B-128750, AUG. 29, 1956

B-128750: Aug 29, 1956

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INTERNATIONAL COOPERATION ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF JULY 25. THE CONTRACTOR WAS AUTHORIZED TO PROVIDE A GRAIN STORAGE EXPERT TO PAKISTAN FOR PERFORMANCE OF THE FOLLOWING SERVICES: (A) REVIEW THE BEST AVAILABLE STATISTICS ON PRODUCTION. WAS. PINNER WAS DISMISSED BY THE CONTRACTOR ON APRIL 14. WHICH WAS GIVEN ON APRIL 15. IS SET FORTH ON PAGES 193 TO 254 OF THE PRINT (PART 2) OF THE HEARINGS HELD BY THE SUBCOMMITTEE. PINNER ATTEMPTED TO USE HIS POSITION AS CONSULTANT TO HAVE THE CONTRACT AWARDED TO A CONCERN THE VICE PRESIDENT OF WHICH HAD WRITTEN THE LETTER OF RECOMMENDATION THAT MAINLY WAS RESPONSIBLE FOR HIS EMPLOYMENT BY THE RALPH M. IN VIEW OF WHICH THE CONTRACT MAY NOT BE SAID TO HAVE CONTEMPLATED THAT IT BEAR THE RISK OF FAULTY PERFORMANCE ON THE PART OF THE EMPLOYEE IN QUESTION.

B-128750, AUG. 29, 1956

TO THE DIRECTOR, INTERNATIONAL COOPERATION ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF JULY 25, 1956, REQUESTING APPROVAL OF A SETTLEMENT PROPOSED TO BE MADE WITH THE RALPH M. PARSONS COMPANY WITH RESPECT TO THE AMOUNT OF COMPENSATION DUE THE COMPANY FOR SERVICES FURNISHED THE FOREIGN OPERATIONS ADMINISTRATION (NOW THE INTERNATIONAL COOPERATION ADMINISTRATION), PURSUANT TO TASK ORDER NO. 1, DATED APRIL 9, 1954, AND AMENDMENT NO. 1 THERETO, DATED OCTOBER 15, 1954, ISSUED UNDER A COST-PLUS-A-FIXED-FEE CONTRACT DATED DECEMBER 2, 1953.

ARTICLE II-E-3 (B) OF THE CONTRACT PROVIDED THAT, TO THE EXTENT OF THE PROFESSIONAL, ADVISORY, CONSULTING AND OTHER ENGINEERING SERVICES TO BE FURNISHED THEREUNDER COULD NOT BE PERFORMED WITH THE FIELD AND HOME OFFICE STAFF OF THE CONTRACTOR, THE CONTRACTOR MIGHT, ON THE BASIS OF TASK ORDERS ISSUED BY USOM (U.S. OPERATIONS MISSION TO PAKISTAN, FOREIGN OPERATIONS ADMINISTRATION), EMPLOY OTHER SUPERVISORY AND TECHNICAL PERSONNEL HAVING THE REQUIRED QUALIFICATION FOR DUTIES, SUBJECT TO THE DIRECTION AND APPROVAL OF USOM.

UNDER THE TASK ORDER, AS AMENDED, THE CONTRACTOR WAS AUTHORIZED TO PROVIDE A GRAIN STORAGE EXPERT TO PAKISTAN FOR PERFORMANCE OF THE FOLLOWING SERVICES:

(A) REVIEW THE BEST AVAILABLE STATISTICS ON PRODUCTION, IMPORTS, EXPORTS AND CONSUMPTION OF VARIOUS GRAIN COMMODITIES.

(B) EVALUATE EXISTING PLANS, REVISE PLANS AND SPECIFICATIONS ON FACILITIES (ELEVATOR WAREHOUSES) FOR STORING AND HANDLING GRAINS.

(C) ESTIMATE THE EXTENT AND TYPE OF ADDITIONAL FACILITIES REQUIRED TO PROVIDE ADEQUATE STORAGE.

(D) INDICATE PRIORITIES ON NEW CONSTRUCTION.

(E) DESCRIBE THE ORGANIZATION NEEDED FOR DETAILED DESIGN AND PLANNING OF PROJECTS, SUPERVISION OF CONSTRUCTION, ETC.

(F) ESTIMATE COSTS OF NEW FACILITIES, TIME REQUIREMENTS, ETC.

(G) ADVISE ON OTHER QUESTIONS ON THE ABOVE SUBJECTS AS MAY BE RAISED BY THE FOA MISSION IN PAKISTAN.

(G) CONSULT WITH AND ADVISE FOA OFFICIALS IN WASHINGTON ON THE SPECIFICATIONS AND THE EVALUATION OF BIDS ON THE GRAIN STORAGE CONTRACT.

(I) ADVISE AND ASSIST DURING THE PERIOD OF DESIGN AND CONSTRUCTION OF GRAIN STORAGE FACILITIES.

IT APPEARS THAT ON APRIL 21, 1954, ROBERT H. PINNER, A CONSULTING ENGINEER, WAS, WITH THE APPROVAL OF USOM, EMPLOYED BY THE CONTRACTOR AND PLACED ON ITS REIMBURSABLE PAYROLL FOR THE PURPOSE OF PERFORMING THE SERVICES IN QUESTION; THAT MR. PINNER PROCEEDED TO PAKISTAN, WHERE HE ENTERED INTO PERFORMANCE UNDER THE TASK ORDER; THAT ICA PAID THE CONTRACT AS REIMBURSABLE FOR THE EXPENSES INCIDENT TO THE EMPLOYMENT OF MR. PINNER, AS THE PRO RATA AMOUNT OF OVERHEAD COSTS ALLOCABLE TO THE WORK, AND AS FIXED FEE THE CONTRACTOR UP TO AND INCLUDING DECEMBER 31, 1954, THE SUM OF $29,652.76; AND THAT THERE REMAINS OUTSTANDING A CLAIM BY THE CONTRACTOR FOR SERVICES FOR THE PERIOD JANUARY 1, 1955, THROUGH APRIL 14, 1955, IN THE AMOUNT OF APPROXIMATELY $4,500.

IT FURTHER APPEARS THAT MR. PINNER WAS DISMISSED BY THE CONTRACTOR ON APRIL 14, 1955, AFTER HE HAD TESTIFIED BEFORE THE SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS AND IN ANTICIPATION OF HIS SECOND APPEARANCE BEFORE THE SUBCOMMITTEE, ON WHICH OCCASION HE CHANGED SUBSTANTIALLY HIS TESTIMONY WITH RESPECT TO CERTAIN OF HIS ACTIVITIES IN THE COURSE OF HIS WORK AS A CONSULTANT UNDER THE CONTRACT. HIS CORRECTED TESTIMONY, WHICH WAS GIVEN ON APRIL 15, 1955, AND IS SET FORTH ON PAGES 193 TO 254 OF THE PRINT (PART 2) OF THE HEARINGS HELD BY THE SUBCOMMITTEE, SERIOUSLY REFLECTED ON HIS IMPARTIALITY IN HANDLING AND EVALUATING THE BIDS SUBMITTED FOR THE CONSTRUCTION OF THE GRAIN STORAGE FACILITIES IN PAKISTAN. OTHER EVIDENCE INTRODUCED BEFORE THE SUBCOMMITTEE TENDED TO CONFIRM THIS LACK OF IMPARTIALITY AND TO SHOW THAT MR. PINNER ATTEMPTED TO USE HIS POSITION AS CONSULTANT TO HAVE THE CONTRACT AWARDED TO A CONCERN THE VICE PRESIDENT OF WHICH HAD WRITTEN THE LETTER OF RECOMMENDATION THAT MAINLY WAS RESPONSIBLE FOR HIS EMPLOYMENT BY THE RALPH M. PARSONS COMPANY, WITHOUT REGARD TO THE INTERESTS OF THE UNITED STATES AND IN DISREGARD OF THE RIGHTS OF THE OTHER BIDDERS. UNDER DATE OF APRIL 21, 1955, FOA ADVISED THE BIDDERS THAT THE AGENCY HAD DECIDED TO REJECT ALL PROPOSALS FOR CONSTRUCTION OF THE GRAIN STORAGE FACILITIES AND READVERTISE THE PROCUREMENT.

YOU STATE THAT, AS A RESULT OF THE REVELATION CONCERNING THE BEHAVIOR OF MR. PINNER, ICA HAS WITHHELD PAYMENT OF THE REFERRED-TO SUM OF $4,500 AND HAS REQUESTED REFUND OF ALL PRIOR PAYMENTS MADE TO THE CONTRACTOR UNDER THE TASK ORDER, BUT THE CONTRACTOR HAS REJECTED THE REQUEST FOR REFUND AND HAS REASSERTED ITS CLAIM FOR THE AMOUNT OF $4,500 ON THE GROUNDS THAT IT PERFORMED ITS CONTRACTUAL OBLIGATIONS WITH DUE DILIGENCE, IN VIEW OF WHICH THE CONTRACT MAY NOT BE SAID TO HAVE CONTEMPLATED THAT IT BEAR THE RISK OF FAULTY PERFORMANCE ON THE PART OF THE EMPLOYEE IN QUESTION. HOWEVER, YOU STATE THAT THE CONTRACTOR HAS OFFERED TO WITHDRAW ITS CLAIM FOR PAYMENT FOR SERVICES NOT YET REIMBURSED FOR THE PERIOD JANUARY 1 THROUGH APRIL 14, 1955, PROVIDED ICA WILL WITHDRAW ITS CLAIM FOR A REFUND. YOU STATE THAT, IN VIEW OF THE ACCEPTABLE RENDITION OF CERTAIN SERVICES BY MR. PINNER, WHICH WERE NOT TAINTED BY HIS APPARENT BEHAVIOR WITH RESPECT TO BID EVALUATION, THE IMPOSSIBILITY OF ASSIGNING A VALUE TO THE VARIOUS SEGMENTS OF SERVICE PERFORMED, AND THE DOUBT AS TO THE LEGAL BASIS FOR THE CONTRACTOR'S CLAIM, IT IS YOUR CONSIDERED JUDGMENT THAT THE CONTRACTOR'S PROPOSAL SHOULD BE ACCEPTED AS BEING IN THE BEST INTERESTS OF THE GOVERNMENT.

IT WAS HELD IN 21 COMP. GEN. 149, 156, THAT A COST-PLUS-A-FIXED-FEE CONTRACTOR MAY NOT BE REIMBURSED FOR LOSSES DUE TO THE NEGLIGENCE OR UNTRUSTWORTHINESS OF HIS EMPLOYEES WHERE HE HAS FAILED TO EXERCISE REASONABLE CARE IN THEIR SELECTION AND EMPLOYMENT, OR WHERE SUCH PERSONS HAVE BEEN RETAINED AFTER THE CONTRACTOR HAS REASON TO KNOW THAT THEY WERE NOT TRUSTWORTHY AND CAREFUL.

IN THE INSTANT CASE, IT APPEARS THAT MR. PINNER LISTED THREE REFERENCES IN THE APPLICATION FOR EMPLOYMENT WHICH HE SUBMITTED TO THE RALPH M. PARSONS COMPANY, ONE OF WHOM WAS A. E. POULSEN, PRESIDENT OF THE POULSEN COMPANY, A LOS ANGELES FIRM OF GRAIN MILLING ENGINEERS AND CONSTRUCTORS FOR WHOM HE HAD WORKED. THE PARSONS COMPANY ADDRESSED A LETTER TO THAT CONCERN ON MARCH 22, 1954, STATING THAT MR. PINNER WAS BEING CONSIDERED FOR A RESPONSIBLE FOREIGN POSITION AS GRAIN ELEVATOR ENGINEER AND REQUESTING THEIR OPINION AS TO HIS SUITABILITY FOR SUCH AN ASSIGNMENT. MR. POULSEN REPLIED ON BEHALF OF THE POULSEN COMPANY BY LETTER OF MARCH 23, 1954, STATING THAT HE HAD PERSONALLY KNOWN MR. PINNER SINCE 1936, AND HAD WORKED WITH HIM ON SEVERAL INSTALLATIONS OF PLANTS, INCLUDING GRAIN STORAGE PLANTS, AND THAT, IN EACH INSTANCE, MR. PINNER HAD DEMONSTRATED THAT HE WAS FULLY CAPABLE OF DOING THE JOB. MR. POULSEN ALSO STATED THAT MR. PINNER HAD WORKED WITH THE POULSEN COMPANY ON "FLOWSHEETS" IN MANY INSTANCES, AND HE FELT CERTAIN THAT HE WAS CAPABLE OF SUPPLYING THE NECESSARY ENGINEERING INFORMATION TO PROPERLY DESIGN AND ERECT A GRAIN STORAGE PLANT; THAT MR. PINNER HAD BEEN RAISED IN THE CONCRETE BUSINESS, SINCE HIS FATHER OWNED THE LARGEST CONCRETE PLANT IN THE IMPERIAL VALLEY, AND HE WAS, THEREFORE, FAMILIAR WITH FORM WORK AND THE MANUFACTURE OF CONCRETE MIXES; THAT MR. PINNER HAD ALSO COMMANDED THE RESPECT OF HIS SUPERIORS, AS WELL AS THE MEN WORKING UNDER HIM; AND THAT HE WAS NOT ONE TO MAKE STATEMENTS THAT HE COULD NOT BACK UP. MR. POULSEN CONCLUDED BY STATING THAT HIS COMPANY WOULD GLADLY REHIRE MR. PINNER IF THEY WERE PLACED IN THE POSITION OF NEEDING A PERSON OF HIS ABILITY, AND THAT HE THOUGHT MR. PINNER WOULD MAKE AN EXCEPTIONALLY FINE INDIVIDUAL FOR THE PARSONS COMPANY TO EMPLOY.

THUS, THE PARSONS COMPANY AT LEAST MADE A LIMITED INVESTIGATION OF MR. PINNER BEFORE EMPLOYING HIM. MOREOVER, IT APPEARS FROM THE EVIDENCE BROUGHT OUT IN THE HEARINGS THAT THE PARSONS COMPANY WAS COMPLETELY UNAWARE THAT PINNER WAS FAVORING POULSEN, WHO, AS VICE PRESIDENT OF THE NEWLY ORGANIZED AGRICULTURAL CONSTRUCTION COMPANY OF WASHINGTON, D.C., WAS ONE OF THE BIDDERS FOR THE PROJECT, WITH INFORMATION NOT SUPPLIED TO THE OTHER BIDDERS DURING THE PERIOD OF TIME THAT BIDS FOR CONSTRUCTION OF THE GRAIN STORAGE FACILITIES FOR PAKISTAN WERE BEING CONSIDERED, OR THAT HE WAS OTHERWISE FAVORING POULSEN'S COMPANY IN THE TRANSACTION, AND THAT THE CONTRACTOR TERMINATED PINNER'S EMPLOYMENT AS SOON AS THE FACTS BECAME KNOWN.

IN VIEW OF THE ABOVE CIRCUMSTANCES, AND SINCE THE GOVERNMENT DID BENEFIT FROM CERTAIN SERVICES PERFORMED BY MR. PINNER UNDER THE CONTRACT WHICH WERE UNRELATED TO THE EVALUATION OF BIDS, WE WILL NOT OBJECT TO CONSUMMATION OF THE SETTLEMENT PROPOSED IN YOUR LETTER, WHICH WOULD APPEAR TO BE IN THE BEST INTERESTS OF THE UNITED STATES.

THE RALPH M. PARSONS COMPANY CONTRACT, TOGETHER WITH TASK ORDER NO. 1, AND AMENDMENT NO. 1 THERETO, WHICH WERE FURNISHED TO US BY YOUR ASSOCIATE GENERAL COUNSEL, ARE RETURNED HEREWITH.