B-167527, AUG. 18, 1969

B-167527: Aug 18, 1969

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HELD THAT OFFICIAL RATE OF EXCHANGE IS STILL 80$ VN TO $1. WHICH WAS RECEIVED HERE ON JULY 18. THE SAID RENTAL IS BASED ON THE CURRENT LIMITED ACCESS FREE MARKET RATE OF EXCHANGE OF THE VN PIASTERS (1US$ - 72.77VN$). OR OF THE EXISTING 40 PERCENT SUPER RENT TAX WILL RESULT IN A REEVALUATION OF THE RENTAL FIGURES.'. YOU STATE THAT FROM THE DATE THE LEASE WAS SIGNED THROUGH JULY 31. WHICH WAS THE RATE AT WHICH THE U.S. THE RATE USED WAS VN$ 80 EQUALS U.S. $1 AND AFTER OCTOBER 1. DISBURSING OFFICER'S BUYING RATE OF VN $118 WAS USED. SOME LEASES CONTAINING CLAUSES IDENTICAL OR SIMILAR TO THAT QUOTED ABOVE WERE ADJUSTED AT THE BEGINNING OF THE NEXT RENTAL PERIOD TO MAKE PAYMENT AT THE INCREASED RATE OF EXCHANGE.

B-167527, AUG. 18, 1969

CONTRACTS - LEASE - OFFICIAL RATE OF EXCHANGE DECISION TO CHIEF, VOUCHER EXAMINATION BRANCH, U.S. AID MISSION TO VIETNAM CONCERNING PAYMENT OF A VOUCHER IN THE AMOUNT OF 93,232.10$ COVERING A RENTAL ADJUSTMENT CLAIMED BY MRS. NGUYEN THI NHIEU FOR PERIOD FROM MAY 29, 1968, THROUGH NOVEMBER 20, 1968. HELD THAT OFFICIAL RATE OF EXCHANGE IS STILL 80$ VN TO $1, AND THUS AN ADJUSTMENT ALLOWED UNDER LEASE WHEN EXCHANGE RATE FLUCTUATES IN EXCESS OF 15 PERCENT COULD NOT BE MADE SINCE EXCHANGE RATE HAS NOT WAIVED MORE THAN 15 PERCENT. INASMUCH AS FACTS SURROUNDING THE LEASE CONTRACT DO NOT PROVIDE ANY INDICATION THAT THE CONTRACT, AS EXECUTED, ENVISIONED THE 118$ VN TO $1 EXCHANGE RATE, IT APPEARS THAT THE LESSOR WOULD BE BOUND BY THE TERMS OF ITS ORIGINAL LEASE CONTRACT.

TO MISS VOLZ:

BY LETTER DATED JUNE 23, 1969, REFERENCE ADFM: VOUCHER NO. 1059/69, WHICH WAS RECEIVED HERE ON JULY 18, 1969, YOU REQUESTED AN ADVANCE DECISION AS TO THE PROPRIETY OF MAKING PAYMENT ON A VOUCHER STATED IN FAVOR OF MRS. NGUYEN THI NHIEU IN THE AMOUNT OF 93,232.10$ VN, COVERING A RENTAL ADJUSTMENT DURING THE PERIOD FROM MAY 29, 1968, THROUGH NOVEMBER 20, 1968, BASED ON ARTICLE 9 OF LEASE NO. AID-430-LE-578 DATED NOVEMBER 13, 1964.

THE INSTANT VOUCHER COVERS A CLAIM FOR THE DIFFERENCE BETWEEN 80$ VN TO $1, THE OFFICIAL RATE OF EXCHANGE AS ESTABLISHED BY GOVERNMENT OF VIETNAM (GVN) DECREE LAW NO. 001/SLU OF JUNE 19, 1966, AND THE PURCHASE RATE OF 118$ VN TO $1 AS PROVIDED BY THE COMBINATION OF THE OFFICIAL RATE OF 80$ VN TO $1 PLUS A SUBSIDY OF 38$ VN TO $1 AS PROVIDED BY DECREE LAW NO. 002/SLU OF JUNE 17, 1966, AS AMENDED BY DECREE LAW NO. 035/SLU OF AUGUST 29, 1967.

UNDER THE TERMS OF ARTICLE 9 OF THE LEASE, THE GOVERNMENT AGREED TO PAY TO THE LESSOR FOR THE USE OF THE PREMISES DESCRIBED THEREIN AS FOLLOWS:

"THE LESSEE SHALL PAY THE LESSOR FOR THE PREMISES RENTED A MONTHLY RENTAL OF TWENTY FIVE THOUSAND VIETNAMESE PIASTERS (25,000$VN) (DEPENDENT UPON THE ANNUAL APPROPRIATION OF FUNDS BY THE CONGRESS OF THE UNITED STATES OF AMERICA). THE SAID RENTAL IS BASED ON THE CURRENT LIMITED ACCESS FREE MARKET RATE OF EXCHANGE OF THE VN PIASTERS (1US$ - 72.77VN$); EVENTUAL FLUCTUATIONS EXCEEDING 15 PERCENT OF THE ABOVE LIMITED ACCESS FREE MARKET OR OTHER OFFICIAL RATE OF EXCHANGE, OR OF THE EXISTING 40 PERCENT SUPER RENT TAX WILL RESULT IN A REEVALUATION OF THE RENTAL FIGURES.'

YOU STATE THAT FROM THE DATE THE LEASE WAS SIGNED THROUGH JULY 31, 1966, ALL PAYMENTS MADE BY THE U.S. AID MISSION AND OTHER U.S. GOVERNMENT AGENCIES REFLECTED, WHEN NECESSARY, THE EXCHANGE RATE OF VN$ 72.77 OR $72.90 TO U.S. $1, WHICH WAS THE RATE AT WHICH THE U.S. DISBURSING OFFICE PURCHASED PIASTERS. FROM AUGUST 1, 1966, TO SEPTEMBER 30, 1967, THE RATE USED WAS VN$ 80 EQUALS U.S. $1 AND AFTER OCTOBER 1, 1967, THE U.S. DISBURSING OFFICER'S BUYING RATE OF VN $118 WAS USED. YOU STATE THAT BEGINNING OCTOBER 1, 1967, SOME LEASES CONTAINING CLAUSES IDENTICAL OR SIMILAR TO THAT QUOTED ABOVE WERE ADJUSTED AT THE BEGINNING OF THE NEXT RENTAL PERIOD TO MAKE PAYMENT AT THE INCREASED RATE OF EXCHANGE. LEASES CONTAINING ONLY A REFERENCE TO A FLUCTUATION IN THE OFFICIAL RATE OF EXCHANGE WERE ALSO SIMILARLY ADJUSTED.

IN YOUR LETTER OF JUNE 23, 1969, YOU STATE THAT WITHIN THE LAST 60 DAYS THE MISSION HAS BEEN INFORMALLY ADVISED THAT SUCH PAYMENTS MAY NOT BE IN ORDER AS IT IS BELIEVED THE OFFICIAL RATE OF EXCHANGE HAD NOT CHANGED. YOU STATE THAT THIS INFORMATION WAS BASED ON OUR DECISIONS B 163206, APRIL 11, 1968, AND B-163433, APRIL 17, 1968. IN THESE DECISIONS, WE CONSIDERED THE PROPRIETY OF PAYING SIMILAR CLAIMS UNDER CONTRACTS CONTAINING A PAYMENT PROVISION ESSENTIALLY THE SAME AS THAT OF THE INSTANT LEASE. THESE DECISIONS, WE STATED THAT THE SUBSIDY OF 38 PIASTERS PER UNITED STATES DOLLAR GRANTED TO THE UNITED STATES BY THE GOVERNMENT OF VIETNAM WAS SOLELY FOR THE BENEFIT OF THE UNITED STATES AND SHOULD NOT BE PASSED ON TO THE CONTRACTORS HAVING CONTRACTS WITH THE UNITED STATES. ADDITION TO THE DECISIONS CITED ABOVE, OUR OFFICE CONSIDERED IN B-162195, AUGUST 18, 1967, A CLAIM FOR SUPPLEMENTAL RENTAL PAYMENTS UNDER A LEASE AGREEMENT. IN THIS DECISION WE HELD, IN ESSENCE, THAT THE AMOUNT CLAIMED COULD NOT EXCEED THE NUMBER OF PIASTERS DENOMINATED IN THE LEASE CONTRACT. THUS, WHAT WE STATED THERE IS EQUALLY APPLICABLE HERE.

THE FACTS SURROUNDING THE LEASE CONTRACT DO NOT PROVIDE ANY INDICATION THAT THE CONTRACT, AS EXECUTED, ENVISIONED THE 118$ VN TO $1 EXCHANGE RATE. THEREFORE, THE LESSOR WOULD APPEAR TO BE BOUND BY THE TERMS OF ITS ORIGINAL LEASE CONTRACT. THE PROVISION IN THE RENTAL CONTRACT FOR RENTAL REEVALUATION BASED ON EVENTUAL FREE MARKET EXCHANGE RATE FLUCTUATIONS WAS MADE BEFORE THE 38$ VN TO $1 VIETNAMESE SUBSIDY WAS GRANTED. HENCE, SUCH EXCHANGE RATE ADJUSTMENT PROVISION DID NOT CONTEMPLATE AN ADJUSTMENT OTHER THAN THAT RESULTING FROM FREE MARKET FLUCTUATIONS AS DISTINGUISHED FROM A FLUCTUATION REPRESENTED BY THE SPECIAL EXCHANGE RATE SUBSIDY WHICH WAS FOR THE BENEFIT OF THE UNITED STATES ONLY. MOREOVER, THE OFFICIAL RATE OF EXCHANGE IS STILL 80$ VN TO $1, AND THUS AN ADJUSTMENT ALLOWED BY THE LEASE PROVISION WHEN THE EXCHANGE RATE FLUCTUATES IN EXCESS OF 15 PERCENT COULD NOT BE MADE SINCE THE STATED VN$ 72.77 EXCHANGE RATE HAS NOT VARIED BY MORE THAN 15 PERCENT.

ACCORDINGLY, PAYMENT IS NOT AUTHORIZED AND THE VOUCHER WITH ENCLOSURES WILL BE RETAINED HERE.

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