B-162551, OCT. 26, 1967

B-162551, OCT. 26, 1967

CONTRACTS - INCREASED COSTS - BOND INCREASE DECISION TO R-K CONSTRUCTION CO. RE REQUEST THAT GAO ADVISE CONTRACTOR'S SURETY THAT ADDITIONAL BOND COVERAGE WAS NOT REQUIRED SO AS TO BE REIMBURSED FOR ADDITIONAL PREMIUM. SINCE CONTRACTING OFFICER DID NOT REQUIRE ADDITIONAL BOND COVERAGE WHEN CONTRACT PRICE WAS INCREASED AND SURETY WHO COLLECTED AN ADDITIONAL BOND PREMIUM IS AWARE OF FACTS OF CLAIM NO PURPOSE WOULD BE SERVED BY GAO COMMUNICATION WITH SURETY. HOWEVER, CONTRACTOR MAY FURNISH SURETY WITH COPY OF GAO LETTER.

TO MR. RAY KLEINSCHMIDT:

IN LETTER OF OCTOBER 14, 1967, YOU ACKNOWLEDGE RECEIPT OF OUR LETTER B- 162551 OF OCTOBER 9, 1967, AND REQUEST THAT OUR OFFICE ADVISE YOUR SURETY COMPANY THAT ADDITIONAL CONTRACT BOND COVERAGE WAS NOT REQUIRED FOR CONTRACT T17CG-1328 IN ORDER THAT YOU MAY BE REIMBURSED BY THE SURETY FOR THE ADDITIONAL PREMIUM YOU PAID ON ACCOUNT OF AN INCREASE IN THE CONTRACT PRICE.

HOWEVER, THE RECORD BEFORE THIS OFFICE SHOWS THAT IT IS THE PRACTICE OF THE SURETY COMPANY TO COLLECT AN ADDITIONAL BOND PREMIUM WHENEVER THE CONTRACT PRICE IS INCREASED EVEN THOUGH THE PENAL AMOUNT OF THE BONDS IS NOT INCREASED.

THEREFORE, SINCE THE SURETY COMPANY IS FULLY AWARE OF THE CIRCUMSTANCES OF YOUR CLAIM WE SEE NO PURPOSE IN COMMUNICATING WITH THE COMPANY. HOWEVER, YOU ARE, OF COURSE, FREE TO FURNISH TO THE SURETY COMPANY A COPY OF OUR LETTER OF OCTOBER 9 WHICH NOT ONLY RECITES THE BASIS OF YOUR CLAIM AND THE FACT THAT THE CONTRACTING OFFICER DID NOT REQUIRE AN ADDITIONAL BOND COVERING THE INCREASED PRICE OF THE CONTRACT BECAUSE OF THE SATISFACTORY PERFORMANCE OF THE CONTRACT, BUT ALSO THE PRINCIPLE OF LAW APPLICABLE TO YOUR CLAIM.