B-112109, B-121072, MAY 16, 1958

B-112109, B-121072, MAY 16, 1958

TO THE SECRETARY OF THE AIR FORCE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 6, 1958, TRANSMITTING FOR OUR CONSIDERATION AND COMMENT A COPY OF A MEMORANDUM DATED FEBRUARY 5, 1958, FROM THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, OFFICE OF THE DEPUTY CHIEF OF STAFF, MATERIEL, SETTING FORTH AN ADMINISTRATIVE REPORT ON THE CURRENT STATUS OF THE TERMINATION CLAIM OF RIZZO BROTHERS COMPANY, A SUBCONTRACTOR UNDER THE ABOVE TERMINATED CONTRACTS.

THE ADMINISTRATIVE REPORT STATES THAT RIZZO RECEIVED $532,198.01 FOR WORK COMPLETED UNDER CONTRACT NO. AF 33/038/-18481 AND $1,291,634.32 FOR WORK UNDER CONTRACT NO. AF 33/038/-22446; THAT AFTER THE TERMINATION OF RIZZO PURCHASE ORDERS AUDITS WERE MADE BY THE AIR FORCE AUDITOR GENERAL'S STAFF AND PRICE REDETERMINATIONS WERE PROVIDED FOR WHEREBY NEW HOURLY RATES WERE ESTABLISHED, AND THAT AS A RESULT OF NEGOTIATIONS BY THE TERMINATION CONTRACTING OFFICER IT WAS DETERMINED THAT RIZZO WOULD REFUND $175,823.74 TO THE GOVERNMENT. THE REPORT STATES ALSO THAT IN NEGOTIATING THIS REDUCTION NO CONSIDERATION WAS GIVEN TO ENTERTAINMENT AND GRATUITIES, IMPROPER TIME CHARGES, AND OTHER SIMILAR ITEMS OF THE TYPE REFERRED TO IN DRIR NO. 6 ISSUED BY THIS OFFICE. THE REPORT STATES FURTHER THAT COLLECTION OF THE AMOUNT OF THE REDUCTION NEGOTIATED HAS BEEN ACCOMPLISHED, IN PART BY A CASH PAYMENT MADE BY RIZZO, IN PART BY TAX REFUND CREDIT DETERMINED TO BE DUE RIZZO BY INTERNAL REVENUE, AND IN PART BY ALLOWANCE OF CERTAIN TERMINATION CLAIMS MADE BY RIZZO. THE REPORT DISCLOSES THAT A BALANCE OF $3,807.63 IS DUE RIZZO IN SETTLEMENT OF THIS MATTER AND MAKES REFERENCE TO DEPARTMENT OF JUSTICE LETTER DATED DECEMBER 10, 1956, WHEREIN YOU WERE ADVISED THAT THE DEPARTMENT'S FILES ON THIS CASE INSOFAR AS THEY RELATED TO DRIRS ISSUED BY OUR OFFICE HAD BEEN CLOSED. ALTHOUGH NO SUPPORTING PAPERS WERE SUBMITTED WITH THE ADMINISTRATIVE REPORT, IT IS ASSUMED THAT ALL OF THE SUBCONTRACTOR'S CLAIMS FOR PAYMENT HAVE BEEN CAREFULLY ANALYZED, EVALUATED, AND REVIEWED AND THAT THE PERTINENT CONTRACT FILES HAVE BEEN COMPLETELY DOCUMENTED TO REFLECT THE FINDINGS OF THE RESPONSIBLE OFFICIALS AND THE BASIS FOR THE APPROVAL OF THE ADJUSTMENTS MADE. CF. 33 COMP. GEN. 533.

IT IS STATED IN YOUR LETTER THAT IT IS THE POSITION OF YOUR DEPARTMENT UNDER ALL THE FACTS AND CIRCUMSTANCES OUTLINED IN THE ADMINISTRATIVE REPORT THAT THE PROPOSED SETTLEMENT IS PROPER AND IN THE BEST INTERESTS OF THE GOVERNMENT, AND THAT THE TERMINATION CONTRACTING OFFICER SHOULD BE AUTHORIZED TO PAY THE BALANCE CLAIMED BY RIZZO AND CLOSE HIS FILE ON THE CASE. IT IS ALSO STATED THAT YOU HAVE FORWARDED A COPY OF THE ADMINISTRATIVE REPORT TO THE DEPARTMENT OF JUSTICE FOR ITS CONSIDERATION.

IN VIEW OF THE FOREGOING, WE WILL INTERPOSE NO OBJECTION TO THE PROPOSED SETTLEMENT WITH THE UNDERSTANDING, OF COURSE, THAT THIS WILL NOT BE CONSTRUED AS RESTRICTING THE FUNCTIONS OF OUR OFFICE.