Page images
PDF
EPUB

contractor's right to reimbursement, if otherwise proper, and it will no longer be necessary to submit to this office reconciliation statements of contractors' depository accounts unless called for in particular cases. However, the certification of the field auditor should contain a statement that such payments have been properly included in the cost and expenditure accounts of the contractor.

(B-22533)

LEAVES OF ABSENCE-ANNUAL-SEPARATION FROM SERVICE

Under the act of March 14, 1936, and the Annual Leave Regulations promulgated pursuant thereto, annual leave is earned for all periods an employee is in a pay status regardless of whether he be on actual duty or on leave with pay, including a period of accumulated and current accrued leave granted upon voluntary or involuntary separation from the service.

A letter accepting the resignation of an employee should state the definite date of termination of the employment, taking into consideration leave earned during a period of pay covering accumulated and current accrued leave granted immediately prior to separation from the service.

In granting an employee the accumulated and current accrued leave to which he is entitled upon separation from the service, a fraction of a day should be considered in multiples of 15 minutes.

Comptroller General Warren to Commissioner, United States Section, International Boundary Commission, United States and Mexico, December 19, 1941:

I have your letter of December 6, 1941, as follows:

It is respectfully requested that you advise this Commission as to the proper administration of annual leave regulations promulgated by the President under date of March 29, 1940, as enunciated in Executive Order 8384, with particular reference to Sections 7, 8, and 10, under the following circumstances:

1. A permanent employee submits his resignation to be effective at the expiration of his accumulated and current accrued annual leave, stating in the resignation his last day of duty to be September 30, 1941. On January 1, 1941, the employee had accumulated 60 days' annual leave. During the calendar year 1941 he had been granted 10 days annual leave prior to September 30, 1941. According to section 7 of the Annual Leave Regulations, he is entitled to all of his accumulated leave plus his current accrued leave to and including the date of separation.

(a) Will this employee earn annual leave while carried on the pay roll after September 30, 1941, for the purpose of receiving compensation for his accumulated and current accrued annual leave?

(b) Please advise what date is meant by that part of section 7 which reads, "* to and including the date of separation." Is it the last day of duty or is it the last day of pay including the period of pay for annual leave? (c) In the event leave is earned while on leave after September 30, 1941, should the definite date of termination of the employment be stated in the letter accepting the resignation? If so, when the fraction of a day becomes less than 1⁄2 day, should the fraction be considered for each 15 minutes?

2. A permanent employee whose services were not required after September 30, 1941, due to reduction in force, had accumulated 60 days' annual leave on January 1, 1941. During the calendar year 1941 he had been granted 15 days annual leave prior to September 30, 1941. Pursuant to section 8 of the Annual Leave Regulations, his date of discharge should be fixed so as to permit him to take all of his accumulated leave and current accrued leave. Section 10 of the Annual Leave Regulations provides that annual leave should accrue to an employee while in a leave-with-pay status.

(a) Under the above circumstances would the employee earn leave after September 30, 1941, while his name appears on the pay roll of the Commission for the purpose of granting to him his accumulated and current accrued annual leave?

The Annual Leave Act of March 14, 1936, 49 Stat. 1161, provides, in section 1, that with the exception of certain classes of employeesall civilian officers and employees of the United States wherever stationed and of the government of the District of Columbia, regardless of their tenure, in addition to any accrued leave, shall be entitled to twenty-six days' annual leave with pay each calendar year, exclusive of Sundays and holidays: Provided, That the part unused in any year shall be accumulated for succeeding years until it totals not exceeding sixty days.

*

Sections 7, 8, and the first sentence of section 10 of the Annual Leave Regulations (Executive Order No. 8384, dated March 29, 1940) provide, respectively, as follows:

SEC. 7. An employee voluntarily separated from the service without prejudice during any calendar year shall be entitled to all of his accumulated leave plus his current accrued leave to and including the date of separation.

SEC. 8. An employee who is involuntarily separated from the service other than for cause due to his own misconduct shall be entitled to all of his accumulative leave and current accrued leave, and the date of his discharge shall be fixed so as to permit him to take such leave. The date of discharge of an employee separated from the service for cause due to his own misconduct may, within the discretion of the administrative officer concerned, be fixed so as to permit the allowance of all or any part of accumulated leave and current accrued leave.

SEC. 10. Annual leave shall accrue to an employee while in a leave-with-pay status.

The terms "accumulated leave" and "current accrued leave" are defined in section 1 of the same regulations as follows:

(f) "Accumulated leave" means the unused annual leave not exceeding 60 days which has accrued during years prior to the current year.

(h) "Current accrued leave" means that part of the current annual leave which bears the same ratio to the current annual leave that the expired part of the current year bears to the full year.

Under the act of March 14, 1936, supra, annual leave of absence at the rate of 26 days per annum, or two and one-sixth days per month-which is authorized to be prorated for a fractional year's service is a right granted by statute. Thomas v. United States, 87 Ct. Cls. 573. Annual leave is earned for all days an employee is in a pay status regardless of whether he be on actual duty or on leave of absence with pay-it having been held that the period of leave of absence with pay is synonymous with a duty status. 13 Comp. Gen. 295, 370; 14 id. 351, 585; 17 id. 349, 641, 906.

There is nothing in the terms of the first sentence of section 10 of the regulations above quoted denying the right to accrue annual leave while an employee is on so-called "terminal leave," that is, on annual leave taken immediately prior to final separation from the service. That situation was recognized in my decision of May 13, 1941, B-15309, to the Secretary of the Interior, in adjusting the final

pay account of an employee who had overdrawn sick leave. Accordingly, question 1 (a) is answered in the affirmative.

Referring to question 1 (b), the words "to and including the date of separation" as used in section 7 of the Annual Leave Regulations, mean the last day the employee is in a pay status, including the period of pay covering terminal leave.

Both questions under 1 (c) are answered in the affirmative. As to the second of such questions, see section 12 of the Annual Leave Regulations.

Question 2 (a) is answered in the affirmative.

(B-21378)

CONTRACTS- COST-PLUS-ADMINISTRATIVE PREAUDIT OF PAYMENTS BY CONTRACTOR; EFFECT OF FINAL AUDIT DATE PROVISION

A provision in a cost-plus-a-fixed-fee contract negotiated pursuant to the act of July 2, 1940, under which vendors' invoices, pay rolls, rental rolls, etc., of the contractor would be approved by administrative personnel of the Government prior to payment by the contractor, and under which the contractor would be reimbursed by the Government for any payment made after such approval, regardless of its validity or correctness, is unauthorized. A provision in a cost-plus-a-fixed-fee contract negotiated pursuant to the act of July 2, 1940, that final audit of the accounts relating to the contract for each calendar year shall be made by the Government not later than 6 months after the end of such year cannot be construed as limiting the time within which the General Accounting Office may exercise its statutory duty of auditing the accounts of the disbursing officer, nor its right to require further evidence in support of vouchers when necessary. Comptroller General Warren to the Secretary of War, December 20, 1941:

There has been brought to my attention contract No. W-ORD526-DA-W-ORD-1, dated June 30, 1941, and supplement thereto dated August 22, 1941, with E. I. duPont de Nemours & Co., Wilmington, Del., negotiated by the War Department under authority contained in the act of July 2, 1940, 54 Stat. 712. Said contract provides for designing, engineering, constructing, and equipping a plant for the manufacture of explosives, for the training of key personnel, and for the operation of said plant, for which the contractor is to be reimbursed "for all costs and expenses of every character and description incurred in the performance of the work," as defined in detail in article IV-A of the contract, together with stipulated fixed fees for the various specified portions of the work.

With respect to reimbursement for costs incurred by the contractor, article IV-B, paragraph 1-b, provides:

The Government shall currently reimburse the Contractor for expenditures made in accordance with article IV-A of this title IV upon certification to and verification by the Contracting Officer of the original certified pay rolls for labor, or the original paid invoices for materials, or other original papers, or other evidence satisfactory to the contracting officer. Reimbursement will be

made weekly but may be made at more frequent intervals if the conditions so warrant.

Among the general provisions of the contract having to do with the verification of the contractor's costs for which reimbursement is authorized is article VI-E, which provides as follows:

1. The contractor agrees to keep records and books of account, on a recognized cost-accounting basis, showing the actual cost to it of all items of labor, materials, equipment, supplies, services, and other expenditures of whatever nature for which reimbursement is authorized under the provisions of this contract. The system of accounting to be employed by the contractor shall be such as is satisfactory to the contracting officer.

2. The contracting officer shall at all times be afforded proper facilities for inspection of the work and of the special bank account or accounts provided for in article IV-C hereof, and shall at all times have access to the premises, work, and materials, to all books, records, correspondence, instructions, plans, drawings, receipts, vouchers, and memoranda of every description of the contractor pertaining to said work; and the contractor shall preserve for a period of 3 years after completion or termination of this contract all the books, records, and other papers herein mentioned, but the Government undertakes and agrees that final audit of the accounts for each calendar year shall be made by the Government not later than six months after the end of each such year.

3. Any duly authorized representative of the contractor shall be accorded the privilege of examining the books, records, and papers of the contracting officer relating to the cost of the work for the purpose of checking up and verifying such cost.

From information in this office it appears that the War Department has issued instructions which envisage the discontinuance by the cost-plus-a-fixed-fee contractors of certain accounting functions relating to the determination of the cost of performance of the contract work and the assumption of such functions exclusively by personnel of the War Department. The functions which are to be assumed by Government personnel are described in a memorandum of May 15, 1941, of the Director of Purchases and Contracts, to include:

(1) all time checking in the field and the preparation of original pay rolls from original records of employment and time reports furnished by the contractor; (2) inspection of material received; (3) auditing vendor's invoices in the first instance; (4) checking of equipment rentals and preparation of rental pay rolls; (5) auditing in the first instance of transportation vouchers; and (6) such other auditing functions as may be effectively performed by Government employees exclusively.

For the evident purpose of effectuating the policy of taking over the contractor's accounting functions of this type, the above-mentioned supplement No. 1, dated August 22, 1941, was executed, providing, in pertinent part, that article VI-E of the contract shall be changed to read as follows:

1. The contractor agrees to keep records and books of account, on a recognized cost-accounting basis, showing the actual cost to it of all items of labor, materials, equipment, supplies, services, and other expenditures of whatever nature for which reimbursement is authorized under the provisions of this contract. The system of accounting to be employed by the contractor shall be such as is satisfactory to the contracting officer.

2. The contracting officer shall at all times be afforded proper facilities for inspection of the work and of the special bank account or accounts provided for 470350m-42-40

in article IV-C hereof, and shall at all times have access to the premises, work, and materials, to all books, records, correspondence, instructions, plans, drawings, receipts, vouchers, and memoranda of every description of the contractor pertaining to said work; and the contractor shall preserve for a period of 3 years after completion or termination of this contract all the books, records, and other papers herein mentioned, but the Government undertakes and agrees that final audit of the accounts for each calendar year shall be made by the Government not later than six months after the end of each such year.

3. Any duly authorized representative of the contractor shall be accorded the privilege of examining the books, records, and papers of the contracting officer relating to the cost of the work for the purpose of checking up and verifying such cost.

4. The following accounting and auditing functions shall be performed exclusively by the Government:

a. Time checking in the field, the preparation and delivery of properly approved original pay rolls to the contractor for payment, the preparation of pay checks and delivery of same to the contractor for signature, and the preparation of earnings records.

b. Inspection and checking of materials received except such materials as require laboratory examinations, performance tests, or technical knowledge in order to make proper inspection thereof, which inspection shall be performed by the contractor upon the written request of the contracting officer.

c. Inspection and checking of tools received.

d. Checking of equipment rentals and the preparation and delivery of properly approved original rental rolls to the contractor for payment.

e. Checking and auditing of vendors' invoices and transportation bills, and preparation and delivery of same, properly approved, to the contractor for payment.

f. Such other accounting and auditing functions as may be effectively performed by Government employees exclusively and as the Contracting Officer and the contractor may mutually agree to in writing.

5. The Contractor shall be relieved of all responsibility for any functions so assumed by the Government and for the results of any procedures prescribed thereunder by the contracting officer, shall be entitled to rely on any information or approvals furnished by representatives of the Government in the performance of such functions, and, notwithstanding any errors or omissions therein, shall be reimbursed for all payments made on the basis of such information or approvals, and for all payments required to be made subsequently by the contractor as a result of such errors or omissions; and shall be furnished with signed duplicate originals or certified true copies of all documents which are prepared, checked, or audited by the Government in the performance of said functions, in order that the records and accounts of the contractor shall be full and complete. If in the performance of said functions the Government shall omit the preparation of documents deemed necessary by the contractor for its records and accounts under this contract, the contractor may prepare such documents and shall be reimbursed for all costs and expenses incident to such work.

It thus appears that the War Department proposes to prepare, examine, audit, and approve pay rolls, equipment rental rolls, invoices for material, transportation bills, including the time checking in the field, inspection and checking of tools and materials, before any such payments are made by the contractor; and that as to such approved bills the contractor may make payment without responsibility for their correctness and notwithstanding any errors therein. The effect is an agreement to reimburse the contractor for any payment made after such approval, regardless of its validity or correctness.

I appreciate that this agreement has as its object a simplification and acceleration of the audit and payment of the expenses of the cost-plus-a-fixed-fee contractor, but I apprehend that the results of

« PreviousContinue »