B-135805, APR. 23, 1958

B-135805: Apr 23, 1958

Additional Materials:

Contact:

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

 

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

THE PROPOSED CONTRACT COVERS ONLY THE SUPPORT FEATURES OF THE EXISTING CONTRACT AND YOU SAY THAT THE PORTION OF THE EXISTING CONTRACT DEALING WITH INTEGRATION AND SALES TO PG AND E (UPON WHICH YOU SAY WE HAVE COMMENTED ADVERSELY IN OUR AUDIT REPORTS) WILL BE LEFT FOR SUBSEQUENT CONSIDERATION. YOUR LETTER IS. WE HAVE REGARDED THE SERIES OF AUDIT REPORTS ON THIS DEPARTMENT'S ARRANGEMENTS. I WOULD GREATLY APPRECIATE YOUR CONFIRMING MY UNDERSTANDING (1) THAT YOUR AGENCY'S AUDIT REPORTS HAVE NOT VOICED OBJECTION TO THE SUPPORT FEATURES OF THE EXISTING SALE AND INTERCHANGE CONTRACT AND (2) THAT THE PROPOSED CONTRACT DOES NOT INVOLVE MATTERS TO WHICH YOUR AUDIT REPORTS HAVE EXPRESSED OBJECTION.'.

B-135805, APR. 23, 1958

TO THE SECRETARY OF THE INTERIOR:

YOUR LETTER OF APRIL 11, 1958, AND ENCLOSURE, CONCERNS A DRAFT OF A PROPOSED CONTRACT BETWEEN THE UNITED STATES (BUREAU OF RECLAMATION) AND THE PACIFIC GAS AND ELECTRIC COMPANY (PG AND E), SAN FRANCISCO, CALIFORNIA, FOR THE PURCHASE BY THE UNITED STATES OF ELECTRIC POWER AND/OR ENERGY.

THE EXISTING CONTRACT UNDER WHICH THE UNITED STATES OBTAINS ELECTRIC POWER AND/OR ENERGY FROM PG AND E EXPIRES ON APRIL 1, 1961. THIS CONTRACT, KNOWN AS THE SALE AND INTERCHANGE CONTRACT (I75R-3428), ALSO COVERS INTEGRATION OF THE GOVERNMENT'S POWER PLANTS WITH THE SYSTEM OF PG AND E AND THE SALE OF POWER AND/OR ENERGY TO THE LATTER BY THE GOVERNMENT. THE PROPOSED CONTRACT APPEARS TO BE, IN EFFECT, AN EXTENSION OF THAT PORTION OF THE EXISTING CONTRACT (I75R-3428) WHICH SECURES FOR THE UNITED STATES THE SUPPLEMENTAL SUPPORT NECESSARY TO PROVIDE DELIVERY UNDER ADVERSE CONDITIONS, OF FIRM POWER OBLIGATIONS UNDER EXISTING CONTRACTS WITH ITS PREFERENTIAL CUSTOMERS IN THE CENTRAL VALLEY BASIN, CALIFORNIA. IN OTHER WORDS, THE PROPOSED CONTRACT COVERS ONLY THE SUPPORT FEATURES OF THE EXISTING CONTRACT AND YOU SAY THAT THE PORTION OF THE EXISTING CONTRACT DEALING WITH INTEGRATION AND SALES TO PG AND E (UPON WHICH YOU SAY WE HAVE COMMENTED ADVERSELY IN OUR AUDIT REPORTS) WILL BE LEFT FOR SUBSEQUENT CONSIDERATION.

YOUR LETTER IS, IN PERTINENT PART, AS FOLLOWS:

"OUR READING OF YOUR AGENCY'S AUDIT REPORTS FAILS TO INDICATE THAT THERE HAS EVER BEEN ADVERSE COMMENT UPON THE SUPPORT FEATURES OF THE PRESENT SALE AND INTERCHANGE CONTRACT. WE HAVE REGARDED THE SERIES OF AUDIT REPORTS ON THIS DEPARTMENT'S ARRANGEMENTS, SINCE 1951, WITH THE COMPANY AS COMPREHENDING ALL OF THE VIEWS OF THE GENERAL ACCOUNTING OFFICE ON THE SUBJECT MATTER. THE PROPOSED PURCHASE CONTRACT, IN OUR VIEW, DOES NOT DEAL WITH ANY MATTER UPON WHICH ADVERSE COMMENT HAS BEEN INCLUDED IN THE AUDIT REPORTS. IN LIGHT OF THESE FACTS, BEFORE APPROVING THE PROPOSED PURCHASE CONTRACT FOR EXECUTION, I WOULD GREATLY APPRECIATE YOUR CONFIRMING MY UNDERSTANDING (1) THAT YOUR AGENCY'S AUDIT REPORTS HAVE NOT VOICED OBJECTION TO THE SUPPORT FEATURES OF THE EXISTING SALE AND INTERCHANGE CONTRACT AND (2) THAT THE PROPOSED CONTRACT DOES NOT INVOLVE MATTERS TO WHICH YOUR AUDIT REPORTS HAVE EXPRESSED OBJECTION.'

YOUR UNDERSTANDING, AS EXPRESSED IN THE LAST SENTENCE OF THE ABOVE QUOTE, IS CORRECT. OUR PRIOR AUDIT REPORTS HAVE NOT CONTAINED COMMENTS CRITICAL IN NATURE CONCERNING THE SUPPORT FEATURES OF THE EXISTING SALES AND INTERCHANGE CONTRACT, NOR DOES THE PROPOSED CONTRACT APPEAR TO INVOLVE MATTERS ON WHICH WE HAVE EXPRESSED OBJECTION IN OUR PRIOR AUDIT REPORTS. OF COURSE, IT MUST BE REALIZED THAT OUR PRIOR AUDIT REPORTS ON THE CENTRAL VALLEY PROJECT WERE BASED ON MATTERS DISCLOSED DURING THE COURSE OF OUR AUDITS OF THE PROJECT AND SUCH REPORTS WOULD NOT NECESSARILY PRECLUDE US FROM COMMENTING ON MATTERS THAT MAY BE DISCLOSED IN THE COURSE OF OUR FUTURE AUDITS OF THE PROJECT.