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Request for Opinion

B-194799 Jan 14, 1980
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Highlights

The Federal Highway Administration (FHwA) requested an opinion on the propriety of the Forest Service reimbursing it for costs incurred in settling a highway construction claim. FHwA and the Forest Service have been cooperating in the construction of forest highways. Road contractors operating within the national forests are contractually required to purchase merchantable timber found on the road right-of-ways. The Forest Service appraises the timber and sets the price which the contractor must pay. The construction claim in this case arose when a firm discovered it had paid more for the timber than it was currently worth. The Forest Service had included an "overbid" factor which inflated the price. The factor was normally used in long-duration timber sales to increase the government's likelihood of receiving full market value in an inflationary market. FHwA felt that the inflated price was a mutual mistake of fact and justified reforming the firm's contract correcting the error. It contended that it lacked expertise in timber appraisals and relied on the Forest Service expertise. It therefore effectively reformed the erroneous payment made to the Forest Service. The Forest Service contended that the claim should not have been paid and that, even if it was assumed that it should have been, the contractor was overpaid. Because of this, it believed that it should not have to reimburse FHwA for the cost of settling the claim. GAO held that the Forest Service was not required to reimburse FHwA for the cost of settling the claim because the record did not indicate the existence of any agreement or mutual understanding between the agencies concerning what occurred. Both agencies were held to have performed their respective statutory duties.

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