B-151887, JULY 3, 1963

B-151887: Jul 3, 1963

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DEPARTMENT OF THE ARMY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 26. 580 WAS ENTERED INTO AND EXECUTED BY THE THREE CORPORATIONS INDIVIDUALLY ALTHOUGH THE FACING SHEET OF THE CONTRACT SHOWS THE THREE CORPORATIONS AS JOINT VENTURERS. 224.55 HAVE BEEN MADE. A PARTIAL PAYMENT ESTIMATE NUMBERED 13 WAS RECEIVED BY THE GOVERNMENT. THIS ESTIMATE WAS SIGNED BY MR. AN ORDER OF THE COURT WAS ISSUED THEREON. IT WAS FURTHER ORDERED THAT THE RECEIVERS DEPOSIT THE MONIES COMING INTO THEIR POSSESSION IN AN AUTHORIZED DEPOSITORY OF THE COURT. THE MATTER OF FUTURE PAYMENTS WAS DISCUSSED WITH REPRESENTATIVES OF THE THREE FIRMS AND NO ACTION WAS TAKEN AS TO THE ISSUANCE OF THE CHECK FOR THE THIRTEENTH ESTIMATE.

B-151887, JULY 3, 1963

TO THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 26, 1963, REQUESTING A DECISION AS TO THE PROPER METHOD OF ISSUING AND MAILING CHECKS UNDER CONTRACT NO. DA-01-076-ENG-5448 ENTERED INTO WITH COMPUDYNE CORPORATION, G. W. REGAN, INC., AND ACME MISSILE AND CONSTRUCTION CORPORATION ON FEBRUARY 23, 1962, FOR THE CONSTRUCTION OF AEROSPACE SIMULATOR, MARK I.

THE CITED CONTRACT IN THE AMOUNT OF $9,369,580 WAS ENTERED INTO AND EXECUTED BY THE THREE CORPORATIONS INDIVIDUALLY ALTHOUGH THE FACING SHEET OF THE CONTRACT SHOWS THE THREE CORPORATIONS AS JOINT VENTURERS. THE CONTRACTING OFFICER REPORTS THAT NO JOINT VENTURE AGREEMENT HAS EVER BEEN SUBMITTED TO HIM. TWELVE PARTIAL PAYMENTS TOTALING $2,033,224.55 HAVE BEEN MADE, WITH THE PAYEES ON THE CHECKS BEING THE THREE COMPANIES AS SHOWN HEREINABOVE. ON JUNE 3, 1963, A PARTIAL PAYMENT ESTIMATE NUMBERED 13 WAS RECEIVED BY THE GOVERNMENT. THIS ESTIMATE WAS SIGNED BY MR. GROVER C. HOSKINS, AS "GENERAL MANAGER, CONST., " FOR THE THREE COMPANIES. PRIOR THERETO, ON MAY 21, 1963, COMPUDYNE HAD FILED A PETITION IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA UNDER CHAPTER XI OF THE BANKRUPTCY ACT. AN ORDER OF THE COURT WAS ISSUED THEREON, APPOINTING TWO RECEIVERS AND ORDERING THAT THE RECEIVERS BE AUTHORIZED TO TAKE POSSESSION OF ALL PROPERTY OF THE ESTATE OF THE DEBTOR, COLLECT AND RECEIVE THE INCOME, REVENUE AND PROCEEDS, ETC. IT WAS FURTHER ORDERED THAT THE RECEIVERS DEPOSIT THE MONIES COMING INTO THEIR POSSESSION IN AN AUTHORIZED DEPOSITORY OF THE COURT. THE CONTRACTING OFFICER REPORTS THAT AT A MEETING IN THE "DISTRICT OFFICE" ON MAY 24, 1963, THE MATTER OF FUTURE PAYMENTS WAS DISCUSSED WITH REPRESENTATIVES OF THE THREE FIRMS AND NO ACTION WAS TAKEN AS TO THE ISSUANCE OF THE CHECK FOR THE THIRTEENTH ESTIMATE,"PENDING RECEIPT OF OFFICIAL INSTRUCTIONS FROM THE COURT, GRANTED AT THE REQUEST OF THE CONTRACTOR CORPORATIONS.' WHILE NO SUCH INSTRUCTIONS WERE RECEIVED, A CHECK DATED JUNE 17, 1963, IN THE AMOUNT OF $389,614.76 WAS ISSUED, PAYABLE TO THE TWO RECEIVERS FOR COMPUDYNE, C. W. REGAN, INC., AND ACME MISSILE AND CONSTRUCTION CORPORATION, AND FORWARDED TO AN ASSISTANT UNITED STATES ATTORNEY FOR THE EASTERN DISTRICT OF PENNSYLVANIA AT PHILADELPHIA, PURSUANT TO HIS SUGGESTION, FOR PLACEMENT IN THE PROPER HANDS FOR DEPOSIT AND DISTRIBUTION. THIS ACTION WAS TAKEN IN ACCORDANCE WITH INFORMATION RECEIVED BY TELEPHONE FROM MR. SULLIVAN CISTONE, ASSISTANT UNITED STATES ATTORNEY, THAT HE HAD CONFERRED WITH THE LAW FIRM REPRESENTING THE TWO RECEIVERS. A MEMBER OF THAT LAW FIRM HAD REPRESENTED THAT THIS PROCEDURE HAD THE APPROVAL OF THE RECEIVERS "AND THE CONCURRENCE OF ALL INTERESTED PARTIES TO THE JOINT VENTURE" AND "IN THE INSTANCE OF THE JOINT VENTURE AGREEMENT THEY HAD SET UP A BANK ACCOUNT FOR THE SOLE AND EXCLUSIVE PURPOSE OF HANDLING THE JOINT VENTURE MONIES.' MR. CISTONE HAD AGREED THAT THE CHECK BE MAILED TO HIM AND THAT HE WOULD SEE TO IT THAT IT WAS PROPERLY DELIVERED. IT IS REPORTED, HOWEVER, THAT THE CHECK IS NOW BEING RETURNED TO THE DISTRICT UPON INSTRUCTIONS OF REPRESENTATIVES OF YOUR OFFICE.

IT HAS BEEN INFORMALLY ASCERTAINED FROM A REPRESENTATIVE OF YOUR OFFICE AND THE ATTORNEY FOR THE REGAN AND ACME FIRMS THAT THE ATTEMPTED CHANGE IN PAYMENT AND DEPOSIT OF MONEY EARNED UNDER THE CONTRACT WOULD HAVE DELAYED THE AVAILABILITY OF FUNDS DESPERATELY NEEDED TO MAKE PAYMENTS TO LABORERS AND MATERIALMEN. ALSO, IT IS UNDERSTOOD THAT THERE IS A SPECIAL ACCOUNT SET UP AT THE SITE OF THE WORK SINCE THE INCEPTION OF THE CONTRACT WORK WHICH WAS BEING USED TO MEET PAYMENTS FOR LABOR AND SUPPLIES. IT HAS BEEN SUGGESTED BY THE ATTORNEY FOR THE TWO FIRMS WHICH ARE PROCEEDING WITH THE CONTRACT WORK THAT CHECKS BE ISSUED AND DELIVERY OF THE CHECKS BE MADE, AS WAS DONE IN MAKING THE PREVIOUS PAYMENTS AND THAT, IF THE INTEREST OF THE PARTIES TO THE CONTRACT NECESSITATES ANY CHANGE IN THE PAYMENT PROCEDURE BECAUSE OF THEIR JOINT VENTURE AGREEMENT, THE TERMS OF WHICH WERE NOT FURNISHED THE GOVERNMENT, THAT THE MATTER AWAIT ANY FURTHER ORDER OF THE COURT AFTER THE PARTIES HAVE BEEN GIVEN AN OPPORTUNITY TO BE HEARD.

HOWEVER, IN OUR OPINION IN ORDER TO ASSURE THAT THE GOVERNMENT WILL SECURE A GOOD ACQUITTANCE THE CHECKS SHOULD BE DRAWN OUT IN THE NAME OF THE RECEIVERS FOR COMPUDYNE AND THE OTHER TWO MEMBERS OF THE JOINT VENTURE, AND MAILED TO THE SITE OF THE PROJECT AS HERETOFORE.