B-23570, OCTOBER 2, 1942, 22 COMP. GEN. 306

B-23570: Oct 2, 1942

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THE COST OF THE VACATION PAY SHOULD BE PRORATED BETWEEN THE GOVERNMENT AND CONTRACTOR ACCORDING TO THE NUMBER OF DAYS THE PARTICULAR EMPLOYEE WAS ENGAGED ON THE CONTRACTOR'S PRIVATE WORK AND THE GOVERNMENT WORK. RATHER THAN ON THE BASIS OF SERVICE DURING THE CALENDAR YEAR IN WHICH THE VACATION IS TAKEN. WHOSE SERVICES ARE TERMINATED FOR CERTAIN REASONS. THE CASH ALLOWANCE SHOULD BE PRORATED BETWEEN THE GOVERNMENT AND CONTRACTOR ACCORDING TO THE NUMBER OF DAYS THE PARTICULAR EMPLOYEE WAS ENGAGED ON THE CONTRACTOR'S PRIVATE WORK AND THE GOVERNMENT WORK. THE UNEXPIRED PORTION OF THE CALENDAR YEAR IN WHICH TERMINATION OCCURS SHOULD NOT BE CHARGED TO THE WORK ON WHICH THE EMPLOYEE WAS LAST ENGAGED.

B-23570, OCTOBER 2, 1942, 22 COMP. GEN. 306

CONTRACTS - COST-PLUS - PRORATION OF VACATION PAY OF EMPLOYEES ENGAGED PARTLY ON CONTRACTOR'S PRIVATE WORK AND PARTLY ON GOVERNMENT WORK WHERE A COST-PLUS-A-FIXED-FEE CONTRACTOR ALLOWS A VACATION WITH PAY TO ITS EMPLOYEES AFTER AT LEAST ONE YEAR'S CONTINUOUS SERVICE AND ALLOWS A VACATION DURING EACH SUCCEEDING CALENDAR YEAR IF SERVICE HAS BEEN CONTINUOUS DURING THE 12 MONTHS IMMEDIATELY PRECEDING SUCH VACATION, THE COST OF THE VACATION PAY SHOULD BE PRORATED BETWEEN THE GOVERNMENT AND CONTRACTOR ACCORDING TO THE NUMBER OF DAYS THE PARTICULAR EMPLOYEE WAS ENGAGED ON THE CONTRACTOR'S PRIVATE WORK AND THE GOVERNMENT WORK, RESPECTIVELY, DURING THE 12 MONTHS IMMEDIATELY PRECEDING THE VACATION, RATHER THAN ON THE BASIS OF SERVICE DURING THE CALENDAR YEAR IN WHICH THE VACATION IS TAKEN. WHERE A COST-PLUS-A-FIXED-FEE CONTRACTOR GRANTS ITS EMPLOYEES, WHOSE SERVICES ARE TERMINATED FOR CERTAIN REASONS, A CASH ALLOWANCE IN LIEU OF A VACATION WITH PAY ALLOWABLE AFTER AT LEAST ONE YEAR'S CONTINUOUS SERVICE OR IN LIEU OF A VACATION ALLOWABLE DURING A SUCCEEDING CALENDAR YEAR IF SERVICE HAS BEEN CONTINUOUS DURING THE 12 MONTHS IMMEDIATELY PRECEDING THE VACATION, THE CASH ALLOWANCE SHOULD BE PRORATED BETWEEN THE GOVERNMENT AND CONTRACTOR ACCORDING TO THE NUMBER OF DAYS THE PARTICULAR EMPLOYEE WAS ENGAGED ON THE CONTRACTOR'S PRIVATE WORK AND THE GOVERNMENT WORK, RESPECTIVELY, DURING THE 12 MONTHS IMMEDIATELY PRECEDING THE VACATION ALLOWANCE, AND THE UNEXPIRED PORTION OF THE CALENDAR YEAR IN WHICH TERMINATION OCCURS SHOULD NOT BE CHARGED TO THE WORK ON WHICH THE EMPLOYEE WAS LAST ENGAGED.

COMPTROLLER GENERAL WARREN TO LT. COL. GEORGE DOBERT, U.S. ARMY, OCTOBER 2, 1942:

THERE HAS BEEN RECEIVED BY REFERENCE FROM HEADQUARTERS, SERVICES OF SUPPLY, FISCAL DIVISION, YOUR LETTER OF JUNE 26, 1942, AS FOLLOWS:

THE INCLOSED VOUCHER, PROPERLY APPROVED AND CERTIFIED, HAS BEEN PRESENTED TO THE UNDERSIGNED DISBURSING OFFICER FOR THE ARMY FOR PAYMENT. THE PROPRIETY OF THE CLAIM AGAINST THE UNITED STATES IS IN DOUBT AND YOUR DECISION IS REQUESTED AS TO THE VALIDITY OF THE VOUCHER FOR REIMBURSEMENT TO THE CONTRACTOR, E. I. DUPONT DE NEMOURS AND COMPANY, INC.

THE VOUCHER CONSTITUTES A BILLING UNDER CONTRACT W-ORD-458, AND COVERS VACATIONS AS REIMBURSABLE UNDER SUBPARAGRAPH (1), PARAGRAPH (A), ARTICLE (IV) OF THE ABOVE CONTRACT AND IS SUBMITTED FOR ADVANCE AUDIT PRIOR TO REIMBURSEMENT.

THE MATTER OF REIMBURSEMENT TO THE CONTRACTOR FOR A VACATION ALLOWANCE MADE PURSUANT TO THE GENERAL POLICY OF THE CONTRACTOR WAS REVIEWED AND THE PAYMENT THEREOF APPROVED IN A DECISION OF THE COMPTROLLER GENERAL ( NO. B- 23570) DATED FEBRUARY 17, 1942. THIS DECISION, WHILE APPROVING THE VACATION PLAN ALSO SET FORTH THAT BILLINGS FOR SUCH ITEMS MUST BE PRO- RATED ON A BASIS OF SERVICE.

THERE ARE NUMEROUS CONDITIONS TO BE ENCOUNTERED IN AN ATTEMPT TO PRORATE THESE ITEMS AND, THEREFORE, IN ADDITION TO AN ADVANCE DECISION ON ITEMS BILLED IN THE SUBJECT VOUCHER, WE ALSO REQUEST DECISION OF THE COMPTROLLER GENERAL AS TO THE POSITION TO BE TAKEN WITH RESPECT TO OTHER ITEMS DETAILED ON THE SCHEDULE ATTACHED TO THE PUBLIC VOUCHER AND IDENTIFIED IN THE FOLLOWING MANNER:

"SCHEDULE OF CONDITIONS TO BE ENCOUNTERED AT INDIANA ORDNANCE WORKS AND WHICH WILL THEREFORE BE REFLECTED IN VACATION BILLINGS AGAINST THE CONTRACT.'

THE ABOVE NOTED SCHEDULE SETS FORTH ALL CONDITIONS WHICH IT IS EXPECTED WILL BE ENCOUNTERED BUT FOR WHICH IT IS DIFFICULT, AT THIS TIME, TO FIND EXAMPLES TO COVER. ITEMS BILLED ON THE PUBLIC VOUCHER ARE NOTED BY ITEM NUMBERS TO IDENTIFY THEM WITH THE SCHEDULE OF CONDITIONS.

THE VIEW OF THE CHIEF OF ORDNANCE WITH RESPECT TO THE QUESTION PRESENTED ARE SET FORTH IN 3RD INDORSEMENT OF JULY 7, 1942, TO THE CHIEF OF FINANCE, AS FOLLOWS:

1. IN COMPLIANCE WITH 2ND INDORSEMENT, OFFICE, CHIEF OF FINANCE, DATED JUNE 30, 1942, REQUESTING REMARK AND RECOMMENDATION ON PROPOSED SUBMISSION OF A VOUCHER IN THE AMOUNT OF $433.40 COVERING REIMBURSEMENT FOR VACATION WAGES DETERMINED IN ACCORDANCE WITH A PRORATING SCHEDULE DRAWN BY THE DU PONT COMPANY, THE FOLLOWING IS FURNISHED.

2. IT IS THE OPINION OF THIS OFFICE THAT THE PRORATING PROCEDURE, UNDER WHICH THE VACATION ALLOWANCE FOR WHICH THE CONTRACTOR WILL BE REIMBURSED IS MADE, REPRESENTS THE MOST FEASIBLE AND FAIR WAY OF HANDLING THE PRORATING OF AMOUNTS. THE PROCEDURE IN QUESTION WAS DISCUSSED WITH MR. E. W. BELL, CHIEF, AUDIT DIVISION, GENERAL ACCOUNTING OFFICE, BY REPRESENTATIVES OF ORDNANCE AND OF THE CONTRACTOR, AT WHICH TIME IT WAS DECIDED THAT THE MATTER BE SUBMITTED WITH ILLUSTRATIVE CASES. AS A RESULT OF THIS DISCUSSION, THE COMMANDING OFFICER OF THE INDIANA ORDNANCE WORKS WAS INSTRUCTED TO HAVE THE CONTRACTOR PREPARE A VOUCHER, ATTACH THE PRORATING SCHEDULE THERETO AND, USING AS MANY OF THE ILLUSTRATIVE CASES AS IT WAS POSSIBLE TO OBTAIN, CLAIM REIMBURSEMENT FOR THE VACATION ALLOWANCES PAID THE EMPLOYEES. THE DISBURSING OFFICER IN JEFFERSONVILLE, INDIANA, WAS THEN REQUESTED TO SUBMIT THE CASE FOR ADVANCE DECISION OF THE COMPTROLLER GENERAL SO THAT NUMEROUS QUESTIONS WHICH OTHERWISE WOULD UNDOUBTEDLY ARISE AFTER THE FACT OF PRORATING WOULD BE FORESTALLED, AND THE PARTIES CONCERNED WOULD HAVE AN APPROVED PROCEDURE TO GUIDE THEIR ACTIONS.

3. THE SCHEDULE FOR PRORATING, FORMING PART OF THE FILE HEREWITH, COVERS AS MANY OF THE SITUATIONS WHICH WOULD ARISE AS IT WAS POSSIBLE TO THINK OF AT THE MOMENT, BUT ADMITTEDLY, IS NOT COMPREHENSIVE. IT IS THE CONSIDERED OPINION OF THE ORDNANCE DEPARTMENT THAT THE USE OF THE PRORATING PROCEDURE AS OUTLINED IS NECESSARY IN ORDER TO GIVE ALL OF THE PARTIES CONCERNED ( CONTRACTOR, ORDNANCE DEPARTMENT, FINANCE OFFICER) A WORKING BASIS UNDER WHICH THEIR ACCOUNT MIGHT BE SET UP, AUDITS MADE THEREOF, AND REIMBURSEMENT SOUGHT AND MADE. IT MAY BE STATED THAT THE ORDNANCE DEPARTMENT CONSIDERS THE SCHEDULED PROCEDURE SATISFACTORY AND THAT ITS USE HAS THE APPROVAL OF THIS OFFICE.

4. IT IS THE VIEW OF THE ORDNANCE DEPARTMENT THAT MANY OF THE SITUATIONS OUTLINED, NOTABLY THOSE DESIGNATED AS 8 (A), (B), (C), (D), WILL BE INFREQUENT, BUT THESE SITUATIONS WERE PRESENTED IN ORDER TO GIVE THE WHOLE PICTURE. ATTENTION IS CALLED TO THE FACT THAT IN ALL CASES THE DU PONT COMPANY BEARS THE SAME PRORATING ALLOWANCE COST AS DOES THE GOVERNMENT WHERE THE SITUATION IS SUCH THAT PART OR ALL OF THE EMPLOYEES TIME WAS SPENT AT THE DU PONT PLANT.

5. THE ORDNANCE DEPARTMENT BEING THE MOVING PARTY IN HAVING THE PROPOSED PROCEDURE SUBMITTED, IS THEREFORE IN FAVOR OF HAVING THE SUBMISSION AS PREPARED BY THE FINANCE OFFICER AT JEFFERSONVILLE, INDIANA, AND SUPPLEMENTED BY THIS INDORSEMENT, FORWARDED TO THE COMPTROLLER GENERAL FOR ADVANCE DECISION. THE ORDNANCE DEPARTMENT WOULD APPRECIATE EXPEDITIOUS CONSIDERATION OF THE MATTER.

THE REFERRED-TO SCHEDULE OF CONDITIONS COVERS THE FOLLOWING ANTICIPATED CIRCUMSTANCES:

ITEM NO. 1. EMPLOYEES SPENDING FULL CALENDAR YEAR AT GOVERNMENT PLANTS.

ITEM NO. 2. EMPLOYEES TRANSFERRED TO GOVERNMENT PLANTS FROM DU PONT PLANTS AFTER HAVING TAKEN CURRENT YEAR VACATION WHILE AT DU PONT PLANTS.

ITEM NO. 3. EMPLOYEES TRANSFERRED TO GOVERNMENT PLANTS FROM DU PONT PLANTS AND GIVEN CURRENT YEAR VACATION AFTER ARRIVAL AT GOVERNMENT PLANTS.

ITEM NO. 4. EMPLOYEES TRANSFERRED TO DU PONT PLANTS FROM GOVERNMENT PLANTS AFTER HAVING BEEN GIVEN CURRENT YEAR VACATION WHILE AT GOVERNMENT PLANTS.

ITEM NO. 5. EMPLOYEES TRANSFERRED TO DU PONT PLANTS FROM GOVERNMENT PLANTS WITHOUT HAVING BEEN GIVEN CURRENT YEAR VACATION AND TO WHOM CURRENT YEAR VACATION IS GIVEN AFTER ARRIVAL AT DU PONT PLANTS.

ITEM NO. 6. EMPLOYEES GIVEN VACATIONS WHO LEAVE EMPLOY BEFORE COMPLETING CURRENT CALENDAR YEAR'S SERVICE EITHER BY VOLUNTARY RESIGNATION OR WHERE TERMINATED FOR CAUSE AFTER HAVING BEEN GIVEN VACATION.

A. WHERE ENTIRE CALENDAR YEAR SERVICE TO TIME OF TERMINATION WAS SPENT AT DU PONT PLANTS.

B. WHERE ENTIRE CALENDAR YEAR SERVICE TO TIME OF TERMINATION WAS SPENT AT GOVERNMENT PLANTS.

C. WHERE PART SERVICE IN CURRENT CALENDAR YEAR WAS AT DU PONT PLANTS AND PART AT GOVERNMENT PLANTS, AND EMPLOYEE WAS AT DU PONT PLANT AT TIME OF SEPARATION FROM SERVICE.

D. WHERE PART SERVICE IN CURRENT CALENDAR YEAR WAS AT DU PONT PLANTS AND PART AT GOVERNMENT PLANTS, AND EMPLOYEE WAS AT GOVERNMENT PLANT AT TIME OF SEPARATION FROM SERVICE.

ITEM NO. 7. EMPLOYEES TERMINATED DUE TO LACK OF WORK, OR TO ENTER MILITARY SERVICE, AND GRANTED VACATION ALLOWANCE AT TIME OF TERMINATION.

A. WHERE ENTIRE CALENDAR YEAR SERVICE TO TIME OF TERMINATION WAS SPENT AT DU PONT PLANTS.

B. WHERE ENTIRE CALENDAR YEAR SERVICE TO TIME OF TERMINATION WAS SPENT AT GOVERNMENT PLANTS.

C. WHERE PART SERVICE IN CURRENT CALENDAR YEAR WAS AT DU PONT PLANTS AND PART AT GOVERNMENT PLANTS, AND EMPLOYEE WAS AT DU PONT PLANT AT TIME OF SEPARATION FROM SERVICE.

D. WHERE PART SERVICE IN CURRENT CALENDAR YEAR WAS AT DU PONT PLANTS AND PART AT GOVERNMENT PLANTS, AND EMPLOYEE WAS AT GOVERNMENT PLANT AT TIME OF SEPARATION FROM SERVICE.

ITEM NO. 8. EMPLOYEES TERMINATED DUE TO LACK OF WORK AND GRANTED VACATION ALLOWANCE, BUT LATER RE-EMPLOYED IN THE SAME YEAR.

A. SERVICES TERMINATED WHILE AT GOVERNMENT PLANT AND RE-EMPLOYED AT GOVERNMENT PLANT.

B. SERVICES TERMINATED WHILE AT GOVERNMENT PLANT AND RE-EMPLOYED AT DU PONT PLANT.

C. SERVICES TERMINATED WHILE AT DU PONT PLANT AND RE-EMPLOYED AT GOVERNMENT PLANT.

D. SERVICES TERMINATED WHILE AT DU PONT PLANT AND RE-EMPLOYED AT DU PONT PLANT.

THE PROPOSED BASIS OF PRORATING VACATION PAY UNDER THE ABOVE SCHEDULE IS AS FOLLOWS:

CHART

CHARGEABLE TO

CHARGEABLE TO GOVERNMENT CONTRACT DU PONT ITEM NO.:

1 --- TOTAL VACATION ALLOWANCE.

2 --- PRORATED ACCORDING TO LENGTH OF SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR.

3 --- PRORATED ACCORDING TO LENGTH OF SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR.

4 --- PRORATED ACCORDING TO LENGTH OF SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR.

5 --- PRORATED ACCORDING TO LENGTH OF SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR.

6 A-- TOTAL VACATION ALLOWANCE.

B-- TOTAL VACATION ALLOWANCE.

C-- PRORATED ACCORDING TO LENGTH OF SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR; UNEXPIRED

PORTION OF CALENDAR YEAR TO BE CONSIDERED

SERVICE ON DU PONT PLANT. D-- PRORATED ACCORDING TO LENGTH OF

SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR; UNEXPIRED

PORTION OF CALENDAR YEAR TO BE CONSIDERED SERVICE

ON GOVERNMENT PLANT.

7 A-- TOTAL VACATION ALLOWANCE.

B-- TOTAL VACATION ALLOWANCE.

C-- PRORATED ACCORDING TO LENGTH OF SERVICE RENDERED

EACH GROUP IN THE CALENDAR YEAR; UNEXPIRED

PORTION OF CALENDAR YEAR TO BE CONSIDERED SERVICE

ON DU PONT PLANT. D-- PRORATED ACCORDING TO LENGTH OF SERVICE

RENDERED

EACH GROUP IN THE CALENDAR YEAR; UNEXPIRED

PORTION OF CALENDAR YEAR TO BE CONSIDERED SERVICE

ON GOVERNMENT PLANT.

8 A, B, C, D. THE CHARGE FOR VACATION ALLOWANCE WILL

HAVE BEEN TAKEN CARE OF IN ACCORDANCE WITH

SITUATIONS OUTLINED IN 7 (A) TO (D) INCLUSIVE

AND THAT CHARGE SHOULD BE ALLOWED TO STAND WITHOUT

CHANGE.

THE VOUCHER INVOLVED COVERS THE AMOUNT CLAIMED BY THE CONTRACTOR AS THE GOVERNMENT'S PROPORTIONATE SHARE OF THE EXPENSE INCURRED FOR VACATION ALLOWANCES TO FIVE OF ITS EMPLOYEES WHO, DURING A PART OR ALL OF THE CALENDAR YEAR IN WHICH SUCH VACATIONS WERE GRANTED, WERE ENGAGED BY THE CONTRACTOR IN THE PERFORMANCE OF THE WORK COVERED BY COST-PLUS-A FIXED-FEE CONTRACT NO. W-ORD-458. IN SUPPORT THEREOF, THERE IS ATTACHED TO THE SAID VOUCHER PERTINENT INFORMATION RELATIVE TO THE EMPLOYMENT RECORD OF EACH OF THE SAID EMPLOYEES UPON THE BASIS OF WHICH THE VACATION PAY IS PRORATED IN ACCORDANCE WITH ITEMS NOS. 1, 3, 6B, 6D, AND 7B OF THE ABOVE-QUOTED SCHEDULE OF CONDITIONS.

AS STATED IN YOUR LETTER, SUPRA, THE MATTER OF THE GOVERNMENT'S LIABILITY FOR VACATION ALLOWANCES TO THE CONTRACTOR'S EMPLOYEES WAS CONSIDERED IN MY DECISION OF FEBRUARY 17, 1942, TO THE SECRETARY OF WAR, WHEREIN IT WAS HELD THAT, WHILE UNDER THE TERMS OF THE CONTRACT HERE INVOLVED IT IS THE OBLIGATION OF THE GOVERNMENT TO PAY ITS SHARE OF SUCH EXPENSE, THE PRORATING THEREOF IS REQUIRED TO BE COMPUTED "ON THE BASIS OF LENGTH OF SERVICE ON THE ( GOVERNMENT) PROJECT. THAT IS, THE GOVERNMENT IS TO BE CHARGED WITH ONLY "THE PROPORTIONATE SHARE OF THE VACATION SALARY EARNED WHILE THERE EMPLOYED.' THE QUESTION NOW PRESENTED IS AS TO THE PROPRIETY OF THE CONTRACTOR'S PROPOSED METHOD OF PRORATING SUCH CHARGES WHICH, IN SUBSTANCE, IS BASED ON THE NUMBER OF DAYS' SERVICE RENDERED BY ITS EMPLOYEES ON ITS PRIVATE WORK AND THE GOVERNMENT WORK, RESPECTIVELY, DURING THE CALENDAR YEAR IN WHICH THE VACATION IS GRANTED, AND, IN THE EVENT OF TERMINATION OF SERVICES DURING THE SAID CALENDAR YEAR, THE WORK UPON WHICH THE EMPLOYEE WAS LAST ENGAGED IS CHARGED WITH THE REMAINING NUMBER OF DAYS IN THE YEAR.

THE EMPLOYEES COVERED BY THE VOUCHER ARE CLASSIFIED AS WAGE ROLL EMPLOYEES PAID ON AN HOURLY BASIS AS DISTINGUISHED FROM WAGE ROLL EMPLOYEES PAID ON A MONTHLY BASIS AND FROM SALARY ROLL EMPLOYEES. SO FAR AS CONCERNS THE CLASS OF EMPLOYEE HERE INVOLVED, THE CONTRACTOR'S POLICY WITH RESPECT TO THE ELIGIBILITY REQUIREMENTS FOR A VACATION, AS SET FORTH UNDER ITEM 201, SECTION 2 OF ITS SERVICE MANUAL, A COPY OF WHICH WAS FORWARDED TO THIS OFFICE FOR USE IN THE AUDIT OF PAYMENTS UNDER THIS CONTRACT, IS, IN PERTINENT PART, AS FOLLOWS:

THERE ARE TWO SEPARATE AND DISTINCT ELIGIBILITY REQUIREMENTS AND AN EMPLOYEE IN ORDER TO BE ELIGIBLE FOR A VACATION MUST HAVE FULFILLED BOTH REQUIREMENTS. THE FIRST IS THAT THE EMPLOYEE MUST HAVE AT LEAST ONE YEAR OF CONTINUOUS SERVICE (SEE SERVICE REQUIREMENT, ITEM 202) AND THE SECOND IS THAT HE MUST NOT HAVE BEEN ABSENT DURING THE TWELVE MONTHS PRECEDING HIS VACATION EXCEPT UNDER CERTAIN SPECIFIED CONDITIONS (SEE ATTENDANCE REQUIREMENT, ITEM 203).

ITEM 202 OF THE SAID SERVICE MANUAL PROVIDES, IN PART, AS FOLLOWS:

SERVICE REQUIREMENT FOR ELIGIBILITY

ONE YEAR OF CONTINUOUS SERVICE NECESSARY

THE PLAN STATES THAT AN EMPLOYEE IN ORDER TO BE ELIGIBLE FOR A VACATION MUST FIRST HAVE COMPLETED AT LEAST ONE YEAR OF CONTINUOUS SERVICE WITH E. I. DU PONT DE NEMOURS AND COMPANY AND/OR SUBSIDIARY COMPANIES AS DEFINED BY THE CONTINUITY OF SERVICE RULES.

ITEM 203 OF THE SAID SERVICE MANUAL CONTAINS THE FOLLOWING PROVISIONS:

ATTENDANCE REQUIREMENT FOR ELIGIBILITY

NO UNEXCUSED ABSENCES DURING THE PRECEDING TWELVE MONTHS

THE SECOND ELIGIBILITY REQUIREMENT IS THAT THE EMPLOYEE MUST NOT HAVE BEEN ABSENT FROM WORK DURING THE TWELVE MONTHS IMMEDIATELY PRECEDING HIS VACATION EXCEPT UNDER ONE OR MORE OF THE FOLLOWING CONDITIONS: LISTED THEREUNDER ARE THE CONDITIONS UNDER WHICH ABSENCE FROM WORK WILL BE EXCUSED AND EXAMPLES OF THE MANNER IN WHICH THE ELIGIBILITY DATE FOR VACATIONS IS TO BE COMPUTED IN THE EVENT SUCH ABSENCES EXCEED THE LIMITATIONS THEREON.

THE SERVICE MANUAL FURTHER PROVIDES UNDER ITEM 502 THAT "IN CASE OF LAY- OFF ON ACCOUNT OF LACK OF WORK, AN EMPLOYEE WHO HAS NOT HAD A VACATION IN THE CURRENT CALENDAR YEAR AND IS OTHERWISE ELIGIBLE WILL BE GRANTED A VACATION ALLOWANCE EQUIVALENT TO ONE WEEK'S VACATION PAY IF LAID OFF PRIOR TO MAY 1, OR TO TWO WEEKS' VACATION PAY IF LAID OFF ON OR AFTER MAY 1.' ITEM 205 (3) OF THE MANUAL PROVIDES THAT EMPLOYEES INDUCTED INTO MILITARY SERVICE WHO ARE ELIGIBLE FOR AND HAVE NOT TAKEN THEIR VACATIONS DURING THE CURRENT CALENDAR YEAR WILL BE GRANTED PAY IN LIEU THEREOF IN ACCORDANCE WITH THE VACATION ALLOWANCE THEY WOULD HAVE RECEIVED HAD THEY BEEN LAID OFF ON ACCOUNT OF LACK OF WORK AS OF THE DAY OF INDUCTION INTO SUCH SERVICE.

IT THUS APPEARS TO BE THE POLICY OF THE CONTRACTOR TO ALLOW A VACATION WITH PAY TO ITS HOURLY WAGE ROLL EMPLOYEES AFTER THEY HAVE COMPLETED AT LEAST ONE YEAR'S CONTINUOUS SERVICE AND TO ALLOW A VACATION DURING EACH SUCCEEDING CALENDAR YEAR PROVIDED THERE HAVE BEEN NO UNEXCUSED ABSENCES DURING THE TWELVE MONTHS IMMEDIATELY PRECEDING SUCH VACATION. THE VACATION ALLOWANCES ARE THUS SHOWN TO BE A FORM OF ADDITIONAL COMPENSATION TO THE EMPLOYEES BY REASON OF THEIR CONTINUOUS SERVICE AND UNINTERRUPTED ATTENDANCE FOR A PERIOD OF AT LEAST TWELVE MONTHS PRIOR TO SUCH VACATIONS. IN VIEW THEREOF, THERE WOULD APPEAR TO BE NO PROPER BASIS FOR THE DISTRIBUTION OF THE COST OF VACATION ALLOWANCES ON THE BASIS OF SERVICE DURING THE CALENDAR YEAR IN WHICH THE VACATION IS TAKEN WITH THE UNEXPIRED PORTION OF THE YEAR TO BE CHARGED TO THE PARTY FOR WHOM SERVICES WERE LAST RENDERED IN THE EVENT OF TERMINATION OF SERVICES, BUT, RATHER, IT WOULD APPEAR THAT THE PRORATING THEREOF SHOULD BE ON THE SAME BASIS AS THE VACATIONS ARE EARNED. THAT IS, THE COST SHOULD BE PRORATED ACCORDING TO THE NUMBER OF DAYS THE EMPLOYEE WAS ENGAGED ON THE CONTRACTOR'S PRIVATE WORK AND THE NUMBER OF DAYS ON THE GOVERNMENT WORK DURING THE TWELVE MONTHS IMMEDIATELY PRECEDING THE VACATION OR THE ALLOWANCE IN LIEU THEREOF.

FURTHER, WITH REFERENCE TO THE STATEMENT THAT THE CONTRACTOR'S PROPOSED METHOD "REPRESENTS THE MOST FEASIBLE AND FAIR WAY OF HANDLING THE PRORATING OF AMOUNTS," IT IS TO BE NOTED IN THIS CONNECTION THAT THE APPLICATION THEREOF WOULD RESULT IN THE GOVERNMENT BEING REQUIRED TO ABSORB PART OF THE COST OF VACATION ALLOWANCES GRANTED TO THOSE EMPLOYEES WHO, AFTER TAKING THEIR VACATIONS, WERE TRANSFERRED TO THE GOVERNMENT WORK DURING THE SAME CALENDAR YEAR. SINCE, UNDER THE TERMS OF THE CONTRACT INVOLVED, THE LIABILITY OF THE GOVERNMENT IS LIMITED TO THE COSTS AND EXPENSES DIRECTLY ATTRIBUTABLE TO THE WORK THEREUNDER, AND SINCE IT IS EVIDENT THAT THE COST OF VACATION ALLOWANCES GRANTED PRIOR THERETO BEARS NO RELATION TO THE PERFORMANCE OF THE CONTRACT WORK AND, ACCORDINGLY, MAY NOT BE CONSIDERED AS DUE THERETO, THE PROPOSED PROCEDURE WOULD SERVE TO IMPOSE UPON THE GOVERNMENT THE PAYMENT OF AMOUNTS IN EXCESS OF THAT PROVIDED FOR IN THE CONTRACT. MOREOVER, SINCE THE FLOW OF EMPLOYEES PRESUMABLY HAS BEEN AND WILL CONTINUE TO BE FROM THE CONTRACTOR'S PRIVATE WORK TO THE GOVERNMENT WORK, IT IS NOT CLEAR THAT THE CHARGING OF THE UNEXPIRED PORTION OF THE CALENDAR YEAR, IN THE EVENT OF TERMINATION OF SERVICES, TO THE WORK UPON WHICH THE EMPLOYEE WAS LAST ENGAGED, REPRESENTS A "FAIR" METHOD OF PRORATION. IN ANY EVENT, SINCE, FOR THE REASON HERETOFORE STATED, THE ADOPTION OF THE PROPOSED METHOD OF PRORATING THE COST OF VACATION ALLOWANCES WOULD RESULT IN A DEVIATION FROM THE TERMS OF THE CONTRACT AND IMPOSE ADDITIONAL COSTS UPON THE GOVERNMENT, WITHOUT ANY APPARENT COMPENSATING BENEFIT THEREFOR, IT MAY NOT BE APPROVED.

UNDER THE METHOD HEREINABOVE PRESCRIBED FOR THE PRORATING OF THE COST OF VACATION ALLOWANCES, BASED ON THE EMPLOYEE'S SERVICE DURING THE TWELVE MONTHS IMMEDIATELY PRECEDING THE VACATION, AS APPLIED TO THE EMPLOYEES FOR WHOSE VACATIONS REIMBURSEMENT IS CLAIMED ON THE VOUCHER INVOLVED, THE GOVERNMENT'S LIABILITY FOR THE FULL AMOUNT THEREOF AS TO CYRUS P. WARREN, CLIFFORD N. BRINSON AND HENRY L. GILLIATT APPEARS CORRECT SINCE EACH IS SHOWN TO HAVE BEEN EMPLOYED UNDER THE CONTRACT HERE INVOLVED FOR THE TWELVE MONTHS IMMEDIATELY PRIOR TO RECEIVING A VACATION OR A VACATION ALLOWANCE IN LIEU THEREOF. HOWEVER, AS TO THEODORE C. GRIMMETT, WHO WAS TRANSFERRED FROM THE CONTRACTOR'S PRIVATE WORK TO THE CONTRACT OPERATIONS ON APRIL 7, 1941, AND RECEIVED A VACATION BEGINNING JUNE 16, 1941, THE GOVERNMENT'S LIABILITY IS ON THE BASIS OF 70 DAYS, COVERING THE PERIOD FROM APRIL 7 TO JUNE 15, 1941, INCLUSIVE, INSTEAD OF 269 DAYS AS CHARGED. ALSO, WITH REFERENCE TO WILLIAM F. MURRAY, TRANSFERRED FROM THE CONTRACTOR'S PRIVATE WORK TO THE CONTRACT WORK ON MARCH 1, 1941, AND WHOSE VACATION COMMENCED ON JUNE 14, 1941, THE GOVERNMENT'S LIABILITY IS ON THE BASIS OF 105 DAYS INSTEAD OF 306 DAYS AS CHARGED.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH ACCOMPANYING PAPERS, IS RETURNED WITH THE ADVICE THAT PAYMENT THEREON, AND UNDER THE VARIOUS CIRCUMSTANCES SET FORTH IN THE SCHEDULE OF CONDITIONS, IS NOT AUTHORIZED OTHERWISE THAN ON THE BASIS HEREIN INDICATED.