B-171518, MAR 23, 1971

B-171518, MAR 23, 1971

CONTRACTS - FIRE SUPPRESSION SERVICES DECISION ALLOWING PAYMENT OF VOUCHERS IN FAVOR OF SDS LUMBER COMPANY, PRIME CONTRACTOR, IN THE AMOUNT OF $9,656.15 AND WILKINS, KAISER & OLSON LOGGING COMPANY, SUBCONTRACTOR, IN THE AMOUNT OF $4,168,86 INCIDENT TO FIRE FIGHTING SERVICES UNDER A TIMBER SALES CONTRACT. ALTHOUGH THE TIMBER SALES CONTRACT ESTABLISHES A MAXIMUM COST TO THE PURCHASER (SDS) OF $2,000 FOR THE SUPRESSION OF NON-NEGLIGENT PURCHASER FIRES, IT WAS THE INTENT OF THE FOREST SERVICE THAT THIS SECTION WOULD NOT OPERATE TO PREVENT PAYMENT TO A PURCHASER FOR HIS EXCESS COSTS OCCASIONED BY A NON-NEGLIGENT FIRE. FURTHER, THE PENDING INSURANCE PAYMENT OF $2,000 TO THE PRIME CONTRACTOR HAS NO EFFECT ON THE GOVERNMENT'S LIABILITY. ALTHOUGH THE GOVERNMENT HAS NO CONTRACTUAL RELATIONSHIP TO THE SUBCONTRACTOR THE CONTRACT REQUIRES THE USE OF THE SUBCONTRACTOR'S MANPOWER AND EQUIPMENT IN FIRE SUPPRESSION EFFORTS AND THEREFORE THE COSTS OF THE CONTRACTOR'S EFFORTS SHOULD INCLUDE THE COSTS OF HIS SUBCONTRACTOR'S EFFORTS.

TO MR. REED H. JENSEN:

WE REFER TO YOUR LETTER OF AUGUST 4, 1970, YOUR REFERENCE 6540, WHICH WAS TRANSMITTED HERE BY MR. ARTHUR W. GREELEY, ON DECEMBER 10, 1970.

YOU HAVE REQUESTED OUR DECISION AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT TWO VOUCHERS. ONE OF THE VOUCHERS IS IN FAVOR OF SDS LUMBER COMPANY IN THE AMOUNT OF $9,656.15; THE OTHER IS IN FAVOR OF WILKINS, KAISER & OLSON LOGGING COMPANY IN THE AMOUNT OF $4,168.86. BOTH VOUCHERS WERE SUBMITTED TO YOU FOR CERTIFICATION PURSUANT TO CLAIMS WHICH AROSE OUT OF THE FOLLOWING SET OF FACTS.

ON MAY 28, 1964, THE FOREST SERVICE, ENTERED INTO CONTRACT NO. 3-347, WITH THE SDS LUMBER COMPANY FOR THE SALE OF CERTAIN TIMBER LOCATED WITHIN GIFFORD PINCHOT NATIONAL FOREST IN SKAMANIA COUNTY, WASHINGTON.

SECTION 9B. FIRE SUPPRESSION, OF SAID CONTRACT REQUIRES, AMONG OTHER THINGS, THAT THE PURCHASER TAKE ALL REASONABLE AND PRACTICABLE ACTION TO PREVENT AND SUPPRESS FOREST FIRES ON THE SALE AREA AND VICINITY, AND TO TAKE IMMEDIATE SUPPRESSION ACTION ON SUCH FIRES. THE SUPPRESSION ACTION INCLUDES THE USE OF THE PURCHASER'S MANPOWER AND EQUIPMENT, INCLUDING HIS SUBCONTRACTORS AND THEIR EMPLOYEES AND EQUIPMENT. SECTION 9C-1 OF THE CONTRACT ESTABLISHES A MAXIMUM COST TO THE PURCHASER OF $2,000 FOR SUPPRESSION OF NON-NEGLIGENT PURCHASER FIRES. ANY EXPENSES OR COSTS IN EXCESS OF THE MAXIMUM OF $2,000, ARE TO BE REIMBURSED BY THE FOREST SERVICE. SECTION 9C-4 OF THE CONTRACT STATES, "THE PROVISIONS OF THIS SECTION SHALL NOT BE CONSTRUED AS RELIEVING THE PURCHASER OF FIRE SUPPRESSION COSTS FOR WHICH HE IS OTHERWISE LIABLE UNDER STATE LAW."

ON JULY 11, 1968, SDS SUBCONTRACTED THE LOGGING OPERATIONS OF ITS TIMBER SALE CONTRACT TO THE WILKINS, KAISER & OLSON LOGGING COMPANY. UNDER THE SUBCONTRACT WILKINS, KAISER & OLSON AGREED TO PURCHASE FIRE INSURANCE FOR THE BENEFIT OF SDS.

ACCORDING TO THE RECORD, A "NON-NEGLIGENT PURCHASER FIRE" STARTED ON A LOGGING UNIT OF THE SALE ON AUGUST 1, 1968, FOR THE SUPPRESSION OF WHICH SDS AND WILKINS, KAISER & OLSON EXPENDED $9,656.15 AND $4,168.86, RESPECTIVELY, AND THE FOREST SERVICE SPENT MORE THAN $130,000. BEFORE IT WAS KNOWN BY THE FOREST SERVICE THAT SDS HAD INCURRED EXPENSES IN FIGHTING THE FIRE, THE COMPANY WAS BILLED FOR AND PAID $2,000, AS PER SECTION 9C-1 OF THE CONTRACT. IT IS ALSO REPORTED THAT THE INSURANCE CARRIER FOR THE SUBCONTRACTOR IS PREPARED TO PAY SDS THE $2,000 IT PAID TO THE FOREST SERVICE, BUT NOT THE $9,656.15 IT SPENT IN FIGHTING THE FIRE.

A WASHINGTON STATE STATUTE, RCW 76.04.380, DEALING WITH UNCONTROLLED FIRE, ITS ABATEMENT AND COSTS, PROVIDES IN PART AS FOLLOWS:

"WHEN A FIRE OCCURS IN A LOGGING OPERATION IT SHALL BE FOUGHT TO THE FULL LIMIT OF AVAILABLE EMPLOYEES, AND SUCH FIRE FIGHTING SHALL BE CONTINUED WITH THE NECESSARY CREWS IN SUCH NUMBERS AS ARE, IN THE OPINION OF THE SUPERVISOR OR HIS AUTHORIZED DEPUTIES, SUFFICIENT TO BRING THE FIRE TO A PATROL BASIS, AND THE FIRE SHALL NOT BE LEFT WITHOUT A FIRE FIGHTING CREW OR FIRE PATROL UNTIL AUTHORITY SO TO DO HAS BEEN GRANTED IN WRITING BY THE SUPERVISOR, OR HIS AUTHORIZED DEPUTIES."

YOU STATE THAT A DOUBT EXISTS "AS TO WHETHER THE TERMS OF THE CONTRACT ARE CLEAR, IN PARTICULAR, SECTION 9C-1 WHICH SETS A DOLLAR LIMIT OF LIABILITY FOR A PURCHASER ON A NON-NEGLIGENT PURCHASER FIRE AND 9C-4 WHICH SEEMS TO SAY THAT PROVISIONS OF STATE LAW WILL TAKE PRECEDENCE OVER ALL ELSE IN THE SECTION." YOU ASK THE FOLLOWING SPECIFIC QUESTIONS:

" *** (1) DO THE TERMS OF THE 9C SECTION OF THE CONTRACT PERMIT PAYMENT OF SDS' FIRE COSTS IN EXCESS OF $2,000? (2) WILL PAYMENT OF $2,000 BY THE INSURANCE CARRIER REDUCE THE AMOUNT, IF ANYTHING IS DUE, PAYABLE TO SDS? (3) DOES WILKINS, KAISER & OLSON, SUBCONTRACTOR FOR SDS, HAVE ANY BASIS FOR REIMBURSEMENT UNDER THE PROVISIONS OF THE 9C SECTION OF THE CONTRACT? (4) IF ANYTHING IS PAYABLE TO WILKINS, KAISER & OLSON, IS IT SUBJECT TO THE $2,000 PROVISION OF SECTION 9C(1)?"

ADDRESSING OURSELVES TO YOUR FIRST QUESTION, WE BELIEVE THAT SDS IS ENTITLED TO REIMBURSEMENT OF ITS FIRE SUPPRESSION COSTS IN EXCESS OF $2,000, ACCORDING TO THE TERMS OF 9C-1 OF THE CONTRACT. IT IS REPORTED BY MR. GREELEY THAT THIS CONTRACT WAS ENTERED INTO IN 1964, ON THE OLD FORM 2400-2, AND WHILE THE LANGUAGE OF SECTION 9C-4 USED IN THE FORM HAS BEEN SUBJECT TO DIFFERING INTERPRETATIONS, IT WAS THE INTENT OF THE FOREST SERVICE THAT SECTION 9C-4 WOULD NOT OPERATE TO PREVENT PAYMENT TO A PURCHASER FOR HIS EXCESS COSTS OCCASIONED BY A NON-NEGLIGENT FIRE. ALSO REPORTS THAT THIS INTENT IS BORNE OUT BY LANGUAGE IN THE CURRENT STANDARD CONTRACT, FORM 2400-5.

FURTHER, WE CAN SEE NO REASON WHY THE PENDING INSURANCE PAYMENT OF $2,000 TO SDS SHOULD HAVE ANY EFFECT ON THE GOVERNMENT LIABILITY TO SDS. THE INSURANCE WAS TAKEN OUT BY THE SUBCONTRACTOR FOR THE PURPOSE OF INDEMNIFYING THE CONTRACTOR. ANY PAYMENT TO SDS UNDER THE INSURANCE CONTRACT IS A MATTER SOLELY BETWEEN THE PARTIES CONCERNED AND HAS NO BEARING ON THE GOVERNMENT'S OBLIGATION TO REIMBURSE THE CONTRACTOR UNDER SECTION 9C OF THE TIMBER SALE CONTRACT.

IN REGARD TO THE THIRD QUESTION, IT SHOULD BE NOTED THAT THE GOVERNMENT HAS NO CONTRACTIONAL RELATIONSHIP WITH THE SUBCONTRACTOR. THE GOVERNMENT'S LIABILITY UNDER SECTION 9C OF THE CONTRACT IS SOLELY TO THE PRIME CONTRACTOR, SDS. HOWEVER, THE CONTRACT REQUIRES THAT THE CONTRACTOR USE ALL HIS MANPOWER AND EQUIPMENT, INCLUDING HIS SUBCONTRACTOR'S MANPOWER AND EQUIPMENT, IN FIRE SUPPRESSION EFFORTS, AND SECTION 9C CALLS FOR THE GOVERNMENT TO REIMBURSE THE CONTRACTOR FOR THE COSTS OF HIS EFFORTS. BELIEVE THAT THE COSTS OF THE CONTRACTOR'S EFFORTS WOULD INCLUDE THE COSTS OF HIS SUBCONTRACTOR'S EFFORTS. SINCE IT APPEARS FROM THE RECORD THAT SDS HAS NOT REIMBURSED HIS SUBCONTRACTOR FOR THE $4,168,86 WHICH THE SUBCONTRACTOR REPORTEDLY HAS EXPENDED, THE PROPER PROCEDURE FOR PAYMENT WOULD BE TO ISSUE TWO CHECKS, ONE TO SDS AND ONE TO SDS AND ITS SUBCONTRACTOR (WILKINS, KAISER & OLSON) AS JOINT PAYEES.

FINALLY, IN RESPONSE TO THE LAST QUESTION, THE VOUCHERS MAY BE PAID AS INDICATED ABOVE IN THE RESPECTIVE AMOUNTS OF $9,656.15 AND $4,168,86, IF OTHERWISE CORRECT. IT IS REPORTED SDS HAS ALREADY DISCHARGED ITS OBLIGATION TO THE FOREST SERVICE UNDER 9C-1 OF THE CONTRACT BY MAKING A PAYMENT OF $2,000. THE SUBCONTRACTOR, AS STATED, HAS NO CONTRACT WITH THE FOREST SERVICE AND THUS HAS NO OBLIGATION TO THE GOVERNMENT UNDER SECTION 9C-1 TO PAY $2,000.