B-102576, JUN 25, 1951

B-102576, JUN 25, 1951

PRECIS-UNAVAILABLE

MAJOR C. E. MYRICK, F.D., U.S. ARMY:

C/O CHIEF OF FINANCE

DEPARTMENT OF THE ARMY

THERE HAS BEEN RECEIVED BY 12TH INDORSEMENT DATED APRIL 3, 1951, FROM THE CHIEF OF FINANCE, YOUR 7TH INDORSEMENT OF OCTOBER 31, 1950, TRANSMITTING AN UNNUMBERED RECLAIM VOUCHER PROPOSING PAYMENT IN THE AMOUNT OF $269.65, TO S. BIRCH AND SONS CONSTRUCTION COMPANY, AL JOHNSON CONSTRUCTION COMPANY, C.F. LYTLE COMPANY, COST-PLUS-A-FIXED-FEE CONTRACTOR UNDER CONTRACT W-112-ENG-1000 DATED MAY 17, 1946, WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT THEREON IS AUTHORIZED.

THE AMOUNT OF THE VOUCHER PREVIOUSLY HAD BEEN REIMBURSED TO THE CONTRACTOR BUT, SUBSEQUENTLY, WAS DEDUCTED FROM OTHER SUMS DUE IT AS THE RESULT OF EXCEPTIONS STATED AGAINST VOUCHERS 80603, MAY 1948 ACCOUNT OF J. H. MCFALL, AND 32354, JANUARY 1949 ACCOUNT OF K. L. BRAZIER, BY THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE. THE EXCEPTIONS WERE STATED FOR THE REASON THAT REIMBURSEMENT OF COSTS INCURRED IN THE TRANSFER OF FUNDS FROM AN ALASKAN BANK TO A BANK IN SEATTLE, WASHINGTON, IS NOT PROVIDED FOR IN THE CONTRACT.

THE CONTRACT WAS ENTERED INTO BETWEEN THE CONTRACTOR AND THE UNITED STATES FOR THE CONSTRUCTION OF DEFENSE BASE FACILITIES IN ALASKA. THE CONTRACT PROVIDES FOR REIMBURSEMENT FOR ALL NECESSARY EXPENSES INCURRED IN THE PERFORMANCE OF THE WORK AND FOR A FIXED FEE. THE PROVISIONS THEREOF, WHICH ARE PERTINENT TO THE INSTANT CASE, ARE AS FOLLOWS:

"ARTICLE II - COST OF THE WORK

"1. REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES: THE CONTRACTOR SHALL BE REIMBURSED IN THE MANNER HEREINAFTER DESCRIBED FOR SUCH OF HIS ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK AS MAY BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER AND AS ARE INCLUDED IN THE FOLLOWING ITEMS:

"S. SERVICE CHARGES, PAID OR INCURRED BY THE CONTRACTOR FOR TRANSFER OF UNITED STATES CURRENCY FROM DOMESTIC BANKS OR BANKING INSTITUTIONS TO TERRITORIAL BANKS OR BANKING INSTITUTIONS AND RETRANSFER OF FUNDS IN CONNECTION WITH AND FOR THE BENEFIT OF THE WORK SHALL BE REIMBURSABLE UNDER THE TERMS OF THIS ARTICLE."

FOR A TIME AFTER THE CONTRACT WAS AWARDED PAYMENTS WERE MADE BY THE ARMY FINANCE OFFICER AT SEATTLE, WASHINGTON. IN INSTRUCTION LETTER A 22 DATED AUGUST 9, 1947, FROM THE DISTRICT ENGINEER, ANCHORAGE, ALASKA, TO THE CONTRACTOR, SEATTLE, WASHINGTON, IT WAS DIRECTED:

"*** THAT EFFECTIVE WITH THE CONTRACTOR'S PAYROLLS FOR THE WEEK ENDING 7 SEPTEMBER 1947, REIMBURSEMENTS WILL BE EFFECTED THROUGH THE OFFICE OF THE FINANCE OFFICER, U.S. ARMY AT FORT RICHARDSON, ALASKA, FOR ALL PAYROLLS COVERING EMPLOYEES OF THE CONTRACTORS STATIONED IN ALASKA, OR WHOSE NAMES MAY APPEAR UPON THE PAYROLL OF ANY JOB SITE IN ALASKA.

"LIKEWISE EFFECTIVE ON 1 SEPTEMBER 1947, ALL PROCUREMENT PROCESSED AND PURCHASED IN ALASKA WILL BE REIMBURSED TO THE CONTRACTORS IN ACCORDANCE WITH REGULATIONS, THROUGH THE OFFICE OF THE FINANCE OFFICER, U.S. ARMY, AT FORT RICHARDSON, ALASKA."

IN MEMORANDUM DATED JULY 10, 1950, FROM THE EXECUTIVE OFFICER, CORPS OF ENGINEERS, UNITED STATES ARMY, ANCHORAGE, ALASKA, TO THE DIVISION ENGINEER, CORPS OF ENGINEERS; PORTLAND, OREGON, IT IS STATED THAT SHORTLY AFTER RECEIVING SUCH INSTRUCTION LETTER, THE CONTRACTOR ADVISED THE CONTRACTING OFFICER THAT IT WOULD BE NECESSARY TO TRANSMIT GOVERNMENT CHECKS RECEIVED IN ALASKA TO A BANK IN SEATTLE, WASHINGTON, AND THAT THE RISK OF LOSS AND/OR DELAY IN DEPENDING UPON MAILING DICTATED A SPECIAL HANDLING ARRANGEMENT. TOWARD THIS END THE CONTRACTOR ARRANGED FOR A BANK IN ALASKA TO MAKE TELEGRAPHIC TRANSFER OF THE REIMBURSEMENT FUNDS RECEIVED IN ALASKA TO THE CONTRACTOR'S SEATTLE BANK. THE AMOUNT OF THE RECLAIM VOUCHER REPRESENTS THE COST OF THIS TELEGRAPHIC SERVICE IN THE TRANSFER OF THE FUNDS.

IN LETTER DATED APRIL 26, 1950, THE CONTRACTOR CONTENDS THAT THE QUESTIONED COST IS REIMBURSABLE IN ACCORDANCE WITH PARAGRAPHS OF ARTICLE II OF THE CONTRACT, QUOTED ABOVE, AND THAT SUCH ARRANGEMENT HAD BEEN APPROVED BY THE CONTRACTING OFFICER.

THAT PORTION OF THE CONTRACT IN PARAGRAPHS OF ARTICLE II QUOTED ABOVE APPEARS TO BE APPLICABLE ONLY TO ANY NECESSARY INTERNAL TRANSFER OF MONEY ACTUALLY NEEDED IN PAYING CURRENT PAYROLLS AND MATERIALS PURCHASED, ETC., AT THE JOB SITE, BUT BEFORE REIMBURSEMENT THEREFORE IS MADE BY THE GOVERNMENT TO THE CONTRACTOR. THOSE TERMS DO NOT COVER AN ORIGINAL TRANSFER OF FUNDS FROM ALASKA TO UNITED STATES NOR DO THEY APPEAR TO COVER THE COST TO THE CONTRACTOR OF DISPOSING OF THE FUNDS ONCE IT HAS RECEIVED REIMBURSEMENT IN HAND PAID BY MEANS OF UNITED STATES TREASURY CHECKS. OTHER WORDS, WHEN PAYMENT BY CHECK IS ACCEPTED, THE CONTRACTOR IS FREE TO DO AS IT PLEASES WITH THAT MONEY, AND THERE IS NO OBLIGATION ON THE PART OF THE GOVERNMENT TO REIMBURSE THE CONTRACTOR FOR COSTS INCURRED IN TRANSMITTING THE FUNDS TO SOME OTHER LOCATION AFTER PAYMENT HAS BEEN ACCEPTED. UNDER THE TERMS OF THE CONTRACT THE GOVERNMENT WAS REQUIRED TO REIMBURSE THE CONTRACTOR IN THE CUSTOMARY MANNER, FOR ALL PROPER EXPENSES INCURRED IN CONNECTION WITH THE CONTRACT WORK. THIS WAS EFFECTED BY THE ISSUANCE OF CHECKS TRANSMITTED TO THE CONTRACTOR BY ORDINARY MAIL. ONCE HAVING ISSUED THE REIMBURSEMENT CHECKS, THE GOVERNMENT HAD DISCHARGED ITS OBLIGATION TO PAY AND ANY MEASURES THE CONTRACTOR CONSIDERED ADVISABLE TO PROTECT ITSELF AGAINST LOSS WERE WITHIN THE DISCRETION OF THE CONTRACTOR OVER WHICH THE GOVERNMENT HAD NO CONTROL. IT THUS APPEARS THAT THE EXPENSE IN QUESTION WAS NOT IN CONNECTION WITH THE CONTRACT WORK WITHIN THE MEANING OF THE ABOVE-QUOTED PROVISION OF THE CONTRACT, BUT, CONVERSELY, WAS FOR THE SOLE BENEFIT OF THE CONTRACTOR.

WHILE, AS STATED BY THE CONTRACTOR, THE CONTRACTING OFFICER, BY INSTRUCTION LETTER NO. A-31 DATED NOVEMBER 7, 1947, APPROVED THE BANK SERVICE CHARGES IN QUESTION, IT IS STATED IN 2D INDORSEMENT DATED AUGUST 4, 1950, FROM DISTRICT ENGINEER, ANCHORAGE, ALASKA, TO DIVISION ENGINEER, PORTLAND, OREGON, THAT REVISION NO. 1 TO INSTRUCTION LETTER A 31 DATED FEBRUARY 19, 1948, RESCINDED THIS AUTHORITY IN ITS ENTIRETY. FURTHERMORE, IT IS STATED IN 2D INDORESEMENT DATED AUGUST 4, 1950, FROM OFFICE, DISTRICT ENGINEER, ALASKA DISTRICT, CORPS OF ENGINEERS, ANCHORAGE, ALASKA, TO THE DIVISION ENGINEER, PORTLAND, OREGON, THAT IT IS THE OPINION OF THE CONTRACTING OFFICER THAT THE GOVERNMENT FULFILLED ITS OBLIGATION UPON DELIVERY OF THE REIMBURSEMENT CHECK TO THE CONTRACTOR AND COSTS INCURRED BY THE CONTRACTOR SUBSEQUENT TO THE RECEIPT OF THE CHECK WERE TO REDUCE COST OF FINANCING AND TO DECREASE INTEREST CHARGES WHICH ARE NOT CONSIDERED AS REIMBURSABLE UNDER THE TERMS OF THIS CONTRACT.

ACCORDINGLY, YOU ARE ADVISED PAYMENT ON THE VOUCHER, WHICH IS RETURNED HEREWITH, IS NOT AUTHORIZED.