A-26341, APRIL 1, 1929, 8 COMP. GEN. 512

A-26341: Apr 1, 1929

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CONTRACTS - DECREASED COSTS - DECREASE IN WAGE SCALE WHERE THERE IS A DECREASE IN THE WAGE SCALE IN THE MINING OF COAL. WHERE POSSIBLE AND THE AMOUNT INVOLVED IS CONSIDERABLE. FOR DECISION WHETHER YOU ARE AUTHORIZED UNDER CONTRACT NO. IT APPEARS FROM THE PAPERS THAT THE PRIMARY QUESTION ON WHICH YOU DESIRE DECISION IS THE CHARACTER OF THE EVIDENCE NECESSARY TO SUPPORT A REDUCTION IN THE CONTRACT PRICE OF COAL DUE TO A DECREASE IN THE WAGE SCALE OF THE MINERS. THE FORM FOR WHICH IS NOW OBSOLETE. PROVIDED IN PARAGRAPH 3 OF THE PURCHASE CONDITIONS THAT THE CONTRACT PRICE OF THE COAL WAS BASED UPON THE WAGE SCALE IN EFFECT WITH MINE EMPLOYEES ON THE DATE OF THE OPENING OF THE BIDS. IT WAS FURTHER PROVIDED THAT: * * * IN EVENT OF ANY SUCH INCREASE OR DECREASE IN COST OF PRODUCTION THE CONTRACTOR SHALL FURNISH THE GOVERNMENT AN AFFIDAVIT.

A-26341, APRIL 1, 1929, 8 COMP. GEN. 512

CONTRACTS - DECREASED COSTS - DECREASE IN WAGE SCALE WHERE THERE IS A DECREASE IN THE WAGE SCALE IN THE MINING OF COAL, AND THE CONTRACT, SUCH AS THE STANDARD GOVERNMENT FORM OF CONTRACT FOR THE PURCHASE OF COAL, PROVIDES FOR A DECREASE IN THE CONTRACT PRICE DUE TO THE DECREASE IN WAGES, THE DECREASE SHOULD BE COMPUTED ON THE BASIS OF AN AFFIDAVIT SUBMITTED BY THE CONTRACTOR, AS REQUIRED BY THE CONTRACT, SUPPLEMENTED, WHERE POSSIBLE AND THE AMOUNT INVOLVED IS CONSIDERABLE, BY A REPORT FROM THE EMPLOYEE OF THE BUREAU OF MINES STATIONED IN THE DISTRICT AS TO THE CORRECTNESS OF THE AFFIDAVIT, OR BY AN INDEPENDENT EXAMINATION MADE OF THE CONTRACTOR'S BOOKS. (AMPLIFIED BY 8 COMP. GEN. 671.)

COMPTROLLER GENERAL MCCARL TO MAJ. W. A. MACNICHOLL, UNITED STATES ARMY, APRIL 1, 1929:

THERE HAS BEEN RECEIVED BY INDORSEMENT DATED MARCH 2, 1929, YOUR REQUEST OF JANUARY 24, 1929, FOR DECISION WHETHER YOU ARE AUTHORIZED UNDER CONTRACT NO. W-928-QM-6116, DATED MAY 26, 1928, TO MAKE PAYMENT ON AN APPROVED VOUCHER OF $10.83 STATED IN FAVOR OF THE STANDARD COAL CO. OF CALIFORNIA, AS 10 PERCENT RETAINED ON YOUR VOUCHER NO. 794, JANUARY, 1929, ACCOUNTS, AND PENDING DECISION AS TO CORRECTNESS OF REDUCTION ON ACCOUNT OF WAGE SCALE. IT APPEARS FROM THE PAPERS THAT THE PRIMARY QUESTION ON WHICH YOU DESIRE DECISION IS THE CHARACTER OF THE EVIDENCE NECESSARY TO SUPPORT A REDUCTION IN THE CONTRACT PRICE OF COAL DUE TO A DECREASE IN THE WAGE SCALE OF THE MINERS.

THE CONTRACT OF MAY 26, 1928, THE FORM FOR WHICH IS NOW OBSOLETE, BEING SUPERSEDED BY A STANDARD GOVERNMENT FORM OF CONTRACT FOR THE PURCHASE OF COAL AND WHICH HAS BEEN APPROVED AND PROMULGATED BY THE PRESIDENT FOR USE THROUGHOUT THE GOVERNMENT SERVICE, PROVIDED IN PARAGRAPH 3 OF THE PURCHASE CONDITIONS THAT THE CONTRACT PRICE OF THE COAL WAS BASED UPON THE WAGE SCALE IN EFFECT WITH MINE EMPLOYEES ON THE DATE OF THE OPENING OF THE BIDS, AND THAT ANY INCREASE OR DECREASE IN THE COST OF PRODUCTION OF THE COAL RESULTING FROM CHANGES IN THE WAGE SCALES SHOULD CORRESPONDINGLY INCREASE OR DECREASE THE CONTRACT PRICE OF THE COAL ON ANY TONNAGE SHIPPED THEREAFTER NOT IN ARREARS AT THE TIME THE CHANGE BECAME EFFECTIVE. IT WAS FURTHER PROVIDED THAT:

* * * IN EVENT OF ANY SUCH INCREASE OR DECREASE IN COST OF PRODUCTION THE CONTRACTOR SHALL FURNISH THE GOVERNMENT AN AFFIDAVIT, COMPARING IN DETAIL THE PER TON AND THE PER HOUR OR PER DAY RATES OF PAY UNDER THE NEW WAGE SCALE WITH THE CORRESPONDING RATES UNDER THE WAGE SCALE UPON WHICH THE CONTRACT PRICE IS BASED, STATING THE EFFECT OF SUCH INCREASE OR DECREASE IN THE COST OF PRODUCTION OF THE COAL SPECIFIED HEREIN AND SHOWING THE PROPOSED INCREASE OR DECREASE IN THE PURCHASE PRICE PER TON RESULTING FROM SUCH CHANGE IN THE WAGE SCALE, AND HE SHALL SUBMIT SUCH OTHER INFORMATION AS THE GOVERNMENT MAY REQUIRE.

THE STANDARD GOVERNMENT FORM OF CONTRACT FOR THE PURCHASE OF COAL PROVIDES, IN PARAGRAPH 3, FOR AN INCREASE OR DECREASE IN THE CONTRACT PRICE OF COAL DUE TO ANY INCREASE OR DECREASE IN THE WAGE SCALE EFFECTIVE AFTER THE DATE OF OPENING OF BIDS, WITH THE PROVISO:

* * * THAT IN EVENT OF ANY SUCH INCREASE IN COST OF PRODUCTION DUE TO INCREASE IN WAGE SCALES, THE CLAIM SHALL BE PRESENTED WITHIN 60 DAYS AND SUPPORTED BY THE AFFIDAVIT OF THE SUPERINTENDENT OR CORRESPONDING OFFICER OF THE MINE OR MINES FROM WHICH THE COAL WAS PRODUCED AND BY REPORT OF A CERTIFIED PUBLIC ACCOUNTANT SHOWING THE COST OF MINING THE COAL BEFORE THE INCREASE IN THE WAGE SCALE, THE AMOUNT OF THE INCREASE IN WAGE SCALE AFTER THE DATE OF THE OPENING OF BIDS, AND THE AMOUNT OF SUCH INCREASE APPLICABLE TO THE COAL DELIVERED UNDER THIS CONTRACT AFTER THE DATE OF SUCH INCREASE. THE BOOKS OF THE CONTRACTOR SHALL BE SO KEPT AS TO SHOW THE FOREGOING FACTS, AND SHALL BE OPEN TO INSPECTION BY AN AUTHORIZED OFFICER OR EMPLOYEE OF THE GOVERNMENT. NO INCREASE OVER THE CONTRACT PRICE SHALL BE ALLOWED UNLESS THE CLAIM IS SO PRESENTED AND THE BOOKS OF THE CONTRACTOR ARE SO KEPT. IN EVENT OF A DECREASE IN COST OF PRODUCTION DUE TO DECREASE IN THE WAGE SCALES, THE DECREASE IN THE CONTRACT PRICE SHALL BE COMPUTED ON THE BASIS OF THE AFFIDAVIT OR AFFIDAVITS OF THE SUPERINTENDENT OR OTHER CORRESPONDING OFFICER OF THE MINE OR MINES FROM WHICH THE COAL WAS PRODUCED OR UPON OTHER EVIDENCE. WHEN THERE HAS BEEN NO CHANGE IN THE WAGE SCALES DURING THE PRODUCTION OF THE CONTRACT COAL, THE CONTRACTOR SHALL SO CERTIFY ON INVOICES OR VOUCHERS SUBMITTED FOR PAYMENT.

IT IS DEEMED DESIRABLE TO REFER IN THIS CONNECTION TO THE REQUIREMENTS OF THE STANDARD GOVERNMENT FORM OF CONTRACT FOR THE PURCHASE OF COAL BECAUSE OF A NUMBER OF INFORMAL INQUIRIES WITH RESPECT THERETO AND BECAUSE THE PROCEDURE THEREUNDER SHOULD BE UNIFORM THROUGHOUT THE VARIOUS DEPARTMENTS AND ESTABLISHMENTS OF THE GOVERNMENT CHARGED WITH THE PURCHASE OF COAL. THE DIFFERENCE IS APPARENT BETWEEN THE SUPERSEDED FORM WHICH WAS USED IN THE CONTRACT OF MAY 26, 1928, AND THE STANDARD FORM, WITH RESPECT TO THE CHANGE IN THE CONTRACT PRICE OF THE COAL DUE TO THE INCREASE OR DECREASE IN THE WAGE SCALE OF THE MINERS. THE STANDARD FORM OF CONTRACT REQUIRES IN THE FIRST PLACE, THE CONTRACTOR TO KEEP ITS BOOKS--- OPEN TO INSPECTION BY THE GOVERNMENT--- IN SUCH A MANNER AS TO SHOW (1) THAT COST OF MINING THE COAL ON THE DATE OF THE OPENING OF BIDS, AND (2) THE AMOUNT OF ANY INCREASE OR DECREASE APPLICABLE TO THE COAL DELIVERED UNDER THE CONTRACT AFTER THE DATE OF SUCH INCREASE. IT REQUIRES, ALSO, THAT CLAIM FOR ANY INCREASE BE SUBMITTED WITHIN 60 DAYS AFTER THE DATE OF THE INCREASE, SUPPORTED BY THE AFFIDAVIT OF THE SUPERINTENDENT OR CORRESPONDING OFFICER OF THE MINES AND BY A REPORT OF A CERTIFIED PUBLIC ACCOUNTANT, SHOWING THE INCREASE APPLICABLE TO THE CONTRACT COAL. IN EVENT OF ANY DECREASE IN THE PRICE OF COAL DUE TO A DECREASE IN THE WAGE SCALE, THE CONTRACTOR IS REQUIRED TO FURNISH AN AFFIDAVIT OF THE DECREASE IN THE WAGE SCALE AND THE GOVERNMENT MAY SUPPLEMENT THAT AFFIDAVIT WITH SUCH OTHER EVIDENCE AS MAY BE DEEMED NECESSARY AND DESIRABLE.

IT APPEARS IN THIS PARTICULAR CASE THAT THE CONTRACTOR HAS SUBMITTED AN AFFIDAVIT SHOWING THE NEW WAGE SCALE AGREEMENT BETWEEN THE MINERS AND THE COAL COMPANY, TOGETHER WITH A "COMPARISON OF THE OLD SCALE OF WAGES AND THE NEW SCALE OF WAGES" AS APPLIED TO THE "MINE" FROM WHICH THE CONTRACT COAL WAS SECURED. IT IS UNDERSTOOD THAT THE BUREAU OF MINES, DEPARTMENT OF COMMERCE, HAS EMPLOYEES IN THE VARIOUS COAL FIELDS, AND THAT THE CORRECTNESS OF THE AFFIDAVIT MAY BE CHECKED BY REFERENCE OF SAME TO THE EMPLOYEE OF THE BUREAU OF MINES LOCATED IN THE DISTRICT WHERE THE COAL WAS SECURED. IN PROPER CASES, WHERE THERE IS ANY REASON TO DOUBT THE CORRECTNESS OF THE AFFIDAVIT, A GOVERNMENT EMPLOYEE MAY BE DETAILED TO EXAMINE THE BOOKS OF THE CONTRACTOR TO DETERMINE WHETHER THE AFFIDAVIT IS CORRECT. SUCH PROCEDURE SHOULD BE FOLLOWED IN DETERMINING ANY DECREASE IN THE PRICE OF COAL UNDER THE STANDARD FORM OF CONTRACT AND THE VOUCHERS ON WHICH PAYMENT HAS BEEN MADE FOR THE COAL SHOULD BE SUPPORTED BY THE AFFIDAVIT OF THE CONTRACTOR AND A REPORT, WHERE PRACTICABLE, FROM THE BUREAU OF MINES EMPLOYEE AS TO THE CORRECTNESS OF THE AFFIDAVIT. WHERE THE AMOUNT INVOLVED IS CONSIDERABLE AND APPROPRIATIONS THEREFOR WILL PERMIT, AN INDEPENDENT EXAMINATION SHOULD BE MADE OF THE CONTRACTOR'S BOOKS BY AN EMPLOYEE OF THE GOVERNMENT WHEN THE CONTRACT PRICE IS REDUCED DUE TO A DECREASE IN THE WAGE SCALE. IT IS UNDERSTOOD, OF COURSE, THAT IN EVENT OF CHANGE IN THE CONTRACT PRICE BECAUSE OF CHANGE IN THE WAGE SCALE, NO PAYMENT IN EVENT OF AN INCREASE IN EXCESS OF THE CONTRACT PRICE NOR ANY PAYMENT IN EVENT OF A DECREASE IN CONTRACT PRICE MAY BE MADE UNTIL THE NEW CONTRACT PRICE HAS BEEN DETERMINED AND THE VOUCHERS ON WHICH SUCH PAYMENTS ARE MADE ARE SUPPORTED AS HEREIN STATED.

IT DOES NOT APPEAR FROM THE SUBMISSION WHETHER THE DELIVERIES HAVE BEEN COMPLETED UNDER THE CONTRACT HERE INVOLVED, BUT SINCE THE CONTRACT WAS FOR THE FISCAL YEAR 1929, IT IS PRESUMED THAT THEY HAVE NOT BEEN COMPLETED. IN THAT EVENT, PAYMENT OF THE RETAINED PERCENTAGES PENDING ANALYSIS OF COAL DELIVERED AS TO WHICH THERE HAS BEEN NO CHANGE IN PRICE MAY BE MADE WHEN THE ANALYSIS SHOWS THAT THE COAL WAS WITHIN THE CONTRACT TOLERANCE, AND THIS NOTWITHSTANDING THE CONTRACT PRICE OF SUBSEQUENT DELIVERIES OF COAL HAS BEEN DECREASED ON ACCOUNT OF A DECREASE IN THE WAGE SCALE. PAYMENT UPON THE VOUCHER, IF OTHERWISE CORRECT,IS AUTHORIZED.