B-132367, JUL. 12, 1957

B-132367: Jul 12, 1957

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REGION V: REFERENCE IS MADE TO YOUR LETTER OF JUNE 24. COVERING THE STIPULATED VALUE OF THREE CYLINDERS WHICH WERE UTILIZED IN EFFECTING THE DELIVERY OF 300 POUNDS OF ANHYDROUS AMMONIA TO THE SYNTHETIC FUELS DEMONSTRATION PLANT. IT APPEARS THAT THE ABOVE PROCUREMENT WAS MADE UNDER SUPPLY CONTRACT NO. THE CYLINDERS WERE TO BE LOANED TO THE BUREAU FREE OF CHARGE FOR 180 DAYS. AFTER WHICH A MONTHLY RENTAL OF $0.50 EACH WAS TO BE CHARGED. THE BUREAU WAS TO REIMBURSE THE CLAIMANT THE AMOUNT OF $30 EACH. THE CYLINDERS OF AMMONIA WERE RECEIVED AT YOUR LOUISIANA STATION ON DECEMBER 8. THE LOUISIANA (MISSOURI) SYNTHETIC FUELS DEMONSTRATION THE PLANT WAS REQUIRED TO BE TURNED OVER TO THE CORPS OF ENGINEERS GENERAL SERVICES ADMINISTRATION.

B-132367, JUL. 12, 1957

TO MR. W. F. OWEN, JR., AUTHORIZED CERTIFYING OFFICER, BUREAU OF MINES, REGION V:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 24, 1957, TRANSMITTING FOR ADVANCE DECISION A CLAIM FOR $90, PRESENTED BY THE PEEBLES CHEMICAL COMPANY, BENNING, D.C., COVERING THE STIPULATED VALUE OF THREE CYLINDERS WHICH WERE UTILIZED IN EFFECTING THE DELIVERY OF 300 POUNDS OF ANHYDROUS AMMONIA TO THE SYNTHETIC FUELS DEMONSTRATION PLANT, U.S. BUREAU OF MINES, LOUISIANA, MISSOURI, PURSUANT TO PURCHASE ORDER NO. LA-53-1185, DATED DECEMBER 3, 1952. IT APPEARS THAT THE ABOVE PROCUREMENT WAS MADE UNDER SUPPLY CONTRACT NO. GS-03S-5209, WHICH COVERED THE PERIOD MARCH 15, 1952, THROUGH 14, 1953.

UNDER THE TERMS OF THE PURCHASE ORDER, THE CYLINDERS WERE TO BE LOANED TO THE BUREAU FREE OF CHARGE FOR 180 DAYS, AFTER WHICH A MONTHLY RENTAL OF $0.50 EACH WAS TO BE CHARGED. FOR ANY CYLINDERS NOT RETURNED WITHIN 360 DAYS, THE BUREAU WAS TO REIMBURSE THE CLAIMANT THE AMOUNT OF $30 EACH. ACCORDING TO THE AVAILABLE RECORDS, THE CYLINDERS OF AMMONIA WERE RECEIVED AT YOUR LOUISIANA STATION ON DECEMBER 8, 1952, SO THAT THE FREE LOAN PERIOD EXPIRED AROUND JUNE 6, 1953, AND THE REIMBURSEMENT OBLIGATION OF $30 PER CYLINDER ACCRUED, UNDER THE TERMS OF SALE, AS OF DECEMBER 3, 1953.

ON JUNE 30, 1953, THE LOUISIANA (MISSOURI) SYNTHETIC FUELS DEMONSTRATION THE PLANT WAS REQUIRED TO BE TURNED OVER TO THE CORPS OF ENGINEERS GENERAL SERVICES ADMINISTRATION. THE ADMINISTRATOR OF THE LATTER ACTIVITY DESIGNATED THE DEPARTMENT OF DEFENSE AS THE PROPER DISPOSAL AGENCY, AND, ACCORDINGLY, CUSTODY OF THE PLANT WAS TURNED OVER TO THE CORPS OF ENGINEERS, U.S. ARMY, ON SEPTEMBER 13, 1953. SOMETIME LATER THE PLANT WAS SOLD TO THE HERCULES POWDER COMPANY, AND WHILE WE ARE NOT ADVISED AS TO THE TERMS OF THE SALE, IT IS UNDERSTOOD THAT THE THREE CYLINDERS HERE INVOLVED WERE INCLUDED IN THE PROPERTY TURNED OVER TO THE PURCHASER. WAY OF EXPLANATION, CERTAIN FORMER OFFICIALS OF THE SYNTHETIC FUELS DEMONSTRATION PLANT HAVE STRESSED THE FACT THAT UNDER THE TRANSFER ARRANGEMENT, IT WAS MUTUALLY AGREED THAT ITEMS PECULIAR TO THE INSTALLATION WERE NOT TO BE REMOVED BY THE BUREAU OF MINES; THAT ANHYDROUS AMMONIA WAS ESSENTIAL TO THE OPERATION OF THE PLANT, AND THAT THE PLANT WAS REQUIRED TO BE TURNED OVER TO THE COPRS OF ENGINEERS AS A "GOING CONCERN.'

INASMUCH AS THE CYLINDERS IN QUESTION WERE TRANSFERRED TO THE CORPS OF ENGINEERS PRIOR TO EXPIRATION OF THE 360-DAY LOAN PERIOD, AND WERE IN THE CORPS' CUSTODY AT THAT TIME, YOU QUESTION THE PROPRIETY OF USING APPROPRIATED MONEYS OF THE BUREAU OF MINES TO MAKE PAYMENT OF THE INSTANT CLAIM.

IT IS TURE, AS POINTED OUT IN YOUR SUBMISSION, THAT THE THREE CYLINDERS WERE ACTUALLY IN THE CUSTODY OF THE CORPS OF ENGINEERS AT THE TIME THE GOVERNMENT'S OPTION TO RETURN THEM EXPIRED. HOWEVER, THERE CAN BE NO DOUBT BUT THAT THE CORPS HAD ONLY THE BARE CUSTODY OF THE LOUISIANA PLANT AND ACCESSORIES FOR A LIMITED TIME, AND THAT ITS ONLY INTEREST THEREIN WAS AS AN AGENT SPECIFICALLY DESIGNATED BY THE GOVERNMENT FOR THE PURPOSE OF DISPOSING OF THE FACILITY BY SALE, WHEREAS THE PRIMARY CONTRACTUAL OBLIGATION TO PAY FOR THE AMMONIA ORDERED UNDER PURCHASE ORDER NO. LA-53- 1185, AND TO REIMBURSE THE CONTRACTOR FOR THE CYLINDERS IN THE EVENT THEY WERE RETAINED BEYOND 360 DAYS, WAS ON THE BUREAU OF MINES BY VIRTUE OF THE PURCHASE CONTRACT. IN THESE CIRCUMSTANCES, IT MAY BE CONSIDERED THAT THE DECISION OF THE BUREAU TO TURN THE PLANT OVER FOR DISPOSAL AS A GOING CONCERN, WHICH APPARENTLY REQUIRED THE INCLUSION OF THE CYLINDERS, CONSTITUTED AN ELECTION TO RETAIN THEM AND FIXED THE OBLIGATION TO PAY THE AGREED CONTRACT PRICE.

THE INVOICE AND RELATED PAPERS ARE RETURNED HEREWITH, AND YOU ARE ADVISED THAT PAYMENT THEREOF MAY BE MADE, IF OTHERWISE CORRECT, FROM THE PROPER APPROPRIATION AVAILABLE TO THE BUREAU OF MINES.