B-20442, MARCH 4, 1942, 21 COMP. GEN. 835

B-20442, MARCH 4, 1942, 21 COMP. GEN. 835

CONTRACTS - COST-PLUS - APPLICABILITY OF STATUTORY RESTRICTIONS ON GOVERNMENT EXPENDITURES DECISION IN 21 COMP. GEN. 273, TO THE EFFECT THAT STATUTORY RESTRICTIONS, SUCH AS THOSE WITH RESPECT TO THE PURCHASE FROM APPROPRIATED FUNDS OF TYPEWRITERS, PASSENGER-CARRYING VEHICLES, AND SUPPLIES MANUFACTURED BY THE FEDERAL PRISON INDUSTRIES, INC., ARE APPLICABLE TO PURCHASES BY A WAR DEPARTMENT COST-PLUS-A-FIXED-FEE CONTRACTOR FOR WHICH REIMBURSEMENT IS MADE BY THE GOVERNMENT, RECONSIDERED AND AFFIRMED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, MARCH 4, 1942:

I HAVE YOUR LETTER OF FEBRUARY 8, 1942, REQUESTING RECONSIDERATION OF MY DECISION OF SEPTEMBER 29, 1941, B-20442 (21 COMP. GEN. 273), TO YOU, IN WHICH IT WAS HELD, QUOTING FROM THE SYLLABUS, AS FOLLOWS:

THE ACT OF JULY 2, 1940, AUTHORIZING THE WAR DEPARTMENT TO CONTRACT ON A COST-PLUS-A-FIXED-FEE BASIS FOR CERTAIN SUPPLIES AND WORK, DID NOT SUSPEND, EITHER EXPRESSLY OR IMPLIEDLY, ANY EXISTING STATUTORY LIMITATIONS OR RESTRICTIONS ON THE EXPENDITURE OF PUBLIC MONEYS EXCEPT THOSE EXPRESSLY MENTIONED THEREIN, AND THEREFORE, STATUTORY RESTRICTIONS, SUCH AS THOSE WITH RESPECT TO THE PURCHASE FROM APPROPRIATED FUNDS OF TYPEWRITERS, PASSENGER-CARRYING VEHICLES, AND SUPPLIES MANUFACTURED BY THE FEDERAL PRISON INDUSTRIES, INC., ARE APPLICABLE TO PURCHASES BY A COST-PLUS-A- FIXED-FEE CONTRACTOR FOR WHICH REIMBURSEMENT IS MADE BY THE GOVERNMENT.

RECONSIDERATION IS REQUESTED, FIRST, FOR THE REASON THAT SINCE SAID DECISION WAS RENDERED THE CONGRESS HAS PASSED THE FIRST WAR POWERS ACT, 1941 ( PUBLIC LAW NO. 354, 77TH CONG.), APPROVED DECEMBER 18, 1941, SECTION 201, TITLE II, OF WHICH, 55 STAT. 839, PROVIDES AS FOLLOWS:

SEC. 201. THE PRESIDENT MAY AUTHORIZE ANY DEPARTMENT OR AGENCY OF THE GOVERNMENT EXERCISING FUNCTIONS IN CONNECTION WITH THE PROSECUTION OF THE WAR EFFORT, IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE PRESIDENT FOR THE PROTECTION OF THE INTERESTS OF THE GOVERNMENT, TO ENTER INTO CONTRACTS AND INTO AMENDMENTS OR MODIFICATIONS OF CONTRACTS HERETOFORE OR HEREAFTER MADE AND TO MAKE ADVANCE, PROGRESS AND OTHER PAYMENTS THEREON, WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT, OR MODIFICATION OF CONTRACTS WHENEVER HE DEEMS SUCH ACTION WOULD FACILITATE THE PROSECUTION OF THE WAR: PROVIDED, THAT NOTHING HEREIN SHALL BE CONSTRUED TO AUTHORIZE THE USE OF THE COST-PLUS-A-PERCENTAGE-OF- COST SYSTEM OF CONTRACTING: PROVIDED FURTHER, THAT NOTHING HEREIN SHALL BE CONSTRUED TO AUTHORIZE ANY CONTRACTS IN VIOLATION OF EXISTING LAW RELATING TO LIMITATION OF PROFITS: PROVIDED FURTHER, THAT ALL ACTS UNDER THE AUTHORITY OF THIS SECTION SHALL BE MADE A MATTER OF PUBLIC RECORD UNDER REGULATIONS PRESCRIBED BY THE PRESIDENT AND WHEN DEEMED BY HIM NOT TO BE INCOMPATIBLE WITH THE PUBLIC INTEREST.

WITH RESPECT THERETO, IT IS STATED IN YOUR LETTER THAT CONSIDERATION OF THE COMPREHENSIVE LANGUAGE OF THE ACT, TOGETHER WITH THE FACT THAT WHILE THE CONGRESS PRESERVED BY SPECIFIC EXCEPTION THE PROHIBITION AGAINST THE COST-PLUS-A-PERCENTAGE-OF-COST SYSTEM OF CONTRACTING AND ANY EXISTING LAW RELATING TO THE LIMITATION OF PROFITS, BUT MADE NO EXCEPTION IN FAVOR OF LAWS LIMITING THE AMOUNTS TO BE EXPENDED FOR TYPEWRITERS AND AUTOMOBILES, SHOWS THAT IT WAS THE INTENTION OF THE CONGRESS TO EMPOWER THE PRESIDENT TO AUTHORIZE YOUR DEPARTMENT AND OTHER DEPARTMENTS ENGAGED IN THE PROSECUTION OF THE WAR EFFORT TO CONTRACT WITHOUT REGARD TO THESE LATTER RESTRICTIONS. IT IS STATED FURTHER THAT WHILE EXECUTIVE ORDER NO. 9001, DATED DECEMBER 27, 1941, ISSUED BY THE PRESIDENT PURSUANT TO THE TERMS OF SAID ACT, AND AUTHORIZING YOUR DEPARTMENT TO EXERCISE ALL THE POWERS CONTAINED IN TITLE II, SECTION 201 THEREOF, SPECIFICALLY PROVIDES THAT NO CONTRACT OR MODIFICATION THEREOF WAS TO BE EXEMPT FROM THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT, 1940 (54 STAT. 1029), THE WALSH-HEALEY ACT (49 STAT. 2036), THE DAVIS-BACON ACT, AS AMENDED (49 STAT. 1011), THE COPELAND ACT, AS AMENDED (48 STAT. 948), AND THE EIGHT-HOUR LAW, AS AMENDED (54 STAT. 884), IF OTHERWISE APPLICABLE, NOR FROM THE FIXED FEE LIMITATIONS CONTAINED IN ACTS APPROPRIATING SUMS TO BE OBLIGATED BY THE CONTRACTS, SAID ORDER DID NOT EXCEPT THE STATUTORY RESTRICTIONS ON THE PURCHASE PRICE OF AUTOMOBILES, TYPEWRITERS, ETC. ACCORDINGLY, IT IS CONTENDED THAT THE EXPRESSION OF CERTAIN LIMITATIONS IN THE EXECUTIVE ORDER IS EQUIVALENT TO THE EXCLUSION OF THOSE NOT MENTIONED AND, THEREFORE, THAT THE RESTRICTIONS OF STATUTES NOT EXCEPTED IN SAID ACT OR ORDER ARE WITHOUT EFFECT INSOFAR AS CONTRACTS MADE BY YOUR DEPARTMENT ARE CONCERNED.

IT IS CLEAR FROM THE TERMS OF SECTION 201 OF THE FIRST WAR POWERS ACT, SUPRA, THAT THE ONLY LAWS WHICH THE CONGRESS INTENDED TO EMPOWER THE PRESIDENT TO AUTHORIZE CERTAIN DEPARTMENTS AND AGENCIES TO DISREGARD IN THE EXERCISE OF FUNCTIONS IN CONNECTION WITH THE PROSECUTION OF THE WAR, WERE THOSE LAWS WHICH RELATE TO THE MAKING, PERFORMANCE, MODIFICATION, OR AMENDMENT OF CONTRACTS. WHEREAS, THE STATUTORY RESTRICTIONS CONSIDERED IN MY DECISION OF SEPTEMBER 29, 1941, SUPRA, WERE NOT LAWS WHICH RELATED TO THE MAKING, PERFORMANCE, MODIFICATION, OR AMENDMENT OF CONTRACTS, BUT WERE LIMITATIONS ON THE EXPENDITURES OF PUBLIC MONEYS; AND THERE IS A SUBSTANTIAL DIFFERENCE--- APPARENT AT A GLANCE--- BETWEEN THESE TWO TYPES OF LAWS. FOR EXAMPLE, THE FACT THAT THE CONGRESS AUTHORIZES A DEPARTMENT TO PURCHASE A TYPEWRITER OR AUTOMOBILE WITHOUT ADVERTISING IS ENTIRELY DIFFERENT FROM AUTHORIZING A DEPARTMENT TO PURCHASE SUCH TYPEWRITER OR AUTOMOBILE WITHOUT REGARD FOR THE PRICE TO BE PAID THEREFOR. ACCORDINGLY, THE FACT THAT THE CONGRESS MAY HAVE USED GENERAL LANGUAGE IN THE ENACTMENT OF SECTION 201 OF THE FIRST WAR POWERS ACT, SUPRA, OR THAT IT MAY HAVE EXCEPTED BY EXPRESS PROVISION THE PROHIBITION AGAINST THE COST-PLUS-A PERCENTAGE-OF-COST SYSTEM OF CONTRACTING, TOGETHER WITH ANY LAW RELATING TO THE LIMITATION OF PROFITS, CANNOT BE ACCEPTED AS WARRANTING THE CONCLUSION THAT THE CONGRESS, THEREFORE, MUST HAVE INTENDED TO EMPOWER THE PRESIDENT TO AUTHORIZE DEPARTMENTS AND AGENCIES ENGAGED IN THE PROSECUTION OF THE WAR TO CONTRACT WITHOUT REGARD TO ANY STATUTORY LIMITATIONS OR RESTRICTIONS WHICH MIGHT HAVE BEEN IMPOSED ON THE EXPENDITURE OF PUBLIC MONEYS.

FURTHERMORE, IF ANY DOUBT EXISTED AS TO THE EXTENT OF THE AUTHORITY WHICH WAS INTENDED TO BE CONFERRED ON THE PRESIDENT BY THE CONGRESS IN THE ENACTMENT OF SECTION 201 OF THE FIRST WAR POWERS ACT, SUCH DOUBT IS REMOVED BY CONSIDERATION OF THE PERTINENT PARTS OF THE COMMITTEE REPORTS ON THE SAID ACT. WITH REGARD TO TITLE II, SECTION 201, IT IS REPORTED IN HOUSE REPORT NO. 1507, 77TH CONGRESS, ST SESSION, AS FOLLOWS:

TITLE II OF THE BILL IS INTENDED TO SPEED UP THE PROCUREMENT OF WAR MATERIAL. IT EMPOWERS THE PRESIDENT, WHENEVER HE DEEMS SUCH ACTION WOULD FACILITATE THE PROSECUTION OF THE WAR, TO AUTHORIZE AGENCIES TO ENTER INTO CONTRACTS WITH A MAXIMUM OF SPEED, SUBJECT TO SUCH RULES AND REGULATIONS AS HE SHALL PRESCRIBE TO PROTECT THE INTEREST OF THE GOVERNMENT. UNDER THIS PROVISION THE PRESIDENT MAY AUTHORIZE AGENCIES, AMONG OTHER THINGS: (A) TO ENTER INTO CONTRACTS WITHOUT COMPETITIVE BIDDING IN THOSE CASES WHERE BIDDING IS STILL REQUIRED; (B) TO ENTER INTO CONTRACTS WITHOUT PERFORMANCE BONDS; (C) TO AMEND OR MODIFY CONTRACTS; (D) TO MAKE PROGRESS PAYMENTS ON CONTRACTS.

ONE OF THE OBJECTIVES OF THIS PROVISION IS TO FACILITATE THE LETTING OF DEFENSE CONTRACTS TO SMALL BUSINESSMEN WHO IN MANY CASES CANNOT MAKE THE GOODS AT AS LOW A PRICE AS THE BIG CORPORATIONS, WHO ARE OFTEN NOT IN A POSITION TO FURNISH PERFORMANCE BONDS, AND WHO NEED PROGRESS PAYMENTS.

FOLLOWING THE PRESIDENT'S DECLARATION OF A NATIONAL EMERGENCY IN SEPTEMBER 1939, CERTAIN RESTRICTIONS ON PROCUREMENT ARRANGEMENTS WERE, FROM TIME TO TIME, LIFTED BY DIFFERENT STATUTES SO THAT IN MOST RESPECTS PROCUREMENT PROCEDURE WAS MADE FLEXIBLE. NEVERTHELESS, SOME RESTRICTIONS REMAIN IN FORCE. TITLE II, IN EFFECT, LIBERALIZES EXISTING STATUTES RELATING TO PROCUREMENT AND PERMITS ELIMINATION OF RESTRICTIONS SO AS TO GIVE THE PROCUREMENT AGENCIES THE FLEXIBILITY THEY NEED IN THE PROCUREMENT OF WAR MATERIEL. (A SUBSTANTIALLY COMPLETE LIST OF STATUTES INVOLVED IS APPENDED TO THIS REPORT.)

THE LIST OF STATUTES APPENDED TO SAID REPORT INCLUDES THOSE WHICH PERTAIN (1) TO ADVERTISING FOR BIDS PRIOR TO ENTERING INTO GOVERNMENT CONTRACTS, (2) TO REQUIREMENTS FOR THE FURNISHING OF PERFORMANCE AND PAYMENT BONDS BY GOVERNMENT CONTRACTORS, AND (3) TO PROHIBITIONS AGAINST ADVANCE PAYMENTS BY THE GOVERNMENT PRIOR TO THE DELIVERY OF GOODS OR THE PERFORMANCE OF WORK. IT APPEARS CLEAR FROM SAID REPORT THAT THERE WAS NO INTENT BY THE CONGRESS TO AUTHORIZE THE SUSPENSION OF EXISTING STATUTORY RESTRICTIONS ON THE PURCHASES OF TYPEWRITERS OR AUTOMOBILES. ALSO, SEE SENATE REPORT NO. 911, 77TH CONGRESS, ST SESSION.

FURTHERMORE, SINCE IT WAS NOT THE INTENT OF SECTION 201 OF THE FIRST WAR POWERS ACT TO EMPOWER THE PRESIDENT TO AUTHORIZE THE DISREGARDING OF ALL LAWS RELATING TO GOVERNMENT CONTRACTS AND APPROPRIATED MONEYS--- SUCH AUTHORITY BEING LIMITED TO THE WAIVER ONLY OF LAWS RELATING TO THE REQUIREMENT OF ADVERTISING FOR BIDS, THE FURNISHING OF PERFORMANCE BONDS, AND THE MAKING OF ADVANCE PAYMENTS, ETC.--- IT CANNOT BE PRESUMED THAT THE EXECUTIVE ORDER INTENDED TO CONFER ON YOUR DEPARTMENT ANY GREATER AUTHORITY THAN WAS GRANTED BY THE CONGRESS IN SAID ACT. MOREOVER, IT DOES NOT APPEAR THAT THE EXECUTIVE ORDER IN FACT PURPORTED TO GRANT ANY GREATER AUTHORITY TO YOUR DEPARTMENT THAN WAS INTENDED TO BE CONFERRED BY THE CONGRESS. IN OTHER WORDS, WHILE THE ORDER SPECIFICALLY PROVIDED THAT NO CONTRACT OR MODIFICATION THEREOF SHOULD BE EXEMPT FROM THE PROVISIONS OF LAW RELATING TO HOURS OF WORK, RATES OF WAGES, ETC., MENTIONED ABOVE, AND OMITTED TO EXCEPT THE STATUTORY RESTRICTIONS ON THE PURCHASES OF TYPEWRITERS AND AUTOMOBILES, EXAMINATION THEREOF SHOWS THAT IN SO DOING THE PRESIDENT WAS MERELY PRESCRIBING REGULATIONS FOR THE PROTECTION OF THE INTEREST OF THE UNITED STATES, AND WAS SETTING FORTH, FOR THE BENEFIT AND GUIDANCE OF YOUR DEPARTMENT, A LIST OF SOME OF THE LAWS RELATING TO GOVERNMENT CONTRACTS WHICH THE CONGRESS INTENDED SHOULD REMAIN IN EFFECT. ACCORDINGLY, THERE APPEARS TO BE NO BASIS IN THE EXECUTIVE ORDER FOR THE CONCLUSION STATED IN YOUR LETTER OF FEBRUARY 8, TO WIT, THAT BY THE EXCEPTION OF CERTAIN STATUTES FROM THE AUTHORITY CONFERRED ON YOUR DEPARTMENT, IT WAS THE INTENTION OF THE EXECUTIVE ORDER TO EXEMPT YOUR DEPARTMENT FROM THE OBSERVANCE OF ANY STATUTORY RESTRICTIONS WHICH WERE NOT SPECIFICALLY EXCEPTED.

SO, ALSO, IN STIPULATING THAT NOTHING THEREIN SHOULD BE CONSTRUED TO AUTHORIZE THE PAYMENT OF A FEE IN EXCESS OF SUCH LIMITATION AS MAY BE SPECIFICALLY SET FORTH IN THE ACT APPROPRIATING THE FUNDS OBLIGATED BY A CONTRACT, THE EXECUTIVE ORDER WAS MERELY PRESCRIBING A DEFINITE REGULATION TO CARRY OUT THE PROHIBITION CONTAINED IN SECTION 201 OF THE FIRST WAR POWERS ACT AGAINST THE MAKING OF ANY CONTRACTS IN VIOLATION OF EXISTING LAWS RELATING TO LIMITATION OF PROFITS.

ACCORDINGLY, IT APPEARS FROM THE FOREGOING THAT NEITHER SECTION 201 OF THE FIRST WAR POWERS ACT NOR EXECUTIVE ORDER NO. 9001, REMOVED, EITHER EXPRESSLY OR IMPLIEDLY, THE STATUTORY LIMITATIONS ON AMOUNTS TO BE EXPENDED AS THE PURCHASE PRICE OF TYPEWRITERS AND PASSENGER-CARRYING VEHICLES.

IT IS STATED FURTHER IN YOUR LETTER OF FEBRUARY 8, 1942, THAT UNDER THE TERMS OF THE APPROVED FORM OF COST-PLUS-A-FIXED-FEE CONTRACT, THE CONTRACTOR IS PAID FOR THE CONSTRUCTION OF A CANTONMENT OR SIMILAR STRUCTURE AND NOT AS A VENDOR TO THE UNITED STATES OF PICKS, SHOVELS, OR TYPEWRITERS, AND THAT THE EFFECT OF THE RECENT DECISION OF THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF ALABAMA V. KING AND BOOZER, ET AL., NO. 602, DECIDED ON NOVEMBER 10, 1941, 314 U.S. 1, IS TO APPROXIMATE THE STATUS OF A COST-PLUS-A-FIXED-FEE CONTRACTOR MORE CLOSELY TO THAT OF A LUMP-SUM CONTRACTOR THAN TO THAT OF A REPRESENTATIVE OF THE GOVERNMENT.

WITH RESPECT THERETO, IT WAS POINTED OUT SPECIFICALLY IN MY DECISION OF SEPTEMBER 29, 1941, SUPRA, THAT THE CONCLUSION REACHED THEREIN WAS NOT BASED ON THE STATUS OF A COST-PLUS-A-FIXED-FEE CONTRACTOR BUT ON THE THEORY THAT THE STATUTORY RESTRICTIONS ON THE PURCHASES OF TYPEWRITERS AND AUTOMOBILES WERE NOT REPEALED EITHER EXPRESSLY OR IMPLIEDLY BY THE ACT OF JULY 2, 1940, PUBLIC LAW 703, 54 STAT. 712, AND THAT SINCE SUCH STATUTES HAD NOT BEEN REPEALED, AND SINCE UNDER THE PROVISIONS OF THE STANDARD FORM OF COST-PLUS-A-FIXED-FEE CONTRACT, THE RIGHT IS RESERVED TO THE GOVERNMENT TO PURCHASE SUPPLIES AND MATERIALS AND TO FURNISH THEM TO THE COST-PLUS-A- FIXED-FEE CONTRACTOR FOR USE IN THE PERFORMANCE OF CONTRACTS, IT WAS THE OBLIGATION OF THE CONSTRUCTING QUARTERMASTERS, WHEN THE COST-PLUS-A-FIXED- FEE CONTRACTOR WAS UNABLE TO PROCURE SUPPLIES COVERED BY STATUTORY RESTRICTIONS AT A PRICE WITHIN THE STATUTORY LIMITATION, TO PURCHASE SAID SUPPLIES UNDER A GOVERNMENT GENERAL SCHEDULE OF SUPPLIES CONTRACT, OR OTHERWISE, AT A PRICE WITHIN THE STATUTORY LIMITATION AND TO FURNISH THE SUPPLIES TO THE COST-PLUS-A FIXED-FEE CONTRACTOR. MOREOVER, THE FACT THAT THE COST-PLUS-A-FIXED FEE CONTRACT MAY COVER THE CONSTRUCTION OF A CANTONMENT OR SOME OTHER BUILDING OR BUILDINGS, AND THE PURCHASE OF SUPPLIES COVERED BY STATUTORY LIMITATIONS ARE MERELY INCIDENT THERETO, DOES NOT ALTER THE OBLIGATION OF THE CONSTRUCTING QUARTERMASTERS IN THIS REGARD. FURTHERMORE, AS WAS POINTED OUT IN SAID DECISION, SUCH PROCEDURE IS IN CONFORMITY WITH THE REGULATIONS OF YOUR DEPARTMENT AS PRESCRIBED IN THE MANUAL OF THE CONSTRUCTION DIVISION, OFFICE OF THE QUARTERMASTER GENERAL, WHICH DIRECTS THAT COST-PLUS-A-FIXED-FEE CONTRACTORS ARE TO SUBMIT PURCHASE ORDERS TO THE CONSTRUCTING QUARTERMASTERS FOR APPROVAL BEFORE PURCHASING ANY CONSTRUCTION MATERIALS, AND THAT WHERE IT IS FOUND BY THE CONSTRUCTING QUARTERMASTERS THAT THE PRICES TO BE PAID BY THE CONTRACTOR ARE HIGHER THAN THOSE ON THE GENERAL SCHEDULE OF SUPPLIES, THE PURCHASE OF THE SUPPLIES SHOULD BE MADE BY THE GOVERNMENT FROM THE GENERAL SCHEDULE AND FURNISHED TO THE CONTRACTOR. WHILE IT IS URGED IN YOUR LETTER OF FEBRUARY 8 THAT THE OBSERVANCE OF SUCH PROCEDURE WOULD RESULT IN COSTLY DELAYS TO THE GOVERNMENT AND WOULD SERIOUSLY INTERFERE WITH THE WORK BEING PERFORMED BY COST-PLUS-A-FIXED FEE CONTRACTORS, NO FACTS HAVE BEEN PRESENTED TO SUPPORT THAT CONTENTION, AND IT IS BELIEVED THAT THE NATURE AND THE NUMBER OF SUPPLIES COVERED BY STATUTORY RESTRICTIONS, OR LISTED ON THE GENERAL SCHEDULES OF SUPPLIES, WHICH WOULD BE USED BY A COST -PLUS-A-FIXED-FEE CONTRACTOR IN THE PERFORMANCE OF A CONSTRUCTION CONTRACT IS VERY SMALL AS COMPARED WITH THE TOTAL QUANTITY OF SUPPLIES AND MATERIALS WHICH WOULD BE USED IN THE WORK. CONSEQUENTLY, IT IS NOT UNDERSTOOD HOW THE OBSERVANCE OF THE REGULATIONS CONTAINED IN THE MANUAL OF THE CONSTRUCTION DIVISION WOULD SERIOUSLY DELAY A COST-PLUS-A-FIXED-FEE CONTRACTOR.

IT IS STATED FURTHER IN YOUR LETTER OF FEBRUARY 8 THAT THE ABOVE REFERRED -TO PROVISIONS IN THE CONSTRUCTION DIVISION MANUAL PROVIDE FOR THE MAKING OF PURCHASES FROM THE GENERAL SCHEDULE OF SUPPLIES ONLY AFTER A "SATISFACTORY DELIVERY DATE CAN BE ARRANGED," AND THAT THE OFFICE OF THE QUARTERMASTER GENERAL WILL NOT APPROVE PURCHASES OF AUTOMOBILES BY COST- PLUS-A-FIXED-FEE CONTRACTORS AT MORE THAN $750 "UNLESS COGENT REASONS ARE SUBMITTED FOR PURCHASE AT HIGHER PRICE.' IN CONNECTION THEREWITH YOU CONTEND THAT WHEN DULY AUTHORIZED OFFICERS HAVE APPROVED PURCHASES AT PRICES HIGHER THAN THOSE LISTED IN THE GENERAL SCHEDULE OF SUPPLIES, OR IN EXCESS OF THE STATUTORY LIMITATIONS, ADEQUATE REASONS FOR SUCH ACTION MUST BE PRESUMED TO HAVE EXISTED.

WHILE THE DIRECTIVES CONTAINED IN REGULATIONS OF THE QUARTERMASTER GENERAL ARE SUBJECT TO THE LIMITATIONS MENTIONED BY YOU, I AM UNABLE TO AGREE WITH THE CONTENTION THAT WHEN A COST-PLUS-A-FIXED-FEE CONTRACTOR IS PERMITTED TO MAKE A PURCHASE OF SUPPLIES AT A PRICE IN EXCESS OF THAT LISTED IN THE GENERAL SCHEDULE OF SUPPLIES, OR IN EXCESS OF A STATUTORY RESTRICTION, IT MUST BE PRESUMED THAT A SATISFACTORY DELIVERY DATE COULD NOT BE ARRANGED, OR THAT OTHER ADEQUATE REASONS EXISTED FOR THE APPROVAL OF SUCH PURCHASES BY THE CONSTRUCTING QUARTERMASTERS. ON THE CONTRARY, WHEN A CONSTRUCTING QUARTERMASTER APPROVES A PURCHASE AT AN AMOUNT IN EXCESS OF THAT LISTED IN THE GENERAL SCHEDULE OF SUPPLIES, OR IN EXCESS OF A STATUTORY LIMITATION, IT IS HIS OBLIGATION TO FURNISH SUCH EVIDENCE AS WILL ESTABLISH AS A FACT THAT A SATISFACTORY DELIVERY DATE COULD NOT BE ARRANGED, OR THAT OTHER COGENT REASONS EXISTED FOR HIS APPROVAL OF SUCH PURCHASES.

CAREFUL CONSIDERATION HAS BEEN GIVEN TO THE MATTERS SET FORTH IN YOUR LETTER OF FEBRUARY 8, 1942, BUT, FOR THE FOREGOING REASONS, I FIND NOTHING THEREIN WHICH WOULD WARRANT OR REQUIRE ANY MODIFICATION OF MY DECISION OF SEPTEMBER 29, 1941, IN THE MATTER.