B-128260, SEP. 26, 1956

B-128260: Sep 26, 1956

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16. THE CONTRACT WAS NEITHER TERMINATED NOR CERTIFIED FOR CONTINUANCE BEYOND JUNE 30. AN ATTEMPT WAS MADE BY OUR CLAIMS DIVISION TO ESTABLISH THE DATES OF THE DELIVERIES INVOLVED FOR THE PURPOSE OF DETERMINING WHAT PART. IT WAS THEN ASCERTAINED THAT THE DELIVERIES IN QUESTION HAD BEEN MADE DURING THE PERIOD DECEMBER 30. BECAUSE CERTAIN OF THE CLAIMS WERE BASED UPON PRICE INCREASES APPROVED SUBSEQUENT TO JUNE 30. THE NAVY REGIONAL ACCOUNTS OFFICE WAS ADVISED BY LETTER DATED JULY 26. OTHER CLAIMS BY VARIOUS COMPANIES HAVE BEEN SUBMITTED BY YOUR DEPARTMENT AND RETURNED BY OUR CLAIMS DIVISION AS NOT BEING ELIGIBLE FOR PAYMENT AGAINST APPROPRIATIONS COVERED BY SECTION 731 1/2 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT.

B-128260, SEP. 26, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16, 1956, WITH ENCLOSURES, CONCERNING THE CLAIMS OF THE STUART F. LOUCHHEIM COMPANY, PHILADELPHIA, PENNSYLVANIA, IN THE AMOUNTS OF $8,362.47, $6,708.45, $5,899.04, $22,734.39, $733.16 AND $23,958.75, UNDER CONTRACT NO. NORD 13110, DATED JUNE 18, 1952.

THE CONTRACT WAS NEITHER TERMINATED NOR CERTIFIED FOR CONTINUANCE BEYOND JUNE 30, 1955, AS REQUIRED BY SECTION 731 1/2 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1955. AN ATTEMPT WAS MADE BY OUR CLAIMS DIVISION TO ESTABLISH THE DATES OF THE DELIVERIES INVOLVED FOR THE PURPOSE OF DETERMINING WHAT PART, IF ANY, OF THE TOTAL CLAIM FOR $68,396.26 COULD BE CHARGED AGAINST THE FISCAL YEAR 1952 APPROPRIATION CITED ON THE CLAIM VOUCHERS, SINCE IT APPEARED THAT THE CONGRESS HAD INTENDED THAT JUNE 30, 1955, SHOULD BE THE LIMITING DATE FOR PERFORMANCE OF ANY MILITARY CONTRACT WHICH OBLIGATED A FISCAL YEAR 1952 APPROPRIATION, UNLESS THE CONTRACT HAD BEEN CERTIFIED FOR CONTINUANCE BY THE SECRETARY OF THE DEPARTMENT CONCERNED PRIOR TO JANUARY 1, 1955. IT WAS THEN ASCERTAINED THAT THE DELIVERIES IN QUESTION HAD BEEN MADE DURING THE PERIOD DECEMBER 30, 1955, TO APRIL 3, 1956, AND, BECAUSE CERTAIN OF THE CLAIMS WERE BASED UPON PRICE INCREASES APPROVED SUBSEQUENT TO JUNE 30, 1955, THE NAVY REGIONAL ACCOUNTS OFFICE WAS ADVISED BY LETTER DATED JULY 26, 1956, THAT THE 1952 APPROPRIATION DID NOT SEEM TO BE AVAILABLE FOR PAYMENT ON THE CLAIMS.

YOU STATE THAT, IN ADDITION TO THESE CLAIMS, OTHER CLAIMS BY VARIOUS COMPANIES HAVE BEEN SUBMITTED BY YOUR DEPARTMENT AND RETURNED BY OUR CLAIMS DIVISION AS NOT BEING ELIGIBLE FOR PAYMENT AGAINST APPROPRIATIONS COVERED BY SECTION 731 1/2 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1955. CONSEQUENTLY, YOU REQUEST OUR DECISION ON THE FOLLOWING QUESTIONS:

"1. DOES SECTION 731 1/2 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1955 DENY THE APPLICATION OF FUNDS TRANSFERRED TO THE CERTIFIED CLAIMS ACCOUNT TO THE PAYMENT OF VOUCHERS FOR DELIVERIES MADE OR FOR SERVICES RENDERED UNDER CONTRACTS WHICH HAD BEEN NEITHER TERMINATED NOR CERTIFIED UNDER SECTION 731 1/2?

"2. IF IT IS HELD THAT MONEYS TRANSFERRED TO THE CERTIFIED CLAIMS ACCOUNT ARE NOT SO AVAILABLE, MAY THE DEPARTMENT OF THE NAVY LIQUIDATE THE OBLIGATIONS INCURRED UNDER THE CONTRACTS COVERED BY SECTION 731 1/2 BY THE USE OF FUNDS AVAILABLE IN THE APPROPRIATION ESTABLISHED UNDER PUBLIC LAW 798, 84TH CONGRESS FOR THE PURPOSES COVERED BY SUCH CONTRACTS$ .

"3. IF THE ANSWERS TO QUESTIONS 1 AND 2 ARE IN THE NEGATIVE, MAY APPROPRIATIONS AVAILABLE FOR OBLIGATION AND EXPENDITURE DURING THE PERIOD IN WHICH DELIVERIES WERE MADE AGAINST SUCH CONTRACTS BE USED FOR THE LIQUIDATION OF OBLIGATIONS LEGALLY INCURRED AGAINST THE APPROPRIATIONS COVERED BY SECTION 731 1/2?

RELATIVE TO THE FIRST TWO QUESTIONS, WE ARE OF THE OPINION THAT THE REQUIRED TERMINATION OF ANY FISCAL YEAR 1952 MILITARY CONTRACT WHICH HAD NOT BEEN CERTIFIED FOR CONTINUANCE BEYOND JUNE 30, 1955, PROHIBITS THE USE OF FUNDS TRANSFERRED TO THE "PAYMENT OF CERTIFIED CLAIMS" ACCOUNT, OR TO THE SUCCESSOR AGENCY ACCOUNTS AS PROVIDED FOR IN THE ACT OF JULY 25, 1956, PUBLIC LAW 798, 84TH CONGRESS, FOR THE PAYMENT OF ANY AMOUNT TO THE CONTRACTOR FOR PERFORMANCE AFTER JUNE 30, 1955.

IN REGARD TO THE THIRD QUESTION, WE PERCEIVE NO OBJECTION TO THE PAYMENT OF REASONABLE AMOUNTS FOR DELIVERIES MADE SUBSEQUENT TO JUNE 30, 1955, UNDER A CONTRACT WHICH SHOULD HAVE BEEN TERMINATED AS OF THAT DATE, OUT OF APPROPRIATIONS MADE AVAILABLE FOR OBLIGATION AND EXPENDITURE DURING THE PERIODS IN WHICH SUCH DELIVERIES WERE ACCOMPLISHED.

IN THE PRESENT CASE, THE BUREAU OF ORDNANCE REPORTED THAT, AT THE TIME OF REVIEW OF CONTRACTS OBLIGATING APPROPRIATIONS COVERED BY SECTION 731 1/2 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1955, INFORMATION AVAILABLE TO THE CONTRACTING OFFICER DISCLOSED THAT OF THE TOTAL OF $120,721.08 OF ORDNANCE AND FACILITIES, NAVY, 1952, FUNDS ALLOTTED FOR PERFORMANCE OF CONTRACT NO. NORD-13110, $92,907.89 HAD BEEN INVOICED IN ACCORDANCE WITH THE PAYMENTS AND LIENS CLAUSE. THE BUREAU'S REPORT FURTHER SETS FORTH THAT AMENDMENT NO. 5 WAS ISSUED REMOVING THE BALANCE OF 1952 FUNDS, $27,813.19, AND SUBSTITUTING 1955FUNDS THEREFOR; THAT THE WORK ACCOMPLISHED UP TO SUCH TIME DID NOT RESULT IN FINISHED UNITS BUT ONLY IN THE PRODUCTION OF VARIOUS COMPONENTS TO BE ASSEMBLED INTO MINE TEST SETS; AND THAT AMENDMENT NO. 6 ADDED 1952 FUNDS TO THE SUBJECT CONTRACT TO PROVIDE FOR AN EQUITABLE ADJUSTMENT FOR CHANGES WHICH HAD BEEN INCORPORATED INTO THE UNCOMPLETED COMPONENTS OF THE MINE TEST SETS PRIOR TO JUNE 30, 1955.

ON THE BASIS OF THE FOREGOING EXPLANATION, IT IS APPARENT THAT THE CONTRACTOR HAD PERFORMED AS OF JUNE 30, 1955, MOST OF THE WORK INVOLVED IN THE FURNISHING OF A CONSIDERABLE PORTION OF THE CONTRACT ITEMS WHICH WERE DELIVERED DURING THE FISCAL YEAR 1956. ACCORDINGLY, AND IN VIEW OF YOUR STATEMENT THAT, UNDER THE PROVISIONS OF THE SUBJECT CONTRACT, THE CONTRACTOR WOULD BE PAID TERMINATION CHARGES FOR WORK DONE UP TO JUNE 30, 1955, IF THE CONTRACT WERE TERMINATED ON THAT DATE, THE CLAIMS FOR $68,396.26, SUBJECT TO THE ADJUSTMENTS NOTED ON THE CLAIM VOUCHERS, WILL BE SETTLED HERE AS A PROPER CHARGE AGAINST THE 1952 FUNDS WHICH WERE OBLIGATED FOR THE MAKING OF PAYMENTS UNDER THE CONTRACT.