B-168544, MAR 22, 1974

B-168544, MAR 22, 1974

1. TIMBER SALES CONTRACT MAY BE MODIFIED TO INCLUDE FORM 2400-6 CLAUSE SO AS TO POSTPONE RATE REDETERMINATION EFFECTIVE DATE, EVEN THOUGH CONTRACTOR'S REQUEST FOR RELIEF WAS DENIED AS UNTIMELY UNDER DISPUTES CLAUSE. 2.POSTPONEMENT OF UPWARD RATE REDETERMINATION FOR DAYS EQUAL TO DAYS LOST BECAUSE OF FORCE MAJEURE DELAYS IS NOT PROPER UNDER RELIEF CLAUSE OF TIMBER SALES CONTRACT FORM 2400-6 WHERE DAYS LOST WERE CAUSED BY ADMINISTRATIVE ACTION IN SUSPENDING WORK OPERATIONS AT SITE BECAUSE OF NONPAYMENTS BY PURCHASER.

TO STAR VALLEY LUMBER COMPANY:

NORTH COTTONWOOD TIMBER SALE CONTRACT (NO. 03-319) COVERING APPROXIMATELY 14,555,000 BOARD FEET OF TIMBER WAS AWARDED TO STAR VALLEY LUMBER COMPANY (STAR VALLEY) OF AFTON, WYOMING, ON JUNE 9, 1966. THUS FAR, THE PURCHASER'S TIMBER HARVESTING OPERATIONS HAVE BEEN INTERRUPTED ON TWO OCCASIONS BY FORCES BEYOND ITS CONTROL. THE FIRST INTERRUPTION WAS THE SUBJECT OF OUR DECISION B-168544 OF MARCH 12, 1970. THE PURCHASER HAD BEEN ORDERED BY THE FOREST SERVICE TO DELAY ITS HARVESTING OPERATIONS FOR A PERIOD OF 25 MONTHS (8-1/2 MONTHS HARVEST OPERATION TIME) WHILE A SEPARATE ROAD CONSTRUCTION CONTRACT WAS COMPLETED. IN THAT DECISION, WE INTERPRETED THE PROVISIONS OF THE CONTRACT - NAMELY, SECTIONS B8.22 AND B3.14 - TO REQUIRE THE PURCHASER TO PAY THE REDETERMINED STUMPAGE RATE OF $39.40 PER THOUSAND BOARD FEET, EFFECTIVE JULY 1, 1969, RATHER THAN ITS ORIGINAL BID RATE OF $1.79 PER THOUSAND BOARD FEET, FOR TIMBER CUT AND SCALED DURING ADDITIONAL LOGGING TIME GRANTED TO THE PURCHASER BECAUSE OF THE DELAY. SEE B-165984, FEBRUARY 7, 1969. IN ADDITION, WE CONCLUDED THAT THE PROPOSED MODIFICATION OF THE CONTRACT WOULD BE INAPPROPRIATE BECAUSE NO OFFICER OR AGENT OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY MONEY OR PROPERTY OF THE UNITED STATES EITHER DIRECTLY OR BY THE RELEASE OF VESTED CONTRACTUAL RIGHTS WITHOUT ADEQUATE CONSIDERATION. SEE 40 COMP. GEN. 309, 311 (1960).

STAR VALLEY HAS EXPERIENCED A SECOND FORCE MAJEURE DELAY. THIS INTERRUPTION WAS CAUSED BY A MUD SLIDE THAT CLOSED THE MAIN HAUL ROAD FROM JUNE 25, 1971, TO SEPTEMBER 19, 1972. THE REGIONAL FORESTER MADE HIS ANNUAL RATE REDETERMINATION ON MAY 31, 1972, ESTABLISHING THE STUMPAGE RATES TO BE PAID FROM JULY 1, 1972, TO JUNE 30, 1973, AT AN AVERAGE PRICE OF $22.62 PER THOUSAND BOARD FEET. ONCE AGAIN, THIS MARKED A SUBSTANTIAL INCREASE OVER THE PREVIOUS PERIOD AVERAGE RATE OF $2.79 PER THOUSAND BOARD FEET.

THE PURCHASER ADDRESSED AN APPEAL TO THE TIMBER CHIEF, BRIDGER NATIONAL FOREST, KEMMERER, WYOMING, BY LETTER OF JUNE 20, 1972. THE PURCHASER STATED THAT "IT IS OUR CONTENTION THAT SINCE WE HAVE BEEN AND ARE STILL PRECLUDED FROM WORKING THIS TIMBER SALE THROUGH AN ACT OF GOD THAT WE SHOULD BE ALLOWED TO OPERATE THE SALE FOR A PERIOD OF TIME EQUAL TO OUR FORCE MAJEURE TIME AT THE STUMPAGE RATE WHICH WOULD HAVE BEEN IN FORCE DURING THE TIME WE WERE PRECLUDED FROM OPERATION." THE REGIONAL FORESTER ADVISED THE PURCHASER BY LETTER OF JULY 14, 1972, THAT THE 1972-73 RATE REDETERMINATION HAD BECOME FINAL AND WAS NO LONGER SUBJECT TO APPEAL BECAUSE THE PURCHASER HAD FAILED TO FILE AN APPEAL OR A REQUEST FOR RECONSIDERATION WITH THE PROPER AGENCY WITHIN THE 30-DAY TIME LIMIT.

BY LETTER DATED AUGUST 1, 1972, THE REGIONAL FORESTER INFORMED THE PURCHASER THAT HE HAD NOT INTENDED TO DELEGATE AUTHORITY TO THE FOREST SUPERVISOR AND THAT FOREST SERVICE REGULATIONS GOVERNING APPEALS AND REQUESTS FOR RECONSIDERATION PRECLUDED FURTHER CONSIDERATION OF THE APPEAL. SUBSEQUENTLY, ON SEPTEMBER 11, 1972, STAR VALLEY ADVISED THE FOREST SUPERVISOR THAT HE DESIRED TO LOG THE SALE BUT WOULD CONTINUE TO SEEK RELIEF FROM THE 1972-73 RATE REDETERMINATION. BY SEPTEMBER 18, 1972, THE MUD SLIDE HAD BEEN CLEARED AND THE ROAD REPAIR WORK COMPLETED, PERMITTING THE PURCHASER TO RESUME LOGGING OPERATIONS ONCE AGAIN.

STAR VALLEY OPERATED IN THE SALE AREA DURING OCTOBER, NOVEMBER AND DECEMBER 1972. HOWEVER, WHEN THE PURCHASER WAS BILLED FOR THE TIMBER CUT AND SCALED DURING NOVEMBER AND DECEMBER 1972 - $49,900.13 AND $30,689.83 - THE PURCHASER ONLY TENDERED PAYMENTS IN THE AMOUNTS OF $3,062.43 AND $7,154.12 RESPECTIVELY. IT WAS CLAIMED THAT THESE AMOUNTS CONSTITUTED FULL PAYMENT AT THE RATES WHICH SHOULD HAVE BEEN IN EFFECT CONSIDERING THE MUD SLIDE INTERRUPTION.

THESE PAYMENTS WERE RETURNED TO STAR VALLEY BECAUSE THEY CONSTITUTED ONLY PARTIAL PAYMENTS OF THE AMOUNT DUE. DEMAND WAS ALSO MADE ON THE PURCHASER'S SURETY FOR THE AMOUNTS OWED. HOWEVER, ON THE ADVICE OF THE PURCHASER, THE SURETY REFUSED PAYMENT. FINALLY, ON JUNE 1, 1973, THE PURCHASER WAS NOTIFIED THAT ALL FALLING, SKIDDING AND HAULING OPERATIONS WERE SUSPENDED BECAUSE OF THE PURCHASER'S FAILURE TO COMPLY WITH SECTION B4.4 OF THE CONTRACT, PROVIDING THAT TIMBER OPERATIONS MAY BE SUSPENDED WHEN PAYMENT IS NOT RECEIVED WITHIN 15 DAYS OF REQUEST THEREFOR. STUMPAGE RATES WERE THEN REDETERMINED FOR THE PERIOD JULY 1, 1973, TO JUNE 30, 1974, INCREASING THE AVERAGE PRICE TO $93.93 PER THOUSAND BOARD FEET.

UPON REVIEW OF THE FILE, WE BELIEVE THAT THE CLAIM FOR ADJUSTMENT MAY BE SETTLED ADMINISTRATIVELY UNDER THE TERMS OF THE TIMBER SALES CONTRACT ITSELF.

BEGINNING IN 1972, A NEW STANDARD FORM TIMBER SALES CONTRACT, FORM 2400- 6, REPLACED THE STANDARD FORM CONTRACT UTILIZED IN THE NORTH COTTONWOOD TIMBER SALE, FORM 2400-5. SECTION B8.21 OF THIS NEW FORM - NOW IN GENERAL USE - PROVIDES THAT THE EFFECTIVE DATE OF A SCHEDULED RATE REDETERMINATION, INCREASING THE RATES, SHALL BE ADJUSTED BY THE NUMBER OF DAYS EQUAL TO THE DAYS LOST PRIOR TO THE RATE REDETERMINATION DATE, IF SUCH LOST DAYS ARE DUE TO CAUSES BEYOND THE PURCHASER'S CONTROL. THIS PROVISION WAS INTENDED TO PROVIDE RELIEF TO A PURCHASER IN CIRCUMSTANCES PRESENT HERE. HOWEVER, IN OUR VIEW, THE DELAYS REFERRED TO IN THIS PROVISION ARE THOSE WHICH PREVENTED TIMBER HARVESTING OPERATIONS AT THE SALE SITE BECAUSE OF FORCE MAJEURE EVENTS AT THE SITE. THE SUBJECT NORTH COTTONWOOD TIMBER SALE WAS MADE ON FORM 2400-5 WHICH DOES NOT CONTAIN SUCH A PROVISION. HOWEVER, THE SUBJECT CONTRACT ON FORM 2400-5 CONTAINS SECTION B8.31 WHICH PROVIDES:

"*** FOREST SERVICE AGREES THAT UPON REQUEST BY PURCHASER THIS CONTRACT SHALL BE MODIFIED TO PROVIDE FOR THE EXERCISE OF ANY AUTHORITY HEREAFTER GRANTED BY LAW, OR REGULATION OF THE SECRETARY OF AGRICULTURE IF SUCH AUTHORITY IS THEN GENERALLY BEING APPLIED TO FOREST SERVICE TIMBER SALE CONTRACTS. ANY OTHER CONTRACTUAL PROVISION IN GENERAL USE BY FOREST SERVICE, TOGETHER WITH COMPENSATING ADJUSTMENTS, MAY BE INSERTED HEREIN BY AGREEMENT."

THUS, WHEN THE 1972-73 AND 1973-74 RATE REDETERMINATIONS WERE MADE, SECTION B8.21 OF FORM 2400-6 COULD HAVE BEEN INCORPORATED INTO THE NORTH COTTONWOOD TIMBER SALE CONTRACT.

ALTHOUGH THE RECORD INDICATES THAT THE PARTIES WERE UNAWARE IN JUNE AND JULY 1972 THAT AN AVENUE OF RELIEF WAS AVAILABLE UNDER THE CONTRACT, WE BELIEVE THAT IT IS REASONABLE TO VIEW THE PURCHASER'S JUNE 20, 1972, REQUEST FOR RELIEF FROM THE RATE REDETERMINATIONS AS CLEARLY CONTEMPLATED BY SECTION B8.21 OF FORM 2400-6.

SINCE IT IS CONCEDED THAT, BUT FOR OVERSIGHT, SECTION B8.21 OF FORM 2400- 6 WOULD HAVE BEEN AVAILABLE TO PROVIDE RELIEF TO STAR VALLEY, THE CONTRACT MAY BE MODIFIED, PURSUANT TO SECTION B8.31, TO DELAY THE EFFECTIVE DATES OF THE 1972-73 AND 1973-74 RATE REDETERMINATIONS UNTIL JULY 1, 1974, AND JULY 1, 1975, RESPECTIVELY, TO ACCOUNT FOR TIME LOST THROUGH FORCE MAJEURE DELAYS AT THE SALE SITE PRIOR TO THE RATE REDETERMINATION DATES.

IN LIGHT OF THE LIMITATIONS IMPLICIT IN SECTION B8.21, WE CANNOT CONCUR IN THE RECOMMENDATION THAT THE EFFECTIVE DATE OF THE 1973-74 RATE REDETERMINATION BE DELAYED UNTIL JULY 1, 1976. THIS RECOMMENDATION RELATES TO DELAYS WHICH AROSE NOT FROM FORCE MAJEURE EVENTS AT THE SALE SITE, BUT FROM ACTIONS TAKEN BY THE FOREST SERVICE, UNDER SECTION B4.4 OF THE CONTRACT, IN SUSPENDING ALL OPERATIONS BY THE PURCHASER AT THE SITE DUE TO ITS FAILURE TO MAKE TIMELY CONTRACT PAYMENTS. SUCH DELAY INCIDENT TO AN ADMINISTRATIVE SUSPENSION OF OPERATIONS IS NOT, IN OUR OPINION, CONTEMPLATED BY THE RELIEF PROVISIONS OF SECTION B8.21 OF FORM 2400-6. THUS, WE DO NOT BELIEVE THAT THE EFFECTIVE DATE OF THE 1973-1974 RATE REDETERMINATION SHOULD BE DELAYED BEYOND JULY 1, 1975.