B-131718, JUL. 9, 1957

B-131718: Jul 9, 1957

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YOU REQUEST AN ADVANCE DECISION AS TO WHETHER PAYMENT ON THE VOUCHER IS AUTHORIZED. ALL OF WHICH AMOUNTS WERE INCLUDED IN OVERHEAD CHARGES REIMBURSED TO THE CONTRACTOR. THESE AMOUNTS WERE DEDUCTED ON D.O. THE BASIS FOR THE EXCEPTION AS TO BIDDING AND PROPOSAL EXPENSES WAS THAT PRORATED COSTS INCURRED IN UNSUCCESSFUL BIDDING ACTIVITIES CONSTITUTED COSTS INCIDENT TO "SELLING AND DISTRIBUTION ACTIVITIES NOT RELATED TO THE CONTRACT PRODUCTS. " REIMBURSEMENT FOR WHICH WAS PRECLUDED BY PARAGRAPH 12- 205 (Q) OF SECTION XV OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH WAS THE COST DETERMINANT IN THE CONTRACT. THIS WAS IN ACCORDANCE WITH THE HOLDING IN B-113252. THAT DECISION WAS. WHEREIN IT WAS HELD THAT CURRENT UNSUCCESSFUL BIDDING EXPENSES COULD BE REGARDED AS INDIRECT COSTS PROPERLY FOR APPORTIONMENT AS A REIMBURSABLE ITEM UNDER CONTRACTS SUCH AS HERE INVOLVED.

B-131718, JUL. 9, 1957

TO CAPTAIN TODD H. NEEL, USN, OFFICER IN CHARGE, DEPARTMENT OF THE NAVY:

YOUR LETTER OF APRIL 25, 1957, YOUR REFERENCE (60956) FD-150 ESM:IDC L6- 4, TRANSMITS RECLAIM VOUCHER NO. 408 IN THE AMOUNT OF $18,828.27, STATED IN FAVOR OF FIRST NATIONAL BANK OF ST. PAUL, ASSIGNEE FOR REMINGTON-RAND UNIVAC-DIVISION OF SPERRY RAND CORPORATION, UNDER COST PLUS-A-FIXED-FEE CONTRACT NO. NOBSR 42001. YOU REQUEST AN ADVANCE DECISION AS TO WHETHER PAYMENT ON THE VOUCHER IS AUTHORIZED.

THE AMOUNT OF THE VOUCHER REPRESENTS BIDDING AND PROPOSAL EXPENSES IN THE AMOUNT OF $8,899.93, DEPRECIATION OF FIXED ASSETS IN THE AGGREGATE AMOUNT OF $7,459.35, AND DISTRIBUTION OF RENT ON A SPACE BASIS IN THE AMOUNT OF $2,468.99, ALL OF WHICH AMOUNTS WERE INCLUDED IN OVERHEAD CHARGES REIMBURSED TO THE CONTRACTOR. PURSUANT TO EXCEPTIONS NOS. 200036 AND 300002, THESE AMOUNTS WERE DEDUCTED ON D.O. VOUCHER NO. 163692, MARCH 1957 ACCOUNT OF H. T. OLSON, SYMBOL NO. 845, FROM AMOUNTS OTHERWISE DUE THE CONTRACTOR UNDER CONTRACT NO. NOBSR 63010.

THE BASIS FOR THE EXCEPTION AS TO BIDDING AND PROPOSAL EXPENSES WAS THAT PRORATED COSTS INCURRED IN UNSUCCESSFUL BIDDING ACTIVITIES CONSTITUTED COSTS INCIDENT TO "SELLING AND DISTRIBUTION ACTIVITIES NOT RELATED TO THE CONTRACT PRODUCTS," REIMBURSEMENT FOR WHICH WAS PRECLUDED BY PARAGRAPH 12- 205 (Q) OF SECTION XV OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH WAS THE COST DETERMINANT IN THE CONTRACT. THIS WAS IN ACCORDANCE WITH THE HOLDING IN B-113252, MARCH 31, 1953, TO THE SECRETARY OF DEFENSE. HOWEVER, AS INDICATED IN THE RECLAIM VOUCHER INVOLVED, THAT DECISION WAS, ON THE BASIS OF ADDITIONAL INFORMATION SUBMITTED BY THE SECRETARY, MODIFIED BY DECISION OF MAY 6, 1954, B-113252, 33 COMP. GEN. 543, WHEREIN IT WAS HELD THAT CURRENT UNSUCCESSFUL BIDDING EXPENSES COULD BE REGARDED AS INDIRECT COSTS PROPERLY FOR APPORTIONMENT AS A REIMBURSABLE ITEM UNDER CONTRACTS SUCH AS HERE INVOLVED.

AS TO THE ITEMS OF DEPRECIATION OF FIXED ASSETS AND DISTRIBUTION OF RENT ON A SPACE BASIS, IN VIEW OF THE AUTHORITY OF THE CONTRACTING OFFICER TO DETERMINE REIMBURSABILITY OF ITEMS OF COST, AND SINCE THE RECORD INDICATES THAT HIS APPROVAL OF THE ITEMS INVOLVED, AFTER FULL CONSIDERATION OF THE QUESTIONS INVOLVED, WAS NOT WITHOUT SUBSTANTIAL BASIS, THESE ITEMS MAY BE REGARDED AS REIMBURSABLE.

ACCORDINGLY, THE VOUCHER AND SUPPORTING PAPERS ARE RETURNED HEREWITH AND YOU ARE ADVISED THAT PAYMENT ON THE VOUCHER IS AUTHORIZED, IF OTHERWISE CORRECT.