B-160434, JAN. 23, 1967

B-160434: Jan 23, 1967

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INCORPORATED: REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 18. WHICH IS THE AGENCY ASSIGNED ADMINISTRATION OF THE CONTRACT. 296.62 WAS DISAPPROVED FORMALLY ON NOVEMBER 21. 941.58 IS BEING RETAINED UNTIL THE AGENCY COMPLETES ITS CURRENT AUDIT FOR THE PERIOD AFTER JUNE 30. IT IS BELIEVED THAT SIMILAR FINDINGS MAY BE MADE FOR THE SUBSEQUENT PERIOD AND THAT WITHHOLDING THE LATTER AMOUNT IS THEREFORE JUSTIFIED. IT IS INDICATED FURTHER THAT EFFORTS ARE BEING MADE TO COMPLETE THE AUDIT AS PROMPTLY AS POSSIBLE. IT IS CONDITIONED UPON THE APPROVAL OF THE CONTRACTING OFFICER. WHILE THE APPROVAL OF THE CONTRACTING OFFICER IS REQUIRED AS A CONDITION TO PAYMENT. WHAT IS A REASONABLE TIME DEPENDS UPON THE PARTICULAR CIRCUMSTANCES IN EACH CASE.

B-160434, JAN. 23, 1967

TO BECO, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 18, 1966, PROTESTING AGAINST THE WITHHOLDING OF PAYMENTS TOTALING $154,103.97 UNDER TIME AND MATERIAL CONTRACT NO. DA-09-030-AMC-56 (M) WITHOUT A FINDING BY THE CONTRACTING OFFICER DISALLOWING CONTRACT COSTS IN SUCH TOTAL AMOUNT.

THE AIR FORCE, WHICH IS THE AGENCY ASSIGNED ADMINISTRATION OF THE CONTRACT, HAS ADVISED THAT NOT MORE THAN $95,238.30 EVER HAS BEEN WITHHELD FROM PAYMENT BY THE DEFENSE CONTRACT AUDIT AGENCY WHICH HAS THE RESPONSIBILITY FOR CERTIFYING VOUCHERS FOR PAYMENT. OF THAT AMOUNT, $67,296.62 WAS DISAPPROVED FORMALLY ON NOVEMBER 21, 1966, BY THAT AGENCY FOR THE PERIOD ENDING JUNE 30, 1966. THE FORMAL NOTICES OF DISAPPROVED COST CONSTITUTE, BY THEIR TERMS, FINAL DECISIONS OF THE CONTRACTING OFFICER WHICH MAY BE APPEALED THROUGH THE CONTRACT DISPUTES PROCEDURE. THE REMAINING $27,941.58 IS BEING RETAINED UNTIL THE AGENCY COMPLETES ITS CURRENT AUDIT FOR THE PERIOD AFTER JUNE 30, 1966. THE AIR FORCE HAS INDICATED TO US THAT BECAUSE OF THE AUDIT FINDINGS FOR THE PERIOD ENDING JUNE 30, 1966, IT IS BELIEVED THAT SIMILAR FINDINGS MAY BE MADE FOR THE SUBSEQUENT PERIOD AND THAT WITHHOLDING THE LATTER AMOUNT IS THEREFORE JUSTIFIED. IT IS INDICATED FURTHER THAT EFFORTS ARE BEING MADE TO COMPLETE THE AUDIT AS PROMPTLY AS POSSIBLE.

GENERAL PROVISION 6,"PAYMENTS," OF THE CONTRACT PROVIDES THAT THE CONTRACTOR MAY SUBMIT SUBSTANTIATED VOUCHERS ONCE EACH MONTH OR MORE OFTEN IF APPROVED BY THE CONTRACTING OFFICER AND THAT PROMPTLY AFTER THE RECEIPT THEREOF THE GOVERNMENT SHALL MAKE PAYMENT THEREON AS APPROVED BY THE CONTRACTING OFFICER, SUBJECT TO A RETAINED PERCENTAGE OF 5 PERCENT BUT NOT TO EXCEED A TOTAL OF $50,000, AND TO A REDUCTION OF AMOUNTS FOUND NOT TO BE PROPERLY PAYABLE BY THE CONTRACTING OFFICER AS A RESULT OF AUDIT OF VOUCHERS AND SUBSTANTIATING MATERIAL.

WHILE THE "PAYMENTS" PROVISION DOES CONTEMPLATE PROMPT PAYMENT BY THE GOVERNMENT, IT IS CONDITIONED UPON THE APPROVAL OF THE CONTRACTING OFFICER. HOWEVER, WHILE THE APPROVAL OF THE CONTRACTING OFFICER IS REQUIRED AS A CONDITION TO PAYMENT, A CONTRACTING OFFICER SHOULD NOT UNREASONABLY DELAY APPROVAL NOR SHOULD A DECISION DENYING APPROVAL OF COSTS BE DELAYED UNREASONABLY. OF COURSE, WHAT IS A REASONABLE TIME DEPENDS UPON THE PARTICULAR CIRCUMSTANCES IN EACH CASE. THE AIR FORCE HAS ADVISED US THAT THERE IS NO EVIDENCE IN THE CASE OF YOUR CONTRACT THAT REASONABLE EFFORTS ARE NOT BEING MADE TO VERIFY THE INVOICES INVOLVED.

ACCORDINGLY, IN THE CIRCUMSTANCES, NO FURTHER ACTION ON YOUR PROTEST IS REQUIRED BY OUR OFFICE.