B-147129, OCT. 16, 1961

B-147129, OCT. 16, 1961

TO THE SECRETARY OF STATE:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 5, 1961, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION WHETHER THE COST-PLUS-A-FIXED-FEE CONSTRUCTION CONTRACTOR, CHRISTIANI AND NIELSEN, PERFORMING UNDER CONTRACTS SCC-23429 AND SCC-27300 MAY BE REIMBURSED SEVERANCE PAY PAID LABORERS, AS A RESULT OF DECREES BY THE PARAGUAYAN NATIONAL BOARD OF LABOR AND BY THE COURT OF APPEAL, AND LEGAL FEES AND EXPENSES PAID IN DEFENSE OF THE CLAIM BEFORE THE BOARD AND THE COURT.

IT IS REPORTED THAT AFTER THE CONTRACTOR COMPLETED THE WORK AND BEFORE ANY CONSIDERATION WAS GIVEN TO DETERMINING THE COST FOR UNPAID WORK, THE CONTRACTOR WAS REQUESTED TO AND DID FURNISH GENERAL RELEASES. THE RELEASES UNDER THE RESPECTIVE CONTRACTS WERE EXECUTED ON OCTOBER 10 AND NOVEMBER 14, 1960. THEREAFTER, ON DECEMBER 28, 1960, $46,106.99 WAS PAID ON CONTRACT SCC-23429 AND $11,000 AND $7,318.79 WAS PAID ON CONTRACT SCC- 27300 IN JANUARY AND APRIL 1961, RESPECTIVELY. ON DECEMBER 28, 1960, THE SAME DATE PAYMENT ON CONTRACT SCC-23429 WAS MADE TO THE CONTRACTOR'S REPRESENTATIVE IN ASUNCION, THE COMPANY'S VICE PRESIDENT IN BUENOS AIRES WROTE THE DEPARTMENT THAT THERE MIGHT BE ADDITIONAL COST IF THE COURT OF APPEAL WOULD NOT REVERSE A BOARD OF LABOR RULING THAT LABORERS EMPLOYED FOR THE JOBS WERE REQUIRED TO BE PAID SEVERANCE PAY UPON THEIR DISCHARGE. IN VIEW OF THE FACT THAT THE RELEASES WERE FURNISHED AND ACCEPTED BEFORE ANY CONSIDERATION WAS GIVEN TO THE BALANCES DUE UNDER THE CONTRACTS IT APPEARS THAT IT WAS THE INTENTION OF THE GOVERNMENT TO PAY WHAT WAS JUSTLY DUE UNDER THE CONTRACTS AND THE INTENTION OF THE CONTRACTOR TO ACCEPT NO LESS. THEREFORE, THE CONTRACTOR'S CLAIM FOR REIMBURSEMENT SHOULD NOT BE PRECLUDED BY THE RELEASES.

BOTH CONTRACTS HAVE A CLAUSE PERMITTING ESCALATION IN THE AMOUNT OF THE CONTRACT WHENEVER CHANGES IN RATES OF WAGES STIPULATED IN THE CONTRACT FOR SKILLED AND/OR UNSKILLED LABOR ARE THE RESULT OF A DECREE BY THE GOVERNMENT OF PARAGUAY. SEVERANCE PAY IS WAGES EARNED THROUGHOUT THE PERIOD OF EMPLOYMENT. SEE OWENS V. PRESS PUBLISHING CO., 111 A.2D 796. THEREFORE, SINCE THE SEVERANCE PAY WAS REQUIRED TO BE PAID BY THE BOARD OF LABOR AND WAS UPHELD UPON APPEAL, THE RATES OF WAGES HAVE BEEN INCREASED WITHIN THE PURVIEW OF THE CONTRACT CLAUSE AND THE INCREASE IS FOR CONSIDERATION AS A REIMBURSABLE COST.

THE ATTORNEY'S FEES AND EXPENSES ATTRIBUTABLE TO THE DEFENSE OF THE CLAIMS ARE ALSO ALLOWABLE ITEMS OF COST. SEE 23 COMP. GEN. 439.

TO THE EXTENT THAT THE CONTRACTOR HAS MADE ALL OF THE ABOVE DISBURSEMENTS, REIMBURSEMENT WOULD BE PROPER.