B-36008, SEP 2, 1943

B-36008: Sep 2, 1943

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IT WAS STATED TO BE THE VIEW OF THE OFFICE OF THE UNDER SECRETARY OF WAR THAT "REIMBURSEMENT MAY PROPERLY BE ALLOWED FOR REASONABLE ATTORNEY'S FEE. " AND THAT THE CONTRACTOR WAS SO ADVISED BY LETTER OF JANUARY 30. IT IS REPORTED THAT NO DECISION WAS RENDERED THEREON FOR THE REASON THAT. WHILE THE MATTER WAS STILL PENDING. IT WAS DETERMINED BY THE PARTIES THAT THEIR RIGHTS WOULD BE MORE EFFECTIVELY AND EXPEDITIOUSLY SETTLED IF. A DETERMINATION WERE MADE AS TO THE PROPER REPRESENTATIVE OF THE EMPLOYEES. THE WITHDRAWAL OF THE ORIGINAL CHARGE WAS APPROVED WITHOUT PREJUDICE. WERE INSTITUTED REQUESTING A DETERMINATION BY THE BOARD OF THE PROPER REPRESENTATIVE FOR COLLECTIVE BARGAINING. THIS LATTER MATTER IS STATED TO HAVE BEEN DISMISSED BY THE BOARD ON FEBRUARY 16.

B-36008, SEP 2, 1943

PRECIS-UNAVAILABLE

LIEUTENANT COLONEL W. GRITZ, F.D., U.S. ARMY:

THERE HAS BEEN RECEIVED, BY REFERENCE FROM HEADQUARTERS, ARMY SERVICE FORCES, OFFICE OF THE FISCAL DIRECTOR, YOUR LETTER OF MAY 4, 1943, REQUESTING DECISION AS TO THE PROPRIETY OF MAKING PAYMENT ON BUREAU VOUCHER NO. 3007, TRANSMITTED THEREWITH, IN FAVOR OF THE FRASER BRACE ENGINEERING CO., INC., IN THE AMOUNT OF $504.90, COVERING PARTIAL REIMBURSEMENT OF ATTORNEY'S FEE AND COSTS INCURRED BY THE CONTRACTOR UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. W 6977 QM-1, DATED OCTOBER 29, 1940.

IT APPEARS FROM THE EVIDENCE OF RECORD, SO FAR AS MATERIAL TO THE CONSIDERATION OF THE INSTANT MATTER, THAT, IN THE COURSE OF THE PERFORMANCE OF THE CITED CONTRACT, COVERING THE CONSTRUCTION AND EQUIPMENT -- INCLUDING THE DESIGN AND ENGINEERING INCIDENT THERETO-- OF AN ORDNANCE MANUFACTURING PLANT, THE CONTRACTOR RETAINED THE SERVICES OF A PRIVATE LAW FIRM TO REPRESENT IT AT A HEARING HELD BY THE NATIONAL LABOR RELATIONS BOARD ON A COMPLAINT FILED ON OCTOBER 27, 1941, BY A GROUP OF THE CONTRACTOR'S EMPLOYEES CHARGING THE CONTRACTOR WITH ENGAGING IN UNFAIR LABOR PRACTICES IN VIOLATION OF SECTION 8 OF THE NATIONAL LABOR RELATIONS ACT, 49 STAT. 449. IT FURTHER APPEARS THAT, PURSUANT TO THE CONTRACTOR'S REQUEST THAT REIMBURSEMENT BE AUTHORIZED FOR THE COSTS INCURRED IN THE DEFENSE OF THE SAID CHARGES, BY INDORSEMENT OF JANUARY 17, 1942, TO THE CHIEF OF ENGINEERS, IT WAS STATED TO BE THE VIEW OF THE OFFICE OF THE UNDER SECRETARY OF WAR THAT "REIMBURSEMENT MAY PROPERLY BE ALLOWED FOR REASONABLE ATTORNEY'S FEE, COSTS, AND EXPENSES INCIDENT TO THE PRESENTATION OF THE CONTRACTOR'S CASE TO THE NATIONAL LABOR RELATIONS BOARD IF SUCH BOARD DETERMINES THAT THE CONTRACTOR HAS NOT VIOLATED THE NATIONAL LABOR RELATIONS ACT," AND THAT THE CONTRACTOR WAS SO ADVISED BY LETTER OF JANUARY 30, 1942, FROM THE DISTRICT ENGINEER.

SO FAR AS CONCERNS THE DISPOSITION MADE BY THE BOARD OF THE CHARGES FILED AGAINST THE CONTRACTOR, IT IS REPORTED THAT NO DECISION WAS RENDERED THEREON FOR THE REASON THAT, WHILE THE MATTER WAS STILL PENDING, IT WAS DETERMINED BY THE PARTIES THAT THEIR RIGHTS WOULD BE MORE EFFECTIVELY AND EXPEDITIOUSLY SETTLED IF, INSTEAD, A DETERMINATION WERE MADE AS TO THE PROPER REPRESENTATIVE OF THE EMPLOYEES. ACCORDINGLY, ON NOVEMBER 27, 1941, THE WITHDRAWAL OF THE ORIGINAL CHARGE WAS APPROVED WITHOUT PREJUDICE, AND, ON THE SAME DATE, SUBSTITUTE PROCEEDINGS, AS AUTHORIZED UNDER SECTION 9 OF THE NATIONAL LABOR RELATIONS ACT, WERE INSTITUTED REQUESTING A DETERMINATION BY THE BOARD OF THE PROPER REPRESENTATIVE FOR COLLECTIVE BARGAINING. THIS LATTER MATTER IS STATED TO HAVE BEEN DISMISSED BY THE BOARD ON FEBRUARY 16, 1942, FOR THE REASON THAT SINCE THE PROJECT WORK WAS NEARING COMPLETION A DETERMINATION OF REPRESENTATION WOULD SERVE NO USEFUL PURPOSE.

FURTHER, IT APPEARS THAT THE CONTRACTOR PAID ITS ATTORNEYS THE SUM OF $954.90, FOR THE SERVICES RENDERED IN THIS MATTER, AND THAT BASED ON THE FINDING OF THE DISTRICT ENGINEER THAT, IN THE EVENT IT WAS DETERMINED REIMBURSEMENT WAS PROPER, "AN ATTORNEY'S FEE IN THE AMOUNT OF $350.00, PLUS COSTS AND EXPENSES AMOUNTING TO $154.90, OR A TOTAL OF $504.90, WOULD BE A REASONABLE CHARGE FOR THE AMOUNT OF WORK INVOLVED," REIMBURSEMENT, TO THIS EXTENT, IS NOW CLAIMED.

WHILE THERE APPEARS TO BE A DIFFERENCE OF OPINION BETWEEN THE DISTRICT ENGINEER AND THE CHIEF OF ENGINEERS AS TO WHETHER OR NOT THERE WAS COMPLIANCE WITH THE CONDITION UPON WHICH REIMBURSEMENT WAS DEEMED AUTHORIZED, NAMELY, THAT IT BE DETERMINED BY THE BOARD THAT THE CONTRACTOR HAD NOT VIOLATED THE NATIONAL LABOR RELATIONS ACT, A DEFINITE DETERMINATION IN THE MATTER IS UNNECESSARY FOR THE REASON THAT, REGARDLESS OF THE CONTRACTOR'S GUILT OR INNOCENCE OF THE CHARGE OF UNFAIR LABOR PRACTICES, THE NATURE OF THE EXPENSE HERE INVOLVED IS SUCH THAT REIMBURSEMENT THEREOF PROPERLY MAY NOT BE MADE.

IT, REPEATEDLY, HAS BEEN HELD BY THIS OFFICE THAT, AS A GENERAL RULE, ATTORNEY FEES AND THE OTHER COSTS INCURRED IN THE DEFENSE OR PROSECUTION OF SUITS ARISING IN THE COURSE OF THE PERFORMANCE OF COST PLUS CONTRACTS ARE OVERHEAD EXPENSES, COMPENSATION FOR WHICH, IN THE ABSENCE OF A SPECIFIC PROVISION TO THE CONTRARY, IS TO BE ASSUMED TO BE INCLUDED IN THE FIXED FEE AND THUS NOT TO BE REIMBURSED AS A PART OF THE COST OF THE WORK. 22 COMP.GEN. 109; B-21516, NOVEMBER 21, 1941; B 31142, JANUARY 12, 1943, AND B-31550, JANUARY 22, 1943. ALSO, SEE CENTRAL CONSTRUCTION CORPORATION V. THE UNITED STATES, 63 C.CLS. 290, 296. THERE IS NOTHING IN THE FACTS OR CIRCUMSTANCES OF THE INSTANT CASE AS WOULD JUSTIFY A DEPARTURE FROM SUCH RULE.

THE TERMS OF THE CONTRACT INVOLVED PROVIDE THAT THE FIXED FEE PAID TO THE CONTRACTOR CONSTITUTES COMPLETE COMPENSATION FOR THE CONTRACTOR'S SERVICES, INCLUDING PROFIT AND GENERAL OVERHEAD EXPENSES AND, IN LIMITATION OF THE GOVERNMENT'S LIABILITY AS TO THE ITEMS OF COST FOR WHICH REIMBURSEMENT MAY BE MADE, PROVIDE THAT, EXCEPT AS SPECIFICALLY AUTHORIZED IN THE CONTRACT, NO OVERHEAD EXPENSES OF ANY KIND SHALL BE INCLUDED IN THE COST OF THE WORK. SINCE A CAREFUL EXAMINATION OF THE MANY ITEMS OF EXPENDITURES FOR WHICH REIMBURSEMENT IS AUTHORIZED, AS LISTED UNDER ARTICLE III OF THE CONTRACT, DOES NOT REVEAL AN ITEM SUCH AS HERE INVOLVED, THE CONCLUSION PERFORCE IS REQUIRED THAT REIMBURSEMENT THEREFOR IS NOT AUTHORIZED. FURTHER, IN CONNECTION WITH THIS MATTER, SINCE IT IS THE RULE, RATHER THAN THE EXCEPTION, THAT, IN THE CONSTRUCTION OF ANY PLANT OF THE MAGNITUDE HERE INVOLVED, DIFFERENCES OF OPINION AND GRIEVANCES-- REAL OR FANCIED-- ARISE BETWEEN EMPLOYEES AND MANAGEMENT, IT MUST BE EVIDENT THAT IT WAS REALIZED BY THE PARTIES THAT THE CONTRACTOR WOULD BE CALLED UPON TO SETTLE SUCH MATTERS AS A PART OF THE REGULAR ADMINISTRATIVE FUNCTIONS OF PLANT MANAGEMENT AND, CONSEQUENTLY, IF THE PARTIES INTENDED THAT SUCH LEGAL EXPENSES AS MIGHT BE OCCASIONED THEREBY WERE TO BE REIMBURSED BY THE GOVERNMENT, SPECIFIC PROVISION TO THAT EFFECT WOULD HAVE BEEN MADE IN THE CONTRACT. IT NECESSARILY FOLLOWS THAT, SINCE THE CONTRACT CONTAINS NO SUCH PROVISION, IT WAS INTENDED THAT SUCH EXPENSES BE BORNE BY THE CONTRACTOR.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH ACCOMPANYING PAPERS, IS RETURNED AND YOU ARE ADVISED THAT PAYMENT THEREON IS NOT AUTHORIZED.