B-145008, DEC. 12, 1962

B-145008, DEC. 12, 1962

TO DAVID E. BALL, DIRECTOR, BUREAU OF THE BUDGET:

BY LEGISLATIVE REFERRAL MEMORANDUM DATED NOVEMBER 28, 1962, THE ASSISTANT DIRECTOR FOR LEGISLATIVE REFERENCE ENCLOSED FOR AN EXPRESSION OF THE VIEWS OF OUR OFFICE A DRAFT OF A PROPOSED VETERANS ADMINISTRATION SUPPLEMENTAL REPORT ON H.R. 10255, 87TH CONGRESS.

THE BILL WOULD AUTHORIZE AND DIRECT THE SECRETARY OF THE TREASURY TO PAY $171,950.86 TO THE COUNTY OF CUYAHOGA, OHIO, IN FULL SETTLEMENT OF ALL CLAIMS AGAINST THE UNITED STATES TO COVER THE GOVERNMENT'S FAIR SHARE OF THE INCREASED COSTS FOR THE CONSTRUCTION OF THE SEWAGE DISPOSAL PLANT TO BE CONSTRUCTED FOR SERVING THE AREA ADJACENT TO THE VETERANS ADMINISTRATION HOSPITAL IN BRECKSVILLE, OHIO.

THE ESSENTIAL FACTS LEADING UP TO THE COUNTY'S CLAIM WERE FULLY SET FORTH IN OUR PRIOR REPORT OF JUNE 12, 1962, TO YOU, COPY ATTACHED. WE HAVE NO FIRST HAND INFORMATION OR DATA ON THE DEVELOPMENTS SINCE OUR PRIOR REPORT TO YOU OTHER THAN THE FACTS AS STATED IN THE PROPOSED REPORT NOW BEFORE YOU FOR CONSIDERATION. INFORMAL INFORMATION RECEIVED HERE, HOWEVER, IS TO THE EFFECT THAT VETERANS ADMINISTRATION HAS TAKEN THE POSITION THAT THE COUNTY HAS EXECUTED A BINDING CONTRACT FOR FURNISHING SEWAGE SERVICE TO THE BRECKSVILLE HOSPITAL AND THAT IF THE TERMS OF THAT CONTRACT ARE TO BE MODIFIED AS A RESULT OF THE PROPOSED LEGISLATION SUCH LEGISLATION SHOULD CONSIDER AND INCLUDE THE NEEDS OF THE BROADVIEW HEIGHTS HOSPITAL WHICH IS PRESENTLY COVERED BY A SEPARATE CONTRACT. THIS VIEW IS UNDERSTOOD TO BE PROMPTED BY THE FACT THAT VETERANS ADMINISTRATION ESTIMATED A DAILY FLOWAGE OF NOT IN EXCESS OF 240,000 GALLONS FROM THE BRECKSVILLE HOSPITAL WHEREAS UNDER THE CONTRACT A PERMISSIBLE FLOWAGE OF 330,000 GALLONS IS AUTHORIZED AND THE ESTIMATED DAILY FLOWAGE FROM BROADVIEW HEIGHTS IS ONLY 36,720 GALLONS OR A TOTAL OF 277,420 GALLONS FOR BOTH HOSPITALS AS COMPARED WITH THE PERMISSIBLE DAILY FLOWAGE OF 330,000 GALLONS AUTHORIZED UNDER THE BRECKSVILLE CONTRACT.

FROM THE FACTS AS STATED IN THE PRESENT PROPOSED REPORT, IT NOW APPEARS THAT THE ACTUAL FOUNDATION COST FOR THE BRECKSVILLE SEWAGE DISPOSAL PLANT WAS $89,028.25 INSTEAD OF THE ESTIMATED $30,000 USED AS A BASIS FOR VETERANS ADMINISTRATION'S COMMENTS ON THIS POINT IN ITS REPORT OF JULY 5, 1962, TO THE CHAIRMAN, COMMITTEE ON THE JUDICIARY, HOUSE OF REPRESENTATIVES. ALSO, THE PROPOSED REPORT NOTES THAT THE NEW ESTIMATE INCLUDES LEGAL AND ENGINEERING FEES, TOGETHER WITH MAINTENANCE AND OPERATION COSTS, ALL OF WHICH IT IS STATED VETERANS ADMINISTRATION FEELS SHOULD BE COVERED BY THE SERVICE CHARGES REFERRED TO IN THE AGREEMENT. IS UNDERSTOOD THAT THIS VIEW IS BASED UPON THE PROVISIONS OF ARTICLE 6 OF CONTRACT V1005-M 597 WHICH PROVIDES THAT NO CHARGES OF ANY CHARACTER EXCEPT AS THERETOFORE STATED SHALL BE MADE AGAINST OR SHALL BE PAYABLE BY THE GOVERNMENT PRIOR TO PUTTING INTO OPERATION THE SEWAGE DISPOSAL TREATMENT PLANT AND THAT FROM AND AFTER THE DATE WHEN THE PLANT BEGINS OPERATION AND RECEIVES SEWAGE FROM THE PREMISES THE GOVERNMENT SHALL BE OBLIGATED TO PAY THE COUNTY FOR SEWAGE TREATMENT, AFTER THE COUNTY SUBMITS PROPER VOUCHERS, A REASONABLE AMOUNT PAYABLE MONTHLY, QUARTERLY, SEMI- ANNUALLY OR ANNUALLY AT COUNTY'S OPTION BY REASON OF THE GOVERNMENT SEWAGE CONTRIBUTING TO THE OPERATING COSTS OF THE TREATMENT PLANT. THEREFORE, IT IS OBSERVED THAT IF THE SUM OF $15,000 (ESTIMATED MAINTENANCE AND OPERATION CHARGES INCLUDED IN ITEM 3 OF THE ATTACHMENT TO MR. GORMAN'S LETTER WHICH IS UNDERSTOOD TO REPRESENT AN OUTLINE AND ITEMIZATION OF THE REVISED COSTS) AND $24,840 (REFERRED TO AS ITEM 4 OF SUCH ATTACHMENT IN ITS ENTIRETY) ARE DEDUCTED FROM THE TOTAL ESTIMATE, THERE WOULD BE LEFT A TOTAL PLANT COST OF APPROXIMATELY $765,000.

THE PROPOSED REPORT STATES THAT VETERANS ADMINISTRATION HAS NEVER ANTICIPATED USE OF THE TOTAL PLANT CAPACITY OF 330,000 GALLONS PER DAY RESERVED FOR USE OF THE BRECKSVILLE HOSPITAL (STATED IN OUR PRIOR REPORT TO HAVE BEEN ON THE BASIS OF A VERBAL RECOMMENDATION BY THE COUNTY SANITARY ENGINEER TO AVOID THE NECESSITY OF FUTURE RENEGOTIATIONS). THEREPORT FURTHER STATES THAT IT IS ANTICIPATED THAT THE RESERVED CAPACITY IS MORE THAN REQUIRED TO HANDLE POSSIBLE INFILTRATION AT BOTH THE BRECKSVILLE AND BROADVIEW HEIGHTS HOSPITALS SERVED BY THE PLANT. THEREFORE, THE VIEW IS EXPRESSED THAT ANY LEGISLATION MUST CONSIDER THE NEEDS OF BOTH HOSPITALS IN ASSESSING ANY CHARGES TO THE GOVERNMENT IN EXCESS OF THE CONTRACTUAL AMOUNT.

AS INDICATED ABOVE, H.R. 10255 WOULD AUTHORIZE PAYMENT OF THE SUM OF $171,950.86 TO THE COUNTY OF CUYAHOGA TO COVER THE GOVERNMENT'S FAIR SHARE OF INCREASED COSTS FOR THE CONSTRUCTION OF THE SEWAGE DISPOSAL PLANT TO BE CONSTRUCTED FOR SERVING THE AREA ADJACENT TO THE VETERANS ADMINISTRATION HOSPITAL IN BRECKSVILLE. IN OUR PRIOR REPORT WE STATED THAT IF FAVORABLE CONSIDERATION SHOULD BE ACCORDED THE BILL WE AGREED WITH THE VIEW EXPRESSED IN THE ORIGINAL PROPOSED REPORT THAT THERE IS NO PROPER BASIS FOR PAYMENT TO THE COUNTY OF THE AMOUNT STATED IN THE BILL. IT WAS POINTED OUT THAT THE AMOUNT OF $45,146.94 WOULD REPRESENT VETERANS ADMINISTRATION'S FAIR SHARE FOR THE NEW HOSPITAL DIVISION BASED ON THE REPORTED COST OF A PLANT WITH A DAILY CAPACITY OF 1 MILLION GALLONS, OR $17,424.72 IN EXCESS OF THE AMOUNT STIPULATED IN THE CONTRACT FOR A PLANT WITH A DAILY CAPACITY OF 800,000 GALLONS, PLUS $27,722.22 REPRESENTING VETERANS ADMINISTRATION'S FAIR SHARE FOR THE BROADVIEW HEIGHTS DIVISION WHICH WAS NOT INCLUDED IN THE DISCUSSIONS AT THE TIME CONTRACT NO. V1005-M 597 WAS EXECUTED. IN CONCLUSION, WE EXPRESSED THE VIEW THAT A PAYMENT OF $45,146.94 IN ADDITION TO THE PAYMENT OF $173,242 PROVIDED IN THE CONTRACT COULD BE JUSTIFIED ON AN EQUITABLE BASIS.

IN THE LIGHT OF THE INCREASED COSTS THE PRESENT PROPOSED REPORT CONCLUDES THAT 33 PERCENT OF THE PLANT COST IS A REASONABLE CHARGE AGAINST THE BRECKSVILLE HOSPITAL AND 4.8 PERCENT IS A REASONABLE CHARGE AGAINST THE BROADVIEW HEIGHTS HOSPITAL AND, THEREFORE, THAT VETERANS ADMINISTRATION CONTINUES TO OPPOSE ENACTMENT OF LEGISLATION TO PAY THE COUNTY OF CUYAHOGA THE SUM OF $171,950.86 AS PROPOSED IN THE BILL. IT IS STATED, HOWEVER, THAT IF THE BILL SHOULD BE AMENDED TO PROVIDE FOR PAYMENT TO THE COUNTY THE SUM OF $115,928 ($79,208 FOR BRECKSVILLE, AND $36,720 FOR BROADVIEW HEIGHTS) AS THE VETERANS ADMINISTRATION'S FAIR SHARE OF THE INCREASED COSTS IN ADDITION TO THE AMOUNT OF $173,242 ORIGINALLY AGREED UPON OR A TOTAL OF $289,170, IT WOULD HAVE NO OBJECTION TO FAVORABLE CONSIDERATION OF THE BILL WITH THE UNDERSTANDING THAT THIS PAYMENT WOULD COVER ALL CONNECTION CHARGES FOR BOTH THE BRECKSVILLE AND THE BROADVIEW HEIGHTS HOSPITALS. AS POINTED OUT IN THE PROPOSED REPORT THE PAYMENT OF $115,928 IN ADDITION TO THE AMOUNT OF $173,242 AGREED UPON, OR A TOTAL OF $289,170, IS A MODIFICATION OF THE ORIGINAL VETERANS ADMINISTRATION RECOMMENDATION THAT THE AMOUNT AUTHORIZED SHOULD PROPERLY BE LIMITED TO $45,146.94 ($17,424.72 FOR BRECKSVILLE AND $27,722.22 FOR BROADVIEW HEIGHTS).

AS WE POINTED OUT IN OUR PRIOR REPORT OF JUNE 12, 1962, THE QUESTION WHETHER RELIEF SHOULD BE GRANTED IN THIS CASE, IS OF COURSE, A MATTER FOR DETERMINATION BY THE CONGRESS. IF FAVORABLE CONSIDERATION IS TO BE ACCORDED THE BILL, WE FEEL THAT ON THE BASIS OF THE FACTS NOW APPEARING IN THE PROPOSED REPORT THAT THERE IS REASONABLE BASIS FOR CONCLUDING THAT ANY LEGISLATION SHOULD CONSIDER THE NEEDS OF BOTH HOSPITALS IN ASSESSING ANY CHARGES IN EXCESS OF THE CONTRACTUAL AMOUNT OF $173,242 ORIGINALLY AGREED UPON AND THAT A PAYMENT OF $115,928 AS PROPOSED BY VETERANS ADMINISTRATION AS THE GOVERNMENT'S FAIR SHARE OF THE INCREASED COSTS IN ADDITION TO THE PAYMENT OF $173,242 PROVIDED FOR IN CONTRACT NO. V1005-M 597 COULD BE JUSTIFIED ON AN EQUITABLE BASIS.