B-175369, JUL 24, 1972

B-175369: Jul 24, 1972

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REFORMATION OF A CONTRACT WILL BE ALLOWED IF. IS SUBSTANTIATED BY THE FACT THAT THESE ITEMS WERE NOTED AS COST REIMBURSABLE ON FRONTIERS' BUDGET PROPOSAL. WHICH WAS THE BASIS FOR THE CONTRACT. THE BASIS FOR THE REQUEST IS THAT THE CONTRACT AS EXECUTED DID NOT EXPRESS THE ACTUAL INTENTION OF THE PARTIES BECAUSE OF A MUTUAL MISTAKE OF FACT. RECEIPT IS ALSO ACKNOWLEDGED OF A LETTER DATED MAY 16. B99-5019 WAS ENTERED INTO BETWEEN FRONTIERS AND THE GOVERNMENT FOR FURNISHING TRAINING AND TECHNICAL ASSISTANCE IN COMMUNITY ORGANIZATION TO COMMUNITY ACTION AGENCIES IN THE OEO ATLANTA REGION. THE CONTRACT WAS A FIRM FIXED-PRICE TYPE WITH ADDITIONAL REIMBURSABLE ITEMS. FRONTIERS WAS TO PROVIDE 1. THE CONTRACT WAS EXTENDED FOR AN ADDITIONAL PERIOD AND THE ESTIMATED COST WAS INCREASED TO ABOUT $230.

B-175369, JUL 24, 1972

PROCUREMENT LAW - REFORMATION - MUTUAL MISTAKE DECISION ALLOWING REFORMATION OF A CONTRACT BETWEEN THE OFFICE OF ECONOMIC OPPORTUNITY AND FRONTIERS UNLIMITED, INC., TO REFLECT THE TRUE INTENT OF THE PARTIES. REFORMATION OF A CONTRACT WILL BE ALLOWED IF, BY REASON OF MUTUAL MISTAKE, THE CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES. THE INTENTION OF THE PARTIES TO CONSIDER FEES, TRAVEL AND PER DIEM OF SPECIALISTS AND TRAINING SUPPORT SERVICES AS COST REIMBURSABLE ITEMS, RATHER THAN AS PART OF THE FIXED PRICE PORTION OF THE CONTRACT, IS SUBSTANTIATED BY THE FACT THAT THESE ITEMS WERE NOTED AS COST REIMBURSABLE ON FRONTIERS' BUDGET PROPOSAL, WHICH WAS THE BASIS FOR THE CONTRACT.

TO MR. PHILLIP V. SANCHEZ:

BY LETTER DATED MARCH 1, 1972, THE CONTRACTING OFFICER, PROCUREMENT DIVISION, OFFICE OF ECONOMIC OPPORTUNITY, WASHINGTON, D.C., REQUESTED OUR OFFICE TO APPROVE REFORMATION OF NEGOTIATED CONTRACT NO. B99-5019, AS AMENDED, BETWEEN YOUR AGENCY AND FRONTIERS UNLIMITED, INC. (FRONTIERS). THE BASIS FOR THE REQUEST IS THAT THE CONTRACT AS EXECUTED DID NOT EXPRESS THE ACTUAL INTENTION OF THE PARTIES BECAUSE OF A MUTUAL MISTAKE OF FACT. RECEIPT IS ALSO ACKNOWLEDGED OF A LETTER DATED MAY 16, 1972, AND ENCLOSURES, FROM THE ACTING ASSOCIATE DIRECTOR FOR ADMINISTRATION.

ON JUNE 30, 1969, CONTRACT NO. B99-5019 WAS ENTERED INTO BETWEEN FRONTIERS AND THE GOVERNMENT FOR FURNISHING TRAINING AND TECHNICAL ASSISTANCE IN COMMUNITY ORGANIZATION TO COMMUNITY ACTION AGENCIES IN THE OEO ATLANTA REGION. THE CONTRACT WAS A FIRM FIXED-PRICE TYPE WITH ADDITIONAL REIMBURSABLE ITEMS. UNDER THE CONTRACT, FRONTIERS WAS TO PROVIDE 1,000 MAN-DAYS OF ASSISTANCE AT AN ESTIMATED COST OF ABOUT $158,000, CONSISTING OF A FIXED-PRICE OF $63,550 AND AN ESTIMATED COST REIMBURSABLE AMOUNT OF $94,450. THE CONTRACT WAS EXTENDED FOR AN ADDITIONAL PERIOD AND THE ESTIMATED COST WAS INCREASED TO ABOUT $230,700 ($92,450 FIXED-PRICE PLUS $138,250 ESTIMATED COST REIMBURSEMENT). PARAGRAPH 6 OF CLAUSE I OF THE CONTRACT PROVIDES THAT THE WORK PERFORMED UNDER PARAGRAPHS 1 (SPECIALIST RESOURCES), 2 (SPECIALIST TRAINING), AND 5 (TRAINING) OF CLAUSE I SHALL NOT CONSTITUTE PART OF OR BE A CHARGE AGAINST THE STIPULATED NUMBER OF MAN DAYS OF TECHNICAL ASSISTANCE. CLAUSE X, CONSIDERATION AND PAYMENT, PROVIDES AS FOLLOWS:

"THE CONTRACTOR SHALL BE PAID THE FIRM FIXED AMOUNT OF $63,550.00 (LATER INCREASED TO $92,450) TO COVER ALL ADMINISTRATIVE AND OPERATIONAL COSTS FOR FURNISHING ONE THOUSAND (1000) MAN-DAYS OF TECHNICAL ASSISTANCE UNDER THIS CONTRACT. IT IS AGREED THAT THIS FOREGOING FIXED AMOUNT SHALL INCLUDE BUT NOT BE LIMITED TO SUCH COSTS AS THE DIRECT AND INDIRECT COSTS OF ADMINISTERING AND OPERATING THE CONTRACT, CANCELLATION OF SERVICES, CHANGE OF SPECIALIST QUALIFICATIONS AND SUCH OTHER MATTERS NORMALLY INCIDENTAL TO THE PERFORMANCE OF A SPECIALIST UTILIZATION CONTRACT. NOT INCLUDED IN SUCH FIXED AMOUNT ARE REIMBURSABLE ITEMS FOR FEE, TRAVEL AND PER DIEM OF SPECIALISTS ONLY."

THE MISTAKE WAS ALLEGED BY FRONTIERS AS A RESULT OF DEFENSE CONTRACT AUDIT AGENCY (DCAA) AUDIT REPORT NO. 101-01-1-0269, DATED JANUARY 15, 1971. ITEMS 15 AND 27 OF THE AUDIT REPORT TOOK EXCEPTION TO CERTAIN ITEMS ON THE GROUND THAT THE CONTRACT PROVIDES FOR SUCH ITEMS TO BE A PART OF THE FIXED-PRICE PORTION THEREOF RATHER THAN A PART OF THE COST REIMBURSABLE PORTION OF THE CONTRACT. THE COSTS DISALLOWED BY THE AUDITOR WERE FOR TWO TRAINING CONFERENCES WHICH WERE CONDUCTED BY FRONTIERS' SUBCONTRACTOR IN THE AMOUNT OF $5,100, AND THE PER DIEM AND TRAVEL EXPENSES FOR SPECIALISTS ATTENDING THE TRAINING CONFERENCES IN THE AMOUNT OF $5,425.07, FOR AN AGGREGATE TOTAL AMOUNT OF $10,525.07. FRONTIERS CONTENDS THAT THE FOREGOING AMOUNT WAS PROPOSED BY IT ON A COST REIMBURSABLE BASIS AND WAS NOT TO BE A PART OF THE FIXED-PRICE PORTION OF THE CONTRACT.

IT IS REPORTED THAT THE MISTAKE WAS MADE WHEN THE PROPOSED WORK AND AMOUNTS WERE SEGREGATED INTO TWO SEPARATE PORTIONS OF A FIXED AMOUNT OF $92,450 FOR ADMINISTRATIVE AND OPERATIONAL COSTS, AND A REIMBURSABLE ESTIMATED AMOUNT OF $138,250 FOR FEES, TRAVEL AND PER DIEM OF SPECIALISTS AND TRAINING SUPPORT SERVICES; THAT DURING THE FISCAL 1969 RUSH, STANDARD CONTRACTUAL LANGUAGE FOR THESE TYPES OF CONTRACTS WAS INCLUDED IN THE CONTRACT IDENTIFYING THESE TRAINING AND SUPPORT COSTS AS PART OF THE FIXED -PRICE CONTRACT, WHEREAS THE AMOUNT ASSIGNED FOR THESE SERVICES WAS INTENDED TO BE INCLUDED IN THOSE ESTIMATED COSTS FOR THE REIMBURSABLE PORTION OF THE CONTRACT; AND THAT THE CONTRACTUAL LANGUAGE WAS NEVER CHANGED TO APPLY TO THE ACTUAL CIRCUMSTANCES IDENTIFYING THE SPECIALISTS' TRAINING COSTS AS PART OF THE COST REIMBURSEMENT PORTION OF THE CONTRACT.

IN A MEMORANDUM DATED SEPTEMBER 28, 1971, THE CONTRACTING OFFICER STATES THAT IT WAS THE INTENTION OF THE CONTRACTING OFFICE THAT THE COST REIMBURSABLE PORTION OF THE CONTRACT SHOULD INCLUDE, IN ACCORDANCE WITH FRONTIERS' BUDGET PROPOSAL, THE FINANCIAL AND ADMINISTRATIVE TRAINING SUPPORT SERVICES; AND THAT THE PARTICIPANTS' FEE, PER DIEM AND TRAVEL SHOULD BE INCLUDED IN THE COST REIMBURSABLE PORTION AMOUNT OF THE CONTRACT. THE CONTRACTING OFFICER ALSO STATES THAT ALTHOUGH CONTRACT CLAUSE I, PARAGRAPH 6, STATEMENT OF WORK, PROVIDES THAT "IT IS AGREED THAT THE WORK PERFORMED UNDER PARAGRAPHS 1, 2, AND 5 OF CLAUSE I SHALL NOT CONSTITUTE PART OF OR BE A CHARGE AGAINST THE ONE THOUSAND (1000) MAN-DAYS OF TECHNICAL ASSISTANCE," THIS CLAUSE IS IN ERROR, AS IT WAS INTENDED THAT THE COSTS FOR TRAINING INCURRED PURSUANT TO PARAGRAPH 5 OF THE CONTRACT SHOULD BE INCLUDED IN THE COST REIMBURSABLE PORTION OF THE CONTRACT.

A CONTRACT MAY BE REFORMED WHERE IT IS SHOWN THAT BY REASON OF A MUTUAL MISTAKE THE CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, AND IT CAN BE ESTABLISHED WHAT THE CONTRACT WAS OR WHAT IT WOULD HAVE BEEN IF A MISTAKE HAD NOT BEEN MADE. SEE 39 COMP. GEN. 363, 365 (1959); 30 ID. 220, 221 (1958). THE RECORD BEFORE US INDICATES THAT IT WAS THE INTENTION OF THE PARTIES TO CONSIDER FEES, TRAVEL AND PER DIEM OF SPECIALISTS AND TRAINING SUPPORT SERVICES AS COST REIMBURSABLE ITEMS. THIS INTENTION IS SUBSTANTIATED BY THE FACT THAT THE FOREGOING ITEMS WERE NOTED AS COST REIMBURSABLE ITEMS ON FRONTIERS' BUDGET PROPOSAL WHICH WAS THE BASIS FOR THE SUBJECT CONTRACT. ACCORDINGLY, CONTRACT NO. B99-5019 MAY BE REFORMED, AS ADMINISTRATIVELY RECOMMENDED, TO REFLECT THE TRUE INTENT AND AGREEMENTS OF THE PARTIES, SUBJECT TO ANY ADJUSTMENT WHICH MIGHT BE REQUIRED BY REASON OF DCAA REPORT OF JANUARY 15, 1971.