B-103025, MAY 10, 1955, 34 COMP. GEN. 577

B-103025: May 10, 1955

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APPROPRIATIONS - REIMBURSEMENT - REFUNDS OF CONTRACT PAYMENTS AMOUNT RECOVERED FROM SURETY OF CONTRACTOR BECAUSE CONSTRUCTION FAILED TO MEET SPECIFICATIONS AFTER CONTRACTOR RECEIVED FINAL PAYMENT IS IN NATURE OF REDUCTION IN CONTRACT PRICE REPRESENTING VALUE OF UNFINISHED WORK. MAY BE DEPOSITED TO APPROPRIATION WHICH WAS CHARGED WITH CONTRACT AND EXPENDED FOR COMPLETION OF WORK. 1955: REFERENCE IS MADE TO YOUR LETTER OF APRIL 15. WHICH WAS ACCEPTED BY THE ATTORNEY GENERAL FROM THE UNITED STATES GUARANTEE COMPANY. IT IS PROPOSED TO ARRANGE FOR SUCH REPAIR OR REPLACEMENT WORK BEFORE THE WITHDRAWAL OF INSPECTION PERSONNEL FROM THE ISLANDS UPON THE TERMINATION OF THE RESPONSIBILITY OF THE UNITED STATES FOR COMPLETION OF THE VIRGIN ISLANDS PUBLIC WORKS PROGRAM.

B-103025, MAY 10, 1955, 34 COMP. GEN. 577

APPROPRIATIONS - REIMBURSEMENT - REFUNDS OF CONTRACT PAYMENTS AMOUNT RECOVERED FROM SURETY OF CONTRACTOR BECAUSE CONSTRUCTION FAILED TO MEET SPECIFICATIONS AFTER CONTRACTOR RECEIVED FINAL PAYMENT IS IN NATURE OF REDUCTION IN CONTRACT PRICE REPRESENTING VALUE OF UNFINISHED WORK, AND RECOVERY OF AN UNAUTHORIZED OVERPAYMENT, AND, THEREFORE, MAY BE DEPOSITED TO APPROPRIATION WHICH WAS CHARGED WITH CONTRACT AND EXPENDED FOR COMPLETION OF WORK.

COMPTROLLER GENERAL CAMPBELL TO THE SECRETARY OF THE INTERIOR, MAY 10, 1955:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 15, 1955, RELATIVE TO THE RECEIPT BY YOUR DEPARTMENT OF A CHECK OF $85,000, WHICH WAS ACCEPTED BY THE ATTORNEY GENERAL FROM THE UNITED STATES GUARANTEE COMPANY, SURETY, IN FULL SETTLEMENT OF ALL CLAIMS IN FAVOR OF THE UNITED STATES ARISING OUT OF CONTRACT NO. WABCF-19, ENTERED INTO ON SEPTEMBER 6, 1946, FOR THE CONSTRUCTION OF WATER AND SEWER SYSTEMS IN THE VIRGIN ISLANDS, BECAUSE OF THE FAILURE OF THE INTERCEPTOR SEWERS ON THE ISLANDS OF ST. THOMAS AND ST. CROIX TO MEET THE CONTRACT SPECIFICATIONS AS TO TIGHTNESS.

YOU RECOMMEND THAT YOUR DEPARTMENT BE AUTHORIZED TO CREDIT THE AMOUNT OF THE SETTLEMENT TO THE APPROPRIATION WHICH MADE FUNDS AVAILABLE FOR CONSTRUCTION OF THE VIRGIN ISLAND SEWERS, SO THAT IT WOULD BE AVAILABLE FOR EXPENDITURE IN THE ACTUAL REPAIR OR REPLACEMENT OF THE LEAKING INTERCEPTORS. IT IS PROPOSED TO ARRANGE FOR SUCH REPAIR OR REPLACEMENT WORK BEFORE THE WITHDRAWAL OF INSPECTION PERSONNEL FROM THE ISLANDS UPON THE TERMINATION OF THE RESPONSIBILITY OF THE UNITED STATES FOR COMPLETION OF THE VIRGIN ISLANDS PUBLIC WORKS PROGRAM, AS CONTEMPLATED BY THE TERMS OF THE REVISED ORGANIC ACT OF THE VIRGIN ISLANDS, APPROVED JULY 22, 1954, 68 STAT. 497.

IT APPEARS FROM YOUR LETTER THAT, UNLESS THE AMOUNT OF $85,000 MAY BE CREDITED TO THE APPROPRIATION OBLIGATED FOR MAKING PAYMENTS UNDER CONTRACT NO. WABCF-19, YOUR DEPARTMENT MIGHT BE PLACED IN THE POSITION OF HAVING TO DELAY THE CORRECTION OF THE DEFECTS IN CONSTRUCTION PENDING THE APPROPRIATION OF AN EQUIVALENT AMOUNT BY THE CONGRESS FOR SUCH PURPOSE. IN THIS CONNECTION, WE HAVE BEEN INFORMALLY ADVISED BY YOUR DEPARTMENT THAT NO FUNDS WERE ADDED TO THE NO-YEAR APPROPRIATION, ENTITLED " VIRGIN ISLANDS PUBLIC WORKS, OFFICE OF TERRITORIES," FOR THE FISCAL YEAR 1955, AND THAT MOST, IF NOT ALL, OF THE UNEXPENDED BALANCE OF SUCH APPROPRIATION WILL BE USED TO MEET OTHER OBLIGATIONS OR COMMITMENTS RELATING TO PUBLIC WORKS CONSTRUCTION IN THE VIRGIN ISLANDS.

IF THE AMOUNT RECOVERED FROM THE SURETY REPRESENTED DAMAGES FOR EXCESS COSTS INCURRED AS THE RESULT OF A BREACH OF THE CONTRACT, IT WOULD BE FOR DEPOSIT AS A MISCELLANEOUS RECEIPT. 10 COMP. GEN. 510; 14 ID. 106. HOWEVER, AS SUGGESTED IN YOUR LETTER, SUCH AMOUNT IS MORE IN THE NATURE OF A REDUCTION IN THE CONTRACT PRICE, REPRESENTING THE APPROXIMATE VALUE OF THE UNFINISHED WORK, AND RECOVERY OF THE AMOUNT OVERPAID--- PARTICULARLY IN VIEW OF THE FACT THAT PAYMENT WAS MADE ON THE CONTRACT WITHOUT PROPER AUTHORIZATION. IT THEREFORE APPEARS THAT THE AMOUNT RECOVERED MAY BE CONSIDERED AVAILABLE FOR THE SATISFACTORY COMPLETION OF THE PARTICULAR PROJECT, AS IT WOULD HAVE BEEN BUT FOR THE IMPROPER PAYMENT. FURTHERMORE, THERE IS NO QUESTION OF THE TYPE WHICH ARISES WHERE AN APPROPRIATION FOR A PARTICULAR FISCAL-YEAR PERIOD HAS LAPSED PURSUANT TO THE PROVISIONS OF SECTION 712 (B), TITLE 31, UNITED STATES CODE. SEE PARAGRAPH 6 (2) OF GENERAL REGULATIONS NO. 120, REVISED, MAY 18, 1954, 33 COMP. GEN. 669, 671, WHICH HAS REFERENCE TO COLLECTIONS CREDITABLE TO NO-YEAR OR CONTINUING APPROPRIATION ACCOUNTS WHICH HAVE NOT BEEN OFFICIALLY CLOSED.

ACCORDINGLY, YOU ARE ADVISED, THAT THE CHECK FOR $85,000 PROPERLY MAY BE CREDITED TO THE APPROPRIATION CHARGEABLE WITH THE CONTRACT WORK AND EXPENDED FOR COMPLETION OF THE WORK IN ACCORDANCE WITH THE SPECIFICATIONS OF CONTRACT NO. WABCF-19.