A-56371, AUGUST 9, 1934, 14 COMP. GEN. 106

A-56371: Aug 9, 1934

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AMOUNTS THEREAFTER COLLECTED FROM THE DEFAULTING CONTRACTOR ON ACCOUNT OF THE EXCESS COST OF DELIVERING COAL TO THE GOVERNMENT DEPARTMENT OR ESTABLISHMENT ARE NOT MONEYS RECEIVED FROM THE SALE OF FUEL CONTEMPLATED BY THE ACT OF MARCH 1. 1934: YOUR ATTENTION IS INVITED TO A MATTER ARISING IN THE ACCOUNTS OF CHARLES E. NOTWITHSTANDING THE FACT THAT SUCH COAL MAY HAVE BEEN PURCHASED BY THE GOVERNMENT FUEL YARDS UNDER OTHER CONTRACTS AT A HIGHER PRICE. IT FURTHER APPEARS THAT THE DIFFERENCE BETWEEN THE PRICE PAID FOR THE FUEL BY THE GOVERNMENT FUEL YARDS AND THE PRICE STATED IN THE CONTRACT OF THE DEFAULTING CONTRACTOR IS COLLECTED FROM THE DEFAULTING CONTRACTOR BY MAKING DEDUCTIONS FROM AMOUNTS OTHERWISE DUE SAID CONTRACTOR.

A-56371, AUGUST 9, 1934, 14 COMP. GEN. 106

APPROPRIATIONS - GOVERNMENT FUEL YARDS - REVOLVING FUND - EXCESS COST OF COAL UNDER DEFAULTING CONTRACT - MISCELLANEOUS RECEIPTS WHERE A CONTRACTOR FOR FURNISHING COAL TO THE GOVERNMENT FUEL YARDS FOR USE OF A GOVERNMENT DEPARTMENT OR ESTABLISHMENT DEFAULTS UNDER ITS CONTRACT, AND THE GOVERNMENT FUEL YARDS SECURES COAL FROM ANOTHER CONTRACTOR AT A HIGHER PRICE BUT DELIVERS THE COAL TO THE GOVERNMENT DEPARTMENT OR ESTABLISHMENT AT THE SAME PRICE STATED IN THE CONTRACT WITH THE DEFAULTING CONTRACTOR, AMOUNTS THEREAFTER COLLECTED FROM THE DEFAULTING CONTRACTOR ON ACCOUNT OF THE EXCESS COST OF DELIVERING COAL TO THE GOVERNMENT DEPARTMENT OR ESTABLISHMENT ARE NOT MONEYS RECEIVED FROM THE SALE OF FUEL CONTEMPLATED BY THE ACT OF MARCH 1, 1933, 47 STAT. 1406, AND MAY NOT LAWFULLY BE RETAINED IN THE APPROPRIATION, BUT SHOULD BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, AUGUST 9, 1934:

YOUR ATTENTION IS INVITED TO A MATTER ARISING IN THE ACCOUNTS OF CHARLES E. MOLSTER, FORMER DISBURSING CLERK, DEPARTMENT OF COMMERCE, INVOLVING AN ERRONEOUS ACCOUNTING PROCEDURE FOLLOWED BY THE GOVERNMENT FUEL YARDS.

IT APPEARS THAT WHERE A CONTRACTOR FOR FURNISHING COAL TO THE GOVERNMENT FUEL YARDS FOR USE BY THE VARIOUS DEPARTMENTS, ESTABLISHMENTS, ETC., OF THE GOVERNMENT DEFAULTS UNDER ITS CONTRACT THE GOVERNMENT FUEL YARDS DELIVERS COAL TO THE GOVERNMENT AGENCIES IN THE EMERGENCY AT THE SAME PRICE STATED IN THE CONTRACT WITH THE DEFAULTING CONTRACTOR, NOTWITHSTANDING THE FACT THAT SUCH COAL MAY HAVE BEEN PURCHASED BY THE GOVERNMENT FUEL YARDS UNDER OTHER CONTRACTS AT A HIGHER PRICE. IT FURTHER APPEARS THAT THE DIFFERENCE BETWEEN THE PRICE PAID FOR THE FUEL BY THE GOVERNMENT FUEL YARDS AND THE PRICE STATED IN THE CONTRACT OF THE DEFAULTING CONTRACTOR IS COLLECTED FROM THE DEFAULTING CONTRACTOR BY MAKING DEDUCTIONS FROM AMOUNTS OTHERWISE DUE SAID CONTRACTOR, THUS RETAINING THE EXCESS COST OF THE COAL IN THE APPROPRIATION "MAINTENANCE AND OPERATION, FUEL YARDS, DISTRICT OF COLUMBIA, BUREAU OF MINES.'

IT APPEARS FROM AN EXAMINATION OF THE ACCOUNTS OF THE FORMER DISBURSING CLERK FOR THE MONTHS OF MARCH AND JUNE, 1930, ON VOUCHERS NOS. 45412, 46599, 54190, AND 85335, IN FAVOR OF A. T. MASSEY COAL CO.; ON VOUCHER NO. 89170 IN FAVOR OF RALEIGH SMOKELESS FUEL CO.; AND ON VOUCHER NO. 79124 APRIL QUARTER, 1932, IN FAVOR OF HALL BROTHERS, INC.--- ALL COVERING COAL DELIVERED TO THE GOVERNMENT FUEL YARDS, THERE WERE DEDUCTED FROM AMOUNTS OTHERWISE DUE SAID COMPANIES, SUMS OF $47.86, $39.76, $108.96, $230.79, $73.13, AND $53.27, RESPECTIVELY, REPRESENTING THE EXTRA COST TO THE GOVERNMENT FUEL YARDS IN SUPPLYING GOVERNMENT AGENCIES WITH COAL PROCURED UNDER OTHER CONTRACTS DUE TO THE CONTRACTOR'S FAILURE TO MAKE SHIPMENT AS ORDERED. EXCEPTIONS WERE NOTED IN THE AUDIT OF THE ACCOUNTS, THE DISBURSING CLERK BEING ADVISED THAT THE AMOUNTS DEDUCTED SHOULD HAVE BEEN DEPOSITED AND COVERED INTO THE GENERAL FUND OF THE TREASURY AS "MISCELLANEOUS RECEIPTS, 4275, REIMBURSEMENT, EXCESS COST OVER CONTRACT PRICE.'

IN A LETTER DATED JANUARY 16, 1931, ADDRESSED TO THE DISBURSING CLERK, THE GOVERNMENT FUEL YARDS STATED:

THE DEDUCTIONS ON THE FIRST FOUR VOUCHERS REPRESENTS THE DIFFERENCE IN THE COST OF COAL PURCHASED AGAINST THE CONTRACT OF A. T. MASSEY COAL COMPANY, INC., FOR THE CAPITOL POWER PLANT. THE CONTRACT PRICE FOR COAL FURNISHED TO THE CAPITOL POWER PLANT WAS $1.11 PER GROSS TON. THE COAL TRANSFERRED TO THE CAPITOL POWER PLANT COST $1.40 PER GROSS TON. THE EXTRA COST OF 29 CENTS PER GROSS TON WAS CHARGED AGAINST THE CONTRACTOR, AS THIS COAL WAS BILLED TO THE CAPITAL POWER PLANT AT THEIR REGULAR CONTRACT PRICE OF $1.11 PER TON.

THE DEDUCTION ON THE FIFTH VOUCHER LISTED ABOVE REPRESENTS THE DIFFERENCE IN THE COST OF COAL PURCHASED AGAINST THE CONTRACT OF THE RALEIGH SMOKELESS FUEL COMPANY FOR THE DISTRICT WORKHOUSE AT OCCOQUAN, VIRGINIA. THE COAL FURNISHED THE DISTRICT WORKHOUSE UNDER CONTRACT WITH THE RALEIGH SMOKELESS FUEL COMPANY COST $5.03 PER GROSS TON DELIVERED. THE COAL TRANSFERRED TO THE DISTRICT WORKHOUSE COST $6.24 PER GROSS TON. THE EXTRA COST OF $1.21 PER GROSS TON WAS CHARGED AGAINST THE CONTRACTOR, AS THIS COAL WAS BILLED TO THE DISTRICT WORKHOUSE AT THE DELIVERED PRICE UNDER THE CONTRACT OF $5.03 PER GROSS TON.

THE FUEL YARDS OPERATES UNDER A REVOLVING FUND APPROPRIATION, WHICH IS MAINTAINED BY ADDING TO THE COST OF THE FUEL PLUS THE FREIGHT, ALL HANDLING AND DELIVERY CHARGES FOR FUEL FURNISHED THE VARIOUS FEDERAL AND DISTRICT ESTABLISHMENTS. IF DEDUCTIONS LIKE THOSE MENTIONED ABOVE WERE DEPOSITED TO THE CREDIT OF MISCELLANEOUS RECEIPTS, THE NET RESULT WOULD BE A GRADUAL DEPLETION OF THE REVOLVING FUND, AS THE CONSUMERS ARE UNWILLING TO PAY ANY ADDITIONAL COST FOR COAL DUE TO DEFAULTING CONTRACTORS. AND IN A LETTER DATED MARCH 21, 1934, ADDRESSED TO THE DISBURSING CLERK BY THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, IT WAS STATED WITH REFERENCE TO THE SUSPENSION ON VOUCHER NO. 79124, AS FOLLOWS:

YOUR LETTER OF FEBRUARY 8, 1934, ADVISES THAT A DEDUCTION OF $53.27 ON VOUCHER NO. 79124, REPRESENTING EXCESS COST OF COAL ON ACCOUNT OF DEFAULTING CONTRACTOR, BE COVERED INTO ,MISCELLANEOUS RECEIPTS, 4275, REIMBURSEMENT EXCESS COST OVER CONTRACT PRICE," CHARGING THE APPROPRIATION "63667--- MAINTENANCE AND OPERATION FUEL YARDS, DISTRICT OF COLUMBIA, BUREAU OF MINES, 1933 AND PRIOR YEARS.'

THIS CASE IS SIMILAR TO THAT COVERED BY LETTER TO YOU, DATED JANUARY 16, 1931, COPY ATTACHED. YOU WILL OBSERVE THAT, IF THIS DEDUCTION OF $53.27 WAS COVERED INTO "MISCELLANEOUS RECEIPTS," IT WOULD REDUCE THE FUEL YARDS' REVOLVING FUND APPROPRIATIONS, SINCE THE FEDERAL INSTITUTIONS, NAVAL AND GALLINGER HOSPITALS, WERE GIVEN CREDIT ON THEIR COAL BILLS DURING THE MONTH OF APRIL 1932 FOR THE AMOUNT OF THIS DEDUCTION; $19.41 TO THE NAVAL HOSPITAL AND $33.86 TO GALLINGER HOSPITAL, TOTAL $53.27. IF THE NAVAL AND GALLINGER HOSPITALS HAD BEEN CHARGED THE FULL COST OF THE COAL SUBSTITUTED FOR THAT UNDER THE CONTRACT, THE DEDUCTION OF $53.27 COULD BE COVERED INTO ,MISCELLANEOUS RECEIPTS" WITHOUT ANY LOSS TO FUEL YARDS' APPROPRIATION. BUT SINCE THESE TWO INSTITUTIONS WERE FURNISHED A HIGHER-PRICED COAL AT NO CORRESPONDING INCREASE IN COST, THE FUEL YARDS' APPROPRIATION WOULD THEREFORE BE REDUCED BY THE AMOUNT DEDUCTED FROM THE DEFAULTING CONTRACTOR IF COVERED INTO "MISCELLANEOUS RECEIPTS.' IT IS THEREFORE SUBMITTED THAT NO ADJUSTMENT IS IN ORDER BETWEEN THE APPROPRIATION REFERRED TO.

THE ACT OF MARCH 1, 1933, 47 STAT. 1406, UNDER THE HEADING "GOVERNMENT FUEL YARDS," PROVIDES:

FOR THE PURCHASE AND TRANSPORTATION OF FUEL; * * * THE UNEXPENDED BALANCE OF THE APPROPRIATIONS HERETOFORE MADE FOR THESE PURPOSES IS REAPPROPRIATED AND MADE AVAILABLE FOR SUCH PURPOSES FOR THE FISCAL YEAR 1934, AND FOR PAYMENT OF OBLIGATIONS FOR SUCH PURPOSES OF PRIOR YEARS, * * *: PROVIDED, THAT ALL MONEYS RECEIVED FROM THE SALES OF FUEL SHALL BE CREDITED TO THIS APPROPRIATION AND BE AVAILABLE FOR THE PURPOSES OF THIS PARAGRAPH: * * *

UNDER THE PROVISIONS OF THE ANNUAL APPROPRIATION ACT CREATING A SO CALLED "REVOLVING FUND" FOR THE GOVERNMENT FUEL YARDS THE AMOUNTS DEDUCTED FROM VOUCHERS IN FAVOR OF THE CONTRACTORS WITH THE GOVERNMENT FUEL YARDS ON ACCOUNT OF EXCESS COST OF DELIVERING COAL TO GOVERNMENT AGENCIES DUE TO THE CONTRACTOR'S DEFAULT IN MAKING DELIVERY AS ORDERED, ARE NOT MONEYS RECEIVED FROM THE SALE OF FUEL AND ARE NOT PROPERLY RETAINED IN THE APPROPRIATION, BUT SHOULD BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. SECTION 3617 AND 3618, REVISED STATUTES, REQUIRE COLLECTIONS MADE ON ACCOUNT OF THE BREACH OF GOVERNMENT CONTRACTS TO BE DEPOSITED AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

THE ERRONEOUS PRACTICE IN THIS MATTER APPEARS TO ARISE FROM THE FACT THAT THE GOVERNMENT FUEL YARDS BILLS THE GOVERNMENT AGENCIES FOR COAL AT THE PRICE STATED IN THE CONTRACT OF THE DEFAULTING CONTRACTOR AND NOT AT THE PRICE OF THE COAL TO THE GOVERNMENT FUEL YARDS. THE APPROPRIATIONS OF THE DEPARTMENTS, ESTABLISHMENTS, ETC., ARE CHARGEABLE WITH THE ACTUAL COST OF THE COAL, WHICH, IN THE INSTANT CASE, IS THE AMOUNT PAID FOR THE COAL BY THE GOVERNMENT FUEL YARDS. THE DEPARTMENTS, ESTABLISHMENTS, ETC., RECEIVING THE COAL FROM THE GOVERNMENT FUEL YARDS SHOULD BE BILLED WITH THE FULL COST OF THE COAL FURNISHED AND SAID AMOUNT IS FOR DEPOSITING TO THE CREDIT OF THE APPROPRIATION "MAINTENANCE AND OPERATION, FUEL YARDS, DISTRICT OF COLUMBIA, BUREAU OF MINES.' 10 COMP. GEN. 510.

THE MATTER IS BROUGHT TO YOUR ATTENTION FOR SUCH ACTION AS MAY BE DEEMED NECESSARY IN ORDER TO CORRECT THE ERRONEOUS PROCEDURE.