER, IN AN AMOUNT OF $182, STATED IN FAVOR OF THE HILL DRILLING COMPANY.

THE VOUCHER COVERS WELL REPAIR SERVICES PERFORMED BY THE COMPANY UNDER PURCHASE ORDER NO. 27040-PHO-107 DATED FEBRUARY 24, 1970, THE PAYMENT FOR WHICH EXCEEDS THE DELEGATED AUTHORITY OF THE CHIEF, DIVISION OF ADMINISTRATION, BUREAU OF LAND MANAGEMENT (BLM), ELY DISTRICT OFFICE, NEVADA.

THE PURCHASE ORDER WAS NEGOTIATED PURSUANT TO THE OPEN MARKET PURCHASE AUTHORITY CONTAINED IN 41 U.S.C. 252 (C) (3) AND, AS ORIGINALLY ISSUED, COVERED AN ESTIMATED 125 HOURS OF MAINTENANCE WORK ON THREE STOCKWATER WELLS AT $18 PER HOUR, OR A TOTAL PRICE OF $2,250. THE RECORD INDICATES THAT IT NORMALLY REQUIRES 30 TO 40 HOURS TO REPAIR A WELL. WORK ON THE FIRST TWO WELLS WENT AS ESTIMATED, BUT THE THIRD WELL REQUIRED A TOTAL OF 77 HOURS TO COMPLETE. IT APPEARS THAT WHEN WORK BEGAN ON THIS WELL THERE WAS NOTHING TO INDICATE THAT IT WOULD REQUIRE OTHER THAN ROUTINE MAINTENANCE AND THAT THERE WAS NO INTENTION TO EXCEED THE ESTIMATED HOURS OF WORK. HOWEVER, IT WAS DISCOVERED THAT THE WELL CASING WAS BROKEN AT A DEPTH OF 356 FEET; CONSEQUENTLY, IT WAS NECESSARY TO GRAVEL PACK THE WELL AND INSTALL A LINER WITHIN THE CASING TO MAKE IT OPERABLE. AT THIS TIME IT WAS KNOWN THAT THIS EXTRA WORK WOULD EXCEED THE ORIGINAL COST ESTIMATE, BUT IT WAS BELIEVED THE WORK COULD BE COMPLETED WITHOUT EXCEEDING THE OPEN MARKET PURCHASE LIMITATION. HOWEVER, DIFFICULTIES WERE ENCOUNTERED IN RECTIFYING THE DEFECT IN THE WELL AND RESULTED IN AN ADDITIONAL 24 HOURS OF WORK AT $18 PER HOUR, OR $432, FOR A TOTAL COST OF $2,682.

WE UNDERSTAND THAT THE ELY DISTRICT OFFICE HAS BEEN INSTRUCTED TO PREPARE MORE CAREFUL ESTIMATES FOR FUTURE PROCUREMENTS AND, WHEN DOUBT ARISES, TO SUBMIT THE PROJECT TO THE PORTLAND SERVICE CENTER FOR FORMAL ADVERTISING. FURTHER, BASED ON THE RECOMMENDATION OF THE CHIEF, DIVISION OF ADMINISTRATIVE SERVICES, PORTLAND SERVICE CENTER, THE CONTRACTOR HAS BEEN PAID FOR THE ADDITIONAL WORK TO THE EXTENT OF THE PROCUREMENT AUTHORITY OF THE CHIEF, DIVISION OF ADMINISTRATION, ELY DISTRICT.

SINCE THE SERVICES WERE PERFORMED IN GOOD FAITH AND THE BENEFITS THEREOF RECEIVED BY THE GOVERNMENT, WE BELIEVE THE CONTRACTOR SHOULD BE PAID THE AMOUNT OUTSTANDING. SEE, GENERALLY, B-163431, FEBRUARY 21, 1968; B- 148082, FEBRUARY 7, 1962. ACCORDINGLY, THE TRANSACTION SHOULD BE RATIFIED BY AN AUTHORIZED OFFICIAL IN THE BLM IN ACCORDANCE WITH SECTION 1-1.405 OF THE FEDERAL PROCUREMENT REGULATIONS. SEE, IN THIS REGARD, OUR DECISION B- 169557, MAY 4, 1970, TO YOU.

THE VOUCHER, RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT, IF OTHERWISE PROPER.