B-26220, JULY 29, 1942, 22 COMP. GEN. 74

B-26220: Jul 29, 1942

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REIMBURSEMENT FOR INTERAGENCY SERVICES THERE IS NO LEGAL OBLIGATION ON ONE GOVERNMENT AGENCY FOR WHICH SERVICES HAVE BEEN PERFORMED BY ANOTHER. NO OBJECTION WILL BE MADE TO A FURTHER REIMBURSEMENT OF ACTUAL COST ON THE BASIS OF AN AMOUNT ADMINISTRATIVELY DETERMINED TO BE A PROPER ADJUSTMENT. IS NO LONGER APPLICABLE WITH RESPECT TO INDIRECT EXPENSES. AS FOLLOWS: THERE ARE SUBMITTED. FOR REIMBURSEMENT OF EXPENSES STATED TO HAVE BEEN INCURRED IN THE MAKING OF FOUNDATION INVESTIGATIONS AT THE LITTLE GRASSY AND DEVIL'S KITCHEN DAM SITES. - 139.81 THERE IS ALSO ENCLOSED WITH THESE VOUCHERS A COMPLETE FILE OF CORRESPONDENCE PERTAINING TO THE SOIL CONSERVATION SERVICE'S RELATIONS AND AGREEMENT WITH THE ST.

B-26220, JULY 29, 1942, 22 COMP. GEN. 74

REIMBURSEMENT FOR INTERAGENCY SERVICES THERE IS NO LEGAL OBLIGATION ON ONE GOVERNMENT AGENCY FOR WHICH SERVICES HAVE BEEN PERFORMED BY ANOTHER, AS AUTHORIZED BY SECTION 601 OF THE ACT OF JUNE 30, 1932, TO REIMBURSE THE OTHER AGENCY AN AMOUNT REPRESENTING ACTUAL COST OF PERFORMANCE IN EXCESS OF THE MAXIMUM AGREED UPON IN ADVANCE, BUT, IT BEING PROVIDED BY THE STATUTE THAT ADJUSTMENT OF THE COST OF PERFORMANCE SHALL BE ON THE BASIS OF THAT WHICH MAY BE AGREED UPON, NO OBJECTION WILL BE MADE TO A FURTHER REIMBURSEMENT OF ACTUAL COST ON THE BASIS OF AN AMOUNT ADMINISTRATIVELY DETERMINED TO BE A PROPER ADJUSTMENT. THERE MAY BE INCLUDED IN THE "ACTUAL COST" TO BE PAID BY ONE GOVERNMENT AGENCY TO ANOTHER FOR SERVICES RENDERED UNDER AUTHORITY OF SECTION 601 OF THE ACT OF JUNE 30, 1932, AN AMOUNT REPRESENTING INDIRECT, OR "OVERHEAD," EXPENSES, COMMONLY RECOGNIZED AS ELEMENTS OF COST, SUCH AS DEPRECIATION, MAINTENANCE, GENERAL OFFICE EXPENSES, ETC. DECISION IN 10 COMP. GEN. 193, RENDERED PRIOR TO SAID ACT OF JUNE 30, 1932, AUTHORIZING ADJUSTMENT OF CHARGES FOR INTERAGENCY SERVICES ON THE BASIS OF ACTUAL COST, IS NO LONGER APPLICABLE WITH RESPECT TO INDIRECT EXPENSES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, JULY 29, 1942:

THERE HAS BEEN CONSIDERED YOUR LETTER OF MAY 21, 1942, AS FOLLOWS:

THERE ARE SUBMITTED, FOR YOUR CONSIDERATION AS TO THE PROPRIETY OF THE CHARGES, THE FOLLOWING STANDARD FORMS 1080, VOUCHERS FOR ADJUSTMENT, WHICH REPRESENT BILLS TOTALING $5,855.66 RENDERED TO THE SOIL CONSERVATION SERVICE BY THE UNITED STATES ENGINEER'S OFFICE, WAR DEPARTMENT, ST. LOUIS, MISSOURI, FOR REIMBURSEMENT OF EXPENSES STATED TO HAVE BEEN INCURRED IN THE MAKING OF FOUNDATION INVESTIGATIONS AT THE LITTLE GRASSY AND DEVIL'S KITCHEN DAM SITES, CRAB ORCHARD CREEK PROJECT, CARBONDALE, ILLINOIS:

CHART REGION VOUCHER PERIOD AMOUNT

4196 JANUARY, FEBRUARY, MARCH, 1941 ---- $1,214.65

4194 MARCH AND APRIL, 1941 -------------- 1,176.08

6125 FEBRUARY, APRIL, AND MAY, 1941 ---- 1,001.74

4193 APRIL, MAY, AND JUNE, 1941 -------- 1,187.11

8729 JANUARY - AUGUST, 1941 ------------- 1,136.27 21193 SEPTEMBER 1941 - --------------------- 139.81 THERE IS ALSO ENCLOSED WITH THESE VOUCHERS A COMPLETE FILE OF CORRESPONDENCE PERTAINING TO THE SOIL CONSERVATION SERVICE'S RELATIONS AND AGREEMENT WITH THE ST. LOUIS DISTRICT ENGINEER'S OFFICE.

FOLLOWING THE COMPLETION OF PRELIMINARY PLANS BY THE SOIL CONSERVATION SERVICE FOR THE CONSTRUCTION OF THE LITTLE GRASSY AND DEVIL'S KITCHEN DAMS, THE PLANS WERE SUBMITTED TO THE UNITED STATES ENGINEER'S OFFICE, WAR DEPARTMENT, ST. LOUIS, MISSOURI, FOR EXAMINATION AND COMMENT. THIS WAS, OF COURSE, NECESSARY, AS IN MAKING FUNDS AVAILABLE THE WORK PROJECTS ADMINISTRATION STIPULATED THAT NO WORK WAS TO BE COMMENCED UNTIL SUCH APPROVAL WAS OBTAINED.

UPON RECEIPT OF THE PROPOSED PLANS FOR THE CONSTRUCTION OF THE DAMS, THE DISTRICT ENGINEER, IN HIS LETTER OF NOVEMBER 23, 1940, STIPULATED THAT THE INVESTIGATIONS REQUIRED IN THE CONSTRUCTION WOULD COST BETWEEN $7,500 AND $10,000. INASMUCH AS THE FUNDS ALLOTTED TO THE SOIL CONSERVATION SERVICE FOR THE PRELIMINARY INVESTIGATIONS WERE LIMITED TO APPROXIMATELY $3,500, A MEETING WAS ARRANGED IN THE DISTRICT ENGINEER'S OFFICE IN ST. LOUIS ON DECEMBER 12, 1940, TO PERMIT A FULL DISCUSSION OF THE MATTER. THE RESULT OF THIS MEETING WAS AN AGREEMENT THAT THE SOIL CONSERVATION SERVICE WOULD REIMBURSE THE UNITED STATES ENGINEER'S OFFICE ON AN ACTUAL COST BASIS FOR WORK DONE UP TO THE MAXIMUM OF $3,500, WITH THE PROVISION THAT IF IT PROVED TO BE NECESSARY TO EXCEED THAT AMOUNT, A DETAILED ESTIMATE OF ADDITIONAL EXPENSES WAS TO BE SUBMITTED TO THE SOIL CONSERVATION SERVICE PRIOR TO THE ACTUAL INCURRENCE IN ORDER THAT THE SERVICE COULD ATTEMPT TO SECURE A RELEASE FROM THE WORK PROJECTS ADMINISTRATION OF FUNDS ALREADY PLEDGED AS SPONSOR'S CONTRIBUTION. IF THE REIMBURSEMENT OF ADDITIONAL EXPENSES OVER THE $3,500 LIMITATION IMPOSED IN THE AGREEMENT WAS NECESSARY, THE REIMBURSEMENT THEREOF WAS TO BE MADE THE SUBJECT OF A NEW AGREEMENT.

IT MAY BE STATED AT THIS TIME THAT NO ADVANCE NOTICE AND ESTIMATE OF EXPENSES IN EXCESS OF THE $3,500 WERE GIVEN AS CALLED FOR IN THE AGREEMENT, MAKING IT IMPOSSIBLE FOR THE SOIL CONSERVATION SERVICE TO HAVE SECURED ADDITIONAL FUNDS BEFORE THE ADDITIONAL EXPENSES WERE INCURRED. THE AGREEMENT REACHED AT THE ST. LOUIS CONFERENCE IS CLEARLY OUTLINED AND CONFIRMED IN THE ENCLOSED COPY OF A LETTER DATED DECEMBER 14, 1940, FROM THE SOIL CONSERVATION SERVICE TO THE ST. LOUIS DISTRICT ENGINEER, AND FULL ACCEPTANCE OF THE TERMS WAS CONSTITUTED IN THE DISTRICT ENGINEER'S REPLY OF JANUARY 3, 1941, COPY ALSO ENCLOSED.

IT IS TO BE NOTED THAT THE ENCLOSED REIMBURSEMENT VOUCHERS INCLUDE SUBSTANTIAL CHARGES OF OVERHEAD COSTS. IN THE ENCLOSED COPY OF A LETTER DATED JULY 24, 1941, ADDRESSED BY LT. COL. H. S. BISHOP, JR., OF THE WATERWAYS EXPERIMENT STATION TO THE DISTRICT ENGINEER, IT IS STATED THAT THE OVERHEAD CHARGES INCLUDE "ALL INDIRECT COSTS SUCH AS DEPRECIATION ON BUILDINGS, MAINTENANCE OF GROUNDS, LIBRARY, AND GENERAL OFFICE EXPENSES, ETC.' IT WOULD APPEAR THAT THESE CHARGES WOULD HAVE BEEN INCURRED REGARDLESS OF WHETHER OR NOT SERVICES HAD BEEN PERFORMED FOR THE SOIL CONSERVATION SERVICE, AND THIS BEING SO, REIMBURSEMENT FOR SUCH CHARGES COULD BE CONSIDERED INCONSISTENT WITH THE RULE STATED IN 10 COMP. GEN. 193 AND DECISIONS CITED THEREIN.

ONE ADDITIONAL VOUCHER IN THE AMOUNT OF $3,271.10, WHICH WAS ORIGINALLY INCLUDED WITH THE FILE, HAS MEANWHILE BEEN PAID BY GUY F. ALLEN, CHIEF DISBURSING OFFICER, SYMBOL NO. 70-107, AS WILL BE EVIDENCED BY DISBURSING OFFICE VOUCHER NO. 7-272850, PAID MARCH 26, 1942. THIS BRINGS THE TOTAL AMOUNT BILLED BY THE CORPS OF ENGINEERS TO $9,126.76, WHICH IS $5,626.76 IN EXCESS OF THAT STIPULATED FOR REIMBURSEMENT IN THE AGREEMENT.

IN VIEW OF THE TERMS OF THE AGREEMENT AND THE FOREGOING FACTS AS EVIDENCED BY THE ENCLOSED FILE, THE QUESTION ARISES AS TO WHETHER THE SOIL CONSERVATION SERVICE CAN PROPERLY MAKE ANY PAYMENT IN EXCESS OF $3,500.00 AND, IF SO, WHETHER THE CHARGES FOR OVERHEAD COSTS MAY BE ALLOWED.

YOUR DECISION IN THE MATTER IS RESPECTFULLY REQUESTED.

THE LETTER OF DECEMBER 14, 1940, FROM THE SOIL CONSERVATION SERVICE TO THE DISTRICT ENGINEER, SETTING FORTH THE CONDITIONS UNDER WHICH THE SOIL CONSERVATION SERVICE WAS WILLING TO REIMBURSE THE UNITED STATES ENGINEER OFFICE AT ST. LOUIS FOR THE FOUNDATION INVESTIGATIONS, IS, IN PERTINENT PART, AS FOLLOWS:

AS AGREED AT THE MEETING IN YOUR OFFICE, IT IS REQUESTED THAT YOU ARRANGE FOR THE INVESTIGATIONS NECESSARY TO ASSURE THE ADEQUACY OF THE PLANS WITH THE FOLLOWING PROVISIONS:

1. THAT THE SOIL CONSERVATION SERVICE WILL REIMBURSE YOUR OFFICE ON AN ACTUAL COST BASIS FOR THE WORK NECESSARILY DONE BY THE WAR DEPARTMENT UP TO A MAXIMUM OF $3,500.

2. IF, DURING THE PROGRESS OF INVESTIGATION, ADDITIONAL INFORMATION SHOULD BECOME AVAILABLE TO INDICATE THE NECESSITY FOR ADDITIONAL WORK BY THE WAR DEPARTMENT, WHICH WOULD EXCEED THE $3,500 LIMIT, A DETAILED ESTIMATE OF THE COST SHALL BE SUBMITTED BY YOUR OFFICE, TO THIS OFFICE, SO THAT A REQUEST CAN BE MADE TO THE STATE WPA OFFICE AT CHICAGO, ILLINOIS, TO RELEASE SOIL CONSERVATION SERVICE FUNDS NOW PLEDGED FOR THE PURCHASE OF MATERIALS, ETC., TO REIMBURSE YOU FOR THE ADDITIONAL INVESTIGATION. PROVISIONS FOR EXCEEDING THE $3,500 LIMIT WOULD THEN BE MADE THE SUBJECT OF A SEPARATE LETTER.

3. AN EFFORT WILL BE MADE BY THE WAR DEPARTMENT TO KEEP THE REIMBURSABLE COST TO A MINIMUM CONSISTENT WITH SECURING ADEQUATE INFORMATION. TOWARDS THIS END, THE FACILITIES AVAILABLE TO THE SOIL CONSERVATION SERVICE PROJECT, SHALL BE UTILIZED INSOFAR AS PRACTICABLE.

THE ABOVE-QUOTED TERMS OF THE LETTER OF DECEMBER 14, 1940, WERE ASSENTED TO BY THE DISTRICT ENGINEER'S LETTER OF JANUARY 3, 1941, IN WHICH HE STATED:

I HAVE DELAYED ANSWERING YOUR LETTER PENDING RECEIPT OF APPROVAL BY THE CHIEF OF ENGINEERS OF THE PROPOSED INVESTIGATION. I WISH TO INFORM YOU NOW, HOWEVER, THAT THE PROGRAM HAS BEEN APPROVED AND THAT THE TERMS OUTLINED IN YOUR LETTER OF DEC. 14TH ARE SATISFACTORY TO THIS OFFICE.

IN THE ABSENCE OF SPECIFIC STATUTORY PROVISIONS AFFECTING PARTICULAR DEPARTMENTS OR ESTABLISHMENTS, THE RENDERING OF SERVICES BY ONE GOVERNMENT AGENCY FOR ANOTHER IS GOVERNED BY SECTION 7 OF THE ACT OF MAY 21, 1920, 41 STAT. 613, AS AMENDED BY SECTION 601 OF THE ECONOMY ACT OF JUNE 30, 1932, 47 STAT. 417. THE AMENDED SECTION, INSOFAR AS HERE MATERIAL, PROVIDES:

(A) ANY EXECUTIVE DEPARTMENT OR INDEPENDENT ESTABLISHMENT OF THE GOVERNMENT, OR ANY BUREAU OR OFFICE THEREOF, IF FUNDS ARE AVAILABLE THEREFOR AND IF IT IS DETERMINED BY THE HEAD OF SUCH EXECUTIVE DEPARTMENT, ESTABLISHMENT, BUREAU, OR OFFICE TO BE IN THE INTEREST OF THE GOVERNMENT SO TO DO, MAY PLACE ORDERS WITH ANY OTHER SUCH DEPARTMENT, ESTABLISHMENT, BUREAU, OR OFFICE FOR MATERIALS, SUPPLIES, EQUIPMENT, WORK, OR SERVICES, OF ANY KIND THAT SUCH REQUISITIONED FEDERAL AGENCY MAY BE IN A POSITION TO SUPPLY OR EQUIPPED TO RENDER, AND SHALL PAY PROMPTLY BY CHECK TO SUCH FEDERAL AGENCY AS MAY BE REQUISITIONED, UPON ITS WRITTEN REQUEST, EITHER IN ADVANCE OR UPON THE FURNISHING OR PERFORMANCE THEREOF, ALL OR PART OF THE ESTIMATED OR ACTUAL COST THEREOF AS DETERMINED BY SUCH DEPARTMENT, ESTABLISHMENT, BUREAU, OR OFFICE AS MAY BE REQUISITIONED; BUT PROPER ADJUSTMENTS ON THE BASIS OF THE ACTUAL COST OF THE MATERIALS, SUPPLIES, OR EQUIPMENT FURNISHED, OR WORK OR SERVICES PERFORMED, PAID FOR IN ADVANCE, SHALL BE MADE AS MAY BE AGREED UPON BY THE DEPARTMENTS, ESTABLISHMENTS, BUREAUS, OR OFFICES CONCERNED: PROVIDED, HOWEVER, THAT IF SUCH WORK OR SERVICES CAN BE AS CONVENIENTLY OR MORE CHEAPLY PERFORMED BY PRIVATE AGENCIES SUCH WORK SHALL BE LET BY COMPETITIVE BIDS TO SUCH PRIVATE AGENCIES. BILLS RENDERED, OR REQUESTS FOR ADVANCE PAYMENTS MADE, PURSUANT TO ANY SUCH ORDER, SHALL NOT BE SUBJECT TO AUDIT OR CERTIFICATION IN ADVANCE OF PAYMENT.

THESE STATUTORY PROVISIONS CONTEMPLATE THAT A GOVERNMENT AGENCY WHICH PERFORMS SERVICES FOR ANOTHER SUCH AGENCY SHALL BE REIMBURSED ON THE BASIS OF THE ACTUAL COST OF PERFORMING THE SERVICE ,AS MAY BE AGREED UPON" BY THE AGENCIES CONCERNED. IT APPEARS FROM THE RECORD PRESENTED THAT THE SOIL CONSERVATION SERVICE HAS MADE NO DEFINITE AGREEMENT TO PAY ANY AMOUNT IN EXCESS OF $3,500 FOR THE SERVICE RENDERED IN THIS INSTANCE, AND HENCE IT IS UNDER NO LEGAL OBLIGATION TO PAY A GREATER AMOUNT. HOWEVER, THE VOUCHERS SUBMITTED BY THE UNITED STATES ENGINEER OFFICE INDICATE THAT THE ACTUAL COST OF CONDUCTING THE FOUNDATION INVESTIGATIONS, EXCLUSIVE OF THE CHARGES DESIGNATED AS OVERHEAD, WAS IN EXCESS OF THE AMOUNT WHICH THE SOIL CONSERVATION SERVICE HERETOFORE HAS AGREED SPECIFICALLY TO PAY. SINCE THE AMOUNT WHICH "MAY BE AGREED UPON" IS NECESSARILY A MATTER PRIMARILY FOR ADMINISTRATIVE DETERMINATION--- SUBJECT TO THE STATUTORY REQUIREMENT THAT PROPER ADJUSTMENT BE MADE ON THE BASIS OF THE ACTUAL COST OF PERFORMING THE SERVICE--- THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO PAYMENTS ON THE VOUCHERS HERE INVOLVED IN SUCH AMOUNT IN EXCESS OF $3,500 AS MAY BE ADMINISTRATIVELY AGREED UPON AS A PROPER ADJUSTMENT.

WITH RESPECT TO YOUR QUESTION AS TO THE PROPRIETY OF REIMBURSING THE UNITED STATES ENGINEER OFFICE FOR THE OVERHEAD CHARGES INCLUDED ON THE VOUCHERS, IT SHOULD BE NOTED THAT THE DECISION, 10 COMP. GEN. 193, TO WHICH YOUR LETTER REFERS, WAS RENDERED PRIOR TO THE ENACTMENT OF SECTION 601 OF THE ECONOMY ACT OF JUNE 30, 1932, AMENDING SECTION 7 OF THE ACT OF MAY 21, 1920, BOTH CITED, SUPRA. PRIOR TO THE AMENDATORY ACT, AUTHORIZING ADJUSTMENT OF CHARGES FOR INTERAGENCY SERVICES ON THE BASIS OF ACTUAL COST, THE ACCOUNTING OFFICERS CONSISTENTLY APPLIED THE RULE THAT THE PERFORMING AGENCY PROPERLY COULD BE REIMBURSED ONLY FOR THOSE ELEMENTS OF COST WHICH ACTUALLY RESULTED IN ADDITIONAL CHARGES AGAINST ITS APPROPRIATIONS. THUS, IN 10 COMP. GEN. 193, SUPRA, IT WAS RECOGNIZED THAT A CHARGE OF TEN PERCENT TO COVER SUCH ADMINISTRATIVE COSTS AS TIMEKEEPING, SUPERVISION, ETC., FORMED A PART OF THE TOTAL COST OF THE SERVICES RENDERED BY A GOVERNMENT AGENCY, BUT IT WAS HELD THAT SUCH A CHARGE WAS NOT PROPERLY PAYABLE BECAUSE THE ELEMENTS ON WHICH IT WAS BASED HAD NOT RESULTED IN ANY ADDITIONAL EXPENDITURE OF FUNDS BY THE PERFORMING AGENCY. HOWEVER, UNDER THE SPECIFIC AUTHORIZATION IN THE AMENDED SECTION FOR THE MAKING OF ADJUSTMENTS ON THE BASIS OF THE ACTUAL COST, THE PERFORMING AGENCY PROPERLY MAY BE REIMBURSED FOR ITEMS WHICH COMMONLY ARE RECOGNIZED AS ELEMENTS OF COST, NOTWITHSTANDING SUCH ITEMS MAY NOT HAVE RESULTED IN DIRECT EXPENDITURES FROM THE FUNDS OF THE PERFORMING AGENCY. SEE 12 COMP. GEN. 442; 13 ID. 150.

IN THE FIRST ENDORSEMENT OF JULY 24, 1941, FROM THE MISSISSIPPI RIVER COMMISSION TO THE DISTRICT ENGINEER, A COPY OF WHICH WAS TRANSMITTED WITH YOUR LETTER, THE OVERHEAD CHARGES INCLUDED ON THE VOUCHERS HERE INVOLVED ARE EXPLAINED AS FOLLOWS:

2. IT WILL BE NOTED THAT THE OVERHEAD CHARGES ARE AT MUCH HIGHER RATES THAN USUALLY CHARGED ON WORK PERFORMED BY ENGINEER OFFICES. THE OVERHEAD CHARGED INCLUDES ALL INDIRECT COST SUCH AS DEPRECIATION ON BUILDINGS, MAINTENANCE OF GROUNDS, LIBRARY, AND GENERAL OFFICE EXPENSE, ETC., AND DUE TO THE TECHNICAL NATURE OF WORK PERFORMED AT A HYDRAULIC LABORATORY CONSIDERABLE OVERHEAD EXPENSE IS INVOLVED. IT IS THE PRACTICE OF THE WATERWAYS EXPERIMENT STATION TO ABSORB OVERHEAD FOR WORK CONDUCTED AT THE STATION AT THE RATE OF 50 PERCENT OF THE DIRECT COST AND FOR WORK CONDUCTED OUTSIDE THE STATION AT THE RATE OF 10 PERCENT OF THE DIRECT COST. SUCH CHARGES ARE AUTHORIZED BY THE CHIEF OF ENGINEERS. DUE TO THE FACT THAT PART OF THE WORK ON THE JOB IN QUESTION WAS CONDUCTED AT THE STATION AND PART OUTSIDE THE STATION, THE OVERHEAD RATES SHOWN ARE MORE THAN 10 PERCENT BUT LESS THAN 50 PERCENT.

IN ADDITION TO THE MATTERS STATED BY THE MISSISSIPPI RIVER COMMISSION IN EXPLANATION OF THE CHARGES ON THE VOUCHERS, THE RECORD INCLUDES COPY OF A LETTER OF SEPTEMBER 26, 1941, FROM THE DISTRICT ENGINEER TO THE SOIL CONSERVATION SERVICE, IN WHICH THE CHARGES ARE FURTHER EXPLAINED AS FOLLOWS: THIS OFFICE KEPT THE REIMBURSABLE COSTS TO A MINIMUM CONSISTENT WITH SECURING ADEQUATE INFORMATION. THE AMOUNT BILLED YOUR OFFICE WAS NOT THE ACTUAL COST TO THIS DISTRICT BUT THE EXACT AMOUNT THIS OFFICE REIMBURSED THE MISSISSIPPI RIVER COMMISSION FOR WORK PERFORMED FOR YOUR OFFICE, AND DID NOT INCLUDE COSTS IN EXCESS OF $700 INCURRED BY THIS DISTRICT FOR WORK PERFORMED FOR YOUR OFFICE. WHEN CITING DECISIONS OF THE COMPTROLLER GENERAL, THE PARTICULAR CIRCUMSTANCES MUST BE BORNE IN MIND. THE WATERWAYS EXPERIMENT STATION AT VICKSBURG, MISSISSIPPI, UNLIKE MOST OTHER GOVERNMENT AGENCIES OR DISTRICTS, PERFORMS PRACTICALLY ALL OF ITS WORK FOR OTHERS. THE ST. LOUIS, MO., ENGR. DISTRICT, FOR EXAMPLE, IS ENGAGED ON RIVER AND HARBOR, FLOOD CONTROL, AND MILITARY WORK, HENCE SMALL COSTS IN CONNECTION WITH CERTAIN WORK PERFORMED FOR OTHER GOVERNMENT AGENCIES AS A COURTESY, AND IN KEEPING WITH DEPARTMENT POLICIES, CAN BE ABSORBED INTO THE COST OF WORK BEING PERFORMED. THIS WAS DONE WITH THE COST OF WORK PERFORMED FOR YOUR OFFICE. THE WATERWAYS EXPERIMENT STATION ON THE OTHER HAND PERFORMS PRACTICALLY ALL OF ITS WORK FOR OTHERS, WITH THE RESULT THAT IT IS NOT POSSIBLE TO ABSORB THE OVERHEAD COST OF THAT STATION IN OTHER WORK AS IS DONE BY THIS DISTRICT. AS A CONSEQUENCE, THE CHARGE FOR OVERHEAD AND INDIRECT COSTS IS A LEGITIMATE CHARGE IN KEEPING WITH REGULATIONS.

IT WOULD APPEAR FROM THE FOREGOING STATEMENTS THAT THE OVERHEAD CHARGES INCLUDED ON THE VOUCHERS ARE IN LINE WITH THOSE CUSTOMARILY MADE BY THE UNITED STATES WATERWAYS EXPERIMENT STATION AT VICKSBURG, AND THAT SUCH CHARGES HAVE BEEN PAID BY THE UNITED STATES ENGINEER OFFICE AT ST. LOUIS IN CONNECTION WITH THE SERVICE PERFORMED BY THE LATTER OFFICE FOR SOIL CONSERVATION SERVICE. ACCORDINGLY, THE OVERHEAD CHARGES IN THIS INSTANCE WOULD APPEAR TO BE PROPERLY FOR CONSIDERATION IN DETERMINING THE AMOUNT OF THE "PROPER ADJUSTMENTS" TO BE MADE "ON THE BASIS OF THE ACTUAL COST" AS CONTEMPLATED BY THE ABOVE-QUOTED STATUTORY PROVISIONS.

AS INDICATED ABOVE, THE QUESTION AS TO THE "PROPER ADJUSTMENTS" TO BE MADE AS REIMBURSEMENT FOR SERVICES RENDERED UNDER THE TERMS OF THE APPLICABLE STATUTE IS ONE PRIMARILY FOR ADMINISTRATIVE CONSIDERATION, TO BE DETERMINED BY AGREEMENT BETWEEN THE AGENCIES CONCERNED. CONSEQUENTLY, I AM UNABLE TO ADVISE YOU MORE DEFINITELY THAN TO STATE THAT, WHILE THE SOIL CONSERVATION SERVICE IS NOT NOW LEGALLY OBLIGATED TO MAKE PAYMENT OF ANY AMOUNT IN EXCESS OF $3,500, PAYMENTS ON THE VOUCHERS--- INCLUDING THE CHARGES DESIGNATED AS OVERHEAD--- MAY BE MADE IN SUCH FURTHER AMOUNTS AS YOU MAY DEEM NECESSARY TO EFFECT A PROPER ADJUSTMENT.