B-28322, MAR 1, 1943

B-28322, MAR 1, 1943

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF WAR:

I HAVE YOUR LETTER OF FEBRUARY 1, 1943, AS FOLLOWS:

"YOUR LETTER OF OCTOBER 15, 1942 (B-28322) ADDRESSED TO LT. COLONEL W. GRITS, F.D., U.S. ARMY, HAS BEEN RECEIVED. YOU STATE THEREIN THAT THE CONTRACTOR-OPERATOR OF A GOVERNMENT-OWNED, PRIVATELY OPERATED PLANT CANNOT PROPERLY BE REIMBURSED BY THE WAR DEPARTMENT FOR PAYMENTS MADE BY HIM FOR BACK WAGES NOT ACTUALLY EARNED BY AN EMPLOYEE BUT PAID TO HIM PURSUANT TO A COMPROMISE SETTLEMENT OF A SUIT INSTITUTED BY SUCH EMPLOYEE AGAINST THE CONTRACTOR FOR DISCRIMINATORY DISCHARGE UNDER THE NATIONAL LABOR RELATIONS ACT AN SEEKING REINSTATEMENT TO HIS FORMER POSITION WITH BACK PAY. THE BREADTH OF LANGUAGE EMPLOYED IN YOUR OPINION RAISES CERTAIN DOUBTS AS TO ITS APPLICABILITY TO SITUATIONS OTHER THAN THAT WHICH WAS SPECIFICALLY DECIDED, WHICH OTHER SITUATIONS OCCUR ALMOST DAILY IN ALL SUCH PLANTS AND WHICH, THOUGH SUPERFICIALLY SIMILAR IN APPEARANCE, ARE VERY DIFFERENT IN SUBSTANCE. PARTICULAR REFERENCE IS MADE TO THAT PORTION OF YOUR OPINION ON PAGE 14 WHICH READS AS FOLLOWS:

"IN VIEW THEREOF, THE FACT THAT THE EXPENDITURE HAS BEEN APPROVED BY A REPRESENTATIVE OF THE CONTRACTING OFFICER MAY NOT OPERATE TO SHIFT FROM THE CONTRACTOR TO THE GOVERNMENT THE CONSEQUENCES OF THE CONTRACTOR'S ACTION WHICH RESULTED IN ITS HAVING TO PAY THE EMPLOYEES FOR A PERIOD DURING WHICH THEY PERFORMED NO SERVICES ON THE CONTRACT WORK."

"IN THE OPERATION OF ANY PLANT OF SUBSTANTIAL SIZE, INCLUDING GOVERNMENT- OWNED, PRIVATELY OPERATED PLANTS, SUSPENSIONS AND DISCHARGES FOR INFRACTIONS OF PLANT RULES, INSUBORDINATION OR FOR OTHER REASONS HAVING NO RELATION TO THE NATIONAL LABOR RELATIONS ACT, ARE FREQUENTLY NECESSARY AND ARE PART OF THE REGULAR ADMINISTRATIVE FUNCTIONS OF PLANT MANAGEMENT. UNDER NORMAL PLANT PROCEDURE AND IN ACCORDANCE WITH SECTION 5(C) OF THE WAR AND NAVY DEPARTMENTS STATEMENT OF LABOR POLICY GOVERNING LABOR RELATIONS IN GOVERNMENT-OWNED, PRIVATELY OPERATED PLANTS, DATED JUNE 22, 1942, SUCH DISCHARGES IF OPPOSED BY THE EMPLOYEE OR HIS REPRESENTATIVE, MAY BE REVIEWED THROUGH THE ESTABLISHED GRIEVANCE PROCEDURE. IT IS TO BE EXPECTED, REGARDLESS OF HOW EFFICIENTLY AND EFFECTIVELY THE SUPERVISORY PERSONNEL IN THE PLANT PERFORM THEIR TASKS, THAT MISTAKES MADE IN GOOD FAITH WILL BE MADE AND THAT CERTAIN OF THOSE PERSONS WHO ARE SUSPENDED OR DISCHARGED WILL, AFTER THE REVIEW OF THEIR CASES THROUGH THE ESTABLISHED GRIEVANCE MACHINERY, BE REINSTATED WITH BACK PAY. SUCH CASES ARE PART OF THE NORMAL ROUTINE IN ANY LARGE INDUSTRIAL ESTABLISHED, AND SOUND PERSONNEL MANAGEMENT REQUIRES A POLICY UNDER WHICH EMPLOYEES ERRONEOUSLY DISCHARGED ARE REINSTATED WITH BACK PAY. PROVISIONS TO THAT EFFECT ARE USUAL IN COLLECTIVE BARGAINING AGREEMENTS AND CAN BE CONSIDERED AS CONSTITUTING PART OF THE TERMS OF EMPLOYMENT OF EVERY EMPLOYEE SUBJECT TO ANY SUCH AGREEMENT. REINSTATEMENT WITH BACK PAY IN SUCH INSTANCES CAN IN NO SENSE BE CONSIDERED AS RESULTING FROM A VIOLATION OF ANY LAW OR REGULATION OR FROM A FAILURE ON THE PART OF MANAGEMENT TO CARRY OUT PROPERLY ANY DUTIES UNDER ITS CONTRACT WITH THE WAR DEPARTMENT. ON THE CONTRARY, IT IS A COST WHICH IS CUSTOMARILY INCIDENT TO THE OPERATION OF AN INDUSTRIAL ESTABLISHMENT. UNDER PERSONNEL POLICIES AND THE INTERESTS OF EFFICIENT PRODUCTION REQUIRE THE REIMBURSEMENT OF CONTRACTORS IN SUCH PLANTS FOR ACCOUNTS PAID OUT IN THE FORM OF BACK PAY UNDER THE CONDITIONS HEREINABOVE OUTLINED.

"THE CONTRACT DISCUSSED IN YOUR DECISION B-28322, CITED SUPRA ALONG WITH MANY OTHER COST-PLUS-A-FIXED-FEE CONTRACTS, CONTAINS A SECTION COVERING REIMBURSEMENT TO THE CONTRACTOR FOR LOSSES INCURRED IN PERFORMING THE CONTRACT, AND A PROVISION SETTING UP THE DEGREE OF CARE REQUIRED OF THE CONTRACTOR'S OFFICERS AND SUPERVISORY EMPLOYEES, ALL OF WHICH HAVE A BEARING ON THE LIABILITY OF THE GOVERNMENT TO REIMBURSE THE CONTRACTOR FOR SUCH LOSSES AS ARE INVOLVED IN THE INSTANT SUBMISSION. THESE PROVISIONS READ 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 BUT NOT LIMITED TO THE FOLLOWING ITEMS:

"'I. LOSSES AND EXPENSES, NOT COMPENSATED BY INSURANCE OR OTHERWISE (INCLUDING SETTLEMENTS 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 TO BE JUST AND REASONABLE UNLESS REIMBURSEMENT THEREFOR IS EXPRESSLY PROHIBITED.' (TITLE V, ARTICLE V-A-L-I, CONTRACT V-ORD-522 DA-W-ORD-18)

"'(A) ALL WORK UNDER THIS CONTRACT IS TO BE PERFORMED AT THE EXPENSE OF THE GOVERNMENT, AND THE GOVERNMENT SHALL INDEMNIFY AND HOLD THE CONTRACTOR HARMLESS AGAINST ANY LOSS, EXPENSE (INCLUDING EXPENSE OF LITIGATION) OR DAMAGE (INCLUDING PERSONAL INJURIES AND DEATHS OF PERSONS AND DAMAGE TO PROPERTY) OF ANY KIND WHATSOEVER ARISING OUT OF OR CONNECTED WITH THE PERFORMANCE OF THE WORK, UNLESS SUCH LOSS, EXPENSE OR DAMAGE SHOULD BE SHOWN BY THE GOVERNMENT TO HAVE BEEN CAUSED DIRECTLY BY BAD FAITH OR WILLFUL MISCONDUCT ON THE PART OF SOME OFFICER OR OFFICERS OF THE CONTRACTOR ACTING WITHIN THE SCOPE OF HIS OR THEIR AUTHORITY AND EMPLOYMENT.' (TITLE VII, ARTICLE VII-A(A), CONTRACT W ORD-522 DA-W-ORD- 18)

"IN THIS CONNECTION YOUR OFFICE HAS ALSO STATED IN DECISION B-18974, DATED AUGUST 16, 1941 (21 COMP.GEN. 194) THAT:

"'*** ON THE OTHER HAND, EVEN THE MOST EXACTING CARE IN THE SELECTION OF A LARGE FORCE OF WORKMEN MAY AFFORD NO GUARANTEE AGAINST NEGLIGENT LOSSES. PERSONS HABITUALLY CAREFUL MAY ON OCCASION SUFFER LAPSES OF ATTENTION OR MOMENTARY INDECISION. UNDER STRESS OR EMOTION OR THROUGH OVERCONFIDENCE OR TEMPORARY CONFUSION IN AN UNUSUAL SITUATION THEY MAY TAKE CHANCES OR FALL INTO CONDUCT WHICH MAY BE BRANDED AS NEGLIGENCE WHEN MEASURED RETROSPECTIVELY AGAINST THE LEGAL STANDARD OF CONDUCT OF THE AVERAGE PRUDENT MAN UNDER SIMILAR CIRCUMSTANCES. ORDINARILY, OF COURSE, AS BETWEEN THE PARTY WHO ENGAGES AN INDEPENDENT CONTRACTOR TO DO CONSTRUCTION WORK AND SUCH CONTRACTOR, THE CONTRACTOR MUST BEAR THE RISK OF SUCH CONDUCT OR NEGLIGENCE, ON THE PART OF HIS OWN EMPLOYEES. THOUGH UNAVOIDABLE ON THE PART OF THE CONTRACTOR IT IS A PART OF THE CONTRACTUAL RISK TO BE COVERED AS AN ELEMENT OF THE COST IN FIXING THE CONTRACT PRICE. BUT, UNDER THE FORM OF CONTRACT HERE INVOLVED, THERE IS NO CONTRACT PRICE FIXED TO COVER RISKS AS AN ELEMENT OF THE COSTS. INSTEAD THE GOVERNMENT IS TO REIMBURSE THE CONTRACTOR HIS ACTUAL COSTS, OF WHICH SUCH UNAVOIDABLE NEGLIGENT LOSSES ARE, OR MAY BE, AN ELEMENT. IF SUCH LOSSES ARE NOT REIMBURSED BY THE GOVERNMENT THEY MUST COME OUT OF THE CONTRACTOR'S FEE, AND IF THAT IS NOT SUFFICIENT, OUT OF HIS POCKET. BUT THE CONTRACT CONTEMPLATES THAT FOR FAITHFUL PERFORMANCE THE CONTRACTOR SHALL COME OUT WHOLE, PLUS THE STIPULATED FEE AS COMPENSATION FOR HIS SERVICES, ETC. IT FOLLOWS THAT WHILE THE CONTRACTOR MAY BE REIMBURSED SUCH LOSSED AS AN ELEMENT OF HIS ACTUAL COSTS, WHERE NOT OTHERWISE EXCLUDED BY THE CONTRACT, HE MAY NOT BE SO REIMBURSED IN CASES WHERE HE HAS FAILED TO EXERCISE REASONABLE CARE IN THE SELECTION AND EMPLOYMENT OF THE INDIVIDUAL WORKERS INVOLVED, OR WHERE SUCH PERSONS HAVE BEEN RETAINED AFTER THE CONTRACTOR HAS REASON TO KNOW THAT THEY ARE NOT TRUSTWORTHY AND CAREFUL. THAT IS, THE CONTRACTOR MAY NOT BE REIMBURSED FOR LOSSES WHERE HIS FAILURE TO PERFORM HIS CONTRACTUAL DUTIES AND OBLIGATIONS IS A APPROXIMATE CAUSE OF THE LOSS.'

"IT WOULD APPEAR, THEREFORE, THAT A REIMBURSEMENT VOUCHER PRESENTED BY THE CONTRACTOR COVERING AN EXPENSE INCURRED BECAUSE OF THE NECESSITY OF PAYING BACK PAY TO EMPLOYEES WRONGFULLY DISCHARGED WOULD IN THE CLASS OF CASE HERE OUTLINED REPRESENT, ON APPROVAL OF THE CONTRACTING OFFICER'S REPRESENTATIVE, A LOSS OF THE TYPE PROVIDED FOR AND SET UP A LIABILITY WHICH THE GOVERNMENT IS LEGALLY OBLIGATED TO PAY.

"DENIAL TO THE CONTRACTOR FOR REIMBURSEMENT OF BACK PAY PAID ITS WRONGFULLY DISCHARGED EMPLOYEES BASED SOLELY ON AN INFERENCE THAT THE CONTRACTOR'S ACTION IN DISCHARGING THE EMPLOYEE IS GROUNDED IN NEGLIGENCE, AND WITHOUT REGARD TO WHETHER SUCH CONTRACTOR'S ACTION IN DISCHARGING OR LAYING OFF IS THE RESULT OF BAD FAITH OR WILLFUL MISCONDUCT, WOULD LEAD TO THE FOLLOWING UNFORTUNATE AND DANGEROUS RESULTS.

"A. CONTRACTORS WILL NOT EXERCISE THEIR RESPONSIBILITY FOR SAFE AND EFFICIENT CONDUCT OF THEIR OPERATIONS BECAUSE THEY WILL NOT MAKE DISCHARGES AND LAYOFFS WHERE THEY RUN THE RISK THAT REVERSAL OF THEIR JUDGMENT BY APPROPRIATE AUTHORITY WILL MEAN THAT THEY CANNOT BE REIMBURSED FOR BACK PAY AWARDS. THEY WILL RETAIN INEFFICIENT EMPLOYEES OR EMPLOYEES WHOSE CONDUCT ENDANGERS THE SAFETY OF THEMSELVES AND OTHERS, EVEN THOUGH IN THEIR HONEST JUDGMENT SUCH EMPLOYEES SHOULD BE DISCHARGED.

"B. CONTRACTORS IN NEGOTIATING COLLECTING BARGAINING AGREEMENTS WILL REFUSE TO INCLUDE PROVISIONS FOR ARBITRATION THEREIN AND THEREBY BE OUT OF LINE WITH NATIONAL POLICY TO ENCOURAGE ARBITRATION AS A MEANS OF SETTLEMENT OF LABOR DISPUTES.

"C. IN NEGOTIATIONS FOR VOLUNTARY SETTLEMENT OF LABOR DISPUTES, THE REFUSAL OF CONTRACTORS TO CONSIDER BACK PAY AS A METHOD OF ADJUSTMENT WILL AGGRAVATE SITUATIONS WHICH MIGHT OTHERWISE BE SATISFACTORILY DISPOSED OF, AND PERHAPS LEAD TO STOPPAGE AND STRIKES INTERFERING WITH PRODUCTION.

"THE ABOVE-QUOTED LANGUAGE FROM YOUR LETTER OF OCTOBER 15, 1942, COULD BE CONSTRUED AS PRECLUDING THE REIMBURSEMENT OF A CONTRACTOR FOR MONIES PAID OUT BY HIM UNDER SUCH CONDITIONS, EVEN THOUGH APPROVED BY THE CONTRACTING OFFICER OR HIS REPRESENTATIVE, SINCE IT RESULTS IN PAYING SUCH EMPLOYEES FOR A PERIOD DURING WHICH THEY DID NOT PHYSICALLY PERFORM ANY SERVICES ON THE CONTRACT WORK. WHILE I AM REASONABLY CERTAIN THAT YOU DID NOT INTEND YOUR DECISION TO APPLY IN SUCH A SITUATION, THE BREADTH OF THE QUOTED LANGUAGE LEAVES SOME ROOM FOR DOUBT AND MIGHT LEAD FINANCE OFFICERS IN THE FIELD TO REFUSE APPROVAL FOR REIMBURSEMENT OF VOUCHERS COVERING BACK PAY UNDER THESE CIRCUMSTANCES. YOUR CLARIFICATION OF THIS POINT WILL, THEREFORE, BE APPRECIATED."

IT IS UNDERSTOOD THAT THE QUESTION HERE INVOLVED IS AS TO WHETHER THE DECISION OF OCTOBER 15, 1942, 22 COMP.GEN. 349, APPLIES TO CASES WHERE EMPLOYEES OF COST-PLUS-A-FIXED-FEE CONTRACTORS ARE SUSPENDED OR DISCHARGED FOR CAUSES SUCH AS INFRACTIONS OF PLANT RULES, INSUBORDINATION, OR OTHER CAUSES WHICH DO NOT IN THEMSELVES INVOLVED POSSIBLE VIOLATIONS OF THE PROVISIONS OF THE NATIONAL LABOR RELATIONS ACT, APPROVED JULY 5, 1935, 49 STAT. 449. YOU STATE THAT, UNDER NORMAL PLANT PROCEDURE AND "SECTION 5(C) OF THE WAR AND NAVY DEPARTMENTS STATEMENT OF LABOR POLICY GOVERNING LABOR RELATIONS IN GOVERNMENT OWNED, PRIVATELY OPERATED PLANTS, DATED JUNE 22, 1942," EMPLOYEES WHO ARE SEPARATED FOR CAUSES MAY CONTEST SUCH SEPARATION BY HAVING THE MATTER "REVIEWED THROUGH THE ESTABLISHED GRIEVANCE PROCEDURE," AND THAT SUCH EMPLOYEE MAY BE REINSTATED WITH BACK PAY IF THE SUBSEQUENT ESTABLISHED FACTS ARE SUCH AS TO JUSTIFY SUCH ACTION.

WHILE YOU MAKE REPRESENTATIONS AS TO "THE UNFORTUNATE AND DANGEROUS RESULTS" WHICH, IT IS CLAIMED, WILL FOLLOW A REFUSAL TO REIMBURSE CONTRACTORS FOR BACK WAGES PAID WRONGFULLY DISCHARGED EMPLOYEES, NO REFERENCE IS MADE TO SPECIFIC INSTANCES WHERE SUCH RESULTS HAVE BEEN OBSERVED NOR TO THE FACTS PERTAINING TO ANY PARTICULAR VOUCHER WHICH HAS BEEN PRESENTED FOR PAYMENT AS INVOLVING THE QUESTION.

ARTICLE V-A OF CONTRACT NO. W-ORD-522 DA-V-ORD-18, DATED AUGUST 18, 1941, CONSIDERED IN THE DECISION OF OCTOBER 15, 1942, PROVIDES GENERALLY THAT THE GOVERNMENT WILL REIMBURSE THE SHERWIN-WILLIAMS DEFENSE CORPORATION FOE THE EXPENDITURES INCURRED INCIDENT TO PERFORMANCE OF THE WORK REQUIRED THEREUNDER, INCLUDING EXPENDITURES FOR "LOSS AND EXPENSES NOT COMPENSATED BY INSURANCE OF OTHERWISE ***, "ACTUALLY SUSTAINED BY THE CONTRACTOR IN CONNECTION WITH THE WORK AND FOUND CERTIFIED BY THE CONTRACTING OFFICER TO BE JUST AND REASONABLE, PLUS CERTAIN FIXED FEES WHICH ARE TO CONSTITUTE COMPLETE COMPENSATION FOR THE CONTRACTOR'S SERVICES, INCLUDING PROFIT. WITH RESPECT TO THE EXTENT OF THE OBLIGATION ASSUMED BY THE GOVERNMENT IN THE MATTER, ARTICLE VII-A(A)AND(B) OF THAT CONTRACT PROVIDES AS FOLLOWS:

"WHILE IT IS THE PURPOSE AND INTENT OF THE CONTRACTOR TO EXERCISE THE SAME DEGREE OF CARE (UNLESS OTHERWISE DIRECTED BY THE GOVERNMENT) IN CARRYING OUT AND PERFORMING THE WORK PROVIDED FOR IN THIS CONTRACT AS IT WOULD IF THE PLANT TO BE CONSTRUCTED, EQUIPPED AND OPERATED BELONGED TO THE CONTRACTOR, NEVERTHELESS, BECAUSE OF THE ABNORMAL CONDITIONS EXISTING, IT IS AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS, TO WIT:

"(A) ALL WORK UNDER THIS CONTRACT IS TO BE PERFORMED AT THE EXPENSE OF THE GOVERNMENT, AND THE GOVERNMENT SHALL INDEMNIFY AND HOLD THE CONTRACTOR HARMLESS AGAINST ANY LOSS, EXPENSE (INCLUDING EXPENSE OF LITIGATION) OR DAMAGE (INCLUDING PERSONAL INJURIES AND DEATHS OF PERSONS AND DAMAGE TO PROPERTY) OF ANY KIND WHATSOEVER ARISING OUT OF OR CONNECTED WITH THE PERFORMANCE OF THE WORK, UNLESS SUCH LOSS, EXPENSES OR DAMAGE SHOULD BE SHOWN BY THE GOVERNMENT TO HAVE BEEN CAUSED DIRECTLY BY BAD FAITH OR WILLFUL MISCONDUCT ON THE PART OF SOME OFFICER OR OFFICERS OF THE CONTRACTOR ACTING WITHIN THE SCOPE OF HIS OR THEIR AUTHORITY AND EMPLOYMENT. "(B) THE GOVERNMENT RECOGNIZES THAT THE WORK HEREIN PROVIDED FOR IS OF A HIGHLY DANGEROUS NATURE AND THAT ITS ACCOMPLISHMENT UNDER EXISTING CONDITIONS WILL BE ATTENDANT WITH EVEN GREATER RISK OF DAMAGE TO PROPERTY, INJURIES TO PERSONS AND FAILURE OR DELAYS IN PERFORMANCE DUE TO UNCERTAIN AND UNEXPECTED CAUSES THAT WOULD NORMALLY EXIST. THE CONTRACTOR IS UNWILLING TO ASSUME SAID RISKS FOR THE CONSIDERATION HEREIN PROVIDED. IT IS THEREFORE AGREED THAT WHATEVER FOR FAILURE OR DELAY IN PERFORMANCE BY ANY INJURY TO OR DEATH OF PERSONS ARISING OUT OF OR IN CONNECTION WITH THE WORK HEREUNDER, NO MATTER WHAT THE CAUSE THEREOF MAY BE OR MAY SEEM TO BE, UNLESS SAME SHALL BE SHOWN BY THE GOVERNMENT TO HAVE BEEN CAUSED DIRECTLY BY BAD FAITH OR WILLFUL MISCONDUCT ON THE PART OF SOME OFFICER OR OFFICERS OF THE CONTRACTOR ACTING WITHIN THE SCOPE OF HIS OR THEIR AUTHORITY AND EMPLOYMENT."

HOWEVER, AS BROAD AND LIBERAL AS THESE PROVISIONS MAY BE, THEY DO NOT RELIEVE THE CONTRACTOR OF ITS OBLIGATIONS UNDER ARTICLE VII-D 1 AND VII-F 7 OF THE CONTRACT TO EXECUTE THE WORK IN A WORKMANLIKE MANNER BY QUALIFIED, CAREFUL, AND EFFICIENT WORKERS, AND TO USE ITS BEST EFFORTS, UNDER ALL CIRCUMSTANCES, TO PROTECT AND SERVE THE INTERESTS OF THE GOVERNMENT.

WHILE UNDER ARTICLE V-A F NO PERSON MAY BE ASSIGNED TO SERVICE BY THE CONTRACTOR AS SUPERINTENDENT OF OPERATION, OR OTHER NAMED RESPONSIBLE ADMINISTRATIVE POSITIONS IN THE CONTRACTOR'S FIELD ORGANIZATION UNTIL THE CONTRACTING OFFICER HAS APPROVED A STATEMENT OF THE QUALIFICATIONS AND EXPERIENCE OF SUCH PERSON AND, UNDER ARTICLE VII-F 6, THE CONTRACTING OFFICER MAY REQUIRE THE CONTRACTOR TO DISMISS FROM THE WORK ANY EMPLOYEE WHOM THE CONTRACTOR DEEMS INCOMPETENT, CARELESS, INSUBORDINATE, OR OTHERWISE OBJECTIONABLE; SUCH PROVISIONS DO NOT RELIEVE THE CONTRACTOR OF ITS PRIMARY OBLIGATION TO FURNISH AND MAINTAIN A FORCE OF COMPETENT AND CAREFUL EMPLOYEES. MANIFESTLY, IF THE CONTRACTOR IS REMISS IN THE PERFORMANCE OF ITS OBLIGATION TO EXERCISE DUE CARE IN THE SELECTION AND RETENTION OF COMPETENT AND CAREFUL EMPLOYEES, IT IS NOT ENTITLED TO CLAIM FROM THE GOVERNMENT REIMBURSEMENT FOR LOSSES RESULTING FROM THE CARELESSNESS OR NEGLIGENCE OF SUCH EMPLOYEES WHEN THE GOVERNMENT IS IN NO WAY RESPONSIBLE THEREFOR. WHILE, AS STATED IN THE DECISION OF AUGUST 16, 1941, 21 COMP.GEN. 149, QUOTED IN PART IN YOUR LETTER ABOVE, WHICH, HOWEVER, DID NOT CONSIDER THE SPECIFIC QUESTIONS HERE INVOLVED, THE CONTRACT GUARANTEES THE CONTRACTOR LIMITED FIXED FEES FOR ITS SERVICES IN ADDITION TO REIMBURSEMENT OF THE ACTUAL COST OF THE WORK, THE FEES ARE PAID TO OBTAIN THE COMPETENT AND FAITHFUL SERVICES OF THE CONTRACTOR, AND THE PROVISIONS FOR REIMBURSEMENT OF THE ACTUAL COST OF PERFORMANCE ARE NOT TO BE TAKEN AS A PROTECTION AGAINST INCOMPETENCY OR CARELESSNESS, OR AS AUTHORITY FOR IMPOSING UPON THE GOVERNMENT, RATHER THAN THE CONTRACTOR, RISKS OR LOSSES WHICH THE CONTRACTOR HAS EXPRESSLY OR IMPLIEDLY AGREED TO ASSUME OR BEAR UNDER PARTICULAR PROVISIONS OF THE CONTRACT.

MOREOVER, ANY GENERAL AUTHORIZATION TO REIMBURSE CONTRACTORS FOR BACK WAGES PAID EMPLOYEES WHO MAY BE FOUND TO HAVE BEEN WRONGFULLY SEPARATED FROM THEIR EMPLOYMENT, MIGHT LEAD TO RESULTS AS DANGEROUS AND UNFORTUNATE AS THOSE MENTIONED BY YOU. THAT IS TO SAY, IT IS REASONABLE TO PRESUME THAT CONTRACTORS WOULD NOT EXERCISE THAT DEGREE OF CARE ORDINARILY REQUIRED IF THEY KNOW IN ADVANCE THAT THE UNITED STATES WILL ASSUME THE COST OF REINSTATEMENT, INCLUDING ANY BACK WAGES WHICH MAY BE PAID UPON RESTORATION TO DUTY.

SHOULD ANY SPECIFIC CASE ARISE-- DISTINGUISHABLE FROM THE CASE CONSIDERED IN THE DECISION OF OCTOBER 15, 1942-- IN WHICH IT IS THE ADMINISTRATIVE VIEW THAT A CONTRACTOR SHOULD BE REIMBURSED FOR BACK WAGES PAID TO AN ERRONEOUSLY DISCHARGED EMPLOYEE OF A CONTRACTOR, I SHALL BE PLEASED TO GIVE THE MATTER CAREFUL CONSIDERATION UPON A PRESENTATION OF THE FACTS PERTAINING THERETO.