B-29719, NOV 3, 1942

B-29719: Nov 3, 1942

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THE SECRETARY OF WAR: I HAVE YOUR LETTER OF OCTOBER 20. YOUR OFFICE STATED: "'GENERALLY RECEIPTS ARE REQUIRED BY THIS OFFICE IN ALL CASES WHERE NECESSARY TO ESTABLISH THE ACTUALITY AND CORRECTNESS OF ANY EXPENDITURES FOR WHICH REIMBURSEMENT IS CLAIMED. OF THE CERTIFICATION BY THE CONSTRUCTION ENGINEER THAT "THE SERVICES WERE PERFORMED AS STATED". THE EVIDENCE AFFORDED MAY BE ACCEPTED AS SUFFICIENT TO ESTABLISH THAT SUCH TRAVEL WAS PERFORMED IN THE MANNER ALLEGED.'. IN VIEW OF THE FACT THAT IT WILL BE IMPOSSIBLE AT THIS DATE TO OBTAIN THE RECEIPTS REQUIRED IN YOUR DECISION B-25466 (B-25446) DATED JULY 25. THAT IS. MAY THE CONTRACTORS BE DIRECTED TO SUBMIT VOUCHERS CLAIMING REIMBURSEMENT FOR TRAVEL PERFORMED PRIOR TO THE TIME WHEN THEY WERE NOTIFIED OF YOUR DECISION.

B-29719, NOV 3, 1942

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF WAR:

I HAVE YOUR LETTER OF OCTOBER 20, 1942, AS FOLLOWS:

"THERE HAS BEEN REFERRED TO THE OFFICE OF THE CHIEF OF THE ORDNANCE A LETTER FROM THE REMINGTON ARMS COMPANY, INC., DATED SEPTEMBER 18, 1942, COPY HEREWITH, WHEREIN THAT COMPANY, REPRESENTATIVE OF OTHERS IN THE SAME SITUATION, SEEKS RELIEF FROM THE RETROSPECTIVE APPLICATION BY THE VARIOUS FINANCE OFFICERS AND YOUR OFFICE, OF DECISION B-25466 (B 26446) DATED JULY 25, 1942.

"THE ORDNANCE DEPARTMENT IN ITS REVIEW OF YOUR DECISION ON THIS MATTER FINDS THAT IN B-20066 DATED SEPTEMBER 13, 1941, YOUR OFFICE STATED:

"'GENERALLY RECEIPTS ARE REQUIRED BY THIS OFFICE IN ALL CASES WHERE NECESSARY TO ESTABLISH THE ACTUALITY AND CORRECTNESS OF ANY EXPENDITURES FOR WHICH REIMBURSEMENT IS CLAIMED. IN THIS INSTANCE, HOWEVER, IN VIEW OF THE SUGGESTED POSSIBILITY THAT THE GOVERNMENT REPRESENTATIVES IN CHARGE OF THE WORK FAILED TO INSTRUCT THE CONTRACTOR IN THE MATTER OF RENDERING ACCOUNTS, AND OF THE CERTIFICATION BY THE CONSTRUCTION ENGINEER THAT "THE SERVICES WERE PERFORMED AS STATED", THE EVIDENCE AFFORDED MAY BE ACCEPTED AS SUFFICIENT TO ESTABLISH THAT SUCH TRAVEL WAS PERFORMED IN THE MANNER ALLEGED.'

"IN LIGHT OF THE CONTRACTOR'S EXPLANATION AS CONTAINED IN ITS LETTER, CITED SUPRA, AND IN VIEW OF THE FACT THAT IT WILL BE IMPOSSIBLE AT THIS DATE TO OBTAIN THE RECEIPTS REQUIRED IN YOUR DECISION B-25466 (B-25446) DATED JULY 25, 1942, THE ORDNANCE DEPARTMENT WOULD LIKE ADVICE AS TO WHETHER IT MAY DIRECT REMINGTON AND OTHER CONTRACTORS SIMILARLY SITUATED IN ACCORDANCE WITH THAT PORTION OF B-20066 ABOVE QUOTED. THAT IS, MAY THE CONTRACTORS BE DIRECTED TO SUBMIT VOUCHERS CLAIMING REIMBURSEMENT FOR TRAVEL PERFORMED PRIOR TO THE TIME WHEN THEY WERE NOTIFIED OF YOUR DECISION, IN THE CASE OF REMINGTON, SEPTEMBER 7, 1942, SUPPORTED BY THOSE RECEIPTS WHICH IT WAS POSSIBLE TO OBTAIN SUBSEQUENTLY, ALONG WITH AN EXPLANATION OF THEIR INABILITY TO OBTAIN THE OTHER RECEIPTS, AND A CERTIFICATE BY THE TRAVELER TO THE EFFECT THAT THE AMOUNT CLAIMED WAS BY HIM EXPENDED, AND REIMBURSED TO HIM BY REMINGTON EVIDENCED BY HIS RECEIPT FOR SUCH AMOUNT?

"IN THE EVENT SUCH A PROCEDURE IS NOT SATISFACTORY TO YOUR OFFICE, IT WOULD BE APPRECIATED IF YOU WOULD ADVISE AS TO A SATISFACTORY METHOD WHEREBY CASES LIKE THE INSTANT ONE CAN BE HANDLED."

THE COPY OF THE LETTER OF SEPTEMBER 18, 1942, FROM REMINGTON ARMS COMPANY, INC., TO THE CHIEF OF ORDNANCE, IS AS FOLLOWS:

"THE FIELD AUDITOR OF THE DENVER ORDNANCE PLANT HAS REQUESTED REMINGTON ARMS COMPANY, INC., TO REPLY TO CERTAIN EXCEPTIONS RAISED BY THE GENERAL ACCOUNTING OFFICE TO CLAIMED REIMBURSEMENTS UNDER CONTRACT W-ORD-495. SPECIFICALLY, THE GENERAL ACCOUNTING OFFICE HAS REQUIRED THAT 'RECEIPTS IN CONFIRMATION OF EXPENDITURES EVIDENCED BY THE EXPENSE STATEMENTS OF THE CONTRACTOR'S EMPLOYEES' BE FURNISHED. FURTHER, THERE HAS BEEN DIRECTED TO OUR ATTENTION RECENTLY A FORMAL RULING OF THE COMPTROLLER GENERAL OF THE UNITED STATES, TO THE EFFECT THAT RECEIPTS WHICH ARE READILY AVAILABLE TO A TRAVELER ARE REQUIRED TO SUBSTANTIATE REIMBURSEMENT TO A COST-PLUS-A- FIXED-FEE CONTRACTOR FOR EXPENSES INCURRED BY EMPLOYEES IN TRAVEL STATUS. AS YOU KNOW, THIS COMPANY IS ENGAGED IN THE PERFORMANCE OF A NUMBER OF ORDNANCE DEPARTMENT CONTRACTS OF THE COST-PLUS-A-FIXED-FEE TYPE FOR THE PRODUCTION OF RIFLES AND SMALL ARMS AMMUNITION, AND, NECESSARILY, TRAVELING EXPENSES HAVE BEEN INCURRED UNDER EACH OF THE CONTRACTS, INVOLVING THE MOVEMENTS OF SEVERAL THOUSANDS OF EMPLOYEES.

"IT IS A GENERAL CONTRACT REQUIREMENT THAT STATEMENT OF PROCEDURE COVERING VARIOUS ESSENTIAL ACTIVITIES INTENDED TO BE FOLLOWED BY THE CONTRACTOR IN THE PERFORMANCE OF THE WORK BE SUBMITTED TO THE CONTRACTING OFFICER, AND THE EARLIEST FORMAL PRESENTATION IN THIS REGARD BY REMINGTON ARMS COMPANY, INC., WAS THE MANUAL, 'POLICIES AND PROCEDURES RELATIVE TO OPERATION OF ORDNANCE PLANTS IN THE MANUFACTURE OF SMALL ARMS AMMUNITION BY REMINGTON ARMS COMPANY, INC.', WHICH MANUAL WAS FORWARDED TO THE COMMANDING OFFICER OF THE LAKE CITY ORDNANCE PLANT WITH A LETTER DATED AUGUST 1, 1941, OVER THE SIGNATURE OF C. K. DAVIS, PRESIDENT AND GENERAL MANAGER. ADDITIONAL MANUALS WERE FORWARDED TO THE COMMANDING OFFICER AND THE OFFICE OF THE CHIEF OF ORDNANCE IN COPIES SUFFICIENT TO INSURE DISTRIBUTION TO THE FINANCE OFFICER AND THE GENERAL ACCOUNTING OFFICE. THIS SAME MANUAL HAS BEEN SUBMITTED PURSUANT TO THE REQUIREMENTS OF CONTRACTS LATER EXECUTED, AND THE CONTENTS THEREOF HAVE BEEN APPLIED UNIFORMLY IN THE ADMINISTRATION OF OUR COST-PLUS-A-FIXED-FEE CONTRACTS.

"SECTION 'B' OF THE CITED MANUAL SETS FORTH IN DETAILED MANNER REMINGTON'S 'POLICY GOVERNING EXPENSE OF EMPLOYEES TRAVELING ON COMPANY BUSINESS', AND THE FOLLOWING STATEMENT THEREIN APPEARS:

"'RECEIPTS FOR EXPENDITURES ARE NOT REQUIRED.'

"THE RULE IN THIS REGARD WAS NOT ESTABLISHED IN CONTEMPLATION OF WORK UNDER REIMBURSABLE GOVERNMENT CONTRACTS, BUT RATHER EXISTS AS THE STANDARD PRACTICE OF THIS COMPANY OVER A PERIOD OF YEARS, IT BEING CONSIDERED THAT THE ITEMIZATION OF EXPENSE OVER THE SIGNATURE OF THE EMPLOYEE TOGETHER WITH THE APPROVAL OF AN APPROPRIATE SUPERVISOR, CONSTITUTE SUFFICIENT SUBSTANTIATION OF THE EXPENSE INVOLVED. THIS SAME PRINCIPLE OF FOLLOWING ESTABLISHED REMINGTON POLICIES AND PRACTICES WAS CARRIED OUT IN OTHER STATEMENTS OF PROCEDURE, IN CONFORMANCE WITH THE GENERAL CONTRACT INTENT, LIMITED TO BE SURE, BY SPECIFIC CONTRACT PROVISIONS AFFECTING CERTAIN PHASES OF THE WORK, AND, AS WELL, GOVERNED BY SUCH EVIDENTIARY REQUIREMENTS IN SUPPORT OF REIMBURSEMENTS AS MIGHT BE AUTHORITATIVELY IMPOSED.

"THE DEGREE OF DISCRETION NECESSARILY LODGED IN THE COMMANDING OFFICERS OF ORDNANCE PLANTS AND THE FINANCE OFFICERS OF THE UNITED STATES ARMY IS SUCH THAT IT BECAME APPARENT, QUITE EARLY IN OUR EXPERIENCE UNDER THE COST -PLUS-A-FIXED-FEE CONTRACTS, THAT MINOR POINTS OF DIFFERENCE IN THEIR RESPECTIVE REQUIREMENTS COULD BE EXPECTED, BUT THAT INSOFAR AS BASIC LAWS WERE TO BE APPLIED OR FUNDAMENTAL EVIDENTIARY REQUIREMENTS WERE TO BE MET, THEIR CONCLUSIONS WOULD BE UNIFORM. IN GENERAL, THIS HAS BEEN THE CASE AND, ACCORDINGLY, THE INFORMAL ADVICE RECEIVED BY THIS COMPANY FROM FIELD AUDITOR IN JANUARY OF THIS YEAR TO THE EFFECT THAT CERTAIN REIMBURSEMENT CLAIMS COVERING TRAVELING EXPENSES INCURRED IN THE TRANSFER OF EMPLOYEES AND THEIR FAMILIES TO THE DENVER ORDNANCE PLANT HAD BEEN FORWARDED BY THE FINANCE OFFICER TO THE GENERAL ACCOUNTING OFFICE FOR AN ADVANCE AUDIT AS TO THE PROPRIETY OF REIMBURSING REMINGTON IN THE ABSENCE OF RECEIPTS, CAME AS A DISTINCT SURPRISE, INASMUCH AS THERE HAD BEEN NO DEMAND FOR RECEIPTS PRIOR TO THAT TIME FROM EITHER THE FIELD AUDITORS OR THE FINANCE OFFICERS CONCERNED WITH THE SEVERAL PLANTS THEN UNDER REMINGTON DIRECTION. ON THE CONTRARY, REIMBURSEMENT HAD BEEN RECEIVED WITHOUT EXCEPTION AT SEVERAL POINTS, AND, IN FACT, NO REQUEST WAS MADE FOR RECEIPTS AT THOSE POINTS UNTIL SOME TIME AFTER THE RELEASE OF DECISION B-25446, THE FORMAL RULING REFERRED TO IN THE FIRST PARAGRAPH OF THIS LETTER. RELYING UPON THE FACT OF ACTUAL REIMBURSEMENT, AND THE PRESENCE OF OUR STATED POLICY IN THE HANDS OF ALL INTERESTED GOVERNMENTAL AGENCIES, INCLUDING THE GENERAL ACCOUNTING OFFICE, REMINGTON DID NOT DEEM IT NECESSARY IN ANY WAY TO ALTER ITS ESTABLISHED PROCEDURE.

"THE NOTICES OF EXCEPTION RECEIVED AT THE DENVER ORDNANCE PLANT WERE CONSIDERED TO BE BASED UPON A LACK OF PROPER INFORMATION IN THE HANDS OF THE GENERAL ACCOUNTING OFFICE, INASMUCH AS OUR PRACTICE HAD BEEN UNIFORM, IN ACCORDANCE WITH EXPRESSED POLICY, AND DID NOT APPEAR TO VIOLATE EITHER THE CONTRACT REQUIREMENTS OR THE PRINCIPLES OF THE SEVERAL DECISIONS OF THE COMPTROLLER GENERAL WHICH HAD BEEN BROUGHT TO OUR ATTENTION FROM TIME TO TIME. THE CONTENTS OF DECISION B-25446 WERE DIRECTED TO OUR ATTENTION SOME TIME AFTER ITS ISSUANCE, AND THE REASONS EXPRESSED THEREIN FOR THE IMPOSITION OF THE RECEIPT REQUIREMENT WERE SUCH AS TO OBVIATE ANY CONCERN ON OUR PART AS TO WHETHER THE GENERAL ACCOUNTING OFFICE WAS IN POSSESSION OF ALL THE FACTS IN OUR PARTICULAR CASE.

"A COMPLETE REVIEW OF THE FILES AT ALL POINTS CONFIRMED THE UNIFORMITY WITH WHICH THE RECEIPT POLICY HAS BEEN FOLLOWED, IN THAT RECEIPTS ARE NOT AVAILABLE, EXCEPT IN SEVERAL SCATTERED INSTANCES WHERE EMPLOYEES CHOSE TO PRESENT RECEIPTS. AS A TEST, AN EFFORT WAS MADE TO ASCERTAIN WHETHER EMPLOYEES COULD FURNISH RECEIPTS AT THE PRESENT TIME IN SUPPORT OF EXPENDITURES, AND THE RESULTS WERE SUCH THAT IT BECAME READILY APPARENT THAT TO SECURE RECEIPTS FROM THE THOUSANDS OF INDIVIDUALS INVOLVED IS AN IMPOSSIBILITY.

"INSTRUCTIONS APPLICABLE TO TRAVEL PERFORMED ON AND AFTER SEPTEMBER 7, 1942, HAVE BEEN ISSUED TO EMPLOYEES TRAVELING ON A REIMBURSABLE BASIS REQUIRING EXPENSE STATEMENTS TO BE SUPPORTED BY RECEIPTS AS DIRECTED BY THE COMPTROLLER GENERAL IN HIS DISCRETION, AND REIMBURSEMENT CLAIMED THEREFOR WILL BE ACCOMPANIED BY SAID RECEIPTS. AS STATED, IT IS IMPOSSIBLE FOR THE COMPANY TO FURNISH RECEIPTS OF THE NATURE INDICATED TO SUPPORT TRAVEL PRIOR TO SEPTEMBER 7, AND ON THE PRESENT RECORD, REIMBURSEMENT MAY NOT BE SECURED FOR THE LARGE SUMS INVOLVED IN THIS ACCOUNT.

"IT WOULD BE GREATLY APPRECIATED IF YOU WOULD TAKE WHATEVER STEPS YOU MAY DEEM NECESSARY TO SECURE FOR THIS COMPANY, ON THE GROUNDS SET FORTH IN THIS LETTER, RELIEF FROM THE RULE IMPOSED BY THE DECISION OF JULY 25, 1942. THE SCOPE OF THE REIMBURSABLE PROGRAM WITH WHICH WE ARE CONCERNED IN SUCH THAT, ON OCCASION, THERE IS BUT A NATURAL RELUCTANCE TO ABANDON ESTABLISHED POLICIES IN THE ABSENCE OF AUTHORITATIVE RULING, AND YOU CAN BE ASSURED THAT HAD THE REQUIREMENT BEEN MADE KNOWN AT THE START OF OUR COST-PLUS-A-FIXED-FEE ACTIVITY, PROVISION WOULD HAVE BEEN MADE TO INSURE THAT REMINGTON COMPLIED WITH THAT REQUIREMENT.

"IT WILL BE NOTED THAT THE MATTER AT ISSUE IS ONE WHICH, IN ITS DEVELOPMENT, RELATES NOT TO ONE PLANT OR ONE CONTRACT, BUT TO ALL THOSE WITH WHICH REMINGTON IS ASSOCIATED AS OPERATOR UNDER ORDNANCE DEPARTMENT COST-PLUS-A-FIXED-FEE CONTRACTS, AND ACCORDINGLY, OUR REQUEST FOR RELIEF IS ADDRESSED TO YOUR ATTENTION RATHER THAN TO A PARTICULAR COMMANDING OFFICER.

"IF THERE IS SOME FURTHER ACTION THAT CAN BE TAKEN OR ADDITIONAL INFORMATION THAT CAN BE FURNISHED, TO INSURE A PROMPT CONSIDERATION OF THIS QUESTION, WE SHALL APPRECIATE BEING ADVISED ACCORDINGLY."

THE DECISION OF SEPTEMBER 13, 1941, B-20066, DID NOT HOLD, AS YOU SEEM TO INFER, THAT RECEIPTS MIGHT BE DISPENSED WITH GENERALLY IN THAT CASE, BUT HELD THAT IN VIEW OF THE SHOWING MADE IN THAT CASE THE EVIDENCE OF RECORD MIGHT BE ACCEPTED AS SUFFICIENT TO ESTABLISH THAT TRAVEL WAS PERFORMED IN THE MANNER ALLEGED AND THAT AS TO THE TRAVELING EXPENSE ITEMS WHICH MIGHT BE VERIFIED INDEPENDENTLY ON THE BASIS OF RECORDS ON FILE IN THIS OFFICE, RECEIPTS WOULD NOT BE REQUIRED IN SUPPORT OF VOUCHERS COVERING REIMBURSEMENT OF SUCH EXPENDITURES. IT MAY BE STATED AS A GENERAL RULE THAT CLAIMS BY COST-PLUS-A-FIXED-FEE CONTRACTORS FOR REIMBURSEMENT OF TRAVELING EXPENSES UNDER THE CONTRACT HERE INVOLVED AND OTHER SIMILAR CONTRACTS MUST BE SUPPORTED BY SUCH EVIDENCE AS REASONABLY WILL ESTABLISH NOT ONLY THAT THE EXPENDITURES FOR WHICH REIMBURSEMENT IS CLAIMED ACTUALLY WAS EXPENDED AS ALLEGED. AND THIS RULE IS FOR APPLICATION REGARDLESS OF ANY PRIVATE POLICY WHICH MAY HAVE BEEN ESTABLISHED BY THE CONTRACTOR TO THE CONTRARY. SEE, GENERALLY, B-20066, OF SEPTEMBER 13, 1941, AND B-25446 OF JULY 25, 1942, TO WHICH REFERENCE IS MADE IN YOUR ABOVE-QUOTED LETTER.

IT WILL BE NOTED FROM B-25446 OF JULY 25, 1942, THAT THE FOREGOING PRINCIPLES WERE HELD TO BE APPLICABLE TO TRAVELING EXPENSE ITEMS FOR WHICH RECEIPTS ARE GENERALLY OBTAINED OR REQUIRED, OR WHICH MAY NOT BE VERIFIED INDEPENDENTLY ON THE BASIS OF RECORDS ON FILE IN THIS OFFICE, IT BEING STATED IN THAT DECISION, WITH RESPECT TO INCIDENTAL EXPENSES NOT COMING WITHIN THE FOREGOING CLASSIFICATIONS, THAT "SO FAR AS CONCERNS THE INCIDENTAL EXPENSES SPECIFICALLY REFERRED TO BY YOU, SUCH AS CAB FARE, TIPS, ETC., IT IS RECOGNIZED THAT RECEIPTS IN SUPPORT THEREOF ARE NOT USUALLY OBTAINED; ARE, AS A GENERAL RULE IMPRACTICABLE, IF NOT IMPOSSIBLE, TO PROCURE; AND, ACCORDINGLY, ARE NOT REQUIRED." THEREFORE, IT IS ASSUMED THAT YOUR SUBMISSION HAS REFERENCE ONLY TO THOSE TRAVELING EXPENSE ITEMS FOR WHICH RECEIPTS ARE GENERALLY OBTAINED OR MAY NOT BE VERIFIED INDEPENDENTLY ON THE BASIS OF RECORDS ON FILE IN THIS OFFICE.

IN VIEW OF THE REPRESENTATIONS MADE BY THE REMINGTON ARMS COMPANY, INC., AND OF THE STATEMENT MADE BY YOU THAT IT WILL NOW BE IMPOSSIBLE TO OBTAIN THE RECEIPTS REQUIRED BY THE DECISION OF JULY 25, 1942, SUPRA, FOR TRAVEL PERFORMED PRIOR TO THE TIME WHEN THE CONTRACTOR WAS NOTIFIED OF THE REQUIREMENTS OF THAT DECISION, AND HAVING REGARD FOR THE FACT THAT THE CONTRACTOR'S POLICY WAS NOT TO REQUIRE RECEIPTS FROM ITS EMPLOYEES FOR EXPENDITURES INCURRED WHILE TRAVELING ON COMPANY BUSINESS, THE PROCEDURE RECOMMENDED BY YOU WILL BE ACCEPTABLE IN THE AUDIT VOUCHERS UNDER THIS AND OTHER CONTRACTS WHERE THE CIRCUMSTANCES ARE SIMILAR. HOWEVER, THE CERTIFICATE TO BE FURNISHED BY THE CONTRACTOR SHOULD SET FORTH THAT AN ATTEMPT WAS MADE TO OBTAIN RECEIPTS IN EACH CASE AND THE REASONS WHY SUCH RECEIPTS WERE NOT OBTAINABLE, IF SUCH WAS THE CASE. ALSO, THE CERTIFICATE TO BE FURNISHED BY THE TRAVELER IN SUCH CASES SHOULD BE UNDER OATH AND SHOULD SET FORTH THE FACTS IN CONNECTION WITH THE EXPENDITURES, INCLUDING INFORMATION AS TO THE PLACE AND DATE ON WHICH THE AMOUNTS WERE EXPENDED; THAT THE SAID AMOUNTS HAVE BEEN REIMBURSED TO HIM BY THE CONTRACTOR, GIVING THE DATE THEREOF; AND THAT THE EXPENSES WERE INCURRED IN CONNECTION WITH THE PERFORMANCE OF TRAVEL, DULY AUTHORIZED, UNDER CONTRACT BETWEEN THE CONTRACTOR AND THE GOVERNMENT, GIVING THE NAME OF THE CONTRACTOR, CONTRACT NUMBER AND DATE.

IT IS TO BE UNDERSTOOD, OF COURSE, THAT THE ABOVE CERTIFICATES ARE NOT TO BE IN LIEU OF OR TO DISPENSE IN ANY MANNER WITH EITHER THE CERTIFICATION ON THE VOUCHER REQUIRED TO BE MADE BY THE CONTRACTING OFFICER OR HIS DULY AUTHORIZED REPRESENTATIVE, OR THE APPROVAL OR RATIFICATION REQUIRED OF THE CONTRACTING OFFICER BY THE TERMS OF THE CONTRACT.