B-153556, AUG. 5, 1964

B-153556: Aug 5, 1964

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DEPARTMENT OF THE ARMY: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 7. THE STATE OF SOUTH DAKOTA WAS TO PERFORM ALL WORK OF RELOCATING CERTAIN HIGHWAYS IN THE MANNER PRESCRIBED BY THE PLANS AND SPECIFICATIONS APPROVED BY THE CONTRACTING OFFICER. IT APPEARS THAT A CONTRACT WAS ENTERED INTO BY THE STATE OF SOUTH DAKOTA WITH G. H. LINDEKUGEL AND SONS FOR CONSTRUCTION OF A PORTION OF HIGHWAY NO. 12 AND IN THE PLANS AND SPECIFICATIONS CERTAIN GRAVEL PITS WERE DESIGNATED UNDER THE CONTRACT FOR USE BY THE SUCCESSFUL BIDDER. A GRAVEL PIT NUMBERED 2 WAS DESIGNATED FOR USE BY LINDEKUGEL. GIVING IT THE RIGHT TO PURCHASE GRAVEL FOR ?05 PER TERM AND THE STATE HAD THE RIGHT TO ASSIGN THIS OPTION TO PARTIES PERFORMING THE CONTRACTS FOR WHICH GRAVEL WAS REQUIRED.

B-153556, AUG. 5, 1964

TO MR. W. M. WILSON, DISBURSING OFFICER C/O OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 7, 1964, FORWARDED HERE BY THE ENGINEER COMPTROLLER'S LETTER OF FEBRUARY 19, 1964, REQUESTING A DECISION AS TO THE PROPRIETY OF PAYMENT OF AN ENCLOSED VOUCHER IN THE AMOUNT OF $1,101.65 CLAIMED BY THE STATE OF SOUTH DAKOTA AS A MATTER FOR SETTLEMENT UNDER COST REIMBURSABLE CONTRACT NO. DA-25-066-ENG-2627 FOR HIGHWAY RELOCATIONS, OAHE RESERVOIR PROJECT, PIERRE, SOUTH DAKOTA.

UNDER THE TERMS OF THE CITED CONTRACT, THE STATE OF SOUTH DAKOTA WAS TO PERFORM ALL WORK OF RELOCATING CERTAIN HIGHWAYS IN THE MANNER PRESCRIBED BY THE PLANS AND SPECIFICATIONS APPROVED BY THE CONTRACTING OFFICER. UNDER ARTICLE 2 OF THE CONTRACT THE GOVERNMENT AGREED TO REIMBURSE THE STATE FOR ALL COSTS EXPENDED IN CONNECTION WITH THE RELOCATION PROVIDED IN ARTICLE 1 THEREOF, SUCH COSTS TO INCLUDE ALL ITEMS OF EXPENSE PROPERLY CHARGEABLE THERETO, INCLUDING, BUT NOT LIMITED TO, ACQUISITION OF ANY NECESSARY RIGHTS-OF-WAY, EASEMENTS, OVERHEAD CHARGES PROPERLY ALLOCABLE TO THE WORK, ETC., AND ANY OTHER ITEMS OF EXPENSE CHARGEABLE TO THE WORK, EXCLUSIVE OF ANY PROFIT TO THE STATE.

IT APPEARS THAT A CONTRACT WAS ENTERED INTO BY THE STATE OF SOUTH DAKOTA WITH G. H. LINDEKUGEL AND SONS FOR CONSTRUCTION OF A PORTION OF HIGHWAY NO. 12 AND IN THE PLANS AND SPECIFICATIONS CERTAIN GRAVEL PITS WERE DESIGNATED UNDER THE CONTRACT FOR USE BY THE SUCCESSFUL BIDDER. A GRAVEL PIT NUMBERED 2 WAS DESIGNATED FOR USE BY LINDEKUGEL. THE STATE OF SOUTH DAKOTA HAD SECURED AN OPTION FROM MR. A. C. SMITH, OWNER OF A GRAVEL PIT, GIVING IT THE RIGHT TO PURCHASE GRAVEL FOR ?05 PER TERM AND THE STATE HAD THE RIGHT TO ASSIGN THIS OPTION TO PARTIES PERFORMING THE CONTRACTS FOR WHICH GRAVEL WAS REQUIRED. WHEN LINDEKUGEL ATTEMPTED TO REMOVE GRAVEL FROM A STOCKPILE WHICH WAS THE PROPERTY OF ANOTHER PARTY WITH WHOM MR. SMITH, THE OWNER OF THE GRAVEL PIT, HAD ENTERED INTO A CONTRACT FOR REMOVAL OF GRAVEL, IT WAS CHALLENGED BY MR. SMITH AND TOLD THAT IT WOULD BE REQUIRED TO PAY ?10 PER TON. BEFORE PROPER ARRANGEMENTS WERE MADE FOR USE OF THE GRAVEL STOCKPILE, LINDEKUGEL USED THE STOCKPILE MATERIAL. MR. SMITH OBTAINED A JUDGMENT AGAINST LINDEKUGEL FOR $7,596.86, PLUS INTEREST AND COSTS. LINDEKUGEL IN TURN GOT A JUDGMENT AGAINST THE STATE OF SOUTH DAKOTA FOR $3,900.61 PLUS INTEREST. THE LEGISLATURE OF SOUTH DAKOTA APPROPRIATED ONLY $1,101.65 TO COMPENSATE LINDEKUGEL FOR THE SUM IT WAS REQUIRED TO PAY AND THIS AMOUNT APPEARS TO HAVE BEEN PAID. THE STATE IN TURN HAS BILLED THE GOVERNMENT FOR THIS AMOUNT.

WHILE YOUR DOUBT AS TO THE REIMBURSABILITY OF THE CLAIMED ITEM OF EXPENSE IS BASED ON THE FACT THAT THE STATE HAD A UNIT PRICE CONTRACT WITH LINDEKUGEL FOR FURNISHING ALL MATERIALS NECESSARY FOR THE CONTRACT WORK, THE RECORD DOES NOT CONTAIN ALL THE PLANS AND SPECIFICATIONS INVOLVED IN THE CONTRACT. IT MUST BE PRESUMED THAT IF THE STATE HAD ANY DEFENSE AGAINST LINDEKUGEL BECAUSE OF THE TERMS OF THE CONTRACT WHEN THE COURT RENDERED JUDGMENT AGAINST THE STATE, IT WOULD HAVE PLEADED SUCH DEFENSE. IN THE ABSENCE OF ANY INFORMATION TO THE CONTRARY IT MUST BE ASSUMED THAT THE JUDGMENT AGAINST THE STATE WAS PROPER AND RECOGNIZED A LIABILITY TO LINDEKUGEL TO PERMIT THE USE OF GRAVEL FROM THE PIT OWNED BY MR. SMITH FOR THE PRICE OF ?05 PER TON. THE AMOUNT PAID BY THE STATE IN SATISFACTION OF THE JUDGMENT MUST BE REGARDED AS AN EXPENSE CHARGEABLE TO THE CONTRACT WORK AND THEREFORE REIMBURSABLE.

THE VOUCHER AND ACCOMPANYING PAPERS ARE RETURNED HEREWITH AND PAYMENT OF THE AMOUNT CLAIMED MAY BE PAID, IF OTHERWISE CORRECT.

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