A-59754, FEBRUARY 5, 1935, 14 COMP. GEN. 592

A-59754: Feb 5, 1935

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WAS THE RELIEF OF THOSE CONTRACTORS WHO HAD ENTERED INTO A SPECIFIC UNDERTAKING TO PERFORM WORK. THEREAFTER WERE FACED WITH LOSS DUE TO COMPLIANCE WITH CODES OF FAIR COMPETITION. WITH INCLOSURES AS FOLLOWS: THERE IS TRANSMITTED HEREWITH IN TRIPLICATE THE UNPERFECTED CLAIM OF THE SAUK RIVER LUMBER CO. THE CONTRACT UPON WHICH THIS CLAIM IS BASED IS AN AGREEMENT FOR THE SALE OF NATIONAL FOREST TIMBER TO THIS CONTRACTOR AND THE LOSSES CLAIMED ARE ADDITIONAL EXPENSES INCURRED IN REMOVING AND MARKETING THE TIMBER PURCHASED FROM THE UNITED STATES. ALLEGED TO HAVE BEEN CAUSED BY COMPLIANCE WITH THE CODE. IT IS REQUESTED THAT EXAMINATION OF THE CLAIM BE MADE AS SUBMITTED FOR THE PURPOSE OF DETERMINING WHETHER THE PROVISIONS OF THE ACT OF JUNE 16.

A-59754, FEBRUARY 5, 1935, 14 COMP. GEN. 592

CONTRACTORS - RELIEF ON ACCOUNT OF INCREASED COSTS OF PERFORMANCE - ACT OF JUNE 16, 1934, 48 STAT. 974 THE PURPOSE OF THE ACT OF JUNE 16, 1934, 48 STAT. 974, WAS THE RELIEF OF THOSE CONTRACTORS WHO HAD ENTERED INTO A SPECIFIC UNDERTAKING TO PERFORM WORK, OR FURNISH SUPPLIES OR MATERIALS TO THE GOVERNMENT, AFTER ADVERTISING AND COMPETITIVE BIDDING ACCORDING TO LAW, BASING THEIR BID PRICES UPON PREVAILING COSTS OF LABOR AND MATERIALS, AND THEREAFTER WERE FACED WITH LOSS DUE TO COMPLIANCE WITH CODES OF FAIR COMPETITION. THE ACT HAS NO APPLICATION TO PURCHASERS FROM THE GOVERNMENT, AND DOES NOT AUTHORIZE THE REIMBURSEMENT OF SUCH PURCHASERS FOR DECREASE IN PROFIT, INCREASED COSTS OF PRODUCTION, OR LOSSES SUSTAINED.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, FEBRUARY 5, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 15, 1935, WITH INCLOSURES AS FOLLOWS:

THERE IS TRANSMITTED HEREWITH IN TRIPLICATE THE UNPERFECTED CLAIM OF THE SAUK RIVER LUMBER CO., EVERETT, WASHINGTON, IN THE AMOUNT OF $93,338.85, TOGETHER WITH A LETTER DATED DECEMBER 21, 1934, FROM MR. WEBSTER BALLINGER, ATTORNEY FOR THE CLAIMANT. THE LUMBER COMPANY HAS SUBMITTED THIS CLAIM AS COMING WITHIN THE PROVISIONS OF THE ACT OF JUNE 16, 1934 (48 STAT. 974), SEEKING RELIEF BECAUSE OF ALLEGED INCREASED COSTS TO ITSELF AS A CONTRACTOR WITH THE UNITED STATES, DUE TO COMPLIANCE WITH THE ACT OF JUNE 16, 1933, AND WITH THE CODE OF FAIR COMPETITION FOR THE LUMBER AND TIMBER PRODUCTS INDUSTRY, ISSUED PURSUANT TO THE PROVISIONS OF TITLE I OF SAID ACT AND APPROVED BY THE PRESIDENT ON AUGUST 19, 1933. INSTEAD OF BEING THE USUAL CONTRACT FOR THE PERFORMANCE OF SERVICES FOR OR THE FURNISHING OF SUPPLIES OR MATERIALS TO THE GOVERNMENT, HOWEVER, THE CONTRACT UPON WHICH THIS CLAIM IS BASED IS AN AGREEMENT FOR THE SALE OF NATIONAL FOREST TIMBER TO THIS CONTRACTOR AND THE LOSSES CLAIMED ARE ADDITIONAL EXPENSES INCURRED IN REMOVING AND MARKETING THE TIMBER PURCHASED FROM THE UNITED STATES, ALLEGED TO HAVE BEEN CAUSED BY COMPLIANCE WITH THE CODE.

IT IS REQUESTED THAT EXAMINATION OF THE CLAIM BE MADE AS SUBMITTED FOR THE PURPOSE OF DETERMINING WHETHER THE PROVISIONS OF THE ACT OF JUNE 16, 1934, ARE APPLICABLE THERETO.

IF IT IS DETERMINED BY YOU THAT THE NATURE OF THIS CLAIM IS SUCH THAT IT MAY BE CONSIDERED UNDER THE PROVISIONS OF SAID ACT, IT IS REQUESTED THAT IT BE RETURNED TO THIS DEPARTMENT IN ORDER THAT IT MAY BE PERFECTED BY THE CLAIMANT AND RESUBMITTED TO THE DEPARTMENT FOR ADMINISTRATIVE FINDING OF FACT AND RECOMMENDATION WITH RESPECT TO THE CLAIM AS CONTEMPLATED IN SECTION 1 OF THE ACT.

THERE ACCOMPANIED YOUR LETTER A PETITION OF THE SAUK RIVER LUMBER COMPANY SETTING FORTH IN SUBSTANCE THAT THAT CORPORATION ON AUGUST 2, 1922, MADE A CONTRACT WITH THE DEPARTMENT OF AGRICULTURE THROUGH THE FORESTRY SERVICE, WHEREBY THE GOVERNMENT UNDERTOOK TO SELL, AND THE CORPORATION UNDERTOOK TO BUY LUMBER, AS SET FORTH IN SAID CONTRACT AND SUBSEQUENT MODIFICATIONS, AT STIPULATED PRICES PER THOUSAND FEET; THAT THE CORPORATION MADE EXTENSIVE OUTLAYS IN PREPARATION FOR LOGGING TIMBER, ENTERED UPON THE UNDERTAKING IN FEBRUARY 1923 AND HAS CONTINUED ITS OPERATIONS SINCE THAT DATE; AND THAT ON OR ABOUT AUGUST 19, 1933, THE PRESIDENT OF THE UNITED STATES APPROVED A CODE OF FAIR COMPETITION FOR THE LUMBER AND TIMBER PRODUCTS INDUSTRY, PROVIDING A MINIMUM WAGE AND MAXIMUM HOUR SCALE UNDER THE TERMS OF WHICH THE COMPANY WAS REQUIRED TO DECREASE THE HOURS OF MANUAL LABOR AND INCREASE THE HOURLY WAGE OF ITS EMPLOYEES. THE CLAIMANT ALLEGES THAT BY REASON OF COMPLIANCE WITH THAT CODE, THE COMPANY SUFFERED AN INCREASED COST OF PRODUCTION IN LABOR OF $72,721.02 DURING THE PERIOD FROM SEPTEMBER 1, 1933, TO SEPTEMBER 30, 934; THAT IF SAID COMPANY HAD NOT BEEN RESTRICTED BY THE ALLOTMENT PROVIDED UNDER SAID CODE IT WOULD HAVE BEEN ABLE TO PRODUCE AN ADDITIONAL AMOUNT OF TIMBER AT A FIXED OVERHEAD; AND THAT THE RESTRICTED ALLOTMENT RESULTED IN AN INCREASED OVERHEAD AMOUNTING IN THE AGGREGATE TO $20,617.83, IN THE SAME PERIOD. WHEREFORE, THE COMPANY SEEKS FROM THE GOVERNMENT THE TOTAL AMOUNT OF $93,338.35.

THE ACT OF JUNE 16, 1934, 48 STAT. 974, UNDER WHICH THE CLAIM IS PRESENTED, NEGATIVES ANY IMPRESSION THAT THE SAID ACT WAS INTENDED TO APPLY TO CASES SUCH AS THIS, OR TO AUTHORIZE THE REIMBURSEMENT OF DEALERS FOR DECREASE IN PROFIT, INCREASED COSTS OF PRODUCTION, OR LOSSES SUSTAINED.

THE PURPOSE OF THE ACT WAS THE RELIEF OF THOSE WHO HAD ENTERED UPON A SPECIFIC UNDERTAKING TO PERFORM WORK FOR OR FURNISH SUPPLIES OR MATERIAL TO THE GOVERNMENT, AFTER ADVERTISING AND COMPETITIVE BIDDING ACCORDING TO LAW, BASING THEIR BID PRICES UPON PREVAILING COSTS OF LABOR AND MATERIAL, AND THEREAFTER WERE FACED WITH LOSS DUE TO COMPLIANCE WITH CODES OF FAIR COMPETITION.

THE CONTRACT HERE IS NOT WITHIN THAT CATEGORY. IT IS MERELY A PURCHASE OF TIMBER FROM THE GOVERNMENT BY A LUMBER COMPANY TO BE MARKETED AT A PROFIT. IF, AS CLAIMED, THE COMPANY'S OVERHEAD EXPENSES WERE INCREASED BY REASON OF CODE COMPLIANCE, THERE WAS, PRESUMABLY, AN INCREASE IN THE PRICES CHARGED BY THE COMPANY FOR ITS PRODUCTS. MANIFESTLY, IF THE PRODUCER INCREASED THE SALE PRICE OF ITS PRODUCT TO COVER INCREASED COST DUE TO CODE COMPLIANCE, THERE IS NO BASIS FOR SEEKING ANY ADJUSTMENT FROM THE GOVERNMENT. THE GOVERNMENT, HOWEVER, IS NOT CONCERNED WITH THE REALIZATION OR AMOUNT OF PROFIT BY THE PURCHASER.

CAREFUL CONSIDERATION IMPELS THE CONCLUSION THAT CLAIMS SUCH AS HERE INVOLVED ARE NOT FOR CONSIDERATION UNDER THE ACT OF JUNE 16, 1934, SUPRA, AND CANNOT BE ADJUSTED BY THIS OFFICE, UNDER THE PROVISIONS THEREOF.

YOUR SUBMISSION IS ANSWERED ACCORDINGLY, AND THE SAUK RIVER LUMBER COMPANY SHOULD BE SO INFORMED.