A-93106, JULY 25, 1938, 18 COMP. GEN. 84

A-93106: Jul 25, 1938

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GENERAL ACCOUNTING OFFICE CLAIM SIGNATURE REQUIREMENTS THERE IS NO STATUTORY AUTHORITY FOR THE STIPULATION IN A NAVY DEPARTMENT PERCENTAGE PAYMENT CONTRACT FOR THE MANUFACTURE OF AIRCRAFT. NOR MAY SUCH INVOICES ORIGINALLY SUBMITTED FOR AMOUNTS MORE THAN DUE BE VIEWED AS CURRENT CLAIMS FOR AMOUNTS WHICH SUBSEQUENTLY MAY HAVE BECOME DUE. HAD RETURNED THE VOUCHERS BECAUSE THERE WAS NO CLAIM OVER THE SIGNATURE OF THE CONTRACTOR AS REQUIRED BY GENERAL REGULATIONS NO. 50 OF THIS OFFICE. IN REPLY IS. AS FOLLOWS: THE CLAIMS OVER THE SIGNATURES OF THE CLAIMANT IN THIS CASE WERE CONTAINED IN THE ORIGINAL INVOICES FOR 100 PERCENT PAYMENT SUBMITTED UNDER THE CONTRACT AND ARE ATTACHED TO THE PAID DISBURSING OFFICER'S VOUCHERS LISTED HEREIN.

A-93106, JULY 25, 1938, 18 COMP. GEN. 84

CONTRACTS - FINAL PAYMENTS - VINSON ACT EXCESS PROFIT REPORTS, AND GENERAL ACCOUNTING OFFICE CLAIM SIGNATURE REQUIREMENTS THERE IS NO STATUTORY AUTHORITY FOR THE STIPULATION IN A NAVY DEPARTMENT PERCENTAGE PAYMENT CONTRACT FOR THE MANUFACTURE OF AIRCRAFT, DEFINING THE TERM "COMPLETION OF THE CONTRACT," AS USED IN SECTION 3 OF THE VINSON ACT OF MARCH 27, 1934, 48 STAT. 505, REQUIRING A REPORT TO THE SECRETARY OF THE NAVY FOR EXCESS PROFIT, ETC., DETERMINATION PURPOSES, TO MEAN THAT "THE CONTRACT SHALL BE CONSIDERED COMPLETE UPON FINAL PAYMENT OF THE SUM DUE UNDER THE PROVISIONS OF THIS CONTRACT * * *," THERE BEING NO REASON TO SUPPOSE THE CONGRESS USED THE TERM IN ANY OTHER THAN ITS USUAL SENSE OF COMPLETION BY THE CONTRACTOR OF THE CONTRACT WORK, AND THE ADMINISTRATIVELY GRANTED STATUTORY AUTHORITY AS TO THE FORM OF THE REPORT NOT INCLUDING AUTHORITY TO MODIFY THE STATUTORY REQUIREMENT AS TO THE TIME THE REPORT SHALL BE MADE, AND ALL FINAL PAYMENT VOUCHERS UNDER CONTRACTS SUBJECT TO THE PROVISIONS OF THE SAID ACT SHOULD BE SUPPORTED BY A SHOWING THAT THE CONTRACTOR HAS FILED THE REPORT REQUIRED BY THE ACT. INVOICES SIGNED BY A CONTRACTOR FOR THE FULL CONTRACT PRICE, AND ATTACHED TO VOUCHERS COVERING PAYMENT OF ONLY A PERCENTAGE THEREOF THEN DUE, MAY NOT BE ACCEPTED AS SUPPLYING THE DEFICIENCY AS TO THE SIGNATURE OF THE CLAIMANT IN CLAIMS ADMINISTRATIVELY TRANSMITTED TO THE GENERAL ACCOUNTING OFFICE FOR DIRECT SETTLEMENT WITHOUT SUCH SIGNATURE, NOR MAY SUCH INVOICES ORIGINALLY SUBMITTED FOR AMOUNTS MORE THAN DUE BE VIEWED AS CURRENT CLAIMS FOR AMOUNTS WHICH SUBSEQUENTLY MAY HAVE BECOME DUE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE NAVY, JULY 25, 1938:

THE BUREAU OF SUPPLIES AND ACCOUNTS REPORTED BY LETTER OF FEBRUARY 4, 1938, UPON CERTAIN VOUCHERS TRANSMITTED HERE FOR DIRECT SETTLEMENT AS CLAIMS IN FAVOR OF UNITED AIRCRAFT CORPORATION, PRATT AND WHITNEY AIRCRAFT DIVISION, FOR AMOUNTS OF RETAINED PERCENTAGE UNDER CONTRACT NOS-43069, DATED JUNE 29, 1935. THIS OFFICE BY LETTER OF JANUARY 31, 1938, HAD RETURNED THE VOUCHERS BECAUSE THERE WAS NO CLAIM OVER THE SIGNATURE OF THE CONTRACTOR AS REQUIRED BY GENERAL REGULATIONS NO. 50 OF THIS OFFICE, 5 COMP. GEN. 1058, AND INQUIRED WHETHER THE CONTRACTOR HAD FILED THE REPORT REQUIRED BY SECTION 3 (A) OF THE ACT OF MARCH 27, 1934, 48 STAT. 505. THE BUREAU LETTER OF FEBRUARY 4, 1938, IN REPLY IS, IN PART, AS FOLLOWS:

THE CLAIMS OVER THE SIGNATURES OF THE CLAIMANT IN THIS CASE WERE CONTAINED IN THE ORIGINAL INVOICES FOR 100 PERCENT PAYMENT SUBMITTED UNDER THE CONTRACT AND ARE ATTACHED TO THE PAID DISBURSING OFFICER'S VOUCHERS LISTED HEREIN.

WITH RESPECT TO THE REPORT REQUIRED BY SECTION 3 (A) OF THE VINSON ACT, THE LAW PROVIDES THAT SUCH REPORT BE MADE IN SUCH FORM AS MAY BE PRESCRIBED BY THE SECRETARY OF THE NAVY.

THE CONTRACT IN QUESTION CONTAINS THE FOLLOWING CLAUSE:

"THAT FOR THE PURPOSE OF THE VINSON ACT, APPROVED MARCH 27, 1934 (PUBLIC, NO. 135), THE CONTRACT SHALL BE CONSIDERED COMPLETE UPON FINAL PAYMENT OF THE SUM DUE UNDER THE PROVISIONS OF THIS CONTRACT; PROVIDED, HOWEVER, THAT THE OBLIGATION OF THE SURETY SO FAR AS APPLICABLE TO THE LIABILITY OF THE CONTRACTOR FOR THE RETURN OF EXCESS PROFIT UNDER THE PROVISIONS OF THE ACT SHALL BE LIMITED (AS TO THE SURETY ONLY) TO ONE YEAR FROM THE DATE OF FINAL SETTLEMENT UNDER THE FOREGOING PROVISIONS.'

IN VIEW OF THE ABOVE CLAUSE, THE REPORT IN THIS CASE IS NOT REQUIRED UNTIL THE CONTRACT IS COMPLETELY PAID.

THE CONTRACT WAS FOR AIRPLANE ENGINES AND SPARE PARTS IN THE ORIGINAL AMOUNT OF $1,764,768.60, WITH A PROVISION FOR PAYMENT OF 98 PERCENT OF THE UNIT CONTRACT PRICES UPON DELIVERY AND ACCEPTANCE IN LOTS OF NOT LESS THAN $5,000 IN VALUE, THE REMAINING TWO PERCENT TO BE PAID AFTER THE EXPIRATION OF A GUARANTEE PERIOD OF SIX MONTHS, PROVIDED ANY REPORTED DEFECTS HAD BEEN CORRECTED. IT APPEARS THAT DELIVERIES WERE COMPLETED UNDER THE CONTRACT PRIOR TO JUNE 30, 1937, AND THAT THE CONTRACTOR HAS BEEN PAID THE 98 PERCENT SPECIFIED PLUS ABOUT ONE-HALF OF THE RETAINED PERCENTAGES, OR APPROXIMATELY ONE AND THREE-QUARTER MILLIONS OF DOLLARS, LEAVING A BALANCE OF SOME $15,000 UNPAID. OF THE UNPAID BALANCE, VOUCHERS CERTIFIED BUT UNSIGNED FOR AMOUNTS TOTALING SOME $14,000 HAVE BEEN TRANSMITTED TO THIS OFFICE FOR DIRECT SETTLEMENT AS CLAIMS, APPARENTLY LEAVING A SMALL BALANCE FOR WHICH VOUCHERS HAVE NOT YET BEEN TRANSMITTED HERE.

SECTION 3 OF THE VINSON ACT OF MARCH 27, 1934, 48 STAT. 505, IN EFFECT WHEN THE CONTRACT WAS MADE, IS, IN PART, AS FOLLOWS:

* * * THAT NO CONTRACT SHALL BE MADE BY THE SECRETARY OF THE NAVY FOR THE CONSTRUCTION AND/OR MANUFACTURE OF ANY COMPLETE NAVAL VESSEL OR AIRCRAFT, OR ANY PORTION THEREOF, HEREIN, HERETOFORE, OR HEREAFTER AUTHORIZED UNLESS THE CONTRACTOR AGREES---

(A) TO MAKE A REPORT, AS HEREINAFTER DESCRIBED, UNDER OATH, TO THE SECRETARY OF THE NAVY UPON THE COMPLETION OF THE CONTRACT.

(B) TO PAY INTO THE TREASURY PROFIT, AS HEREINAFTER PROVIDED SHALL BE DETERMINED BY THE TREASURY DEPARTMENT, IN EXCESS OF 10 PERCENTUM OF THE TOTAL CONTRACT PRICE, SUCH AMOUNT TO BECOME THE PROPERTY OF THE UNITED STATES: PROVIDED, THAT IF SUCH AMOUNT IS NOT VOLUNTARILY PAID THE SECRETARY OF THE TREASURY MAY COLLECT THE SAME UNDER THE USUAL METHODS EMPLOYED UNDER THE INTERNAL REVENUE LAWS TO COLLECT FEDERAL INCOME TAXES.

THE REPORT SHALL BE IN FORM PRESCRIBED BY THE SECRETARY OF THE NAVY AND SHALL STATE THE TOTAL CONTRACT PRICE, THE COST OF PERFORMING THE CONTRACT, THE NET INCOME, AND THE PERCENTUM SUCH NET INCOME BEARS THE CONTRACT PRICE. A COPY OF SUCH REPORT SHALL BE TRANSMITTED TO THE SECRETARY OF THE TREASURY FOR CONSIDERATION IN CONNECTION WITH THE FEDERAL INCOME TAX RETURNS OF THE CONTRACTOR FOR THE TAXABLE YEAR OR YEARS CONCERNED.

THE METHOD OF ASCERTAINING THE AMOUNT OF EXCESS PROFIT TO BE PAID INTO THE TREASURY SHALL BE DETERMINED BY THE SECRETARY OF THE TREASURY IN AGREEMENT WITH THE SECRETARY OF THE NAVY AND MADE AVAILABLE TO THE PUBLIC. * * *

ARTICLE 36 OF THE CONTRACT HERE IN QUESTION PROVIDES, IN PART:

EXCESS PROFIT.--- THE CONTRACTOR HEREBY AGREES:

(A) TO MAKE A REPORT, UNDER OATH, TO THE SECRETARY OF THE NAVY, UPON COMPLETION OF THIS CONTRACT, IN SUCH FORM AS MAY BE PRESCRIBED BY THE SECRETARY OF THE NAVY, INCLUDING A STATEMENT OF THE TOTAL CONTRACT PRICE, THE COST OF PERFORMING THE CONTRACT, THE NET INCOME, AND THE PERCENTUM SUCH NET INCOME BEARS TO THE CONTRACT PRICE. * * *

(G) THAT FOR THE PURPOSE OF THE VINSON ACT, APPROVED MARCH 27, 1934 (PUBLIC, NO. 135), THE CONTRACT SHALL BE CONSIDERED COMPLETE UPON FINAL PAYMENT OF THE SUM DUE UNDER THE PROVISIONS OF THIS CONTRACT * * *.

THE STIPULATION IN SAID ARTICLE 36 (A) OF THE CONTRACT THAT A REPORT WOULD BE MADE UPON COMPLETION OF THE CONTRACT IS IN CONFORMITY WITH THE STATUTORY REQUIREMENT IN SECTION 3 (A) OF THE VINSON ACT, SUPRA, BUT THERE APPEARS NO STATUTORY AUTHORITY FOR THE STIPULATION IN ARTICLE 36 (G) APPARENTLY PURPORTING IN EFFECT TO DEFINE THE STATUTORY MEANING OF THE TERM "COMPLETION OF THE CONTRACT" AS USED IN SECTION 3 (A) OF THE ACT. THE SAID SECTION 3 (A) REQUIRED THE CONTRACTOR TO AGREE TO MAKE THE REPORT UPON "COMPLETION OF THE CONTRACT," AND THE CONTRACTOR SO AGREED. THERE APPEARS NO REASON TO SUPPOSE THAT THE CONGRESS USED THE TERM "COMPLETION OF THE CONTRACT" IN ANY OTHER THAN ITS USUAL SENSE OF COMPLETION BY THE CONTRACTOR OF THE CONTRACT WORK, WHEREUPON THE COST OF PERFORMANCE COULD BE ASCERTAINED. THE STATUTE PROVIDES THAT THE REPORT "SHALL BE IN FORM PRESCRIBED BY THE SECRETARY OF THE NAVY," BUT, OBVIOUSLY, AUTHORITY TO PRESCRIBE THE "FORM" OF THE REPORT MAY NOT BE EXPENDED INTO AUTHORITY, BY AGREEMENT OR OTHERWISE, TO MODIFY THE STATUTORY REQUIREMENT AS TO THE TIME THE REPORT SHALL BE MADE. THE TWO MATTERS ARE CLEARLY DISTINCT.

IT IS NOTED IN THIS CONNECTION THAT THE CONTRACT STIPULATION HERE INVOLVED IS THAT "THE CONTRACTOR HEREBY AGREES * * * THAT FOR THE PURPOSE OF THE VINSON ACT * * * THE CONTRACT SHALL BE CONSIDERED COMPLETE UPON FINAL PAYMENT OF THE SUM DUE UNDER THE PROVISIONS OF THIS CONTRACT * * " JUST WHAT WAS INTENDED BY THIS IS NOT CLEAR. IT DOES NOT SAY THAT BOTH PARTIES OR THAT THE GOVERNMENT AGREES TO THE DEFINITION, BUT ONLY THAT THE "CONTRACTOR" AGREES. AGREES TO WHAT? TO A DEFINITION OF THE "VINSON ACT.' BUT THE "VINSON ACT" WAS NOT MENTIONED IN THE PRECEDING STIPULATIONS, AND, WHILE SUCH STIPULATIONS WERE THOSE REQUIRED BY THE VINSON ACT, THERE WAS NO REFERENCE THEREIN TO THAT ACT, AND THUS, IN ANY EVENT, IT IS ONLY BY INDIRECTION OR QUESTIONABLE INTERPRETATION THAT THE ABSOLUTE STIPULATION IN ARTICLE 36 (A) OF THE CONTRACT TO MAKE THE REPORT UPON THE COMPLETION OF THE CONTRACT MAY BE VIEWED AS AFFECTED BY ARTICLE 36 (G) OF THE CONTRACT, NOT PURPORTING TO DEFINE THE TERMS OF ARTICLE 36 (A), BUT PURPORTING TO DEFINE THE TERMS OF THE ,VINSON ACT.' HOWEVER THESE MATTERS MAY BE, IT IS CERTAIN THAT A STATUTE MAY NOT BE MODIFIED BY CONTRACT, AND TO THE EXTENT THAT THE CONTRACTUAL PROVISION IN QUESTION IS AT VARIANCE WITH THE STATUTORY REQUIREMENT THERE WAS NO AUTHORITY FOR ITS INCORPORATION IN THE CONTRACT, AND TO THAT EXTENT IT MAY NOT BE TAKEN AS BINDING THE UNITED STATES. IT HAS BEEN ACCEPTED HERETOFORE THAT NO CONSIDERATION OF FINAL PAYMENT VOUCHER IS IN ORDER UNTIL AFTER THE APPROPRIATE ADMINISTRATIVE OFFICIALS HAVE MADE A DETERMINATION "THAT THE CONTRACT HAS BEEN COMPLETED.' GLOBE INDEMNITY CO. V. UNITED STATES, 291 U.S. 476, 483.

THE VIEW THAT THE TERM "COMPLETION OF THE CONTRACT" IN SECTION 3 (A) OF THE VINSON ACT WAS INTENDED IN THE USUAL SENSE OF COMPLETION OF THE CONTRACT WORK BY THE CONTRACTOR IS SUPPORTED BY SECTION 3 (B) OF THE ACT AS AMENDED BY THE ACT OF JUNE 25, 1936, 49 STAT. 1926, TO READ AS FOLLOWS:

SEC. 3. (B) TO PAY INTO THE TREASURY PROFIT, AS HEREINAFTER PROVIDED SHALL BE DETERMINED BY THE TREASURY DEPARTMENT, IN EXCESS OF 10 PERCENTUM OF THE TOTAL CONTRACT PRICES, OF SUCH CONTRACTS WITHIN THE SCOPE OF THIS SECTION AS ARE COMPLETED BY THE PARTICULAR CONTRACTING PARTY WITHIN THE INCOME TAXABLE YEAR, SUCH AMOUNT TO BECOME THE PROPERTY OF THE UNITED STATES, BUT THE SURETY UNDER SUCH CONTRACTS SHALL NOT BE LIABLE FOR THE PAYMENT OF SUCH EXCESS PROFIT: PROVIDED, THAT IF THERE IS A NET LOSS ON ALL SUCH CONTRACTS OR SUBCONTRACTS COMPLETED BY THE PARTICULAR CONTRACTOR OR SUBCONTRACTOR WITHIN ANY INCOME TAXABLE YEAR, SUCH NET LOSS SHALL BE ALLOWED AS A CREDIT IN DETERMINING THE EXCESS PROFIT, IF ANY, FOR THE NEXT SUCCEEDING INCOME TAXABLE YEAR: PROVIDED FURTHER, THAT IF SUCH AMOUNT IS NOT VOLUNTARILY PAID THE SECRETARY OF THE TREASURY SHALL COLLECT THE SAME UNDER THE USUAL METHODS EMPLOYED UNDER THE INTERNAL-REVENUE LAWS TO COLLECT FEDERAL INCOME TAXES: PROVIDED FURTHER, THAT ALL PROVISIONS OF LAW(INCLUDING PENALTIES) APPLICABLE WITH RESPECT TO THE TAXES IMPOSED BY TITLE 1 OF THE REVENUE ACT OF 1934, AND NOT INCONSISTENT WITH THIS SECTION, SHALL BE APPLICABLE WITH RESPECT TO THE ASSESSMENT, COLLECTION, OR PAYMENT OF EXCESS PROFITS TO THE TREASURY AS PROVIDED BY THIS SECTION, AND TO REFUNDS BY THE TREASURY OF OVERPAYMENTS OF EXCESS PROFITS INTO THE TREASURY: AND PROVIDED FURTHER, THAT THIS SECTION SHALL NOT APPLY TO CONTRACTS OR SUBCONTRACTS FOR SCIENTIFIC EQUIPMENT USED FOR COMMUNICATION, TARGET DETECTION, NAVIGATION, AND FIRE CONTROL AS MAY BE SO DESIGNATED BY THE SECRETARY OF THE NAVY, AND THE SECRETARY OF THE NAVY SHALL REPORT ANNUALLY TO THE CONGRESS THE NAMES OF SUCH CONTRACTORS AND SUBCONTRACTORS AFFECTED BY THIS PROVISION, TOGETHER WITH THE APPLICABLE CONTRACTS AND THE AMOUNTS THEREOF: AND PROVIDED FURTHER, THAT THE INCOME-TAXABLE YEARS SHALL BE SUCH TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1965, EXCEPT THAT THE ABOVE PROVISOS RELATING TO THE ASSESSMENT, COLLECTION, PAYMENT, OR REFUNDING OF EXCESS PROFIT TO OR BY THE TREASURY SHALL BE RETROACTIVE TO MARCH 27, 1934.

BY THIS SECTION AS THUS AMENDED CONTRACTORS MAY IN EFFECT COMBINE ALL SUCH NAVY CONTRACTS COMPLETED WITHIN AN INCOME-TAXABLE YEAR FOR THE PURPOSE OF DETERMINING THE NET INCOME IN EXCESS OF 10 PERCENT TO BE PAID INTO THE TREASURY, INSTEAD OF BEING LIABLE FOR SUCH EXCESS INCOME ON INDIVIDUAL CONTRACTS IRRESPECTIVE OF LOSSES OR OF NET INCOME LESS THAN 10 PERCENT ON OTHER SUCH CONTRACTS COMPLETED THE SAME YEAR. WHILE THIS AMENDMENT WAS NOT ENACTED UNTIL AFTER THE PRESENT CONTRACT WAS MADE, THE AMENDMENT WAS MADE RETROACTIVELY EFFECTIVE IN THIS RESPECT TO CONTRACTS COMPLETED IN ANY INCOME TAXABLE YEAR BEGINNING AFTER DECEMBER 31, 1935, WHICH WOULD INCLUDE THE PRESENT CONTRACT. THE SAID SECTION 3 (B) AS THUS AMENDED USES THE WORDING "OF SUCH CONTRACTS* * * AS ARE COMPLETED BY THE PARTICULAR CONTRACTING PARTY WITHIN THE INCOME TAXABLE YEAR * * *.' THAT IS, THE MATTER IS GOVERNED BY THE TIME THE PARTICULAR CONTRACTING PARTY COMPLETES THE CONTRACT WORK, AND NOT BY THE TIME, POSSIBLY MUCH LATER, WHEN FINAL PAYMENT IS MADE BY THE GOVERNMENT. SECTION 3 (A) AS TO THE TIME OF MAKING THE REPORT BY THE CONTRACTOR "UPON THE COMPLETION OF THE CONTRACT" WAS NOT AMENDED, BUT AS THE MAKING OF SUCH REPORTS UNDER SECTION 3 (A) IS A PRELIMINARY TO THE ASSESSMENT AND COLLECTION OF ANY EXCESS PROFIT UNDER SECTION 3 (B), IT SEEMS CLEAR THAT THE TERM "COMPLETION OF THE CONTRACT" AS USED IN THE ORIGINAL AND UNAMENDED SECTION 3 (A) AS GOVERNING THE TIME FOR MAKING THE REPORTS IS SYNONYMOUS WITH "CONTRACTS * * * COMPLETED BY THE PARTICULAR CONTRACTING PARTY" AS USED IN THE AMENDED SECTION 3 (B). THAT IS TO SAY, UNDER THE TERMS OF THE STATUTE THE TIME FOR MAKING THE REPORT UNDER SECTION 3 (A) IS GOVERNED BY THE TIME OF COMPLETION OF THE CONTRACT WORK BY A CONTRACTOR, THE SAME AS UNDER SECTION 3 (B), AND NOT BY THE TIME THE CONTRACTOR RECEIVES FINAL PAYMENT.

THIS VIEW IS FURTHER SUPPORTED BY THE DEFINITION OF "COMPLETION OF CONTRACT" CONTAINED IN THE REGULATIONS UNDER SAID SECTION 3 OF THE VINSON ACT PROMULGATED BY TREASURY DECISION 4723, APPROVED BY THE SECRETARY OF THE TREASURY ON DECEMBER 31, 1936, AND BY THE SECRETARY OF THE NAVY ON JANUARY 6, 1937. ARTICLE 5 (A) OF SUCH REGULATIONS IS AS FOLLOWS:

COMPLETION OF CONTRACT DEFINED.--- THE METHOD OF ASCERTAINING THE AMOUNT OF EXCESS PROFIT IN RESPECT OF A CONTRACT OR SUBCONTRACT COMING WITHIN THE SCOPE OF THE ACT DEPENDS UPON THE DATE OF COMPLETION OF THE CONTRACT OR SUBCONTRACT (I.E., WHETHER THE CONTRACT OR SUBCONTRACT WAS COMPLETED PRIOR TO THE CONTRACTING PARTY'S FIRST INCOME-TAXABLE YEAR BEGINNING AFTER DECEMBER 31, 1935, OR WAS COMPLETED WITHIN OR SUBSEQUENT TO SUCH INCOME- TAXABLE YEAR). WITH THE EXCEPTION OF THOSE CONTRACTS WHICH PROVIDE A METHOD FOR DETERMINING THE DATE OF COMPLETION, THE DATE OF DELIVERY OF THE VESSEL, AIRCRAFT, OR PORTION THEREOF COVERED BY THE CONTRACT OR SUBCONTRACT SHALL BE CONSIDERED THE DATE OF COMPLETION OF THE CONTRACT OR SUBCONTRACT UNLESS OTHERWISE DETERMINED BY THE SECRETARY OF THE NAVY AND THE SECRETARY OF THE TREASURY OR THEIR DULY AUTHORIZED REPRESENTATIVES. AS TO A REFUND IN CASE OF ADJUSTMENT DUE TO SUBSEQUENTLY INCURRED ADDITIONAL COSTS, SEE ARTICLE 19 OF THESE REGULATIONS. IF A CONTRACT OR SUBCONTRACT IS AT ANY TIME CANCELLED OR TERMINATED, IT IS COMPLETED AT THE TIME OF THE CANCELLATION OR TERMINATION.

THUS, THE ADMINISTRATIVE REGULATIONS UNDER THE ACT DEFINE "COMPLETION OF THE CONTRACT" FOR THE PURPOSES OF THE LEGISLATION AS MEANING PRIMARILY "THE DATE OF DELIVERY OF THE VESSEL, AIRCRAFT, OR PORTION THEREOF COVERED BY THE CONTRACT OR SUBCONTRACT," WHICH IS GENERALLY TANTAMOUNT TO COMPLETION BY THE CONTRACTOR OF THE CONTRACT WORK. REGULATIONS NO MORE THAN CONTRACTS MAY MODIFY A STATUTE, BUT WHERE, AS HERE, THE REGULATIONS APPEAR TO SET FORTH THE CORRECT INTERPRETATION OF THE STATUTORY PURPOSE, THERE WOULD BE NO AUTHORITY TO VARY THAT PURPOSE BY CONTRACT OR BY AN ADMINISTRATIVE DETERMINATION OTHERWISE IN INDIVIDUAL CASES. THAT IS, IF THE TERM "UPON COMPLETION OF THE CONTRACT" IN SECTION 3 (A) MEANS UPON COMPLETION BY THE CONTRACTOR OF THE CONTRACT WORK, THEN NO ADMINISTRATIVE ACTION IS AUTHORIZED WHICH PURPORTS TO EXTEND THE TIME FOR MAKING THE REPORT TO A LATER AND DIFFERENT DATE OR WHICH PUTS THE OBLIGATION ON A DIFFERENT BASIS, AND ANY PURPORTED AGREEMENT OR ADMINISTRATIVE DETERMINATION TO SUCH EFFECT MUST BE VIEWED AS INVALID BECAUSE CONTRARY TO THE STATUTE. SEE BY ANALOGY GLOBE INDEMNITY CO. V. UNITED STATES, 291 U.S. 476, 483.

BY THE TERMS OF THE STATUTE THE CONTRACTOR MUST AGREE TO MAKE THE REPORT UPON THE COMPLETION OF THE CONTRACT, THAT IS, AS HELD HEREIN, UPON THE COMPLETION OF THE CONTRACT WORK. THIS AGREEMENT IS INCLUDED AS A PART OF THE CONTRACT AND BECOMES ONE OF THE CONTRACTOR'S OBLIGATIONS THEREUNDER AND A CONDITION TO FINAL PAYMENT. THE STATUTE MAKES NO PROVISION FOR A SEPARATE ENFORCEMENT OF THIS OBLIGATION, AS IT DOES THE OBLIGATION REQUIRED BY SECTION 3 (B) TO PAY EXCESS PROFIT INTO THE TREASURY. FINAL PAYMENT SHOULD BE MADE BEFORE THE REPORT IS FILED A CONTRACTOR MIGHT DELAY INDEFINITELY IN MAKING SUCH REPORT, OR WHOLLY DEFEAT SUCH STIPULATION BY FAILING TO CLAIM SOME SMALL BALANCE DUE; OR, UNDER A CONTRACT LIKE THE PRESENT ONE, BY FAILING TO CORRECT SOME SMALL DEFECT TO RIPEN ITS RIGHT TO FINAL PAYMENT. THIS, OF COURSE, WAS NOT CONTEMPLATED BY THE STATUTE. AS THE STATUTE REQUIRES AN AGREEMENT BY THE CONTRACTOR TO MAKE A REPORT UPON COMPLETION OF THE CONTRACT, AND AS THIS IS A PART OF THE CONTRACTUAL OBLIGATION WITHOUT OTHER MEANS OF ENFORCEMENT, IT WOULD APPEAR CLEARLY INTENDED AS A PART OF THE PERFORMANCE BY THE CONTRACTOR OF THE CONTRACT PROPER, AND THUS A CONDITION PRECEDENT TO ANY RIGHT TO FINAL PAYMENT.

GENERAL REGULATIONS NO. 50 OF THIS OFFICE PROVIDE THAT CLAIMS WILL NOT BE CONSIDERED UNLESS PRESENTED IN WRITING OVER THE BONA FIDE SIGNATURE OF THE CLAIMANT. THE VOUCHERS IN THE PRESENT CASE TRANSMITTED HERE FOR DIRECT SETTLEMENT AS CLAIMS ARE NOT SIGNED BY THE CONTRACTOR, BUT IT IS POINTED OUT THAT INVOICES SIGNED BY THE CONTRACTOR WERE ATTACHED TO VOUCHERS COVERING PAYMENT OF 98 PERCENT OF THE CONTRACT PRICE UPON DELIVERY OF THE ARTICLES, AND THAT SUCH INVOICES WERE FOR THE FULL CONTRACT PRICE. THIS MAY NOT BE ACCEPTED AS A COMPLIANCE WITH GENERAL REGULATIONS NO. 50. WHEN THE ORIGINAL INVOICES WERE PRESENTED THE FULL PRICES OF THE ARTICLES WERE NOT DUE AND PAYABLE. UNDER THE TERMS OF THE CONTRACT, 2 PERCENTUM OF SUCH PRICES WAS NOT TO BE PAID UNTIL AFTER 6 MONTHS, AND THEN ONLY ON CONDITION ANY RECORDED DEFECTS HAD BEEN CORRECTED. INVOICES ORIGINALLY SUBMITTED FOR AMOUNTS MORE THAN THEN DUE MAY NOT BE VIEWED AS CURRENT CLAIMS FOR AMOUNTS WHICH SUBSEQUENTLY MAY HAVE BECOME DUE. THE RULE IS A SALUTARY ONE. WHILE IT MAY BE THAT THE AMOUNTS NOW ADMINISTRATIVELY PROPOSED FOR PAYMENT APPEAR DUE THE CONTRACTOR ON THE BOOKS OF THE NAVY DEPARTMENT, AND THAT NO PART THEREOF HAS BEEN INCLUDED IN PRIOR PAYMENTS, THIS CANNOT BE KNOWN FOR A CERTAINTY, AND WHERE MONEY IS TO BE PAID OUT THE GOVERNMENT SHOULD HAVE THE ADDED PROTECTION OF AN AFFIRMATIVE STATEMENT BY CLAIMANTS OF THEIR CLAIMS. FOR GOVERNMENT OFFICERS TO INITIATE PAYMENTS NOT CLEARLY CLAIMED AS BEING CURRENTLY DUE WOULD LEAD TO DUPLICATE PAYMENTS, OR OVERPAYMENTS, OR POSSIBLY FURTHER CLAIMS OR TO OTHER ABUSES, AND SUCH PROCEDURE MAY NOT BE SANCTIONED BY THE ACCOUNTING OFFICERS. SEE ALSO SECTION 35, ACT OF MARCH 4, 1909, 35 STAT. 1095.

FOR THESE REASONS I DECIDE THAT, ON THE PRESENT RECORD, NO AMOUNT MAY BE ALLOWED THE CONTRACTOR ON THE VOUCHERS IN QUESTION UNLESS AND UNTIL CLAIM THEREFOR IS SUBMITTED OVER THE SIGNATURE OF THE CLAIMANT, AND THEN ONLY UPON A SHOWING THAT THE CONTRACTOR HAS SUBMITTED THE REPORT REQUIRED PURSUANT TO SECTION 3 (A) OF THE VINSON ACT, SUPRA. IN ALL CASES OF CONTRACTS SUBJECT TO THE PROVISIONS OF THE SAID VINSON ACT WHERE FINAL PAYMENT IS MADE BY NAVY OR OTHER ADMINISTRATIVE DISBURSING OFFICERS, THE VOUCHER SHOULD BE SUPPORTED BY A SHOWING THAT THE CONTRACTOR HAS FILED THE REPORT REQUIRED PURSUANT TO SECTION 3 (A) OF THE ACT.

A COPY OF THIS DECISION WILL BE TRANSMITTED TO THE SECRETARY OF THE TREASURY FOR HIS INFORMATION AND SUCH ACTION AS MAY BE DEEMED APPROPRIATE UNDER SECTION 3 (B) OF THE ACT, SUPRA, TOWARD ASSESSING AND COLLECTING ANY EXCESS PROFIT DUE THE UNITED STATES FROM THE UNITED AIRCRAFT COMPANY BY REASON OF THE SAID CONTRACT.