A-94111, MAY 13, 1938, 17 COMP. GEN. 951

A-94111: May 13, 1938

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THERE IS NO PROPER BASIS FOR ADJUSTMENT OF THE CONTRACT PRICE. THERE WAS FORWARDED HERE YOUR FIFTH ENDORSEMENT DATED MARCH 14. HEREWITH FOR TRANSMITTAL TO THE GENERAL ACCOUNTING OFFICE IS CLAIM OF THE HENRYETTA FUEL COMPANY. THE ADVERTISED PURCHASE CONDITIONS AND THE CONTRACT UNDER WHICH THIS COAL WAS PURCHASED PROVIDED THAT. IN ORDER FOR A CONTRACTOR TO HAVE A CHANGE MADE IN THE CONTRACT PRICE ON ACCOUNT OF WAGE INCREASE. THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE TO WHICH ON THE PAY ROLL A PREDOMINANT AMOUNT OF MONEY IS REGULARLY PAID FOR PRODUCING COAL. AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING OF BIDS. 3.

A-94111, MAY 13, 1938, 17 COMP. GEN. 951

CONTRACTS - INCREASED COSTS - WAGES - COAL CONTRACTS - BIDDER'S DESIGNATION OF SEVERAL CLASSES OF EMPLOYEES INSTEAD OF PREDOMINANT OCCUPATIONAL CLASS, AND CLAIMS SETTLEMENT PROCEDURE WHERE COAL PURCHASE CONDITIONS AND CONTRACT PROVIDED FOR A PERCENTAGE CONTRACT PRICE ADJUSTMENT IN CASE OF WAGE CHANGES AFTER THE OPENING OF BIDS, BASED ON THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR RECEIVING THE SAME WAGE RATE SPECIFIED BY THE CONTRACTOR, AND THE CONTRACTOR'S BID NEVERTHELESS SPECIFIED SEVERAL CLASSES OF EMPLOYEES RECEIVING SEVERAL DIFFERENT WAGE RATES, THERE IS NO PROPER BASIS FOR ADJUSTMENT OF THE CONTRACT PRICE. CLAIMS FOR ADJUSTMENT IN THE PRICE OF COAL BY REASON OF INCREASE IN WAGE RATES UNDER CONTRACTS PROVIDING FOR A PERCENTAGE ADJUSTMENT IN CASE OF WAGE CHANGES AFTER THE OPENING OF BIDS, BASED ON THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR RECEIVING THE SAME WAGE RATE SPECIFIED BY THE CONTRACTOR, SHOULD BE SUBMITTED TO THIS OFFICE FOR DIRECT SETTLEMENT RATHER THAN FOR ADVANCE DECISIONS.

ACTING COMPTROLLER GENERAL ELLIOTT TO MAJ. L. P. WORRALL, UNITED STATES ARMY, MAY 13, 1938:

BY NINTH ENDORSEMENT DATED APRIL 5, 1938, FROM THE CHIEF OF FINANCE, WAR DEPARTMENT, THERE WAS FORWARDED HERE YOUR FIFTH ENDORSEMENT DATED MARCH 14, 1938, CONCERNING A CLAIM OF THE HENRYETTA FUEL CO. SUMMARIZED IN LETTER OF OCTOBER 22, 1937, FROM THE QUARTERMASTER SUPPLY OFFICER, EIGHTH CORPS AREA GENERAL DEPOT, AS FOLLOWS:

1. HEREWITH FOR TRANSMITTAL TO THE GENERAL ACCOUNTING OFFICE IS CLAIM OF THE HENRYETTA FUEL COMPANY, HENRYETTA, OKLAHOMA, FOR $196.68 ALLEGED TO BE DUE ON ACCOUNT OF INCREASE IN COST OF COAL DELIVERED TO THE QUARTERMASTERS AT FORT SILL, OKLAHOMA, AND FORT CLARK, TEXAS, UNDER CONTRACT W 503 QM- 17083, DATED APRIL 22, 1937.

2. THE ADVERTISED PURCHASE CONDITIONS AND THE CONTRACT UNDER WHICH THIS COAL WAS PURCHASED PROVIDED THAT, IN ORDER FOR A CONTRACTOR TO HAVE A CHANGE MADE IN THE CONTRACT PRICE ON ACCOUNT OF WAGE INCREASE, HE MUST "SPECIFY ON THE APPROPRIATE BIDDING FORM THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE THAT HAS A PREDOMINANT EFFECT ON THE COST OF PRODUCING COAL AT THE MINE OR MINES NAMED BY HIM; I.E., THAT PARTICULAR OCCUPATIONAL CLASS OF MINE EMPLOYEES RECEIVING THE SAME WAGE RATE TO WHICH ON THE PAY ROLL A PREDOMINANT AMOUNT OF MONEY IS REGULARLY PAID FOR PRODUCING COAL; THE CLASS SELECTED SHALL NOT BE FOR SUPERVISORY OR CLERICAL EMPLOYEES; " AND THAT "THE PREDOMINANT WAGE RATE CLASS OF EMPLOYEES SO SPECIFIED MUST BE DESCRIBED IN SUCH A MANNER THAT IT MAY BE CLEARLY IDENTIFIED IN THE WAGE AGREEMENT BETWEEN THE OPERATOR OF THE MINE AND THE MINE EMPLOYEES IN EFFECT ON THE DATE OF OPENING OF BIDS.' THE CIRCULAR ADVERTISEMENT (BID FORM) REQUIRED THE BIDDER TO SHOW THE "NAME OR OTHER IDENTIFYING DESCRIPTION OF THE WAGE SCALE IN EFFECT ON DATE OF OPENING OF BIDS.' BOTH THE ADVERTISED PURCHASE CONDITIONS AND THE CONTRACT PROVIDED THAT IN EVENT OF A CHANGE IN WAGE RATE FOR THE PREDOMINANT OCCUPATIONAL CLASS OF LABOR SPECIFIED BY THE BIDDER, THERE SHALL BE FURNISHED TO THE CONTRACTING OFFICER, WITHIN 60 DAYS FROM THE DATE OF THE CHANGE IN THE WAGE RATE, AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING OF BIDS.

3. IN THE BID OF THE HENRYETTA FUEL COMPANY (INCLOSURE 1), UPON WHICH CONTRACT W 503 QM-17083 WAS BASED, THEY SPECIFY AS THE IDENTIFYING DESCRIPTION OF THE WAGE SCALE IN EFFECT ON DATE OF OPENING OF BIDS "ARKANSAS-OKLAHOMA COAL OPERATORS ASS-N U.M.W. OF A., DIST. NO. 21," AND AS THE PREDOMINANT OCCUPATIONAL CLASS OF MINE EMPLOYEES FOR USE IN CALCULATING CHANGE IN CONTRACT PRICE DUE TO CHANGE IN WAGE RATE "DRIVERS, TIMBERMEN, TRACK LAYERS, MOTORMEN.'

4. IN LETTER OF JULY 7TH, 1937 (INCLOSURE 2), CONTRACTOR INFORMED THIS OFFICE THAT THERE HAD BEEN A CHANGE IN THE WAGE SCALE FROM $4.50 TO $5.00 PER DAY AND REQUESTED TO BE INFORMED AS TO WHAT THE INCREASE WOULD FIGURE AND HOW SAME SHOULD BE INVOICED. PRINTED COPIES OF WAGE AGREEMENTS BY AND BETWEEN THE ARKANSAS-OKLAHOMA COAL OPERATORS ASSOCIATION AND INDEPENDENT OPERATORS OF ARKANSAS AND OKLAHOMA AND PROVISIONAL DISTRICT NO. 21, UNITED MINE WORKERS OF AMERICA, ONE IN EFFECT ON DATE OF OPENING OF BIDS (INCLOSURE 2-A) AND THE OTHER EFFECTIVE MAY 8TH, 1937 (INCLOSURE 2-B), WERE RECEIVED IN THIS OFFICE JULY 8TH, 1937. THE CONTRACTOR WAS ADVISED IN LETTER OF JULY 9, 1937 (INCLOSURE 3), THAT AS THEY FAILED TO FURNISH AUTHENTICATED COPIES OF THE WAGE AGREEMENTS WITHIN THE TIME PRESCRIBED BY THE CONTRACT PURCHASE CONDITIONS, IT WOULD BE NECESSARY FOR THEM TO INVOICE THE COAL AT THE CONTRACT PRICE, SUBMITTING A CLAIM TO THIS OFFICE FOR TRANSMITTAL TO THE GENERAL ACCOUNTING OFFICE FOR SETTLEMENT COVERING ANY INCREASED COST DUE TO INCREASE IN WAGE SCALE. THE CONTRACTOR WAS ALSO INFORMED THAT THE TERM AUTHENTICATED" AS USED IN DECISION OF THE COMPTROLLER GENERAL RELATIVE TO WAGE SCALES WAS INTERPRETED BY THIS OFFICE TO MEAN THAT THEY SHOULD BE SIGNED BY REPRESENTATIVES OF BOTH PARTIES TO THE AGREEMENTS.

5. IN LETTER OF JULY 17TH, 1937 (INCLOSURE 5), THE CONTRACTOR STATED AS FOLLOWS:

"WE SENT YOU A COPY OF EACH CONTRACT AS NOTED IN OUR LETTER OF JULY 7TH AND WE BELIEVE THEM TO BE AUTHENTIC COPIES AS THEY ARE THE ONLY CONTRACT AVAILABLE TO US AND ARE CONSIDERED AUTHENTIC IN ALL DEALINGS WITH THE UNION AND BY ALL THE OPERATORS. YOUR INTERPRETATION, THAT THEY MUST BE SIGNED BY REPRESENTATIVES, HAS THEREFORE DISQUALIFIED OUR CLAIM FOR AN INCREASE AND WE WOULD LIKE FOR YOU, IF POSSIBLE, TO CONSIDER THE CONTRACTS AS FURNISHED AS AUTHENTIC COPIES. IT WOULD BE IMPOSSIBLE TO FURNISH COPIES OF THE CONTRACTS SIGNED BY THE ORIGINAL SIGNERS AS FOR ONE MY FATHER WAS A SIGNER AND HAS SINCE DIED, HAVING DIED ON JULY 18, 1936, AND OTHERS ARE UNAVAILABLE. SO IF YOU CAN POSSIBLY DO SO IT WOULD AID US IN PRESENTING OUR CLAIM IF YOU COULD CONSIDER THE CONTRACT FURNISHED AS AUTHENTIC COPIES AS WE ACTED IN GOOD FAITH WHEN WE FURNISHED THEM.'

CONTRACTOR WAS INFORMED IN LETTER OF JULY 21ST, 1937 (INCLOSURE 6), THAT INASMUCH AS THEY STATED IT WOULD BE IMPOSSIBLE TO FURNISH COPIES OF THE AGREEMENTS SIGNED BY THE ORIGINAL SIGNERS, THIS OFFICE WAS UNABLE TO STATE WHAT THE GENERAL ACCOUNTING OFFICE WOULD REQUIRE IN SUPPORT OF THEIR CLAIM, BUT SUGGESTED THAT THEY HAVE THE PRESENT AUTHORIZED REPRESENTATIVES OF THE CONTRACTING PARTIES TO THE WAGE AGREEMENTS ACKNOWLEDGE THE AUTHENTICITY OF THE PRINTED COPIES OF THE TWO AGREEMENTS.

6. CERTIFICATE WAS RECEIVED IN THIS OFFICE FROM THE CONTRACTOR SEPTEMBER 20, 1937, SIGNED BY THE REPRESENTATIVES OF PROVISIONAL DISTRICT NO. 21, UNITED MINE WORKERS OF AMERICA, AND THE COMMISSIONER OF THE ARKANSAS- OKLAHOMA COAL OPERATORS' ASSOCIATION, CERTIFYING THAT THE PRINTED COPY OF CONTRACT BY AND BETWEEN THE ARKANSAS-OKLAHOMA COAL OPERATORS ASSOCIATION AND INDEPENDENT COAL OPERATORS OF ARKANSAS AND OKLAHOMA, AND PROVISIONAL DISTRICT NO. 21, UNITED MINE WORKERS OF AMERICA, IN FULL FORCE AND EFFECT FROM MAY 8TH, 1937, AND EXPIRING MIDNIGHT MARCH 31ST, 1939, IS A TRUE AND CORRECT COPY OF THE WAGE AGREEMENT BETWEEN THE MINERS AND OPERATORS.

7. THE PRINTED COPIES OF THE AGREEMENTS REFERRED TO ABOVE FAIL TO SHOW THAT EITHER THE HENRYETTA FUEL COMPANY OR THE ATLAS COAL COMPANY, THE OPERATORS OF THE MINE, ARE PARTIES TO THESE AGREEMENTS.

8. AS THE ADVERTISED PURCHASE CONDITIONS AND CONTRACT W 503 QM 17083 PROVIDE THAT IN ORDER FOR THE CONTRACTOR TO HAVE A CHANGE MADE IN THE CONTRACT PRICE ON ACCOUNT OF WAGE INCREASE HE MUST FURNISH TO THE CONTRACTING OFFICER WITHIN 60 DAYS FROM THE DATE OF CHANGE IN THE WAGE RATE AUTHENTICATED COPIES OF THE NEW WAGE SCALE AND OF THE WAGE SCALE WHICH WAS IN EFFECT ON THE DATE OF OPENING OF BIDS, AND AS THE CONTRACTOR FAILED TO COMPLY WITH THIS REQUIREMENT OF THE ADVERTISED PURCHASE CONDITIONS, AND FURTHER AS THE PRINTED COPIES OF THE AGREEMENTS FURNISHED FAILED TO SHOW THAT EITHER THE CONTRACTOR, OR THE OPERATOR OF THE MINE FROM WHICH THE COAL WAS DELIVERED UNDER THE CONTRACT, WERE PARTIES TO THE WAGE AGREEMENTS, THE CONTRACTING OFFICER IS UNABLE TO DETERMINE WHAT INCREASE, IF ANY, SHOULD BE MADE IN THE CONTRACT PRICE.

9. IT IS GENERALLY KNOWN THAT THE MINING INDUSTRY THROUGHOUT THE UNITED STATES INCREASED THE WAGE SCALE OF MINE EMPLOYEES ON OR ABOUT APRIL 1ST, 1937, AND IT IS BELIEVED THE CLAIMANT, IN THIS CASE, SHOULD BE ALLOWED THE BENEFIT OF ANY WAGE SCALE INCREASE EFFECTED IN THE PRODUCING MINE AS PROVIDED IN CHANGES TO "STANDARD GOVERNMENT PURCHASE CONDITIONS (COAL)," STANDARD FORM NO. 43, WHICH FORMS A PART OF THE SUBJECT CONTRACT.

10. THE APPROPRIATION PROPERLY CHARGEABLE IS SHOWN IN THE ORIGINAL CONTRACT. THERE ARE NO FUNDS AVAILABLE IN THIS OFFICE UNDER THE APPROPRIATION IN QUESTION FOR PAYMENT OF ANY AMOUNT THAT MAY BE FOUND DUE THE CLAIMANT.

11. THERE ARE INCLOSED HEREWITH CLAIM OF THE CONTRACTOR FOR $196.68; COPY OF CONTRACTOR'S BID; LIST OF SHIPMENTS MADE SINCE MAY 8TH, 1937, SHOWING DATES, TONNAGE, CAR NUMBERS, AND INITIALS; TOGETHER WITH FILE OF CORRESPONDENCE BETWEEN THIS OFFICE AND THE CONTRACTOR AND CERTIFICATE TO THE EFFECT THAT THERE WERE NO CHANGES WHICH WOULD AFFECT THE CONTRACT PRICE BETWEEN THE DATE OF OPENING OF BIDS AND THE DATES OF DELIVERY OF COAL UNDER THE CONTRACT. ONE NUMBER OF THE ORIGINAL CONTRACT WAS FORWARDED TO THE QUARTERMASTER GENERAL FOR TRANSMITTAL TO THE GENERAL ACCOUNTING OFFICE ON APRIL 28, 1937.

THE FACTS SUMMARIZED IN PARAGRAPHS 2 AND 3 IN THE ABOVE-QUOTED LETTER BRING THE CLAIM WITHIN THE RULE STATED IN DECISION OF FEBRUARY 2, 1938, 17 COMP. GEN. 621 AND A-92372, DATED MARCH 17, 1938, 17 COMP. GEN. 744 TO THE EFFECT THAT WHERE THE CONTRACTOR NAMED IN THE ACCEPTED BID THREE CLASSES OF EMPLOYEES RECEIVING DIFFERENT WAGE RATES THERE IS NO PROPER BASIS FOR ADJUSTMENT OF THE CONTRACT PRICE UNDER THE TERMS OF A CONTRACT CONTAINING STIPULATIONS SIMILAR TO THAT CONTAINED IN THE CONTRACT OF APRIL 22, 1937, IN THIS CASE. ACCORDINGLY, NO PAYMENT MAY BE MADE TO THE CONTRACTOR OF THE CLAIMED ITEM OF $196.68, OR ANY PART THEREOF, AND THE PAPERS WILL BE RETAINED IN THE FILES OF THIS OFFICE.

ALSO, ATTENTION IS INVITED TO DECISION OF MARCH 19, 1938, A-92077, TO MAJ. E. M. FOSTER, F.D., UNITED STATES ARMY, TO THE EFFECT THAT CLAIMS FOR INCREASE IN THE PRICE OF COAL BY REASON OF INCREASE IN WAGE RATES SHOULD BE SUBMITTED TO THIS OFFICE FOR DIRECT SETTLEMENT RATHER THAN FOR ADVANCE DECISIONS.