B-173553, SEP 27, 1971

B-173553: Sep 27, 1971

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SINCE COMPLIANCE WITH NOTIFICATION CLAUSE IS NOT PRECEDENT TO CONTRACTUAL OBLIGATION OF THE GOVERNMENT TO PAY FOR ELECTRIC POWER AT A RATE COMPARABLE WITH THAT CHARGED THE GENERAL PUBLIC. JOHNSON: REFERENCE IS MADE TO THE LETTER 134C DATED JULY 9. THE CONTRACT WAS ENTERED INTO ON JUNE 10. FOR AN INDEFINITE PERIOD WITH THE PUBLIC WORKS COMMISSION SINCE IT WAS THE SOLE SOURCE OF SUPPLY FOR WATER. INCLUDED IN THE CONTRACT WAS A CLAUSE ENTITLED "CHANGE IN RATES. THE "CHANGE IN RATES" CLAUSE PROVIDES THAT RATES "WILL BE INCREASED OR DECREASED WHEN SUCH ACTION IS APPROVED BY THE GOVERNING REGULATORY COMMISSION.". WE HAVE BEEN ADVISED BY THE VA HOSPITAL THAT THE NOTIFICATION CLAUSE WAS INCLUDED IN THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT FOR FISCAL YEAR APPROPRIATION AND ACCOUNTING PURPOSES.

B-173553, SEP 27, 1971

CONTRACTS - WAIVER OF 60-DAY NOTICE PROVISION DECISION THAT 60-DAY WRITTEN NOTICE REQUIREMENT FOR ELECTRIC RATE INCREASE PROVIDED FOR IN CONTRACT BETWEEN VA HOSPITAL, FAYETTEVILLE, N. C. AND FAYETTEVILLE, N. C. PUBLIC WORKS COMMISSION MAY BE WAIVED, SINCE COMPLIANCE WITH NOTIFICATION CLAUSE IS NOT PRECEDENT TO CONTRACTUAL OBLIGATION OF THE GOVERNMENT TO PAY FOR ELECTRIC POWER AT A RATE COMPARABLE WITH THAT CHARGED THE GENERAL PUBLIC.

TO MR. DONALD E. JOHNSON:

REFERENCE IS MADE TO THE LETTER 134C DATED JULY 9, 1971, AND ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, REQUESTING OUR ADVICE AS TO THE PROPRIETY OF WAIVING THE 60-DAY WRITTEN NOTICE REQUIREMENT FOR ELECTRIC RATE INCREASES PROVIDED FOR IN CONTRACT V565P-387 BETWEEN THE VETERANS ADMINISTRATION HOSPITAL, FAYETTEVILLE, NORTH CAROLINA, AND THE PUBLIC WORKS COMMISSION, FAYETTEVILLE, NORTH CAROLINA.

THE CONTRACT WAS ENTERED INTO ON JUNE 10, 1970, FOR AN INDEFINITE PERIOD WITH THE PUBLIC WORKS COMMISSION SINCE IT WAS THE SOLE SOURCE OF SUPPLY FOR WATER, SANITARY SEWER AND ELECTRIC SERVICES. INCLUDED IN THE CONTRACT WAS A CLAUSE ENTITLED "CHANGE IN RATES," RECOGNIZING THE RIGHT OF THE COMMISSION TO REGULATE RATES CHARGED THE VETERANS ADMINISTRATION HOSPITAL (VA), NOT TO EXCEED THOSE CHARGED THE GENERAL PUBLIC FOR SIMILAR SERVICES. AS STATED ABOVE, THE CONTRACT PROVIDED FOR A 60-DAY WRITTEN NOTIFICATION FROM THE COMMISSION TO VA OF ANY PROPOSED RATE CHANGE, TO BE EFFECTIVE ON A FISCAL YEAR BASIS, COMMENCING JULY 1 AND TERMINATING JUNE 30 OF THE FOLLOWING YEAR. FURTHER, THE "CHANGE IN RATES" CLAUSE PROVIDES THAT RATES "WILL BE INCREASED OR DECREASED WHEN SUCH ACTION IS APPROVED BY THE GOVERNING REGULATORY COMMISSION." WE HAVE BEEN ADVISED BY THE VA HOSPITAL THAT THE NOTIFICATION CLAUSE WAS INCLUDED IN THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT FOR FISCAL YEAR APPROPRIATION AND ACCOUNTING PURPOSES.

THE COMMISSION RECEIVES ITS ELECTRIC SUPPLY FROM THE CAROLINA POWER AND LIGHT COMPANY, WHICH FILED A NOTICE OF INTENTION TO INCREASE ITS ELECTRIC RATES WITH THE FEDERAL POWER COMMISSION ON OR ABOUT DECEMBER 28, 1970. THE INCREASE BECAME EFFECTIVE ON MAY 28, 1971, AND THE COMMISSION NOTIFIED VA ON JUNE 22, 1971, THAT A 20 PERCENT INCREASE WOULD BECOME EFFECTIVE JULY 5, 1971. HOWEVER, 60-DAY WRITTEN NOTICE WAS NOT GIVEN.

THE GENERAL RULE IS THAT AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO SURRENDER OR WAIVE CONTRACT RIGHTS THAT HAVE VESTED IN THE GOVERNMENT WITHOUT A COMPENSATING BENEFIT TO THE UNITED STATES. B 166606, MAY 15, 1969. SINCE COMPLIANCE WITH THE NOTIFICATION CLAUSE IS NOT, IN OUR OPINION, A PRECEDENT TO THE CONTRACTUAL OBLIGATION OF THE GOVERNMENT TO PAY FOR ELECTRIC POWER AT A RATE COMPARABLE WITH THAT CHARGED THE GENERAL PUBLIC, THE 60-DAY NOTICE REQUIREMENT MAY BE WAIVED IN THIS INSTANCE.

ACCORDINGLY, IT WOULD SEEM THAT THE APPROVED INCREASED RATE MAY BE PAID ON AND AFTER JULY 5, 1971.