B-175541, APR 6, 1972

B-175541: Apr 6, 1972

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CONCURS WITH THE RECOMMENDED PROPOSAL SINCE THE GOVERNMENT IS CLEARLY LIABLE AND DAMAGES ARE ASCERTAINABLE WITH CERTAINTY. 44 COMP. IT IS SUGGESTED THAT A BINDING RELEASE BE OBTAINED FROM THE COMPANY WITH RESPECT TO ANY FUTURE CLAIMS ARISING OUT OF THE CONTRACT TERMINATION. SECRETARY: REFERENCE IS MADE TO A LETTER DATED MARCH 21. CIRCUMSTANCES AND BASES UPON WHICH OUR DECISION IS REQUESTED: "THE TIMBER SALE CONTRACT DOES NOT CONTAIN ANY PROVISIONS AUTHORIZING THE UNITED STATES TO TERMINATE THE CONTRACT IN THE PUBLIC INTEREST WITHOUT THE CONSENT OF THE PURCHASER. WE HAVE REVIEWED THE PROPOSED TERMINATION SETTLEMENT AND IN OUR OPINION THE CONDITIONS ARE VERY REASONABLE *** . WE ARE PLACED IN A POSITION WHERE THE GOVERNMENT IS IN EFFECT BREACHING THE CONTRACT.

B-175541, APR 6, 1972

CONTRACTS - TERMINATION FOR THE PUBLIC INTEREST - PROPOSED SETTLEMENT CONCERNING A PROPOSED SETTLEMENT FOR THE TERMINATION OF A TIMBER SALE CONTRACT AWARDED TO PRODUCERS LUMBER COMPANY BY THE FOREST SERVICE, BOISE NATIONAL FOREST OFFICE. THE COMP. GEN. CONCURS WITH THE RECOMMENDED PROPOSAL SINCE THE GOVERNMENT IS CLEARLY LIABLE AND DAMAGES ARE ASCERTAINABLE WITH CERTAINTY. 44 COMP. GEN. 353, 358 (1964); PHILLIPS CONSTRUCTION COMPANY, INC., V UNITED STATES, 179 CT. CL. 54 (1967). HOWEVER, IT IS SUGGESTED THAT A BINDING RELEASE BE OBTAINED FROM THE COMPANY WITH RESPECT TO ANY FUTURE CLAIMS ARISING OUT OF THE CONTRACT TERMINATION.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED MARCH 21, 1972, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY FOR RURAL DEVELOPMENT AND CONSERVATION, REFERRING FOR OUR CONCURRENCE THE PROPOSED SETTLEMENT FOR THE TERMINATION OF A TIMBER SALE CONTRACT AWARDED TO PRODUCERS LUMBER COMPANY BY THE FOREST SERVICE, BOISE NATIONAL FOREST OFFICE.

THE RECORD DISCLOSES THAT, SUBSEQUENT TO THE AWARD AND FORMAL EXECUTION OF THE CONTRACT, BUT PRIOR TO ANY ACTUAL TIMBER CUTTING THEREUNDER BY THE COMPANY, REPRESENTATIVES OF THE FOREST SERVICE DETERMINED THAT TO PERMIT THE COMPANY TO PERFORM THE CONTRACT IN THE DESIGNATED SALE AREA WOULD BE DETRIMENTAL AND INJURIOUS TO EXPECTED PLANS FOR RECREATIONAL DEVELOPMENT AND EXPANSION INTO THE AREA IN QUESTION. A LEGAL MEMORANDUM DATED FEBRUARY 16, 1972, IN THE RECORD, QUOTED IN PERTINENT PART BELOW, SETS FORTH THE FACTS, CIRCUMSTANCES AND BASES UPON WHICH OUR DECISION IS REQUESTED:

"THE TIMBER SALE CONTRACT DOES NOT CONTAIN ANY PROVISIONS AUTHORIZING THE UNITED STATES TO TERMINATE THE CONTRACT IN THE PUBLIC INTEREST WITHOUT THE CONSENT OF THE PURCHASER. AFTER SOME NEGOTIATIONS WITH THE PURCHASER, PRODUCERS LUMBER COMPANY, PRODUCERS AGREED TO A CANCELLATION CONDITIONED UPON PAYMENT OF THEIR OUT-OF-POCKET EXPENSES. WE HAVE REVIEWED THE PROPOSED TERMINATION SETTLEMENT AND IN OUR OPINION THE CONDITIONS ARE VERY REASONABLE *** .

"BECAUSE OF THE LACK OF A TERMINATION FOR CONVENIENCE CLAUSE IN THE TIMBER SALE CONTRACT, WE ARE PLACED IN A POSITION WHERE THE GOVERNMENT IS IN EFFECT BREACHING THE CONTRACT. IT IS OUR CONCLUSION THAT THE CONTRACTING OFFICER HAS NO AUTHORITY TO SETTLE THE TERMINATION CLAIM OF PRODUCERS LUMBER COMPANY. SUCH SETTLEMENT AUTHORITY IS RESERVED TO THE GENERAL ACCOUNTING OFFICE *** ."

THE PROPOSED SETTLEMENT CONSISTS OF THE FOLLOWING OUT-OF-POCKET EXPENSES INCURRED BY THE CONTRACTOR: A DEPOSIT OF $4,200 REPRESENTING THE FIRST PAYMENT TOWARD THE TOTAL SALE PRICE, INTEREST THE CONTRACTOR HAS PAID TO OBTAIN THE BID DEPOSIT, AND THE COST OF MAINTAINING THE REQUIRED PERFORMANCE BOND FROM THE CONTRACT DATE TO THE DATE OF SETTLEMENT. CONCUR WITH THE RECOMMENDED PROPOSAL SINCE THERE IS NO DOUBT REGARDING THE LIABILITY OF THE GOVERNMENT AND DAMAGES ARE ASCERTAINABLE WITH CERTAINTY. SEE 44 COMP. GEN. 353, 358 (1964); AND PHILLIPS CONSTRUCTION COMPANY, INC. V UNITED STATES, 179 CT. CL. 54 (1967).

WE SUGGEST THAT, CONCOMITANT WITH THE SETTLEMENT, THE FOREST SERVICE OBTAIN AN EFFECTIVE AND BINDING RELEASE FROM THE COMPANY WITH RESPECT TO ANY FUTURE CLAIMS ARISING OUT OF THE CONTRACT TERMINATION.