B-160406, FEB. 23, 1967

B-160406, FEB. 23, 1967

TO JOHN T. DAWSON, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 11, 1967, ADVISING THAT YOU ARE ONE OF THE ATTORNEYS REPRESENTING TOM SAMUELS, TRUSTEE OF BANKRUPT PACIFIC INTERNATIONAL RESEARCH, LTD., AND REQUESTING INFORMATION AS TO THE STEPS NECESSARY TO BE TAKEN BY THE TRUSTEE TO SECURE PAYMENT OF $20,314.55 ALLEGEDLY OWED BY THE VETERANS ADMINISTRATION TO THE BANKRUPT UNDER CONTRACT NO. V1005P-375A DATED JUNE 25, 1965. THE AFOREMENTIONED CONTRACT, FOR THE DESIGN, ENGINEERING AND PLANNING REQUIREMENTS OF A VETERANS ADMINISTRATION HOSPITAL IN SAN DIEGO, CALIFORNIA, IS A COST- REIMBURSEMENT TYPE CONTRACT. UNDER THE TERMS OF THE CONTRACT THE GOVERNMENT AGREED TO REIMBURSE THE CONTRACTOR UP TO A MAXIMUM OF $153,157.00 FOR ALLOWABLE COSTS AS GOVERNED BY THE CONTRACT'S TERMS. THE RELEVANT TERMS OF THE CONTRACT ARE AS FOLLOWS:

"ARTICLE 5 (A) REIMBURSEMENT FOR COSTS. THE GOVERMENT SHALL REIMBURSE THE CONTRACTOR UPON THE SUBMISSION OF PROPERLY PREPARED VOUCHERS OR INVOICES APPROVED BY THE CONTRACTING OFFICER FOR THE ,ACTUAL COST" TO THE CONTRACTOR OF PERFORMANCE OF ITS UNDERTAKINGS HEREUNDER IN A TOTAL AMOUNT NOT TO EXCEED $153,157.00. THE CONTRACTOR MAY SUBMIT SUCH VOUCHERS AT MONTHLY INTERVALS FOR ,ACTUAL COST" INCURRED AND NOT PREVIOUSLY REIMBURSED. THE CONTRACTING OFFICER MAY WITHHOLD ALL OR ANY PART OF THE FINAL REIMBURSEMENT PAYMENT UNTIL RECEIPT OF THE FINAL REPORT, THE PROPERTY ACCOUNTING, THE PATENT DISCLOSURE AND DESIGNATION REQUIRED HEREUNDER AND AN ADMINISTRATIVE AND FINANCIAL AUDIT IS MADE, IF NECESSARY, OF THE BOOKS OF THE CONTRACTOR WITH RESPECT TO THE PROCEDURES AND EXPENSES OF THE CONTRACTOR UNDER THIS AGREEMENT. PROVIDED THAT THE VACO SPECIAL COMMITTEE SHALL ATTACH TO ANY SUCH VOUCHER A CERTIFICATE SIGNED BY HIM, STATING THAT THE EXPENDITURES FOR WHICH REIMBURSEMENT IS CLAIMED IN SAID VOUCHER HAVE BEEN MADE AND WERE REQUIRED IN FULFILLMENT OF THE CONTRACTOR'S UNDERTAKINGS HEREIN, AND THAT THE SUBJECT WORK HAS PROGRESSED ACCORDING TO THE CONTRACTOR'S COMMITMENTS IN ARTICLE 1 (A) HEREIN; AND, FOR THE PURPOSE OF ENABLING THE VACO SPECIAL COMMITTEE TO EXECUTE SAID CERTIFICATE, THE CONTRACTOR SHALL FURNISH TO THE VACO SPECIAL COMMITTEE SUCH INFORMATION IN RESPECT TO EACH SUCH VOUCHER AS THE VACO SPECIAL COMMITTEE MAY REASONABLY REQUIRE.

"/B) COST ESCAPE. NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF, WHEN AND IF "ACTUAL COST" IN SUCH MAXIMUM AMOUNT SHALL HAVE BEEN INCURRED OR OBLIGATED HEREUNDER, THE CONTRACTOR SHALL NOT BE REQUIRED TO INCUR OR OBLIGATE FURTHER "ACTUAL COST" HEREUNDER UNLESS AND UNTIL THE GOVERNMENT SHALL FIRST AGREE IN WRITING TO REIMBURSE THE CONTRACTOR THEREFOR.

"/C) VOUCHERS. ALL VOUCHERS SUBMITTED SHALL INDICATE, WITH RESPECT TO EACH CLASS OF ITEMS LISTED BY THE CONTRACTOR THEREON, THE PARTICULAR SUBPARAGRAPH OF ARTICLE 6 BELOW UNDER WHICH REIMBURSEMENT IS CLAIMED, AND SHALL BE ITEMIZED AS REQUIRED BY THE CONTRACTING OFFICER AND SUPPORTED BY A CERTIFICATE READING AS FOLLOWS:

"I FURTHER CERTIFY THAT THE PERSONAL SERVICES AND THE SUPPLIES, EQUIPMENT, MATERIAL, ETC., LISTED HEREON WERE REQUIRED BY AND WERE USED IN THE PERFORMANCE OF THE WORK UNDER THE CONTRACT REFERRED TO ON THIS VOUCHER AND THAT PAYMENTS HAVE BEEN MADE OF ALL AMOUNTS FOR WHICH REIMBURSEMENTS ARE HEREBY CLAIMED; THAT THE AMOUNTS CLAIMED FOR PERSONAL SERVICES INVOLVING PART TIME WORK, DETERMINED FROM A DISTRIBUTION OF WAGES FOR THE PERIOD INDICATED TO BE DIRECTLY CHARGEABLE TO THE UNITED STATES UNDER THE PROVISIONS OF THE CONTRACT REFERRED TO ON THIS VOUCHER, ARE TRUE AND CORRECT AND THAT PAYMENTS OF THESE AMOUNTS HAVE BEEN MADE TO ALL EMPLOYEES WHOSE WAGES ARE INCLUDED IN THE DISTRIBUTION; THAT PAYROLLS, PROCUREMENT RECORDS, INVOICES AND REQUISITIONS CONCERNED WILL BE KEPT FOR AT LEAST THREE YEARS, SUBJECT TO INSPECTION UPON REQUEST BY AUTHORIZED REPRESENTATIVES OF THE UNITED STATES GOVERNMENT; AND THAT NO INDIVIDUAL ITEMS COSTING $50 OR MORE HAVE BEEN INCLUDED IN THE SUB-TOTALS AND TOTALS OF CHARGES FOR WHICH NO ITEMIZATIONS OR EVIDENTIARY SUBSTANTIATIONS ARE FURNISHED.

PAYEE ---------------------------

PER --------------- (TITLE) -----

DATE ------------- "/THE ABOVE CERTIFICATE MAY BE TYPED OR STAMPED ON THE REVERSE SIDE OF THE ORIGINAL OF THE VOUCHER.)

"/D)SUBCONTRACTS. THE CONTRACTOR SHALL NOT ENTER INTO SUB CONTRACTS WITHOUT OBTAINING THE WRITTEN APPROVAL OF THE VACO SPECIAL COMMITTEE AND CONTRACTING OFFICER.'

THE VETERANS ADMINISTRATION REPORTS THAT SIX VOUCHERS IN THE TOTAL AMOUNT OF $132,842.45 WERE SUBMITTED BY THE CONTRACTOR FOR REIMBURSABLE EXPENSES UNDER THE CONTRACT AND THAT THE CONTRACTOR HAS BEEN PAID THE $132,842.45. VOUCHER NO. 7 (FINAL) IN THE AMOUNT OF $20,314.55 ($153,157 MAXIMUM ALLOWABLE COSTS LESS $132,842.45 PREVIOUSLY PAID) WAS SUBMITTED BY THE CONTRACTOR TO THE VETERANS ADMINISTRATION FOR REIMBURSEMENT ON FEBRUARY 17, 1966. HOWEVER, THE VETERANS ADMINISTRATION BECAME AWARE OF THE POSSIBILITY THAT SOME OF COSTS CLAIMED IN SAID VOUCHER MAY NOT HAVE BEEN PAID BY THE CONTRACTOR, PARTICULARLY IN CONNECTION WITH THE SUBCONTRACT WITH DEAN PRICE, A.I.A., AND ASSOCIATES, LTD. (DEAN PRICE). SINCE THE CONTRACTOR'S CERTIFICATION ON VOUCHER NO. 7 STATED THAT PAYMENT HAD BEEN MADE FOR THE AMOUNTS CLAIMED THEREON AS REIMBURSEMENT, THE CONTRACTOR WAS REQUESTED TO VERIFY THE VALIDITY OF THE CERTIFICATION. BY LETTER DATED MARCH 18, 1966, THE CONTRACTOR ADVISED THAT THE VOUCHER INCLUDED THE "ROUTINE CERTIFICATION" OF SERVICES RENDERED AND PAID FOR AND THAT THE SUBMISSION OF THE VOUCHER AS CERTIFIED IN THIS MATTER WAS AN OVERSIGHT ON THEIR PART. IT WAS ALSO STATED THAT UPON COMPLETION OF THE CONTRACT AND UPON RECEIPT FROM THEIR SUBCONTRACTOR, DEAN PRICE, OF A CERTIFIED STATEMENT SETTING FORTH ALLOWABLE AND ACTUAL COSTS PAID UNDER THE SUBCONTRACT, THEY WOULD APPROVE PAYMENT TO DEAN PRICE, AND AT THAT TIME THEY WOULD RESUBMIT VOUCHER NO. 7 WITH PROPER CERTIFICATION.

THE RECORD SHOWS THAT THE ABOVE REFERRED TO SUBCONTRACT WITH DEAN PRICE PROVIDES THAT DEAN PRICE WOULD PERFORM CERTAIN PORTIONS OF THE WORK COVERED BY THE CONTRACT BETWEEN PACIFIC INTERNATIONAL RESEARCH, LTD., AND THE VETERANS ADMINISTRATION, FOR THE MAXIMUM SUM OF $77,000. THE PAYMENT PROVISIONS OF THE SUBCONTRACT, ARTICLE 4 (A/-/D), ARE SIMILAR TO THOSE SET FORTH IN THE PRIME CONTRACT QUOTED ABOVE (ARTICLE 5). IN THE LETTER OF MARCH 18, 1966, THE CONTRACTOR FURTHER STATED THAT DEAN PRICE HAD NOT AS OF MARCH 17, 1966, PAID CERTAIN OF THEIR ENGINEERING CONSULTANTS.

THE VETERANS ADMINISTRATION REPORTS THAT THE CONTRACT REQUIREMENTS WERE SATISFACTORILY COMPLETED ON APRIL 20, 1966. UNTIL SUCH TIME AS THE CONTRACTOR SUBMITS A PROPERLY CERTIFIED VOUCHER SETTING FORTH THE "ACTUAL COSTS" INCURRED AND PAID IN THE PERFORMANCE OF THE CONTRACT WORK, THERE ARE NO ADDITIONAL AMOUNTS DUE THE CONTRACTOR FROM THE GOVERNMENT. HOWEVER, SINCE THE CONTRACTOR IS BANKRUPT AND IT MAY NOT BE POSSIBLE FOR HIM TO PAY THE "ACTUAL COSTS" INCURRED IN PERFORMING THE CONTRACT WORK AND THEN CLAIM REIMBURSEMENT, CONSIDERATION WILL BE GIVEN THE MATTER IF THE CONTRACTOR, OR THE TRUSTEE ON HIS BEHALF, WILL SUBMIT A CERTIFIED STATEMENT SETTING FORTH ALLOWABLE COSTS INCURRED, TO WHOM PAYMENTS HAVE BEEN MADE AND TO WHOM AMOUNTS ARE OWING FOR WORK PERFORMED UNDER THE CONTRACT.

THERE IS ENCLOSED FOR YOUR INFORMATION A COPY OF OUR LETTER OF TODAY TO THE ATTORNEYS FOR DEAN PRICE.