B-145757, JUN. 15, 1961

B-145757, JUN. 15, 1961

TO THE IVEY OIL COMPANY:

REFERENCE IS MADE TO YOUR ATTORNEYS' LETTER OF APRIL 25, 1961, REQUESTING REVIEW OF GENERAL ACCOUNTING OFFICE SETTLEMENT DATED DECEMBER 15, 1960, WHICH CERTIFIED FOR PAYMENT A VOUCHER IN THE AMOUNT OF $1,065.59, THAT BEING A PORTION OF YOUR CLAIM IN THE AMOUNT OF $4,262.37 REPRESENTING AN AMOUNT ALLEGED TO BE DUE AS ADDITIONAL PAYMENT UNDER ITEM NO. 281 OF CONTRACT NO. ASP-22671 DATED NOVEMBER 3, 1959.

UNDER THE TERMS OF THE CONTRACT, YOU AGREED TO FURNISH TO THE MILITARY PETROLEUM SUPPLY AGENCY THREE ITEMS OF FUEL OIL DELIVERED AT FORT LEONARD WOOD, MISSOURI, FOR THE PERIOD DECEMBER 1, 1959, THROUGH MAY 31, 1960. ITEM NO. 281 COVERED 1,665,000 GALLONS OF NO. 2 FUEL OIL AT A BASE PRICE OF 10.48 CENTS PER GALLON. THE CONTRACT PROVIDED FOR ESCALATION OF PRICES UNDER CONDITIONS SPECIFICALLY SET OUT THEREIN. THE REFERENCE PRICE TO BE USED IN DETERMINING THE AMOUNT OF PRICE ESCALATION WAS STATED TO BE THE LOW PRICE PUBLISHED IN THE WALL STREET JOURNAL, WHICH PRICE WAS 8.5 CENTS PER GALLON SEPTEMBER 11, 1959, THE DATE OF THE BID ON WHICH THE CONTRACT WAS BASED. PART B OF SECTION 1A (PRICE ESCALATION) PROVIDED IN PART:

"/A)THE CONTRACTOR SHALL NOTIFY THE CONTRACTING OFFICER, MILITARY PETROLEUM SUPPLY AGENCY, WASHINGTON 25, D.C., OF ANY CHANGE IN THE REFERENCE PRICE BY TELEGRAM DATED (PREFERABLY CONFIRMED PROMPTLY BY LETTER), REGISTERED LETTER MAILED, OR UNREGISTERED LETTER RECEIVED, WITHIN SEVEN (7) DAYS FROM THE DATE THEREOF.

"/I) IN THE EVENT THE CONTRACTOR FAILS SO TO NOTIFY THE CONTRACTING OFFICER OF ANY INCREASE IN REFERENCE PRICE, SUCH INCREASE SHALL APPLY ONLY TO DELIVERIES MADE ON AND AFTER THE DATE OF RECEIPT BY THE CONTRACTING OFFICER OF A WRITTEN NOTIFICATION FROM THE CONTRACTOR OF SUCH INCREASE.

"/II) IN THE EVENT THE CONTRACTOR FAILS TO GIVE NOTICE OF A DECREASE IN THE REFERENCE PRICE, SUCH DECREASE SHALL APPLY TO ALL DELIVERIES MADE ON OR SUBSEQUENT TO THE DATE OF SUCH DECREASE.

"/III) AN INCREASE OR DECREASE IN ANY REFERENCE PRICE PUBLISHED IN A TRADE PRICE SERVICE OR IN A COMMERCIAL JOURNAL SHALL APPLY ONLY TO DELIVERIES MADE ON AND AFTER THE PUBLICATION DATE OF SUCH TRADE PRICE SERVICE OR COMMERCIAL JOURNAL.

"/IV) THE CONTRACTING OFFICER WILL ISSUE A CHANGE NOTICE TO THIS CONTRACT TO REFLECT ANY CHANGE PURSUANT TO THIS SECTION I.'

YOUR COMPANY WAS ALSO THE CONTRACTOR UNDER CONTRACT NO. ASP-21362 DATED MAY 13, 1959, PROVIDING FOR THE FURNISHING AND DELIVERY OF THREE ITEMS OF SIMILAR PRODUCTS TO FORT LEONARD WOOD DURING THE 6-MONTH PERIOD PRIOR TO DECEMBER 1, 1959, AND PROVIDING THAT PRICES UNDER THAT CONTRACT WERE TO ESCALATE WITH THE LOW PRICE PUBLISHED IN THE WALL STREET JOURNAL--- THE SAME REFERENCE PRICE AS THAT SUBSEQUENTLY SPECIFIED UNDER CONTRACT NO. ASP -22671. BY A TELEGRAM DATED NOVEMBER 18, 1959, REFERRING SPECIFICALLY TO IFB-59-113 ON WHICH CONTRACT NO. ASP-21362 WAS BASED, YOU GAVE NOTICE THAT THE REFERENCE PRICE ON ITEM NO. 282 HAD ADVANCED ONE-FOURTH CENT ON OCTOBER 13, 1959, AND THAT THE REFERENCE PRICES ON ITEMS NOS. 281 (DIESEL GRADE DF-2), 282 (NO. 1 FUEL) AND 283 (FUEL OIL NO. 2) HAD ADVANCED ONE- FOURTH CENT ON NOVEMBER 10, 1959.

IT APPEARS THAT THE FIRST NOTICE WHICH YOU GAVE REFERRING SPECIFICALLY TO CONTRACT NO. ASP-22671 WAS BY A TELEGRAM DATED JANUARY 7, 1960, STATING THAT THE REFERENCE PRICES ON ITEMS NOS. 279 (DIESEL GRADE DF-2) AND 281 (FUEL OIL NO. 2) ADVANCED ONE-FOURTH CENT NOVEMBER 6, ONE-FOURTH CENT NOVEMBER 18, AND ONE-HALF CENT DECEMBER 1, 1959.

SINCE NOTICE WAS NOT GIVEN WITHIN SEVEN DAYS FROM THE DATE OF THE ADVANCES, CHANGE NO. 2 TO THE CONTRACT WAS ISSUED UNDER DATE OF JANUARY 28, 1960, INCREASING THE UNIT PRICES ON ITEMS NOS. 279 AND 281 BY ONE CENT PER GALLON EFFECTIVE JANUARY 8, 1960--- THE DATE OF RECEIPT OF THE TELEGRAM.

IN YOUR LETTER OF JANUARY 23, 1960, TO THE PETROLEUM SUPPLY AGENCY, YOU REQUESTED AN ADDITIONAL PAYMENT, WHICH REQUEST WAS DENIED. UNDER DATE OF MAY 20, 1960, YOU SUBMITTED TO OUR OFFICE YOUR CLAIM IN THE AMOUNT OF $4,262.37. BY THE REFERRED-TO SETTLEMENT OF DECEMBER 15, 1960, THE CLAIMS DIVISION OF OUR OFFICE ALLOWED A PORTION OF YOUR CLAIM IN THE AMOUNT OF $1,065.59 ON THE BASIS THAT THE PRICE INCREASE OF ONE-FOURTH CENT PER GALLON ON ITEM NO. 283 OF CONTRACT NO. ASP 21362 REPORTED IN YOUR TELEGRAM OF NOVEMBER 18, 1959, COULD BE REGARDED AS APPLICABLE ALSO TO ITEM NO. 281 OF CONTRACT NO. ASP-22671, SINCE BOTH ITEMS COVERED FUEL OIL NO. 2.

IN YOUR ATTORNEYS' LETTER OF APRIL 25, 1961, ALLOWANCE OF THE ADDITIONAL AMOUNT OF $3,196.78 IS REQUESTED, IT BEING CONTENDED THAT YOUR TELEGRAM OF NOVEMBER 18, 1959, WAS ADEQUATE NOTICE AS TO TWO ADVANCES OF ONE-FOURTH CENT EACH IN THE REFERENCE PRICE AND THAT PUBLICATION IN THE WALL STREET JOURNAL OF APPLICABLE PRICE ADVANCES WAS ADEQUATE NOTICE AS TO ALL ADVANCES.

ESCALATION CLAUSES SUCH AS THAT CONTAINED IN THE SUBJECT CONTRACT HAVE CONSISTENTLY BEEN HELD BY OUR OFFICE TO ESTABLISH CONDITIONS PRECEDENT TO THE CONSIDERATION OF CLAIMS ASSERTED THEREUNDER. SEE 22 COMP. GEN. 13; 17 ID. 744. SUCH CONDITIONS MUST BE EXACTLY FULFILLED OR NO LIABILITY CAN ARISE ON THE PROMISE WHICH THE CONDITIONS QUALIFY. SHEKETOFF V. PREVEDINE, (CONN.), 51 A.2D 922; 171 A.L.R. 1009. PERFORMANCE OF A CONDITION MAY NOT BE EXCUSED EVEN THOUGH PERFORMANCE BECOMES IMPOSSIBLE BECAUSE OF AN ACT OF GOD OR ANY OTHER REASON AND EVEN THOUGH SUCH IMPOSSIBILITY AROSE WITHOUT ANY FAULT ON THE PART OF THE PARTY REQUIRED TO PERFORM THE CONDITION. MIZELL V. BURNETT, (N.C.), 69 AM.DEC. 744; OAKLEY V. MORTON, (N.Y.), 62 AM.DEC. 49; 12 AM.JUR. 884. IN THE ABSENCE OF THE PRESCRIBED NOTICE, REGARDLESS OF THE REASON THEREFOR, THE CONTRACT VESTED IN THE GOVERNMENT THE RIGHT TO OBTAIN THE FUEL OIL AT THE PRICE FIXED BY THE CONTRACT OR AS LAST MODIFIED IN ACCORDANCE WITH THE ESCALATION CONDITIONS. NO OFFICER OR AGENT OF THE GOVERNMENT HAS THE AUTHORITY TO WAIVE SUCH VESTED RIGHT WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT. BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.CL. 584; PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 CT.CL. 327.

IT SEEMS CLEAR THAT YOUR TELEGRAM OF NOVEMBER 18, 1959, CANNOT PROPERLY BE REGARDED AS NOTICE OF TWO ADVANCES IN THE PRICE OF NO. 2 FUEL OIL, SINCE ONE OF THE ADVANCES REPORTED APPLIED ONLY TO ITEM NO. 282 (NO. 1 FUEL) AND NOT TO NO. 2 FUEL OIL. MOREOVER, THAT ADVANCE WAS REPORTED AS EFFECTIVE OCTOBER 13, 1959--- PRIOR TO THE DATE OF CONTRACT NO. ASP- 22671. THE OTHER ADVANCE REPORTED IN THE TELEGRAM OF NOVEMBER 18, 1959, HAS BEEN GIVEN EFFECT IN THE GENERAL ACCOUNTING OFFICE SETTLEMENT OF DECEMBER 15, 1960, ALLOWING A PRICE INCREASE OF ONE-FOURTH CENT PER GALLON ON NO. 2 FUEL OIL COVERED BY ITEM NO. 281 OF CONTRACT NO. ASP-22671.

OBVIOUSLY, HAVING REGARD FOR THE ABOVE-QUOTED PROVISIONS OF THE CONTRACT AND THE AUTHORITIES ABOVE CITED, YOUR TELEGRAM OF JANUARY 7, 1960, WAS TOO LATE TO SERVE AS THE BASIS OF ANY PRICE INCREASE PRIOR TO THE DATE OF RECEIPT OF THE TELEGRAM BY THE CONTRACTING OFFICER. FURTHERMORE, THE PUBLICATION OF A PRICE INCREASE IN THE WALL STREET JOURNAL IS NOT IN ITSELF SUCH NOTICE TO THE CONTRACTING OFFICER AS TO SERVE AS THE BASIS FOR ANY INCREASE IN CONTRACT PRICE, IN VIEW OF THE CONTRACT PROVISIONS SPECIFICALLY REQUIRING THE CONTRACTOR TO GIVE THE CONTRACTING OFFICER NOTICE OF PRICE INCREASES.

FOR THE REASONS ABOVE SET FORTH, THERE IS NO LEGAL BASIS FOR ALLOWANCE OF ANY ADDITIONAL AMOUNT OF YOUR CLAIM AND THE SETTLEMENT OF DECEMBER 15, 1960, IS HEREBY SUSTAINED.