B-163065, JAN. 19, 1968

B-163065, JAN. 19, 1968

CONTRACTS - MISTAKES - REFORMATION DECISION TO SECRETARY OF AGRICULTURE AUTHORIZING REFORMATION OF FOUR TIMBER SALE CONTRACTS FOR SALE OF TIMBER IN NICOLET NATIONAL FOREST, RHINELANDER, WISCONSIN. ALTHOUGH ERROR RESULTING FROM COMPUTOR MISTAKE IN ESTIMATING CORRECT VOLUMES OF TIMBER FOR SALE IS NOT MUTUAL MISTAKE TO LEGALLY JUSTIFY REFORMATION, IN VIEW OF UNIQUE CIRCUMSTANCES AND RELATIVELY SMALL AMOUNTS INVOLVED NO OBJECTION TO REFORMATION IN THESE CASES WILL BE MADE.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 6, 1967, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY, REQUESTING OUR DECISION WHETHER, UNDER THE CIRCUMSTANCES RELATED IN THE LETTER, THE ACTION OF THE UNITED STATES FOREST SERVICE IN REFORMING FOUR TIMBER SALE CONTRACTS COVERING THE SALE OF TIMBER IN THE NICOLET NATIONAL FOREST, RHINELANDER, WISCONSIN, WAS PROPER.

THE NAMES OF THE PURCHASERS AND THE AMOUNTS INVOLVED ARE SHOWN IN THE LETTER TO BE AS FOLLOWS:

LUMP SUM PAYMENT FOR TIMBER

DATE OF ORIGINAL MODIFIED

CONTRACT CONTRACT CONTRACT

BRUCE ISON 1/25/65 $ 3,277.00 $ 3,164.20

LEONARD HESS 2/17/65 3,980.50 3,536.50

*LYLE PALMER 2/1/65 13,098.00 11,564.93

LYLE PALMER 5/10/65 13,460.00 12,799.93

$33,815.50 $31,065.56

* PLUS $1,290.35 OF PULPWOOD ADDED TO CONTRACT NO. 06-295, NOT

INVOLVED IN ERROR.

THE RECORD INDICATES THAT EACH OF THE SALES WAS MADE AS A "LUMPSUM" SALE, WHEREBY THE BIDDER WAS INVITED TO BID A TOTAL VALUE RATHER THAN A UNIT PRICE BASED ON BOARD FEET OR OTHER UNIT OF MEASURE; THAT THE METHOD OF DETERMINING THE BOARD FEET FOR APPRAISAL AND DETERMINING MINIMUM ACCEPTABLE PRICES FOR ADVERTISING THE TIMBER FOR SALE WAS BY MEASUREMENT OF EACH TREE IN ADVANCE OF ADVERTISING; AND THAT THE SALE CONTRACT WAS THEN DRAWN UP ON THE BASIS OF THE TOTAL NUMBER OF TREES BY SPECIES, WITH NO GUARANTEE OF VOLUME OR THAT THE ESTIMATED NUMBER WAS MORE OR LESS THAN SHOWN. FOLLOWING THE ACTUAL ADVANCE TREE MEASUREMENT, EACH TREE WAS MARKED FOR CUTTING BEFORE ADVERTISING AND THE MERCHANTABLE VOLUME OF EACH TREE WAS DETERMINED FROM VOLUME TABLES APPROVED FOR USE IN THE AREA BY THE FOREST SERVICE WITH ADJUSTMENTS FOR DEFECT, NORMAL BREAKAGE, UNMERCHANTABLE TOPS AND VARIATIONS IN TREE FORM AND HEIGHT.

IT IS REPORTED THAT VOLUMES ARE DETERMINED BY USE OF A COMPUTER PROGRAM USING A PREPARED WIRED PROGRAM PANEL IN THE MACHINE AND THAT JUST PRIOR TO ADVERTISING THE TREES COVERED BY THE CONTRACTS IN QUESTION, THE FOREST SERVICE, REGION 9, ACQUIRED A NEW UNIVAC 1004 AND PREPARED A PROGRAM PANEL FOR THE NEW MACHINE WHICH WAS "DEBUGGED" AND CHECKED PROPERLY. IT ALSO IS REPORTED THAT UNKNOWN TO THE MACHINE OPERATORS, AFTER DEBUGGING AND CHECKING, A WIRE EITHER BACKED OUT OR WAS PULLED OUT OF THE PANEL, CAUSING AN ERRONEOUS CALCULATION OF THE TIMBER VOLUMES. IT IS STATED THAT THE TREES WERE CLASSIFIED INTO FOUR CATEGORIES, ALL OF WHICH ARE DESIGNATED AS "CULLS"; THAT EACH CLASS HAS A DIFFERENT PERCENTAGE OF VOLUME REDUCTION FROM THE GROSS MEASUREMENTS TO ARRIVE AT THE ESTIMATED NET USABLE VOLUME OF TIMBERIN THE TREE FOR THE PURPOSE OF MAKING LUMBER; THAT THE THIRD AND FOURTH GRADE CLASSES, WHICH HAVE THE HIGHEST REDUCTION PERCENTAGES, WERE THE ONES WHICH THE COMPUTER ERRONEOUSLY TABULATED AS CLASSES ONE AND TWO WITH THE LOWEST VOLUME REDUCTION PERCENTAGES; AND THAT THIS WAS CONTRARY TO THE OBJECTIVES IN THE MEASUREMENT AND CLASSIFICATION OF THE TREES BY THE FOREST SERVICE. HENCE, THE SALES WERE ADVERTISED WITH MERCHANTABLE VOLUMES SHOWN HIGHER THAN THOSE WHICH WOULD HAVE BEEN CORRECT UNDER SECTION 6D OF THE CONTRACTS RESPECTING TREE MEASUREMENT SCALING.

AFTER THE COMPUTER ERROR WAS DISCOVERED, FOREST SERVICE OFFICIALS RECOMPUTED THE TIMBER VOLUMES UNDER CORRECT COMPUTER PROCEDURES. THEREAFTER, THE FOUR CONTRACTS IN QUESTION WERE MODIFIED, ON THE BASIS OF THE RECOMPUTATION, BY REDUCING THE TOTAL CONTRACT PRICE OF EACH CONTRACT AS SHOWN ABOVE. IT WAS STATED IN THE LETTER OF DECEMBER 6, 1967, THAT IT WAS DEEMED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO MAKE ADJUSTMENTS THAT WERE EQUITABLE TO THE PURCHASERS AND TO THE GOVERNMENT SINCE IT WAS THE INTENTION OF THE FOREST SERVICE TO ADVERTISE THE CORRECT VOLUMES AS DETERMINED BY THE ESTIMATOR IN THE FIELD. IT ALSO WAS STATED THAT THE EXPERIENCE OF THE FOREST SERVICE HAS BEEN THAT BIDDERS OFTEN ACCEPT THE ADVERTISED ESTIMATED VOLUMES AS VALID WITHOUT FURTHER VERIFICATION. WE ARE FURTHER ADVISED THAT THE FOUR PURCHASERS WERE NOT AWARE OF THE COMPUTER ERROR WHICH WAS REFLECTED BY THE HIGH VOLUMES ADVERTISED UNTIL ABOUT 8 MONTHS AFTER THE COMPUTER MALFUNCTION WAS DISCOVERED.

IN ORDER TO JUSTIFY REFORMATION OF ANY WRITTEN INSTRUMENT, THE MUTUAL MISTAKE MUST HAVE BEEN IN THE DRAWING OF THE INSTRUMENT AND NOT IN MAKING THE AGREEMENT OUT OF WHICH IT GREW OR WHICH IT EVIDENCES. A MUTUAL ERROR STANDING ALONE -- SUCH AS APPEARS TO BE THE CASE HERE -- IS NOT ENOUGH TO JUSTIFY REFORMATION; THE ERROR MUST OCCUR IN REDUCING THE PRIOR BARGAIN TO WRITING AND CAUSE THAT WRITING TO EXPRESS THE PRIOR BARGAIN INCORRECTLY. WE, THEREFORE, ARE OF THE OPINION THAT THE REPORTED FACTS DID NOT LEGALLY JUSTIFY THE MODIFICATION OF THE CONTRACTS ON A MUTUAL MISTAKE BASIS.

HOWEVER, IN VIEW OF THE PARTICULAR AND UNIQUE CIRCUMSTANCES PRESENT HERE AND THE RELATIVELY SMALL AMOUNTS INVOLVED, OUR OFFICE WILL NOT RAISE ANY OBJECTION TO THESE MODIFICATIONS.

A REFERENCE TO THIS DECISION SHOULD BE INCLUDED IN EACH OF THE CONTRACT FILES INVOLVED.