A-13067, NOV. 3, 1959

A-13067, NOV. 3, 1959

TO THE SECRETARY OF THE ARMY:

FURTHER REFERENCE IS MADE TO OUR LETTER OF MAY 26, 1959, TO YOU, AND TO REPLY DATED JULY 27, 1959, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), CONCERNING BILLINGS MADE BY CERTAIN INDEPENDENT TELEPHONE COMPANIES FOR TWX SERVICES FURNISHED BY THE BELL TELEPHONE COMPANIES PURSUANT TO COMMERCIAL SERVICES AUTHORIZATIONS (CSA) ISSUED BY THE GOVERNMENT UNDER THE TERMS OF A GENERAL CONTRACT COMMUNICATIONS FACILITIES BETWEEN THE MILITARY DEPARTMENTS AND THE AMERICAN TELEPHONE AND TELEGRAPH COMPANY (AT AND T) AND EACH OF THE BELL SYSTEM COMPANIES. THE SIGNAL CORPS HAS REFUSED TO HONOR BILLINGS FROM INDEPENDENT COMPANIES WHICH HAVE NO DIRECT CONTRACTUAL RELATIONSHIP WITH THE GOVERNMENT ON THE BASIS THAT PAYMENT TO SUCH COMPANIES WOULD BE CONTRARY TO THE PROVISIONS OF 31 U.S.C. 203 AND 41 ID. 15, PROHIBITING THE ASSIGNMENT OF CLAIMS AND/OR CONTRACTS.

IT IS OUR UNDERSTANDING THAT THE BILLINGS ARE BASED ON CERTAIN SPECIAL ARRANGEMENTS BETWEEN AT AND T, ITS SUBSIDIARIES, AND THE UNITED STATES INDEPENDENT TELEPHONE ASSOCIATION, TO THE EFFECT THAT WHERE AT AND T OR ANY BELL SYSTEM COMPANY RENDERS TWX SERVICE OR OTHER SERVICE TO A SUBSCRIBER, THE BELL COMPANY WILL UTILIZE CERTAIN LOCAL CHANNELS FURNISHED BY THE INDEPENDENT IN SUPPORT OF THE SERVICE, AND THAT ALL BILLINGS FOR THE SERVICE WILL BE MADE DIRECTLY TO THE SUBSCRIBER BY THE INDEPENDENT WHICH WILL COLLECT THE BILLING FROM THE SUBSCRIBER AND THEREAFTER SETTLE WITH THE BELL COMPANY.

APPARENTLY, TO OVERCOME THE LEGAL OBJECTION TO BILLING AND COLLECTING BY THE INDEPENDENT COOPERATING TELEPHONE COMPANY, AT AND T HAS SUGGESTED THAT THE EXISTING ARRANGEMENTS WITH THE INDEPENDENT COMPANIES MAY BE CONTINUED IF THE FOLLOWING CLAUSE BE INSERTED IN THE CSA:

"BILLING AND COLLECTION FOR SERVICES FURNISHED UNDER THIS COMMERCIAL SERVICE AUTHORIZATION WILL BE MADE BY THE (INDEPENDENT) TELEPHONE COMPANY, AND PAYMENT WILL BE MADE DIRECTLY TO THAT COMPANY. PAYMENT MADE IN THIS MANNER SHALL OPERATE AS A FULL DISCHARGE OF THE GOVERNMENT'S LIABILITY AND OBLIGATION FOR PAYMENT OF THE SERVICES RENDERED.'

ALTERNATIVE PROCEDURES ALSO HAVE BEEN ADVANCED WHICH RETAIN THE PRINCIPLE OF DIRECT BILLING BY, AND PAYMENT TO, THE BELL COMPANIES BUT PROVIDE FOR THE DEPOSIT OF POWERS OF ATTORNEY WITH THE GOVERNMENT TO AUTHORIZE THE CASHING OF GOVERNMENT CHECKS BY THE INDEPENDENT COMPANY AS DESIGNATED AGENT OF THE BELL COMPANY.

WE SEE NO LEGAL OBJECTION TO THE PAYMENT OF BILLINGS UNDER POWERS OF ATTORNEYS EXECUTED BY THE APPLICABLE BELL COMPANY IN FAVOR OF AN INDEPENDENT COMPANY. CF. 17 COMP. GEN. 245; 21 ID. 265, 268. ALSO, WHILE WE BELIEVE THAT THE PAYMENT CLAUSE QUOTED ABOVE WOULD CONSTITUTE A PROPER METHOD OF PAYMENT AND THE GOVERNMENT WOULD SECURE A GOOD AND SUFFICIENT ACQUITTANCE, IT IS SUGGESTED THAT SUCH CLAUSE BE AMENDED TO PROVIDE SPECIFICALLY THAT ADJUSTMENTS IN BILLING OR SETTLEMENT FOR DISPUTED SERVICE DEFECTS WHICH MAY BE MADE WITH THE INDEPENDENT COMPANY SHALL BE BINDING ON THE APPLICABLE BELL COMPANY.

HOWEVER, WE BELIEVE THAT THE QUESTION AS TO WHICH OF THE METHODS FOR ACCOMPLISHING PAYMENT TO OR THROUGH THE INDEPENDENT COMPANIES WOULD BE TO THE BEST ADVANTAGE OF THE GOVERNMENT PROPERLY IS FOR DETERMINATION BY YOUR DEPARTMENT IN COOPERATION WITH THE OTHER DEPARTMENTS CONCERNED. WE WOULD, OF COURSE, BE WILLING TO EXTEND SUCH ASSISTANCE AS MAY BE REQUIRED TO RESOLVE THE MATTER TO THE SATISFACTION OF ALL PARTIES CONCERNED. A COPY OF THIS LETTER IS BEING FURNISHED TO THE WASHINGTON OFFICE OF AT AND T.