B-85938, MAY 26, 1949

B-85938: May 26, 1949

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THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 28. IT WAS AGREED THAT THE TUMPANE COMPANY. ARTICLE 1(D) (C) PROVIDED AS FOLLOWS: "(D) THE GOVERNMENT WILL PROVIDE THE CONTRACTOR WITH QUARTERS POWER AND OTHER UTILITIES AS MAY BE AVAILABLE AT THE SITE OF WORK. THE GOVERNMENT WILL ALSO PROVIDE SUCH OTHER GOVERNMENT-OWNED EQUIPMENT. NOT COVERED BY THE LEASE AGREEMENT REFERRED TO IN ARTICLE 1(G) HEREOF AS IS AVAILABLE AT GOVERNMENT AIRCRAFT PLANT NO. 1. ARTICLE 1(G) OF THE CONTRACT PROVIDED THAT IT WAS ANTICIPATED THAT THE GOVERNMENT WOULD LEASE TO THE CONTRACTOR. ALL OF WHICH PROPERTY HAD BEEN AND WAS TO BE ACCEPTED BY THE CONTRACTOR. IN YOUR LETTER IT IS STATED THAT THE ENCLOSURES FORWARDED THEREWITH INDICATE THAT IT WAS THE INTENTION OF THE PARTIES TO REIMBURSE.

B-85938, MAY 26, 1949

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 28, 1949, WITH ENCLOSURES, REQUESTING AUTHORITY TO REFORM-- BY REASON OF A MUTUAL ERROR-- CONTRACT NO. W33-038 AC-18441, DATED JUNE 30, 1947.

UNDER THE TERMS OF ITEM 1 OF ARTICLE 1(A) OF THE CONTRACT, IT WAS AGREED THAT THE TUMPANE COMPANY, INC., WOULD PURCHASE, FABRICATE OR INSTALL REPLACEMENT PARTS AND PERFORM ALL REPAIRS UPON CERTAIN MACHINE TOOLS LOCATED AT GOVERNMENT AIR CRAFT PLANT NO. 1, OMAHA NEBRASKA, SO AS TO PLACE THE SAID TOOLS IN A SERVICEABLE CONDITION TO THE SATISFACTION OF THE CONTRACTING OFFICER. ARTICLE 1(B) PROVIDED THAT THE CONTRACTOR WOULD FURNISH ALL THE NECESSARY PERSONNEL AND THE HAD TOOLS CUSTOMARILY USED FOR PERFORMANCE OF THE WORK CALLED FOR UNDER ITEM 1 OF ARTICLE 1(A) OF THE CONTRACT, AND ARTICLE 1(A) OF THE CONTRACT, AND ARTICLE 1(D) (C) PROVIDED AS FOLLOWS:

"(D) THE GOVERNMENT WILL PROVIDE THE CONTRACTOR WITH QUARTERS POWER AND OTHER UTILITIES AS MAY BE AVAILABLE AT THE SITE OF WORK, PROVIDED, HOWEVER, THAT THE CONTRACTOR SHALL FURNISH THE NECESSARY LEAD IN, PIPING AND CABLE TO THE POINT OF OUTLET. THE GOVERNMENT WILL ALSO PROVIDE SUCH OTHER GOVERNMENT-OWNED EQUIPMENT, NOT COVERED BY THE LEASE AGREEMENT REFERRED TO IN ARTICLE 1(G) HEREOF AS IS AVAILABLE AT GOVERNMENT AIRCRAFT PLANT NO. 1, OMAHA, NEBRASKA.

"(E) FOR THE PURPOSE OF THE WORK CALLED FOR IN PARAGRAPH (A) ABOVE, THE GOVERNMENT SHALL DELIVER TO THE CONTRACTOR AT THE GOVERNMENT AIRCRAFT PLANT NO. 1, OMAHA, NEBRASKA, THE MACHINE TOOLS DESCRIBED IN PARAGRAPH (A) ABOVE."

ARTICLE 1(G) OF THE CONTRACT PROVIDED THAT IT WAS ANTICIPATED THAT THE GOVERNMENT WOULD LEASE TO THE CONTRACTOR, UNDER A SEPARATE LEASE AGREEMENT, CERTAIN ARTICLES LISTED ON PAGE 2 OF THE CONTRACT FOR USE IN THE PERFORMANCE THEREOF. ARTICLE 3(A) OF THE CONTRACT PROVIDED FOR THE COMPENSATION TO BE PAID BY THE GOVERNMENT FOR THE SERVICES RENDERED BY THE CONTRACTOR. ARTICLE 3(C) PROVIDES AS FOLLOWS:

"(C) IN ADDITION TO THE FOREGOING RATE FOR DIRECT LABOR THE GOVERNMENT SHALL ALSO PAY THE CONTRACTOR THE ACTUAL COST OF MATERIALS, SUPPLIES AND PURCHASED PARTS USED DIRECTLY IN THE PERFORMANCE OF THIS CONTRACT AFTER ALLOWANCE FOR SALVAGE VALUE, IF ANY, OF SUCH MATERIAL NOT EXPENDED. THE COST OF SUCH MATERIALS, SUPPLIES AND PURCHASED PARTS SHALL NOT INCLUDE HANDLING CHARGES OR PROFIT. THE CONTRACTOR AGREES THAT PURCHASES MADE SPECIFICALLY FOR THIS CONTRACT SHALL BE CHARGED AT THEIR ACTUAL PRICE; THAT PAYMENTS FOR MATERIALS WITHDRAWN FROM ITS OWN STOCK SHALL BE FAIR AND REASONABLE, AS DETERMINED BY THE CONTRACTING OFFICER, BUT IN NO EVENT SHALL SUCH PAYMENTS EXCEED THE CURRENT MARKET PRICE AS DETERMINED BY SOUND ACCOUNTING PRACTICE; AND THAT INCOMING TRANSPORTATION CHARGES MAY BE INCLUDED."

THEREAFTER, THE PARTIES ENTERED INTO A LEASE AGREEMENT DATED FEBRUARY 11, 1948, ARTICLE 1 OF WHICH PROVIDES THAT THE GOVERNMENT THEREBY LEASED TO THE TUMPANE COMPANY, INC., THE PROPERTY LISTED IN SCHEDULE "A" ATTACHED THERETO, ALL OF WHICH PROPERTY HAD THERETOFORE BEEN DELIVERED TO THE CONTRACTOR AND INSTALLED AT THE PLANT OF THE GOVERNMENT, AND ALL OF WHICH PROPERTY HAD BEEN AND WAS TO BE ACCEPTED BY THE CONTRACTOR. ARTICLE 3 OF THE LEASE AGREEMENT PROVIDED THAT THE CONTRACTOR AGREED TO PAY TO THE GOVERNMENT FOR THE USE OF SAID FACILITIES RENT IN THE SUM OF $1.

IN YOUR LETTER IT IS STATED THAT THE ENCLOSURES FORWARDED THEREWITH INDICATE THAT IT WAS THE INTENTION OF THE PARTIES TO REIMBURSE, THE CONTRACTOR ITS ACTUAL EXPENSES INCURRED IN THE REPAIR AND MAINTENANCE OF THE EQUIPMENT FURNISHED BY THE GOVERNMENT FOR USE IN THE PERFORMANCE OF CONTRACT NO. W33-038 AC-18441. YOU INVITE ATTENTION TO ARTICLE 3(C) OF THE CONTRACT, SUPRA, AND STATE THAT IT WAS THE INTENTION OF THE PARTIES AT THE TIME THE CONTRACT WAS NEGOTIATED THAT SAID ARTICLE 3(C) WOULD CONSTITUTE AUTHORITY FOR "REIMBURSEMENT TO THE CONTRACTOR UNDER THE WORD 'SUPPLIES,' OF ALL REPORTS, PRODUCTION, AND INSPECTION FORMS AND TAGS AND OTHER PRINTED FORMS NOT NORMALLY USED IN THE CONTRACTOR'S COMMERCIAL OPERATIONS AND WHICH ARE REQUIRED BY THE GOVERNMENT IN THE PERFORMANCE OF THIS CONTRACT."

INCLUDED AMONG THE ENCLOSURES WITH YOUR LETTER IS A MEMORANDUM OF A CONFERENCE IN THE OFFICE OF THE JUDGE ADVOCATE, HEADQUARTERS, AIR MATERIAL COMMAND, REGARDING THE INTENTION OF THE PARTIES RELATIVE TO REIMBURSEMENT OF EXPENSES INCIDENT TO MAINTENANCE OF EQUIPMENT FURNISHED BY THE GOVERNMENT FOR USE IN THE PERFORMANCE OF EQUIPMENT FURNISHED BY THE GOVERNMENT FOR USE IN THE PERFORMANCE OF THE CONTRACT, A STATEMENT DATED FEBRUARY 24, 1949, BY THE NEGOTIATOR FOR THE GOVERNMENT CONCERNING THE MATTER, AND A STATEMENT BY THE CONTRACTING OFFICER AND A LETTER DATED APRIL 7, 1949, FROM THE TUMPANE COMPANY, INC., TO THE COMMANDING GENERAL, AIR MATERIAL COMMAND, WRIGHT PATTERSON AIR FORCE BASE, DAYTON, OHIO. THE SAID STATEMENTS ARE TO THE EFFECT THAT, AT THE TIME OF THE NEGOTIATION OF THE CONTRACT, IT WAS THE INTENTION AND UNDERSTANDING OF THE PARTIES THAT THE CONTRACTOR WOULD BE REIMBURSED FOR THE ACTUAL EXPENSES INCURRED IN THE REPAIR AND MAINTENANCE OF ALL GOVERNMENT FURNISHED EQUIPMENT AND SUPPLIES USED IN THE PERFORMANCE OF THE CONTRACT. THE STATEMENTS OF THE NEGOTIATOR AND THE CONTRACTING OFFICER ARE TO THE EFFECT THAT IT IS RECOGNIZED THAT THE PRESENT PROVISIONS OF CONTRACT NO. W33-308 AC 18441 DO NOT DEFINITELY AND CLEARLY SET FORTH THE INTENT OF THE NEGOTIATIONS ON WHICH THE CONTRACT WAS PREPARED, IN THAT THEY DO NOT SPECIFICALLY PROVIDE, AS INTENDED, FOR REIMBURSEMENT TO THE CONTRACTOR OF EXPENSES INCURRED FOR REPAIR AND MAINTENANCE OF THE EQUIPMENT FURNISHED BY THE GOVERNMENT. IN ADDITION, THE NEGOTIATOR STATED THAT IT WAS UNDERSTOOD, AND WAS THE INTENT OF THE PARTIES AT THE TIME OF WRITING THE CONTRACT, TO PROVIDE THEREIN FOR REIMBURSEMENT TO THE TUMPANE COMPANY, INC., AT ACTUAL COST, WITHOUT PROFIT, FOR SUCH EXPENSES.

IT IS WELL SETTLED THAT WHEN A CONTRACT DOES NOT EMBODY THE AGREEMENT ACTUALLY MADE BY THE PARTIES THERETO, OR WHERE A WRITING EXECUTED BY THEM IS AT VARIANCE WITH THE INTENTION AND UNDERSTANDING OF THE PARTIES, EITHER PARTY CAN OBTAIN A DECREE DIRECTING THAT THE AGREEMENT BE REFORMED SO THAT IT WILL EXPRESS THE INTENTION AND UNDERSTANDING OF THE PARTIES, EITHER PARTY CAN OBTAIN A DECREE DIRECTING THAT THE AGREEMENT BE REFORMED SO THAT IT WILL EXPRESS THE INTENTION AND UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE MATTER. SEE SECTION 504, REINSTATEMENT OF THE LAW OF CONTRACTS. ALSO, SEE ACKERLIND, ADMINISTRATOR OF LIND V. UNITED STATES, 240 U.S. 531; POOLE ENGINEERING AND MACHINE COMPANY V. UNITED STATES, 58 C.CLS. 9; WALTER D. LOVELL V. UNITED STATES, 59 ID. 494; HYGIENIC FIBRE CO. V. UNITED STATES, 59 ID. 598, 609; JOSEPH F. MORGAN V. UNITED STATES, 59 ID. 650; AND NORTHERN PACIFIC RAILWAY COMPANY V. UNITED STATES, 70 F.SUPP. 836, 865.

ACCORDINGLY, THIS OFFICE WILL INTERPOSE NO OBJECTION TO THE EXECUTION OF A SUPPLEMENTAL AGREEMENT TO CONTRACT NO. W33-038 AC 18441 PROVIDING FOR REIMBURSEMENT TO THE CONTRACTOR OF THE EXPENSES INCURRED FOR REPAIR AND MAINTENANCE OF GOVERNMENT EQUIPMENT USED IN THE PERFORMANCE OF THE CONTRACT.

A REFERENCE TO THIS DECISION SHOULD BE MADE IN FORWARDING THE SUPPLEMENTAL AGREEMENT TO THE GENERAL ACCOUNTING OFFICE FOR FILING.

THE ENCLOSURE WITH YOUR LETTER ARE RETURNED HEREWITH.