B-152287, SEP. 12, 1963

B-152287, SEP. 12, 1963

TO THE SECRETARY OF COMMERCE:

THIS REFERS TO A LETTER DATED AUGUST 15, 1963 (REFERENCE: 34-62), WITH ENCLOSURES, FROM THE BUREAU OF PUBLIC ROADS, REQUESTING OUR DECISION RELATIVE TO THE PROPOSED REFORMATION OF CONTRACT NO. CPR 11 8725, DATED APRIL 25, 1963, WITH THE J. E. GREINER COMPANY OF BALTIMORE, MARYLAND, FOR THE DEVELOPMENT OF A PLAN FOR AN INFORMATION AND DATA STORAGE AND RETRIEVAL SYSTEM FOR HIGHWAY CONSTRUCTION SPECIFICATIONS OF THE HIGHWAY DEPARTMENTS OF ALL THE STATES, THE DISTRICT OF COLUMBIA, PUERTO RICO, AND THE BUREAU OF PUBLIC ROADS.

THE RECORD SHOWS THAT THE CONTRACTOR, BY ITS PROPOSAL OF MARCH 22, 1963, OUTLINED THE PROPOSED WORK AS FOLLOWS:

"F. PROPOSED PROCEDURE

INASMUCH AS THE SCOPE OF THE SERVICES HEREIN DESCRIBED CANNOT BE DEFINED WITH SUFFICIENT PRECISION AT THE PRESENT TIME TO PERMIT AN ESTIMATE OF THE FINAL COST OF THE PROJECT, IT IS PROPOSED THAT THE ENGINEERING SERVICES BE DIVIDED INTO TWO PHASES AS FOLLOWS:

"PHASE I: THIS PHASE WILL COVER ALL ENGINEERING SERVICES REQUIRED FOR A THOROUGH SYSTEM ANALYSIS AND TO DEVELOP IN DETAIL THE PROCEDURES TO BE FOLLOWED IN ORDER TO ATTAIN THE PROJECT OBJECTIVES. INCLUDED IN THE PLANNING WILL BE THE DEVELOPMENT OF THE CLASSIFICATION SYSTEM, THE THESAURUS AND THE SYSTEM FOR STORAGE AND RETRIEVAL OF INFORMATION AND DATA BY MECHANIZED SYSTEMS AND THE METHODS OF ANALYSIS TO BE FOLLOWED IN THE CASE OF EACH ELEMENT OF THE PROJECT AS DESCRIBED HEREIN. IN ADDITION TO THE ABOVE, PHASE I SHALL INCLUDE THE WORK TO BE PERFORMED UNDER C-5-/B).

"THE BUREAU OF PUBLIC ROADS WILL BE KEPT FULLY INFORMED AT ALL TIMES OF THE DEVELOPMENT OF THE PHASE I STUDIES TO INSURE THE ESTABLISHMENT OF A PROGRAM WHICH WILL SATISFY THE BUREAU'S REQUIREMENTS.

"PHASE II: THE PRODUCT OF THE ENGINEERING SERVICES DEVELOPED DURING THE PROGRESS OF PHASE I IS ESSENTIAL AND NECESSARILY PRECEDENTIAL TO THE ORDERLY ESTABLISHMENT OF PROCEDURES AND DESCRIPTION OF OPERATION FOR PHASE II. THIS PHASE WILL COVER ALL ENGINEERING SERVICES REQUIRED TO DEVELOP THE OPERATIVE SYSTEMS, COMPARATIVE ANALYSIS, REPORTS, ETC., AS ESTABLISHED IN PHASE I.'

BY LETTER OF APRIL 23, 1963, THE BUREAU OF PUBLIC ROADS TRANSMITTED THE CONTRACT TO THE CONTRACTOR FOR SIGNATURE. THE CONTRACT PROVIDED FOR A FIXED FEE PAYMENT OF $100,000; AND, AS STATED IN THE TRANSMITTAL LETTER OF APRIL 23, 1963, THE CONTRACT WAS INTENDED TO COVER THE FOLLOWING:

"THE EXECUTION OF THIS CONTRACT FOR PHASE I OF THE WORK IS NOT TO BE CONSTRUED IN ANY WAY AS A COMMITMENT BY US TO YOUR COMPANY FOR ANY FURTHER WORK TO BE DONE AS MENTIONED IN YOUR PROPOSAL OF MARCH 22, 1963.'

THIS INTENT WAS REITERATED IN A BUREAU OF PUBLIC ROADS OFFICE MEMORANDUM OF APRIL 26, 1963, PREPARED BY MR. ROBERT F. BAKER, DIRECTOR, OFFICE OF RESEARCH AND DEVELOPMENT, TO THE REGIONAL ENGINEERS.

IT IS REPORTED THAT IN DRAFTING THE CONTRACT, THE BUREAU INADVERTENTLY INTERMINGLED SOME OF THE ELEMENTS OF BOTH PHASE I AND PHASE II OF SECTION C (CONDUCT) OF THE CONTRACTOR'S PROPOSAL, AS CONTAINED IN ITS LETTER OF MARCH 22, 1963; AND THAT THIS MISTAKE WAS NOT DISCOVERED UNTIL AFTER WORK HAD BEGUN ON THE CONTRACT. THE BUREAU PROPOSES FOUR CHANGES (PROPOSED CHANGES A THROUGH D) TO CLAUSE C. CONDUCT OF THE CONTRACT. THE EFFECT OF PROPOSED CHANGES A, C AND D WOULD BE TO NARROW THE CONTRACTOR'S WORK TO THAT COVERED BY PHASE I, WHILE PROPOSED CHANGE B WOULD CLARIFY THE CONTRACTOR'S OBLIGATION TO DEVELOP A CLASSIFICATION SYSTEM WHICH WILL PROVIDE FOR APPROPRIATE INDEXING OF TERMS PROPERLY CATEGORIZED AND CROSS REFERENCED, RATHER THAN REQUIRING ONLY A LISTING OF SPECIFICATION ITEMS. NO CHANGE IN CONTRACT PRICE IS PROPOSED.

THE RULE OF LAW IS THAT WHERE, BY REASON OF MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE ACTUAL AGREEMENT WAS. ACKERLIND V. UNITED STATES, 240 U.S. 531; 39 COMP. GEN. 363, 365. THE PARTIES TO THIS CONTRACT INTENDED TO INCLUDE ONLY THE PHASE I WORK. BY INADVERTENCE, THE CONTRACT INCLUDED OTHER ELEMENTS OF WORK (PHASE II WORK) AND EXCLUDED CERTAIN PORTIONS OF THE PHASE I WORK. ACCORDINGLY, THE CONTRACT MAY BE REFORMED AS PROPOSED, TO REFLECT THE ACTUAL AGREEMENT OF THE PARTIES.

THE BUREAU ASKS IF IT IS REQUIRED TO REFER ALL CASES TO THIS OFFICE INVOLVING REQUESTS FOR CONTRACT REFORMATION. ADMINISTRATIVE OFFICERS OF THE GOVERNMENT ARE WITHOUT AUTHORITY TO REFORM CONTRACTS, AS REFORMATION OF CONTRACTS IS A JUDICIAL RATHER THAN AN ADMINISTRATIVE FUNCTION. SEE 20 COMP. GEN. 782, 785 AND THE CASES CITED. HOWEVER, SINCE THE GENERAL ACCOUNTING OFFICE HAS THE JURISDICTION TO MAKE FINAL SETTLEMENTS BINDING ON THE EXECUTIVE BRANCH, THE PROCEDURE HAS LONG BEEN FOR THIS OFFICE TO AUTHORIZE CONTRACT REFORMATION IF THE FACTS SO JUSTIFY, THEREBY SAVING THE COSTS AND DELAYS OF COURT LITIGATION. 15 COMP. GEN. 238, 240. ACCORDINGLY, ALL REQUESTS WITHIN YOUR DEPARTMENT FOR CONTRACT REFORMATION SHOULD BE REFERRED TO THIS OFFICE FOR SETTLEMENT.