B-145484, MAY 5, 1961

B-145484, MAY 5, 1961

TO MR. LAVELLE C. OTT, AUTHORIZED CERTIFYING OFFICER, NATIONAL INSTITUTES OF HEALTH:

BY LETTER OF MARCH 30, 1961, YOU REQUESTED AN OPINION AS TO WHETHER CERTAIN ITEMS OF COST CLAIMED BY THE COMMONWEALTH OF PENNSYLVANIA UNDER A "TECHNICAL ASSISTANCE PROJECT" CONTRACT COULD PROPERLY BE CERTIFIED FOR PAYMENT. FROM YOUR LETTER AND THE ENCLOSURES THERETO, THE PERTINENT FACTS IN THE MATTER MAY BE SUMMARIZED AS FOLLOWS:

ON JUNE 8, 1960, THE NATIONAL INSTITUTES OF HEALTH ENTERED INTO CONTRACT NUMBERED SA-43-PH-9735 WITH THE COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF PUBLIC WELFARE TO MANAGE AND CONDUCT A 3-DAY CONFERENCE ON JUNE 8, 9, AND 10, 1960, ON "CREATIVE USE OF MENTAL HEALTH FILMS" AND AT THE COMPLETION THEREOF TO PREPARE AND DELIVER 500 COPIES OF A FINAL REPORT BY SEPTEMBER 8, LATER AMENDED TO DECEMBER 2, 1960. ARTICLE III OF THE CONTRACT PROVIDED THAT:

"ARTICLE III

COMPENSATION

"A. MAXIMUM ACTUAL COST

"THE ACTUAL COST TO THE GOVERNMENT, INCLUDING ALL DIRECT AND INDIRECT COSTS, FOR THE PERFORMANCE OF THIS WORK SHALL NOT EXCEED

"$4,544.00 AND THE CONTRACTOR AGREES TO UTILIZE ITS BEST EFFORTS TO COMPLETE THE PERFORMANCE OF THIS WORK WITHIN THIS ESTIMATED COST AND THE PERIOD OF TIME SET FORTH IN ARTICLE II.

"B. ALLOWABLE COSTS

"REIMBURSEMENT TO THE CONTRACTOR SHALL BE SPECIFICALLY LIMITED TO THOSE COSTS CLAIMED BY THE CONTRACTOR AND AS DESCRIBED BELOW, INCURRED DIRECTLY AND SPECIFICALLY IN THE PERFORMANCE OF THIS CONTRACT, AND ACCEPTED BY THE CONTRACTING OFFICER AS BEING ALLOWABLE UNDER THE TERMS OF THIS AGREEMENT:

"1. ACTUAL TRANSPORTATION EXPENSES BUT NOT TO EXCEED THE COST OF FIRST CLASS AIR TRAVEL BY MOST DIRECT ROUTE, OR IF BY PRIVATELY OWNED AUTOMOBILE, NOT TO EXCEED 9 CENTS PER MILE PLUS TOLLS. TOTAL TRAVEL EXPENSES SHALL NOT, HOWEVER, EXCEED THE ESTIMATE OF $1,300.00.

"2. ACTUAL SUBSISTENCE EXPENSES UP TO $12.00 PER DIEM PER PERSON, NOT TO EXCEED, HOWEVER, THE ESTIMATE OF $1,944.00.

"3. HONORARIA, AT THE RATE OF $50.00 PER DIEM, NOT TO EXCEED, HOWEVER, $600.00 IN THE AGGREGATE.

"4. COSTS FOR THE PREPARATION, EDITING, PRINTING, AND BINDING OF 500COPIES OF THE FINAL REPORT NOT TO EXCEED $700.00.

"5. SUCH OTHER COSTS AS SHOULD, IN THE OPINION OF THE CONTRACTING OFFICER, BE INCLUDED IN THE COST OF THE SERVICES TO BE PERFORMED UNDER THIS CONTRACT.'

THE CONFERENCE WAS HELD AS SCHEDULED AND THE REPORT FORMAT HAS BEEN ACCEPTED AND THE REQUIRED NUMBER OF COPIES HAVE BEEN DELIVERED TO THE PROJECT OFFICERS. FORTY-FIVE PERSONS FROM VARIOUS STATES PARTICIPATED IN THE CONFERENCE. THE CONTRACTOR HAS SUBMITTED AN INVOICE IN THE AMOUNT OF $4,834.64 FOR PAYMENT UNDER THE CONTRACT. THE ITEMS MAKING UP THE TOTAL CLAIMED ARE DISTRIBUTED AS FOLLOWS:

TABLE

TRAVEL $1,943.08

SUBSISTENCE 2,091.56

HONORARIA TO FACULTY 600.00

EDITING OF PROCEEDINGS 200.00

TOTAL $4,834.64

HOWEVER, AN EXAMINATION OF THE PAPERS SUPPORTING THE CLAIM SHOWS THAT THE AMOUNT FOR TRAVEL INCLUDES ITEMS THAT SHOULD HAVE BEEN INCLUDED IN THE AMOUNT FOR SUBSISTENCE; THAT THE TOTAL CLAIMED FOR SUBSISTENCE INCLUDES AMOUNTS IN EXCESS OF THE $12 PER DIEM RATE SPECIFIED IN THE CONTRACT; AND THAT A PORTION OF THE COSTS CLAIMED FOR TRAVEL AND SUBSISTENCE WERE INCURRED ON JUNE 6 AND 7, 1960, PRIOR TO THE EFFECTIVE DATE OF THE CONTRACT.

AS TO THE COSTS INCURRED PRIOR TO THE EFFECTIVE DATE OF THE CONTRACT, THERE IS NO QUESTION BUT THAT THEY WERE INCURRED IN CONTEMPLATION OF A CONTRACT TO BE SIGNED AND THAT THEY WERE A NECESSARY INCIDENT TO COMPLETION OF THE CONTRACT WORK. IT APPEARS THAT WHEN THE CONTRACT WAS SIGNED ON JUNE 8, THE PARTIES INADVERTENTLY NEGLECTED TO PROVIDE FOR AN EFFECTIVE DATE THAT WOULD ENCOMPASS PARTICIPANTS WHO HAD COMMENCED TRAVEL ON JUNE 6 AND 7. REIMBURSEMENT OF THESE COSTS NEED NOT BE QUESTIONED, IF OTHERWISE PROPERLY PAYABLE.

FROM AN ANALYSIS, SUBMITTED WITH YOUR LETTER, OF THE PAPERS SUPPORTING THE CLAIM, IT APPEARS THAT THE FIGURE OF $1,943.08 CLAIMED FOR TRAVEL INCLUDES SUBSISTENCE COSTS INCURRED DURING TRAVEL IN THE AMOUNT OF $79.21 AND THAT OF THE AMOUNT CLAIMED FOR SUBSISTENCE, $538.18 CONSTITUTES SUBSISTENCE COSTS INCURRED AT A RATE IN EXCESS OF $12 PER DIEM. ASIDE FROM THE QUESTION CONSIDERED ABOVE OF COSTS INCURRED PRIOR TO THE EFFECTIVE DATE OF THE CONTRACT, YOU ARE CONCERNED AS TO WHETHER PAYMENT MAY BE MADE TO THE CONTRACTOR IN EXCESS OF THE INDIVIDUAL LIMITATIONS CONTAINED IN THE CONTRACT PROVISIONS QUOTED ABOVE. THE CONTRACT LIMITS THE GOVERNMENT'S LIABILITY FOR TRAVEL EXPENSES TO A MAXIMUM OF $1,300 AND ACTUAL SUBSISTENCE EXPENSES TO A MAXIMUM OF $12 PER DIEM PER PERSON NOT TO EXCEED A TOTAL OF $1,944. APPLYING THESE MAXIMUMS AND CORRECTING FOR THE SUBSISTENCE EXPENSES ERRONEOUSLY INCLUDED AS TRAVEL EXPENSE, THE CONTRACTOR'S INVOICE WOULD BE REVISED AS FOLLOWS:

TABLE

TRAVEL $1,300.00

SUBSISTENCE 1,632.59

HONORARIA TO FACULTY 600.00

EDITING OF PROCEEDINGS 200.00

TOTAL $3,732.59

ON THE OVERRUN OF TRAVEL COSTS, THE CONTRACTOR HAS EXPLAINED THAT IT MISTAKENLY ANTICIPATED THAT PARTICIPANTS COMING FROM THE SAME LOCATION WOULD SHARE RIDES IN ONE AUTOMOBILE, BUT THAT INDIVIDUAL SCHEDULE DIFFERENCES DID NOT PERMIT THIS ECONOMY TO THE EXTENT ANTICIPATED.

AS TO THE OVERRUN OF SUBSISTENCE COSTS, THE CONTRACTOR STATED THAT THE $12 RATE PROPOSED BY IT WAS SUBMITTED AS AN ESTIMATE ONLY, INASMUCH AS ACTUAL RATES HAD NOT YET BEEN NEGOTIATED WITH THE HOTEL AT WHICH THE CONFERENCE WAS TO BE HELD. THE RATE AS FINALLY NEGOTIATED WAS $16.66 PER DAY, AMERICAN PLAN, AND INCLUDED USE OF CONFERENCE ROOMS. ALSO, THROUGH INADVERTENCE, THE CONTRACTOR APPARENTLY FAILED TO MAKE PROVISION IN ITS BUDGET ESTIMATES FOR SUBSISTENCE DURING TRAVEL.

IT WOULD APPEAR, FROM THE INFORMATION SUBMITTED WITH YOUR LETTER, THAT IT WAS THE GOVERNMENT'S INTENTION AT THE TIME THE CONTRACT WAS SIGNED TO FULLY REIMBURSE THE CONTRACTOR FOR ALL PROPER COSTS TO BE INCURRED, THE CONTRACT LIMITATIONS ON TRAVEL AND SUBSISTENCE BEING DESIGNED PRIMARILY TO LIMIT THE NUMBER OF CONTRACT PARTICIPANTS, AND THAT THIS INTENTION HAS NOT BEEN VIOLATED. HOWEVER, IN ESTABLISHING THESE LIMITATIONS, THE GOVERNMENT RELIED UPON BUDGET INFORMATION DEVELOPED AND SUBMITTED BY THE CONTRACTOR AND IT DOES NOT APPEAR THAT COST ESTIMATES UTILIZED WERE SO OUT OF LINE AS TO PUT THE CONTRACTING OFFICER ON NOTICE THAT THEY WERE IN ERROR. THUS THERE CAN BE NO QUESTION THAT THE CONTRACT AS SIGNED CONSTITUTED A BINDING AGREEMENT. THAT THE CONTRACTOR UNDERESTIMATED THE COSTS TO BE INCURRED OR THAT IT MAY HAVE BEEN UNDER THE IMPRESSION THAT THE COSTS SET FORTH COULD LATER BE REVISED AFFORD NO BASIS FOR VARYING THE CONTRACT TERMS.

WHILE REIMBURSEMENT TO THE CONTRACTOR WOULD, IN VIEW OF THE LIMITATIONS DISCUSSED, ORDINARILY BE LIMITED TO $3,732.59, IT IS NOTED THAT ARTICLE III.B.5. PROVIDES FOR SUCH OTHER COSTS AS SHOULD, IN THE OPINION OF THE CONTRACTING OFFICER, BE INCLUDED IN THE COST OF SERVICES TO BE PERFORMED UNDER THE CONTRACT. AND IT IS CLEAR THAT SOME UNASCERTAINABLE PORTION OF THE AMOUNT CLAIMED FOR SUBSISTENCE INCLUDES CONSIDERATION PAID FOR THE USE OF CONFERENCE ROOMS. THEREFORE, UNDER THE CIRCUMSTANCES AND IN LIGHT OF THE MINOR AMOUNT INVOLVED, WE WILL NOT OBJECT TO PAYMENT TO THE CONTRACTOR IN THE AMOUNT OF $3,732.59, IF OTHERWISE CORRECT, PLUS SO MUCH OF THE SUBSISTENCE COSTS ACTUALLY INCURRED AS MAY BE PAID WITHOUT CAUSING TOTAL PAYMENTS UNDER THE CONTRACT TO EXCEED THE OVERALL LIMITATION OF $4,544 SET FORTH THEREIN, PROVIDED THAT AN ADDITIONAL AMOUNT OF $500, WHICH WE UNDERSTAND THE CONTRACTOR WILL BILL FOR FURTHER COSTS RELATED TO PUBLICATION OF THE CONFERENCE REPORT, IS ALSO INCLUDED WITHIN THE OVERALL LIMITATION.