B-122255, FEB. 15, 1957

B-122255: Feb 15, 1957

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GENERAL SERVICES ADMINISTRATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 11. YOU STATE FURTHER THAT THERE IS A POSSIBILITY OF DISPOSAL OF THE PLANT TO PRIVATE INDUSTRY IN THE NEAR FUTURE. IF THE PROPOSED PROCEDURE IS ADOPTED. THE SCOPE OF THE AUDIT WILL BE DEVELOPED IN COLLABORATION WITH OUR CIVIL ACCOUNTING AND AUDITING DIVISION. GENERAL SERVICES ADMINISTRATION WILL REVIEW REPORTS SUBMITTED PERIODICALLY BY THE PUBLIC ACCOUNTANTS. WE UNDERSTAND THE NICARO OPERATION IS BEING CONDUCTED UNDER THE AUTHORITY OF SECTION 303 OF THE DEFENSE PRODUCTION ACT. THE FUNCTIONS AUTHORIZED UNDER SECTION 303 OF THE ACT WERE DELEGATED TO THE ADMINISTRATOR OF GENERAL SERVICES BY SECTION 303 OF EXECUTIVE ORDER NO. 10480.

B-122255, FEB. 15, 1957

TO THE HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 11, 1957, ASKING WHETHER WE WOULD OBJECT TO THE EMPLOYMENT OF A FIRM OF PRIVATE ACCOUNTANTS TO AUDIT THE NICARO NICKEL OPERATION CONDUCTED BY GENERAL SERVICES ADMINISTRATION IN NICARO, ORIENTE, CUBA.

BY LETTER OF SEPTEMBER 27, 1956, B-122255, WE APPROVED A SIMPLIFIED REIMBURSEMENT PROCEDURE FOR PROCESSING PAYMENTS TO THE THREE CONTRACTORS INVOLVED, WITH THE UNDERSTANDING THAT AN EFFECTIVE AND CURRENT AUDIT PROGRAM WOULD ALSO BE NECESSARY UNDER THE NEW PROCEDURE. YOU NOW STATE THAT IT HAS BEEN FOUND TO BE IMPOSSIBLE TO MAINTAIN SUCH AN AUDIT BECAUSE OF THE DIFFICULTY IN RECRUITING AND RETAINING COMPETENT AUDITORS AT NICARO. YOU STATE FURTHER THAT THERE IS A POSSIBILITY OF DISPOSAL OF THE PLANT TO PRIVATE INDUSTRY IN THE NEAR FUTURE. FOR THESE REASONS, YOU STATE IT TO BE YOUR BELIEF THAT THE INTERESTS OF THE GOVERNMENT WOULD BEST BE SERVED BY ENGAGING A PUBLIC ACCOUNTING FIRM TO AUDIT THE NICARO OPERATION, RATHER THAN BY MAINTAINING A GENERAL SERVICES ADMINISTRATION AUDIT STAFF AT NICARO AND NEW YORK. IF THE PROPOSED PROCEDURE IS ADOPTED, THE SCOPE OF THE AUDIT WILL BE DEVELOPED IN COLLABORATION WITH OUR CIVIL ACCOUNTING AND AUDITING DIVISION, AND GENERAL SERVICES ADMINISTRATION WILL REVIEW REPORTS SUBMITTED PERIODICALLY BY THE PUBLIC ACCOUNTANTS.

WE UNDERSTAND THE NICARO OPERATION IS BEING CONDUCTED UNDER THE AUTHORITY OF SECTION 303 OF THE DEFENSE PRODUCTION ACT, AS AMENDED, 50 U.S.C. APP. 2093. SECTION 710 (C) OF THAT ACT, 50 U.S.C. APP. 2160 (C), SPECIFICALLY AUTHORIZES THE PRESIDENT TO EMPLOY ORGANIZATIONS OF EXPERTS AND CONSULTANTS, AS AUTHORIZED BY SECTION 15 OF THE ACT OF AUGUST 2, 1946, 5 U.S.C. 55A. THE FUNCTIONS AUTHORIZED UNDER SECTION 303 OF THE ACT WERE DELEGATED TO THE ADMINISTRATOR OF GENERAL SERVICES BY SECTION 303 OF EXECUTIVE ORDER NO. 10480, AS AMENDED, AND SECTION 602 (A) OF THAT EXECUTIVE ORDER DELEGATES TO THE ADMINISTRATOR THE AUTHORITY GIVEN THE PRESIDENT BY SECTION 710 (C) OF THE ACT.

ACCORDINGLY, AND IN VIEW OF THE CIRCUMSTANCES OUTLINED IN YOUR LETTER,WE WILL INTERPOSE NO OBJECTION TO THE EMPLOYMENT, IN ACCORDANCE WITH SAID SECTION 15, OF A FIRM OF PRIVATE ACCOUNTANTS TO AUDIT THE NICARO OPERATION. IT IS REQUESTED THAT YOU CONTACT MR. PHILIP CHARAM, ASSISTANT DIRECTOR, CIVIL ACCOUNTING AND AUDITING DIVISION, IN CONNECTION WITH THE SCOPE OF THE AUDIT TO BE UNDERTAKEN.