B-35657, AUG 6, 1943

B-35657: Aug 6, 1943

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THE FACTS SURROUNDING THE SHIPMENT OF THE MACHINES ARE SET FORTH BY THE CHIEF OF ORDNANCE IN THIRD INDORSEMENT OF MARCH 23. THE FOLLOWING FACTS IN REFERENCE TO THE MACHINES MENTIONED IN BASIC COMMUNICATION ARE PROVIDED FOR THE INFORMATION OF ALL CONCERNED: THE OFFICE OF THE ASST. WAS URGENTLY IN NEED OF TWO GRINDING MACHINES OF THE TYPE THEN ON HAND AS EXCESS EQUIPMENT AT THE KINGSBURY ORDNANCE PLANT. "2. THE UNDERSIGNED EXPLAINED THAT THE EQUIPMENT WAS EXCESS AT KINGSBURY AND THAT IT HAD BEEN PURCHASED BY THE ORDNANCE DEPT. IT WAS EXPLAINED TO COL. THE UNDERSIGNED EXPLAINED TO MAJOR MILLER THAT THIS OFFICE DID NOT HAVE THE VALUE OF THE MACHINES AND ADVISED THAT MAJOR MILLER CALL THE KINGSBURY ORDNANCE PLANT AND ALSO THAT IT WAS THE UNDERSTANDING OF THIS OFFICE THAT INTERNATIONAL RADIO AND TELEPHONE WOULD PAY THE FREIGHT ON THE SUBJECT MACHINES.

B-35657, AUG 6, 1943

PRECIS-UNAVAILABLE

COLONEL F. PEARSON, F.D., U.S. ARMY:

THERE HAS BEEN RECEIVED YOUR LETTER ON MAY 1, 1943, PRESUMABLY FORWARDED BY THE CHIEF OF FINANCE, WAR DEPARTMENT, WHEREIN YOU REQUEST A DECISION AS TO THE PROPRIETY OF REIMBURSING THE UNITED STATES RUBBER COMPANY, NEW YORK, NEW YORK, FOR FREIGHT AND DEMURRAGE CHARGES PAID ON TWO GRINDING MACHINES SHIPPED FROM THE KINGSBURY ORDNANCE PLANT, LA PORTE, INDIANA, TO THE INTERNATIONAL RADIO & TELEPHONE COMPANY, NEWARK, NEW JERSEY, IN CONNECTION WITH CONTRACT NO. W-ORD-528, DATED JULY 16, 1941.

THE FACTS SURROUNDING THE SHIPMENT OF THE MACHINES ARE SET FORTH BY THE CHIEF OF ORDNANCE IN THIRD INDORSEMENT OF MARCH 23, 1942, TO THE NEW YORK ORDNANCE DISTRICT, NEW YORK, NEW YORK, IN PART, AS FOLLOWS:

"1. THE FOLLOWING FACTS IN REFERENCE TO THE MACHINES MENTIONED IN BASIC COMMUNICATION ARE PROVIDED FOR THE INFORMATION OF ALL CONCERNED: THE OFFICE OF THE ASST. CHIEF OF INDUSTRIAL SERVICE, FACILITIES, RECEIVED A TELEPHONE CALL FROM THE COMMANDING OFFICER OF THE KINGSBURY ORDNANCE PLANT ON JANUARY 2, 1942, IN WHICH HE STATED HE HAD LEARNED IN CONVERSATION WITH THE COMMANDING OFFICER OF THE DES MOINES ORDNANCE PLANT THAT THE INTERNATIONAL RADIO AND TELEPHONE CO. OF NEWARK, NEW JERSEY, WAS URGENTLY IN NEED OF TWO GRINDING MACHINES OF THE TYPE THEN ON HAND AS EXCESS EQUIPMENT AT THE KINGSBURY ORDNANCE PLANT.

"2. UPON RECEIPT OF THIS INFORMATION THE UNDERSIGNED TELEPHONED THE NEW YORK ORDNANCE DISTRICT AND CONVERSED WITH COL. CLEMENTS AND EXPLAINED TO HIM THAT THE INTERNATIONAL RADIO AND TELEPHONE CO. REQUIRED THE MACHINERY IN QUESTION IN CONNECTION WITH A CONTRACT OR PURCHASE ORDER ASSOCIATED WITH THE SMALL ARMS AMMUNITION PROGRAM. THE UNDERSIGNED EXPLAINED THAT THE EQUIPMENT WAS EXCESS AT KINGSBURY AND THAT IT HAD BEEN PURCHASED BY THE ORDNANCE DEPT. WITH ORDNANCE DEPT. FUNDS AND SUGGESTED THAT IT MIGHT BE DELIVERED TO THE NEW YORK ORDNANCE DISTRICT TO THE INTERNATIONAL RADIO AND TELEPHONE CO. AND THAT THE NEW YORK ORDNANCE DISTRICT WOULD THEN BE ABLE TO MAKE A LEASE ARRANGEMENT UNDER WHICH INTERNATIONAL RADIO AND TELEPHONE CO. WOULD BE ABLE TO USE THE MACHINES. IT WAS EXPLAINED TO COL. CLEMENTS THAT A SIMILAR ARRANGEMENT FOR SOME OTHER MACHINES HAD BEEN MADE THROUGH THE PHILADELPHIA ORDNANCE DISTRICT FOR THE BENEFIT OF THE AMERICAN CAR AND FOUNDRY COMPANY. COL. CLEMENTS ADVISED THE UNDERSIGNED THAT THE DETAILS OF THE ARRANGEMENT COULD BE MADE BETWEEN THE COMMANDING OFFICER AT KINGSBURY AND CAPT. WENTZ OF THE NEW YORK ORDNANCE DISTRICT.

"3. THE UNDERSIGNED CALLED THE COMMANDING OFFICER, KINGSBURY ORDNANCE PLANT, AND TOLD THEM THAT ARRANGEMENTS WOULD BE MADE TO MAKE SHIPMENT OF THE GRINDERS ON MEMORANDUM RECEIPT TO THE NEW YORK ORDNANCE DISTRICT, C/O THE INTERNATIONAL RADIO AND TELEPHONE CO., 1000 PASSAIC AVE., NEWARK, N. J., AND THAT SHIPMENT WOULD PROBABLY BE MADE ON ORDINARY BILL OF LADING, FREIGHT COLLECT TO BE PAID BY INTERNATIONAL RADIO AND TELEPHONE CO. THE UNDERSIGNED ALSO ADVISED THE COMMANDING OFFICER AT KINGSBURY TO CALL THE NEW YORK ORDNANCE DISTRICT AND DISCUSS THE MATTER WITH CAPT. WENTZ.

"4. AFTER THE ABOVE THE UNDERSIGNED CALLED THE COMMANDING OFFICER AT THE DES MOINES ORDNANCE PLANT AND ADVISED THAT KINGSBURY WOULD SHIP THE GRINDERS TO INTERNATIONAL UNDER ARRANGEMENTS, THE DETAILS OF WHICH WOULD BE WORKED OUT BETWEEN THE COMMANDING OFFICER AT KINGSBURY AND CAPT. WENTZ OF THE NEW YORK ORDNANCE DISTRICT.

"5. ON JANUARY 10TH MAJOR MILLER, NEW YORK ORDNANCE DISTRICT, CALLED THE UNDERSIGNED AND REQUESTED THE VALUE OF THE SUBJECT MACHINES. THE UNDERSIGNED EXPLAINED TO MAJOR MILLER THAT THIS OFFICE DID NOT HAVE THE VALUE OF THE MACHINES AND ADVISED THAT MAJOR MILLER CALL THE KINGSBURY ORDNANCE PLANT AND ALSO THAT IT WAS THE UNDERSTANDING OF THIS OFFICE THAT INTERNATIONAL RADIO AND TELEPHONE WOULD PAY THE FREIGHT ON THE SUBJECT MACHINES. THE UNDERSIGNED HAS UNSUPPORTED RECOLLECTION OF A TELEPHONE CALL BEING RECEIVED FROM THE NEW YORK ORD. DIST. IN WHICH IT WAS STATED BY THE OFFICER CALLING THAT IT WAS NECESSARY TO DIVERT THE MACHINES TO THE U.S. RUBBER CO. AT WHICH TIME THE UNDERSIGNED STATED THAT IT WAS HIS BELIEF THAT THE U.S. RUBBER CO. WAS NOT CONCERNED AND THAT THE MATTER SHOULD BE DISCUSSED WITH THE U.S. RUBBER CO. IN THIS CONNECTION IT SHOULD BE EXPLAINED THAT THE U.S. RUBBER CO. IS THE CONTRACTOR FOR THE DES MOINES ORDNANCE PLANT FOR WHOSE ACCOUNT IT IS UNDERSTOOD THAT THE INTERNATIONAL RADIO AND TELEPHONE CO. WAS PERFORMING WORK FOR WHICH THE SUBJECT MACHINES WERE REQUIRED."

IT IS FURTHER STATED BY THE CHIEF OF ORDNANCE IN FOURTH INDORSEMENT OF MARCH 26, 1942, TO THE COMMANDING OFFICER, DES MOINES ORDNANCE PLANT, DES MOINES, IOWA, IN PART, AS FOLLOWS:

"2. AFTER DIRECT CONVERSATION WITH 2ND LT. F. G. BAUER OF THE NEW YORK ORDNANCE DISTRICT AND INDIRECT CONVERSATION WITH MR. TISDALE OF THE U.S. RUBBER CO., IT IS THE UNDERSTANDING OF THIS OFFICE THAT THE SUBJECT MACHINES WERE INCORRECTLY SENT FROM LA PORTE, INDIANA TO INTERNATIONAL RADIO AND TELEPHONE CO., NEWARK NEW JERSEY. NO WRITTEN LEASE EXISTS WITH INTERNATIONAL RADIO, THEREFORE, INTERNATIONAL RADIO CANNOT BE HELD FOR PAYMENT OF THE FREIGHT BILL. INTERNATIONAL RADIO ADVISED U.S. RUBBER, WHO FINALLY SENT ONE GRINDER TO TAYLOR INSTRUMENT COMPANY, ROCHESTER, NEW YORK, AND THE OTHER TO LIBERTY TOOL AND DIE COMPANY, ROCHESTER, NEW YORK, WHERE THEY ARE ON LEASE FROM THE ROCHESTER ORDNANCE DISTRICT.

"3. SINCE THE TWO GRINDERS ARE BEING USED ON WORK IN CONNECTION WITH THE DES MOINES ORDNANCE PLANT, IT IS THE OPINION OF THIS OFFICE THAT THE DES MOINES ORDNANCE PLANT SHOULD PAY THE FREIGHT BILL. BEFORE SUCH PAYMENT IS MADE, HOWEVER, IT IS SUGGESTED THAT THE DISBURSING OFFICER DRAW UP THE PROPER VOUCHERS AND SEND, TOGETHER WITH ALL THE FACTS TO THE GENERAL ACCOUNTING OFFICE, AND OBTAIN AN ADVANCE DECISION TO INSURE THAT SUCH PAYMENT WILL BE APPROVED."

THE VOUCHER SUBMITTED IS SUPPORTED BY FREIGHT BILLS EVIDENCING PAYMENT OF FREIGHT AND DEMURRAGE CHARGES. ALSO, THERE WAS SUBMITTED CONTRACTOR'S INVOICES NOS. MR10-3310 AND MR10-3311, DATED OCTOBER 26, 1942, WHEREBY THE ACCOUNTS OF TAYLOR INSTRUMENT COMPANY AND LIBERTY TOOL & DIE CORPORATION WERE CHARGED WITH THE DIFFERENCE IN THE COST OF FREIGHT ON THE MACHINES SHIPPED FROM NEWARK, NEW JERSEY AND THE COST HAD THE MACHINES BEEN SHIPPED DIRECT FROM LA PORTE, INDIANA. THE VOUCHER CONTAINS A STATEMENT BY THE REPRESENTATIVE OF THE CONTRACTING OFFICER THAT THE REIMBURSEMENT OF THE ITEM OF EXPENSE IN THE AMOUNT OF $216.78 IS ALLOWED UNDER PARAGRAPH R OF SECTION 1 OF ARTICLE V-A, TITLE V, AND ARTICLE VII-A OF TITLE VII OF THE CONTRACT.

SUCH PROVISIONS OF THE CONTRACT ARE AS FOLLOWS:

"1. THE CONTRACTOR SHALL BE REIMBURSED IN THE MANNER HEREINAFTER DESCRIBED FOR SUCH OF ITS ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK UNDER THIS CONTRACT, AS MAY BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER, AND AS ARE INCLUDED IN THE FOLLOWING ITEMS:

"R. SUCH OTHER ITEMS AS SHOULD, IN THE OPINION OF THE CONTRACTING OFFICER, BE INCLUDED IN THE COST OF THE WORK. WHEN SUCH AN ITEM IS ALLOWED BY THE CONTRACTING OFFICER, IT SHALL BE SPECIFICALLY CERTIFIED AS BEING ALLOWED UNDER THIS PARAGRAPH.

"ARTICLE VII-A - RESPONSIBILITY OF CONTRACTOR

"IT IS THE UNDERSTANDING OF THE PARTIES HERETO, AND THE INTENTION OF THIS CONTRACT, THAT ALL WORK UNDER TITLES I, II, III, AND IV OF THIS CONTRACT IS TO BE PERFORMED AT THE EXPENSE OF THE GOVERNMENT AND THAT THE GOVERNMENT SHALL HOLD THE CONTRACTOR HARMLESS AGAINST ANY LOSS, EXPENSE (INCLUDING EXPENSE OF LITIGATION), OR DAMAGE (INCLUDING LIABILITY TO THIRD PERSONS BECAUSE OF DEATH, BODILY INJURY OR PROPERTY INJURY OR DESTRUCTION OR OTHERWISE) OF ANY KIND WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF THE WORK UNDER THIS CONTRACT, EXCEPT TO THE PERSONAL FAILURE ON THE PART OF THE CORPORATE OFFICERS OF THE CONTRACTOR, OR OF OTHER REPRESENTATIVES OF THE CONTRACTOR HAVING SUPERVISION OR DIRECTION OF THE OPERATION OF THE PLANT AS A WHOLE, TO EXERCISE GOOD FAITH OR THAT DEGREE OF CARE WHICH THEY NORMALLY EXERCISE N THE CONDUCT OF THE CONTRACTOR'S BUSINESS."

BY THE TERMS OF ARTICLE V-A OF THE CONTRACT, AS QUOTED ABOVE, REIMBURSEMENT OF THE CONTRACTOR'S EXPENDITURES, INCLUDING THOSE APPROVED UNDER THE SAID SUBPARAGRAPH R, NECESSARILY IS LIMITED AND RESTRICTED TO SUCH COSTS AND EXPENSES AS ARE INCURRED "IN THE PERFORMANCE OF THE WORK UNDER THIS CONTRACT". IN THIS CONNECTION, THE RECORD INDICATES THAT AT THE TIME THE MACHINES WERE ORDERED SHIPPED TO THE INTERNATIONAL RADIO AND TELEPHONE COMPANY, IT WAS INTENDED THAT THEY BE USED IN THE MANUFACTURE OF EQUIPMENT NEEDED UNDER THE PRIME CONTRACT. FURTHERMORE, THE RECORD INDICATES THAT THE MACHINES, UPON RESHIPMENT, WERE USED IN CONNECTION WITH THE CONTRACT WORK.

MOREOVER, IT APPEARS THAT THE MACHINES ARE THE PROPERTY OF THE UNITED STATES AND THE SHIPMENT FROM THE KINGSBURY ORDNANCE PLANT WAS ORDERED BY GOVERNMENT OFFICIALS, ALTHOUGH THROUGH A MUTUAL MISUNDERSTANDING AS TO THE SIZE NEEDED, AND WERE SO DIRECTED WITH THOUGHT THAT SUCH ACT WAS FOR THE BEST INTEREST OF THE GOVERNMENT. ALSO, THE RECORD INDICATES THAT THE DEMURRAGE CHARGE OCCURRED WHILE ARRANGEMENTS WERE BEING MADE TO RESHIP THE MACHINES WHERE THEY COULD BE USED IN CONNECTION WITH THE PRIME CONTRACT WORK AND THAT THE PAYMENT OF SUCH CHARGE WAS MORE ECONOMICAL THAN TO STORE THE MACHINES AT NEWARK, NEW JERSEY, AND LATER RESHIP TO THE CONSIGNEES.

IN VIEW OF THE ABOVE AND THE FACT THAT THERE IS NO EVIDENCE THAT THE CONTRACTOR FAILED TO EXERCISE GOOD FAITH OR THAT DEGREE OF CARE WHICH NORMALLY MAY BE EXPECTED IN THE CONDUCT OF ITS BUSINESS, IT APPEARS THAT THE REIMBURSEMENT OF SUCH CHARGES MAY BE INCLUDED IN THE COST OF THE CONTRACT WORK.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH SUPPORTING PAPERS, IS RETURNED HEREWITH, AND YOU ARE ADVISED THAT PAYMENT THEREON IS AUTHORIZED, IF OTHERWISE CORRECT.