B-160063, FEB. 10, 1967

B-160063: Feb 10, 1967

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COMPRESSED GAS COMPANY: REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 14. THE COST OF PROPANE GAS WAS INCREASED THREE CENTS PER GALLON BY CLAIMANT'S SUPPLIER. IN OCTOBER 1966 IT WAS INCREASED AGAIN. THE REQUEST WAS FORWARDED TO THE WASHINGTON OFFICES OF FPI FOR A DECISION IN THE MATTER. YOU WERE ADVISED THAT. INASMUCH AS THIS IS A FIRM FIXED PRICE CONTRACT WITH NO PROVISIONS FOR PRICE ESCALATION. THERE IS NO AUTHORITY TO MAKE AN UPWARD PRICE REVISION TO COVER ANY INCREASED COST TO THE CONTRACTOR. WHILE WE APPRECIATE THE FACT THAT YOU HAVE PERFORMED IN GOOD FAITH. THE CONTRACT AS PERFORMED WAS A VALID AND BINDING ONE. THERE IS NO LEGAL BASIS FOR US TO ALTER ITS TERMS AND CONDITIONS.

B-160063, FEB. 10, 1967

TO U.S. COMPRESSED GAS COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 14, 1966, SEEKING AN INCREASE OVER THE CONTRACT PRICE FOR THE SUPPLY OF PROPANE GAS TO FEDERAL PRISON INDUSTRIES, INCORPORATED (HEREAFTER FPI), LEWISBURG, PENNSYLVANIA, PURSUANT TO CONTRACT 14PI-3950.

THE ABOVE-MENTIONED CONTRACT PROVIDED FOR THE SALE AND DELIVERY OF APPROXIMATELY 95,000 GALLONS OF PROPANE GAS AT A UNIT PRICE OF $0.0948 PER GALLON FOR THE PERIOD JANUARY 1, 1966 THROUGH DECEMBER 31, 1966. ON JUNE 1, 1966, THE COST OF PROPANE GAS WAS INCREASED THREE CENTS PER GALLON BY CLAIMANT'S SUPPLIER; IN OCTOBER 1966 IT WAS INCREASED AGAIN, THIS TIME ONE -HALF CENT PER GALLON.

AS A RESULT OF THESE INCREASES, YOU REQUESTED FPI TO INCREASE THE CONTRACT PRICE SO THAT YOU MIGHT REALIZE A SMALL PROFIT RATHER THAN SUFFER A LOSS UNDER THE CONTRACT. THE REQUEST WAS FORWARDED TO THE WASHINGTON OFFICES OF FPI FOR A DECISION IN THE MATTER. BY LETTER OF JULY 21, 1966, YOU WERE ADVISED THAT, INASMUCH AS THIS IS A FIRM FIXED PRICE CONTRACT WITH NO PROVISIONS FOR PRICE ESCALATION, THERE IS NO AUTHORITY TO MAKE AN UPWARD PRICE REVISION TO COVER ANY INCREASED COST TO THE CONTRACTOR. SUBSEQUENTLY, ON SEPTEMBER 14, 1966, YOU MADE A SIMILAR REQUEST TO US BUT CONTINUED TO MAKE DELIVERIES AT THE CONTRACT PRICE.

WHILE WE APPRECIATE THE FACT THAT YOU HAVE PERFORMED IN GOOD FAITH, THE CONTRACT AS PERFORMED WAS A VALID AND BINDING ONE, AND THERE IS NO LEGAL BASIS FOR US TO ALTER ITS TERMS AND CONDITIONS.