be made for any extra services whatever, which any officer or clerk may be required to perform, unless expressly authorized by law. SEC. 1765. No officer in any branch of the public service, or any other person whose salary, pay or emoluments are fixed by law or regulations, shall receive any additional pay, extra allowance, or compensation, in any form whatever, for the disbursement of public money, or for any other service or duty whatever, unless the same is authorized by law, and the appropriation therefor explicitly states that it is for such additional pay, extra allowance, or compensation. Section 6 of the act of May 10, 1916, as amended by the act of August 29, 1916, 39 Stat. 120, 582, provides in pertinent part as follows: That unless otherwise specially authorized by law, no money appropriated by this or any other act shall be available for payment to any person receiving more than one salary when the combined amount of said salaries exceeds the sum of $2,000 per annum, * Also, see 39 U. S. C. 136, which provides: Mail messengers and other postal employees; employment in dual capacity; extra duties; compensation. Postmasters and acting postmasters are authorized, when in the judgment of the Postmaster General the needs and interests of the Postal Service require, to employ mail messengers and other postal employees in a dual capacity, or to assign extra duties to such mail messengers and other employees; and, notwithstanding the provisions of sections 58 [1916 dual compensation statute], 69 [1764, Revised Statutes], and 70 [1765, Revised Statutes] of Title 5, compensation shall be paid to such mail messengers and other employees for such services if the total compensation actually paid for all services does not exceed $2,000 for any one fiscal year. (Mar. 1, 1929, c. 442, § 1, 45 Stat. 1441.) The compensation paid for special delivery of mail matter is not based upon any element of time but constitutes a payment of an indefinite and undetermined aggregate made up of charges for separate services dependent entirely upon contingencies beyond the control of the Government or the employee, and, accordingly, does not constitute "salary" within the meaning of the dual compensation statute of 1916, supra. 16 Comp. Gen. 909; 18 Comp. Gen. 768, 773; 20 id. 730. As fees for special delivery service are fixed by law, and as the act of June 2, 1900, 31 Stat. 260 (39 U. S. C. 175, supra) expressly authorized the Postmaster General to establish rules under which the special delivery of mail may be effected by any salaried clerk or employee at first- and second-class post offices and the lawful fees allowed for such service, such payments have not been considered as coming within the inhibition of section 1764 and 1765, Revised Statutes, since the date of the enactment of said act of June 2, 1900. In this connection see Saunders v. United States, 120 U. S. 126; United States v. McCandless, 147 U. S. 692. See, also, decision of this office dated July 19, 1924, 4 Comp. Gen. 84, wherein it was held as follows (quoting from the syllabus): (The position of laborer in the custodian service, Treasury Department, with compensation fixed by long-established practice, having the force of a regulation, although not published as such, is separate and distinct from that of specialdelivery messenger in the Postal Service, the fees payable for special delivery being also fixed by regulation, the holding of both positions is not barred by section 1765, Revised Statutes, nor by the act of May 10, 1916, 39 Stat. 120, fees for special-delivery service not being salary within the meaning of the latter act. Accordingly, at the time of the approval of the act of March 1, 1929, 45 Stat. 1441 (39 U. S. C. 136, supra), there was no legal objection to the employment of, and payment to, postal employees at first- and second-class post offices for special-delivery service. Obviously, the limitation fixed in that remedial statute for payments to postal employees in addition to their regular salary for services in a "dual capacity" or when assigned to "extra duties" could not have been intended to relate to payment of fees for special-delivery service which theretofore had been expressly authorized by law. Compare 8 Comp. Gen. 487; id. 578; id. 610, wherein cases were considered involving the act of March 1, 1929. It is concluded, therefore, that postal employees of the classes men- ̈ tioned in your letter who are authorized by the regulations of the Post Office Department to be employed as special-delivery messengers may be paid the authorized fees fixed by law and regulation for such service in addition to their regular salary without contravening any of the dual compensation statutes. If special-delivery service at Boston, Mass., a first-class office, was performed by the employees mentioned in your letter during their regular tours of duty, no payment would be authorized for such special-delivery service. Section 1096 (3) of the Postal Laws and Regulations, supra. (B-18974) CONTRACTS-COST-PLUS-LOSS OR DAMAGE DUE TO NEGLIGENCE OF EMPLOYEES The Government's obligation to reimburse a cost-plus-a-fixed-fee contractor for loss or damage caused by the negligence of the employees of the contractor must necessarily be governed by the terms of the particular contract involved as applied to a given situation, but it may be stated broadly that, under the terms of contract forms "C. P. F. F. Form No. 1" and "F. F. Form No. 1-Rev.", if a contractor is not chargeable with any breach of his contractual duties and obligations, including the duty to exercise due diligence to employ and retain competent, trustworthy and careful personnel, he may be reimbursed for such loss or damage as an element of his actual costs, if not otherwise excluded by the contract. If by the terms of the subcontract, a cost-plus-a-fixed-fee contractor could not obtain compensation from a subcontractor for loss or damage caused by the negligence of the employees of the subcontractor, and the contractor were himself free from fault, the right of such contractor to reimbursement from the Government for loss or damage so incurred would be governed by the same principles as are applicable to his right to reimbursement for losses caused by the negligence of his own employees. Under a cost-plus-a-fixed-fee form of contract, if the contractor were at fault in connection with loss or damage to particular property but the Government through its employees were chargeable with contributory negligence, the parties should be left in status quo, that is, the owner of the property, whether Government or contractor, should suffer the loss. Comptroller General Warren to the Secretary of War, August 16, 1941: I have your letter of July 19, 1941, as follows: Under authority of Public Act 703, 76th Congress, approved July 2, 1940, the War Department has entered into numerous cost-plus-a-fixed-fee contracts C. P. F. F. Form No. 1, approved by The Assistant Secretary of War July 12, 1940, and F. F. Form No. 1-Rev. June 19, 1941, approved by the Under Secretary of War June 19, 1941, copies of which are enclosed herewith. During the administration of the construction projects, various contractors operating under the aforementioned forms of contract have sustained losses resulting from the negligence of one or more of their own employees. Tools have been lost; buildings have been destroyed by fire; payroll funds have been miscarried; subcontractors' equipment has been damaged, and so on. The liabil ity of the government to reimburse the contractor for such losses has not been definitely settled. The need for an early determination is apparent. Accordingly, you are requested to render an advance opinion on the question: Under C. P. F. F. Form No. 1 and F. F. Form No. 1-Rev., is the government obligated to reimburse the contractor for losses caused by the negligence of the contractor's or subcontractor's employees? If the degree of negligence or the contributory neglect of a government employee will affect the liability of the government, will you discuss these factors in your decision? As far as this office knows, the problem is one of first impression. It is true that your office in its decision of April 14, 1941, B-15593, discussed the matter generally. However, in the specific case before you the loss resulted from the negligence of a government employee. Therefore, it appears that the language of your decision, although persuasive, is not directed to and does not dispose of the particular question herein posed. Although it is evident from said decision of April 14, 1941, that your office is familiar with the background of cost-plus-a-fixed-fee contracts, it may be that other information relating to the emergency character of the work, the practical difficulties and hazards facing the contractor, or the formula employed to fix the fee will be of assistance. If so, this office, upon request, will promptly furnish these and all other essential details. The general character of the question submitted, without a statement of the material facts in particular cases, permits a reply in general terms only. You ask whether under certain forms of costplus-a-fixed-fee contracts the Government is obligated to reimburse the contractor for losses caused by the negligence of the employees of a contractor or of a subcontractor. The short answer is that it all depends on the facts and circumstances of the particular case in relation to the respective rights and obligations of the Government and the contractor expressed or contemplated by the contract. In the decision of April 14, 1941, 20 Comp. Gen. 632, mentioned in your letter, the matter was discussed in relation to a loss arising from the destruction of certain of the contractor's heavy construction equipment in a rail collision at Raritan Arsenal caused by the negligence of the conductor of the arsenal switching crew, a Government employee. After quoting various provisions of the contract (C. P. F. F. Form No. 1) material to the question, it was said: Reading these provisions together shows that 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, regardless of contingencies, in performing the work in accordance with the contract and the directions and instructions of the contracting officer, plus only a limited fixed fee as compensation for services, general overhead, use of the contractor's own or borrowed money, and profit. In addition to the provisions expressly stating what the fixed fee is to cover, the comparatively small amount of such fixed fee in this contract, $20,000 or less than 5 percent, in relation to the estimated cost of the work, $467,000, shows that there is no margin included in such fee to compensate the contractor for the risks and contingencies of work of such character and magnitude which ordinarily are assumed by a contractor and covered by the contract price. The provision in article II 1 (j) that the Government will reimburse the contractor for premiums on bonds and insurance policies which the contracting officer may require for the protection of the Government or may approve as reasonably necessary for the protection of the contractor, indirectly imposes the cost of such risks on the Government, and further demonstrates that the Government and not the contractor is to bear the risks involved in the performance of the contract. The express inclusion in such provision of public liability, employer's liability, and fidelity insurance shows that the Government is thus indirectly to assume even the risk of insurable losses resulting from the negligence or defalcations of the contractor's employees. To make certain that the contractor does come out whole, regardless of contingencies, the contract expressly provides in subparagraphs 1 (k) and (p) of article II that the contractor shall be reimbursed-in addition to the numerous items specified in detail in other subparagraphs-for "Losses and expenses, not compensated by insurance or otherwise actually sustained by the contractor in connection with the work," and for "Such other items as should, in the opinion of the contracting officer, be included in the cost of the work." The purpose, of course, is by thus assuming the risks and, in effect, guaranteeing the contractor against loss, to procure the work for the United States at actual cost, plus only such a comparatively small fixed fee for the contractor's services, etc., as would be appropriate under such conditions. Such provisions are thus of the essence of "cost-plus-a-fixed-fee" contracts, the use of which is expressly sanctioned by the act of July 2, 1940, supra, and so are not contrary to the principles of the decision, 18 Comp. Gen. 285, cited in your letter, that contract stipulations which may increase the cost of performance are unauthorized unless reasonably requisite to the accomplishment of the legislative purposes of the contract appropriation involved, or unless such stipulations are authorized by statute. * * * The general statement that such contracts basically contemplate that the actual cost of the whole work and the risk thereof are to be assumed by the Government and that the contractor is to come out whole regardless of contingencies, plus only a limited fixed fee as compensation for his services, general overhead, etc., does not mean that the Government is to assume the risk of the contractor's own fault or folly, or that the contractor is to come out whole regardless of careless conduct of the work or other disregard of his contractual duties. While such contracts in effect guarantee the contractor a limited fixed fee for his services in addition to reimbursement of the actual cost of the work, the fee is paid to obtain the competent and faithful services of the contractor; and the provisions for reimbursement of actual costs are not to be taken as a shield for incompetence or an excuse for carelessness. Nor is it to be inferred from such basic concept of this type of contract that the Government is to assume any risks or bear any losses which the contractor has expressly or impliedly agreed to assume or bear under particular provisions of the contract. Thus it was pointed out in the decision of April 14, 1941, supra, that the contractor would not be entitled to reimbursement for the loss or damage of equipment not caused by the negligence of the Government where the contractor was being paid on a rental basis for the use of such equipment at rates "in conformity with similar rates of rental charged in the particular territory," for the reason that such rates normally include a margin to compensate the owner for the risk of loss and damage except that resulting from the negligence of the bailee. 470350-42-12 Various provisions in C. P. F. F. Form No. 1 bearing on the problem are set forth below. Identical or substantially similar provisions are contained in F. F. Form No. 1. ARTICLE I-Statement of work. 1. The Contractor shall, in the shortest possible time, furnish the labor, materials, tools, machinery, equipment, facilities, supplies not furnished by the Government, and services, and do all things necessary for the completion of the following work: in accordance with the drawings and specifications or instructions contained in appendix "A" hereto attached and made a part hereof, or to be furnished hereafter by the Contracting Officer and subject in every detail to his supervision, direction, and instructions. In consideration for his undertaking under this contract the Contractor shall receive the following: (a) Reimbursement for expenditures as provided in article II. Dollars --------) which shall constitute complete compensation for the Contractor's services, including profit and all general overhead expenses. 3. The title to all work, completed or in the course of construction, shall be in the Government. Likewise, upon delivery at the site of the work or at an approved storage site and upon inspection and acceptance in writing by the Contracting Officer, title to all materials, tools, machinery, equipment, and supplies, for which the Contractor shall be entitled to be reimbursed under article II, shall vest in the Government. These provisions as to title being vested in the Government shall not operate to relieve the Contractor from any duties imposed under the terms of this Contract. 4. The work shall be executed in the best and most workmanlike manner by qualified, careful, and efficient workers, in strict conformity with the best standard practices. ARTICLE II-Cost of the work. REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES. 1. The Contractor shall be reimbursed in the manner hereinafter described for such of his actual expenditures in the performance of the work as may be approved or ratified by the Contracting Officer and as are included in the following items: (a) All labor, material, tools, machinery, equipment, supplies, services, power, and fuel necessary for either temporary or permanent use for the benefit of the work. All articles of machinery or equipment valued at $300 or less shall be classed as tools and shall be charged directly to the work. Title thereto shall thereupon pass to the Government. (d) Loading and unloading at the site of the work of construction plant, owned or rented by the Contractor; * * the installation and dismantling thereof, and such repairs and spare parts as are not included in the rental; provided such repairs or spare parts are not made necessary by defects in such plant, or parts thereof, or by the fault or negligence of the Contractor or his employees; (g) "Salaries of resident engineers, superintendents, timekeepers, foremen, and other field employees of the Contractor in connection with the work. No person shall be assigned to service by the Contractor as superintendent of construction, chief engineer, chief purchasing agent, chief accountant, or similar position in the Contractor's field organization, or as principal assistant to any such person, until there has been submitted to and approved by the Contracting Officer a statement of the qualifications and experience of the person proposed for such assignment." * |
