B-28736, NOVEMBER 14, 1942, 22 COMP. GEN. 464

B-28736: Nov 14, 1942

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THE FURNISHING OF TECHNICAL SUPERVISION OF THE PROJECT ARE IN CONTRAVENTION OF SECTION 2 OF THE ACT OF AUGUST 7. WHERE PAYMENTS ON A COST-PLUS-A-FIXED-FEE BASES ARE MADE TO ARCHITECT- ENGINEERS UNDER A WAR DEPARTMENT CONTRACT PROVIDING NOT ONLY FOR THE PREPARATION OF DESIGNS. IS REQUIRED TO BE FURNISHED THIS OFFICE UPON COMPLETION OF THE PROJECT IN ORDER THAT IT MAY BE ASCERTAINED WHETHER THE AMOUNTS PAID FOR THE FURNISHING OF DESIGNS. IS APPLICABLE TO REIMBURSEMENTS OF EXPENDITURES FOR "SUPERVISION OF CONSTRUCTION" UNDER COST-PLUS-A. EXAMINATION OF THE FIRST OF THESE CONTRACTS REVEALS THAT NO DEFINITE SEGREGATION WAS MADE THEREIN WITH RESPECT TO THE SERVICES TO BE PERFORMED BY THE CONTRACTOR IN CONNECTION WITH THE PREPARATION OF THE DESIGNS.

B-28736, NOVEMBER 14, 1942, 22 COMP. GEN. 464

FEES - ARCHITECT-ENGINEERS - LIMITATIONS IN DETERMINING WHETHER PAYMENTS ON A COST-PLUS-A-FIXED-FEE BASIS TO ARCHITECT-ENGINEERS UNDER A WAR DEPARTMENT CONTRACT COVERING NOT ONLY THE FURNISHING OF DESIGNS, PLANS, ETC., IN CONNECTION WITH A CONSTRUCTION PROJECT BUT, ALSO, THE FURNISHING OF TECHNICAL SUPERVISION OF THE PROJECT ARE IN CONTRAVENTION OF SECTION 2 OF THE ACT OF AUGUST 7, 1939, LIMITING TO 6 PERCENT OF THE ESTIMATED COST OF A PROJECT THE AMOUNT THAT MAY BE PAID ARCHITECT-ENGINEERS FOR FURNISHING DESIGNS, PLANS, ETC., THERE NEED BE CONSIDERED ONLY THE AMOUNTS PAID FOR FURNISHING DESIGNS, PLANS, ETC., EXCLUDING AMOUNTS REPRESENTING PAYMENTS FOR TECHNICAL SUPERVISION OF THE WORK. WHERE PAYMENTS ON A COST-PLUS-A-FIXED-FEE BASES ARE MADE TO ARCHITECT- ENGINEERS UNDER A WAR DEPARTMENT CONTRACT PROVIDING NOT ONLY FOR THE PREPARATION OF DESIGNS, PLANS, ETC., IN CONNECTION WITH A CONSTRUCTION PROJECT BUT, ALSO, FOR THE FURNISHING OF TECHNICAL SUPERVISION OF THE PROJECT, AN ITEMIZED STATEMENT SHOWING THE FEES PAID AND THE NATURE AND AMOUNTS OF EXPENSES REIMBURSED FOR THE FURNISHING OF DESIGNS, PLANS, ETC., TOGETHER WITH A SIMILAR SHOWING AS TO FEES AND EXPENSES PAID FOR TECHNICAL SUPERVISION OF THE WORK, IS REQUIRED TO BE FURNISHED THIS OFFICE UPON COMPLETION OF THE PROJECT IN ORDER THAT IT MAY BE ASCERTAINED WHETHER THE AMOUNTS PAID FOR THE FURNISHING OF DESIGNS, PLANS, ETC., DO NOT EXCEED 6 PERCENT OF THE ESTIMATED COST OF THE PROJECT IN CONTRAVENTION OF SECTION 2 OF THE ACT OF AUGUST 7, 1939.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, NOVEMBER 14, 1942:

THERE HAS BEEN RECEIVED, BY REFERENCE FROM THE CHIEF OF ENGINEERS, A LETTER DATED AUGUST 8, 1942, FROM THE UNITED STATES ENGINEER OFFICE, CAMP SAN LUIS OBISPO ACCOUNTING SECTION, LOS ANGELES, CALIFORNIA, REQUESTING ADVICE AS TO WHETHER, UNDER MY DECISION OF DECEMBER 18, 1941, TO YOU, 21 COMP. GEN. 580, THE STATUTORY PROVISION LIMITING THE AMOUNT TO BE PAID ARCHITECTS AND ENGINEERS FOR THEIR SERVICES TO 6 PERCENT OF THE ESTIMATED COST OF THE PROJECT INVOLVED, IS APPLICABLE TO REIMBURSEMENTS OF EXPENDITURES FOR "SUPERVISION OF CONSTRUCTION" UNDER COST-PLUS-A-- FIXED- FEE CONTRACTS.

THE QUESTION WITH RESPECT TO WHICH THE DISTRICT ENGINEER REQUESTS ADVICE HAS ARISEN IN CONNECTION WITH CONTRACTS NOS. W-6948-QM-1, DATED SEPTEMBER 23, 1940 AND W-6948-QM-12, DATED MAY 21, 1941, WITH ARCHITECT ENGINEERS FOR THE PREPARATION OF NECESSARY DESIGNS, DRAWINGS, AND SPECIFICATIONS AND FOR THE FURNISHING OF TECHNICAL SUPERVISION IN CONNECTION WITH CONSTRUCTION PROJECTS AT CAMP SAN LUIS OBISPO, CALIFORNIA, ON A COST-PLUS- A-FIXED-FEE BASIS. EXAMINATION OF THE FIRST OF THESE CONTRACTS REVEALS THAT NO DEFINITE SEGREGATION WAS MADE THEREIN WITH RESPECT TO THE SERVICES TO BE PERFORMED BY THE CONTRACTOR IN CONNECTION WITH THE PREPARATION OF THE DESIGNS, DRAWINGS, AND SPECIFICATIONS AND THE SERVICES TO BE PERFORMED IN CONNECTION WITH THE TECHNICAL SUPERVISION OF THE WORK. MOREOVER, THE CONTRACT CONTAINED NO STIPULATION RESPECTING THE AMOUNT OF THE FIXED FEE WHICH WAS TO BE PAID FOR THE WORK OF PREPARING THE PLANS AND THE AMOUNT THEREOF WHICH WAS TO BE PAID FOR THE SERVICES OF TECHNICAL SUPERVISION. HOWEVER, THE SECOND CONTRACT SPECIFICALLY SETS FORTH THE CHARACTER AND EXTENT OF THE SERVICES WHICH THE ARCHITECT-ENGINEER WAS TO PERFORM IN PREPARATION OF THE NECESSARY DESIGNS, DRAWINGS, ETC., AND THE EXTENT OF THE SERVICES TO BE PERFORMED IN CONNECTION WITH THE TECHNICAL SUPERVISION OF THE PROJECT. ALSO, SAID CONTRACT STIPULATED THE AMOUNTS WHICH WERE TO BE PAID AS FIXED FEES FOR EACH TYPE OF SERVICE.

THE STATUTORY LIMITATION IN QUESTION IS THAT CONTAINED IN SECTION 2 OF THE ACT OF AUGUST 7, 1939, 53 STAT. 1240, WHICH READS AS FOLLOWS:

WHENEVER DEEMED BY HIM TO BE ADVANTAGEOUS TO THE NATIONAL DEFENSE AND PROVIDING THAT IN THE OPINION OF THE SECRETARY OF WAR THE EXISTING FACILITIES OF THE WAR DEPARTMENT ARE INADEQUATE, THE SECRETARY OF WAR IS HEREBY AUTHORIZED TO EMPLOY, BY CONTRACT OR OTHERWISE, OUTSIDE ARCHITECTURAL OR ENGINEERING CORPORATIONS, FIRMS, OR INDIVIDUALS FOR THE PRODUCTION AND DELIVERY OF THE DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS, REQUIRED FOR THE ACCOMPLISHMENT OF ANY PUBLIC WORKS OR UTILITIES PROJECT OF THE WAR DEPARTMENT WITHOUT REFERENCE TO THE CLASSIFICATION ACT OF 1923 (42 STAT. 1488), AS AMENDED (5 U.S.C., CH. 13), OR TO SECTION 3709 OF THE REVISED STATUTES OF THE UNITED STATES (41 U.S.C. 5). IN NO CASE SHALL THE FEE PAID FOR ANY SERVICE AUTHORIZED BY THIS SECTION EXCEED 6 PERCENTUM OF THE ESTIMATED COST, AS DETERMINED BY THE SECRETARY OF WAR, OF THE PROJECT TO WHICH SUCH FEE IS APPLICABLE. WITH RESPECT TO SAID LIMITATION IT WAS HELD IN THE DECISION OF DECEMBER 18, 1941, REFERRED TO ABOVE, THAT THE SIX PERCENT MAXIMUM FEE PRESCRIBED BY THE QUOTED SECTION, WHEN APPLIED TO THE COST PLUS-A-FIXED-FEE ARCHITECT- ENGINEER CONTRACTS THERE CONSIDERED, IS A LIMITATION NOT MERELY UPON THE FIXED FEE BUT THAT--- SUBJECT TO CERTAIN EXCEPTIONS--- IT IS A LIMITATION UPON THE TOTAL PAYMENTS MADE UNDER SUCH A CONTRACT, INCLUDING BOTH THE FIXED FEE AND REIMBURSEMENT OF EXPENDITURES. THE QUESTION PRESENTED BY THE DISTRICT ENGINEER IN THE LETTER OF AUGUST 8, SUPRA, IS, IN SUBSTANCE WHETHER IN DETERMINING THE AMOUNTS PAID TO THE CONTRACTOR UNDER THE INSTANT AND SIMILAR CONTRACTS, AS REIMBURSEMENT FOR EXPENDITURES AND AS PAYMENTS FOR FIXED FEES, EXCEED THE STATUTORY LIMITATION CONTAINED IN THE ACT OF AUGUST 7, 1939, SUPRA, THERE SHOULD BE INCLUDED AMOUNTS PAID TO THE CONTRACTOR AS REIMBURSEMENT OF EXPENSES AND AS FEES FOR SERVICES RENDERED IN CONNECTION WITH THE TECHNICAL SUPERVISION OF THE CONSTRUCTION OF THE PROJECT.

WITH RESPECT TO ARCHITECT-ENGINEER CONTRACTS SUCH AS THE INSTANT ONE, WHICH COVER NOT ONLY THE PREPARATION OF DESIGNS, PLANS SPECIFICATIONS, ETC., BUT ALSO THE FURNISHING OF TECHNICAL SUPERVISION, IT WAS HELD IN B- 18126 OF MARCH 19, 1942, TO YOU, THAT WHILE THE ACT OF JULY 2, 1940, 54 STAT. 712, MAY BE REGARDED AS AUTHORITY FOR THE MAKING OF CONTRACTS WITH ARCHITECTS AND ENGINEERS FOR SUPERVISORY SERVICES, IT CANNOT BE REGARDED AS HAVING THE EFFECT OF WAIVING THE LIMITATION IMPOSED BY SECTION 2 OF THE ACT OF AUGUST 7, 1939,"UPON THE AMOUNTS TO BE PAID TO ARCHITECTS AND ENGINEERS FOR ANY SERVICE PERFORMED UNDER CONTRACTS FOR THE PRODUCTION AND DELIVERY OF DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS.' IN OTHER WORDS, WHERE CONTRACTS COVER BOTH THE PREPARATION AND DELIVERY OF DESIGNS, PLANS, ETC., AND THE FURNISHING OF SUPERVISORY SERVICES, THE PROVISION IN THE ACT OF AUGUST 7, 1939, LIMITING FEES OF ARCHITECT-ENGINEERS TO 6 PERCENT OF THE ESTIMATED COST OF THE PROJECT INVOLVED, APPLIES TO THAT PART OF SAID CONTRACTS WHICH COVERS THE ,PRODUCTION AND DELIVERY OF THE DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS.' ACCORDINGLY, IN DETERMINING WHETHER THE STATUTORY LIMITATION HAS BEEN EXCEEDED THERE NEED BE CONSIDERED ONLY THE QUESTION AS TO WHETHER THE TOTAL OF THE AMOUNTS PAID TO THE CONTRACTORS AS REIMBURSEMENT OF EXPENSES AND AS FEES FOR THE PREPARATION AND DELIVERY OF DESIGNS, ETC., EXCEEDS 6 PERCENT OF THE ESTIMATED COST OF THE PROJECT; AND THERE NEED NOT BE INCLUDED IN THE COMPUTATION ANY AMOUNTS PAID TO THE CONTRACTOR AS REIMBURSEMENT OF EXPENSES OR AS COMPENSATION FOR TECHNICAL SUPERVISION OF THE WORK.

HOWEVER, IN ORDER THAT THIS OFFICE, IN THE AUDIT OF VOUCHERS UNDER THE FOREGOING AND SIMILAR CONTRACTS, MAY ASCERTAIN WHETHER THE AMOUNTS PAID TO THE CONTRACTOR AS REIMBURSEMENT OF EXPENSES AND AS FEES FOR THE PREPARATION AND DELIVERY OF DESIGNS, PLANS, DRAWINGS, AND SPECIFICATIONS, DO NOT EXCEED 6 PERCENT OF THE ESTIMATED COST OF THE PROJECT INVOLVED, THERE SHOULD BE FORWARDED HERE, FOR ATTACHING TO THE CONTRACT, UPON THE COMPLETION OF EACH PROJECT, AN ITEMIZED STATEMENT CONTAINING A DETAILED BREAKDOWN OF THE TOTAL AMOUNTS PAID UNDER THE ARCHITECT-ENGINEER CONTRACT SHOWING THE NATURE AND AMOUNTS OF THE EXPENSES AND FEES PAID TO THE CONTRACTOR FOR THE WORK OF PREPARATION AND DELIVERY OF DESIGNS, PLANS, DRAWINGS AND SPECIFICATIONS, AND SHOWING, ALSO, THE NATURE AND AMOUNTS OF EXPENSES AND FEES PAID TO THE CONTRACTOR FOR THE SERVICES OF TECHNICAL SUPERVISION. OTHERWISE, THIS OFFICE WILL BE REQUIRED TO WITHHOLD CREDIT ON VOUCHERS COVERING PAYMENTS UNDER SAID CONTRACTS.