B-128908, SEP. 26, 1956

B-128908: Sep 26, 1956

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

HEDGES: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 25. OF ATTORNEY'S FEES OF INDIVIDUAL DEFENDANTS IN A SUIT IN WHICH YOU ARE THE PLAINTIFF. A TRIAL WAS HELD IN AUGUST 1955. AT WHICH TIME A NONSUIT WAS TAKEN. YOU REPORT THAT IT WAS CALLED TO YOUR ATTENTION THAT THE ATTORNEY'S FEES FOR DEFENDANTS IN THIS CASE WERE PAID BY THE CARBIDE AND CARBON CHEMICAL COMPANY WHICH COMPANY WAS REIMBURSED FOR SUCH FEES BY THE ATOMIC ENERGY COMMISSION. FURTHER YOU STATE THAT THE SUIT WAS AGAINST INDIVIDUALS AND NEITHER CARBIDE NOR THE ATOMIC ENERGY COMMISSION WERE INVOLVED AND YOU REQUEST INFORMATION AS TO THE AUTHORITY FOR THE ATOMIC ENERGY COMMISSION TO APPROVE PAYMENT AND REIMBURSE CARBIDE FOR THESE FEES.

B-128908, SEP. 26, 1956

TO MR. W. F. HEDGES:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 25, 1956, IN WHICH YOU RAISE CERTAIN QUESTIONS, AND REQUEST INFORMATION, CONCERNING AN ALLEGED REIMBURSEMENT BY THE ATOMIC ENERGY COMMISSION, THROUGH THE CARBIDE AND CARBON CHEMICALS COMPANY, OF ATTORNEY'S FEES OF INDIVIDUAL DEFENDANTS IN A SUIT IN WHICH YOU ARE THE PLAINTIFF.

IN YOUR LETTER YOU STATE THAT YOU BROUGHT SUIT AGAINST J. J. FRITZ AND W. H. SIDNER IN THE CIRCUIT COURT, ANDERSON COUNTY, TENNESSEE,AND A TRIAL WAS HELD IN AUGUST 1955, AT WHICH TIME A NONSUIT WAS TAKEN. YOU REPORT THAT IT WAS CALLED TO YOUR ATTENTION THAT THE ATTORNEY'S FEES FOR DEFENDANTS IN THIS CASE WERE PAID BY THE CARBIDE AND CARBON CHEMICAL COMPANY WHICH COMPANY WAS REIMBURSED FOR SUCH FEES BY THE ATOMIC ENERGY COMMISSION. FURTHER YOU STATE THAT THE SUIT WAS AGAINST INDIVIDUALS AND NEITHER CARBIDE NOR THE ATOMIC ENERGY COMMISSION WERE INVOLVED AND YOU REQUEST INFORMATION AS TO THE AUTHORITY FOR THE ATOMIC ENERGY COMMISSION TO APPROVE PAYMENT AND REIMBURSE CARBIDE FOR THESE FEES.

IN OUR LETTER TO YOU OF AUGUST 16, 1956, WE ADVISED THAT IT WAS NECESSARY TO SECURE A REPORT ON THE MATTER FROM THE ATOMIC ENERGY COMMISSION AND OUR OFFICE IS NOW IN RECEIPT OF SUCH A REPORT. THE REPORT SHOWS THAT FOR SOME TIME PRIOR TO AUGUST 31, 1954, YOU WERE EMPLOYED AS A BUYER IN THE PURCHASING DIVISION, UNION CARBIDE NUCLEAR COMPANY, IN WHICH POSITION YOU PURCHASED ALL FOOD AND FOOD PRODUCTS USED IN CERTAIN CAFETERIAS AT PLANTS K-25 AND Y-12 AND THE OAK RIDGE NATIONAL LABORATORY. AT SOME TIME PRIOR TO AUGUST 31, 1954, YOU WERE ADVISED BY MR. JOHN J. FRITZ, DIRECTOR OF THE PURCHASING DIVISION, UNION CARBIDE NUCLEAR COMPANY THAT IT HAD BEEN BROUGHT TO HIS ATTENTION THAT YOU WERE THE OWNER OF A FOOD BROKERAGE COMPANY WHICH SOLD FOOD AND FOOD PRODUCTS TO VARIOUS VENDORS FROM WHOM PURCHASES WERE MADE BY YOU IN YOUR OFFICIAL CAPACITY AS BUYER FOR THE UNION CARBIDE NUCLEAR COMPANY. THE CONFLICT OF INTEREST WAS EXPLAINED TO YOU WITH THE REQUEST THAT YOU SELL YOUR BUSINESS OR RESIGN BY AN AGREED DATE. YOUR FAILURE TO DO EITHER RESULTED IN THE TERMINATION OF YOUR SERVICES ON AUGUST 31, 1954, FOR THE STATED REASON OF REFUSING DIRECTION.

THEREAFTER MR. FRITZ AND MR. SIDNER WERE SERVED SUMMONS TO APPEAR AT THE CIRCUIT COURT, ANDERSON COUNTY, TENNESSEE, CONCERNING THE LAW SUIT FILED AGAINST THEM BY YOU. ON THE BASIS THAT THE SUIT BROUGHT BY YOU WAS AGAINST MESSRS. FRITZ AND SIDNER IN THEIR OFFICIAL CAPACITIES AS EMPLOYEES OF UNION CARBIDE NUCLEAR COMPANY AND SINCE THAT COMPANY IS PERFORMING ITS FUNCTIONS AT OAK RIDGE, TENNESSEE, UNDER A COST REIMBURSEMENT TYPE CONTRACT WITH THE ATOMIC ENERGY COMMISSION, PERMISSION WAS REQUESTED FROM THE ATOMIC ENERGY COMMISSION TO HIRE PRIVATE COUNSEL FOR MESSRS. FRITZ AND SIDNER IF THE DEPARTMENT OF JUSTICE DID NOT ENTER THE CASE. FOR THE REASON THAT THE CONTRACT BETWEEN THE UNION CARBIDE NUCLEAR COMPANY AND THE ATOMIC ENERGY COMMISSION PROVIDES FOR THE INCLUSION, AS COST OF THE WORK, OF EXPENDITURES FOR THE MAINTENANCE OF WELFARE AND OTHER PLANS FOR THE BENEFIT OF EMPLOYEES WHEN CONSISTENT WITH THE GENERAL EMPLOYEE RELATIONS POLICIES OF THE UNION CARBIDE NUCLEAR COMPANY, WHICH COMPANY HAS A POLICY TO FURNISH FREE LEGAL ASSISTANCE TO EMPLOYEES FOR THEIR ACTS IN CONNECTION WITH THEIR EMPLOYMENT, THE ATOMIC ENERGY COMMISSION AUTHORIZED UNION CARBIDE NUCLEAR COMPANY TO EMPLOY LEGAL COUNSEL AND TO CHARGE THE COSTS THEREOF TO THE CONTRACT.

THE REPORT FROM THE ATOMIC ENERGY COMMISSION FURTHER STATES THAT IT IS THE GENERAL POLICY OF THE OAK RIDGE OPERATIONS OFFICE TO AUTHORIZE A CONTRACTOR TO EMPLOY LEGAL COUNSEL FOR THEIR EMPLOYEES FOR SUITS BROUGHT AGAINST SUCH EMPLOYEES FOR ACTS WHICH TOOK PLACE DURING THE PERFORMANCE OF THEIR OFFICIAL DUTIES IF THIS IS CONSISTENT WITH THE CONTRACTOR'S POLICIES. JUSTIFICATION FOR SUCH A POLICY BY THE ATOMIC ENERGY COMMISSION AND THE ENSUING COSTS THEREOF IS BASED ON THE THEORY THAT A JUDGMENT AGAINST AN EMPLOYEE MIGHT AFFECT A SUIT AGAINST THE CONTRACTOR.

IT APPEARS FROM THE ABOVE REPORT THAT YOUR SUIT AGAINST MESSRS. FRITZ AND SIDNER WAS IN REALITY NOT, AS YOU ALLEGED, FOR THEIR ACTS AS INDIVIDUALS BUT ACTUALLY FOR ACTS TAKEN BY THEM IN THEIR OFFICIAL CAPACITY AS EMPLOYEES OF THE UNION CARBIDE NUCLEAR COMPANY. UNDER THE CIRCUMSTANCES, THE EXPENSES OF EMPLOYING LEGAL COUNSEL FOR SUCH EMPLOYEES CONCERNING THEIR ACTS IN THEIR OFFICIAL CAPACITY REPRESENT A COST TO THE CONTRACTOR IN THE PERFORMANCE OF THE CONTRACT FOR WHICH PROVISION IS MADE FOR REIMBURSEMENT.

OUR OFFICE IS OF THE OPINION THAT THE REIMBURSEMENT BY THE ATOMIC ENERGY COMMISSION OF THE COST OF THE COUNSEL FEES FOR THE TWO NAMED DEFENDANTS IN THE SUIT BROUGHT BY YOU IS A PROPER EXPENSE UNDER THE CONTRACT BETWEEN THE UNION CARBIDE NUCLEAR COMPANY AND THE ATOMIC ENERGY COMMISSION AND HENCE IS A PROPER EXPENDITURE OF MONEYS APPROPRIATED FOR THE USE OF THE ATOMIC ENERGY COMMISSION.