B-98667, DECEMBER 1, 1950, 30 COMP. GEN. 220

B-98667: Dec 1, 1950

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1950: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 16. IN WHICH YOU REQUESTED A DECISION WHETHER PAYMENT IS AUTHORIZED ON BUREAU VOUCHER NO. 28161-30. WERE SENT TO THE CONSUMER'S FUEL COMPANY AND TO TEN OTHER COAL DEALERS. FOUR BIDS WERE RECEIVED. ONE OF WHICH WAS FROM THE CONSUMER'S FUEL COMPANY AND WAS ACCOMPANIED BY A LETTER DATED JUNE 20. IN WHICH IT WAS STATED IN PART: THE PRICES QUOTED YOU ABOVE IS (SIC) BASED ON CURRENT PRICES. THIS BID IS NECESSARILY SUBJECT TO ANY MINE OR FREIGHT INCREASE (BY NOTICE OF SUCH INCREASE TO YOU IN ADVANCE OF SHIPMENT) AND SUBJECT TO SUBSEQUENT GOVERNMENT RESTRICTION AND FURTHER SUBJECT TO STRIKES OR SUSPENSIONS BEYOND OUR CONTROL. THAT THE BID SUBMITTED BY CONSUMER'S FUEL COMPANY WAS ACCEPTED ON JUNE 23.

B-98667, DECEMBER 1, 1950, 30 COMP. GEN. 220

CONTRACTS - REFORMATION - MUTUAL MISTAKE A CONTRACT FOR THE PURCHASE OF COAL WHICH THROUGH A MUTUAL MISTAKE OF THE PARTIES DID NOT PROVIDE FOR ADJUSTING THE CONTRACT PRICES IN THE EVENT OF MINE OR FREIGHT INCREASES, AS STIPULATED IN A LETTER ACCOMPANYING THE CONTRACTOR'S BID, MAY BE REFORMED TO REFLECT THE TRUE UNDERSTANDING AND AGREEMENT OF THE PARTIES.

COMPTROLLER GENERAL WARREN TO H. R. DUCKETT, HOUSING AND HOME FINANCE AGENCY, DECEMBER 1, 1950:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 16, 1950, WITH ENCLOSURES, SUPPLEMENTING YOUR LETTER OF OCTOBER 9, 1950, IN WHICH YOU REQUESTED A DECISION WHETHER PAYMENT IS AUTHORIZED ON BUREAU VOUCHER NO. 28161-30, STATED IN FAVOR OF CONSUMER'S FUEL COMPANY, SOMERVILLE, NEW JERSEY, IN THE AMOUNT OF $56.41, CLAIMED UNDER CONTRACT NO. NJ (28160/M-118, DATED JUNE 23, 1949.

IN YOUR LETTER OF OCTOBER 9, 1950, YOU STATED THAT ON JUNE 1, 1949, INVITATIONS TO BID ON THE FURNISHING OF ANTHRACITE COAL TO THE MANVILLE HOMES PROJECT, MANVILLE, NEW JERSEY, WERE SENT TO THE CONSUMER'S FUEL COMPANY AND TO TEN OTHER COAL DEALERS; THAT, IN RESPONSE TO THE SAID INVITATIONS, FOUR BIDS WERE RECEIVED, ONE OF WHICH WAS FROM THE CONSUMER'S FUEL COMPANY AND WAS ACCOMPANIED BY A LETTER DATED JUNE 20, 1949, IN WHICH IT WAS STATED IN PART:

THE PRICES QUOTED YOU ABOVE IS (SIC) BASED ON CURRENT PRICES. THIS BID IS NECESSARILY SUBJECT TO ANY MINE OR FREIGHT INCREASE (BY NOTICE OF SUCH INCREASE TO YOU IN ADVANCE OF SHIPMENT) AND SUBJECT TO SUBSEQUENT GOVERNMENT RESTRICTION AND FURTHER SUBJECT TO STRIKES OR SUSPENSIONS BEYOND OUR CONTROL. THAT THE BID SUBMITTED BY CONSUMER'S FUEL COMPANY WAS ACCEPTED ON JUNE 23, 1949, BY THE GENERAL HOUSING MANAGER OF THE PROJECT IN QUESTION; THAT THE CONTRACT AWARDED TO SAID COMPANY WAS PREPARED ON STANDARD FORM NO. 1036-REVISED, CONSISTING OF THE INVITATION, BID, AND ACCEPTANCE, AND THAT THERE WAS NOT INCORPORATED THEREIN THE PROVISION CONTAINED IN THE CONTRACTOR'S LETTER OF JUNE 20, 1949, QUOTED ABOVE; THAT THE CONTRACT PROVIDED FOR THE DELIVERY OF APPROXIMATELY 40 TONS OF CHESTNUT COAL AT THE PRICE OF $18.05 PER TON AND APPROXIMATELY 40 TONS OF STOVE COAL AT THE PRICE OF $18.10 PER TON, AND ASIDE FROM A PROVISION THAT, DUE TO LIMITED STORAGE FACILITIES, NOT MORE THAN THREE TONS OF COAL WOULD BE ORDERED AT ANY TIME, THE CONTRACT CONTAINED NO PROVISION AS TO WHEN THE COAL SHOULD BE DELIVERED; THAT ON APRIL 5, 1950, THERE WAS RECEIVED FROM THE CONSUMER'S FUEL COMPANY A BILL FOR $186.79 FOR CHESTNUT COAL, BASED ON THE PRICE OF $18.60 PER TON, AND ON APRIL 24, 1950, THERE WAS RECEIVED ANOTHER BILL IN THE AMOUNT OF $431.47 FOR CHESTNUT COAL BASED ON THE PRICE OF $19.40 PER TON; THAT OF THE TOTAL AMOUNT OF $618.26 INVOICED BY THE CONTRACTOR, $561.85 HAS BEEN PAID, AND THAT THE DIFFERENCE BETWEEN SAID AMOUNTS IS THE AMOUNT NOW CLAIMED ON THE BUREAU VOUCHER REFERRED TO ABOVE; THAT THE SUM OF $56.41, SHOWN ON SAID VOUCHER, REPRESENTS UNEARNED DISCOUNT OF $16.14 AND AN INCREASE IN THE PRICE OF COAL IN THE AMOUNT OF $40.27; AND THAT THE COST OF THE COAL FURNISHED UNDER THE CONTRACT INVOLVED WAS LESS THAN IT WOULD HAVE BEEN UNDER THE LOWEST BID RECEIVED.

WITH YOUR LETTER OF NOVEMBER 16, 1950, THERE WERE ENCLOSED A LETTER DATED NOVEMBER 8, 1950, FROM SIDNEY D. SKOWRONEK, PRESIDENT OF THE CONSUMER'S FUEL COMPANY--- WHO SIGNED THE BID SUBMITTED BY THE CONTRACTOR--- AND A MEMORANDUM DATED NOVEMBER 9, 1950, FROM HARRY GLANZ, THE CONTRACTING OFFICER WHO EXECUTED THE CONTRACT ON BEHALF OF THE GOVERNMENT, WITH RESPECT TO THE OMISSION FROM THE CONTRACT OF THAT PART OF THE CONTRACTOR'S LETTER OF JUNE 20, 1949, QUOTED ABOVE, AND THEIR RESPECTIVE UNDERSTANDING AND INTENTION RELATIVE THERETO.

IN HIS LETTER, MR. SKOWRONEK STATED IN PART THAT "WE WERE UNDER THE IMPRESSION THAT THE MIMEOGRAPHED COPY OF THE CONTRACT WAS NOT TO BE TAMPERED WITH IN ANY FORM OF ADDITIONAL WRITING. WE THEREFORE ASSUMED THAT BY ATTACHING OUR LETTER OF JUNE 20, 1949 THAT ANY ACCEPTANCE OF OUR CONTRACT WITH ATTACHED LETTER WOULD AUTOMATICALLY SUPPORT OUR TERMS PLUS YOUR TERMS OF CONTRACT.' THE CONTRACTING OFFICER IN HIS MEMORANDUM STATED IN EFFECT THAT IT WAS HIS BELIEF, AT THE TIME OF THE EXECUTION OF THE CONTRACT, THAT THE EXPLANATORY LETTER SUBMITTED BY THE CONTRACTOR IN CONNECTION WITH ITS BID WAS SUFFICIENT TO PROVIDE FOR FREIGHT AND MINE INCREASES AND THAT HE, THEREFORE, SIGNED THE CONTRACT WITHOUT INCORPORATING THEREIN ANY PROVISION WITH RESPECT TO SUCH INCREASES; THAT IT WAS THE MUTUAL UNDERSTANDING OF BOTH THE CONTRACTOR AND THE CONTRACTING OFFICER, AT THE TIME THE CONTRACT WAS EXECUTED, THAT THE PRICES QUOTED BY THE CONTRACTOR WERE SUBJECT TO MINE AND FREIGHT INCREASES AND SUBSEQUENT GOVERNMENT RESTRICTIONS; THAT THE CONTRACTOR'S BID, AS QUALIFIED BY ITS LETTER OF JUNE 20, 1949, WAS ACCEPTED BECAUSE IT WAS BELIEVED AT THE TIME TO BE IN THE BEST INTEREST OF THE GOVERNMENT; AND THAT "IN SPITE OF ALL INCREASES," THE GOVERNMENT ACTUALLY DID SAVE MONEY BY THE ACCEPTANCE OF THE BID. ACCORDINGLY, THE CONTRACTING OFFICER RECOMMENDED PAYMENT OF THE CONTRACTOR'S CLAIM.

WHERE, BY REASON OF A MUTUAL MISTAKE IN OMITTING FROM A CONTRACT A MATERIAL PROVISION ON WHICH THE PARTIES PREVIOUSLY HAD AGREED, THE CONTRACT, AS REDUCED TO WRITING, DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, SUCH MISTAKE IS GROUND FOR REFORMING THE WRITTEN INSTRUMENT IF IT CAN BE ESTABLISHED WHAT THE CONTRACT ACTUALLY WAS OR WOULD HAVE BEEN BUT FOR THE MISTAKE. 26 COMP. GEN. 899; 20 COMP. GEN. 533, AND CASES THERE CITED. IT NOW APPEARS TO BE CLEARLY ESTABLISHED THAT IT WAS THE INTENTION OF THE PARTIES, IN THE EVENT OF MINE OR FREIGHT INCREASES, TO PROVIDE FOR AN ADJUSTMENT OF THE PRICES STIPULATED IN THE CONTRACT. VIEW THEREOF AND SINCE SUCH A PROVISION BY MUTUAL MISTAKE WAS OMITTED FROM THE CONTRACT, IT IS OBVIOUS THAT THE CONTRACT, AS EXECUTED, DOES NOT CONFORM TO THE REAL INTENTION OF THE PARTIES. ACCORDINGLY, THE CONTRACT MAY BE VIEWED IN THE LIGHT OF THE TRUE UNDERSTANDING AND AGREEMENT OF THE PARTIES, AND YOU ARE ADVISED THAT THE VOUCHER, WHICH TOGETHER WITH SUPPORTING PAPERS IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT, IF OTHERWISE CORRECT.