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B-145436, NOV. 6, 1961

B-145436 Nov 06, 1961
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CITY OF KETCHIKAN: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 17. WE ARE ADVISED BY THE DEPARTMENT OF THE ARMY THAT INTERCONNECTION AGREEMENTS SUCH AS THE CONTRACT REFERRED TO ARE EXECUTED BY THE ALASKA COMMUNICATION SYSTEM (AS THE LONG-DISTANCE MESSAGE TELEPHONE AGENCY) WITH LOCAL TELEPHONE COMPANIES IN ALASKA FOR THE PURPOSE OF EXTENDING THE CAPABILITY OF THE LOCAL EXCHANGE SYSTEM TO INCLUDE LONG-DISTANCE TELEPHONE SERVICE OFFERINGS TO THE LOCAL COMPANY CUSTOMERS. THE ARRANGEMENT IS INTENDED TO PROVIDE A MEANS FOR EFFECTING COLLECTION OF TOLL CHARGES BY THE LOCAL COMPANY AND TRANSMITTAL TO THE GOVERNMENT OF ITS AGREED PORTION THEREOF. WHEN THE ALASKA COMMUNICATION SYSTEM WAS UNABLE TO PROCURE THE EXCHANGE SERVICES FROM KETCHIKAN AT WHAT IT CONSIDERED A REASONABLE PRICE.

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B-145436, NOV. 6, 1961

TO MR. ROBERT E. SHARP, CITY MANAGER, CITY OF KETCHIKAN:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 17, 1961,REQUESTING RECONSIDERATION OF SETTLEMENT DATED FEBRUARY 23, 1961, BY WHICH OUR CLAIMS DIVISION DISALLOWED THE CLAIM OF KETCHIKAN PUBLIC UTILITIES FOR SUMS AGGREGATING $8,413.89, REPRESENTING AMOUNTS ALLEGED TO BE DUE FOR CERTAIN TELEPHONE SERVICES FURNISHED THE ALASKA COMMUNICATION SYSTEM, UNITED STATES ARMY SIGNAL CORPS. ALSO, THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 23, 1961, RELATING TO YOUR CLAIM.

THE FOREGOING CLAIM REPRESENTS THE ESTIMATED COST OF REDUCED TELEPHONE INTERCONNECTION SERVICES--- AT $0.392 PER MESSAGE--- ALLEGEDLY FURNISHED THE ALASKA COMMUNICATION SYSTEM DURING THE MONTHS OF JUNE, JULY, AUGUST, AND SEPTEMBER, 1960, FOLLOWING THE EXPIRATION OF CONTRACT NO. DA-45-041-SC -1142 ON MAY 31, 1960.

WE ARE ADVISED BY THE DEPARTMENT OF THE ARMY THAT INTERCONNECTION AGREEMENTS SUCH AS THE CONTRACT REFERRED TO ARE EXECUTED BY THE ALASKA COMMUNICATION SYSTEM (AS THE LONG-DISTANCE MESSAGE TELEPHONE AGENCY) WITH LOCAL TELEPHONE COMPANIES IN ALASKA FOR THE PURPOSE OF EXTENDING THE CAPABILITY OF THE LOCAL EXCHANGE SYSTEM TO INCLUDE LONG-DISTANCE TELEPHONE SERVICE OFFERINGS TO THE LOCAL COMPANY CUSTOMERS, AND TO ESTABLISH THE DIVISION OF REVENUE DUE THE LOCAL COMPANY FOR THEIR PARTICIPATION AND USE OF THE COMPANY PLANT AND FACILITIES. AT THE SAME TIME, THE ARRANGEMENT IS INTENDED TO PROVIDE A MEANS FOR EFFECTING COLLECTION OF TOLL CHARGES BY THE LOCAL COMPANY AND TRANSMITTAL TO THE GOVERNMENT OF ITS AGREED PORTION THEREOF.

IN THE INSTANT CASE, WHEN THE ALASKA COMMUNICATION SYSTEM WAS UNABLE TO PROCURE THE EXCHANGE SERVICES FROM KETCHIKAN AT WHAT IT CONSIDERED A REASONABLE PRICE, IT WAS PREPARED TO ABANDON THE INTERCONNECTIONS BETWEEN THE TWO SYSTEMS, AND TO RENDER LONG-DISTANCE TOLL SERVICES TO THE RESIDENTS OF THE CITY OVER GOVERNMENT-OWNED FACILITIES INSTEAD, WITHOUT DEPENDENCE UPON ANY OF THE SERVICES THE CITY MAY HAVE PREVIOUSLY RENDERED UNDER THE EXPIRED CONTRACT.

THE DEPARTMENT OF THE ARMY STATES THAT THE CITY OF KETCHIKAN, SEEKING TO RETAIN THE FORMER MEANS OF LONG-DISTANCE SERVICES AS A CONVENIENT METHOD OF DISCHARGING ITS OWN OBLIGATIONS TO SUBSCRIBERS OF ITS TELEPHONE FACILITIES, BUT BEING UNWILLING AT THAT TIME TO AGREE UPON A REASONABLE RATE THEREFOR, REQUESTED THE ALASKA COMMUNICATION SYSTEM TO MAINTAIN THE MUNICIPALITY'S CONNECTION WITH THE ACS FACILITY. THE ALASKA COMMUNICATION SYSTEM THEREUPON AGREED, FOR THE SOLE BENEFIT OF THE CITY, TO ACCEPT AND DELIVER TOLL CALLS THROUGH ACS FACILITIES. THE CITY CONTINUED TO RECEIVE THE BENEFIT OF SUCH SERVICES IN THE ONLY MANNER TECHNICALLY POSSIBLE UNDER THE CIRCUMSTANCES, THAT IS TO SAY, THROUGH ITS OWN INTERCOMMUNICATION EXCHANGE WITH GOVERNMENT FACILITIES.

IT IS THE POSITION OF THE DEPARTMENT OF THE ARMY THAT UNDER THE TERMS OF THIS PARTICULAR ARRANGEMENT, THE GOVERNMENT NEITHER BARGAINED FOR, NOR DID IT RECEIVE, ANY BENEFIT. THE DEPARTMENT ASSERTS THAT AT THE MOST THE FUNCTIONS OF THE CITY, ACTING AS A CONNECTING LINK SO THAT IT MIGHT ASSURE CONTINUED LONG-DISTANCE SERVICES TO ITS OWN CUSTOMERS, SHOULD BE CONSIDERED AS INCIDENTAL IN NATURE, ARISING SOLELY FROM THE TECHNICAL ARRANGEMENTS NECESSARY TO ASSURE CONTINUED SERVICE TO THE MUNICIPALITY. IT IS STATED ALSO THAT THE ABSENCE OF ANY ACTION ON THE PART OF THE CITY TO RESUME PERFORMANCE OF ANOTHER IMPORTANT ELEMENT OF A FORMAL INTERCONNECTION AGREEMENT--- THE COLLECTION WORK--- THEREBY LEAVING THE GOVERNMENT TO DEAL DIRECTLY WITH THE CITY'S TOLL USERS, INDICATES THE LIMITED ASPECTS OF THE INFORMAL ARRANGEMENT.

IN THE CIRCUMSTANCES, THERE APPEARS TO BE SUBSTANTIAL DOUBT AS TO WHETHER THE GOVERNMENT IS LEGALLY LIABLE TO THE MUNICIPALITY FOR ANY PART OF THE CLAIM ASSERTED. WE THEREFORE CONCLUDE THAT NO PAYMENT MAY BE AUTHORIZED IN THE ABSENCE OF A JUDICIAL DETERMINATION AND JUDGMENT BY A COURT OF COMPETENT JURISDICTION, AND THE PREVIOUS DISALLOWANCE IS SUSTAINED.

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