B-134219, DEC. 5, 1960

B-134219, DEC. 5, 1960

TO MR. WESLEY I. DUMM:

REFERENCE IS MADE TO A LETTER DATED JULY 8, 1960, WITH ENCLOSURES, FROM YOUR ATTORNEY, REQUESTING A RECONSIDERATION OF OUR DECISION OF FEBRUARY 17, 1960, REGARDING THE MATTER OF YOUR REPORTED INDEBTEDNESS TO THE UNITED STATES OF $30,118.58. OF THAT AMOUNT THE SUM OF $30,004.58 HAS BEEN THE ITEM IN DISPUTE AND HAS BEEN THE SUBJECT OF OUR DECISIONS OF SEPTEMBER 10, 1959, AND FEBRUARY 17, 1960.

ALL THE PERTINENT FACTS IN THIS CASE HAVE BEEN SET OUT IN OUR SETTLEMENT OF JANUARY 15, 1959, AND OUR TWO DECISIONS. OUR LAST DECISION OF FEBRUARY 17, 1960, STATED THAT THE MATTER WOULD BE CONSIDERED CLOSED. YOU ASK THAT THE RECORD BE EXAMINED IN FULL DETAIL AND WE HAVE AGAIN EXAMINED THE RECORD BUT FIND NO NEW ARGUMENTS IN SUPPORT OF YOUR POSITION. HOWEVER, YOU HAVE PRESENTED A LETTER DATED JULY 7, 1960, FROM MR. EDWARD J. KERRIGAN TO SUPPORT YOUR ALLEGATION--- FIRST MADE IN YOUR LETTER OF NOVEMBER 14, 1956--- THAT IN NEGOTIATING THE AMOUNTS TO BE PAID UNDER YOUR CONTRACTS FOR THE FISCAL YEARS 1948 TO 1951, INCLUSIVE, NO ALLOWANCE WAS MADE FOR TUBES TAKEN FROM THE TUBE COMPLEMENT FURNISHED YOU IN 1942 AND USED IN THE OPERATION OF THE BROADCAST FACILITIES.

CONTRACT NO. OEMCR-344 DATED MAY 1, 1944, RETROACTIVE TO JANUARY 1, 1944, PROVIDED, AMONG OTHER THINGS, FOR PAYMENT BY THE UNITED STATES OF THE MONTHLY COMPENSATION OF $9,531.55 FOR BROADCAST TIME AND ALL OTHER SERVICES TO BE PERFORMED, BASED ON COST. IT PROVIDED, ALSO, FOR A RENEGOTIATION OF THE PAYMENTS TO BE MADE UPON RENEWAL OF THE CONTRACT AND THAT WHERE THE PARTIES COULD NOT AGREE UPON THE COMPENSATION TO BE PAID, PAYMENTS WERE TO BE MADE UPON THE SAME BASIS AS THE IMMEDIATELY PRECEDING TERM. IN THAT CASE AN AUDIT WAS TO BE MADE AT THE END OF EACH RENEWAL TERM, AND IF THE OPERATING COSTS WERE HIGHER THAN THE AMOUNTS PAID BY THE GOVERNMENT, THE DIFFERENCE WAS TO BE PAID BY THE GOVERNMENT AND IF THE PAYMENTS EXCEEDED THE OPERATING COSTS, THE CONTRACTOR WAS TO REFUND THE DIFFERENCE. THUS, IT WILL READILY BE SEEN THAT IT WAS THE INTENT OF THE PARTIES THAT THE NEGOTIATED RATE EACH YEAR SHOULD REPRESENT, AS NEARLY AS POSSIBLE, THE COSTS OF OPERATION WITHOUT KEEPING AN ACCURATE CHECK OF OPERATING EXPENSES.

ALTHOUGH MR. KERRIGAN IN HIS LETTER OF JULY 7, 1960, STATES THE CONTRACTS EACH YEAR--- FOR FOUR YEARS--- WERE NEGOTIATED BY USING THE AUDITED TUBE EXPENSE FOR PRIOR YEARS, IT IS NOT STATED WHETHER THIS TUBE EXPENSE TOOK INTO ACCOUNT THE COST OF TUBES TAKEN FROM THE TUBE INVENTORY ON HAND. THIS REGARD, IT IS DESIRED TO POINT OUT AGAIN, AS WAS DONE IN OUR SETTLEMENT OF JANUARY 15, 1959, THAT AN AUDIT CONDUCTED BY THE ADMINISTRATIVE OFFICE SHOWS THAT DURING THE PERIOD FROM JANUARY 1, 1944, THROUGH JUNE 30, 1953, YOU RECEIVED THE SUM OF $148,615.82 FOR TUBES AND THAT YOU EXPENDED ONLY $90,245.68 FOR TUBES, THUS INDICATING THAT YOU WERE PAID $58,370.14 MORE THAN YOU EXPENDED FOR TUBES. EVEN FOR THE LAST YEAR OF ACTUAL OPERATION (FISCAL YEAR 1953) AND FOR WHICH THE GOVERNMENT HAD NO OPPORTUNITY OF RECOVERING EXCESSIVE ALLOWANCES FOR TUBES BY WAY OF NEGOTIATING A LOWER RATE THE SUCCEEDING YEAR, THE ADMINISTRATIVE OFFICE REPORTS THAT YOU RECEIVED THE SUM OF $15,000 FOR TUBES BUT EXPENDED ONLY $399.04. THE NET RESULT OF OUR PRIOR ACTION IN THIS CASE IS THAT YOU HAVE BEEN CHARGED WITH $16,761.60 FOR TUBES TAKEN FROM THE TUBE INVENTORY AND IF THIS SUM IS DEDUCTED FROM THE AMOUNT OF $58,370.14 GAINED BY YOU ON THE TUBE COSTS, IT STILL LEAVES YOU WITH A PROFIT ON TUBES OF $41,608.54.

NOTHING HAS BEEN FURNISHED WHICH WOULD WARRANT ANY CHANGE IN THE CONCLUSION REACHED IN OUR DECISION OF FEBRUARY 17, 1960, AND ACCORDINGLY, WE MUST ADHERE TO THAT CONCLUSION.