B-42474, AUGUST 10, 1944, 24 COMP. GEN. 97

B-42474: Aug 10, 1944

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ALTHOUGH SUCH PAYMENTS WERE MADE PRIOR TO THE ISSUANCE OF CIRCULAR LETTER NO. 2849 BY THE CHIEF OF ENGINEERS ON MARCH 11. WAS ADOPTED AS A MATTER OF EXPEDIENCY AS BEING IN THE GOVERNMENT'S INTEREST. 23 COMP. IS AS FOLLOWS: 1. THERE IS FORWARDED HEREWITH BUREAU VOUCHER S 1750 PAYABLE TO FIRST NATIONAL BANK OF DENVER TRUSTEE-ASSIGNEE OF WM. REFERENCE IS MADE TO DECISION OF THE COMPTROLLER GENERAL. IN WHICH IT IS HELD THAT SUCH LUMP SUM PAYMENTS CANNOT BE MADE TO COST-PLUS- FIXED-FEE CONTRACTORS. ATTENTION IS INVITED TO CIRCULAR LETTER NO. 2849. THE SUBJECT VOUCHER IS ONE OF A NUMBER NOW BEING PRESENTED BY THE CONTRACTOR AT SUNFLOWER ORDNANCE WORKS TO PICK UP LUMP SUM ACCRUED ANNUAL LEAVE AND CURRENT PAYROLLS CARRYING SUCH LUMP SUM PAYMENTS ARE BEING PRESENTED TO THIS OFFICE FOR PAYMENT. 4.

B-42474, AUGUST 10, 1944, 24 COMP. GEN. 97

CONTRACTS - COST-PLUS - LUMP SUM LEAVE PAYMENTS TO EMPLOYEES UPON TERMINATION OF SERVICES A WAR DEPARTMENT COST-PLUS-A-FIXED-FEE ARCHITECT-ENGINEER CONTRACTOR MAY BE REIMBURSED FOR LUMP SUM PAYMENTS MADE TO NON-MANUAL EMPLOYEES FOR LEAVE ACCRUED AT TERMINATION OF EMPLOYMENT, ALTHOUGH SUCH PAYMENTS WERE MADE PRIOR TO THE ISSUANCE OF CIRCULAR LETTER NO. 2849 BY THE CHIEF OF ENGINEERS ON MARCH 11, 1944, RELATING TO THE MAKING OF LUMP SUM PAYMENTS FOR LEAVE, PROVIDED THERE BE FURNISHED TO A SHOWING THAT, AS INDICATED BY SAID CIRCULAR LETTER THE PRACTICE OF MAKING LUMP SUM PAYMENTS, INSTEAD OF CONTINUING THE EMPLOYEES ON THE PAY ROLL UNTIL THEIR ACCRUED LEAVE HAD EXPIRED, WAS ADOPTED AS A MATTER OF EXPEDIENCY AS BEING IN THE GOVERNMENT'S INTEREST. 23 COMP. GEN. 430, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO LT. COL. FRED O. TIFFANY, U.S. ARMY, AUGUST 10, 1944:

THERE HAS BEEN FORWARDED HERE BY THE FISCAL DIRECTOR, HEADQUARTERS, ARMY SERVICE FORCES, YOUR LETTER OF APRIL 8, 1944, ADDRESSED TO THAT OFFICE, WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED ON THE QUESTION PRESENTED THEREIN. YOUR LETTER OF APRIL 8, IS AS FOLLOWS:

1. THERE IS FORWARDED HEREWITH BUREAU VOUCHER S 1750 PAYABLE TO FIRST NATIONAL BANK OF DENVER TRUSTEE-ASSIGNEE OF WM. S. LOZIER, BRODERICK AND GORDON, IN THE AMOUNT OF $3,108.85, REPRESENTING REIMBURSEMENT FOR LUMP SUM PAYMENT OF ACCUMULATED LEAVE TO COST-PLUS FIXED-FEE CONTRACTOR. REFERENCE IS MADE TO DECISION OF THE COMPTROLLER GENERAL, B-28129, IN WHICH IT IS HELD THAT SUCH LUMP SUM PAYMENTS CANNOT BE MADE TO COST-PLUS- FIXED-FEE CONTRACTORS. ATTENTION IS INVITED TO CIRCULAR LETTER NO. 2849, DATED 11 MARCH 1944, FROM THE OFFICE OF THE CHIEF OF ENGINEERS IN THIS REGARD.

2. THE RECORD OF NEGOTIATIONS FILED WITH THIS CONTRACT CONTAINS AGREEMENT AS TO TERMS AND CONDITIONS OF EMPLOYMENT OF NON-MANUAL PERSONNEL, SETTING OUT SUBSTANTIALLY THE PROVISIONS PROVIDED FOR IN PAR. 3 OF CIRCULAR LETTER NO. 2849. HOWEVER, THIS OFFICE HAS NOT BEEN ADVISED AS TO THE EXTENT TO WHICH COMPTROLLER GENERAL'S DECISION NO. B 28129 WOULD OPERATE TO ALLOW THE REIMBURSEMENT REQUESTED IN THE VOUCHER.

3. THE SUBJECT VOUCHER IS ONE OF A NUMBER NOW BEING PRESENTED BY THE CONTRACTOR AT SUNFLOWER ORDNANCE WORKS TO PICK UP LUMP SUM ACCRUED ANNUAL LEAVE AND CURRENT PAYROLLS CARRYING SUCH LUMP SUM PAYMENTS ARE BEING PRESENTED TO THIS OFFICE FOR PAYMENT.

4. YOUR COMMENT AND INSTRUCTION IN THIS REGARD IS REQUESTED.

IT APPEARS THAT THE VOUCHER INVOLVED COVERS A RECLAIM BY THE CONTRACTOR FOR REIMBURSEMENT UNDER THE PROVISIONS OF COST-PLUS-A-FIXED FEE CONTRACT NO. 2-461-ENG-10274 OF LUMP SUM PAYMENTS MADE TO ITS EMPLOYEES IN LIEU OF ACCRUED LEAVE STANDING TO THEIR CREDIT AT THE TERMINATION OF THEIR EMPLOYMENT--- THE AMOUNT WHICH IS PROPOSED TO BE PAID THEREON HAVING BEEN DEDUCTED BY YOUR OFFICE ON JANUARY 10, 1944, FROM A PREVIOUS VOUCHER. THE CONTRACT PROVIDED FOR THE FURNISHING OF ARCHITECT-ENGINEER AND OTHER SERVICES INCIDENT TO THE DESIGN, INSPECTION AND SUPERVISION OF THE SUNFLOWER ORDNANCE WORKS ON A COST PLUS-A-FIXED--FEE BASIS. THE REIMBURSEMENT OF THE COST OF NECESSARY LABOR WAS SPECIFICALLY PROVIDED FOR IN PARAGRAPH 1 (A) OF ARTICLE XI THEREOF. IT APPEARS THAT, UNDER APPLICABLE LEAVE POLICIES AND PRACTICES PRESCRIBED BY THE CHIEF ENGINEERS- -- WHICH YOU STATE CONSTITUTED A PART OF THE CONTRACT NEGOTIATIONS--- NON- MANUAL EMPLOYEES OF THE CONTRACTOR ARE ENTITLED TO LEAVE WITH PAY ACCRUING AT THE RATE OF TWO DAYS PER MONTH IN LIEU OF SICK OR VACATION ALLOWANCES. ALSO, IT APPEARS THAT, UNDER SUCH PRACTICES AND POLICIES, LEAVE MAY BE GRANTED BY THE CONTRACTOR WITH THE APPROVAL OF THE CONTRACTING OFFICER "AT SUCH TIME OR TIMES AS MAY BE DEEMED IN THE BEST INTERESTS OF THE GOVERNMENT" AND THAT "LEAVE MAY BE GRANTED DURING THE COURSE OF EMPLOYMENT OR AT THE COMPLETION OF EMPLOYMENT"--- THOSE EMPLOYEES WHO RESIGN OR WHO ARE INVOLUNTARILY SEPARATED FOR CAUSES NOT DUE TO THEIR MISCONDUCT BEING ENTITLED TO LEAVE TO AND INCLUDING THE DATE OF SEPARATION. HENCE "THERE APPARENTLY IS NO QUESTION BUT THAT THE CONTRACTOR IS ENTITLED TO REIMBURSEMENT FOR SALARY PAYMENTS MADE TO ITS NON-MANUAL EMPLOYEES WHILE THEY ARE IN A LEAVE STATUS AND ARE BEING CARRIED ON THE CONTRACTOR'S PAY ROLL AS SUCH. HOWEVER, AS APPEARS FROM ABOVE, THE AMOUNT PROPOSED TO BE PAID ON THE INSTANT VOUCHER CONSTITUTES REIMBURSEMENTS OF LUMP SUM PAYMENTS WHICH WERE MADE BY THE CONTRACTOR TO CERTAIN OF ITS NON-MANUAL EMPLOYEES FOR ACCRUED LEAVE WHICH STOOD TO THEIR CREDIT AT THE TERMINATION OR COMPLETION OF THEIR EMPLOYMENT. IN OTHER WORDS, INSTEAD OF CARRYING THE SAID EMPLOYEES ON ITS PAY ROLL UNTIL THEIR ACCRUED LEAVE HAD EXPIRED, THE CONTRACTOR MADE LUMP SUM PAYMENTS TO THE EMPLOYEES, UPON THE TERMINATION OF THEIR ACTUAL EMPLOYMENT UNDER THE CONTRACT.

IT APPEARS FROM YOUR LETTER OF APRIL 8, 1944, SUPRA, THAT YOU ENTERTAIN DOUBT AS TO WHETHER THE CONTRACTOR MAY BE REIMBURSED FOR THE LUMP PAYMENTS THUS MADE IN VIEW OF THE DECISION OF THIS OFFICE DATED DECEMBER 14, 1943, B-28029 (23 COMP. GEN. 430). IT WAS HELD IN THE SAID DECISION, QUOTING FROM THE SYLLABUS, AS FOLLOWS:

WHERE A COST-PLUS-A-FIXED-FEE CONTRACT CONTAINS NO SPECIFIC PROVISION AUTHORIZING REIMBURSEMENT TO THE CONTRACTOR FOR COMPENSATION PAID IN LIEU OF LEAVE ACCRUED BUT NOT TAKEN BY AN EMPLOYEE AT THE TIME OF HIS DEATH, AND IT IS NOT SHOWN THAT SUCH PAYMENT WAS MADE PURSUANT TO REGULATIONS GOVERNING THE GRANTING OF LEAVE BENEFITS TO EMPLOYEES, OR SHOWN TO BE REASONABLY INCIDENT TO PERFORMANCE OF THE CONTRACT WORK AND SERVE A USEFUL PURPOSE IN FULFILLING THE CONTRACT REQUIREMENTS THERE IS NO LEGAL BASIS FOR REGARDING THE EXPENDITURE AS A PROPER CHARGE TO THE GOVERNMENT UNDER THE CONTRACT.

HENCE, THE QUESTION PRESENTED HEREIN IS SUBSTANTIALLY DIFFERENT FROM THAT DECIDED IN THE AFORESAID DECISION OF DECEMBER 14, 1943.

THE RECORD SHOWS THAT, SUBSEQUENT TO THE ISSUANCE OF SUCH DECISION, THE CHIEF OF ENGINEERS, BY CIRCULAR LETTER NO. 2849, DATED MARCH 11, 1944, IN EFFECT, AUTHORIZED THE MAKING OF LUMP SUM PAYMENTS TO NON MANUAL EMPLOYEES OF COST-PLUS-A-FIXED-FEE CONTRACTORS FOR ALL APPROVED ANNUAL LEAVE STANDING TO THEIR CREDIT AT THE TIME THEIR SERVICES WERE COMPLETED OR TERMINATED UNDER SUCH CONTRACTS. THE PERTINENT PROVISIONS OF SAID CIRCULAR LETTER ARE AS FOLLOWS:

3. ATTENTION IS INVITED TO PARAGRAPH 10, APPENDIX "C" TO W.D. CONTRACT FORMS NOS. 3, 4, AND 12. THE PROVISIONS THEREOF, WHICH WERE MADE A PART OF CONTRACT DOCUMENTS DURING THE LATTER PART OF 1942, ARE IN ACCORD WITH NON-MANUAL EMPLOYEES' LEAVE PRACTICES AND POLICIES PRESCRIBED BY THE CHIEF OF ENGINEERS AND THE QUARTERMASTER GENERAL FROM THE OUTSET OF EMERGENCY. THOSE CONTRACT CLAUSES PROVIDE THAT LEAVE MAY BE GRANTED BY THE CONTRACTOR WITH THE APPROVAL OF THE CONTRACTING OFFICER "AT SUCH TIME OR TIMES AS MAY BE DEEMED IN THE BEST INTERESTS OF THE GOVERNMENT," THAT SUCH LEAVE WILL ACCRUE AT THE RATE OF TWO DAYS PER MONTH IN LIEU OF ANY SICK OR VACATION ALLOWANCE, AND THAT IT WILL BE WITH PAY ON A REIMBURSABLE BASIS. THOSE CONTRACT CLAUSES ALSO PROVIDE THAT,"LEAVE MAY BE GRANTED DURING THE COURSE OF EMPLOYMENT OR AT THE COMPLETION OF EMPLOYMENT," AND THAT THOSE EMPLOYEES "WHO RESIGN, OR ARE INVOLUNTARILY SEPARATED FOR CAUSES NOT DUE TO THEIR MISCONDUCT, SHALL BE ENTITLED TO LEAVE TO AND INCLUDING DATE OF SEPARATION.' (ITALICS SUPPLIED.)

4. THE PROCEDURES AND THE POLICIES HERETOFORE FOLLOWED, AND UPON WHICH THE PRESENT CONTRACT PROVISIONS ARE BASED, REST UPON THE CONCLUSIONS OF THE WAR DEPARTMENT THAT THE GRANTING OF THE RIGHT TO THE ACCRUAL OF LEAVE IS NECESSARY AND PROPER IN THE PERFORMANCE OF THE WORK; AND, MOREOVER, THAT EXPENSES INCURRED IN CONNECTION THEREWITH ON A REIMBURSABLE BASIS BY COST-PLUS-A-FIXED FEE CONTRACTORS ARE IN THE INTERESTS OF THE GOVERNMENT. LIKEWISE, GRANTING THE CONTRACTING OFFICER THE AUTHORITY TO CONTROL THE TIME AND EXTENT OF SUCH LEAVE DURING THE PROSECUTION OF A PROJECT AND TO MAKE LUMP SUM PAYMENTS AT THE TERMINATION OR COMPLETION OF EMPLOYMENT IS IN THE INTERESTS OF THE GOVERNMENT. THE PROVISIONS QUOTED IN PARAGRAPH 3, ABOVE, PROVIDE FOR MAKING LUMP SUM PAYMENTS TO EMPLOYEES ON THE PAYROLL AFTER THEIR SERVICES ACTUALLY HAVE CEASED WOULD NOT BE CONSISTENT WITH "COMPLETION OF EMPLOYMENT" AND WAS AND IS CONSIDERED TO BE IMPRACTICAL IN MOST CASES.

5. EXCEPT WHERE IT WOULD BE IMPRACTICAL SO TO DO OR WHERE, BECAUSE OF PAST PRACTICES OF AN ARCHITECT-ENGINEER, ARCHITECT-ENGINEER-MANAGER, OR CONSTRUCTION CONTRACTOR, HARDSHIP WOULD RESULT TO IT, PAYMENT IN A LUMP SUM WILL HEREAFTER BE MADE TO ALL NON-MANUAL EMPLOYEES OF COST PLUS-A- FIXED-FEE CONTRACTORS FOR ALL ACCRUED LEAVE STANDING TO THEIR CREDIT AT THE TIME THEIR SERVICES ARE COMPLETED OR TERMINATED. THE SAME PRACTICE WILL BE FOLLOWED WITH RESPECT TO SUCH A DECEASED WITH ACCRUED LEAVE REMAINING TO HIS CREDIT AT THE TIME OF DEATH. THE LUMP SUM REPRESENTING ACCRUED LEAVE MAY BE PAID TO THE LEGAL REPRESENTATIVE OF THE ESTATE OF THE DECEASED OR, IF HIS ESTATE IS NOT BEING ADMINISTERED, SUCH SUM MAY BE PAID TO HIS WIDOW OR OTHER NEXT OF KIN WHEN THE CONTRACTOR, WITH THE APPROVAL OF THE CONTRACTING OFFICER, IS SATISFIED THAT SUCH ACTION IS APPROPRIATE. (SEE 20 COMP. GEN. 859.)

THE RECORD SHOWS FURTHER THAT THE CHIEF OF ENGINEERS IN SECOND INDORSEMENT OF MAY 5, 1944, TO THE OFFICE OF THE FISCAL DIRECTOR, ARMY SERVICE FORCES, RECOMMENDED THAT PAYMENT OF THE INSTANT VOUCHER BE MADE ON THE GROUND THAT THE LUMP SUM PAYMENTS FOR WHICH REIMBURSEMENT IS CLAIMED THEREON WERE MADE PURSUANT TO CIRCULAR LETTER NO. 2849, SUPRA. HOWEVER, SINCE THE LUMP SUM PAYMENTS HERE IN QUESTION WERE MADE PRIOR TO JANUARY 10, 1944, WHEREAS THE SAID CIRCULAR LETTER NO. 2849 WAS NOT ISSUED UNTIL MARCH 11, 1944, IT IS OBVIOUS THAT THE INSTANT PAYMENTS COULD NOT HAVE BEEN MADE PURSUANT THERETO.

MOREOVER, THE RECORD DOES NOT INDICATE DEFINITELY WHY THE CONTRACTOR UNDERTOOK TO MAKE THE LUMP SUM PAYMENTS HERE IN QUESTION TO ITS NON MANUAL EMPLOYEES RATHER THAN CONTINUING SUCH EMPLOYEES ON ITS PAY ROLL UNTIL THEIR ACCRUED LEAVE HAD EXPIRED. HOWEVER, SAID CIRCULAR LETTER NO. 2849, SUPRA, INDICATES THAT IT HAS BEEN THE PRACTICE AND PROCEDURE OF THE ENGINEER DEPARTMENT TO MAKE LUMP SUM PAYMENTS OF ACCRUED ANNUAL LEAVE TO NON-MANUAL EMPLOYEES OF COST-PLUS-A-FIXED-FEE CONTRACTORS UPON THE TERMINATION OF THEIR EMPLOYMENT FOR THE REASON THAT SAID EMPLOYEES ARE ENTITLED TO ACCRUED LEAVE TO AND INCLUDING THE DATE OF THE SEPARATION OF THEIR EMPLOYMENT AND THAT SUCH LEAVE IS AUTHORIZED TO BE GRANTED BY THE CONTRACTOR, WITH THE APPROVAL OF THE CONTRACTING OFFICER, EITHER DURING THE COURSE OF EMPLOYMENT OR AT THE COMPLETION OF EMPLOYMENT. IN OTHER WORDS, IT IS INDICATED THAT THE PRACTICE OF MAKING LUMP SUM PAYMENTS FOR ACCRUED LEAVE HAS BEEN ADOPTED AS A MATTER OF EXPEDIENCY AS BEING IN THE BEST INTEREST OF THE UNITED STATES RATHER THAN THE PRACTICE OF CONTINUING TO RETAIN EMPLOYEES ON THE CONTRACTORS' PAY ROLLS AFTER THEIR ACTUAL EMPLOYMENT ON CONTRACTS HAS CEASED. HENCE, IF IT BE A FACT THAT THE LUMP SUM PAYMENTS FOR WHICH REIMBURSEMENT IS CLAIMED ON THE INSTANT VOUCHER WERE MADE FOR THE FOREGOING REASONS AND PURSUANT TO THE REFERRED-TO POLICY AND PRACTICE, AND IF A STATEMENT TO SUCH EFFECT IS ATTACHED TO THE VOUCHER, THE PAYMENT THEREOF IS AUTHORIZED, IF OTHERWISE CORRECT.