B-45845, JAN 11, 1945

B-45845: Jan 11, 1945

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COVERING A RECLAIM FOR SAID AMOUNT WHICH WAS COLLECTED FROM THE CONTRACTOR UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. THE EXPENSE FOR WHICH REIMBURSEMENT IS CLAIMED REPRESENTS BACK WAGES PAID TO FIVE EMPLOYEES OF THE CONTRACTOR WHO WERE DISCHARGED BY IT AND SUBSEQUENTLY WERE REINSTATED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD. THE FACTS RELATIVE TO THE MATTER ARE STATED IN FIFTH INDORSEMENT OF NOVEMBER 2. WHICH REPRESENTS WAGES THEY WOULD HAVE RECEIVED FROM THE COMPANY DURING THE PERIOD FROM TERMINATION OF EMPLOYMENT TO REINSTATEMENT. FORMAL EXCEPTION WAS TAKEN BY THE COMPTROLLER GENERAL TO THE PAYMENT. "3. WAS MADE IN THE SINCERE BELIEF THAT HE WAS ACTING FOR THE BEST INTERESTS OF THE GOVERNMENT IN FURTHERING THE PROGRESS OF WORK UNDER THE CONTRACT.

B-45845, JAN 11, 1945

PRECIS-UNAVAILABLE

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

THERE HAS BEEN RECEIVED BY SIXTH INDORSEMENT OF NOVEMBER 20, 1944, FROM THE FISCAL DIRECTOR, ARMY SERVICE FORCES, BUREAU VOUCHER NO. US/7704, IN THE SUM OF $1,568.50, IN FAVOR OF THE UNITED STATES CARTRIDGE COMPANY, COVERING A RECLAIM FOR SAID AMOUNT WHICH WAS COLLECTED FROM THE CONTRACTOR UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. W-ORD-491, DATED DECEMBER 5, 1940, WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO THE PROPRIETY OF THE PAYMENT THEREOF.

THE EXPENSE FOR WHICH REIMBURSEMENT IS CLAIMED REPRESENTS BACK WAGES PAID TO FIVE EMPLOYEES OF THE CONTRACTOR WHO WERE DISCHARGED BY IT AND SUBSEQUENTLY WERE REINSTATED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD. THE FACTS RELATIVE TO THE MATTER ARE STATED IN FIFTH INDORSEMENT OF NOVEMBER 2, 1944, FROM THE CHIEF OF ORDNANCE TO THE OFFICE OF THE FISCAL DIRECTOR, AS FOLLOWS:

"2. THE RECORD DISCLOSES THAT THE CONTRACTOR DISCHARGED FIVE OF ITS EMPLOYEES AT THE ST. LOUIS ORDNANCE PLANT AND SUBSEQUENTLY REINSTATED THEM. PURSUANT TO DIRECTION FROM THE NATIONAL LABOR RELATIONS BOARD, THE COMPANY PAID THESE MEN THE AGGREGATE SUM OF $1,568.50, WHICH REPRESENTS WAGES THEY WOULD HAVE RECEIVED FROM THE COMPANY DURING THE PERIOD FROM TERMINATION OF EMPLOYMENT TO REINSTATEMENT, LESS THEIR NET EARNINGS FROM OTHER SOURCES IN THAT PERIOD. FORMAL EXCEPTION WAS TAKEN BY THE COMPTROLLER GENERAL TO THE PAYMENT.

"3. THE MENTIONED CONTRACT PROVIDES IN PERTINENT PART AS FOLLOWS:

"'TITLE II, ARTICLE II-A - REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES

"'1. THE GOVERNMENT SHALL BEAR ALL COSTS AND EXPENSES OF EVERY CHARACTER AND DESCRIPTION INCURRED BY THE CONTRACTOR UNDER THIS CONTRACT, WHEN APPROVED IN ADVANCE OR SUBSEQUENTLY RATIFIED BY THE CONTRACTING OFFICER, WHICH COSTS AND EXPENSES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE FOLLOWING ITEMS, TO WIT:

"'(G) LOSSES AND EXPENSES, NOT COMPENSATED BY INSURANCE OR OTHERWISE (INCLUDING SETTLEMENTS OF CLAIMS BETWEEN THE CONTRACTOR AND THIRD PARTIES, MADE WITH THE WRITTEN CONSENT OF THE CONTRACTING OFFICER), ACTUALLY SUSTAINED BY THE CONTRACTOR IN CONNECTION WITH THE WORK AND FOUND AND CERTIFIED BY THE CONTRACTING OFFICER AS NOT BEING DUE TO THE PERSONAL FAILURE ON THE PART OF THE CORPORATE OFFICER'S OF THE CONTRACTOR OR OF OTHER REPRESENTATIVES OF THE CONTRACTOR HAVING SUPERVISION AND DIRECTION OF THE OPERATION OF THE PLANT AS A WHOLE, TO EXERCISE GOOD FAITH OR THAT DEGREE OF CARE WHICH THEY NORMALLY EXERCISE IN THE CONDUCT OF THE CONTRACTOR'S BUSINESS.'

"4. THE UNITED STATES CARTRIDGE COMPANY STATES ITS POSITION IN THE MATTER BY LETTER DATED 17 FEBRUARY 1944, PART OF WHICH READS AS FOLLOWS:

"'IN OUR CASE, EACH ACT OF DISMISSAL BY A SUPERVISOR, WAS MADE IN THE SINCERE BELIEF THAT HE WAS ACTING FOR THE BEST INTERESTS OF THE GOVERNMENT IN FURTHERING THE PROGRESS OF WORK UNDER THE CONTRACT. THE TESTIMONY BEFORE THE N.L.R.B. SHOWS CONFLICTING STATEMENTS OF FACT AND DIVERSE STATEMENTS OF MOTIVE, TO SUCH AN EXTENT THAT THE BOARD ITSELF WAS UNCERTAIN OF THE FACTS IN MANY INSTANCES. WHEN OPPOSING INTERPRETATIONS ARE SO DIVERGENT THAT IT REQUIRES AN EXTENDED HEARING BY AN EXECUTIVE TRIBUNAL, AND THE LATTER IS FORCED TO RELY ON "THE RECORD AS A WHOLE" IN ORDER TO ARRIVE AT DECISIONS, THE LAW ITSELF IS NOT SO PATENTLY SELF- EXPLANATORY, THAT EVERY SUPERVISOR OR FOREMAN CAN BE PRESUMED TO HAVE ADVANCE KNOWLEDGE OF ALL THE DUTIES AND RESPONSIBILITIES THAT LAW IMPOSES.

"'SO IN SPITE OF THE FACT THAT SOME MONTHS AFTERWARD, THE N.L.R.B. RULED THAT SOME OF OUR MINOR SUPERVISORY EMPLOYEES ACTED IN VIOLATION OF THE CONCEPTS OF THE BOARD, THERE IS NOTHING IN THE RECORD TO INDICATE THAT THEY DID NOT ACT IN GOOD FAITH, AND IN THE SINCERE BELIEF THAT THEY WERE FULFILLING THE OBLIGATIONS OF THEIR POSITIONS.

"'AND EVEN IF IT WERE RULED THAT THE INDIVIDUAL FOREMAN ERRED, OR IF THEIR GOOD FAITH IN EACH INSTANCE COULD BE QUESTIONED, THERE IS NOT ONE IOTA OF EVIDENCE THAT THE LIABILITY WAS INCURRED BY "PERSONAL FAILURE ON THE PART OF THE OFFICERS OF THE CONTRACTOR OR OF OTHER REPRESENTATIVES OF THE CONTRACTOR HAVING SUPERVISION AND DIRECTION OF THE OPERATION OF THE PLANT AS A WHOLE TO EXERCISE THAT GOOD FAITH, ETC."'

"5.THE FINDING OF FACT OF THE CONTRACTING OFFICER'S REPRESENTATIVE STATES:

"'I HEREBY FIND AS A FACT THAT THE ITEMS DESCRIBED ABOVE REPRESENT LOSSES OR EXPENSES INCURRED IN CONNECTION WITH THE WORK UNDER CONTRACT W-ORD-491, THAT REIMBURSEMENT THEREFOR IS NOT PROHIBITED BY THE CONTRACT, THAT THE AMOUNTS INVOLVED ARE JUST AND REASONABLE, THAT THEY ARE NOT COVERED BY INSURANCE, THAT THE CONTRACTOR HAS NOT FAILED TO SECURE BONDS AND INSURANCE AS REQUESTED BY THE CONTRACTING OFFICER'S REPRESENTATIVE, THAT THE CONTRACTOR HAS NOT OTHERWISE BEEN COMPENSATED, AND THAT THE EVIDENCE FAILS TO DISCLOSE THAT THESE LOSSES OR EXPENSES WERE DUE TO THE PERSONAL DISCLOSE THAT THESE LOSSES OR EXPENSES WERE DUE TO THE PERSONAL FAILURE ON THE PART OF THE CORPORATE OFFICERS OF THE CONTRACTOR OR OF OTHER REPRESENTATIVES OF THE CONTRACTOR HAVING SUPERVISION AND DIRECTION OF THE OPERATION OF THE PLANT AS A WHOLE TO EXERCISE GOOD FAITH OR THAT DEGREE OF CARE WHICH THEY NORMALLY EXERCISE IN THE CONDUCT OF THE CONTRACTOR'S BUSINESS.'"

WHILE THE CONTRACTOR ADMITS THE DISCHARGE OF THE EMPLOYEES IN QUESTION, IT CONTENDS THAT ITS SUPERVISORS AND FOREMEN WHO DISMISSED SAID EMPLOYEES SINCERELY BELIEVED THAT THEY WERE ACTING IN THE INTEREST OF THE GOVERNMENT AND IN FURTHERANCE OF THE WORK COVERED BY THE CONTRACT; THAT THE DISCHARGE OF THE EMPLOYEES WAS DIRECTLY CONNECTED WITH THE WORK; THAT THE PAYMENT OF BACK WAGES TO SUCH EMPLOYEES, AT THE DIRECTION OF THE NATIONAL LABOR RELATIONS BOARD, WAS A LOSS, AND THE PAYMENT THEREOF CONSTITUTED THE DISCHARGE OF A "LIABILITY *** ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF THE WORK"; AND THAT THERE IS NO EVIDENCE THAT SUCH LIABILITY WAS "DUE TO THE PERSONAL FAILURE ON THE PART OF THE CORPORATE OFFICERS OF THE CONTRACTOR OR OF OTHER REPRESENTATIVES OF THE CONTRACTOR HAVING SUPERVISION AND DIRECTION OF THE OPERATION OF THE PLANT AS A WHOLE, TO EXERCISE GOOD FAITH OR THAT DEGREE OF CARE WHICH THEY NORMALLY EXERCISE IN THE CONDUCT OF THE CONTRACTOR'S BUSINESS." HENCE, THE CONTRACTOR INSISTS THAT IT IS ENTITLED TO REIMBURSEMENT OF THE AMOUNT INVOLVED UNDER THE PROVISIONS OF PARAGRAPH 9 OF ARTICLE I-B OF THE CONTRACT, WHICH IS AS FOLLOWS:

"9. IT IS THE UNDERSTANDING OF THE PARTIES HERETO, AND THE INTENTION OF THIS CONTRACT, THAT ALL WORK, INCLUDING THE HANDLING OF FUNDS, UNDER THIS TITLE I IS TO BE PERFORMED AT THE EXPENSE AND RISK OF THE GOVERNMENT AND THAT THE GOVERNMENT SHALL INDEMNIFY AND HOLD THE CONTRACTOR HARMLESS AGAINST ANY LOSS, EXPENSE, DAMAGE OR LIABILITY OF ANY KIND WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF THE WORK UNDER THIS TITLE I, EXCEPT TO THE EXTENT THAT SUCH LOSS, EXPENSE, DAMAGE OR LIABILITY IS DUE TO THE PERSONAL FAILURE ON THE PART OF THE CORPORATE OFFICERS OF THE CONTRACTOR OR OF OTHER REPRESENTATIVES OF THE CONTRACTOR HAVING SUPERVISION AND DIRECTION OF THE OPERATION OF THE PLANT AS A WHOLE, TO EXERCISE GOOD FAITH OR THAT DEGREE OF CARE WHICH THEY NORMALLY EXERCISE IN THE CONDUCT OF THE CONTRACTOR'S BUSINESS."

THE RECORD DOES NOT DISCLOSE THE CONTRACTOR'S REASONS FOR DISCHARGING THE EMPLOYEES, NOR DOES IT CONTAIN THE FINDINGS UPON WHICH THE NATIONAL LABOR RELATIONS BOARD ORDERED THE REINSTATEMENT OF, AND THE PAYMENT OF BACK WAGES TO, SAID EMPLOYEES. HOWEVER, IN A LETTER OF FEBRUARY 17, 1944, TO THE OFFICE OF THE COMMANDING OFFICER, ST. LOUIS ORDNANCE PLANT, THE CONTRACTOR STATES THAT THE EVIDENCE BEFORE THE NATIONAL LABOR RELATIONS BOARD WAS CONFLICTING "TO SUCH AN EXTENT THAT THE BOARD ITSELF WAS UNCERTAIN OF THE FACTS IN MANY INSTANCES." BE THAT AS IT MAY, WHETHER THE CONTRACTOR WAS GUILTY OF UNFAIR LABOR PRACTICES WAS A QUESTION FOR THE DETERMINATION OF THE BOARD SINCE IT HAS THE EXCLUSIVE PROVINCE OF APPRAISING CONTRADICTORY OR CIRCUMSTANTIAL EVIDENCE, THE WEIGHT AND CREDIBILITY OF TESTIMONY AND OF DRAWING INFERENCES FROM ESTABLISHED FACTS. BOEING AIRPLANE CO., WICHITA DIVISION V. NATIONAL LABOR RELATIONS BOARD (C.C.A.) 140 F.2D 423; NATIONAL LABOR RELATIONS BOARD V. LETTIE LEE, INC. (C.C.A.), 131 F.2D 665; 22 COMP.GEN. 349. MOREOVER, EVERY PRESUMPTION OF REGULARITY ATTENDS THE ACTION OF THE BOARD (CUPPLES COMPANY MANUFACTURERS V. NATIONAL LABOR RELATIONS BOARD (C.C.A.), 103 F.2D 953), AND WHEN ITS ULTIMATE FINDINGS ARE MADE A PRESUMPTION EXISTS THAT THEY WERE MADE IN ACCORDANCE WITH THE LAW. NATIONAL LABOR RELATIONS BOARD V. TEXAS MINING & SMELTING CO. (C.C.A.), 117 F.2D 86. ALSO, SEE INLAND STEEL CO. V. NATIONAL LABOR RELATIONS BOARD (C.C.A.), 105 F.2D 246; NATIONAL LABOR RELATIONS BOARD V. JASPER CHAIR CO. (C.C.A.), 138 F.2D 756. IN VIEW THEREOF, IT MUST BE ASSUMED THAT THE ORDER OF THE BOARD REQUIRING THE REINSTATEMENT OF THE EMPLOYEES AND THE PAYMENT TO THEM OF BACK WAGES NECESSARILY WAS PREDICATED UPON A FINDING THAT THE EMPLOYEES WERE DISCHARGED BY THE CONTRACTOR IN VIOLATION OF THE NATIONAL LABOR RELATIONS ACT, 49 STAT. 449.

IN THIS CONNECTION, WHILE IT IS TO BE RECOGNIZED THAT THE PROVISIONS OF ARTICLES I-B-9 AND II-A-1-G OF THE CONTRACT INVOLVED ARE BROAD AND LIBERAL IN THEIR SCOPE, THEY NEITHER PROVIDE FOR NOR CONTEMPLATE THE REIMBURSEMENT OF "ANY LOSS, EXPENSE, DAMAGE OR LIABILITY" WHICH THE CONTRACTOR HAS SUSTAINED OR INCURRED AS A RESULT OF ITS DISREGARD OR VIOLATION OF SOME DUTY OR RESPONSIBILITY IMPOSED UPON IT BY LAW AND WHICH DID NOT IN ANY WAY FURTHER THE PROSECUTION OF THE WORK. CONSEQUENTLY, THE CONTRACTOR NOW CANNOT RECOUP ITS LOSS-- WHICH RESULTED FROM ITS FAILURE TO DISCHARGE ITS OBLIGATIONS TO ITS EMPLOYEES UNDER THE ACT IN QUESTION-- BY TRANSFERRING THE BURDEN THEREOF TO THE GOVERNMENT AND THEREBY DEFEAT ONE OF THE PURPOSES FOR WHICH THE STATUTE WAS ENACTED. 22 COMP.GEN. 349.

ACCORDINGLY, PAYMENT ON THE INSTANT VOUCHER IS NOT AUTHORIZED.

THE VOUCHER, TOGETHER WITH SUPPORTING PAPERS, IS RETURNED HEREWITH.