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B-148834, SEP. 13, 1965

B-148834 Sep 13, 1965
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THE GENERAL TIRE AND RUBBER COMPANY: REFERENCE IS MADE TO YOUR LETTER OF APRIL 19. THE OMISSION OF THE COST OF THE WOODEN BOXES FROM YOUR BID WAS THE SUBJECT OF A PRIOR DECISION OF OUR OFFICE. WHEREIN WE RULED THAT DESPITE CONTENTIONS BY YOUR COMPANY THAT IT HAD FAILED TO INCLUDE THE COST OF WOODEN BOXES IN THE BID UPON WHICH THE CONTRACT WAS BASED. THERE WAS NO BASIS FOR INCREASING THE CONTRACT PRICE BECAUSE OF THAT UNILATERAL ERROR. SINCE THE WOODEN BOXES HAVE BEEN ELIMINATED FROM THE CONTRACT. THE CONTRACTING OFFICER HAS DETERMINED THAT THE GOVERNMENT IS ENTITLED BY WAY OF AN EQUITABLE ADJUSTMENT TO A DEDUCTION FROM THE CONTRACT PRICE OF $165. THERE SHOULD NOT BE ANY REDUCTION IN THE CONTRACT PRICE SINCE YOUR COMPANY DID NOT INCLUDE ANYTHING FOR THE WOODEN BOXES IN THE BID UPON WHICH THE CONTRACT IS BASED.

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B-148834, SEP. 13, 1965

TO MR. M. A. MERRYMAN, MANAGER GOVERNMENT SALES, INDUSTRIAL PRODUCTS DIVISION, THE GENERAL TIRE AND RUBBER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 19, 1965 (ADDRESSED TO OUR OFFICE THROUGH THE CONTRACTING OFFICER AT EDGEWOOD ARSENAL) REQUESTING CANCELLATION OF THE $165,904.13 DEMAND MADE BY THE CONTRACTING OFFICER AS A RESULT OF THE ISSUANCE OF MODIFICATION 2 TO CONTRACT DA-30-070 CML-1578 COVERING THE SUPPLY OF CERTAIN GAS MASKS.

MODIFICATION 2 DELETED THE PROVISION IN THE CONTRACT REQUIRING THE GAS MASKS TO BE PACKAGED IN WOODED BOXES. THE OMISSION OF THE COST OF THE WOODEN BOXES FROM YOUR BID WAS THE SUBJECT OF A PRIOR DECISION OF OUR OFFICE, B-148834, MAY 28, 1962, WHEREIN WE RULED THAT DESPITE CONTENTIONS BY YOUR COMPANY THAT IT HAD FAILED TO INCLUDE THE COST OF WOODEN BOXES IN THE BID UPON WHICH THE CONTRACT WAS BASED, THERE WAS NO BASIS FOR INCREASING THE CONTRACT PRICE BECAUSE OF THAT UNILATERAL ERROR. NOW, SINCE THE WOODEN BOXES HAVE BEEN ELIMINATED FROM THE CONTRACT, THE CONTRACTING OFFICER HAS DETERMINED THAT THE GOVERNMENT IS ENTITLED BY WAY OF AN EQUITABLE ADJUSTMENT TO A DEDUCTION FROM THE CONTRACT PRICE OF $165,904.13, WHICH HE ESTIMATES TO BE THE FAIR MARKET VALUE OF THE BOXES ELIMINATED. YOU SUGGEST THAT, AS A MATTER OF EQUITABLE ADJUSTMENT, THERE SHOULD NOT BE ANY REDUCTION IN THE CONTRACT PRICE SINCE YOUR COMPANY DID NOT INCLUDE ANYTHING FOR THE WOODEN BOXES IN THE BID UPON WHICH THE CONTRACT IS BASED.

THE "CHANGES" ARTICLE IN THE CONTRACT PROVIDES FOR AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE WHENEVER THERE IS AN INCREASE OR DECREASE IN THE COST OF ANY PART OF THE WORK UNDER THE CONTRACT.

THERE HAS BEEN CONSIDERED A CASE SIMILAR TO THE IMMEDIATE ONE IN S. N. NIELSEN COMPANY V. UNITED STATES, 141 CT.CL. 793. IN THE CITED CASE, A FEW DAYS AFTER THE AWARD OF A CONTRACT REQUIRING THE INSTALLATION OF ELECTRIC CABLE IN UNDERGROUND DUCTS, THE CONTRACTING OFFICER ISSUED A CHANGE ORDER ELIMINATING THE DUCTS FROM THE WORK. AS IN THE IMMEDIATE CONTRACT, THE ELECTRICAL CONTRACT CONTAINED AN EQUITABLE ADJUSTMENT CLAUSE. TO ARRIVE AT AN APPROPRIATE ADJUSTMENT IN THE CONTRACT PRICE, THE CONTRACTING OFFICER CONSIDERED THE ACTUAL VALUE OF THE WORK AS ORIGINALLY CONTRACTED AND THE ACTUAL VALUE OF THE WORK AS CHANGED AND DEDUCTED THE DIFFERENCE FROM THE ORIGINAL CONTRACT PRICE. THE CONTRACTOR, HOWEVER, CONTENDED THAT IT MADE AN ERROR IN ITS BID UPON WHICH THE CONTRACT WAS BASED IN THAT IT HAD INCLUDED NOTHING IN ITS BID FOR MATERIALS AND IT THEREFORE SUGGESTED THAT THE CONTRACTING OFFICER SHOULD HAVE TAKEN INTO CONSIDERATION THE SUM IT HAD ACTUALLY UTILIZED IN ARRIVING AT ITS BID PRICE SO THAT THE DIFFERENCE DEDUCTED FROM THE CONTRACT PRICE WOULD NOT BE AS MUCH AS THE CONTRACTING OFFICER FIGURED. THE COURT DENIED THE CONTRACTOR'S CONTENTION AND HELD THAT THE FIGURE THE CONTRACTOR HAD UTILIZED IN ITS BID WAS OF NO SIGNIFICANCE. THE COURT SAID THAT THE ERRONEOUS FIGURE HAS NO RELATION TO THE ACTUAL COST AND THE CONTRACTOR IS NOT ENTITLED TO RELY UPON IT IN AN EQUITABLE ADJUSTMENT. THE COURT INDICATED FURTHER THAT THE CONTRACTOR COULD NOT ATTEMPT TO SEEK THROUGH THE EQUITABLE ADJUSTMENT PROVISION THE REFORMATION IT COULD NOT OTHERWISE OBTAIN FOR ITS UNILATERAL ERROR IN BID.

IN VIEW OF THE DECISION OF THE COURT OF CLAIMS IN THE FOREGOING CASE, IT DOES NOT APPEAR THAT THE CONTRACTING OFFICER'S DEMAND IN THE IMMEDIATE CASE IS INAPPROPRIATE. ACCORDINGLY, YOUR REQUEST IS DENIED.

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