B-80070, SEP 21, 1948

B-80070: Sep 21, 1948

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THE SECRETARY OF THE AIR FORCE: I HAVE YOUR LETTER OF SEPTEMBER 13. W-05-063 AC 105 WAS AWARDED TO THE LANDON CONSTRUCTION COMPANY FOR PERFORMANCE OF THE WORK FOR THE LUMP-SUM CONSIDERATION OF $12. WAS UNABLE TO RECOLLECT THE CONDITIONS SURROUNDING THE SIGNATURE OF THE CONTRACT WITHOUT A REVIEW OF THE DOCUMENT. THE URGENCY OF THE SITUATION WILL NOT PERMIT OF THE DELAY INCIDENT TO TRANSMITTAL. CAPTAIN KUSEK WAS REASSIGNED SHORTLY AFTER THE EXECUTION OF THIS DOCUMENT AND WAS NOT PRESENT DURING MOST OF THE PERIOD WHEN THE WORK WAS PERFORMED. WHO WAS THEN THE ADMINISTRATIVE ASSISTANT TO CAPTAIN KUSEK. THERE ARE TWO POINTS THAT ARE AMBIGUOUSLY OR INCOMPLETELY STATED IN THE CONTRACT: "A. THE POINT OF WHETHER THE CONTRACT WAS INTENDED TO BE A UNIT PRICE OR A LUMP SUM CONTRACT.

B-80070, SEP 21, 1948

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF THE AIR FORCE:

I HAVE YOUR LETTER OF SEPTEMBER 13, 1948, WITH ENCLOSURES, REQUESTING AUTHORITY TO REFORM-- BY REASON OF A MUTUAL ERROR-- CONTRACT NO. W-05-063 AC-105, DATED JUNE 25, 1947, WITH THE LANDON CONSTRUCTION COMPANY, CASPER, WYOMING.

IT APPEARS THAT THE CONTRACTING OFFICE, HEADQUARTERS, FIFTEENTH AIR FORCE, COLORADO SPRINGS, COLORADO, INVITED BIDS-- TO BE OPENED JUNE 25, 1947-- FOR FURNISHING ALL PLANT, LABOR, MATERIALS AND EQUIPMENT AND PERFORMING ALL WORK OF RESEALING OF JOINTS IN AIR FIELD CONCRETE PAVEMENTS AT CASPER ARMY AIR FIELD, CASPER, WYOMING, AS DESCRIBED IN THE GOVERNMENT'S SPECIFICATIONS THEREFOR. PARAGRAPH 2.02, ON PAGE 17 OF THE SPECIFICATION, CONTAINS A TABULATION SHOWING THE "ESTIMATED QUANTITIES AND BID UNITS" AS FOLLOWS:

(OMITTED TABLE)

PARAGRAPH 1-03(B) OF THE SPECIFICATIONS ADVISED THAT THE CONTRACTOR MIGHT REASONABLY EXPECT A VARIATION IN THE ESTIMATED QUANTITIES, SUCH THAT THE TOTAL PAYMENT FOR THE COMPLETED WORK MIGHT RANGE FROM 75 TO 125 PERCENT OF THE TOTAL AMOUNT, BASED ON THE ESTIMATED QUANTITIES. PARAGRAPH 2-08 PROVIDED THAT THE UNIT PRICES AGREED UPON WOULD INCLUDE PAYMENT FOR ALL LABOR, EQUIPMENT AND MATERIAL NECESSARY SATISFACTORILY TO COMPLETE THE WORK WITHIN THE TIME ALLOTTED AND IN ACCORDANCE WITH THE SPECIFICATIONS AND CONTRACT DRAWINGS.

IN RESPONSE TO THE INVITATIONS, THE LANDON CONSTRUCTION COMPANY SUBMITTED A BID DATED JUNE 21, 1947, WHEREIN IT OFFERED TO PERFORM THE WORK AT CASPER ARMY AIR FIELD IN STRICT ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS, SCHEDULES, AND DRAWINGS, FOR THE CONSIDERATION OF $12,356 COMPUTED AT 5 CENTS PER POUND ON ITEM NO. 1 OF THE BID SCHEDULES, SUPRA, 8 CENTS PER LINEAL FOOT ON ITEM NO. 2, AND 4 CENTS PER LINEAL FOOT ON ITEM NO. 3. THEREAFTER, CONTRACT NO. W-05-063 AC 105 WAS AWARDED TO THE LANDON CONSTRUCTION COMPANY FOR PERFORMANCE OF THE WORK FOR THE LUMP-SUM CONSIDERATION OF $12,356. IN A LETTER DATED MAY 5, 1948, THE LANDON CONSTRUCTION COMPANY ADVISED COLONEL MOTYL, U.S. ARMY AIR BASE, CASPER, WYOMING, THAT SAID LETTER WOULD SERVE AS AN ACCEPTANCE OF THE INCREASE OF QUANTITIES FOR SEALING CRACKS ON PARKING APRON BEING PERFORMED UNDER THE CONTRACT HERE INVOLVED; THAT THE UNIT PRICES FOR SEALING DUMMY AND EXPANSION JOINTS WOULD REMAIN THE SAME, NAMELY, 4 CENTS AND 8 CENTS, RESPECTIVELY; THAT THE PRICE OF THE SEALING MATERIAL WOULD REMAIN 5 CENTS PER POUND UNTIL 37,500 POUNDS HAD BEEN USED; AND THAT ANY MATERIAL REQUIRED IN EXCESS OF THAT NUMBER OF POUNDS WOULD BE FURNISHED AT ACTUAL COST.

IN A REPORT DATED SEPTEMBER 7, 1948, TO THE CHIEF OF STAFF, U.S. AIR FORCE, WASHINGTON, D.C., THE COMMANDING GENERAL, HEADQUARTERS STRATEGIC AIR COMMAND, ANDREWS AIR FORCE BASE, STATED AS FOLLOWS:

"E. THIS HEADQUARTERS ATTEMPTED TO OBTAIN BY TELETYPE FROM THE THEN CONTRACTING OFFICER, CAPTAIN KUSEK, A STATEMENT AS TO THE INTENTIONS OF THE GOVERNMENT AT THE TIME OF SIGNING WITH REGARD TO THE MATTERS OF UNIT PRICES AND AMOUNT OF OVERRUN REQUIRED. CAPTAIN KUSEK, NOW ASSIGNED AT MUROC AIR FORCE BASE, WAS UNABLE TO RECOLLECT THE CONDITIONS SURROUNDING THE SIGNATURE OF THE CONTRACT WITHOUT A REVIEW OF THE DOCUMENT. THE URGENCY OF THE SITUATION WILL NOT PERMIT OF THE DELAY INCIDENT TO TRANSMITTAL, REVIEW AND RETURN OF THE CONTRACT AND STATEMENT. CAPTAIN KUSEK WAS REASSIGNED SHORTLY AFTER THE EXECUTION OF THIS DOCUMENT AND WAS NOT PRESENT DURING MOST OF THE PERIOD WHEN THE WORK WAS PERFORMED.

"F. THIS HEADQUARTERS DID OBTAIN A STATEMENT FROM MR. BECKER, WHO WAS THEN THE ADMINISTRATIVE ASSISTANT TO CAPTAIN KUSEK, AND WHO HAS BEEN PRESENT DURING BOTH THE SIGNING AND THE PERFORMANCE OF THE CONTRACT. HIS STATEMENT (INCLOSURE 3) INDICATES THAT THE GOVERNMENT INTENDED TO CONTRACT TO BE A UNIT PRICE CONTRACT, THAT UNIT PRICES WOULD HOLD UP TO 125 PERCENT OF THE ESTIMATED QUANTITIES, AND THAT THE CONTRACTOR WOULD PERFORM THE WORK AT THE UNIT PRICES INDICATED.

"5. IN SUMMATION, THERE ARE TWO POINTS THAT ARE AMBIGUOUSLY OR INCOMPLETELY STATED IN THE CONTRACT:

"A. THE POINT OF WHETHER THE CONTRACT WAS INTENDED TO BE A UNIT PRICE OR A LUMP SUM CONTRACT. WHEREAS, THE CONTRACT DOES NOT SPECIFICALLY STATE UNIT PRICES, THE INVITATION FOR BIDS AND BID (INCLOSURE 1), THE CONTRACTING OFFICER'S ABSTRACT OF BIDS (INCLOSURE 1), THE LETTER FROM THE CONTRACTOR (INCLOSURE 1), AND THE STATEMENT OF MR. BECKER (INCLOSURE 3), INDICATED THAT THE INTENTION OF BOTH PARTIES WAS TO EXECUTE A UNIT PRICE AGREEMENT.

"B. THE POINT OF WHETHER THE CONTRACTOR IS REQUIRED TO PERFORM ONLY THE ESTIMATED QUANTITIES, THE ESTIMATED QUANTITIES PLUS 25 PERCENT, OR THE COMPLETE JOB FOR THE PRICE STATED. THE CONTRACT (INCLOSURE 1) MENTIONS THAT THE CONTRACTOR MAY EXPECT ACTUAL QUANTITIES TO VARY UP TO 125 PERCENT OF THE ESTIMATED QUANTITIES, THE CONTRACTOR'S LETTER (INCLOSURE 2) INDICATES HIS INTENTION AND WILLINGNESS TO PERFORM TO THE 125 PERCENT FIGURE, AND THE STATEMENT OF MR. BECKER (INCLOSURE 3) IS TO THE EFFECT THAT THE GOVERNMENT'S INTENTION WAS THAT THE UNIT PRICES WOULD HOLD UP TO 125 PERCENT OF THE ESTIMATED QUANTITIES.

"6. IN VIEW OF THE APPARENT INTENT OF BOTH PARTIES, IT IS REQUESTED THAT THE CONTRACT BE REFORMED TO:

"A. PROVIDE FOR PAYMENT ON THE BASIS OF THE UNIT PRICES SHOWN IN THE BID AND;

"B. REQUIRE THE CONTRACTOR TO PERFORM UP TO 125 PERCENT OF THE ORIGINALLY ESTIMATED QUANTITIES AT THE UNIT PRICES.

"7. UPON REFORMATION OF THE CONTRACT, THIS HEADQUARTERS INTENDS TO ISSUE A SUPPLEMENTAL AGREEMENT TO PROVIDE FOR ALL SEALING MATERIAL ABOVE 37,500 POUNDS TO BE FURNISHED BY THE CONTRACTOR AT COST (APPROXIMATELY 13 1/2 CENTS PER POUND) IN ORDER TO COMPLETE THE SEALING OF EXPOSED JOINTS."

AS A GENERAL RULE THIS OFFICE REQUIRES A STATEMENT BY THE CONTRACTING OFFICER WHO SIGNED THE CONTRACT CONCERNING THIS INTENTION AND UNDERSTANDING OF THE MATTER-- IF DIFFERENT FROM THAT EXPRESSED IN THE CONTRACT-- BEFORE CONSIDERATION WILL BE GIVEN TO A REQUEST FOR REFORMATION OF A CONTRACT ON THE GROUND THAT A MUTUAL ERROR WAS MADE THEREIN. HOWEVER, THE FAILURE TO FURNISH SUCH A STATEMENT BY THE CONTRACTING OFFICER WHO SIGNED CONTRACT NO. W-05-063 AC-105 WILL NOT BE OBJECTED TO IN THE PRESENT CASE, SINCE THE RECORD APPEARS SATISFACTORILY TO ESTABLISH THAT SAID CONTRACT DOES NOT EXPRESS THE INTENTION AND UNDERSTANDING OF THE PARTIES IN THAT IT PROVIDES FOR PAYMENT FOR THE WORK ON A LUMP-SUM BASIS, WHEREAS IT IS APPARENT THAT THE INTENTION AND UNDERSTANDING OF THE PARTIES WAS THAT PAYMENT WOULD BE MADE ON THE BASIS OF UNIT PRICES FOR THE ACTUAL QUANTITIES OF THE WORK PERFORMED.

IT IS WELL SETTLED THAT WHEN A CONTRACT DOES NOT EMBODY THE AGREEMENT AS ACTUALLY MADE BY THE PARTIES THERETO OR WHERE A WRITING EXECUTED BY THEM IS MATERIALLY AT VARIANCE WITH THE INTENTION OF THE PARTIES, EITHER PARTY CAN OBTAIN A DECREE THAT THE AGREEMENT BE REFORMED SO THAT IT EXPRESSES THE INTENTION OF THE PARTIES. RESTATEMENT OF THE LAW OF CONTRACTS, SECTION 504. ALSO, SEE ACKERLIND, ADMINISTRATOR OF LIND V. UNITED STATES, 240 U.S. 531; POOLE ENGINEERING & MACHINE COMPANY V. UNITED STATES, 58 C.CLS. 9; WALTER D. LOVELL V. UNITED STATES, 59 C.CLS. 494; HYGIENIC FIBRE CO. V. UNITED STATES, 59 C.CLS. 598, 609; AND JOSEPH F. MORGAN V. UNITED STATES, 59 C.CLS. 650.

ACCORDINGLY, THIS OFFICE WILL INTERPOSE NO OBJECTION TO THE EXECUTION OF A SUPPLEMENTAL AGREEMENT TO CONTRACT W-05-063 AC-105 PROVIDING FOR PAYMENT FOR THE WORK AT THE UNIT PRICES SHOWN IN THE CONTRACTOR'S BID IN LIEU OF PAYMENT AT THE LUMP-SUM PRICE OF $12,356 SPECIFIED IN THE CONTRACT, THE SAID SUPPLEMENTAL AGREEMENT TO BE ON THE BASIS AND SUBJECT TO THE LIMITATION SET FORTH IN PARAGRAPH 6 AND 7 OF THE REPORT OF SEPTEMBER 7, 1948, SUPRA.

A REFERENCE TO THIS DECISION SHOULD BE MADE WHEN FORWARDING THE SUPPLEMENTAL AGREEMENT TO THE AUDIT DIVISION, GENERAL ACCOUNTING OFFICE, FOR FILING.

THE PAPERS ARE RETURNED HEREWITH.