B-19052, JULY 31, 1941, 21 COMP. GEN. 92

B-19052, JULY 31, 1941, 21 COMP. GEN. 92

CONTRACTS - COST-PLUS - TELEGRAPHIC EXPENSES - PAYMENT PROCEDURE WHERE THE WAR DEPARTMENT HAS EXERCISED ITS RESERVED RIGHT TO PAY DIRECTLY TO TELEGRAPH COMPANIES TELEGRAPHIC CHARGES INCURRED BY ITS COST-PLUS-A- FIXED-FEE CONTRACTS IN CONNECTION WITH CONTRACT WORK, DIRECT PAYMENT OF INVOICES RENDERED TO SUCH A CONTRACTOR MAY BE MADE, AT GOVERNMENT RATES, EVEN THOUGH THE TELEGRAPH COMPANIES FURNISH ONLY CERTIFIED COPIES, RATHER THAN ORIGINALS, OF TRANSMITTED MESSAGES AND INVOICES NOT CERTIFIED BY THEM IN THE MANNER CUSTOMARILY REQUIRED FOR SUCH SERVICE, PROVIDED THE INVOICES ARE CERTIFIED AND VERIFIED BOTH BY THE CONTRACTOR AND THE PROPER GOVERNMENT AGENT, AND THE NECESSARY ADMINISTRATIVE MEASURES ARE TAKEN TO PREVENT DUPLICATE PAYMENTS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, JULY 31, 1941:

I HAVE YOUR LETTER OF JULY 22, 1941, AS FOLLOWS:

CONTROVERSY HAS ARISEN BETWEEN THE WAR DEPARTMENT AND THE TELEGRAPH COMPANIES AS TO WHETHER TELEGRAMS SENT BY WAR DEPARTMENT CONTRACTORS ON A COST-PLUS-A-FIXED-FEE BASIS IN CONNECTION WITH THE CONTRACT ARE OR ARE NOT, ENTITLED TO THE GOVERNMENT RATE (WHICH IS 60 PERCENT OF THE COMMERCIAL RATE). THE TREASURY DEPARTMENT HAS HELD THAT SUCH TELEGRAMS ARE EXEMPT FROM FEDERAL TAXES, AND THE ATTORNEY GENERAL HAS GIVEN AN OPINION TO THE EFFECT THAT THESE CONTRACTORS ARE INSTRUMENTALITIES OF THE FEDERAL GOVERNMENT.

PENDING AN AUTHORITATIVE DECISION OF THE CONTROVERSY, DIRECT PAYMENT BY THE GOVERNMENT FOR THESE TELEGRAMS WHICH THE COMPANY MAY INVOICE TO THE CONTRACTOR, MIGHT BE MADE UNDER THE TERMS OF THESE CONTRACTS. THERE ARE, HOWEVER, TWO OBSTACLES IN THE WAY OF THIS PROCEDURE, NAMELY:

1. THE REQUIREMENT THAT THE ORIGINAL TELEGRAM BE ATTACHED TO THE INVOICE, AS TELEGRAPH COMPANIES REFUSE TO SURRENDER THE ORIGINAL.

2. THE REQUIREMENT FOR THE PAYEE'S CERTIFICATE ON THE INVOICE, TO THE EFFECT THAT THE BILL IS CORRECT AND UNPAID, AND THE RATE CHARGED IS NO GREATER THAN THE RATES CHARGED THE GENERAL PUBLIC; AS THE TELEGRAPH COMPANY WILL OMIT THE CERTIFICATE ON THE INVOICE TO THE CONTRACTOR.

IF THESE REQUIREMENTS WERE WAIVED, IT IS BELIEVED THAT THE PROBLEM WOULD BE TEMPORARILY SOLVED AND THAT SUCH WAIVER WOULD IN NOWISE JEOPARDIZE THE INTERESTS OF THE GOVERNMENT. ACCORDINGLY, IT IS REQUESTED THAT SUCH WAIVER BE AUTHORIZED, UNDER COST-PLUS-A-FIXED-FEE CONTRACTS.

THE VARIOUS CONTRACTS EXECUTED BY THE WAR DEPARTMENT UPON A COST PLUS-A- FIXED-FEE BASIS PROVIDE GENERALLY FOR THE REIMBURSEMENT OF THE CONTRACTOR'S EXPENSES IN PERFORMING THE WORK, AMONG WHICH ARE INCLUDED MINOR EXPENSES SUCH AS TELEGRAMS, BUT THERE IS RESERVED TO THE GOVERNMENT THE RIGHT TO PAY DIRECTLY TO THE PERSONS CONCERNED ALL SUMS DUE FROM THE CONTRACTOR FOR LABOR, MATERIALS OR OTHER CHARGES. EVIDENTLY THE WAR DEPARTMENT HAS DECIDED TO EXERCISE ITS RESERVED RIGHT TO PAY DIRECTLY SUCH TELEGRAPHIC CHARGES AS MAY BE INCURRED BY THE CONTRACTOR IN CONNECTION WITH THE WORK, BUT DOUBT HAS ARISEN AS TO THE PROPRIETY OF SO DOING BECAUSE OF THE REFUSAL OF THE TELEGRAPH COMPANIES TO FORWARD WITH THEIR INVOICES TO THE CONTRACTOR THE ORIGINAL COPIES OF TRANSMITTED TELEGRAMS AND TO CERTIFY SUCH INVOICES IN THE MANNER CUSTOMARILY REQUIRED OF INVOICES PRESENTED TO THE GOVERNMENT COVERING OFFICIAL TELEGRAPH SERVICE. IT WOULD APPEAR THAT THE POSITION OF THE TELEGRAPH COMPANIES IS DUE TO THE REPORTED DISPUTE AS TO WHETHER THE GOVERNMENT RATE OR THE COMMERCIAL RATE APPLIES TO TELEGRAMS FILED BY COST-PLUS-A-FIXED-FEE CONTRACTORS AND APPARENTLY IS DICTATED BY A FEAR THAT COMPLIANCE WITH EITHER OF THESE REQUIREMENTS MIGHT PREJUDICE THEIR CONTENTION THAT COMMERCIAL RATES APPLY TO SUCH MESSAGES.

AS TO CLAIMS PRESENTED TO THE GOVERNMENT FOR TELEGRAPH SERVICE, IT IS A LONG ESTABLISHED PRACTICE TO REQUIRE THAT THE ORIGINALS OF OUTGOING MESSAGES BE FILED IN SUPPORT THEREOF. SEE 16 COMP. GEN. 217; 14 ID. 825. THE CERTIFICATE REQUIRED ON INVOICES PRESENTED TO THE GOVERNMENT FOR SUCH SERVICES IS THAT PRESCRIBED BY CIRCULAR LETTER OF APRIL 2, 1938, A-51607, A-49009. IT IS NOT APPARENT TO THIS OFFICE WHY A COMPLIANCE WITH EITHER OF THESE REQUIREMENTS WOULD ADVERSELY AFFECT THE POSITION OF THE TELEGRAPH COMPANIES IN THE MATTER IF THE MESSAGES WERE INVOICED AT THE COMMERCIAL RATE AND PAYMENT ACCEPTED UNDER PROTEST.

HOWEVER, SINCE THE PROCEDURE CONTEMPLATED BY YOU IS IN LIEU OF REIMBURSING THE CONTRACTOR FOR TELEGRAPH EXPENSES ON THE BASIS OF ITS PAID INVOICES OR OTHER ORIGINAL PAPERS AS CERTIFIED AND VERIFIED BY THE CONTRACTING OFFICER, YOU ARE ADVISED THAT OBJECTION WILL NOT BE MADE BY THIS OFFICE TO THE DIRECT PAYMENT BY THE GOVERNMENT OF SUCH INVOICES RENDERED TO COST-PLUS-A-FIXED-FEE CONTRACTOR WHEN SUPPORTED BY CERTIFIED COPIES OF TRANSMITTED MESSAGES, PROVIDED THE INVOICES ARE CERTIFIED AND VERIFIED BOTH BY THE CONTRACTOR AND THE CONTRACTING OFFICER, OR HIS REPRESENTATIVE, AS BEING PROPER CHARGES AGAINST THE CONTRACT WORK, SUCH PAYMENTS TO BE MADE AT THE GOVERNMENT RATE. IT IS ASSUMED THAT ANY NECESSARY ADMINISTRATIVE MEASURES WILL BE TAKEN TO PREVENT A DUPLICATION OF PAYMENTS FOR SUCH TELEGRAPHIC SERVICES.