B-182233, OCT 3, 1974

B-182233: Oct 3, 1974

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DELIVERY OF THE DERRICK WAS TO BE 420 CALENDAR DAYS THEREAFTER. AMCA REQUESTS OUR OFFICE TO AUTHORIZE AN EQUITABLE ADJUSTMENT ON ITS BEHALF FOR ADDITIONAL COSTS TO BE INCURRED UNDER THE CONTRACT THAT WERE NEITHER CONTEMPLATED NOR FORESEEN AT THE TIME THE CONTRACT WAS NEGOTIATED AND EXECUTED. THE BASIS FOR AMCA'S REQUEST ARE (1) THE CURRENT. IT IS A WELL-SETTLED PROPOSITION THAT WHERE A GOVERNMENT CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION TO BE PAID. NO PROVISION IS MADE FOR ANY INCREASE IN THE EVENT PERFORMANCE BECOMES MORE EXPENSIVE OR DIFFICULT. THE FACT THAT THE COST OF PERFORMANCE IS INCREASED BY FACTORS WHICH DO NOT CONSTITUTE UNDUE INTERFERENCE BY THE GOVERNMENT AS A CONTRACTOR PROVIDES NO BASIS FOR EQUITABLE PRICE RELIEF. 53 COMP.

B-182233, OCT 3, 1974

INCREASED COSTS OF PERFORMANCE DUE TO SPIRALING COSTS OF RAW MATERIALS INDUSTRY ALLOCATION PROGRAM PROVIDE NO BASIS FOR EQUITABLE PRICE ADJUSTMENT OF FIXED-PRICE CONTRACT WHICH CONTAINS NO COST ESCALATION PROVISIONS SINCE THOSE FACTORS DO NOT CONSTITUTE UNDUE INTERFERENCE BY GOVERNMENT AS CONTRACTOR.

AMCA INTERNATIONAL CORPORATION:

ON OCTOBER 17, 1973, AMCA INTERNATIONAL CORPOATION (AMCA) ENTERED INTO CONTRACT NO. DACW61-74-C-0107 WITH THE ARMY CORPS OF ENGINEERS, PORT DEPOSIT, MARYLAND, TO CONSTRUCT A LARGE FLOATING DERRICK FOR THE FIXED PRICE OF $1,342,531. DELIVERY OF THE DERRICK WAS TO BE 420 CALENDAR DAYS THEREAFTER. THE CONTRACT CONTAINS NO COST ESCALATION PROVISIONS.

AMCA REQUESTS OUR OFFICE TO AUTHORIZE AN EQUITABLE ADJUSTMENT ON ITS BEHALF FOR ADDITIONAL COSTS TO BE INCURRED UNDER THE CONTRACT THAT WERE NEITHER CONTEMPLATED NOR FORESEEN AT THE TIME THE CONTRACT WAS NEGOTIATED AND EXECUTED. THE BASIS FOR AMCA'S REQUEST ARE (1) THE CURRENT, UNPRECEDENTED, SPIRALING INCREASES IN THE COSTS OF RAW MATERIALS NECESSARY TO PERFORM UNDER THE CONTRACT, AND (2) A STEEL ALLOCATION PROGRAM INPOSED BY THE IRON AND STEEL INDUSTRY DURING THE PROCUREMENT PHASE OF THIS CONTRACT.

IT IS A WELL-SETTLED PROPOSITION THAT WHERE A GOVERNMENT CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION TO BE PAID, AND NO PROVISION IS MADE FOR ANY INCREASE IN THE EVENT PERFORMANCE BECOMES MORE EXPENSIVE OR DIFFICULT, THE FACT THAT THE COST OF PERFORMANCE IS INCREASED BY FACTORS WHICH DO NOT CONSTITUTE UNDUE INTERFERENCE BY THE GOVERNMENT AS A CONTRACTOR PROVIDES NO BASIS FOR EQUITABLE PRICE RELIEF. 53 COMP. GEN. 157 (1973); B-175674, MAY 30, 1972. AS WAS STATED IN PENN BRIDGE CO. . UNITED STATES, 59 CT. CL. 892,896 (1924):

"*** CONTRACTUAL RIGHTS ONCE FIXED IN A PROPER CONTRACT EXECUTED BY AUTHORITY ARE INVIOLATE. THEY MAY BE FORFEITED BY ONE PARTY OR THE OTHER, CONSTRUCTION IS PERMISSIBLE IF THE TERMS ARE AMBIGUOUS, BUT IN THE ABSENCE OF AMBIGUITY OR FORFEITURE OF RIGHTS BY CONDUCT, SUCH A CONTRACT CANNOT BUT BE ENFORCED AS WRITTEN." (EMPHASIS SUPPLIED.)

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL AUTHORITY FOR OUR OFFICE TO GRANT AMCA THE RELIEF REQUESTED.