B-127431, JUN. 8, 1956

B-127431, JUN. 8, 1956

TO MR. T. W. RAGLAND, OFFICER IN CHARGE, NAVY REGIONAL ACCOUNTS OFFICE:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 2, 1956, REFERENCE (60956/FD- 120, EM:GH, L6-4, TRANSMITTED HERE BY LETTER OF MARCH 23, 1956, L10- 4/CONT. AVIATION AND ENGINEERING CORP., FROM THE OFFICE OF THE COMPTROLLER, DEPARTMENT OF THE NAVY, REQUESTING A DECISION AS TO WHETHER RECLAIM VOUCHER NO. 213 FOR $2,881.88 UNDER CPFF CONTRACT HOB/S) 2601, WITH THE CONTINENTAL AVIATION AND ENGINEERING CORPORATION, MAY BE PAID BY YOUR OFFICE.

THE RECLAIM ARISES OUT OF EXCEPTIONS NOTED BY OUR OFFICE AGAINST THE ACCOUNTS OF J. A. REBENTISH, SYMBOL 540-15, FOR PAYMENTS FOR OVERHEAD CHARGED ON SALARY PAYMENTS TO S. T. WILLIAMS.

OUR INFORMATION INDICATES THAT MR. WILLIAMS' SERVICES FOR THE PERIOD IN QUESTION WERE PERFORMED PRINCIPALLY AT NAVAL BASES AND CONTRACTORS' PLANTS ON THE WEST COAST AND ALASKA. ARTICLE 3 (A) (III) OF THE CONTRACT PROVIDES FOR AN ALLOWANCE OF OVERHEAD BASED ON "DIRECT LABOR COST AT THE PLANT OF THE CONTRACTOR AT DETROIT, MICHIGAN," AND "DIRECT LABOR COST AT THE PLANT OF THE CONTRACTOR AT MUSKEGON, MICHIGAN.' SINCE MR. WILLIAMS' SERVICES CANNOT BE CONSIDERED AS DIRECT LABOR COSTS AT THE CONTRACTORS' PLANTS IN DETROIT OR MUSKEGON, THE EXCEPTION PREVIOUSLY NOTED MUST BE SUSTAINED.

THE CONTRACTOR'S STATEMENT IN CONNECTION WITH THE EXCEPTION CONTENDS THAT ANOTHER OF THE CONTRACTOR'S EMPLOYEES, MR. E. J. QUAIL, PERFORMED SERVICES SIMILAR TO THOSE ASSIGNED TO MR. WILLIAMS AND THAT NO EXCEPTION WAS TAKEN TO THE INCLUSION OF MR. QUAIL'S SALARY IN THE COMPUTATION OF THE OVERHEAD. NO EXCEPTION WAS TAKEN TO THE INCLUSION OF MR. QUAIL'S SALARY AND OVERHEAD BECAUSE, FOR THE PERIOD INVOLVED, THE INCREASE IN OVERHEAD COST OCCASIONED BY THE INCLUSION OF MR. QUAIL'S SALARY WAS DEEMED INSUFFICIENT TO WARRANT AN EXCEPTION. THE SAME CONCLUSION WAS REACHED IN REGARD TO THE INCLUSION OF MR. WILLIAMS' SALARY IN OVERHEAD UNDER SIMILAR CONDITIONS. THUS, THE EXCEPTIONS PERTAINING TO THE PERIOD MAY 1 TO SEPTEMBER 30, 1948, BECAUSE OF THE INCLUSION OF MR. WILLIAMS' SALARY IN OVERHEAD, WERE CLEARED AFTER RECEIPT OF ADVICE THAT THE OVERHEAD RATE FOR THAT PERIOD HAD BEEN REDETERMINED AND FIXED AT 19.9 PERCENT.

WITH RESPECT TO THE PERIOD NOVEMBER 1, 1947, TO APRIL 30, 1948, IT IS OUR UNDERSTANDING THAT NO REVISION OF THE OVERHEAD RATE WAS EFFECTED. IT HAS ALSO BEEN DETERMINED THAT MR. WILLIAMS' SALARY WAS NOT CONSIDERED IN THE DEVELOPMENT OF THE OVERHEAD RATES APPLIED DURING THAT PERIOD, AS IT WAS IN THE REDETERMINATION OF THE RATE FOR THE LATER PERIOD. IT THEREFORE WAS NOT THE INTENT OF OUR OFFICE TO WITHDRAW ALL OF THE AMOUNT CITED IN THE ORIGINAL EXCEPTIONS, AS SUGGESTED BY THE CONTRACTOR, AND WE FIND NO PROPER BASIS FOR FURTHER ACTION THEREON.

ACCORDINGLY, THE VOUCHER, WHICH WITH ACCOMPANYING PAPERS IS ENCLOSED, MAY NOT BE PAID.