B-160577, FEB. 2, 1967

B-160577, FEB. 2, 1967

TO THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 19, 1966, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION REGARDING THE MODIFICATION OF TIMBER SALE CONTRACT 13-60 WITH THE GEORGIA-PACIFIC CORPORATION.

AFTER ADVERTISING FOR BIDS, THE CONTRACT WAS AWARDED ON DECEMBER 31, 1962, TO GEORGIA-PACIFIC FOR CUTTING AN ESTIMATED 24 MILLION BOARD FEET (M B.F.) OF TIMBER IN THE SNOQUALMIE NATIONAL FOREST. THE CORPORATION BID AN AVERAGE OF $35.95 PER M B.F. FOR THIS TIMBER WHICH WAS APPRAISED AND ADVERTISED AT AN AVERAGE OF $23.26 PER M B.F. THE CONTRACT TERMINATION DATE IS MARCH 31, 1967. HOWEVER, TIMBER CUTTING AND REMOVAL WERE COMPLETED IN SEPTEMBER 1966, AND THE FINAL STATEMENT OF ACCOUNT INDICATES A VOLUME CUT OF 20,426.2 M B.F.

SECTION 10B OF THE CONTRACT LISTS 7.0 MILES OF PRINCIPAL TRUCK ROADS TO BE BETTERED OR CONSTRUCTED IN ACCORDANCE WITH APPROVED SPECIFICATIONS MADE A PART OF THE CONTRACT. THE ESTIMATED COST OF SUCH CONSTRUCTION AS USED IN THE APPRAISAL AND PROVIDED FOR IN THE ROAD AMORTIZATION PROVISION OF THE CONTRACT (SECTION 3A-3) IS $194,000. THE ASSISTANT SECRETARY'S LETTER OF DECEMBER 19, 1966, STATES THAT THE CUTTING PLAN WHICH SERVED AS A BASIS FOR THE SALE APPRAISAL CONTEMPLATED HARVESTING FOUR CLEAR-CUT UNITS BY THE CONVENTIONAL HIGH LEAD LOGGING METHOD. THIS LOGGING METHOD INVOLVES YARDING LOGS TO PREPARED LANDINGS LOCATED ON THE UPPER SIDES OF THE CUTTING UNITS. A HAUL-ROAD SYSTEM PLANNED FOR THIS METHOD WAS LOCATED TO CONNECT THE PLANNED LANDINGS WITH EXISTING ROAD NO. 2520, A SHORT SEGMENT OF WHICH CONNECTS WITH THE MAIN HIGHWAY SERVING THE AREA. THE SALE PLAN PROVIDED FOR A .97-MILE SECTION OF REQUIRED ROAD TO REACH THE UPPER SIDE OF CUTTING UNIT NO. 3. THE CONSTRUCTION ESTIMATE FOR THIS .97 MILE OF ROAD WAS $32,601, WHICH WAS INCLUDED IN THE AMOUNT OF $194,000 SHOWN IN SECTION 3A-3 FOR ROAD AMORTIZATION AT RATES STATED THEREIN. IT IS STATED THAT IF THIS AMOUNT OF $32,601 IS USED TO REDUCE THE ROAD AMORTIZATION TO $161,399, THE AMORTIZED ROAD AMOUNT RECOGNIZED IN PRICES FOR TIMBER CUT EXCEEDS THIS SUM BY $19,641.95. THE PURCHASER ELECTED NOT TO CONSTRUCT THIS REQUIRED SECTION OF ROAD BUT TO EMPLOY AN ALTERNATIVE METHOD OF LOGGING. INSTEAD OF USING THE CONVENTIONAL HIGH-LEAD SYSTEM WHICH YARDS LOGS UPHILL, A SLACK-LINE SYSTEM WAS INSTALLED AND USED FOR LOGGING UNIT NO. 3. AS A RESULT OF USING THE SLACK-LINE SYSTEM, THE .97 MILE OF ROAD DESCRIBED ABOVE WAS NOT NEEDED BY THE PURCHASER.

ON OCTOBER 25, 1965, THE PURCHASER REQUESTED IN WRITING THAT THE .97-MILE SECTION OF ROAD NO. 2527 BE DELETED FROM THE LOGGING PLAN AND THAT "THE ORIGINAL ESTIMATE OF THE COST CHARGED INTO REMAINING STUMPAGE.' THIS WAS INTERPRETED BY THE FOREST SERVICE TO MEAN A PRICE ADJUSTMENT TO OFFSET THIS REDUCTION IN COST.

IN ACCORDANCE WITH THIS REQUEST, A PROPOSED MODIFICATION OF THE CONTRACT REDUCING THE ROAD REQUIREMENT AND PROVIDING A COMPENSATING PRICE ADJUSTMENT WAS SENT TO THE PURCHASER IN DECEMBER 1965. THE PURCHASER, BY LETTER OF DECEMBER 14, 1965, THEN REVERSED HIS PREVIOUS POSITION AND RETURNED, UNEXECUTED, THE PROPOSED MODIFICATION. THE PURCHASER CONTENDS THAT THE .97-MILE SECTION OF ROAD NO. 2527 IS NOT NECESSARY FOR LOGGING THE SALE AND THAT THE CONTRACT DOES NOT REQUIRE ROAD CONSTRUCTION WHICH IS NOT NEEDED BY THE PURCHASER BUT ONLY AUTHORIZES THE PURCHASER TO BUILD SUCH ROADS AS HE MAY NEED FOR HARVESTING THE TIMBER. FOR SUCH REASON, THE PURCHASER CONTENDS THAT THE PROPOSED MODIFICATION IS UNNECESSARY.

WE MUST DISAGREE WITH THE PURCHASER'S CONTENTION. SECTION 10A OF THE CONTRACT AUTHORIZES THE PURCHASER TO CONSTRUCT AND MAINTAIN ALL ROAD "NEEDED FOR THE CUTTING AND REMOVAL OF THE TIMBER INCLUDED IN THIS CONTRACT.' MORE SPECIFICALLY, HOWEVER, SECTION 10B REQUIRES THE PURCHASER TO CONSTRUCT CERTAIN NAMED ROADS, INCLUDING ROAD NO. 2527, IN ACCORDANCE WITH CONTRACT SPECIFICATIONS. THEREFORE, IT IS OUR VIEW THAT THE 7 MILES OF PRINCIPAL TRUCK ROAD TO BE CONSTRUCTED IN ACCORDANCE WITH SECTION 10B IS A REQUIREMENT UNDER THE CONTRACT THAT MAY NOT BE WAIVED IN THE ABSENCE OF ADEQUATE CONSIDERATION MOVING TO THE GOVERNMENT.

AS A RESULT OF THE PURCHASER'S COMPLAINT AFTER AWARD, THE FOREST SERVICE HAS NOW BEEN PERSUADED TO DELETE THE .97-MILE SECTION OF ROAD NO. 2527 FROM THE LOGGING PLAN WITH A COMPENSATING PRICE ADJUSTMENT. HOWEVER, AT THE TIME THE SALE TIMBER WAS APPRAISED AND THE CONTRACT ENTERED INTO, IT WAS NOT APPARENT THAT THE SPECIFIED ROAD CONSTRUCTION WORK EXCEEDED WHAT THE PURCHASER NEEDED AS A PRUDENT OPERATOR FOR REMOVING THE TIMBER FROM THE SALE AREA. APPARENTLY, NO QUESTIONS WERE RAISED AS TO THE PROVISIONS OF SECTION 10B FOR ROAD CONSTRUCTION WORK PRIOR TO, OR AT THE TIME OF, ENTERING INTO THE CONTRACT. THE ORIGINAL JUDGMENT OF THE FOREST SERVICE WOULD THEREFORE APPEAR TO HAVE BEEN MADE IN GOOD FAITH. THE GOVERNMENT IS ENTITLED TO HAVE THE CONTRACT PERFORMED IN ACCORDANCE WITH ITS ROAD REQUIREMENTS OR TO RECEIVE A COMPENSATING ADJUSTMENT UNDER THE CONTRACT.

IN OUR DECISION B-157241, AUGUST 27, 1965, REGARDING A PROPOSAL TO MODIFY ROAD CONSTRUCTION REQUIREMENTS UNDER A TIMBER SALE CONTRACT WITHOUT A COMPENSATING PRICE ADJUSTMENT, WE CONCLUDED THAT IT WOULD BE IMPROPER TO REDUCE ROAD CONSTRUCTION REQUIREMENTS BY CONTRACT MODIFICATION WITHOUT PROVIDING FOR A CORRESPONDING INCREASE IN STUMPAGE RATES. THE PURCHASER ARGUES THAT SUCH DECISION IS INAPPLICABLE HERE BECAUSE THERE IS NO "NEED" FOR SUCH ROAD CONSTRUCTION FOR LOGGING PURPOSES. BUT THE CRITERION APPLICABLE HERE IS NOT "NEED" UNDER SECTION 10A; RATHER, THERE IS INVOLVED A CONTRACT OBLIGATION TO CONSTRUCT A SPECIFIC ROAD WITHOUT REFERENCE TO THE PURCHASER'S ,NEED" AS SUCH. WE THEREFORE DO NOT THINK THAT THE REPORTED FACTS IN THE GEORGIA-PACIFIC CONTRACT JUSTIFY A DIFFERENT RESULT FROM THAT REACHED IN B-157241.

IT IS A WELL-ESTABLISHED RULE THAT, WITHOUT COMPENSATING BENEFIT TO THE UNITED STATES, AGENTS AND OFFICERS OF THE UNITED STATES HAVE NO AUTHORITY TO MODIFY OR AMEND EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE CONTRACT RIGHTS VESTED IN THE GOVERNMENT. BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 CT.CL. 584; 15 COMP. GEN. 25; 18 ID. 114, 116; 19 ID. 48; 22 ID. 260; 35 ID. 56 AND 40 ID. 684.

ACCORDINGLY, WE BELIEVE THAT THE CONTRACT REQUIREMENTS OF SECTION 10B MAY NOT BE MODIFIED FOR THE BENEFIT OF THE PURCHASER WITHOUT CORRESPONDING PRICE ADJUSTMENT.