B-157443, AUG. 16, 1965

B-157443, AUG. 16, 1965

TO THE HONORABLE DAVID E. BELL, ADMINISTRATOR, AGENCY FOR INTERNATIONAL DEVELOPMENT:

REFERENCE IS MADE TO A LETTER DATED AUGUST 10, 1965, AND ENCLOSURES, FROM HERMAN KLEINE, ACTING ASSISTANT ADMINISTRATOR FOR AFRICA, REQUESTING OUR DECISION ON THE LEGALITY OF A PROPOSED REFORMATION OF AGENCY FOR INTERNATIONAL DEVELOPMENT CONTRACT NO. 669-104, EXECUTED MAY 16, 1963, WITH THE WALSH CONSTRUCTION COMPANY, INCORPORATED, FOR THE CONSTRUCTION OF FACILITIES AT THE CUTTINGTON COLLEGE, ZORZOR INSTITUTE, AND BOOKER WASHINGTON INSTITUTE IN LIBERIA. THE REFORMATION PROPOSED WOULD INCREASE THE CONTRACT PRICE BY $34,000.

IT IS REPORTED THAT WALSH WAS THE ONLY BIDDER UNDER THE ORIGINAL SOLICITATION FOR BIDS FOR THIS CONSTRUCTION WORK, BUT ITS BID IN THE AMOUNT OF $1,259,644, WAS NOT ACCEPTED AS SUBMITTED BECAUSE IT EXCEEDED THE PROJECT COST ESTIMATE BY SOME 20 PERCENT.

IN AN EFFORT TO DECREASE THE COST OF CONSTRUCTING THE DESIRED FACILITIES TO AN ACCEPTABLE FIGURE, NEGOTIATIONS WERE ENTERED INTO, CONDUCTED LARGELY BY THE PROJECT ARCHITECTURE AND ENGINEERING FIRMS, WITH THE PARTICIPATION OF MR. JOHN A. HACKETT, USAID PUBLIC WORKS OFFICER, AND AN ACCEPTABLE REDUCTION IN THE COST OF THE PROJECT WAS AGREED UPON, WHICH WAS REFLECTED IN A MODIFIED PROPOSAL FROM THE WALSH FIRM READING IN PART AS FOLLOWS:

"THIS BID IS OFFERED AS PER THE ORIGINAL PLANS AND SPECIFICATIONS WITH THE SOLE EXCLUSION BEING THE ELECTRICAL SITE WORK AT CUTTINGTON COLLEGE WHICH WILL BE DONE BY OTHERS.

CHART

ZORZOR INSTITUTE ....................................... $ 287,325.

CUTTINGTON COLLEGE ..................................... 190,462.

BOOKER WASHINGTON INSTITUTE ............................ 628,513.

$1,106,300.-

PURSUANT TO A REQUIREMENT OF THE ORIGINAL INVITATION, FOR THE STIPULATION OF A REDUCTION IN PRICE IF THE REQUIREMENT FOR A DIRECTOR'S HOUSE AT THE ZORZOR INSTITUTE WAS DELETED, WALSH HAD OFFERED IN ITS ORIGINAL BID A REDUCTION OF $34,000. IN THE NEGOTIATIONS WHICH RESULTED IN THE MODIFIED PROPOSAL IT HAD BEEN AGREED THAT THE HOUSE WOULD BE DELETED AND THE REVISED PRICE ARRIVED AT IN THE NEGOTIATIONS DID NOT INCLUDE IT. HOWEVER, IN PREPARING THE CONTRACT WHICH WAS EXECUTED UPON ACCEPTANCE OF THE REVISED PROPOSAL, THE CONTRACTING OFFICER, WHO HAD NOT PARTICIPATED IN THE NEGOTIATIONS LEADING TO THE CONTRACT, NOT KNOWING THAT THE COST OF THE DIRECTOR'S HOUSE HAD ALREADY BEEN DEDUCTED, INSERTED A PROVISION DELETING THE HOUSE AND REDUCING THE AGREED PRICE OF $287,325 FOR THE ZORZOR WORK BY $34,000. THE CONTRACT WAS THEN EXECUTED, INCLUDING ONLY THE AMOUNT OF $253,325 THEREFOR. SHORTLY THEREAFTER, THE MISTAKE WAS DISCOVERED BY WALSH AND CALLED TO THE ATTENTION OF THE COGNIZANT AID OFFICIALS, WHO HAVE CONFIRMED THE FACTS AS RELATED ABOVE.

IN DETERMINING THE VALIDITY AND ENFORCEABILITY OF A CONTRACT, IT IS THE MUTUAL INTENT OF THE PARTIES WHICH PRIMARILY GOVERNS, AND FOR THIS REASON SUBSTANTIAL AGREEMENT IN ALL MATERIAL RESPECTS MUST BE SHOWN. WHERE, BY REASON OF A MUTUAL MISTAKE A MATERIAL PROVISION ON WHICH THE PARTIES HAVE PREVIOUSLY AGREED IS INCORRECTLY STATED IN A CONTRACT, SO THAT THE CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, SUCH MISTAKE IS GROUND FOR REFORMING THE CONTRACT IF IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS. SEE 30 COMP. GEN. 220, AND CASES CITED.

SINCE IT CLEARLY APPEARS BOTH FROM THE WORKSHEETS OF THE CONTRACTOR WHICH DETAILED THE REDUCTIONS REFLECTED IN THE MODIFIED OFFER AND FROM THE STATEMENT OF THE GOVERNMENT OFFICER WHO PARTICIPATED IN THE NEGOTIATIONS THAT THE SUBJECT CONTRACT DID NOT EMBODY THE ACTUAL AGREEMENT OF THE PARTIES WITH RESPECT TO PRICE, REFORMATION TO INCREASE THE CONTRACT PRICE BY $34,000 IS JUSTIFIED UNDER THE ABOVE PRINCIPLES. ACCORDINGLY, OUR OFFICE WILL NOT OBJECT TO EXECUTION OF AN AMENDMENT SO MODIFYING THE CONTRACT.