B-27147, AUG 7, 1942

B-27147, AUG 7, 1942

PRECIS-UNAVAILABLE

MAJOR L. B. GRAHAM, F.D., U.S. ARMY:

C/O HEADQUARTERS, SERVICES OF SUPPLY, FISCAL DIVISION,

WAR DEPARTMENT

I HAVE, BY REFERENCE FROM HEADQUARTERS, SERVICES OF SUPPLY, FISCAL DIVISION, YOUR LETTER OF MARCH 13, 1942, AS FOLLOWS:

"1. UNDER THE PROVISIONS OF PARAGRAPHS 1 B AND 3 B, AR 35-730, DATED JUNE 1, 1939, AND PURSUANT TO AUTHORITY CONTAINED IN SECTION 8 OF THE ACT OF JULY 31, 1894, (28 STAT. 208), APPLICATION IS HEREBY SUBMITTED FOR AN ADVANCE DECISION CONCERNING PAYMENT OF VOUCHER (STANDARD FORM 1034) TO HERCULES POWDER COMPANY UNDER COST-PLUS-FIXED FEE CONTRACT W-ORD-492, DATED DECEMBER 17, 1940.

"2. AS SUBMITTED THE ENCLOSED VOUCHER COVERS REIMBURSEMENT TO THE HERCULES POWDER COMPANY OF AMOUNTS SHOWN TO HAVE BEEN EXPENDED UNDER CONTRACT NO. W-ORD-492 FOR THE PURCHASE OF CIGARS, CIGARETTES, CANDY, ETC., WHICH ARTICLES WERE FURNISHED TO THE EMPLOYEES AS CHRISTMAS GIFTS. IT IS STATED IN THE SUPPORTING PAPERS THAT THIS WAS A CONTINUATION OF AN ESTABLISHED POLICY OF THE HERCULES POWDER COMPANY TO DONATE GIFTS TO THEIR EMPLOYEES AT CHRISTMAS TIME, AND SETTLEMENT OF THE VOUCHER HAS BEEN APPROVED AND RECOMMENDED FOR PAYMENT BY THE CHIEF OF ORDNANCE AND THE CONTRACTING OFFICER. DOUBT IS EXPRESSED AS TO THE AUTHORITY TO MAKE REIMBURSEMENT OF SUCH ITEMS.

"3. I AM A DISBURSING OFFICER, U.S. ARMY, AND THE ENCLOSED VOUCHER HAS BEEN SUBMITTED TO ME FOR PAYMENT."

THE VOUCHER REFERRED TO IN YOUR LETTER COVERS REIMBURSEMENT TO THE HERCULES POWDER COMPANY, PRIME CONTRACTOR UNDER CONTRACT NO. W-ORD-492, DATED DECEMBER 20, 1940, FOR THE CONSTRUCTION OF THE NEW RIVER AMMUNITION LOADING DEPOT AT PULASKI, VIRGINIA, ON ACCOUNT OF EXPENDITURES FOR CIGARS, CIGARETTES, CANDY, ETC., DISTRIBUTED AS CHRISTMAS GIFTS TO THE DIRECT EMPLOYEES OF THE CONTRACTOR AT SAID PLANT. WITH RESPECT TO PAYMENTS OF THIS NATURE-- THAT IS, REIMBURSEMENT FOR CHARGES INCURRED UNDER PLANS FOR THE BENEFIT OF EMPLOYEES-- TITLE IV, ARTICLE IV-A OF THE CONTRACT PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"1. THE CONTRACTOR SHALL BE REIMBURSED IN THE MANNER HEREINAFTER DESCRIBED FOR ITS ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK UNDER THIS CONTRACT AS MAY BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER AND WHICH COST AND EXPENSES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE FOLLOWING ITEMS:"

"Q. EXTRA COMPENSATION TO EMPLOYEES, ANY DISCONTINUANCE WAGES, CHARGES UNDER AND A PROPORTIONATE SHARE OF THE COST OF ALL WELFARE AND OTHER EMPLOYEE RELATIONS PLANS MAINTAINED BY THE CONTRACTOR. IN THE PAYMENT OF EXTRA COMPENSATION AND IN THE MAKING OF EXPENDITURES PURSUANT TO OR IN THE MAINTENANCE OF WELFARE OR OTHER PLANS FOR THE BENEFIT OF EMPLOYEES, THE GOVERNMENT SHALL BE CHARGEABLE THEREFOR INSOFAR AS THE SAME ARE CONSISTENT WITH THE CONTRACTOR'S GENERAL EMPLOYEE RELATIONS POLICIES THROUGHOUT ITS ORGANIZATION, ARE INCURRED PURSUANT TO AGREEMENT MADE AS A RESULT OF COLLECTIVE BARGAINING WITH REPRESENTATIVES OF EMPLOYEES, OR ARE EXPRESSLY AUTHORIZED IN WRITING BY THE REPRESENTATIVE OF THE CONTRACTING OFFICER; IT BEING INTENDED THAT THE EMPLOYEES OF SAID PLANT SHALL BE TREATED NO LESS FAVORABLY THAN EMPLOYEES OF OTHER PLANTS OF THE CONTRACTOR. IT IS RECOGNIZED THAT UNDER THE CONTRACTOR'S GENERAL WELFARE PLANS FOR ITS EMPLOYEES AND UNDER ITS PRACTICE AT OTHER PLANTS OF ACTING AS A SELF- INSURER UNDER WORKMEN'S COMPENSATION LAWS, THE CONTRACTOR CUSTOMARILY PAYS BENEFITS AND RENDERS SERVICES BEYOND THOSE TO WHICH THE EMPLOYEE IS ENTITLED AS A MATTER OF LAW OR UNDER THE TERMS OF EMPLOYER'S LIABILITY INSURANCE POLICIES. IN ORDER THAT THE EMPLOYEES AT THE PLANT TO BE CONSTRUCTED, EQUIPPED AND OPERATED HEREUNDER SHALL RECEIVE TREATMENT AS FAVORABLE AS THAT ACCORDED TO EMPLOYEES OF THE CONTRACTOR AT OTHER PLANTS, IT IS RECOGNIZED THAT THE COST OF PROVIDING FOR SUCH BENEFITS AND SERVICES RENDERED TO EMPLOYEES AT THIS PLANT SHALL BE TREATED AS PART OF THE COST OF WORK DONE HEREUNDER.

"THE PROVISIONS OF THIS SUBPARAGRAPH Q SHALL APPLY ONLY TO THE DIRECT EMPLOYEES OF HERCULES POWDER COMPANY."

SECTION VI, PARAGRAPH I OF THE ORDNANCE MANUAL OF INSTRUCTIONS FOR THE ADMINISTRATION OF CONTRACTS, UNDER THE CAPTION "DATA NECESSARY TO SUPPORT REIMBURSEMENT UNDER EMPLOYEE RELATIONS PLANS," PROVIDES AS FOLLOWS:

"1. WHERE THE CONTRACT PROVIDES FOR REIMBURSEMENT FOR EXPENDITURES MADE UNDER EMPLOYEE RELATIONS PLANS, THE CONTRACTOR'S PLAN SHOULD BE REDUCED TO WRITING AND SUBMITTED FOR THE APPROVAL BY THE CONTRACTING OFFICER'S REPRESENTATIVE. A COPY OF THE PLAN BEARING REFERENCE TO THE PRIME CONTRACT BY NUMBER TOGETHER WITH EVIDENCE OF THE CONTRACTING OFFICER'S REPRESENTATIVE'S APPROVAL SHOULD BE FORWARDED DIRECT TO THE GENERAL ACCOUNTING OFFICE, CONTRACT EXAMINING SECTION, WASHINGTON, D.C., AND TO THE DISBURSING OFFICER NAMED IN THE CONTRACT.

"2. SUBSEQUENT VOUCHERS CLAIMING REIMBURSEMENT FOR AMOUNTS EXPENDED UNDER SUCH APPROVED EMPLOYEE RELATIONS PLANS SHOULD REFER TO THE DOCUMENTS PREVIOUSLY FORWARDED. SUCH EXPENDITURES SHOULD BE APPROVED AND BE SUPPORTED BY RECEIPTS."

THE VOUCHER IS SUPPORTED BY PURCHASE ORDERS, INVOICES, AND VENDORS' RECEIPTS FOR THE ARTICLES FURNISHED, AND BY A PHOTOSTATIC COPY OF A LETTER DATED NOVEMBER 28, 1941, BY WHICH THE CONTRACTOR AUTHORIZED THE NEW RIVER PLANT MANAGER TO DISTRIBUTE CHRISTMAS GIFTS TO ITS DIRECT EMPLOYEES AT SAID PLANT IN ACCORDANCE WITH THE GENERAL POLICY THROUGHOUT ITS ORGANIZATION. ALSO ATTACHED THERETO ARE PHOTOSTATIC COPIES OF CORRESPONDENCE INDICATING THAT THE CONTRACTOR'S EMPLOYEE RELATIONS PLAN WAS SUBMITTED TO AND APPROVED BY THE CONTRACTING OFFICER, IN ACCORDANCE WITH THE ABOVE-QUOTED MANUAL OF INSTRUCTIONS, BUT THAT PROVISION FOR THE DISTRIBUTION OF CHRISTMAS GIFTS TO ITS EMPLOYEES WAS INADVERTENTLY OMITTED THEREFROM. FURTHERMORE, IT APPEARS THAT THE OMISSION WAS CORRECTED BY A SUPPLEMENTAL STATEMENT FROM THE CONTRACTOR DATED JANUARY 16, 1942, CERTIFYING THAT THE DISTRIBUTION OF CHRISTMAS GIFTS IN FACT WAS A PART OF ITS CUSTOMARY EMPLOYEE RELATIONS POLICY. BOTH THE VOUCHER AND THE PHOTOSTATIC COPY OF THE CONTRACTOR'S LETTER OF NOVEMBER 28, 1941, SUPRA, BEAR THE APPROVAL OF THE CONTRACTING OFFICER'S REPRESENTATIVE.

IT APPEARS TO BE THE INTENTION OF THE CONTRACT THAT EMPLOYEE RELATIONS BE LEFT TO THE CONTRACTOR'S DISCRETION, SUBJECT, OF COURSE, TO REASONABLE CONTROL BY THE GOVERNMENT OF EXPENDITURES IN CONNECTION THEREWITH. THE CONTRACTOR AUTHORIZED THE DISTRIBUTION OF CHRISTMAS GIFTS TO ITS EMPLOYEES ENGAGED IN THE OPERATION OF THE NEW RIVER ORDNANCE DEPOT UNDER CONTRACT NO. W-ORD-492, SUPRA, STATING THAT THE ACTION IS IN ACCORDANCE WITH ITS CUSTOMARY EMPLOYEE RELATIONS POLICY, AND THE CONTRACTING OFFICER'S REPRESENTATIVE CONCURS.

UNDER THE EXPRESS TERMS OF THE CONTRACT, THE GOVERNMENT IS CHARGEABLE WITH EXPENSES INCURRED BY THE CONTRACTOR PURSUANT TO ITS WELFARE OR OTHER PLANS FOR THE BENEFIT OF EMPLOYEES, SO FAR AS CONSISTENT WITH THE CONTRACTOR'S GENERAL EMPLOYEE RELATIONS POLICY, PROVIDED THE EXPENDITURES ARE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER. THE VOUCHER SUBMITTED COVERS REIMBURSEMENT OF EXPENDITURES MADE BY THE CONTRACTOR UNDER A WELFARE PLAN WHICH IS SHOWN TO BE CONSISTENT WITH THE CONTRACTOR'S GENERAL EMPLOYEE RELATIONS POLICY, AND THE EXPENDITURES BEAR THE APPROVAL OF THE CONTRACTING OFFICER'S REPRESENTATIVE. ACCORDINGLY, PAYMENT ON THE VOUCHER IS AUTHORIZED, IF OTHERWISE CORRECT.

THE VOUCHER AND SUPPORTING PAPERS ARE RETURNED HEREWITH.