B-18773, AUGUST 4, 1941, 21 COMP. GEN. 97

B-18773, AUGUST 4, 1941, 21 COMP. GEN. 97

CONTRACTS - COST-PLUS - TRAVELING, ETC., EXPENSES OF CONTRACTOR'S EMPLOYEES A PROVISION IN A COST-PLUS-A-FIXED-FEE CONTRACT PROVIDING FOR REIMBURSEMENT TO THE CONTRACTOR FOR EXPENDITURES IN CONNECTION WITH TRANSPORTATION AND TRAVELING EXPENSES OF HIS EMPLOYEES IN CONNECTION WITH THE WORK DOES NOT AUTHORIZE REIMBURSEMENT FOR (1) LIVING EXPENSES OF EMPLOYEES AT THE SITE OF THE WORK PRIOR TO THE ARRIVAL OF THEIR FAMILIES, (2) TRAVELING EXPENSES OF EMPLOYEES IN RETURNING TO THEIR HOMES FO FAMILIES AND HOUSEHOLD EFFECTS, OR (3) EXPENSES OF MOVING SUCH FAMILIES AND HOUSEHOLD EFFECTS TO THE SITE OF THE WORK.

COMPTROLLER GENERAL WARREN TO LT. COL. GEORGE DOBERT, U.S. ARMY, AUGUST 4, 1941:

THERE HAS BEEN RECEIVED BY INDORSEMENT OF JULY 10, 1941, FROM THE CHIEF OF FINANCE, YOUR LETTER OF JUNE 27, 1941, REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF THE ATMOSPHERIC NITROGEN CORPORATION, IN THE AMOUNT OF $3,314.13, COVERING REIMBURSEMENT UNDER CONTRACT NO. W-ORD 499, DATED FEBRUARY 7, 1941, FOR TRAVEL, HOTEL, AND MISCELLANEOUS EXPENSES PAID BY THE CONTRACTOR TO ITS EMPLOYEES.

THE VOUCHER IS SUPPORTED BY ITEMIZED STATEMENTS OF THE EXPENSES INCURRED BY THE EMPLOYEES, TOGETHER WITH THEIR SIGNED RECEIPTS INDICATING THE PAYMENT OF SUCH EXPENSES TO THEM EITHER DIRECTLY BY THE CONTRACTOR OR INDIRECTLY THROUGH ITS REPORTED PARENT COMPANY, THE SOLVAY PROCESS CO. AN EXPLANATION OF THE EXPENDITURES AND THE BASIS UPON WHICH REIMBURSEMENT IS CLAIMED IS SET FORTH IN A LETTER OF APRIL 29, 1941, FROM THE ATMOSPHERIC NITROGEN CORPORATION TO THE CONTRACTING OFFICER'S REPRESENTATIVE AS FOLLOWS:

ARTICLE III-A-I-F OF CONTRACT W-ORD-499 PROVIDES FOR REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES AS FOLLOWS:

"F. TRANSPORTATION AND TRAVELING EXPENSES TO AND FROM THE WORK OF THE NECESSARY FIELD FORCES FOR THE ECONOMICAL AND SUCCESSFUL PROSECUTION OF THE WORK; AND SUCH PORTION OF THE TRANSPORTATION, TRAVELING, HOTEL, AND OTHER EXPENSES OF OFFICERS, ENGINEERS AND ALL OTHER EMPLOYEES OF THE CONTRACTOR AS IS ACTUALLY INCURRED IN CONNECTION WITH THE WORK UNDER THIS CONTRACT.'

OUR TRAVEL PROCEDURE FOR EMPLOYEES TRAVELING IN CONNECTION WITH THE WORK UNDER W-ORD-499 WAS OUTLINED BY US AND APPROVED BY THE CONTRACTING OFFICER'S REPRESENTATIVE IN LETTER OF MARCH 6, 1941. THIS LETTER DID NOT COVER THE COMPANY'S PRACTICE AS REGARDS EXPENSES INCURRED IN MOVING EMPLOYEES, THEIR FAMILIES, AND HOUSEHOLDS TO AND FROM THE SITE OF THE WORK.

COMPANY PRACTICE IN THIS REGARD IS BASED ON THE DESIRE THAT THE INDIVIDUAL SO TRANSPORTED OR MOVED WILL NOT BE OUT-OF-POCKET IN CONNECTION WITH TRANSFER, WHICH IS BEING MADE AT COMPANY'S REQUEST. HENCE, WE ORDINARILY WOULD REIMBURSE THE INDIVIDUAL FOR THE FOLLOWING ITEMS OF EXPENSE:

(1) EXPENSES TO AND WHILE AT THE SITE OF THE WORK DURING THE PERIOD THE EMPLOYEE IS STILL UNDERGOING EXPENSE OF MAINTAINING HIS FAMILY AND HOUSEHOLD AT HIS USUAL RESIDENCE PRIOR TO MOVING TO THE SITE. LENGTH OF THIS PERIOD IS DETERMINED BY CONDITIONS SUCH AS AVAILABILITY OF HOUSING FACILITIES AT NEW LOCATION, SITUATION AT HOME (SICKNESS, CHILDREN IN SCHOOL, LEASE PROVISIONS, ETC.), AND OTHER EXTENUATING CIRCUMSTANCES. WOULD EXPECT THE EMPLOYEE TO EXERCISE DUE DILIGENCE AND, ORDINARILY, TO BE SETTLED AT HIS NEW LOCATION IN FOUR TO SIX WEEKS, IN CASE HE HAS A FAMILY TO MOVE; AND IN LESS TIME IN CASE HE IS SINGLE; HOWEVER, THIS MIGHT BE INCREASED OR DECREASED SO AS TO BE FAIR AND JUST TO ALL CONCERNED. WOULD ALSO EXPECT TO PAY THE EMPLOYEE'S EXPENSES IN CONNECTION WITH TRIP BACK HOME FOR MOVING TO NEW LOCATION, IN CASE SUCH IS APPROVED BY PROPERLY AUTHORIZED SUPERIOR.

(2) EXPENSES IN CONNECTION WITH MOVING HOUSEHOLD GOODS AND FAMILY TO THE SITE OF THE WORK. THIS WOULD ORDINARILY INCLUDE TRAVELING EXPENSES FOR FAMILY AND TRUCKING EXPENSE OF HOUSEHOLD GOODS TO THE SITE.

(3) SUCH OTHER EXPENSES AS MIGHT REASONABLY BE DEEMED AS RESULTING FROM THE TRANSFER. HOWEVER, IN NO CASE WOULD INCREASED RENTAL, IF ANY, AT NEW LOCATION BE CONSIDERED A REIMBURSABLE ITEM.

IN OUR OPINION, IT IS CLEAR THAT THE ABOVE EXPENSES FALL WITHIN THE PROPER CONSTRUCTION OF ARTICLE III-A-1-F. THE EXPENSES DESCRIBED ABOVE ARE, OBVIOUSLY, EXPENSES OF EMPLOYEES OF THE CONTRACTOR NOT ONLY ACTUALLY INCURRED IN CONNECTION WITH THE WORK BUT NECESSARILY INCURRED. OUR INTERPRETATION OF THE PARAGRAPH CONFORMS WITH OUR UNDERSTANDING AT THE TIME THE CONTRACT WAS EXECUTED. IT WAS THEN RECOGNIZED THAT THE PLANT COULD NOT BE BUILT WITHOUT THE TRANSFER OF MANY EMPLOYEES FROM OTHER LOCATIONS TO HENDERSON. THIS FACT IS RECOGNIZED IN ARTICLE III-A-1-G, WHEREIN IT IS PROVIDED, IN PART, THAT IN TRANSFERRING MEN FROM THEIR REGULAR POSITIONS TO THE PLANT, SALARY INCREASES MIGHT BE NECESSARY. WAS UNNECESSARY TO MAKE EXPRESS PROVISION IN ARTICLE III-A-1-G FOR THE EXPENSES INCIDENT TO MOVING, BECAUSE SUCH ITEMS WERE DEEMED COVERED IN THE GENERAL LANGUAGE OF ARTICLE III-A-1-F.

IF YOU AGREE, KINDLY INDICATE YOUR APPROVAL ON GREEN COPY ATTACHED AND RETURN TO US.

IN RESPONSE TO YOUR REQUEST OF JUNE 12, 1941, ADDRESSED TO THE CONSTRUCTING QUARTERMASTER, FOR A FURTHER EXPLANATION AND ITEMIZATION OF CERTAIN CHARGES MADE, WHICH REQUEST WAS REFERRED TO THE CONTRACTOR FOR REPLY, THE ATMOSPHERIC NITROGEN CORPORATION IN ITS LETTER OF JUNE 24, 1941, STATED:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 14, 1941, AND TO MR. UTLEY'S LETTER OF JUNE 18, 1941, ADDRESSED TO OUR PLANT ACCOUNTANT, REFERRING TO EXPENSE STATEMENTS.

WE RESPECTFULLY CALL YOUR ATTENTION TO OUR LETTER TO YOU OF MARCH 6, 1941, IN WHICH IT WAS STATED THAT "IN ORDER TO AVOID DELAY AND EXPEDITE PROGRESS, WE PROPOSE TO FOLLOW EXACTLY, IN THE PERFORMANCE OF WORK UNDER CONTRACT NO. W-ORD-499, OUR USUAL PROCEDURE AS OUTLINED ABOVE, REQUESTING REIMBURSEMENT FROM THE GOVERNMENT, PURSUANT TO ARTICLE III-A-1 (F) OF TRANSPORTATION AND TRAVELING EXPENSES ACTUALLY INCURRED IN CONNECTION WITH THE WORK ON THE BASIS OF SUCH PROCEDURE.' ( ITALICS ADDED.)

IN THAT LETTER WE OUTLINED OUR USUAL PROCEDURE AS FOLLOWS:

"TRAVEL PROCEDURE IS NOT SPECIFICALLY OUTLINED BUT CUSTOMARY PRACTICE IS FOR EMPLOYEES TO TRAVEL BY THE MOST DIRECT ROUTE AND RETURN IN SHORTEST TIME THAT ASSIGNMENT WILL PERMIT. EXPENSE OTHER THAN TRANSPORTATION, WHICH IN CASE OF RAIL IS THAT ACTUALLY INCURRED AND IN CASE OF EMPLOYEE'S USING HIS OWN CAR IS $0.06 PER MILE, IS REIMBURSED AS ACTUALLY INCURRED IN CONNECTION WITH THE WORK INVOLVED, KEEPING IN MIND THE POSITION OF THE MAN IN THE ORGANIZATION AND CONDITIONS IN LOCALITY VISITED. THE EXPENSES ARE DETAILED IN ACCORDANCE WITH THE ATTACHED FORM, SIGNED BY THE INDIVIDUAL TRAVELING, AND APPROVED BY A SUPERIOR.

"ALL TRIPS ARE TO BE MADE AS ECONOMICALLY AS POSSIBLE, IN MUCH THE SAME MANNER AS EMPLOYEES MIGHT TRAVEL ON PERSONAL BUSINESS.

"UNDER THE COMPANY'S USUAL PROCEDURE, THE OFFICERS OF THE COMPANY AND THE FOLLOWING INDIVIDUALS WOULD BE AUTHORIZED TO APPROVE TRAVEL AND EXPENSE ACCOUNTS IN CONNECTION THEREWITH: "

YOU WILL NOTE THAT THIS PROCEDURE WAS APPROVED BY YOU AND THAT YOUR NAME WAS SIGNED ON THE CARBON COPY OF THE LETTER, INDICATING SUCH APPROVAL.

AS ORALLY DISCUSSED WITH YOU, YOU WILL ALSO RECALL THAT WHEN CONTRACT NO. W-ORD-499 WAS BEING NEGOTIATED, THE REPRESENTATIVES OF THE UNITED STATES GOVERNMENT ASSURED US THAT, IN MATTERS OF THIS KIND, THE COMPANY'S USUAL PRACTICE WOULD PREVAIL AND THAT NO DIFFICULTY REGARDING REIMBURSEMENT WOULD BE MET IF THAT PRACTICE WAS FOLLOWED.

THE PURPOSE OF FOLLOWING OUR USUAL PRACTICE IS, IN OUR OPINION, VERY IMPORTANT "IN ORDER TO AVOID DELAY AND EXPEDITE PROGRESS" IN THE PERFORMANCE OF THE WORK REQUIRED TO BE DONE UNDER CONTRACT NO. W-ORD 499.

IN MR. UTLEY'S LETTER OF JUNE 18, 1941, THERE WERE RETURNED TO OUR PLANT ACCOUNTANT SOME TWENTY EXPENSE STATEMENTS FOR REVIEW AND POSSIBLE FURTHER ITEMIZATION. SOME OF THESE STATEMENTS COVER TRIPS TAKEN IN APRIL 1941. UNDER THE COMPANY'S USUAL PROCEDURE, ALL OF THE STATEMENTS HAVE BEEN APPROVED BY INDIVIDUALS WHOSE NAMES WERE LISTED AS AUTHORIZED TO APPROVE SUCH STATEMENTS IN OUR LETTER OF MARCH 6, 1941. TO TRY TO ASSEMBLE FURTHER INFORMATION REQUIRED FOR ANY FURTHER ITEMIZATION WOULD TAKE A VERY SUBSTANTIAL AMOUNT OF TIME OF MEN WHO ARE ENGAGING THEIR ENTIRE TIME ON WORK UNDER CONTRACT NO. W-ORD-499. IN FACT, IN MOST INSTANCES, IT WOULD NOW BE IMPOSSIBLE TO RECALL ANY OF THE EXPENSE DETAILS OF THESE TRIPS, WHICH WE BELIEVE HAVE BEEN GIVEN IN SUFFICIENT PARTICULARITY IN THE EXPENSE STATEMENTS AS HANDED TO YOU. AS AN EXAMPLE, WE HAVE INDICATED, IN EACH INSTANCE, THE POINT VISITED.

CONSEQUENTLY, WE RETURN HEREWITH THE STATEMENTS REFERRED TO IN YOUR LETTER OF JUNE 14 AND THOSE ATTACHED TO MR. UTLEY'S LETTER OF JUNE 18, 1941, AND REQUEST THAT YOU TAKE SUCH STEPS AS YOU DEEM FIT TO OBTAIN FOR US THE REIMBURSEMENT OF THESE ITEMS.

WHILE THE VOUCHER IN QUESTION BEARS THE APPROVAL OF THE REPRESENTATIVE OF THE CONTRACTING OFFICER, IT IS STATED IN HIS LETTER OF JUNE 10, 1941, TO YOU, THAT SUCH APPROVAL IS FOR THE PURPOSE ONLY OF OBTAINING A DECISION AS TO WHETHER THE EXPENSES COVERED THEREBY ARE REIMBURSABLE, AND IT IS EVIDENT THEREFROM THAT IN HIS OPINION THE CLAIMED AMOUNT REPRESENTED EXPENSES, THE ALLOWANCE OF WHICH ARE NOT AUTHORIZED UNDER THE TERMS OF THE CONTRACT.

CONTRACT NO. W-ORD-499, ENTERED INTO ON A COST-PLUS-A-FIXED-FEE BASIS AS AUTHORIZED UNDER THE ACT OF JULY 2, 1940, 54 STAT. 712, PROVIDES FOR THE DESIGNING, ENGINEERING, CONSTRUCTING, EQUIPPING, AND OPERATING OF AN ORDNANCE MANUFACTURING PLANT, IN CONSIDERATION OF THE REIMBURSEMENT BY THE GOVERNMENT OF THE CONTRACTOR'S EXPENDITURES AS PROVIDED IN THE CONTRACT, PLUS STIPULATED FIXED FEES. WHETHER A PARTICULAR ITEM OF EXPENSE IS REIMBURSABLE TO THE CONTRACTOR AS SUCH, OR WHETHER IT IS INCLUDED IN THE LUMP-SUM/FIXED FEES MADE DEPENDS UPON THE TERMS OF THE CONTRACT.

BY ARTICLES I-B-1 AND II-A-1 OF THE CONTRACT, THE CONTRACTOR IS AUTHORIZED TO DO ALL THINGS NECESSARY FOR THE CONSTRUCTION AND OPERATION OF THE PLANT, INCLUDING THE EMPLOYMENT OF ALL PERSONS ENGAGED IN THE WORK UNDER THE CONTRACT. WITH RESPECT TO REIMBURSEMENT OF THE CONTRACTOR'S COSTS, ARTICLE III-B-1 OF THE CONTRACT IS TO THE EFFECT THAT THE GOVERNMENT WILL CURRENTLY REIMBURSE THE CONTRACTOR FOR SUCH EXPENDITURES MADE IN ACCORDANCE WITH ARTICLE III-A AS MAY BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER UPON CERTIFICATION TO AND VERIFICATION BY THE SAID OFFICER. SECTION 1-F OF SAID ARTICLE III-A IS AS FOLLOWS:

TRANSPORTATION AND TRAVELING EXPENSES TO AND FROM THE WORK OF THE NECESSARY FIELD FORCES FOR THE ECONOMICAL AND SUCCESSFUL PROSECUTION OF THE WORK; AND SUCH PORTION OF THE TRANSPORTATION, TRAVELING, HOTEL AND OTHER EXPENSES OF OFFICERS, ENGINEERS AND ALL OTHER EMPLOYEES OF THE CONTRACTOR AS IS ACTUALLY INCURRED IN CONNECTION WITH THE WORK UNDER THIS CONTRACT.

IT APPEARS TO BE THE CONTRACTOR'S CONTENTION THAT THIS SECTION OF THE CONTRACT AUTHORIZES AS AN ALLOWABLE ITEM OF COST THE TRAVELING AND LIVING EXPENSES INCURRED ON BEHALF OF ITS EMPLOYEES IN THE TRANSFER OF THE "EMPLOYEES, THEIR FAMILIES, AND HOUSEHOLDS TO AND FROM THE SITE OF THE WORK.'

IT APPEARS THAT IN CONNECTION WITH THE PERFORMANCE OF THE CONTRACT, TWO GENERAL TYPES OF TRANSPORTATION, TRAVELING, AND INCIDENTAL EXPENSES WERE CONTEMPLATED: (1) THE COST (TRANSPORTATION AND TRAVEL EXPENSE) OF TRANSFERRING EMPLOYEES, PERMANENTLY ASSIGNED TO THE PERFORMANCE OF THE CONTRACT WORK, FROM SOME OTHER LOCATION TO THE CONTRACT SITE, AND (2) THE COST (TRANSPORTATION, TRAVEL, HOTEL, ETC., EXPENSE) OF SUCH OCCASIONAL TRAVEL BY EMPLOYEES FROM THEIR PERMANENT STATIONS AS MIGHT BE NECESSITATED BY CONDITIONS ARISING DURING THE PERFORMANCE OF THE CONTRACT. THE EXPENSES INCURRED BY THE CONTRACTOR FOR WHICH REIMBURSEMENT IS CLAIMED ON THE VOUCHER HERE UNDER CONSIDERATION, APPEAR TO RELATE TO THE FIRST OF THE TYPES ABOVE-MENTIONED--- THE TRANSFER OF EMPLOYEES FROM SOME OTHER LOCATION TO THE CONTRACT SITE. HOWEVER, IN ADDITION TO THE TRANSPORTATION AND OTHER TRAVEL EXPENSES OF SUCH EMPLOYEES--- WHICH IF APPROVED AND VERIFIED BY THE CONTRACTING OFFICER APPEAR TO BE AN ALLOWABLE ITEM OF COST --- THERE ARE CLAIMED (1) THE LIVING EXPENSES OF EMPLOYEES AT THE SITE OF WORK PRIOR TO THE ARRIVAL OF THEIR FAMILIES, (2) THE TRAVELING EXPENSES OF THE EMPLOYEES IN RETURNING TO THEIR HOMES FOR THEIR FAMILY AND HOUSEHOLD EFFECTS, AND (3) THE EXPENSES INCURRED IN MOVING SUCH FAMILIES AND HOUSEHOLD GOODS TO THE SITE OF THE WORK. NONE OF THESE THREE ITEMS APPEAR TO BE TRAVELING OR OTHER EXPENSES PROPER FOR REIMBURSEMENT UNDER THE TERMS OF THE ABOVE-QUOTED SECTION OF THE CONTRACT OR ANY OTHER PROVISION THEREOF, SINCE THE FACTS NOW OF RECORD DO NOT INDICATE THAT THE MOVING OF THE EMPLOYEES' FAMILY AND HOUSEHOLD EFFECTS IS A SERVICE NECESSARILY REQUIRED OR CONTEMPLATED FOR THE SATISFACTORY PERFORMANCE OF THE WORK COVERED BY THE CONTRACT. INSOFAR AS THE LIVING EXPENSES OF THE EMPLOYEE AFTER ARRIVAL AT THE CONTRACT SITE ARE CONCERNED, IT IS BELIEVED THAT A CORRECT INTERPRETATION OF ARTICLE III-A-I-F IS SET FORTH IN LETTER DATED APRIL 30, 1941, FROM THE OFFICE OF THE CHIEF OF ORDNANCE, TO THE CONTRACTING OFFICER, IN PERTINENT PART, AS FOLLOWS:

IT WOULD SEEM THAT THE INTENT OF THE ABOVE QUOTED PROVISION IS TO COMPENSATE EMPLOYEES OF THE CONTRACTOR FOR ALL EXPENSES INCURRED WITH CONNECTION TO THE WORK WHEN ABSENT FROM THEIR PERMANENT DUTY STATION. LIVING EXPENSES SUCH AS COST OF HOTEL ROOM, GARAGE RENT, FOOD, ETC., INCURRED BY AN EMPLOYEE AT HIS PERMANENT DUTY STATION ARE NOT SUCH AS WAS CONTEMPLATED BY THE PROVISION QUOTED ABOVE, AND SHOULD NOT BE REIMBURSED THE CONTRACTOR. WITH REFERENCE TO THE CONTRACTOR'S STATEMENT THAT THE PAYMENT OF SUCH EXPENSES IS IN ACCORD WITH ITS CUSTOMARY PRACTICE AND THAT IT INTERPRETED THE CONTRACT AT THE TIME OF ITS EXECUTION AS AUTHORIZING REIMBURSEMENT THEREFOR, IT IS WELL SETTLED THAT USAGE OR PRACTICE OF THE CONTRACTOR CANNOT OPERATE TO CONTRADICT OR VARY THE SPECIFIC TERMS OF THE CONTRACT. MOORE V. UNITED STATES, 196 U.S. 157.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH PERTINENT PAPERS, IS RETURNED AND YOU ARE ADVISED THAT PAYMENT THEREON IS AUTHORIZED ONLY AS TO THE ITEMS OF ALLOWABLE COST AS HEREIN INDICATED AFTER PROPER VERIFICATION AND APPROVAL THEREOF AS REQUIRED BY THE CONTRACT.