B-143206, JUL. 19, 1960

B-143206: Jul 19, 1960

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NOAKES AND ASSOCIATES: REFERENCE IS MADE TO YOUR LETTERS OF MAY 16 AND 27. WAS ENTERED INTO ON A COST-PLUS-A-FIXED-FEE BASIS BY A COPARTNERSHIP DOING BUSINESS UNDER THE NAME AND STYLE AS INDICATED ABOVE. ALL OTHER COSTS AND EXPENSES WHICH ARE NOT REIMBURSABLE UNDER THE PROVISIONS OF SECTION 2 OF THIS ARTICLE VI. THE ALLOWABLE COSTS SHALL INCLUDE AN AMOUNT EQUAL TO EIGHTY-FIVE PERCENT (85 PERCENT) OF THE AGGREGATE AMOUNT OF SALARIES AND WAGES OF THE CONTRACTOR'S EMPLOYEES WHICH ARE REIMBURSED UNDER THE PROVISIONS OF PARAGRAPH A. SAID PERCENTAGE RATE IS PROVISIONAL ONLY. ARTICLE XXII RELATING TO DISPUTES PROVIDED THAT ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT WHICH WAS NOT DISPOSED OF BY AGREEMENT SHOULD BE DECIDED BY THE CONTRACTING OFFICER WHO WAS TO REDUCE HIS DECISION TO WRITING AND FURNISH A COPY TO THE CONTRACTOR.

B-143206, JUL. 19, 1960

TO EDWARD H. NOAKES AND ASSOCIATES:

REFERENCE IS MADE TO YOUR LETTERS OF MAY 16 AND 27, 1960, RELATIVE TO THE INDEBTEDNESS OF WHITE, NOAKES AND NEUBAUER IN THE AMOUNT OF $3,682.78 UNDER CONTRACT NO. AT/30-3/-251 ENTERED INTO WITH THE ATOMIC ENERGY COMMISSION ON JULY 16, 1956.

THE CONTRACT COVERED THE FURNISHING OF ARCHITECT-ENGINEER SERVICES. WAS ENTERED INTO ON A COST-PLUS-A-FIXED-FEE BASIS BY A COPARTNERSHIP DOING BUSINESS UNDER THE NAME AND STYLE AS INDICATED ABOVE. WITH RESPECT TO COMPENSATION FOR OVERHEAD, ARTICLE VI (3) OF THE CONTRACT PROVIDED, AS FOLLOWS:

"TO COMPENSATE THE CONTRACTOR FOR ITS OVERHEAD COSTS, INDIRECT CHARGES AND GENERAL AND ADMINISTRATIVE EXPENSES, PROPERLY ALLOCABLE TO THE WORK HEREUNDER, AND ALL OTHER COSTS AND EXPENSES WHICH ARE NOT REIMBURSABLE UNDER THE PROVISIONS OF SECTION 2 OF THIS ARTICLE VI, THE ALLOWABLE COSTS SHALL INCLUDE AN AMOUNT EQUAL TO EIGHTY-FIVE PERCENT (85 PERCENT) OF THE AGGREGATE AMOUNT OF SALARIES AND WAGES OF THE CONTRACTOR'S EMPLOYEES WHICH ARE REIMBURSED UNDER THE PROVISIONS OF PARAGRAPH A, SECTION 1, OF THIS ARTICLE. SAID PERCENTAGE RATE IS PROVISIONAL ONLY, AND PAYMENTS OR CHARGES MADE IN ACCORDANCE WITH SAID RATE SHALL BE SUBJECT TO SUBSEQUENT AND RETROACTIVE ADJUSTMENT AS HEREINAFTER PROVIDED. AS SOON AS PRACTICABLE AFTER THE COMPLETION OF ALL WORK HEREUNDER, THE PARTIES HERETO SHALL DETERMINE AND AGREE UPON A REDETERMINATION AND ADJUSTMENT OF SAID PERCENTAGE RATE ON THE BASIS OF THE ACTUAL COST EXPERIENCE OF THE CONTRACTOR IN THE PERFORMANCE OF THE WORK HEREUNDER, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. PAYMENTS OR CHARGES THERETOFORE MADE SHALL BE ADJUSTED RETROACTIVELY BY PAYMENT OR CREDIT AS MAY BE APPROPRIATE.'

ARTICLE IX (2) OF THE CONTRACT PROVIDED THAT ALL BOOKS OF ACCOUNT AND RECORDS RELATING TO THE CONTRACT SHOULD BE SUBJECT TO INSPECTION AND AUDIT BY THE COMMISSION AT ALL REASONABLE TIMES. ARTICLE XXII RELATING TO DISPUTES PROVIDED THAT ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT WHICH WAS NOT DISPOSED OF BY AGREEMENT SHOULD BE DECIDED BY THE CONTRACTING OFFICER WHO WAS TO REDUCE HIS DECISION TO WRITING AND FURNISH A COPY TO THE CONTRACTOR. SUCHA DECISION WAS SUBJECT TO APPEAL TO THE COMMISSION WITHIN 30 DAYS BUT IF NO APPEAL WAS TAKEN THE DECISION OF THE CONTRACTING OFFICER WAS FINAL AND CONCLUSIVE.

THE RECORD SHOWS THAT WORK UNDER THE CONTRACT WAS COMPLETED ON OCTOBER 24, 1957, EXCEPT THAT A TOTAL OF 16 1/2 HOURS OF SERVICE WAS RENDERED BY A CONSULTANT EMPLOYEE ON FEBRUARY 26, 1958, AND MARCH 24 AND 28, 1958, IN CONNECTION WITH FINAL INSPECTION OF THE WORK. AN AUDIT OF THE CONTRACTOR'S BOOKS AND RECORDS COVERING THE PERIOD JULY 16, 1956, TO OCTOBER 24, 1957, WAS MADE BY AN AUDITOR FOR THE COMMISSION. THE REPORT OF THE AUDITOR SHOWED, AMONG OTHER THINGS, AN UNALLOWABLE ITEM OF OVERHEAD IN THE AMOUNT OF $4,738.77, WITH THE RESULT THAT THERE WAS FOUND DUE THE COMMISSION A NET REFUND OF $3,682.78. BY LETTER DATED AUGUST 1, 1958, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR OF THE RESULTS OF THE AUDIT AND STATED THAT "WE HAVE BEEN INFORMED BY THE AUDITOR THAT MR. DONALD J. NEUBAUER HAS CONCURRED IN THE ABOVE DISALLOWANCES.' DEMAND WAS MADE IN THE LETTER FOR PAYMENT OF THE SUM OF $3,682.78. THIS LETTER OF AUGUST 1, 1958, AS WELL AS A FOLLOW-UP LETTER OF SEPTEMBER 9, 1958, REMAINED UNANSWERED. ON JANUARY 8, 1959, THE CONTRACTING OFFICER FORWARDED THE MATTER TO OUR OFFICE AS AN UNCOLLECTIBLE INDEBTEDNESS AND IN HIS ADDITIONAL REPORT OF MARCH 6, 1959, HE STATED THAT ATTEMPTS HAD BEEN MADE TO CONTACT MEMBERS OF THE PARTNERSHIP BUT HE HAD BEEN UNSUCCESSFUL.

ASIDE FROM THE FACT THAT YOU DISPUTE THE CORRECTNESS OF THE REPORT OF THE COMMISSION'S AUDITOR IN THIS MATTER, YOU NOW PRESENT AN AFFIDAVIT DATED MAY 4, 1960, EXECUTED BY MR. DONALD J. NEWBAUER IN WHICH HE STATES THAT THE PARTNERSHIP KNOWN AS WHITE, NOAKES AND NEUBAUER WAS DISSOLVED IN JANUARY 1957, AND THAT HE DID NOT CONCUR IN THE RECOMPUTATION OF THE OVERHEAD COSTS BY THE AUDITOR FOR THE COMMISSION. ALSO, YOU STATE IN YOUR LETTER OF MAY 16, 1960, THAT THE CONTRACTOR HAS NEVER AGREED TO THE FINDINGS OF THE COMMISSION'S AUDITOR AND HAS NEVER BEEN OFFERED THE OPPORTUNITY TO CORRECT THIS ERRONEOUS CONCLUSION DIRECTLY.

AS STATED HEREINABOVE, THE CONTRACTOR WAS NOTIFIED ON AUGUST 1, 1958, BY THE CONTRACTING OFFICER OF THE RESULTS OF THE COMMISSION'S AUDIT AND YOU WERE THEN ADVISED THAT MR. NEUBAUER HAD CONCURRED IN THE AUDIT. NO REPLY WAS RECEIVED. ALSO, NO REPLY WAS RECEIVED TO THE FOLLOW-UP LETTER OF SEPTEMBER 9, 1958. IT IS NOT UNDERSTOOD, THEREFORE, WHY IT IS NOW CONTENDED THAT THE CONTRACTOR DID NOT HAVE ANY OPPORTUNITY TO CORRECT ANY ERRONEOUS STATEMENTS OR THE AUDIT AT THAT TIME. ALSO, WHILE IT IS IMPLIED THAT MR. NEUBAUER HAD NO AUTHORITY TO ACT FOR THE CONTRACTOR (A PARTNERSHIP), IT IS NOTED THAT ALL AMENDMENTS TO THE CONTRACT--- THREE IN NUMBER--- WERE EXECUTED SOLELY BY HIM IN HIS CAPACITY AS PARTNER, AND THESE AMENDMENTS WERE DATED MAY 28, AUGUST 29, AND OCTOBER 14, 1957. THE CONTRACTING OFFICER ADVISED YOU ON APRIL 19, 1960, THAT NO DISPUTE EXISTED BETWEEN THE CONTRACTOR AND THE GOVERNMENT BECAUSE MR. NEUBAUER HAD AGREED TO THE COST DISALLOWANCES BY THE COMMISSION'S AUDITOR AND TO THE EXTENT THAT A DISPUTE DID EXIST IT WAS RESOLVED BY THE CONTRACTING OFFICER'S LETTER OF AUGUST 1, 1958, TO THE CONTRACTOR AND THAT THIS LETTER CONSTITUTED A DECISION. NO APPEAL FROM THAT DECISION WAS TAKEN WITHIN THE TIME LIMIT PRESCRIBED BY THE CONTRACT AND THEREFORE THE DECISION IS FINAL AND CONCLUSIVE UNDER THE TERMS OF THE CONTRACT. THE RECORD IS DEVOID OF ANY REASON WHY THE CONTRACTOR DID NOT REPLY TO THE LETTERS OF AUGUST 1 AND SEPTEMBER 9, 1958, FROM THE CONTRACTING OFFICER. ON THE PRESENT RECORD, WE FIND NO LEGAL BASIS FOR DISAGREEING WITH THE ADMINISTRATIVE DETERMINATION IN THIS CASE.