B-174796, JAN 31, 1972, 51 COMP GEN 453

B-174796: Jan 31, 1972

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WHICHEVER IS LESS" UPON CANCELLATION OF A CONFIRMED RESERVATION. TERMS WHICH WERE FURNISHED THE CONTRACTING AGENCY BEFORE ISSUANCE OF A PURCHASE ORDER RESERVING THE FACILITIES. MAY BE PAID SINCE A VALID CONTRACTUAL RELATIONSHIP WAS CREATED UPON ISSUANCE OF THE PURCHASE ORDER AND THE PROVISIONS OF AIRLIE'S OPERATING POLICY FURNISHED THE GOVERNMENT PRIOR TO THE ISSUANCE OF THE PURCHASE ORDER BECAME A PART OF THE CONTRACT. WHILE CANCELLATION OF HOTEL RESERVATIONS WITHIN A REASONABLE TIME PRIOR TO THE DATES RESERVED GENERALLY WILL NOT INVOLVE LIABILITY TO PAY FOR UNUSED ROOMS. THERE IS NO BASIS FOR A DETERMINATION THAT THE CANCELLATION CHARGES ARE UNREASONABLE SINCE AIRLIE IS EXCLUSIVELY A CONFERENCE CENTER WHICH DEALS ONLY IN GROUP RESERVATIONS.

B-174796, JAN 31, 1972, 51 COMP GEN 453

MEETINGS - RESERVATION CANCELLED - LIABILITY THE SERVICE CHARGES IMPOSED BY AIRLIE HOUSE "75% OF TOTAL OR $750.00 PER NIGHT, WHICHEVER IS LESS" UPON CANCELLATION OF A CONFIRMED RESERVATION, TERMS WHICH WERE FURNISHED THE CONTRACTING AGENCY BEFORE ISSUANCE OF A PURCHASE ORDER RESERVING THE FACILITIES, MAY BE PAID SINCE A VALID CONTRACTUAL RELATIONSHIP WAS CREATED UPON ISSUANCE OF THE PURCHASE ORDER AND THE PROVISIONS OF AIRLIE'S OPERATING POLICY FURNISHED THE GOVERNMENT PRIOR TO THE ISSUANCE OF THE PURCHASE ORDER BECAME A PART OF THE CONTRACT. WHILE CANCELLATION OF HOTEL RESERVATIONS WITHIN A REASONABLE TIME PRIOR TO THE DATES RESERVED GENERALLY WILL NOT INVOLVE LIABILITY TO PAY FOR UNUSED ROOMS, AND A PROVISION REGARDING PAYMENT OF AN UNREASONABLY LARGE AMOUNT WOULD BE AN UNENFORCEABLE PENALTY CLAUSE, THERE IS NO BASIS FOR A DETERMINATION THAT THE CANCELLATION CHARGES ARE UNREASONABLE SINCE AIRLIE IS EXCLUSIVELY A CONFERENCE CENTER WHICH DEALS ONLY IN GROUP RESERVATIONS.

TO MATILDA UDOFF, UNITED STATES DEPARTMENT OF COMMERCE, JANUARY 31, 1972:

THIS IS IN REFERENCE TO YOUR LETTER OF DECEMBER 17, 1971, REQUESTING OUR ADVANCE DECISION AS TO WHETHER A VOUCHER COVERING CANCELLATION SERVICE CHARGES MAY BE CERTIFIED FOR PAYMENT. YOU STATE THAT ON APRIL 7, 1971, AN ADMINISTRATIVE OFFICER OF THE NATIONAL BUREAU OF STANDARDS RESERVED CERTAIN FACILITIES AT AIRLIE HOUSE, WARRENTON, VIRGINIA, FOR A CONFERENCE TO BE HELD MAY 4 THROUGH 5, 1971. THE RESERVATION WAS CONFIRMED BY AIRLIE HOUSE IN ITS LETTER OF APRIL 9, 1971, WITH WHICH IT ENCLOSED A BROCHURE DESCRIBING ITS OPERATING POLICY AND CANCELLATION SERVICE CHARGES. THE BROCHURE PROVIDED THAT CANCELLATION OF A CONFIRMED RESERVATION LESS THAN 30 DAYS PRIOR TO THE CONFIRMED DATE WOULD RESULT IN A SERVICE CHARGE OF "75% OF TOTAL OR $750.00 PER NIGHT, WHICHEVER IS LESS."

ON APRIL 19, 1971, YOUR SUPPLY DIVISION ISSUED A PURCHASE ORDER TO AIRLIE HOUSE TO PROCURE THE DESIRED CONFERENCE SERVICES. YOU STATE THAT THIS PURCHASE ORDER DOES NOT INDICATE WHETHER IT CONFIRMED THE ARRANGEMENTS MADE BY THE ADMINISTRATIVE OFFICER, WHO WAS NOT A CONTRACTING OFFICER, OR WHETHER THE CONTRACTING OFFICER WAS AWARE OF THE TERMS OF THE AIRLIE HOUSE OPERATING POLICY. ON APRIL 28, 1971, THE ADMINISTRATIVE OFFICER CANCELLED THE RESERVATIONS, AND BY A STATEMENT OF CHARGES DATED MAY 7, 1971, THE AIRLIE FOUNDATION, OPERATOR OF AIRLIE HOUSE, BILLED YOU FOR CANCELLATION SERVICE CHARGES IN THE AMOUNT OF $378.75, WHICH REPRESENTS 75 PERCENT OF $505, THE AMOUNT OF THE ROOM CHARGES HAD THE RESERVATIONS NOT BEEN CANCELLED.

YOU STATE THAT THE QUESTION IS "WHETHER OR NOT A VALID CONTRACT HOLDING THE GOVERNMENT TO THE PROVISIONS OF THE AIRLIE FOUNDATION OPERATING POLICY AND CANCELLATION SERVICE CHARGES EXISTED INASMUCH AS THE CONTRACTING/ORDERING OFFICER FOR THE NATIONAL BUREAU OF STANDARDS WAS NOT ADVISED OF THESE CONDITIONS AT THE TIME PURCHASE ORDER NO. S 195333-71 WAS ISSUED."

IN 41 COMP. GEN. 780 (1962), WE APPROVED PAYMENT FOR UNUSED RESERVATIONS AT A SYDNEY, AUSTRALIA, HOTEL WHEN THE RESERVATIONS WERE CANCELED LATE IN THE AFTERNOON OF THE DAY FOR WHICH THE ROOMS HAD BEEN RESERVED AND THE HOTEL WAS UNABLE TO RENT OUT ALL OF THE ROOMS AFTER IT RECEIVED THE CANCELLATION NOTICE. IN B-121198, AUGUST 1, 1955, WE ALLOWED PAYMENT FOR HOTEL RESERVATIONS CANCELED AS A RESULT OF POSTPONEMENT OF A THREE-POWER CONFERENCE SCHEDULED TO BE HELD IN BERMUDA IN JUNE 1953. WE NOTED THAT PREEXISTING RESERVATIONS HAD BEEN CANCELED BY THE HOTEL IN ORDER TO ACCOMMODATE THE PLANNED CONFERENCE, AND THAT THE HOTEL'S RESERVATIONS WERE GENERALLY MADE "SOMETIME IN ADVANCE AND USUALLY COORDINATED WITH STEAMSHIP OR AIRLINE RESERVATIONS."

WHILE CANCELLATION OF HOTEL RESERVATIONS WITHIN A REASONABLE TIME PRIOR TO THE REQUESTED DATES GENERALLY WILL NOT INVOLVE LIABILITY TO PAY FOR THE UNUSED ROOMS, WE BELIEVE THE GOVERNMENT IS OBLIGATED IN THIS INSTANCE TO THE SAME EXTENT AS IT WAS IN THE CASES MENTIONED ABOVE. A VALID CONTRACTUAL RELATIONSHIP WAS CREATED WHEN THE PURCHASE ORDER WAS ISSUED, AND THE PROVISIONS OF AIRLIE'S OPERATING POLICY, FURNISHED TO THE GOVERNMENT PRIOR TO ISSUANCE OF THE PURCHASE ORDER, WERE A PART OF THE CONTRACT THUS CREATED. WHILE A PROVISION REQUIRING PAYMENT OF AN UNREASONABLY LARGE AMOUNT WOULD BE AN UNENFORCEABLE PENALTY CLAUSE, 5 CORBIN ON CONTRACTS 1057, THE CIRCUMSTANCES HERE PROVIDE NO BASIS FOR A DETERMINATION THAT AIRLIE'S CANCELLATION CHARGES ARE UNREASONABLE. THE RECORD INDICATES THAT AIRLIE WAS UNABLE TO UTILIZE THE SPACE ORIGINALLY RESERVED BY YOUR AGENCY DESPITE ATTEMPTS TO DO SO. IN THIS RESPECT, AIRLIE HAS STATED THAT IT IS

*** EXCLUSIVELY A CONFERENCE CENTER WHICH DEALS ONLY IN GROUP RESERVATIONS. UNDER THE TERMS OF OUR CORPORATE CHARTER AS A NON-PROFIT EDUCATIONAL FOUNDATION, WE CANNOT ACCEPT INDIVIDUAL TRANSIENT OVERNIGHT GUESTS. THUS, WE DO NOT OPERATE IN THE SAME MANNER AS HOTELS AND MOTELS WHICH PROVIDE CONFERENCE FACILITIES AS AN ADJUNCT TO THEIR PRIMARY INNKEEPING ENDEAVORS AND WE ARE PRECLUDED FROM ROUTINELY FILLING SPACE ON AN OPPORTUNE BASIS.

ACCORDINGLY, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE PAID IF IT IS OTHERWISE CORRECT.