B-43679, SEPTEMBER 9, 1944, 24 COMP. GEN. 205

B-43679: Sep 9, 1944

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ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK" REQUIRES THE CONCLUSION THAT NO AMOUNT IN EXCESS OF THAT NECESSARY FOR THE EVENTUAL PAYMENT OF BENEFITS TO EMPLOYEES WAS TO BE PAID THE CONTRACTOR AS REIMBURSEMENT FOR EXPENDITURES IN CONNECTION WITH ITS RETIREMENT PLAN. THE CONTRACTING OFFICER'S AUTHORIZATION OF LUMP-SUM PAYMENT OR A PERCENTAGE OF THE ESTIMATED EXPENDITURES TO COVER THE PAYMENT OF PENSIONS WILL NOT BE QUESTIONED IF THE AUTHORIZATION IS BASED UPON A REASONABLE DETERMINATION OR ESTIMATE OF PROBABLE EXPENDITURES. IN VIEW OF THE DIFFICULTY OF DETERMINING WITH CERTAINTY THE NUMBER OF EMPLOYEES WHO WILL ULTIMATELY PARTICIPATE IN THE PENSION BENEFITS OF THE CONTRACTOR'S RETIREMENT PLAN.

B-43679, SEPTEMBER 9, 1944, 24 COMP. GEN. 205

CONTRACTS - COST-PLUS - PENSIONS, RETIREMENT, ETC., OF EMPLOYEES EVEN THOUGH CONTAINING NO PROVISION THAT AMOUNTS TO BE REIMBURSED TO THE CONTRACTOR BY THE GOVERNMENT FOR THE COST OF MAINTAINING EMPLOYEE WELFARE PLANS, SUCH AS A RETIREMENT PLAN, BE A PROPORTIONATE SHARE, THE PROVISION OF A COST-PLUS-A-FIXED-FEE CONTRACT LIMITING REIMBURSEMENT TO ,ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK" REQUIRES THE CONCLUSION THAT NO AMOUNT IN EXCESS OF THAT NECESSARY FOR THE EVENTUAL PAYMENT OF BENEFITS TO EMPLOYEES WAS TO BE PAID THE CONTRACTOR AS REIMBURSEMENT FOR EXPENDITURES IN CONNECTION WITH ITS RETIREMENT PLAN. UNDER A COST-PLUS-A-FIXED-FEE CONTRACT PROVIDING FOR REIMBURSEMENT OF THE COST OF EMPLOYEE WELFARE PLANS, THE CONTRACTOR MAY NOT BE REIMBURSED FOR ITS EXPENDITURES IN CONNECTION WITH A RETIREMENT PLAN ON THE BASIS OF AN ARBITRARY DETERMINATION OF THE GOVERNMENT'S PROPORTIONATE SHARE OF THE EXPENDITURES; HOWEVER, THE CONTRACTING OFFICER'S AUTHORIZATION OF LUMP-SUM PAYMENT OR A PERCENTAGE OF THE ESTIMATED EXPENDITURES TO COVER THE PAYMENT OF PENSIONS WILL NOT BE QUESTIONED IF THE AUTHORIZATION IS BASED UPON A REASONABLE DETERMINATION OR ESTIMATE OF PROBABLE EXPENDITURES. IN VIEW OF THE DIFFICULTY OF DETERMINING WITH CERTAINTY THE NUMBER OF EMPLOYEES WHO WILL ULTIMATELY PARTICIPATE IN THE PENSION BENEFITS OF THE CONTRACTOR'S RETIREMENT PLAN, REIMBURSEMENT UNDER A WAR DEPARTMENT COST- PLUS-A-FIXED-FEE CONTRACT OF THE GOVERNMENT'S PROPORTIONATE SHARE OF THE EXPENDITURES IN CONNECTION WITH THE PLAN MAY BE MADE ON THE BASIS OF A PERCENTAGE OF THE PROBABLE COST THEREOF, WHICH PERCENTAGE WAS DETERMINED AS PROPER BY THE CONTRACTING OFFICER ON THE BASIS OF THE EXPERIENCE DERIVED BY THE WAR DEPARTMENT FROM A STUDY OF OTHER RETIREMENT PLANS, WITH DUE REGARD BEING GIVEN TO THE NUMBER OF WORKERS TEMPORARILY EMPLOYED BY THE CONTRACTOR.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, SEPTEMBER 9, 1944:

REFERENCE IS MADE TO YOUR LETTER OF JULY 31, 1944, AS FOLLOWS:

TRANSMITTED HEREWITH ARE PAPERS TOGETHER WITH VOUCHERS IN FAVOR OF THE U.S. RUBBER COMPANY, DES MOINES, IOWA, IN THE AMOUNT OF $142,336.17 COVERING CLAIM FOR REFUNDS DUE TO PREVIOUS DEDUCTIONS MADE BY COLONEL F. PEARSON, FINANCE OFFICER, U.S.A. THE DEDUCTIONS AND AMOUNTS WITHHELD ARE AS FOLLOWS:

VOUCHERS FROM WHICH AND AMOUNTS WITHHELD U.S.R. CO. VO. NO.----- R-6017 R -6023 R-6048 R-6030 BUREAU VOU. NO------ --- 295 296 299 303 D.O. VOUCHER NO-------- - 112961 112960 112962 113399 PERIOD--------------------- APR. 1944 APR. 1944 APR. 1944 APR. 1944 AMOUNT WITHHELD---------- 7,972.45 19,532.52 104,930.80

9,900.40

TOTAL------------------------------------------------- $142,336.17

ITEMS WITHHELD BUREAU VOU.

NO-------- R-5658 R-4891 R-5144 R-4633 R-5440 D.O. VOUCHER

NO-------- 80246 31309 43734 20304 63242 PERIOD------ JAN. 1944 SEPT. 1943 *1OCT. 1943 AUG. 1943 NOV. 1943 AMOUNT------ 7,972.45 10,187.41 9,345.11 104,930.80 9,900.40

TOTAL---------------------------------------------------- $142,336.17

THESE DEDUCTIONS WERE MADE BY THE FINANCE OFFICER FROM REMITTANCES TO THE DES MOINES ORDNANCE PLANT, DES MOINES, IOWA, BY REASON OF EXCEPTIONS TAKEN IN WAR CONTRACT PROJECT AUDIT SECTION. THE NOTICES OF EXCEPTION DATED MARCH 25, 1944 STATE,*

"THERE IS NO SHOWING THAT THE AMOUNT REPRESENTS THE GOVERNMENTS PROPORTIONATE SHARE OF THE PENSION PLAN ACCOUNT AS PROPOSED BY THE COMMANDING OFFICER, DES MOINES ORDNANCE PLANT, IN LETTER OF MARCH 25, 1942.'

THE PERTINENT CONTRACT PROVISION UNDER WHICH THE EXPENDITURE WAS MADE MERELY REQUIRES THAT SUCH EXPENDITURE BE MADE IN ACCORDANCE WITH THE EMPLOYEE RELATIONS PLANS MAINTAINED BY THE CONTRACTOR AND THAT SUCH PLAN SHALL BE EXPRESSLY AUTHORIZED IN WRITING BY THE CONTRACTING OFFICER. NOWHERE IS THERE A REQUIREMENT THAT THE AMOUNT BE A PROPORTIONATE SHARE. IN THE OPINION OF THE DEPARTMENT THIS IS AN ADJUSTMENT IN THE INTEREST OF THE GOVERNMENT. IN THIS CONNECTION ATTENTION IS INVITED TO CERTIFICATE OF FACT OF MAJOR F. O. RISING, COMMANDING OFFICER OF THE PLANT, IN WHICH HE STATES:

"IN MY OPINION IT HAS BEEN ESTABLISHED AS A FACT THAT THE EXPENDITURES DESCRIBED HEREIN WERE INCURRED PURSUANT TO AN ESTABLISHED EMPLOYEE RELATIONS PLAN CONSISTENT WITH THE GENERAL EMPLOYEE WELFARE PLANS EXISTING THROUGHOUT THE CONTRACTOR'S ORGANIZATION, AND THAT THE COSTS HEREIN GIVEN REPRESENT THE GOVERNMENT'S PROPORTIONATE SHARE THEREOF AS DETERMINED AND STATED IN BRIG. GEN. KIRK'S LETTER DATED 27 MAY 1943, AND ARE IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH M OF ARTICLE V-A TITLE V OF CONTRACT W-ORD-528.'

THE MATTER AT ISSUE INVOLVES THE EMPLOYEE RETIREMENT ALLOWANCE PLAN OF THE CONTRACTOR AT THE DES MOINES ORDNANCE PLANT UNDER CONTRACT W ORD-528. THE REASON FOR THE SUSPENSION IS APPARENTLY THAT THERE IS NO SHOWING THAT THE AMOUNT REIMBURSABLE ON INDIVIDUAL VOUCHERS REPRESENTS THE WAR DEPARTMENT'S PROPORTIONATE SHARE OF THE PENSION PLAN ACCOUNT.

THE CONTRACTOR IN LETTER OF 9 MAY 1944 HAS STATED THAT THE COMPANY'S RETIREMENT ALLOWANCE PLAN IS AN ESTABLISHED EMPLOYEE WELFARE PLAN. FURTHER APPEARS THAT BRIG. GEN. KIRK, CONTRACTING OFFICER, IN HIS LETTER OF 27 MAY 1943, MADE A SPECIFIC DETERMINATION WITH RESPECT TO THE MATTER OF REIMBURSEMENT OF THE CONTRACTOR'S CONTRIBUTION TOWARDS THIS WELFARE PLAN AND EXPRESSLY AUTHORIZED IN WRITING THE PARTICULAR SHARE OF THE PLAN WHICH IS TO BE CHARGED TO THE WAR DEPARTMENT. THE AMOUNT FOR WHICH THE CONTRACTOR SEEKS REIMBURSEMENT HAS BEEN DETERMINED IN ACCORDANCE WITH SUCH AUTHORIZATION. IT WILL BE NOTED THAT UNDER SUCH DETERMINATION THE NORMAL PENSION ACCRUAL RATE OF 1.3 PERCENT OF THE PAYROLL WAS DISCOUNTED 75 PERCENT, THE GOVERNMENT BEARING ONLY 25 PERCENT OF SUCH RATE OR 10.325 PERCENT OF THE PAYROLL. THIS IS A NEGOTIATED FIGURE IN ACCORDANCE WITH THE WELFARE CLAUSE OF THE CONTRACT BASED UPON THE AUTHORITY OF THE CONTRACTING OFFICER TO MAKE SUCH DETERMINATION.

THE U.S. RUBBER COMPANY'S RETIREMENT ALLOWANCE PLAN PROVIDES FOR THE PAYMENT UNDER CERTAIN CONDITIONS OF BENEFITS TO EMPLOYEES WHO RETIRE OR WHO BECOME TOTALLY DISABLED. ALSO UNDER CERTAIN CONDITIONS IT PROVIDES A TERMINATION ALLOWANCE TO EMPLOYEES WHO WITHDRAW FROM EMPLOYMENT BUT WHO ARE NOT ELIGIBLE FOR THE RETIREMENT OR DISABILITY BENEFITS. SINCE THE WORKERS AT THESE PLANTS INCLUDE MANY INDIVIDUALS TEMPORARILY EMPLOYED, REIMBURSEMENT TO THE CONTRACTOR FOR HIS CONTRIBUTIONS TO THE RETIREMENT ALLOWANCE PLAN ON THE BASIS OF THE REGULAR ACCRUAL FACTORS WOULD RESULT IN REIMBURSEMENT IN EXCESS OF THE AMOUNTS WHICH WOULD BE ACTUALLY NEEDED BY THE CONTRACTOR TO PROVIDE FOR THE RETIREMENT, DISABLEMENT, OR WITHDRAWAL OF INDIVIDUALS EMPLOYED ON ORDNANCE CONTRACTS. IN ARRIVING AT A REDUCED ACCRUAL RATE FOR THIS RETIREMENT ALLOWANCE PLAN, CONSIDERATION WAS GIVEN TO THE MANNER IN WHICH THE CORRESPONDING NEGOTIATION WAS CARRIED ON IN CONNECTION WITH THE RETIREMENT PLAN FOR THE E. I. DU PONT DE NEMOURS COMPANY'S EMPLOYEES. IN DETERMINING REIMBURSEMENT OF THAT CONTRACTOR'S CONTRIBUTIONS TOWARD THE DU PONT COMPANY'S RETIREMENT PLAN, ITS REGULAR PENSION ACCRUAL RATE WAS DISCOUNTED 70 PERCENT TO REFLECT THE REDUCED NEED FOR PENSIONS AMONG EMPLOYEES WORKING ON ORDNANCE CONTRACTS, OF WHOM MANY HAVE ONLY TEMPORARY TENURE. THIS GENERAL METHOD WAS FOLLOWED IN THE INSTANT CASE AND THE AVERAGE ACCRUAL RATE OF 1.3 PERCENT OF PAYROLL OF THE U.S. RUBBER COMPANY WAS DISCOUNTED 75 PERCENT, I.E., THE WAR DEPARTMENT WAS CALLED UPON TO PAY ONLY 25 PERCENT OF THE NORMAL PENSION ACCRUAL RATE FOR THIS CONTRACTOR AS DETERMINED BY TOTAL PAYMENTS FROM THE RETIREMENT ALLOWANCE PLAN OVER THE MOST RECENT 10 YEAR PERIOD FOR WHICH STATISTICS WERE AVAILABLE.

NOTICE OF EXCEPTION REFERS TO A LETTER FROM THE COMMANDING OFFICER, DATED 25 MARCH 1942, EXPRESSING A GENERAL OPINION THAT UPON THE TERMINATION OF EMPLOYMENT OF ANY EMPLOYEE WHILE HE IS WORKING AT THE DES MOINES ORDNANCE PLANT, THE GOVERNMENT SHOULD BE LIABLE TO REIMBURSE ONLY AN AMOUNT BEARING THE SAME RATIO TO THE TOTAL AMOUNT AWARDED UNDER THE PLAN AS THE TIME WORKED AT THE PLANT BEARS TO THE TOTAL TIME HE WAS EMPLOYED BY THE CONTRACTOR. THE GENERAL OPINION EXPRESSED IN SUCH LETTER, WHILE APPARENTLY REFERRING TO ONLY ONE TYPE OF BENEFIT PROVIDED UNDER THE RETIREMENT ALLOWANCE PLAN, IS NOT INCONSISTENT WITH THE LATER DETERMINATION MADE BY THE CONTRACTING OFFICER AND IN ANY EVENT CAN NOT AFFECT THE VALIDITY OF SUCH DETERMINATION. THE PARTICULAR METHOD OUTLINED IN THIS LETTER WOULD REQUIRE DETERMINATION OF THE RATIO OF TIME SPENT PERFORMING CPFF OPERATIONS TO TOTAL TIME SPENT IN THE EMPLOYMENT OF THE CONTRACTOR FOR EACH INDIVIDUAL WITHDRAWING FROM EMPLOYMENT; THIS WOULD ALSO APPEAR TO BE NECESSARY IN RESPECT TO AN INDIVIDUAL WHO HAD BEEN EMPLOYED AT THE PLANT UNDER A CPFF CONTRACT BUT WHO WAS LATER TRANSFERRED TO OTHER OPERATIONS AND WHOSE EMPLOYMENT LATER WAS TERMINATED. FURTHERMORE, THE USE OF A DISCOUNTED ACCRUAL RATE AS FINALLY ADOPTED BY THE CONTRACTING OFFICER SUBSEQUENT TO THE TIME WHEN THE OPINION IN THE ABOVE-MENTIONED LETTER FROM THE COMMANDING OFFICER WAS EXPRESSED, GIVES APPROPRIATE CONSIDERATION AND PRACTICAL RECOGNITION TO THE POINT SET FORTH IN SUCH LETTER. THE WAR DEPARTMENT HAS STUDIED VARIOUS RETIREMENT PLANS AND THE FACTORS UPON WHICH A FAIR AND REASONABLE DISCOUNT RATE MAY BE DETERMINED. BASED UPON SUCH STUDY IT IS BELIEVED THAT THE METHOD FINALLY ADOPTED IN THIS PARTICULAR CASE, INVOLVING THE DISCOUNTING OF THE REGULAR PENSION ACCRUAL RATE BY 75 PERCENT, IS REASONABLE AND IN THE INTEREST OF THE GOVERNMENT AND SHOULD BE RECOGNIZED.

IT IS THE CONSIDERED JUDGMENT OF THIS DEPARTMENT THAT THE AMOUNTS INVOLVED ARE PROPERLY REIMBURSABLE UNDER THE CONTRACT AND IT IS REQUESTED THAT YOU GIVE CONSIDERATION TO THIS MATTER WITH THE VIEW TO AUTHORIZING PAYMENT OF THE ATTACHED VOUCHERS.

IT IS REQUESTED THAT THE ENTIRE FILE BE RETURNED TO THIS DEPARTMENT WITH YOUR OPINION.

CONTRACT NO. W-ORD-528, DATED JULY 16, 1941, ENTERED INTO ON A COST PLUS- A-FIXED-FEE BASIS AS AUTHORIZED UNDER THE ACT OF JULY 2, 1940, 54 STAT. 712, PROVIDES, GENERALLY, FOR MANAGEMENT SERVICES IN CONNECTION WITH THE DESIGN AND CONSTRUCTION OF AN ORDNANCE MANUFACTURING PLANT, AND FOR THE EQUIPPING AND SUBSEQUENT OPERATION THEREOF UPON ITS COMPLETION, IN CONSIDERATION OF THE REIMBURSEMENT BY THE GOVERNMENT OF CONTRACTOR'S EXPENDITURES AS DEFINED IN THE CONTRACT, PLUS STIPULATED FIXED FEES. FAR AS MATERIAL TO THE CONSIDERATION OF THE INSTANT MATTER, TITLE V OF THE CONTRACT, ENTITLED "COST OF THE WORK AND PAYMENT THEREFOR," PROVIDES UNDER ARTICLE V-A, COVERING REIMBURSEMENT FOR THE CONTRACTOR'S EXPENDITURES, 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: * *

M. EXTRA COMPENSATION TO EMPLOYEES, DISCONTINUANCE WAGES AND CHARGES UNDER WELFARE AND OTHER EMPLOYEE RELATIONS PLANS MAINTAINED BY THE CONTRACTOR; PROVIDED, THAT THE GOVERNMENT SHALL BE CHARGEABLE THEREFOR ONLY INSOFAR AS THE SAME ARE CONSISTENT WITH THE GENERAL EMPLOYEE RELATIONS POLICIES EXISTING THROUGHOUT THE CONTRACTOR'S ORGANIZATION, OR ARE INCURRED PURSUANT TO AGREEMENT MADE AS A RESULT OF COLLECTIVE BARGAINING WITH THE REPRESENTATIVES OF EMPLOYEES, AND ARE EXPRESSLY AUTHORIZED IN WRITING BY THE CONTRACTING OFFICER.

THE EXPENDITURE FOR WHICH REIMBURSEMENT, IN PART, IS CLAIMED BY THE CONTRACTOR COVERS THE AMOUNT SET ASIDE OR DEPOSITED IN A SPECIAL FUND, PURSUANT TO THE CONTRACTOR'S RETIREMENT ALLOWANCE PLAN, TO PROVIDE FOR THE PAYMENT, UNDER CERTAIN CONDITIONS, OF BENEFITS TO THOSE OF ITS EMPLOYEES WHO ARE RETIRED OR BECOME TOTALLY DISABLED. THE EVIDENCE OF RECORD WITH RESPECT TO THE SAID PLAN ESTABLISHES THAT IT BECAME EFFECTIVE ON JANUARY 1, 1940; THAT IT IS A PART OF THE EMPLOYEE WELFARE PLANS MAINTAINED BY THE CONTRACTOR THROUGHOUT ITS ORGANIZATION; AND THAT THE THEN CONTRACTING OFFICER, BY LETTER OF MAY 27, 1943, EXPRESSLY AUTHORIZED AND APPROVED, AS THE GOVERNMENT'S ,PROPORTIONATE SHARE OF THE COST OF MAINTAINING THE PENSION AND RETIREMENT PLAN OF THE U.S. RUBBER COMPANY," THE PAYMENT BY THE GOVERNMENT OF 25 PERCENT OF THE AMOUNT RESULTING FROM THE APPLICATION OF THE CONTRACTOR'S NORMAL PENSION RATE TO THE PAY ROLLS AT THIS AND CERTAIN OTHER PLANTS OPERATED BY THE CONTRACTOR UNDER GOVERNMENT COST-PLUS -A-FIXED-FEE CONTRACTS. IT APPEARS THAT IN THE COURSE OF THE AUDIT OF VOUCHERS COVERING REIMBURSEMENT TO THE CONTRACTOR FOR THE PAYMENTS MADE TO THE PENSION ACCRUAL FUND, COMPUTED ON THE BASIS AS APPROVED BY THE CONTRACTING OFFICER, EXCEPTION TO THE SAID PAYMENTS WAS TAKEN BY THE AUDIT DIVISION OF THIS OFFICE FOR THE REASON, IN SUBSTANCE, AS STATED IN YOUR LETTER,"THAT THERE IS NO SHOWING THAT THE AMOUNT REIMBURSABLE ON INDIVIDUAL VOUCHERS REPRESENTS THE WAR DEPARTMENT'S PROPORTIONATE SHARE OF THE PENSION PLAN ACCOUNT.' IT FURTHER APPEARS THAT THE DISBURSING OFFICER INVOLVED, INSTEAD OF REQUESTING REVIEW OF SUCH EXCEPTIONS, DEDUCTED THE TOTAL AMOUNT OF SUCH PAYMENTS IN MAKING OTHER PAYMENTS TO THE CONTRACTOR. THE VOUCHER HERE INVOLVED COVERS A RECLAIM OF THE AMOUNT SO DEDUCTED.

WHILE, AS STATED IN YOUR LETTER, THE CONTRACT PROVISION QUOTED ABOVE DOES NOT CONTAIN A REQUIREMENT THAT THE AMOUNT PAID BY THE GOVERNMENT IN REIMBURSEMENT FOR THE COST OF MAINTAINING EMPLOYEE WELFARE PLANS BE A PROPORTIONATE SHARE, THE LANGUAGE USED IN THE CONTRACT, LIMITING REIMBURSEMENT TO "ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK," CLEARLY INDICATES THAT IT WAS THE INTENTION OF THE PARTIES THAT NO AMOUNT BE PAID TO THE CONTRACTOR IN REIMBURSEMENT FOR THIS EXPENDITURE IN EXCESS OF THAT REQUIRED FOR THE EVENTUAL PAYMENT OF BENEFITS TO THE EMPLOYEES.

THE CONTRACTOR'S RETIREMENT ALLOWANCE PLAN, AS A PREREQUISITE FOR PARTICIPATION IN THE BENEFITS THEREUNDER REQUIRES THAT THE EMPLOYEE RENDER AT LEAST 20 YEARS OF SERVICE TO THE CONTRACTOR. SEPARATE AND APART FROM ANY NORMAL EMPLOYMENT TURNOVER, IT IS EVIDENT THAT, SINCE THE SERVICES OF THOSE EMPLOYEES, WHO WERE HIRED ONLY FOR THE PERFORMANCE OF THE CONTRACTOR'S COST-PLUS-A-FIXED-FEE CONTRACTS, WILL TERMINATE, IN LARGE MEASURE, WITH THE TERMINATION OF THE SAID CONTRACTS, RELATIVELY FEW OF THEM WILL QUALIFY FOR PENSION BENEFITS. THE PURPOSE OF THE AUDIT EXCEPTION WAS TO ESTABLISH THAT PROPER CONSIDERATION HAD BEEN GIVEN TO THIS FACTOR BY THE CONTRACTING OFFICER IN FIXING THE RATE FOR APPLICATION IN COMPUTING THE AMOUNT OF THE GOVERNMENT'S CONTRIBUTION TO THE PENSION FUND ACCOUNT. IN THIS CONNECTION, WHILE UNDER THE TERMS OF THE CONTRACT INVOLVED THE CONTRACTING OFFICER IS VESTED WITH BROAD AND GENERAL POWERS IN THE MATTER OF APPROVING REIMBURSABLE ITEMS OF COST, SUCH POWERS ARE NOT UNLIMITED IN THEIR SCOPE; NOR MAY THEY BE REGARDED AS AFFECTING IN ANY MANNER WHATEVER THE STATUTORY DUTY OF THIS OFFICE TO REQUIRE EVIDENCE DEEMED NECESSARY IN SUPPORT OF PAYMENTS MADE BY DISBURSING OFFICERS FROM APPROPRIATED MONEYS. CONSIDERED IN THE LIGHT OF THE FOREGOING, WHILE AN ARBITRARY DETERMINATION OF THE GOVERNMENT'S ,PROPORTIONATE SHARE" OF THE EXPENDITURE INVOLVED IS UNAUTHORIZED, IN APPRECIATION OF THE DIFFICULTIES ATTENDANT UPON THE DETERMINATION WITH ANY DEGREE OF CERTAINTY OR EXACTITUDE THE PROPORTION OF THE EMPLOYEES PRESENTLY ENGAGED ON THIS AND OTHER SIMILAR CONTRACTS OF THE CONTRACTOR, WHO WILL ULTIMATELY PARTICIPATE IN THE BENEFITS OF THE SAID PENSION PLAN--- THIS CONTINGENCY BEING DEPENDENT, AMONG OTHER THINGS, ON THE EXTENSION AND SCOPE OF THE CONTRACTOR'S POST-WAR OPERATIONS--- THE CONTRACTING OFFICER'S AUTHORIZATION OF THE PAYMENT OF A LUMP SUM OR, AS HERE, A PERCENTAGE OF THE CONTRACTOR'S EXPENDITURES TO COVER THE PAYMENT OF PENSIONS TO ITS EMPLOYEES, IF SHOWN TO BE BASED UPON A REASONABLE DETERMINATION OR ESTIMATE OF THE PROBABLE COST TO THE CONTRACTOR, WILL NOT BE QUESTIONED BY THIS OFFICE.

IN THE PRESENT CASE, IT APPEARS FROM YOUR ABOVE-QUOTED LETTER THAT THE DETERMINATION MADE AS TO THE GOVERNMENT'S SHARE OF THE EXPENDITURE INVOLVED WAS BASED UPON THE EXPERIENCE REPORTED TO HAVE BEEN DERIVED BY THE WAR DEPARTMENT FROM A STUDY OF OTHER RETIREMENT PLANS AND THAT, IN CONNECTION THEREWITH, DUE CONSIDERATION WAS GIVEN TO THE NUMBER OF WORKERS TEMPORARILY EMPLOYED BY THE CONTRACTOR. ACCORDINGLY, ON THE BASIS OF THE FACTS NOW OF RECORD, YOU ARE ADVISED THAT PAYMENT ON THE VOUCHER, COVERING REIMBURSEMENT TO THE CONTRACTOR COMPUTED ON THE BASIS AS APPROVED BY THE CONTRACTING OFFICER, IS AUTHORIZED, IF OTHERWISE CORRECT.