B-125199, OCT 21, 1955

B-125199: Oct 21, 1955

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WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT ON THE VOUCHERS IS AUTHORIZED. THE SAID AMOUNTS WERE REIMBURSED TO THE CONTRACTOR UNDER THE CONTRACTS. LATER WERE COLLECTED FROM THE CONTRACTOR AS A RESULT OF GAO EXCEPTIONS NOS. 400019 AND 400030. THE BASIS FOR THE EXCEPTIONS WAS THAT PRORATED COSTS INCURRED IN UNSUCCESSFUL BIDDING ACTIVITIES CONSTITUTED COSTS INCIDENT TO "SELLING AND DISTRIBUTION ACTIVITIES NOT RELATED TO THE CONTRACT PRODUCTS. " REIMBURSEMENT FOR WHICH WAS PRECLUDED BY PARAGRAPH 15-205(Q) OF SECTION XV OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH WAS THE COST DETERMINANT IN THE CONTRACTS. THIS WAS IN ACCORDANCE WITH THE HOLDING IN B-113252.

B-125199, OCT 21, 1955

PRECIS-UNAVAILABLE

LIEUTENANT COLONEL M. S. LIPSKER, USAF, DISBURSING OFFICER THROUGH: DEPUTY DIRECTOR OF FINANCE:

YOUR LETTER OF JULY 22, 1955, TRANSMITS RECLAIM VOUCHERS NOS. 43, 78, 79, 81 AND 92, IN THE RESPECTIVE AMOUNTS OF $357.83, $2,363.26, $3,143.30, $492.60, AND $1,268.56, STATED IN FAVOR OF FIRST NATIONAL BANK OF ST. PAUL, ASSIGNEE FOR REMINGTON RAND, INC. (ENGINEERING RESEARCH ASSOCIATES DIVISION), ST. PAUL, MINNESOTA, UNDER COST-PLUS-A FIXED-FEE CONTRACTS NOS. AF33(038)-23069, AF33(038)-14298, AF33(600) 6293, AF33(038)-10965 AND AF33(038)-14317, DATED MARCH 29, 1951, JUNE 21, 1950, OCTOBER 17, 1951, MARCH 16, 1950, AND JUNE 19, 1950, RESPECTIVELY, WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT ON THE VOUCHERS IS AUTHORIZED.

THE AMOUNTS OF THE VOUCHERS, TAKEN IN NUMERICAL ORDER, REPRESENT THE PRO RATA SHARE OF BIDDING AND PROPOSAL EXPENSES CHARGED AGAINST THE CONTRACTS FOR THE FOLLOWING PERIODS AS RELATED, IN SEQUENCE, TO THE VOUCHERS INVOLVED: (1) AUGUST, OCTOBER AND NOVEMBER, 1952, JANUARY THROUGH APRIL, 1953, AND MAY THROUGH DECEMBER, 1953; (2) MAY, 1951, THROUGH APRIL, 1952, JULY 1952, THROUGH MARCH, 1953, MAY THROUGH OCTOBER, 1953; (3) JULY, 1952, THROUGH APRIL, 1953, FEBRUARY THROUGH APRIL, 1952, MAY THROUGH DECEMBER, 1953; (4) JUNE THROUGH AUGUST, 1951, FEBRUARY THROUGH APRIL, 1953, SEPTEMBER, 1951, THROUGH APRIL, 1952, AND (5) MAY, 1951, THROUGH MAY, 1952; JUNE AND JULY, 1952, FEBRUARY, MARCH AND APRIL, 1953, AND MAY THROUGH OCTOBER, 1953. THE SAID AMOUNTS WERE REIMBURSED TO THE CONTRACTOR UNDER THE CONTRACTS, BUT LATER WERE COLLECTED FROM THE CONTRACTOR AS A RESULT OF GAO EXCEPTIONS NOS. 400019 AND 400030, STATED AGAINST D.O. VOUCHERS NOS. 2628 AND 1404, ET AL., IN YOUR OCTOBER, 1952, AND JULY, 1953, ACCOUNTS; EXCEPTIONS NOS. 400035, 400036 AND 400037, STATED AGAINST D.O. VOUCHERS NOS. 3111, 3123 AND 1721, ET AL., IN THE AUGUST, 1951, ACCOUNTS OF J. W. ARMBRUSTER, SYM. 225-336, AND YOUR OCTOBER AND AUGUST 1953, ACCOUNTS; EXCEPTIONS NOS. 400020, 400027 AND 400041, STATED AGAINST D.O. VOUCHER NO. 3262, ET AL., IN YOUR OCTOBER, 1952, ACCOUNTS, D.O. VOUCHER NO. 23250, ET AL., IN THE APRIL, 1952, ACCOUNTS OF J. W. ARMBRUSTER, AND D.O. VOUCHER NO. 834, ET AL., IN YOUR JULY, 1953, ACCOUNTS; EXCEPTIONS NOS. 400028, 400029, 400038 AND 400039, STATED AGAINST D.O. VOUCHER NO. 2658, ET AL., IN THE OCTOBER, 1951, ACCOUNTS OF G. B. CRANDALL, SYM. 225-332, D.O. VOUCHER NO. 18684, ET AL., IN YOUR MAY, 1953, ACCOUNTS D.O. VOUCHER NO. 14015, ET AL., IN THE JANUARY, 1952, ACCOUNTS OF J. W. ARMBRUSTER, AND D.O. VOUCHER NO. 32923 IN THE SEPTEMBER, 1951, ACCOUNTS OF T. J. BROOKS, SYM. 225-635; AND EXCEPTIONS NOS. 400032, 400033 AND 400034, STATED AGAINST D.O. VOUCHER NO. 4641, ET AL., IN THE SEPTEMBER, 1951, ACCOUNTS OF J. W. ARMBRUSTER, AND D.O. VOUCHERS NOS. 2958 AND 927, ET AL., IN YOUR OCTOBER, 1952, AND JULY, 1953, ACCOUNTS.

THE BASIS FOR THE EXCEPTIONS WAS THAT PRORATED COSTS INCURRED IN UNSUCCESSFUL BIDDING ACTIVITIES CONSTITUTED COSTS INCIDENT TO "SELLING AND DISTRIBUTION ACTIVITIES NOT RELATED TO THE CONTRACT PRODUCTS," REIMBURSEMENT FOR WHICH WAS PRECLUDED BY PARAGRAPH 15-205(Q) OF SECTION XV OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH WAS THE COST DETERMINANT IN THE CONTRACTS. THIS WAS IN ACCORDANCE WITH THE HOLDING IN B-113252, MARCH 31, 1953, TO THE SECRETARY OF DEFENSE. HOWEVER, AS INDICATED IN THE RECLAIM VOUCHERS INVOLVED, THAT DECISION WAS, ON THE BASIS OF ADDITIONAL INFORMATION SUBMITTED BY THE SECRETARY, MODIFIED BY DECISION OF MAY 6, 1954, B-113252, 33 COMP. GEN. 543, WHEREIN IT WAS HELD THAT CURRENT UNSUCCESSFUL BIDDING EXPENSES COULD BE REGARDED AS INDIRECT COSTS PROPERLY FOR APPORTIONMENT AS A REIMBURSABLE ITEM UNDER CONTRACTS SUCH AS HERE INVOLVED.

ACCORDINGLY, THE VOUCHERS, TOGETHER WITH SUPPORTING PAPERS, ARE RETURNED HEREWITH, AND YOU ARE ADVISED THAT PAYMENT THEREON IS AUTHORIZED, IF OTHERWISE CORRECT.