B-28052, JANUARY 27, 1943, 22 COMP. GEN. 710

B-28052, JANUARY 27, 1943, 22 COMP. GEN. 710

CONTRACTS - COST-PLUS - EXPENSES INCIDENT TO DEPUTIZING PLANT GUARDS - PREMIUMS ON BONDS WHERE IT IS ESTABLISHED, UNDER A COST-PLUS-A-FIXED-FEE CONTRACT PROVIDING FOR THE CONSTRUCTION AND SUBSEQUENT OPERATION BY THE CONTRACTOR OF AN ORDNANCE PLANT ON BEHALF OF THE GOVERNMENT, THAT THE DEPUTIZING OF PLANT GUARDS ACTUALLY ENABLED THE GUARDS TO PERFORM THEIR DUTIES MORE EFFECTIVELY, AND SERVED A USEFUL PURPOSE IN FULFILLING THE CONTRACT REQUIREMENTS, REIMBURSEMENT FOR PREMIUMS ON BONDS INCIDENT TO SUCH DEPUTIZING IS A PROPER CHARGE AGAINST THE GOVERNMENT UNDER THE " REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES" TERMS OF THE CONTRACT. COMP. GEN. 183, MODIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, JANUARY 27, 1943:

I HAVE YOUR LETTER OF JANUARY 9, 1943, AS FOLLOWS:

THERE HAS BEEN DIRECTED TO THE ATTENTION OF THE WAR DEPARTMENT A RECENT DECISION OF YOUR OFFICE DATED SEPTEMBER 7, 1942, B-28052, WHEREIN IT WAS DECIDED THAT THE EVIDENCE OF RECORD AS PRESENTED FAILED TO SHOW THAT THE DEPUTIZING OF PLANT GUARDS WAS REASONABLY NECESSARY FOR THE PROTECTION OF THE GOVERNMENT OR THE CONTRACTOR, AND THAT THE EXPENSES INCURRED INCIDENT THERETO WERE NOT PROPER CHARGES UNDER THE TERMS OF THE CONTRACT.

IN YOUR DECISION YOU STATE:

"THE REASONS ASSIGNED BY THE CONTRACTING OFFICER'S REPRESENTATIVE IN THE INDORSEMENT OF FEBRUARY 3, 1942, SUPRA, FOR DEPUTIZING THE PLANT GUARDS SUGGEST A MISAPPREHENSION AS TO THEIR AUTHORITY IN THEIR CAPACITY AS PRIVATE EMPLOYEES CHARGED BY THE CONTRACTOR WITH THE PROTECTION OF THE PLANT. IF IT WERE A FACT, AS STATED BY THAT OFFICER, THAT, UNLESS DEPUTIZED, THESE GUARDS HAD NO AUTHORITY TO MAKE ARRESTS OR OTHERWISE PROTECT PLANT PROPERTY, OR IF SUCH WERE NECESSARY TO ENABLE THE GUARDS TO PERFORM MORE EFFECTIVELY THEIR DUTY OF PATROLLING THE PROJECT SITE, OF PREVENTING UNAUTHORIZED PERSONS FROM ENTERING THEREON, AND OF PREVENTING ACTS OF SABOTAGE TO, OR THEFT OF, THE PROPERTY DURING THE PERIOD OF CONSTRUCTION AND OPERATION OF THE PLANT, THERE WOULD BE NO HESITATION IN APPROVING THE CHARGE INVOLVED AS A PROPER EXPENDITURE FOR REIMBURSEMENT BY THE GOVERNMENT. HOWEVER, SUCH DOES NOT APPEAR TO BE THE CASE. IT IS THE UNDERSTANDING OF THIS OFFICE THAT, WITHIN THE CONFINES OF THE PROJECT SITE, A GUARD HAS NO LESS AUTHORITY THAN A POLICE OFFICER SO FAR AS CONCERNS THE PROTECTION OF THE PROPERTY WITH WHICH HE IS ENTRUSTED AND THAT, WHEN THE CIRCUMSTANCES AUTHORIZING IT EXIST, A GUARD, AS WELL AS ANY OTHER PRIVATE PERSON, HAS THE SAME RIGHT TO ARREST AS AN OFFICER. NOR IS IT PERCEIVED IN WHAT MANNER THE AUTHORITY OF THE GUARDS WOULD BE AFFECTED BY WHETHER THE SAID PROPERTY WAS UNDER FEDERAL OR STATE PROTECTION.' ITALICS SUPPLIED.)

FURTHER INVESTIGATION OF THE SITUATION EXISTING AT THE PLANT IN QUESTION CONVINCES THE WAR DEPARTMENT THAT THE DEPUTIZING OF THE PLANT GUARDS DID, IN FACT, ENABLE THEM TO MORE EFFECTIVELY PERFORM THEIR DUTIES. THEREFORE, A RECONSIDERATION OF YOUR DECISION OF SEPTEMBER 7, 1942, IS REQUESTED IN THE LIGHT OF THE FOLLOWING INFORMATION.

IN RECONSIDERING YOUR DECISION, IT SHOULD BE BORNE IN MIND THAT THESE PLANT GUARDS ARE NOT EMPLOYEES OF THE FEDERAL GOVERNMENT, BUT OF THE CONTRACTOR. FURTHERMORE, IT IS APPARENT THAT IN THE PERFORMANCE OF THEIR DUTIES THERE WILL BE MANY OCCASIONS WHEN THEY WILL BE REQUIRED TO ACT OUTSIDE THE LIMITS OF THE PLANT AREA.

PLANT GUARDS CAN MORE EFFECTIVELY PERFORM THEIR DUTIES IF ARMED RATHER THAN IF UNARMED. INASMUCH AS THE GUARDS IN QUESTION ARE EMPLOYEES OF THE CONTRACTOR AND NOT OF THE GOVERNMENT, THEY ARE SUBJECT TO THE PROVISIONS OF SECTION 12936 OF THE IOWA CODE WHICH PROHIBITS THE CARRYING OF CONCEALED WEAPONS WITHOUT A LICENSE THEREFOR. THE OBTAINING OF LICENSES TO CARRY SUCH WEAPONS IS GOVERNED BY SECTION 12938 OF THE CODE WHICH PROVIDES:

" PERMIT TO CARRY CONCEALED WEAPONS. THE SHERIFF OF ANY COUNTY MAY ISSUE A PERMIT TO A RESIDENT OF HIS COUNTY ONLY, LIMITED TO THE TIME WHICH SHALL BE DESIGNATED THEREIN, TO CARRY CONCEALED OR OTHERWISE, A REVOLVER, PISTOL, OR POCKET BILLY.'

ASIDE FROM THE FACT THAT IT IS DOUBTFUL WHETHER PERMITS COULD OR WOULD BE ISSUED UNDER THIS SECTION TO PRIVATE PERSONS FOR THE PURPOSES OF ARREST OR LAW ENFORCEMENTS, IT IS CLEAR THAT SUCH PERMITS COULD NOT BE ISSUED TO SUCH GUARDS AS ARE NOT RESIDENTS OF POLK COUNTY, THE COUNTY IN WHICH THE PLANT IS LOCATED; AND IT IS A FACT THAT MANY OF THE GUARDS EMPLOYED AT THIS PLANT LIVE IN OTHER COUNTIES. THUS THE ONLY METHOD OF AUTHORIZING THESE GUARDS TO BE ARMED WAS TO MAKE THEM PEACE OFFICERS UNDER SECTION 5238 OF THE IOWA CODE, FOR WHICH PURPOSE THE FURNISHING OF SURETY BONDS WAS REQUIRED UNDER SECTION 5241.

AN EXAMINATION OF THE LAWS OF IOWA ALSO MAKES IT APPARENT THAT THE ARRESTING POWERS OF PEACE OFFICERS ARE BROADER THAN THOSE OF PRIVATE INDIVIDUALS. IN IOWA, AS IN OTHER STATES, A PRIVATE PERSON HAS THE POWER OF ARREST ONLY WHERE:

(A) A FELONY HAS BEEN COMMITTED IN HIS PRESENCE, OR

(B) IT IS NECESSARY TO PREVENT THE COMMISSION OF A FELONY, OR

(C) A FELONY HAS BEEN COMMITTED BY AN INDIVIDUAL WHOM SUCH PRIVATE PERSON KNOWS TO BE THE INDIVIDUAL WHO COMMITTED THE ACT, OR

(D) A BREACH OR THREATENED BREACH OF THE PEACE HAS BEEN COMMITTED OR IS ABOUT TO BE COMMITTED IN THE PRESENCE OF SUCH PRIVATE PERSON.

THERE ARE AT LEAST TWO ADDITIONAL CIRCUMSTANCES UNDER WHICH A PEACE OFFICER CAN ARREST AND WHERE A PRIVATE PERSON CANNOT, NAMELY WHERE THE OFFENSE IS A MISDEMEANOR OR SOME OTHER PUBLIC OFFENSE NOT AMOUNTING TO A FELONY OR A BREACH OF THE PEACE, AND WHERE, ALTHOUGH THE OFFENSE HAS NOT BEEN THREATENED OR COMMITTED IN THE PRESENCE OF THE ARRESTING PERSON, SUCH PERSON HAS A REASONABLE BASIS FOR THE BELIEF THAT THE INDIVIDUAL ARRESTED IS GUILTY OF A CRIME WHICH HAS, IN FACT, BEEN COMMITTED. TO THIS EFFECT SEE SECTION 13468 OF THE IOWA CODE, STATE V. THOMAS, 186 N.W. 695 AND COMSTOCK V. MARYLAND CASUALTY COMPANY, 179 N.W. 962. THUS IT IS EVIDENT THAT IN THIS PARTICULAR CASE THE GUARDS IN QUESTION, BECAUSE DEPUTIZED AS PEACE OFFICERS, WERE GIVEN BROADER ARRESTING POWERS THAN THEY WOULD HAVE HAD AS PRIVATE INDIVIDUALS, AND THAT THESE BROADER POWERS ENABLE THEM TO MORE EFFECTIVELY CARRY OUT THEIR DUTIES, ESPECIALLY WHERE THEY MAY BE REQUIRED TO PURSUE OTHERS OR MAKE ARRESTS BEYOND THE LIMITS OF THE PLANT.

IT WOULD ALSO APPEAR THAT BY ENABLING THESE GUARDS THUS TO ARREST ON THE BASIS OF A REASONABLE BELIEF THAT A PARTICULAR PERSON IS GUILTY OF AN OFFENSE, THE POSSIBILITY THAT SUITS FOR FALSE ARREST MIGHT BE COMMENCED AND PROSECUTED AGAINST THE CONTRACTOR WAS VERY SUBSTANTIALLY MINIMIZED. INASMUCH AS THE EXPENSE OF DEFENDING SUCH SUITS AND ANY LIABILITY OF THE CONTRACTOR RESULTING THEREFROM WOULD IN ALL PROBABILITY CONSTITUTE REIMBURSABLE COSTS OF THE CONTRACTOR UNDER HIS CONTRACT WITH THE GOVERNMENT, THE MINIMIZATION OF SUCH SUITS CONSTITUTES A CONSIDERATION WHICH MAY BE PROPERLY TAKEN INTO ACCOUNT BY THE COMMANDING OFFICER IN DETERMINING WHETHER OR NOT THE EXPENSE OF OBTAINING SURETY BONDS FOR THESE GUARDS SHOULD BE INCURRED AS A STEP IN HAVING THEM DEPUTIZED UNDER THE IOWA STATUTES.

IT, THEREFORE, APPEARS TO THE WAR DEPARTMENT THAT THE DECISION OF THE COMMANDING OFFICER TO HAVE THESE GUARDS DEPUTIZED AND TO UNDERGO THE EXPENSE OF OBTAINING SURETY BONDS FOR THAT SPECIFIC PURPOSE WAS BASED ON VERY SUBSTANTIAL GROUNDS. IT CONFERRED ON THE GUARDS WIDER AND MORE EFFECTIVE ARRESTING POWERS; IT ENABLED ALL OF THEM TO BE ARMED; AND IT THEREBY INCREASED THEIR ABILITY TO EFFECTIVELY PERFORM THEIR DUTIES. THE ACTION OF THE COMMANDING OFFICER WAS ALSO TAKEN FOR THE FURTHER PURPOSE OF REDUCING POSSIBLE CLAIMS AGAINST THE GOVERNMENT BY THE PRIME CONTRACTOR FOR REIMBURSEMENT FOR EXPENSES OF LITIGATION AND PAYMENT OF JUDGMENTS ARISING OUT OF CLAIMED FALSE ARRESTS.

ON THE BASIS OF THE RECORD ALREADY BEFORE YOUR OFFICE AND THE ADDITIONAL REASONS HEREIN ADVANCED, IT IS THOUGHT THAT THE COMMANDING OFFICER WAS CORRECT IN HIS DETERMINATION THAT THE DEPUTIZING OF THE PLANT GUARDS AND THE SUBSEQUENT APPROVAL OF THE PAYMENT OF THE PREMIUM ON THEIR BONDS WERE "REASONABLY NECESSARY FOR THE PROTECTION OF THE GOVERNMENT OR THE CONTRACTOR" AND THAT THE BOND PREMIUMS WERE A REASONABLE COST UNDER THE CONTRACT. YOUR FAVORABLE RECONSIDERATION OF THIS CASE IS REQUESTED.

IN THE DECISION OF SEPTEMBER 7, 1942, PUBLISHED IN 22 COMP. GEN. 183, THERE WAS CONSIDERED, AT THE REQUEST OF THE DISBURSING OFFICER INVOLVED, LIEUTENANT COLONEL F. PEARSON, FINANCE DEPARTMENT, UNITED STATES ARMY, THE QUESTION AS TO WHETHER, ON THE FACTS THERE PRESENTED, THE DISBURSING OFFICER WAS AUTHORIZED TO EFFECT PAYMENT ON BUREAU VOUCHER NO. R-135, STATED IN FAVOR OF THE UNITED STATES RUBBER COMPANY, NEW YORK, NEW YORK, FOR REIMBURSEMENT OF $770, REPRESENTING THE AMOUNT EXPENDED BY THE COMPANY FOR PREMIUMS ON BONDS REQUIRED INCIDENT TO THE DEPUTIZING OF GUARDS EMPLOYED BY THE COMPANY IN CONNECTION WITH WORK UNDER ITS COST-PLUS-A- FIXED-FEE CONTRACT NO. W-ORD-528, DATED JULY 16, 1941, PROVIDING FOR THE CONSTRUCTION AND SUBSEQUENT OPERATION OF AN ORDNANCE PLANT AT DES MOINES, IOWA.

UNDER ARTICLE VII-G, TITLE VII, OF THE CONTRACT, THE CONTRACTOR AGREED INTER ALIA, THAT IT OULD:

1. PROCURE AND THEREAFTER MAINTAIN SUCH BONDS AND INSURANCE IN SUCH FORMS AND IN SUCH AMOUNTS AND FOR SUCH PERIODS OF TIME AS THE CONTRACTING OFFICER MAY APPROVE OR REQUIRE IN WRITING.

2. PROCURE ALL NECESSARY PERMITS AND LICENSES; OBEY AND ABIDE BY ALL APPLICABLE LAWS, REGULATIONS AND ORDINANCES AND OTHER RULES OF THE UNITED STATES OF AMERICA, OF THE STATE, TERRITORY, OR SUBDIVISION THEREOF WHEREIN THE WORK IS DONE, OR OF ANY OTHER DULY CONSTITUTED PUBLIC AUTHORITY.

WITH RESPECT TO " REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES" ARTICLE V- A, TITLE V, OF THE CONTRACT, PROVIDED IN PERTINENT PART AS FOLLOWS:

1. THE CONTRACTOR SHALL BE REIMBURSED IN THE MANNER HEREINAFTER DESCRIBED FOR SUCH OF ITS ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK UNDER THIS CONTRACT, AS MAY BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER, AND AS ARE INCLUDED IN THE FOLLOWING ITEMS:

H. PREMIUMS ON SUCH BONDS AND INSURANCE POLICIES AS THE CONTRACTING OFFICER OR THE SECRETARY OF WAR MAY APPROVE OR REQUIRE AS REASONABLY NECESSARY FOR THE PROTECTION OF THE GOVERNMENT OR THE CONTRACTOR.

IT WAS HELD IN THE DECISION OF SEPTEMBER 7, 1942, SUPRA, THAT SINCE THE EVIDENCE SUBMITTED IN SUPPORT OF BUREAU VOUCHER NO. R-135 FAILED TO ESTABLISH THAT HAD THE PLANT GUARDS NOT BEEN DEPUTIZED THEY WOULD HAVE HAD ANY LESS AUTHORITY THAN ORDINARY POLICE OFFICERS TO PROTECT PROPERTY, MAKE ARRESTS, ET CETERA, WITHIN THE CONFINES OF THE PLANT PREMISES, IT WAS NOT ESTABLISHED THAT DEPUTIZING THE GUARDS WAS REASONABLY NECESSARY FOR THE PROTECTION OF THE INTERESTS OF EITHER THE GOVERNMENT OR THE CONTRACTOR, OR OTHERWISE WAS NECESSARY FOR THE PROPER PERFORMANCE OF THE CONTRACT WORK. HENCE, THE DISBURSING OFFICER WAS INFORMED THAT THE AMOUNT CLAIMED ON THE VOUCHER, $770, WAS NOT SATISFACTORILY SHOWN TO CONSTITUTE A PROPER REIMBURSEMENT CHARGE AGAINST THE GOVERNMENT UNDER THE CONTRACT, AND THE VOUCHER TOGETHER WITH ITS SUPPORTING PAPERS WAS RETURNED TO THE DISBURSING OFFICER WITH THE ADVICE THAT PAYMENT THEREON WAS NOT AUTHORIZED.

HOWEVER, AS SHOWN BY THE FACTS NOW SET FORTH IN YOUR LETTER OF JANUARY 9, 1943, QUOTED ABOVE, IT APPEARS TO HAVE BEEN FOUND BY YOU, UPON FURTHER INVESTIGATION OF THE MATTER, THAT:

1. IN VIEW OF THE NATURE OF THEIR EMPLOYMENT THE GUARDS WERE REQUIRED TO PERFORM CERTAIN DUTIES OUTSIDE OF THE CONFINES OF THE PLANT AREA.

2. THE SAID GUARDS COULD MORE EFFECTIVELY PERFORM THEIR DUTIES IF ARMED, RATHER THAN IF UNARMED, AND SINCE, APPARENTLY, UNDER THE LAW OF THE STATE OF IOWA, PERMITS TO CARRY FIREARMS COULD NOT HAVE BEEN ISSUED TO PRIVATE CITIZENS--- PARTICULARLY TO THOSE WHO WERE NOT RESIDENTS OF THE COUNTY IN WHICH THE PLANT IS SITUATED--- FOR THE PURPOSE OF MAKING ARRESTS OR OTHERWISE ENFORCING THE LAW, IT WAS NECESSARY TO DEPUTIZE THE GUARDS AND TO FURNISH THE SURETY BONDS REQUIRED FOR THAT PURPOSE.

3. SINCE, UNDER THE LAW OF THE STATE OF IOWA, DEPUTIZED PEACE OFFICERS--- AS DISTINGUISHED FROM PRIVATE GUARDS--- HAVE AUTHORITY TO MAKE ARRESTS FOR MISDEMEANORS, ET CETERA, AND SINCE, ALTHOUGH AN OFFENSE HAS NOT BEEN COMMITTED OR EVEN THREATENED IN THEIR PRESENCE THEY MAY MAKE AN ARREST WHERE THEY HAVE A REASONABLE BASIS TO BELIEVE THAT THE PERSON ARRESTED IS GUILTY OF A CRIME WHICH HAS IN FACT BEEN COMMITTED, THE POSSIBILITY OF SUITS FOR FALSE ARRESTS AGAINST THE CONTRACTOR WERE MINIMIZED GREATLY BY DEPUTIZING THE GUARDS.

FROM THESE FACTS IT NOW APPEARS THAT, AS STATED IN YOUR LETTER, THE DEPUTIZING OF THE PARTICULAR GUARDS IN QUESTION ACTUALLY DID ENABLE THEM TO PERFORM THEIR DUTIES MORE EFFECTIVELY, WHICH, IN TURN, SERVED A USEFUL PURPOSE IN FULFILLING THE CONTRACT REQUIREMENTS. IN OTHER WORDS, WHILE THE EVIDENCE OF RECORD AT THE TIME OF THE DECISION OF SEPTEMBER 7, 1942, SUPRA, WAS RENDERED, JUSTIFIED THE CONCLUSION REACHED THEREIN, UPON RECONSIDERATION OF THE MATTER IN THE LIGHT OF THE FACTS SET FORTH IN YOUR LETTER, IT NOW APPEARS THAT THE AMOUNT OF $770 EXPENDED BY THE CONTRACTOR FOR THE PURPOSE OF BONDING THE GUARDS, PROPERLY MAY BE REGARDED AS HAVING BEEN "REASONABLY NECESSARY FOR THE PROTECTION OF THE GOVERNMENT OR THE CONTRACTOR" WITHIN THE MEANING OF THE ABOVE-QUOTED REIMBURSEMENT PROVISIONS OF THE CONTRACT.

ACCORDINGLY, YOU ARE ADVISED THAT, ON THE BASIS OF THE FACTS NOW APPEARING, NO OBJECTION WILL BE RAISED BY THIS OFFICE TO OTHERWISE PROPER PAYMENT ON BUREAU VOUCHER NO. R-135.