B-178662, MAY 9, 1974

B-178662: May 9, 1974

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WHEN PARTIES INTENDED THAT ERECTION OF WAREHOUSES 2 AND 3 BE DELETED FROM PROJECT BECAUSE OF LACK OF FUNDS AND WHERE THROUGH AN OVERSIGHT ERECTION OF WAREHOUSES WAS NOT DELETED FROM PROJECT. CONTRACT MAY BE REFORMED WHERE IT IS SHOWN THAT BY REASON OF MUTUAL MISTAKE CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT ACTUAL AGREEMENT OF PARTIES AND IT CAN BE ESTABLISHED WHAT CONTRACT WOULD HAVE BEEN IF MISTAKE HAD NOT BEEN MADE. REQUEST FOR PROPOSALS (RFP) DACA85-73-R-0001 WAS ISSUED BY THE U.S. BY AMENDMENT 4 THE RFP NUMBER WAS CHANGED TO RFP DACA85-73- R-0006. PROPOSALS WERE RECEIVED FROM B-E-C-K CONSTRUCTORS AND THE RED SAMM MINING COMPANY WHICH WERE OPENED ON AUGUST 14. MEETINGS WERE HELD WITH B-E-C-K.

B-178662, MAY 9, 1974

WHEN PARTIES INTENDED THAT ERECTION OF WAREHOUSES 2 AND 3 BE DELETED FROM PROJECT BECAUSE OF LACK OF FUNDS AND WHERE THROUGH AN OVERSIGHT ERECTION OF WAREHOUSES WAS NOT DELETED FROM PROJECT, CONTRACT MAY BE REFORMED WHERE IT IS SHOWN THAT BY REASON OF MUTUAL MISTAKE CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT ACTUAL AGREEMENT OF PARTIES AND IT CAN BE ESTABLISHED WHAT CONTRACT WOULD HAVE BEEN IF MISTAKE HAD NOT BEEN MADE; CONSEQUENTLY, THE CONTRACTING OFFICER'S DIRECTIVE TO THE CONTRACTOR TO CONSTRUCT WAREHOUSES 2 AND 3 MAY BE REGARDED AS A CONSTRUCTIVE CHANGE AND THE CLAIM FOR ADDITIONAL WORK PROCESSED ACCORDINGLY.

TO B-E-C-K CONSTRUCTORS:

ON JULY 27, 1972, REQUEST FOR PROPOSALS (RFP) DACA85-73-R-0001 WAS ISSUED BY THE U.S. ARMY CORPS OF ENGINEERS, ALASKA DISTRICT, ANCHORAGE, ALASKA. THE RFP SOLICITED PROPOSALS FOR THE CONSTRUCTION OF THE COBRA DANE CONTRACTORS CAMP. VHF OMNI RANGE, AND THE TECH CONTROL FACILITY AT THE SHEMYA AIR FORCE BASE, ALASKA, UNDER SCHEDULES "A," "B," AND "C," RESPECTIVELY. BY AMENDMENT 4 THE RFP NUMBER WAS CHANGED TO RFP DACA85-73- R-0006. PROPOSALS WERE RECEIVED FROM B-E-C-K CONSTRUCTORS AND THE RED SAMM MINING COMPANY WHICH WERE OPENED ON AUGUST 14, 1972. MEETINGS WERE HELD WITH B-E-C-K, THE LOW OFFEROR, ON AUGUST 17 AND 18, 1972, TO DISCUSS THE SCOPE OF WORK, ERRORS OR AMBIGUITIES OF PLANS AND SPECIFICATIONS AND POSSIBLE REDUCTIONS IN CONTRACT PRICES. THE SECOND OFFEROR, RED SAMM, WAS GIVEN COPIES OF THE REVISIONS IN CONTRACT REQUIREMENTS AND WAS REQUESTED TO PREPARE A REVISED PROPOSAL, WHICH IT DID. FURTHER DISCUSSIONS WERE HELD WITH RED SAMM ON AUGUST 22, 1972, AND PRESUMABLY ITS PROPOSAL REMAINED HIGH BY APPROXIMATELY $600,000.

SCHEDULE "A" OF RFP -0006 PROVIDED, AMONG OTHER THINGS, FOR THE ERECTION OF WAREHOUSES 2 AND 3. IT IS REPORTED THAT AFTER RECEIVING PROPOSALS, IT WAS DETERMINED THAT IN ORDER TO BRING THE PROJECT WITHIN THE MONETARY AMOUNT OF MONEY AVAILABLE, OFFERORS SHOULD ELIMINATE FROM THEIR COST PROPOSALS AMOUNTS APPLICABLE TO THE ERECTION OF WAREHOUSES 2 AND 3; AND THAT B-E-C-K REDUCED ITS PROPOSAL IN THE AMOUNT OF $121,052. BY LETTER DATED DECEMBER 20, 1972, THE PROCURING ACTIVITY ADVISED B-E-C-K THAT ITS PROPOSAL IN THE AGGREGATE TOTAL AMOUNT OF $799,226 UNDER RFP -0006 HAD BEEN ACCEPTED AND THAT COPIES OF THE CONTRACT FOR ITS SIGNATURE WERE ENCLOSED.

IN A LETTER DATED DECEMBER 28, 1972, B-E-C-K ADVISED THE CORPS OF ENGINEERS THAT IT WAS RETURNING COPIES OF THE CONTRACT UNSIGNED BECAUSE THE WAREHOUSES HAD NOT BEEN DELETED FROM THE STATEMENT OF WORK IN SCHEDULE "A." BY LETTER DATED JANUARY 9, 1973, THE CORPS OF ENGINEERS ADVISED B-E- C-K THAT IT HAD REVIEWED THE REASONS GIVEN BY THE COMPANY FOR REFUSING TO SIGN THE CONTRACT AND THAT IT ENCLOSED COPIES OF THE CONTRACT WHICH REFLECTED THE ELIMINATION OF THE WAREHOUSES FROM THE SCHEDULE. B-E-C-K SIGNED THE COPIES OF THE CORRECTED CONTRACT.

SUBSEQUENTLY, THE ALASKAN AIR COMMAND, THE USING SERVICE, OBTAINED ADDITIONAL FUNDING FOR THE PROJECT AND IT REQUESTED THE CORPS OF ENGINEERS TO ACCOMPLISH ERECTION OF WAREHOUSES 2 AND 3 BY MEANS OF A CHANGE ORDER TO THE CONTRACT. IT IS REPORTED THAT PERSONNEL FROM THE CONTRACTING OFFICE EXAMINED THE CONTRACT AND THE SPECIFICATIONS FOR THE PURPOSE OF PREPARING A CHANGE ORDER AND THAT DURING SUCH EXAMINATION, THEY DISCOVERED THAT WHILE THE WAREHOUSES WERE DELETED FROM THE STATEMENT OF WORK IN SCHEDULE "A," THE REQUIREMENT FOR CONSTRUCTION OF THE WAREHOUSES HAD NOT BEEN DELETED FROM THE SPECIFICATIONS. THEREAFTER, THE CONTRACTING OFFICER DETERMINED THAT A CHANGE ORDER TO THE CONTRACT SHOULD NOT BE ISSUED TO COVER THE CONSTRUCTION OF WAREHOUSES 2 AND 3 SINCE THE SPECIFICATIONS ALREADY CALLED FOR THE CONSTRUCTION OF THE WAREHOUSES.

THE RECORD REFLECTS THAT THE CORPS OF ENGINEERS NEGOTIATOR REQUESTED B-E- C-K TO ERECT WAREHOUSES 2 AND 3, WHICH IT HAS DONE. B-E-C-K HAS REQUESTED THAT IT BE PAID AN ADDITIONAL SUM OF $121,052 - THE AMOUNT BY WHICH IT REDUCED THE PRICE IN ITS PROPOSAL AFTER IT WAS INFORMED THAT ERECTION OF WAREHOUSES 2 AND 3 WOULD BE DELETED FROM THE PROJECT.

THERE IS FOR APPLICATION HERE THE ESTABLISHED RULE OF CONTRACT LAW THAT WHERE, BY REASON OF MUTUAL MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL INTENTION OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE INTENDED AGREEMENT ACTUALLY WAS. 36 COMP. GEN. 507 (1957); 39 ID. 363 (1959).

IT IS APPARENT FROM THE RECORD BEFORE US THAT THE INTENT OF THE PARTIES WAS THAT THE SUBJECT CONTRACT WOULD NOT COVER THE ERECTION OF WAREHOUSES 2 AND 3 AND THAT THE PARTIES ERRONEOUSLY BELIEVED THAT THE WAREHOUSES HAD BEEN DELETED FROM THE SPECIFICATIONS. THE MISTAKE WAS MUTUAL, AND BY REASON THEREOF, THE CONTRACT FAILED TO EXPRESS THE TRUE INTENTION OF THE PARTIES.

SINCE WE CONCLUDE THAT A MUTUAL MISTAKE WAS MADE BY THE PARTIES IN DRAWING UP THE CONTRACT, IT FOLLOWS THAT B-E-C-K CANNOT LEGALLY BE HELD TO PERFORM ALL THE WORK SPECIFIED THEREIN AT THE CONTRACT PRICE. ACCORDINGLY, CONTRACT NO. DACA85-73-C-0028 MAY BE REFORMED TO REFLECT THE TRUE INTENT AND AGREEMENT OF THE PARTIES THAT THE CONTRACT WOULD NOT COVER THE ERECTION OF WAREHOUSES 2 AND 3. THE RECORD INDICATES THAT WHEN ADDITIONAL FUNDS BECAME AVAILABLE FOR THE ERECTION OF THE WAREHOUSES, THE PROCURING ACTIVITY REQUESTED B-E-C-K TO PERFORM THIS WORK. B-E-C-K SEEKS PAYMENT OF THE SUM OF $121,052 FOR THE ADDITIONAL WORK PERFORMED BY IT. B- E-C-K'S CLAIM WAS AUDITED BY THE DEFENSE CONTRACT AUDIT AGENCY (DCAA). ITS REPORT OF FEBRUARY 27, 1974, DCAA STATES THAT B-E-C-K'S PRICING DATA IS ACCEPTABLE FOR NEGOTIATION PURPOSES BUT THAT THE DATA IS NOT NECESSARILY ACCURATE, COMPLETE, AND CURRENT IN ALL RESPECTS. AS A RESULT OF ITS AUDIT REVIEW, DCAA QUESTIONS CERTAIN COSTS AMOUNTING TO $1,214 AND STATES THAT CERTAIN OTHER COSTS AMOUNTING TO $15,325 ARE UNSUPPORTED.

IN VIEW OF THE FOREGOING, THE CONTRACTING OFFICER'S DIRECTIVE TO THE CONTRACTOR TO CONSTRUCT WAREHOUSES 2 AND 3 MAY BE REGARDED AS A CONSTRUCTIVE CHANGE AND THE CLAIM FOR THE ADDITIONAL WORK PROCESSED ACCORDINGLY.