B-18773, NOVEMBER 21, 1941, 21 COMP. GEN. 466

B-18773, NOVEMBER 21, 1941, 21 COMP. GEN. 466

CONTRACTS - COST-PLUS - TRAVELING, ETC., EXPENSES OF CONTRACTOR'S EMPLOYEES SINCE IT NOW APPEARS THAT THE TERM "OTHER EXPENSES" AS USED IN A COST- PLUS-A-FIXED-FEE CONTRACT IN CONNECTION WITH REIMBURSING THE CONTRACTOR THE TRANSPORTATION AND TRAVELING EXPENSES OF ITS EMPLOYEES WAS INTENDED TO INCLUDE (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 FOR THEIR FAMILIES AND HOUSEHOLD EFFECTS, AND (3) EXPENSES OF MOVING SUCH FAMILIES AND HOUSEHOLD EFFECTS TO THE SITE OF THE WORK, FURTHER OBJECTION WILL NOT BE MADE TO THE REIMBURSEMENT OF SUCH EXPENSES IF THEY ARE PROPERLY SUBSTANTIATED AND APPROVED. 21 COMP. GEN. 97, MODIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, NOVEMBER 21, 1941:

I HAVE YOUR LETTER OF OCTOBER 28, 1941, AS FOLLOWS:

THERE HAS COME TO THE ATTENTION OF THIS OFFICE, YOUR DECISION B 18773, DATED AUGUST 4, 1941, TO LT. COL. GEORGE DOBERT, F.D., U.S. ARMY, AND AFTER CAREFUL CONSIDERATION OF ITS CONTENTS, I AM CONSTRAINED TO REQUEST A RECONSIDERATION ON THE FOLLOWING ADDITIONAL ARGUMENTS AND EVIDENCE.

IN YOUR DECISION YOU STATE:

"* * * 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 THE 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 EMPLOYEE'S FAMILY AND HOUSEHOLD EFFECTS IS A SERVICE NECESSARILY REQUIRED OR CONTEMPLATED FOR THE SATISFACTORY PERFORMANCE OF THE WORK COVERED BY THE CONTRACT. * * *"

YOU ALSO STATE:

"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.'

YOUR INTERPRETATION OF THE MEANING OF TITLE III, ARTICLE III-A-1-F IS NOT IN CONFORMITY WITH THAT WHICH WAS CONTEMPLATED BY THE NEGOTIATORS AND THE CONTRACTORS AT THE TIME OF NEGOTIATION. THE FIRST PART OF PARAGRAPH F CONTEMPLATES THAT THE CONTRACTOR SHALL BE REIMBURSED FOR THAT PART OF THE DAILY COST OF TRANSPORTATION OF THE FIELD FORCES FOR THE ECONOMICAL AND SUCCESSFUL PROSECUTION OF THE WORK, THAT IS, EMPLOYEES OF THE CONTRACTOR WHO LIVE AT A DISTANCE CONSIDERED TOO GREAT TO REQUIRE SUCH EMPLOYEES TO STAND THE ENTIRE DAILY TRANSPORTATION COST. THIS TRANSPORTATION IS USUALLY ACCOMPLISHED BY THE CONTRACTOR HIRING A WORK TRAIN ON WHICH THE EMPLOYEES ARE PERMITTED TO RIDE TO AND FROM THE SITE OF THE WORK AT SOME NOMINAL CHARGE, THE CONTRACTOR AND THE GOVERNMENT IN TURN STANDING ANY EXCESS COST.

THE SECOND PART OF PARAGRAPH F CONTEMPLATES TRANSPORTATION, TRAVELING, HOTEL, AND OTHER EXPENSES (WHICH INCLUDES THE EXPENSES YOU HAVE OBJECTED TO) OF OFFICERS, ENGINEERS, AND ALL OTHER EMPLOYEES OF THE CONTRACTOR, AS IS ACTUALLY INCURRED IN CONNECTION WITH THE WORK UNDER THIS CONTRACT.

IN ORDER TO ASCERTAIN THE FACTS AS TO WHAT WAS CONTEMPLATED AT THE TIME OF NEGOTIATION OF THE CONTRACT, RESORT HAS BEEN HAD TO A FILE MAINTAINED IN THIS OFFICE, WHICH CONTAINS, AMONG OTHER THINGS, ESTIMATES SUBMITTED BY THE CONTRACTOR. IT WOULD SEEM PROPER TO STATE AT THIS TIME THAT THE AUTHOR OF THE LETTER DATED APRIL 30, 1941, FROM THE OFFICE OF THE CHIEF OF ORDNANCE, REFERRED TO IN YOUR DECISION, HAD NO KNOWLEDGE OR BENEFIT OF THE ABOVE REFERRED TO INFORMATION.

FOR THE PURPOSE OF CLARIFYING WHAT PARAGRAPH F ACTUALLY CONTEMPLATED, THERE IS QUOTED FROM THE CONTRACTOR'S ESTIMATE THE FOLLOWING:

" CONTRACTOR'S COST TO TRAIN NEW EMPLOYEES, TITLE III, ARTICLE III A-1, PARAGRAPH P.'

8. TRAVELING, LIVING, AND MOVING EXPENSES.

AFTER EMPLOYMENT AS COVERED IN PARAGRAPH 1 ABOVE, TRAVEL EXPENSES OF EMPLOYEES INCLUDING THE MOVING OF FAMILIES, FURNITURE, ETC., TO HOPEWELL OR PLANT SITE, IS A DIRECT CHARGE TO TITLE II.

SEE EXHIBIT A ATTACHED.

THIS EXHIBIT CLEARLY SHOWS THAT TRAVELING, LIVING, AND MOVING EXPENSES WERE CONTEMPLATED AS REIMBURSABLE UNDER TITLE III, ARTICLE III-A-1-F, FOR NOWHERE ELSE IS PROVISION MADE THEREFOR.

IT WILL ALSO BE NOTED THAT THE CLAUSE IN PARENTHESES IN PARAGRAPH P STATES,"EXCEPT COSTS TO BE REIMBURSED UNDER PARAGRAPH F OF THIS SECTION 1 OF ARTICLE III-A).' THIS CLEARLY INDICATES THAT, TRAVELING, LIVING, AND MOVING EXPENSES, ETC., AS SHOWN BY EXHIBIT A WERE CONTEMPLATED AS REIMBURSABLE UNDER PARAGRAPH F OF ARTICLE III-A-1.

IN FURTHER SUBSTANTIATION OF THE CONTRACTOR'S CONTENTION THERE IS ATTACHED EXHIBIT B, SHOWING THE ESTIMATED CONSTRUCTION AND MANUFACTURING COSTS UNDER TITLES I AND II, RESPECTIVELY. IT WILL BE NOTED THAT THERE IS INCLUDED IN THE MANUFACTURING EXPENSES UNDER TITLE II, $88,000 FOR TRAVELING, MOVING, AND OTHER EXPENSES INCIDENTAL TO TRANSFERRING EMPLOYEES FROM ONE LOCATION TO ANOTHER, NOT INCLUDED IN COST OF TRAINING KEY EMPLOYEES.

THE ABOVE REFERENCES TO EXHIBITS A AND B ARE FOR THE PURPOSE OF INDICATING THAT LIVING EXPENSES OF EMPLOYEES AT THE SITE OF THE WORK PRIOR TO ARRIVAL OF THEIR FAMILIES, TRAVELING EXPENSES OF THE EMPLOYEES IN RETURNING TO THEIR HOMES FOR THEIR FAMILY AND HOUSEHOLD EFFECTS, AND EXPENSES INCURRED IN MOVING SUCH FAMILIES AND HOUSEHOLD GOODS TO THE SITE OF THE WORK WERE CONTEMPLATING AS A DIRECT CHARGE TO THE COST OF THE WORK UNDER TITLE II. IF IT IS CONCEDED THAT THESE CHARGES WERE CONTEMPLATED AS A DIRECT COST UNDER TITLE II, THEN CERTAINLY THEY SHOULD BE REIMBURSABLE UNDER TITLE III, ARTICLE III-A-1-F.

IT SHOULD BE REMEMBERED THAT THE WHOLE PURPOSE OF THIS DISCUSSION IS TO DETERMINE JUST WHAT PARAGRAPH F CONTEMPLATED. PARAGRAPH F STATES "* * * TRANSPORTATION, TRAVELING, HOTEL, AND OTHER EXPENSES * * *.' "AND OTHER EXPENSES" IN THIS INSTANCE WOULD APPEAR TO BE A VERY BROAD TERM AND IN THE LIGHT OF WHAT HAS BEEN STATED IT CONTEMPLATES LIVING AND MOVING EXPENSES AS INDICATED BY PARAGRAPH 8 OF THE ATTACHED EXHIBIT A. LIVING EXPENSES WOULD BE JUST SUCH EXPENSES AS ARE CLAIMED IN THIS INSTANCE BY THE CONTRACTOR. MOVING EXPENSES WOULD NOT ONLY COVER THE EXPENSES OF PACKING SUCH THINGS AS ARE REQUIRED TO BE PACKED, BUT ALSO THE ACTUAL COST OF SHIPPING THE HOUSEHOLD GOODS, TRAVELING EXPENSES (RAILROAD FARE, PULLMAN, AND SUBSISTENCE), OF THE HEAD OF THE HOUSEHOLD IN RETURNING TO HIS HOME FOR THE PURPOSE OF PREPARING HIS FURNITURE AND FAMILY FOR THE TRANSFER.

CONTRACT NO. W-ORD-499 WITH THE ATMOSPHERIC NITROGEN CORPORATION OF NEW YORK, NEW YORK, WAS ENTERED INTO FOR THE PURPOSE OF DESIGNING, ENGINEERING, CONSTRUCTING, EQUIPPING AND OPERATING A PLANT FOR THE MANUFACTURE OF ANHYDROUS AMMONIA AT WEST HENDERSON, KENTUCKY. THE SITE OF THE PLANT IS MANY MILES FROM THE PARENT CORPORATION'S HOME OFFICE AND FROM THE HOMES OF THE EMPLOYEES SELECTED TO STAFF THE DEFENSE JOB. IN ORDER THAT EMPLOYEES MAY AT LEAST COME OUT WHOLE WHEN ACCEPTING SUCH ASSIGNMENTS, WHETHER IN CONNECTION WITH THIS CONTRACT OR SOME OTHER BUSINESS OF THE CONTRACTOR, THE CONTRACTOR HAS STATED, THAT "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.' AND IT WOULD SEEM QUITE CLEAR FROM THE ESTIMATES THAT THIS IS WHAT WAS CONTEMPLATED.

BY ARTICLE 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.

IT WOULD SEEM, IN VIEW OF THE EXISTING CIRCUMSTANCES (THAT IS, THE DIFFICULTY THAT CONTRACTORS ARE EXPERIENCING IN OBTAINING COMPETENT ENGINEERS, ETC.), THAT IT WOULD BE QUITE NECESSARY FOR THE CONTRACTOR TO PAY ALL EXPENSES INCURRED BY EMPLOYEES IN ORDER TO INDUCE THEM TO LEAVE THEIR OLD POSITIONS FOR THE NEW.

ARTICLE III-A-1 OF THE CONTRACT IS AS FOLLOWS:

"THE CONTRACTOR SHALL BE REIMBURSED IN THE MANNER HEREINAFTER DESCRIBED FOR SUCH OF ITS ACTUAL EXPENDITURES IN THE PERFORMANCE OF THE WORK UNDER THE CONTRACT AS MAY BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER AND AS ARE INCLUDED IN THE FOLLOWING ITEMS.' ( ITALICS SUPPLIED.)

ARTICLE III-A-1-F OF THE CONTRACT IS IN PART AS FOLLOWS:

"* * *; 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.' ( ITALICS SUPPLIED.)

ARTICLE III-A-1-U OF THE CONTRACT IS AS FOLLOWS:

"SUCH OTHER ITEMS AS SHOULD, IN THE OPINION OF THE CONTRACTING OFFICER, BE INCLUDED IN THE COST OF THE WORK. WHEN SUCH AN ITEM IS ALLOWED BY THE CONTRACTING OFFICER, IT SHALL BE SPECIFICALLY CERTIFIED AS BEING ALLOWED UNDER THIS PARAGRAPH.'

CONSIDERING THE FACT THAT THE CONTRACTOR WAS HIRED AS AN INDEPENDENT CONTRACTOR AND NOT AS AN AGENT, IT IS NOT UNDERSTOOD BY WHAT RULE EXPENSES SUCH AS ARE HERE INVOLVED ARE NOT REIMBURSABLE UNDER ANY PROVISION OF THE CONTRACT. THEY WERE TRANSFERRED TO THE SITE OF THE WORK IN FURTHERANCE OF THE CONTRACT AND THE DISPUTED EXPENSES WERE INCURRED IN DIRECT CONNECTION WITH THE WORK, AS A RESULT OF SUCH TRANSFER AND REIMBURSEMENT TO SUCH EMPLOYEES WOULD SEEM NECESSARY IN ORDER TO INDUCE THEM TO ACCEPT POSITIONS AT THE SITE FOR THE SUCCESSFUL PROSECUTION OF THE WORK.

IT WAS THE INTENTION OF THE CONTRACTOR TO PAY ALL EXPENSES OF THE TRANSFERRED EMPLOYEES UNTIL THEY WERE FINALLY SETTLED IN THEIR NEW POSITIONS AND HOMES. THIS WAS MADE CLEAR IN A LETTER FROM THE CONTRACTOR TO THE CONTRACTING OFFICER'S REPRESENTATIVE WHICH WAS QUOTED IN YOUR DECISION AND IS BORNE OUT BY THE ESTIMATES ATTACHED. THE ONLY PROVISIONS IMPOSED BY THE TERMS OF THE CONTRACT AS A CONDITION PRECEDENT TO REIMBURSEMENT ARE (1) THAT THE EXPENDITURES BE INCURRED IN THE PERFORMANCE OF THE WORK UNDER THE CONTRACT, (2) THAT SUCH EXPENDITURES BE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER, AND/OR (3) WHEN ALLOWED UNDER ARTICLE III-A-1-U, IT SHALL BE SPECIFICALLY CERTIFIED AS BEING ALLOWED UNDER THIS PARAGRAPH.

THE MATTER OF APPROVING OR RATIFYING AN EXPENDITURE BEING A MINISTERIAL DUTY, WOULD APPEAR TO BE NOT NECESSARY FOR DISCUSSION HERE. THEREFORE, THE ONLY QUESTIONS TO BE DECIDED ARE, (1) WAS THE EXPENDITURE MADE IN PERFORMANCE OF THE WORK UNDER THE CONTRACT, AND (2) IF SO, WHO IS GOING TO BEAR THE COST. THESE DISPUTED EXPENSES WERE INCURRED AS A DIRECT RESULT OF THE TRANSFER OF THESE EMPLOYEES FROM THEIR REGULAR POSITIONS TO THE ATMOSPHERIC NITROGEN CORPORATION FIELD OFFICE AT HENDERSON, KENTUCKY, AND FURTHER, THESE EXPENSES WOULD NOT HAVE BEEN INCURRED BUT FOR THE WORK REQUIRED TO BE PERFORMED BY THE TERMS OF THIS CONTRACT.

IN YOUR DECISION B-15593, DATED APRIL 14, 1941, WHEREIN THE QUESTION CONSIDERED WAS AS TO WHETHER THE CONTRACTOR COULD BE REIMBURSED FOR DAMAGES CAUSED BY GOVERNMENT PROPERTY, YOU INDICATED THE STATUTORY BASIS FOR THE COST-PLUS-A-FIXED-FEE TYPE OF CONTRACT AND YOU STATED:

"READING THESE PROVISIONS TOGETHER SHOWS THAT THE CONTRACT BASICALLY CONTEMPLATES THAT THE ACTUAL COST OF THE WHOLE WORK AND THE RISK THEREOF IS TO BE ASSUMED BY THE GOVERNMENT; THAT IS, THAT THE CONTRACTOR IS TO COME OUT WHOLE, * * *"

THIS DEPARTMENT HAS ALWAYS ADOPTED A SIMILAR VIEW IN NEGOTIATING AND INTERPRETING SUCH CONTRACTS. IT HAS ALWAYS BEEN CONSIDERED IN NEGOTIATING COST-PLUS-A-FIXED-FEE CONTRACTS, THAT THE CONTRACTOR WILL BE REIMBURSED ALL OF ITS EXPENDITURES IN CONNECTION WITH THE WORK UNDER THE CONTRACT AND ANY EXCEPTIONS MUST BE SPECIFICALLY SET FORTH IN THE CONTRACT ITSELF. MUST BE APPARENT, TO SET FORTH SPECIFICALLY EACH AND EVERY ITEM TO BE REIMBURSED TO THE CONTRACTOR WOULD BE A PRACTICAL IMPOSSIBILITY AND IT HAS NEVER BEEN THE INTENTION OF THIS DEPARTMENT THAT IN REIMBURSING THE CONTRACTOR UNDER SUCH CONTRACTS THE REIMBURSEMENT SHOULD BE LIMITED TO THE SPECIFIC ITEMS SET FORTH IN THAT PART OF THE CONTRACT RELATING TO SUCH REIMBURSEMENT.

TO SUMMARIZE:

1. THE EXPENSES WERE INCURRED IN DIRECT CONNECTION WITH THE CONTRACT AND CERTAINLY WOULD NOT HAVE BEEN INCURRED HAD IT NOT BEEN FOR THE EXISTENCE OF THE CONTRACT.

2. THE CONTRACT DOES NOT PROHIBIT SUCH EXPENSES. ON THE CONTRARY, ARTICLE III-A-1-F VERY CLEARLY STATES TRANSPORTATION, TRAVEL, HOTEL AND OTHER EXPENSES AS ARE ACTUALLY INCURRED IN CONNECTION WITH THE WORK.

3. THE EXPENSES WERE PAID BY THE CONTRACTOR AND WILL BE APPROVED BY THE CONTRACTING OFFICER'S REPRESENTATIVE WITHOUT QUALIFICATION. IN VIEW OF THE FOREGOING, AND SIMILARITY OF THE PROVISIONS CONTAINED IN CONTRACT NO. W-ORD-499 WITH THOSE CONSIDERED IN B-15593, YOUR FAVORABLE RECONSIDERATION OF THE INSTANT CASE IS REQUESTED.

AS STATED IN THE DECISION OF AUGUST 4, 1941, B-18773, 21 COMP. GEN. 97, RECONSIDERATION OF WHICH IS REQUESTED IN THE ABOVE-QUOTED LETTER, THE DETERMINATION OF "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.' THE CONTRACT HERE INVOLVED PROVIDES GENERALLY THAT THE GOVERNMENT WILL REIMBURSE THE CONTRACTOR FOR THE EXPENDITURES INCURRED INCIDENT TO THE PERFORMANCE OF THE WORK REQUIRED THEREUNDER PLUS CERTAIN FIXED FEES WHICH ARE TO CONSTITUTE COMPLETE COMPENSATION FOR THE CONTRACTOR'S SERVICES, INCLUDING PROFIT. IT APPEARS THAT IN CONNECTION WITH THE REQUIREMENT THAT THE CONTRACTOR SECURE THE NECESSARY PERSONNEL FOR THE OPERATION OF AN ORDNANCE MANUFACTURING PLANT, THE CONTRACTOR, IN ADDITION TO THE PAYMENT OF THE TRANSPORTATION AND OTHER TRAVEL EXPENSES OF THOSE ASSIGNED TO THE CONTRACT SITE, PAID THE EXPENSES INCURRED BY THESE EMPLOYEES (1) WHILE LIVING AT THE SITE OF WORK PRIOR TO THE ARRIVAL OF THEIR FAMILIES, (2) IN RETURNING TO THEIR HOMES FOR THEIR FAMILIES AND HOUSEHOLD EFFECTS, AND (3) IN MOVING THEIR FAMILIES AND HOUSEHOLD GOODS TO THE SITE OF THE WORK.

IT MAY BE STATED GENERALLY, THAT IN THE ABSENCE OF AN AGREEMENT TO THE CONTRARY, THE ABOVE-MENTIONED EXPENSES WOULD APPEAR TO BE A CHARGE PROPERLY FOR PAYMENT BY THE EMPLOYEE, AS A PERSONAL EXPENSE INCIDENT TO HIS EMPLOYMENT. PARTICULARLY, WOULD THIS APPEAR TO BE TRUE, INSOFAR AS THOSE EMPLOYEES WHO WERE HIRED AND TRAINED BY THE CONTRACTOR FOR SPECIFIC ASSIGNMENT AT THE CONTRACT SITE WERE CONCERNED. ACCORDINGLY, THE DETERMINATION OF WHETHER THE PAYMENT OF SUCH EXPENSES BY THE CONTRACTOR WAS IN THE NATURE OF A GRATUITY, THE COST OF WHICH MUST BE ASSUMED TO HAVE BEEN INCLUDED IN ONE OF THE SEVERAL FIXED FEES, OR WHETHER THE GOVERNMENT WAS CONTRACTUALLY OBLIGATED TO REIMBURSE THE CONTRACTOR FOR SUCH EXPENSES, AS BEING EITHER REQUIRED OR REASONABLY IMPLIED IN THE SATISFACTORY PERFORMANCE OF THE WORK, NECESSARILY IS DEPENDENT UPON THE TERMS OF THE CONTRACT, CONSIDERED IN THE LIGHT OF THE INDICATED INTENTIONS OF THE PARTIES.

IN THE INTERPRETATION OF THE PROVISIONS OF THE COST-PLUS-A-FIXED-FEE FORM OF CONTRACT, IT IS APPRECIATED THAT THIS TYPE OF CONTRACT ESTABLISHES THE BASIS FOR A HIGHLY COOPERATIVE UNDERTAKING BETWEEN THE CONTRACTOR AND THE GOVERNMENT AND THAT SUCH PROVISIONS REQUIRE AND ARE ENTITLED TO A LIBERAL CONSTRUCTION; THAT IF THE INTENT OF THE PARTIES CANNOT BE DETERMINED FROM THE EXPRESS PROVISIONS OF THE CONTRACT, THE PRACTICAL INTERPRETATION OF THE CONTRACTING PARTIES IS OF GREAT WEIGHT, IF NOT CONTROLLING, IN ASCERTAINING THEIR INTENTION AT THE TIME OF ITS EXECUTION; THAT THE ENUMERATION IN THE CONTRACT OF THE VARIOUS PARTICULAR ITEMS OF COST AS TO WHICH REIMBURSEMENT IS AUTHORIZED IS NOT INTENDED TO BE EXCLUSIVE OF OTHER ITEMS WHICH MAY ARISE AND WHICH MAY NOT BE EXPRESSLY PROVIDED FOR; AND THAT, AS STATED IN MY DECISION OF APRIL 14, 1941, 20 COMP. GEN. 632, 636,"THE CONTRACT BASICALLY CONTEMPLATES THAT THE ACTUAL COST OF THE WHOLE WORK AND THE RISK THEREOF ARE TO BE ASSUMED BY THE GOVERNMENT; THAT IS, THAT THE CONTRACTOR IS TO COME OUT WHOLE * * * IN PERFORMING THE WORK IN ACCORDANCE WITH THE CONTRACT * * *.' HOWEVER, IT WAS NOT INTENDED IN THAT DECISION, NOR IS IT THE VIEW OF THIS OFFICE, THAT, AS SUGGESTED BY YOU, ANY AND EVERY EXPENSE INCURRED BY THE CONTRACTOR INCIDENTAL TO THE PERFORMANCE OF THE WORK REQUIRED UNDER THE CONTRACT, REGARDLESS OF HOW REMOTELY CONNECTED THEREWITH, IS TO BE REIMBURSED BY THE GOVERNMENT,"AND ANY EXCEPTIONS MUST BE SPECIFICALLY SET FORTH IN THE CONTRACT ITSELF.' MUST BE PRESUMED THAT CERTAIN OF THE EXPENSES INCURRED WERE INTENDED TO BE BORNE BY THE CONTRACTOR AND PAID FROM THE GROSS PROFIT DERIVED FROM THE CONTRACT, AND AS INCLUDED IN THE FIXED FEE. WHILE IT IS RECOGNIZED THAT NO GENERAL RULE MAY BE LAID DOWN WHICH WILL FIT ALL CIRCUMSTANCES WHICH MAY ARISE, IT WOULD APPEAR THAT, TO BE REIMBURSABLE BY THE GOVERNMENT, AS EXPENSE INCURRED BY THE CONTRACTOR, NOT OTHERWISE SPECIFICALLY PROVIDED FOR, MUST BE SHOWN TO BE REASONABLY INCIDENT TO THE PERFORMANCE OF THE WORK AND TO SERVE A USEFUL PURPOSE IN FULFILLING THE CONTRACT REQUIREMENTS.

TITLE III, ARTICLE III-A, OF THE CONTRACT HERE INVOLVED LISTS THE VARIOUS ITEMS OF EXPENDITURES FOR WHICH THE CONTRACTOR WILL BE REIMBURSED BY THE GOVERNMENT; AND IT APPEARS TO BE CONCEDED THAT ONLY SECTION 1-F THEREOF BEARS ANY REASONABLE RELATIONSHIP TO THE TYPE OF EXPENSE HERE INVOLVED. WHILE THE SAID SECTION AUTHORIZES REIMBURSEMENT FOR "TRANSPORTATION AND TRAVELING EXPENSES TO AND FROM THE WORK OF THE NECESSARY FIELD FORCES * * *" AND FOR "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," THERE WAS NOTHING IN THE RECORD BEFORE ME WHEN THE DECISION OF AUGUST 4, 1941, WAS RENDERED TO INDICATE THAT THE TERM "OTHER EXPENSES" WAS INTENDED TO INCLUDE THE EXPENSE OF MOVING FAMILIES AND HOUSEHOLD EFFECTS TO AND FROM THE SITE OF THE WORK.

HOWEVER, IT NOW APPEARS FROM YOUR ABOVE-QUOTED LETTER AND THE PAPERS TRANSMITTED THEREWITH THAT THE PARTIES TO THE CONTRACT ACTUALLY CONTEMPLATED THE INCURRENCE BY THE CONTRACTOR OF THE EXPENDITURES INVOLVED AND THAT THE AMOUNT THEREOF WOULD BE REIMBURSED BY THE GOVERNMENT. ACCORDINGLY, ON THE BASIS OF THE FACTS NOW OF RECORD, YOU ARE ADVISED THAT THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO THE REIMBURSEMENT OF THE CONTRACTOR FOR THESE EXPENSES INCURRED ON BEHALF OF ITS EMPLOYEES, PROVIDED SUCH EXPENSES ARE PROPERLY SUBSTANTIATED, ARE APPROVED OR RATIFIED BY THE CONTRACTING OFFICER, AND ARE VERIFIED IN ACCORDANCE WITH THE TERMS OF THE CONTRACT.