B-80255, OCT 13, 1948

B-80255, OCT 13, 1948

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 16, 1948, WITH ENCLOSURES, FROM THE UNDER SECRETARY OF THE AIR FORCE, REQUESTING A DECISION AS TO THE LEGAL PROPRIETY OF REFORMING-- BY REASON OF A MUTUAL ERROR-- SUPPLEMENTAL AGREEMENT NO. 31, DATED MARCH 26, 1948, TO CONTRACT NO. W 33-038-AC-7201, WITH THE ALLISION DIVISION, GENERAL MOTORS CORPORATION.

IT APPEARS FROM THE AFORESAID LETTER AND ITS ENCLOSURES THAT ON MARCH 22, AND 23, 1948, CONFERENCE WERE HELD AT THE WRIGHT-PATTERSON AIR FORCE BASE IN CONNECTION WITH THE READJUSTMENT OF PRICES UNDER CONTRACT NO. W-33-038- AC-7201; THAT THE CONTRACTOR SUBMITTED A COST STATEMENT FOR CONSIDERATION IN CONNECTION WITH THE PRICE REDETERMINATION WHICH INCLUDED COMMITMENT CANCELLATION CLAIMS OF ITS SUBCONTRACTORS IN THE ESTIMATED AMOUNT $660,060, ARISING OUT OF CHANGED SPECIFICATIONS REQUESTED BY THE GOVERNMENT AS REFLECTED IN CONTRACT CHANGE NOTIFICATION NOS. 4, 5, 15, 16, 17, 20, AND 25; AND THAT IT WAS AGREED BY THE PARTIES THAT THE SUM OF $660,060, WOULD BE ACCEPTED AS AN ITEM OF COST UNDER THE CONTRACT SUBJECT TO SUBMISSION OF THE CLAIMS TO THE LOCAL CONTRACTING OFFICER FOR REVIEW AND APPROVAL. SUPPLEMENTAL AGREEMENT NO. 31 WAS FORMALLY EXECUTED ON MARCH 26, 1948, AND THEREAFTER IT WAS DISCOVERED THAT THE THIRD TITLE THEREOF, BY REASON OF A MUTUAL MISTAKE, ERRONEOUSLY STATED THE CONTRACTOR'S COMMITMENT CANCELLATIONS WERE INCURRED IN CONNECTION WITH CONTRACT CHANGE NOTICE NO. 26.

BY LETTER DATED APRIL 14, 1948, THE CONTRACTOR REQUESTED AN AMENDMENT TO THE SUPPLEMENTAL AGREEMENT TO CONFORM WITH THE AGREEMENT OF THE PARTIES. IN AN AFFIDAVIT DATED JULY 27, 1948 THE CONTRACTING OFFICER STATED THAT THE REFERENCE TO CONTRACT CHANGE NOTIFICATION NO. 26 IN THE THIRD TITLE OF SUPPLEMENTAL AGREEMENT NO. 31 WAS INCORRECT AND THAT CONTRACT CHANGE NOTIFICATION NOS. 4, 5, 15, 16, 17, 20, AND 25 SHOULD HAVE BEEN REFERRED TO THEREIN IN ACCORDANCE WITH THE AGREEMENT AND UNDERSTANDING OF THE PARTIES.

AFFIDAVITS TO THE SAME EFFECT HAVE BEEN FURNISHED BY VARIOUS INDIVIDUALS WHO ATTENDED THE PRICE REDETERMINATION CONFERENCES. THUS IT IS APPARENT THAT, DUE TO A MISTAKE IN THE PREPARATION OF SUPPLEMENTAL AGREEMENT NO. 31, THE REFERENCE IN THE THIRD TITLE THEREOF TO CONTRACT CHANGE NOTIFICATION NO. 26, WAS NOT IN ACCORDANCE WITH THE CONTRACTOR'S COST STATEMENT OR THE INTENTION OF THE PARTIES AND, CONSEQUENTLY, THAT THE SUPPLEMENTAL AGREEMENT AS EXECUTED DID NOT EXPRESS THE TRUE AGREEMENT WHICH THERETOFORE HAD BEEN ENTERED INTO BETWEEN THE PARTIES.

THE GENERAL RULE IS THAT WHERE, THROUGH A MUTUAL MISTAKE OF THE PARTIES, THEIR WRITTEN CONTRACT DOES NOT REFLECT THE TRUE CONTRACT ON WHICH THEY PREVIOUSLY HAD AGREED AND ATTEMPTED TO NEGOTIATE, EITHER PARTY MAY AVAIL HIMSELF OF THE MISTAKE TO HAVE THE CONTRACT REFORMED TO CONFORM WITH THE AGREEMENT WHICH OTHERWISE WOULD HAVE BEEN MADE. SEE 20 COMP.GEN. 533, AND THE NUMEROUS CASES THERE CITED.

ACCORDINGLY, THIS OFFICE WILL INTERPOSE NO OBJECTION TO MODIFICATION OF THE SUPPLEMENTAL AGREEMENT NO. 31 IN THE MANNER INDICATED.

THE PAPERS, WITH THE EXCEPTION OF THE STATEMENT FROM THE CONTRACTING OFFICER, ARE RETURNED HEREWITH.