B-131955, JUN. 5, 1957

B-131955: Jun 5, 1957

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138.96 ORIGINALLY WAS PAID BY D.O. SUBSEQUENTLY WAS RECOVERED BY MEANS OF AN APPROPRIATE ADMINISTRATIVE DEDUCTION MADE FROM THE PROCEEDS OF D.O. OF WHICH 148 WERE TYPE C-3 AND 10 TYPE C-6. ONLY WHEN SUCH SERVICES WERE ORDERED BY THE CONTRACTING OFFICER. REIMBURSEMENT FOR REWORK SERVICES ORDERED OF THE CONTRACTOR WAS TO HAVE BEEN ON A TIME AND MATERIAL BASIS. PAYMENT FOR THE REWORK ORDERED AND APPROVED BY THE CONTRACTING OFFICER WAS RESTRICTED TO THE MAXIMUM FIGURE STATED IN THE CONTRACTOR'S PROPOSAL. THE REQUISITIONING PROCEDURE FOR SUCH REWORK WAS SET FORTH IN ARTICLE 4 OF THE GENERAL SPECIFICATIONS. THE CONTRACTOR WILL FURNISH WRITTEN NOTICE IN SIX (6) COPIES FOR ALL REQUIREMENTS FOR GOVERNMENT AND/OR CONTRACTOR FURNISHED PARTS AND/OR CONTRACTOR REWORK * * * TO THE USAF INSPECTOR ASSIGNED TO INSPECT THE WORK IN PROCESS * * * AT THE EARLIEST PRACTICABLE TIMES.

B-131955, JUN. 5, 1957

TO CAPTAIN D. F. TRAUTWEIN, FINANCE OFFICER, USAF:

BY LETTER DATED MAY 17, 1957, THE COMMANDER OF THE AIR FORCE FINANCE CENTER TRANSMITTED HERE YOUR COMMUNICATION OF MARCH 27, 1957, REQUESTING AN ADVANCE DECISION ON THE ENCLOSED VOUCHER FOR $1,138.96, IN FAVOR OF THE CHARLESTON COLLEGE OF WATCHMAKING, CHARLESTON, MISSISSIPPI, COVERING CERTAIN REWORK ALLEGEDLY PERFORMED ON A QUANTITY OF CAMERAS, AUTHORIZED BY THE CONTRACTING OFFICER FOR THE BROOKLEY AIR FORCE BASE, ALABAMA, UNDER CONTRACT NO. AF 01/601/18546, DATED FEBRUARY 5, 1954, AS AMENDED.

THE AMOUNT OF $1,138.96 ORIGINALLY WAS PAID BY D.O. VOUCHER NO. 12521, SEPTEMBER 1954 ACCOUNTS OF LIEUTENANT COLONEL HOKE MCWHORTER, SYMBOL 135, AND SUBSEQUENTLY WAS RECOVERED BY MEANS OF AN APPROPRIATE ADMINISTRATIVE DEDUCTION MADE FROM THE PROCEEDS OF D.O. VOUCHER NO. 1044-99, OF YOUR DECEMBER 1956 ACCOUNTS, DSSN 5034.

IT APPEARS THAT PRIOR TO JUNE 1954 THERE HAD BEEN DELIVERED TO THE CONTRACTOR FOR SERVICING, PURSUANT TO THE TERMS OF THE BASIC SPECIFICATIONS, A TOTAL OF 158 CAMERAS, OF WHICH 148 WERE TYPE C-3 AND 10 TYPE C-6. THE CONTRACT EXPRESSLY PROVIDED FOR REWORK TO BE DONE ON THE CAMERAS, OF A TYPE OR CHARACTER NOT SPECIFICALLY CALLED FOR BY THE ORIGINAL SPECIFICATIONS, ONLY WHEN SUCH SERVICES WERE ORDERED BY THE CONTRACTING OFFICER, THEN A MR. CHARLES T. HIGGINS. REIMBURSEMENT FOR REWORK SERVICES ORDERED OF THE CONTRACTOR WAS TO HAVE BEEN ON A TIME AND MATERIAL BASIS, WITH THE HOURLY RATES FIXED IN ACCORDANCE WITH THE RATE SCHEDULE SET FORTH IN CONTRACT SCHEDULE "A.' ARTICLE 3 (D) OF THE GENERAL SPECIFICATIONS REQUIRED THE CONTRACTOR TO SUBMIT TO THE CONTRACTING OFFICER A PROPOSAL FOR ACCOMPLISHING THE REWORK SERVICES, ALONG WITH A STATEMENT OF THE MAXIMUM TOTAL CHARGE THEREFOR. PAYMENT FOR THE REWORK ORDERED AND APPROVED BY THE CONTRACTING OFFICER WAS RESTRICTED TO THE MAXIMUM FIGURE STATED IN THE CONTRACTOR'S PROPOSAL. THE REQUISITIONING PROCEDURE FOR SUCH REWORK WAS SET FORTH IN ARTICLE 4 OF THE GENERAL SPECIFICATIONS, AS FOLLOWS:

"A. THE CONTRACTOR WILL FURNISH WRITTEN NOTICE IN SIX (6) COPIES FOR ALL REQUIREMENTS FOR GOVERNMENT AND/OR CONTRACTOR FURNISHED PARTS AND/OR CONTRACTOR REWORK * * * TO THE USAF INSPECTOR ASSIGNED TO INSPECT THE WORK IN PROCESS * * * AT THE EARLIEST PRACTICABLE TIMES, TO INSURE PUBLICATION OF AMENDMENTS (CHANGE ORDERS) TO THE CONTRACT BY THE CONTRACTING OFFICER.'

ON APRIL 14, 1954, THE CONTRACTING AGENCY RECEIVED A FORMAL REQUEST SIGNED BY MR. GEORGE T. FOWLER, THE PARTNER WHO EXECUTED THE BASIC CONTRACT FOR THE PARTNERSHIP FIRM OF CHARLESTON COLLEGE OF WATCHMAKING, FOR AN AMENDMENT TO THE CONTRACT TO PROVIDE FOR PARTS AND REWORK ALLEGEDLY FOUND NECESSARY ON 100 TYPE C-3 CAMERAS. AGAIN ON APRIL 28, 1954, MR. FOWLER FILED ADDITIONAL REQUESTS FOR REWORK ON 48 TYPE C-3 CAMERAS AND ON 10 TYPE C-6 CAMERAS. THE REQUESTED REWORK WAS DULY ITEMIZED BY THE CONTRACTOR, CONCURRED IN BY THE USAF INSPECTOR, AND APPROVED BY THE CONTRACTING OFFICER, MR. HIGGINS. ACCORDINGLY, UNDER THE DATES OF APRIL 21, MAY 13 AND APRIL 28, 1954, THERE WERE ISSUED CHANGE ORDERS NOS. 3, 4 AND 5, IN THE RESPECTIVE AMOUNTS OF $1,069.92, $736.50 AND $157.25 TO COVER THE COST OF THE EXTRA SERVICES (REWORK) PERFORMED.

HOWEVER, THE RECORD SHOWS FURTHER THAT ON JUNE 28, 1954, THE DIRECTORATE OF PROCUREMENT AT THE BROOKLEY AIR FORCE BASE RECEIVED ANOTHER REQUEST FROM THE CONTRACTOR, ALSO SIGNED BY MR. GEORGE T. FOWLER, FOR AN ADDITIONAL AMENDMENT TO COVER REWORK--- APPARENTLY OF SIMILAR CHARACTER--- TOTALING $1,224.36 ON THE IDENTICAL 148 TYPE C-3 AND 10 TYPE C-6 CAMERAS. THIS LATTER REQUISITION DIFFERED FROM THE THREE PREVIOUS REQUESTS IN THAT IT DID NOT BEAR THE USAF INSPECTOR'S STAMP OF APPROVAL, AS WAS REASONABLY CONTEMPLATED BY THE REQUISITIONING PROCEDURES OUTLINED IN ARTICLE 4 OF THE GENERAL SPECIFICATIONS. IT WAS, NEVERTHELESS, APPROVED BY THE CONTRACTING OFFICER, AND ACCORDINGLY, ON JULY 5, 1954, THERE WAS ISSUED CHANGE ORDER NO. 7, AUTHORIZING THE REWORK ALLEGEDLY INVOLVED.

THEREAFTER, FOLLOWING PAYMENT OF THE $1,224.36 (LESS ADMINISTRATIVE DEDUCTION OF $85.40), THE DEPUTY CHIEF, PROCUREMENT DIVISION, DEPARTMENT OF THE AIR FORCE, DIRECTED THAT THE AMOUNT PAID BE RECOVERED BACK FROM THE CONTRACTOR, ON THE FOLLOWING DETERMINATION:

"DUE TO THE FACT THAT THE AIR FORCE ISSUED CHANGE ORDER NO. 3 AND CHANGE ORDER NO. 4 TO CONTRACT AF01/601) 18546, P/O (01-601/54-7151, FOR PARTS AND REWORK NECESSARY ON 100 AND ON 48 TYPE C-3 CAMERAS RESPECTIVELY; AND DUE TO THE FACT THAT CHANGE ORDER NO. 5 WAS ISSUED TO SAID CONTRACT FOR PARTS AND REWORK NECESSARY ON 10 TYPE C-6 CAMERAS; AND FURTHER DUE TO THE FACT THAT CHANGE ORDER NO. 7 WAS SUBSEQUENTLY ISSUED TO SAID CONTRACT TO COVER REWORK ON 148 TYPE C-3 CAMERAS AND 10 TYPE C-6 CAMERAS, WHICH WERE THE IDENTICAL CAMERAS AS COVERED BY CHANGE ORDER NO. 3, 4, AND 5, AND ON WHICH PAYMENT TO CHARLESTON COLLEGE OF WATCHMAKING, CHARLESTON, MISSISSIPPI, UNDER CHANGE ORDER NO. 7 TO CONTRACT AF01/601/18546, P/O (01- 601/54-7151 WAS MADE IN THE AMOUNT OF $1,224.36 BY D.O. VOUCHER NO. 12521 (OF WHICH $85.40 WAS DISALLOWED BY DD 396 NO. 3); I HEREBY DETERMINE THAT AN UNLAWFUL PAYMENT OF $1,138.96 HAS BEEN MADE BY THE AIR FORCE ON D.O. VOUCHER NO. 12521 INCIDENT TO CHANGE ORDER NO. 7 OF MOAMA CONTRACT NO. AF01/601/18546, P/O (01-601/54-7151, AND THAT SUCH AMOUNT SHOULD BE SET- OFF AGAINST SUMS PRESENTLY DUE CHARLESTON COLLEGE OF WATCHMAKING, A PARTNERSHIP, CHARLESTON, MISSISSIPPI.'

OTHERWISE, THE RECORD SHOWS THAT LATE IN 1956 MR. GEORGE T. FOWLER, OF THE CONTRACTING PARTNERSHIP FIRM OF CHARLESTON COLLEGE OF WATCHMAKING, WAS CONVICTED IN FEDERAL COURT OF GIVING GRATUITIES TO THE CONTRACTING OFFICER, CHARLES T. HIGGINS, AND WAS SENTENCED TO THREE YEARS IMPRISONMENT (NOW SUSPENDED). MR. HIGGINS, WHILE INDICTED, WAS ACQUITTED EARLY THIS YEAR AFTER PLEADING THAT HE HAD NOT BEEN AWARE OF THE GRATUITIES, WHICH PLEA WAS SUSTAINED BY MR. FOWLER'S TESTIMONY THAT HE HAD PAID MR. HIGGINS' FINANCIAL OBLIGATIONS WITHOUT THE LATTER'S KNOWLEDGE.

THE ONLY ISSUE PRESENTED IN YOUR SUBMISSION IS WHETHER REPAYMENT IS AUTHORIZED OF THE AMOUNT OF $1,138.96 COLLECTED FROM THE CONTRACTOR TO COVER THE ALLEGED REWORK SERVICES AUTHORIZED TO BE PERFORMED BY CHANGE ORDER NO. 7 ON THE 148 TYPE C-3 AND THE 10 TYPE C-6 CAMERAS HERE INVOLVED.

SECTION 1 OF THE ACT OF JUNE 25, 1948, 62 STAT. 978, 28 U.S.C. 2514, PROVIDES FOR THE FORFEITURE OF THE ENTIRE CLAIM OF ANY PERSON WHO PRACTICES OR ATTEMPTS TO PRACTICE FRAUD AGAINST THE UNITED STATES EITHER IN THE "PROOF, STATEMENT, ESTABLISHMENT OR ALLOWANCE THEREOF.' ALTHOUGH THE PRESENT RECORD IS NOT CONCLUSIVE AS TO WHETHER THE INDICTMENT UPON WHICH MR. FOWLER WAS CONVICTED WAS BASED UPON THE SAME TRANSACTION WHICH GAVE RISE TO THE INSTANT CLAIM, WE NEVERTHELESS HAVE CONSISTENTLY ADHERED TO THE RULE THAT THE ONLY PROPER ACTION OPEN TO THE ACCOUNTING OFFICERS UPON THE PRESENTATION OF A FRAUDULENT CLAIM AGAINST THE GOVERNMENT, OR ONE EVEN TAINTED BY THE SUSPICION OF FRAUD OR IRREGULARITY, IS TO DENY PAYMENT, LEAVING THE CLAIMANT FREE TO PURSUE HIS REMEDY, IF ANY, IN THE APPROPRIATE COURT, WHERE THE FACTS MAY BE JUDICIALLY DETERMINED AND THE MATTER IN CONTROVERSY SETTLED IN ACCORDANCE WITH THE APPLICABLE PRINCIPLES OF LAW. SEE, IN THIS CONNECTION, CHARLES V. UNITED STATES, 19 C.CLS. 316, 319; CHARLES A. BLUME V. UNITED STATES, 81 ID. 210, 214; 10 COMP. GEN. 138; 14 ID. 150; 15 ID 466; 23 ID. 907.

INASMUCH AS THE RECORD IN THE INSTANT CASE CONTAINS SUBSTANTIAL EVIDENCE OF FRAUD OR IRREGULARITY WITH RESPECT TO THE REWORK SERVICES ALLEGEDLY PERFORMED UNDER AUTHORITY OF CHANGE ORDER NO. 7 TO THE CONTRACT, YOU ARE ADVISED THAT PAYMENT ON THE RECLAIM VOUCHER--- WHICH IS BEING RETAINED HERE--- IS NOT AUTHORIZED.