B-174502, DEC 9, 1971

B-174502, DEC 9, 1971

CONTRACTS - REFORMATION - MUTUAL MISTAKE OF FACT DECISION ALLOWING REFORMATION OF CONTRACT BETWEEN ENVIRONMENTAL PROTECTION AGENCY AND WALTER C. MCCRONE ASSOCIATES, INC., AS THE AGREEMENT DID NOT EXPRESS THE ACTUAL INTENTION OF THE PARTIES BECAUSE OF A MUTUAL MISTAKE OF FACT.

TO MR. WILLIAM D. RUCKELSHAUS:

BY LETTER DATED NOVEMBER 5, 1971, THE ASSISTANT ADMINISTRATOR FOR PLANNING AND MANAGEMENT REQUESTED OUR OFFICE TO APPROVE REFORMATION OF A CONTRACT, NO. EHSD71-25, DATED AUGUST 21, 1970, BETWEEN YOUR AGENCY AND WALTER C. MCCRONE ASSOCIATES, INC. (MCCRONE). THE BASIS FOR THE REQUEST IS THAT THE CONTRACT AS EXECUTED DID NOT EXPRESS THE ACTUAL INTENTION OF THE PARTIES BECAUSE OF A MUTUAL MISTAKE OF FACT.

IT IS REPORTED THAT ON APRIL 24, 1970, A REQUEST FOR PROPOSALS (RFP) WAS ISSUED TO THE MCCRONE FIRM FOR A COST-PLUS-FIXED-FEE CONTRACT FOR MEASUREMENT AND CHARACTERIZATION OF PARTICULATES IN THE WET SCRUBBING PROCESS FOR SULPHUR OXIDES CONTROL. THE RFP FOR THIS EFFORT INCORPORATED AS A PART OF THE STATEMENT OF WORK A REQUIREMENT FOR BOTH MANUAL AND AUTOMATIC CONTINUOUS TECHNIQUES FOR MEASURING AND CHARACTERIZING PARTICULATE STREAMS ENTERING AND LEAVING WET SCRUBBING PROCESS SYSTEMS. THE EFFORT INVOLVING MANUAL TECHNIQUES IS DESCRIBED UNDER THE "SCOPE" PARAGRAPH, SUBPARAGRAPHS A, B, AND C, UNDER PHASE II AND UNDER PHASE I SUBPARAGRAPH 6. THE EFFORT INVOLVING AUTOMATIC CONTINUOUS TECHNIQUES IS DESCRIBED UNDER THE "SCOPE" PARAGRAPH, SUBPARAGRAPHS D AND E., UNDER PHASE III AND PHASE IV.

WHILE MCCRONE'S PROPOSAL WAS GENERALLY RESPONSIVE TO THE TERMS OF THE SOLICITATION IT DID PROPOSE A MORE COMPREHENSIVE PROGRAM THAN WAS DESIRED, AND THEREFORE EXCEEDED THE ORIGINAL COST ESTIMATES OF THE GOVERNMENT. CONSEQUENTLY, AT THE NEGOTIATIONS WHICH WERE CONDUCTED ON JUNE 17, 1970, THE PARTIES AGREED TO THE DELETION OF PHASES II AND IV FROM THE PROPOSAL'S ORIGINAL FOUR-PHASE SCOPE OF WORK. THESE DELETIONS HAD THE EFFECT OF, FIRST, THE DELETION IN THEIR ENTIRETY OF CERTAIN TESTS, SPECIFICALLY THOSE INVOLVING HARDWARE FOR MEASUREMENT OF SUSPENDED SOLIDS, AND HARDWARE FOR AUTOMATIC CONTINUOUS TECHNIQUES REQUIRED IN THE RFP. SECOND, THE REDUCTION OF PHASE II AND IV EFFORTS INVOLVED IN THE REMAINING MANUAL AND AUTOMATIC CONTINUOUS TECHNIQUES TASKS. HOWEVER, AS THE STATEMENT OF WORK WAS REFLECTED IN THE RESULTANT CONTRACT, NEITHER OF THESE REDUCTIONS WAS ACCURATELY REFLECTED. THE INTRODUCTORY STATEMENT, WITH ITS SENTENCES (A THROUGH E), WAS INADVERTENTLY INCLUDED IN THE CONTRACT JUST AS IT HAD APPEARED IN THE RFP. ITEMS (C), (D) AND (E) SHOULD HAVE BEEN DELETED SINCE THE PARTIES HAD AGREED TO DELETE THAT WORK AND SINCE THE SPECIFIC PHASE BY PHASE TREATMENT OF THE SCOPE OF WORK IN THE CONTRACT DID NOT COVER THE WORK DESCRIBED GENERALLY IN ITEMS (C), (D) AND (E).

BY LETTER DATED OCTOBER 16, 1970, THE CONTRACTOR BROUGHT THESE DISCREPANCIES TO THE ATTENTION OF THE CONTRACTING OFFICER AND PROPOSED A SUBSTITUTE SCOPE OF WORK STATEMENT SO AS TO PROPERLY REFLECT THE ACTUAL INTENTION OF THE PARTIES AS REACHED AT THE TIME OF THEIR NEGOTIATIONS ON JUNE 17, 1970. ON NOVEMBER 6, 1970, THE GOVERNMENT PROJECT OFFICER CORROBORATED THIS ALLEGATION THAT THE SCOPE OF WORK CONTAINED IN THE CONTRACT WAS NOT THE SCOPE OF WORK AGREED UPON DURING NEGOTIATIONS OF THE CONTRACT. CONSEQUENTLY THE PARTIES EXECUTED ON SEPTEMBER 20, 1971, A NEW SCOPE OF WORK STATEMENT WHICH BOTH PARTIES AGREED WAS THE ONE CONTEMPLATED BY THEM.

ACCORDINGLY, YOU REQUEST OUR CONCURRENCE TO A NO-COST MODIFICATION OF THE CONTRACT IN QUESTION, SUBSTITUTING THE SEPTEMBER 20 SCOPE OF WORK STATEMENT FOR THE STATEMENT THAT IS NOW CONTAINED IN THE CONTRACT. WHILE THE RECORD DOES NOT REVEAL WHY THE ERRORS IN QUESTION WHERE NOT DISCOVERED BY EITHER PARTY AT THE TIME OF EXECUTION OF THE CONTRACT, THERE IS LITTLE DOUBT THAT IT WAS THE MUTUAL BELIEF OF THE PARTIES THAT PHASES II AND IV WERE TO BE DELETED IN THEIR ENTIRETY, AND THAT ITEMS C, D AND E, THEREFORE SHOULD ALSO HAVE BEEN DELETED. IN THE CIRCUMSTANCES WE BELIEVE THERE IS FOR APPLICATION THE ESTABLISHED RULE OF CONTRACT CONSTRUCTION THAT WHERE, BY REASON OF MUTUAL MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL INTENTION OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS. COMP. GEN. 363, 365 (1959).

CONSEQUENTLY, YOU ARE ADVISED THAT THE CONTRACT OF AUGUST 21, 1970, MAY BE REFORMED, BY INCORPORATING THE SUGGESTED MODIFICATION, TO REFLECT THE ACTUAL INTENT OF THE PARTIES AT THAT TIME.

THE ENCLOSURES FURNISHED WITH THE LETTER OF NOVEMBER 5, 1971, ARE RETURNED.