B-115538 July 2, 1953

B-115538: Jul 2, 1953

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Postmaster General: Reference is made to letter of May 28. In instances where the claims are subject to adjustment and settlement through administrative action. In the Deputy Postmaster General's letter it is pointed out that the practice of the Post Office Department has been to disallow such items. It is indicated that the practice may not be satisfactory. An example is reported. 10%' pointing out that the United States Attorney in his city has informed him that such expenses are legally recoverable in that jurisdiction when suit is brought against the Government by a utility company. This declaration of liability is amplified in 28 U.S.C. 2672 by language defining the liability as that existing "under circumstances where the United States.

B-115538 July 2, 1953

The Honorable The Postmaster General

My dear Mr. Postmaster General:

Reference is made to letter of May 28, 1953, from the Deputy Postmaster General, requesting a decision of general applicability as to the propriety, under the codified Federal tort claims legislation, 28 U.S.C. 1346(b), 1402(b), 1504, 2401(b), 2402, 2411-12, and 2671-80, of allowing overhead charges, whether presented as specific items or otherwise included in claims, in instances where the claims are subject to adjustment and settlement through administrative action.

In the Deputy Postmaster General's letter it is pointed out that the practice of the Post Office Department has been to disallow such items, following examples established under other damage statutes, and to restrict awards to elements of damage susceptible to more definite assertainment. However, it is indicated that the practice may not be satisfactory, since some dissatisfaction has been encountered in connection with awards made in such manner, and in view of the fact that the statutory provisions fix liability on the basis of the law of the place where the act or omission occurred. An example is reported, as follows:

" * * * the city attorney of the City of Los Angeles has recently taken exception to the disallowances by the Department of an overhead charge billed as 'administrative and general expenses--10%' pointing out that the United States Attorney in his city has informed him that such expenses are legally recoverable in that jurisdiction when suit is brought against the Government by a utility company. He also advises that the procedure of charging such administrative expenses to individual jobs has been approved by the Federal Power Commission in its uniform system of accounts prescribed for public utilities."

28 U.S.C. 2674, dealing with administrative adjustment of tort claims not in excess of $1,000, provides that "The United States shall be liable, respecting the provisions of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances, but shall not be liable with an exception not pertinent here for interest prior to judgment or for punitive damages." This declaration of liability is amplified in 28 U.S.C. 2672 by language defining the liability as that existing "under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred."

It seems entirely clear from the plain language of the two provisions that the elements and extent of damages are required to be determined by the law of the place where the injury took place. As stated in State of Maryland, To Use of Burkhart v. United States, 165 F. 2d 869; the tests of local law are to determine the nature and extent of recovery permitted. See discussion at 1 A.L.R. 2d 213, 234, section 16, and additional cases cited therein. Duff v. United States, 171 F. 2d 846; San Diego Gas & Electric Co. v. United States, 173 F. 2d 92; Olson v. United States, 175 F. 2d 510; United States v. Brooks, 176 F. 2d 482. Under the circumstances, obviously the propriety of recognizing overhead charges in whatever manner claimed would depend upon applicable legal precedents in the locality where the cause of action arose. Probably such controlling procedents will lack uniformity and be impossible of restatement in the form of generalizations.

In any event, in authorizing the head of each Federal agency to consider and settle otherwise proper claims against the United States for money damages of $1,000 or less, the legislation provides that--

"Subject to the provisions of this title relating to civil actions on tort claims against the United States, any such award or determination shall be final and conclusive on all officers of the Government, except when procured by means of fraud." (28 U.S.C. 2672.)

No jurisdiction is conferred on this Office with respect to tort claims arising in any Federal agency other than the General Accounting Office, and it follows that any undertaking by this Office to define the elements or extent of damages to be taken into consideration by the bonds of agencies would involve an assessment of Federal responsibility under the statue and be tantamount to exercising the authority vested in you as the head of an agency by the finality provisions thereof. See comment on finality provisions at 1 A.L.R. 2d 213, 226, section 4.

Hence, save insofar as there may be involved questions related to the observance of conditions established for exercise of the administrative settlement authority, or otherwise for determination by the General Accounting Office in the course of its audit, I feel that an expression of opinion concerning the merits of claims falling within the administrative settlement jurisdiction of the general tort claims provisions would be inappropriate.

Sincerely yours,

Lindsay C. Warren Comptroller General of the United