B-100981, SEP. 28, 1955

B-100981, SEP. 28, 1955

TO THE SECRETARY OF STATE:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 8, 1955, WITH ENCLOSURES, RELATIVE TO CLAIM FOR $434,643.60 PRESENTED BY THE COMMONWEALTH OF AUSTRALIA TO COVER THE COST OF 10,000,000 SANDBAGS WHICH WERE FURNISHED THE CORPS OF ENGINEERS, UNITED STATES ARMY, IN AUSTRALIA, DURING THE YEAR 1945. THIS CLAIM WAS DISALLOWED BY SETTLEMENT ISSUED BY OUR OFFICE UNDER DATE OF JULY 31, 1951.

FROM THE FACTS PRESENTLY OF RECORD, IT APPEARS THAT THE 10,000,000 SANDBAGS WERE FIRST REQUISITIONED BY THE UNITED STATES ARMY SERVICE SUPPLY IN MELBOURNE, AUSTRALIA, ON OR ABOUT SEPTEMBER 28, 1944, AND THAT, PURSUANT TO SUCH REQUISITION, THE AUSTRALIAN DEPARTMENT OF SUPPLY AND SHIPPING FILLED THIS ORDER DURING THE ENSUING YEAR 1945 FROM STOCKS WHICH ORIGINALLY HAD BEEN IMPORTED FROM INDIA. FURTHER, IT APPEARS THAT THE NEGOTIATING PARTIES OF BOTH GOVERNMENTS UNDERSTOOD AT THE TIME THAT THE PROCUREMENT WAS BEING MADE UPON A "CASH REIMBURSABLE" BASIS, PARTICULARLY SINCE ITEMS OF IMPORTED GOODS HAD NOT BEEN ADMITTED TO RECIPROCAL LAND- LEASE ELIGIBILITY. IT ALSO APPEARS THAT THIS SANDBAG TRANSACTION, AND THE TERMS UPON WHICH THE PROCUREMENT WAS CONSUMMATED, HAD BEEN DISCUSSED BY THE NEGOTIATING PARTIES AND HAD SUBSTANTIALLY BEEN AGREED UPON BY THEM PRIOR TO THE TIME OF EXECUTION OF THE AUSTRALIAN-UNITED STATES MUTUAL AID SETTLEMENT AGREEMENT OF JUNE 7, 1946, 60 STAT. 1707. MOREOVER, IT NOW SEEMS REASONABLY CLEAR THAT THE ARMY, THROUGH ITS JUDGE ADVOCATE GENERAL, HAS CONCEDED LIABILITY FOR PAYMENT FOR THESE ITEMS ON A CASH REIMBURSABLE BASIS, THEREBY INDICATING THAT THE TRANSACTION WAS NOT INTENDED TO BE COVERED BY THE GENERAL WAIVER CLAUSE RECITED IN SECTION 7/C) OF THE MUTUAL AID SETTLEMENT AGREEMENT.

IN THE CIRCUMSTANCES, AND AFTER A CAREFUL REVIEW OF THE ENTIRE RECORD IN THE CASE, IT REASONABLY MAY BE CONCLUDED THAT THE SANDBAG TRANSACTION HERE UNDER CONSIDERATION FALLS WITHIN THE CATEGORY OF THOSE EXCEPTED ITEMS DESCRIBED IN SECTION 7, SUBPARAGRAPHS (B) AND (B//I) OF THE SETTLEMENT AGREEMENT, WHICH PROPERLY MAY BE SETTLED INDEPENDENTLY OF SUCH AGREEMENT.

ACCORDINGLY, AND SINCE THE AMOUNTS CLAIMED FOR THE SANDBAGS IN QUESTION NOW APPEAR PROPER FOR REIMBURSEMENT TO THE COMMONWEALTH OF AUSTRALIA, APPROPRIATE INSTRUCTIONS ARE BEING ISSUED TODAY WITH A VIEW TOWARDS AUTHORIZING ALLOWANCE OF THE CLAIM, IF OTHERWISE CORRECT. HOWEVER, PURSUANT TO THE REQUEST MADE IN THE CONCLUDING PARAGRAPH OF YOUR LETTER OF JUNE 8, TO US, PAYMENT ON THE CLAIM WILL BE WITHHELD AWAITING FURTHER ADVICE FROM YOU.