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UNDER THE DIRECT DISTRIBUTION PROGRAM WHICH WERE LOST WHILE IN THE POSSESSION OF THE ILLINOIS DEPARTMENT OF PUBLIC AID. WHICH IS OPERATED BY THE ILLINOIS DEPARTMENT OF PUBLIC AID. THE DETERMINATION WAS APPARENTLY BASED ON FINDINGS MADE DURING THE AUDIT THAT SOME OF THE DEPOT'S COMMODITY CARDS HAD BEEN ALTERED AND SOME FICTITIOUS CARDS HAD BEEN PREPARED FOR THE PURPOSE OF COVERING INVENTORY SHORTAGES AND. WHICH WAS THE VALUE OF COMMODITIES FOUND TO BE MISSING AFTER THE DEPOT WAREHOUSE WAS BROKEN INTO ON DECEMBER 21. WAS DUE TO THE STATE AGENCY'S FAILURE TO PROVIDE ADEQUATE PROTECTION AGAINST THEFT. THE DETERMINATION WAS APPARENTLY BASED FOR THE MOST PART ON STATEMENTS MADE AFTER THE BREAK IN BY THE ACTING SUPERINTENDENT OF THE DEPOT.

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B-155483, DEC. 2, 1964

TO MR. HAROLD O. SWANK, DIRECTOR, STATE OF ILLINOIS, DEPARTMENT OF PUBLIC AID:

YOUR LETTER OF AUGUST 26, 1964, TO THE ACTING DIRECTOR, MIDWEST AREA, UNITED STATES DEPARTMENT OF AGRICULTURE, AGRICULTURAL MARKETING SERVICE, FOOD DISTRIBUTION DIVISION, TAKING EXCEPTION TO THE CLAIM OF THE UNITED STATES AGAINST THE ILLINOIS DEPARTMENT OF PUBLIC AID IN THE AMOUNT OF $3,576.08 AND TO THE ACTION TAKEN THEREON, HAS BEEN REFERRED TO OUR OFFICE FOR CONSIDERATION. THE CLAIM REPRESENTS THE VALUE OF COMMODITIES DONATED BY THE DEPARTMENT OF AGRICULTURE, AGRICULTURAL MARKETING SERVICE, FOOD DISTRIBUTION DIVISION, UNDER THE DIRECT DISTRIBUTION PROGRAM WHICH WERE LOST WHILE IN THE POSSESSION OF THE ILLINOIS DEPARTMENT OF PUBLIC AID, AN AGENCY OF THE STATE OF ILLINOIS, FORMERLY KNOWN AS THE ILLINOIS PUBLIC AID COMMISSION.

THE RECORD SHOWS THAT THE UNITED STATES DEPARTMENT OF AGRICULTURE AND THE ILLINOIS PUBLIC AID COMMISSION ENTERED INTO AN AGREEMENT DATED DECEMBER 5, 1958, FOR THE DISTRIBUTION AND USE OF DONATED COMMODITIES UNDER THE DIRECT DISTRIBUTION PROGRAM. THE AGREEMENT, BY SPECIFIC REFERENCE, INCORPORATES THE REGULATIONS COVERING "DONATION OF FOOD COMMODITIES FOR USE IN UNITED STATES FOR SCHOOL LUNCH PROGRAMS, SUMMER CAMPS FOR CHILDREN, AND RELIEF PURPOSES, AND IN STATE CORRECTIONAL INSTITUTIONS FOR MINORS" 6 CRF 503, AS PART THEREOF. SUBSECTION 503.6 (1) FORMERLY 503.6 (K), OF PART 503, CHAPTER V, TITLE 6, CODE OF FEDERAL REGULATIONS, CONCERNING THE IMPROPER DISTRIBUTION OR LOSS OF OR DAMAGE TO COMMODITIES, PROVIDES IN PERTINENT PART, AS FOLLOWS:

"* * * IF A DISTRIBUTING AGENCY IMPROPERLY DISTRIBUTES OR USES ANY COMMODITY, OR CAUSES LOSS OF OR DAMAGE TO A COMMODITY THROUGH ITS FAILURE TO PROVIDE PROPER STORAGE, CARE, OR HANDLING, THE DISTRIBUTING AGENCY SHALL, AT THE DEPARTMENT'S OPTION * * * (2) PAY TO THE DEPARTMENT THE VALUE OF THE COMMODITY AS DETERMINED BY THE DEPARTMENT. * * *"

THE FILE TRANSMITTED TO OUR OFFICE BY THE DEPARTMENT SHOWS THAT AN AUDIT BY THE DEPARTMENT OF THE RECORDS OF THE ST. CLAIR COUNTY COMMODITY DEPOT, EAST ST. LOUIS, ILLINOIS, WHICH IS OPERATED BY THE ILLINOIS DEPARTMENT OF PUBLIC AID, FOR THE PERIOD JUNE 26, 1961, TO SEPTEMBER 20, 1962, DISCLOSED SHORTAGES OF COMMODITIES VALUED BY THE DEPARTMENT AT $3,576.08. THE DEPARTMENT DETERMINED THAT $1,552.40 OF THE LOSS RESULTED FROM THE STATE AGENCY'S FAILURE TO MAINTAIN ADEQUATE SUPERVISION OF THE DEPOT'S OPERATIONS. THE DETERMINATION WAS APPARENTLY BASED ON FINDINGS MADE DURING THE AUDIT THAT SOME OF THE DEPOT'S COMMODITY CARDS HAD BEEN ALTERED AND SOME FICTITIOUS CARDS HAD BEEN PREPARED FOR THE PURPOSE OF COVERING INVENTORY SHORTAGES AND, THAT THE DEPOT WAREHOUSE DID NOT PROVIDE ADEQUATE PROTECTION AGAINST PILFERAGE. ALSO, THE DEPARTMENT DETERMINED THAT $2,023.68 OF THE LOSS, WHICH WAS THE VALUE OF COMMODITIES FOUND TO BE MISSING AFTER THE DEPOT WAREHOUSE WAS BROKEN INTO ON DECEMBER 21, 1961, WAS DUE TO THE STATE AGENCY'S FAILURE TO PROVIDE ADEQUATE PROTECTION AGAINST THEFT. THE DETERMINATION WAS APPARENTLY BASED FOR THE MOST PART ON STATEMENTS MADE AFTER THE BREAK IN BY THE ACTING SUPERINTENDENT OF THE DEPOT, AN INVESTIGATIVE REPRESENTATIVE OF THE STATE AGENCY, A REPRESENTATIVE OF THE AMERICAN DISTRICT TELEGRAPH COMPANY THAT FURNISHED A BURGLAR ALARM SYSTEM TO PROTECT THE WAREHOUSE, AND EAST ST. LOUIS CITY POLICE REPORTS. THESE STATEMENTS SHOW THAT, WHILE THERE WAS AN ALARM SYSTEM ON THREE ENTRANCE DOORS AND THREE LOADING DOORS OF THE WAREHOUSE, THERE WERE MANY OTHER OPENINGS THROUGH WHICH COMMODITIES COULD BE REMOVED THAT WERE NOT PROTECTED AND, THAT THE LOADING DOOR WHERE THE BREAK IN OCCURRED COULD BE OPENED AT LEAST EIGHTEEN INCHES WITHOUT SETTING OFF THE BURGLAR ALARM.

THE DEPARTMENT ESTABLISHED A CLAIM AGAINST THE STATE AGENCY IN THE AMOUNT OF $3,576.08 AND REQUESTED REIMBURSEMENT BY LETTER OF AUGUST 6, 1963. LETTER OF AUGUST 20, 1963, YOU DENIED LIABILITY AND THE DEPARTMENT REFERRED THE MATTER TO OUR CLAIMS DIVISION FOR COLLECTION. UPON DEMAND BY OUR CLAIMS DIVISION YOU CONTINUED TO DENY LIABILITY WHEREUPON LETTERS WERE ADDRESSED TO VARIOUS AGENCIES OF THE FEDERAL GOVERNMENT REQUESTING THAT CLAIMS DUE THE STATE OF ILLINOIS BE FORWARDED TO THE CLAIMS DIVISION OF THE GENERAL ACCOUNTING OFFICE FOR DIRECT SETTLEMENT. THE CORPS OF ENGINEERS, UNITED STATES ARMY ENGINEER DISTRICT, CHICAGO, ILLINOIS, BY LETTER OF OCTOBER 14, 1964, FORWARDED A CHECK IN THE AMOUNT OF $3,576.03 TO OUR CLAIMS DIVISION TO LIQUIDATE THE AFOREMENTIONED INDEBTEDNESS.

IN YOUR LETTER OF AUGUST 20, 1963, TO THE DEPARTMENT, YOU DENIED LIABILITY FOR THE LOSS OF COMMODITIES IN THE AMOUNT OF $1,552.40 ON THE BASIS THAT THE SHORTAGES DID NOT RESULT FROM GROSS NEGLIGENCE OR INEFFICIENCY OF OPERATIONS EXTENDING FROM A PRIOR AUDIT PERIOD AND, YOU DENIED LIABILITY FOR THE LOSS OF COMMODITIES IN THE AMOUNT OF $2,023.68 ON THE BASIS THAT INVESTIGATIONS HAVE NOT ESTABLISHED THAT THE THEFT RESULTED FROM GROSS NEGLIGENCE IN PROVIDING AN ADEQUATELY PROTECTED STORAGE FACILITY.

IT HAS LONG BEEN THE RULE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO ACCEPT THE REPORT OF THE ADMINISTRATIVE OFFICERS OF THE UNITED STATES IN THE ABSENCE OF CONVINCING EVIDENCE TO THE CONTRARY. IN ADDITION, UPON DISPUTED QUESTIONS OF FACT SUCH AS EXIST IN THE INSTANT CASE, THE LONG- ESTABLISHED RULE FURNISHED BY THE ADMINISTRATIVE OFFICERS, IN THE ABSENCE OF EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS THEREOF.

ON THE BASIS OF THE RECORD BEFORE US, THE CLAIM OF THE DEPARTMENT FOR THE VALUE OF THE COMMODITIES THAT WERE LOST WHILE IN THE POSSESSION OF THE STATE AGENCY APPEARS TO BE FULLY SUPPORTED BY THE ADMINISTRATIVE REPORT. HOWEVER, IN VIEW OF THE REQUEST IN YOUR LETTER OF AUGUST 26, 1964, TO BE HEARD ON THE MATTER, WE WILL WITHHOLD DEPOSITING THE AFOREMENTIONED CHECK IN THE TREASURY OF THE UNITED STATES FOR A PERIOD OF THIRTY DAYS TO ENABLE YOU TO SUBMIT ANY ADDITIONAL INFORMATION YOU MAY HAVE ON THE MATTER.

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