B-128572, AUG. 9, 1956

B-128572: Aug 9, 1956

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FINANCE AND ACCOUNTING OFFICER: REFERENCE IS MADE TO YOUR LETTER OF JUNE 25. REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF THE EQUITABLE SECURITY TRUST COMPANY. COMPLETION DATE FOR PERFORMANCE OF THE CONTRACT WAS DECEMBER 31. THE CONTRACT PRICE WAS INCREASED TO A TOTAL OF $102. THE TIME OF PERFORMANCE WAS EXTENDED TO JANUARY 31. 789.31 FOR WORK WHICH WAS AUTHORIZED AND DIRECTED TO BE PERFORMED BY ABERDEEN PROVING GROUNDS. THAT THE AMOUNT CHARGED WAS CONSIDERED TO BE FAIR AND PAYMENT WAS RECOMMENDED. 789.31 WAS A TOTAL OVERRUN OF COSTS AMOUNTING TO $443.67 (SUBSEQUENTLY REDUCED TO $438.67) REPORTED BY THE CONTRACTOR AS HAVING BEEN INCURRED SUBSEQUENT TO THE CONTRACT COMPLETION DATE.

B-128572, AUG. 9, 1956

TO CAPTAIN LYLE L. RITCHIE, FINANCE CORPS, FINANCE AND ACCOUNTING OFFICER:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 25, 1956 (ORDEI-LO/LS), REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF THE EQUITABLE SECURITY TRUST COMPANY, ASSIGNEE OF THE GENERAL DEVELOPMENT CORPORATION, IN THE AMOUNT OF $438.74, REPRESENTING COSTS INCURRED IN THE PERFORMANCE OF COST-PLUS-FIXED -FEE CONTRACT NO. DA-36-034-ORD-1179, DATED DECEMBER 29, 1952, SUBSEQUENT TO ITS COMPLETION DATE.

UNDER THE CONTRACT OF DECEMBER 29, 1952, THE GENERAL DEVELOPMENT CORPORATION AGREED TO FURNISH THE SERVICES, MATERIALS AND FACILITIES LEADING TO AND REQUIRED IN THE DEVELOPMENT OF BALLISTIC MEASUREMENT EQUIPMENT AT AN ESTIMATED COST OF $68,163, AND WITH A FIXED FEE TO THE CONTRACTOR OF $4,089. COMPLETION DATE FOR PERFORMANCE OF THE CONTRACT WAS DECEMBER 31, 1953. BY SUPPLEMENTAL AGREEMENT NO. 1, DATED OCTOBER 27, 1953, SUPPLEMENTAL AGREEMENT NO. 2, DATED DECEMBER 30, 1953, AND SUPPLEMENTAL AGREEMENT NO. 3, DATED SEPTEMBER 9, 1955, THE CONTRACT PRICE WAS INCREASED TO A TOTAL OF $102,041.31, WITH NO CHANGE IN THE FIXED FEE. THE TIME OF PERFORMANCE WAS EXTENDED TO JANUARY 31, 1954, BY SUPPLEMENTAL AGREEMENT NO. 2.

YOU REPORT THAT IN PERFORMING THE ASSIGNED TASK OF DESIGNING AND FABRICATING TWO STROBOSCOPIC FILM READERS UNDER THE CONTRACT, THE CONTRACTOR EXPENDED AN ADDITIONAL AMOUNT OF $2,789.31 FOR WORK WHICH WAS AUTHORIZED AND DIRECTED TO BE PERFORMED BY ABERDEEN PROVING GROUNDS; ALSO, THAT BY LETTER OF FEBRUARY 24, 1955, THE ABERDEEN PROVING GROUNDS ADVISED THAT THE WORK HAD BEEN APPROVED, THAT THE AMOUNT CHARGED WAS CONSIDERED TO BE FAIR AND PAYMENT WAS RECOMMENDED. INCLUDED IN THE AMOUNT OF $2,789.31 WAS A TOTAL OVERRUN OF COSTS AMOUNTING TO $443.67 (SUBSEQUENTLY REDUCED TO $438.67) REPORTED BY THE CONTRACTOR AS HAVING BEEN INCURRED SUBSEQUENT TO THE CONTRACT COMPLETION DATE--- JANUARY 31, 1954.

IT IS REPORTED FURTHER THAT THE ARMY AUDIT AGENCY AUDITOR DISAPPROVED PAYMENT OF THESE COSTS BECAUSE THEY WERE INCURRED SUBSEQUENT TO THE CONTRACT COMPLETION DATE. IT IS STATED THAT WHEN SUPPLEMENTAL AGREEMENT NO. 3 WAS EXECUTED BY THE PARTIES, SUFFICIENT MONEY WAS PLACED IN THE CONTRACT TO COVER THE COSTS INCURRED BUT THAT THE COMPLETION DATE WAS NOT EXTENDED.

UNDER THE PROVISIONS OF THE CONTRACT THE CONTRACTOR WAS TO BE REIMBURSED FOR ITS COSTS INCURRED IN THE PERFORMANCE OF THE SERVICES REQUIRED THEREUNDER, TO BE COMPUTED IN ACCORDANCE WITH THE PRINCIPLES SET FORTH IN SECTION XV OF THE ARMED SERVICES PROCUREMENT REGULATIONS.

BY SUPPLEMENTAL AGREEMENT NO. 3, DATED SEPTEMBER 9, 1955, THE CONTRACT PRICE WAS INCREASED BY THE AMOUNT OF $2,789.31, INCLUDING THE ADDITIONAL COSTS HERE INVOLVED, IT BEING PROVIDED THEREIN AS FOLLOWS:

"WHEREAS, SAID CONTRACT IS A COST REIMBURSEMENT CONTRACT WITH ESTIMATED COST AND FIXED-FEE, AND

"WHEREAS, THE PARTIES HAVE AGREED TO INCREASE THE PRICE OF THIS CONTRACT TO PERMIT REIMBURSEMENT TO THE CONTRACTOR FOR THE COST OF WORK ALREADY COMPLETED IN ACCORDANCE WITH DIRECTIONS OF THE GOVERNMENT; AND

"WHEREAS, IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO REFLECT SUCH AGREEMENT IN THIS SUPPLEMENTAL AGREEMENT.'

WHILE, FROM A TECHNICAL STANDPOINT, THE CONTRACTUAL OBLIGATIONS OF THE PARTIES MAY HAVE TERMINATED AT THE CONTRACT COMPLETION DATE, BY THE TERMS OF SUPPLEMENTAL AGREEMENT NO. 3, IT WAS SPECIFICALLY PROVIDED THAT THE CONTRACTOR WOULD BE REIMBURSED FOR THE COST OF WORK ALREADY COMPLETED IN ACCORDANCE WITH DIRECTIONS OF THE GOVERNMENT, AND SINCE IT APPEARS THAT THE WORK WAS PERFORMED IN GOOD FAITH AT THE REQUEST OF GOVERNMENT OFFICIALS AND THE PRICE CHARGED THEREFOR IS REASONABLE, NO OBJECTION WILL BE INTERPOSED TO PAYMENT OF THE CLAIM.

THE VOUCHER TRANSMITTED WITH YOUR LETTER IS RETURNED HEREWITH AND PAYMENT THEREOF IS AUTHORIZED, IF OTHERWISE CORRECT. A COPY OF THIS DECISION SHOULD BE ATTACHED TO THE VOUCHER IN MAKING PAYMENT.