Assuming that these employees are entitled to such overtime, then there exists the approximate contingent liability before mentioned. It is approximated for the reason that records of the time actually consumed by the employees involved were not maintained since the employer-contractor did not, until the Wage and Hours inspector's visit, regard such employees as being covered by the Act. The question of what evidence will be required to support reimbursement to the contractor, in the event it is decided such payment may be approved, must, therefore, be decided. The contractor proposes to prepare suitable time and other records, following a procedure as discussed in detail in his letter dated May 11, which is part of the file herewith, and which procedure, if satisfactory to your office, will be approved for use by the Ordnance Department.

Attention is called to the fact that by letter dated June 17, 1942, copy herewith, the Regional Director of the Wage and Hour Division of the United States. Department of Labor stated, with respect to the accrued wages of the employees representing the above-mentioned contingent liability of the contractor, that no administrative or other action forcing the contractor to pay will be taken by the Division, but stressed the fact that independent action by the contractor's employees involved might be taken under 16 (b) of the Act. Such section reads as follows:

"(b) Any employer who violates the provisions of section 6 or section 7 of this Act shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated, or such employee or employees may designate an agent or representative to maintain such action for and in behalf of all employees similarly situated. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action."

It is also evident, from the copies of the two letters addressed to the contractor written by guards at the plant, dated February 24, 1941 [1942], and March 7, 1942, forming part of the file herewith, that such independent action will be taken, and if successful, would represent a legal liability for the overtime in question, plus a further amount for liquidated damages, for reasonable attorney's fees, and costs of the action."

In view of the fact that a substantial sum of money is involved in the instant case, and of the further fact that there are other cases where the same question is involved and a contingent liability exists in the contractor, the Ordnance Department hesitates to advise the contractor to pay the amount involved in advance of a decision by the General Accounting Office as to the reimbursability of such amount.

The questions therefore presented for your determination, under the foregoing facts, are:

a. Is the Ordnance Department right in considering the Fair Labor Standards Act applicable to cost-plus-a-fixed-fee contractors engaged in operation and other Ordnance phases of cost-plus-a-fixed-fee contracts?

b. If a is in the affirmative, may administrative approval of the Contracting Officer's Representative be properly given the contractor for payment to his employees for accrued overtime?

c. If such administrative approval may be given, and considering the fact that no time records are available, since none were maintained, what evidence will be required of the contractor in order to be reimbursed for the payment so made?

Your expeditious consideration of these questions and decision thereon would be greatly appreciated.

The pertinent reimbursement provisions of cost-plus-a-fixed-fee contract No. W-ORD-462, dated August 16, 1940, with the Hercules Powder Company, Wilmington, Delaware, covering the construction, equipment and operation of an ammunition plant at or near Radford, Virginia, are as follows:

ARTICLE VI-A, Reimbursement for Contractor's Expenditures.

1. The Government shall bear all cost and expenses of every character and description incurred by the Contractor, when approved or ratified by the Con

tracting Officer, in connection with the acquisition of site, design, construction, equipping and operating of said plant, or any part thereof (including equipment, alterations, maintenance and closing down), which costs and expenses shall include but shall not be limited to the following items, to wit:

(b) All labor (including guards and fire protection forces)

Under Article V-D of the contract it is provided that in the operation of the plant and the purchase of supplies and materials required for the production of powder in the operation of the plant, and not otherwise, the contractor shall comply with the requirements of the Walsh-Healey Act, 49 Stat. 2036, one of which is payment of overtime to the contractor's employees. The Walsh-Healey Act expressly authorizes the Secretary of Labor to make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of the act. Pursuant to such authority the Secretary of Labor under Regulations No. 504 (amended as of April, 1939) has ruled that:

Art. 102 (Employees Affected).—The stipulations shall be deemed applicable only to employees engaged in or connected with the manufacture, fabrication, assembling, handling, supervision, or shipment of materials, supplies, articles, or equipment required under the contract and shall not be deemed applicable to office or custodial employees. [Italics supplied.]

And, by way of amplification, custodial employees have been specifically designated by the Secretary of Labor to be those whose duties are directed to the maintenance of the plant and who do not perform work on the commodities required by the Government, such as watchmen, et cetera. See section III, paragraph b (4), Rulings and Interpretations No. 2, September 29, 1939, under the Walsh-Healey Public Contracts Act.

Since, therefore, guards employed by the contractor during the operation and production phases of the contract obviously are excluded from the operation of the Walsh-Healey Act, you have presented the question as to whether such guards are entitled to the overtime benefits of the Fair Labor Standards Act of 1938, 52 Stat. 1060, and, if so, whether reimbursement therefor is authorized under the terms of the contract.

The applicability of the Fair Labor Standards Act to guards employed by cost-plus-a-fixed-fee contractors engaged in operation and other ordnance phases of such contracts does not appear to have been the subject of judicial determination; however, it is to be observed that the said act, by its terms, is one of general application designed for the declared purpose of correcting and eliminating certain detrimental labor conditions "in industries engaged in commerce or in the production of goods for commerce." Moreover, it appears from section XI, paragraph G, of the Ordnance Manual of Instructions for the Administration of Contracts that the Administrator, Wage and Hour Division, Department of Labor, has advised the Chief of

Ordnance with respect to the status of employees of cost-plus-a-fixedfee contractors as follows:

It is our opinion that the employees of the private manufacturer are within the general coverage of the Fair Labor Standards Act if the manufacturer, at the time of production, had reason to believe the War Department after receiving the products would transport them into interstate commerce. It is also our opinion that the provision contained in Section 3 (d) of the Act, excluding the United States from the coverage of the Act as an employer, does not exclude from the provisions of the statute a private Contractor with the War Department of the character described above.

From copy of letter of June 17, 1942, forwarded with your submission, it appears, also, that the Regional Director of the said Division, after investigating the matter, has taken the position that the guards in question are covered by the act and are entitled to payment for overtime in accordance therewith. While the Fair Labor Standards Act does not specifically confer upon the Administrator, Wage and Hour Division, Department of Labor, or his representatives, any general authority to issue rulings including industries or employees within the coverage of the act and such rulings are not necessarily binding on the courts, their interpretations of the act are entitled to be given great weight and, if reasonable, will be followed by the courts. Thompson v. Daugherty, 40 F. Supp. 279.

Therefore, if it be administratively determined that the interests of the Government will be best served by conceding that the guards here involved are entitled to overtime pay under the Fair Labor Standards Act, this office will not be required to take issue with that view. See Wood v. Central Sand & Gravel Co., et al., 33 F. Supp. 40; Reeves v. Howard County Refining Co., 33 F. Supp. 90; A. B. Kirschbaum, Petitioner v. L. Metcalfe Walling, Admr., decided June 1, 1942, by the Supreme Court of the United States.

Accordingly, this office will not question otherwise proper reimbursements under the contract for such overtime payments as the contractor may make to the guards involved in accordance with such interpretation of the Fair Labor Standards Act. The reimbursement vouchers evidencing the overtime payments should show the contracting officer's approval thereof, and should be supported by such applicable time or other appropriate records as will show with reasonable accuracy the actual overtime worked by each guard, together with a report of the Government Field Auditor showing that he has verified the correctness of the methods used in computing the said payments.

(B-26510)

PAY-NAVAL AND FLEET RESERVISTS-SERVICE CREDITS Under section 1 of the act of May 4, 1942, authorizing warrant officers and enlisted men of the Naval Reserve, Marine Corps Reserve, and the National Guard of the United States to be credited with longevity for pay purposes on the basis of full time for all service since June 30, 1925, both active and inactive, in the Naval Reserve, Marine Corps Reserve, and the Nation

Guard, Navy enlisted men assigned or transferred to the Fleet Reserve prior to completion of maximum service which may be counted for pay purposes are entitled to count their inactive time as reservists, but only for longevity pay purposes when on active duty. Persons retired under the Naval Reserve Act of 1938, whether placed on the honorary retired list created by section 309 of the act or on the Regular Navy retired list, are not thereafter officers or enlisted men of the Naval Reserve in an inactive status, and, therefore, time on such honorary retired list of Naval Reserve warrant officers and enlisted men and time on such Regular Navy retired list of Fleet Reserve enlisted men who have been placed thereon for physical disability is not inactive reserve service which may be counted, pursuant to the act of May 4, 1942, for longevity pay purposes.

Assistant Comptroller General Elliott to the Secretary of the Navy, September 30, 1942:

There has been received your letter of June 5, 1942, transmitting a letter dated May 29, 1942, from the Paymaster General of the Navy, as follows:

Reference:

(a) Act of July 1, 1922 (42 Stat. 799).

(b) Sections 201 and 205 of the Naval Reserve Act of 1938 approved June 25, 1938.

(c) Article H-9202 Bureau of Navigation Manual.

(d) Section 7 of the Naval Reserve Act of 1938 approved June 25, 1938. (e) Paragraph G-4 (a) Pay Bill Instructions Appendix A Bureau of Supplies and Accounts Manual.

1. Paragraph G-4 (a) Pay Bill Instructions, which is based on Section 7 of the Naval Reserve Act of 1938 and decisions of the Comptroller General in connection therewith, provides that service in the case of enlisted men of the Naval Reserve includes all service in the Navy, Marine Corps, Coast Guard, legal active service in the Naval Militia, active duty service (but not training duty) with the Naval Reserve Force, National Naval Volunteers, Marine Corps Reserve, and Naval Reserve. The Act of May 4, 1942, extended the service which may be counted for pay purposes by enlisted men of the Naval Reserve to include "full time for all service since June 30, 1925, both active and inactive, in the Naval Reserve, Marine Corps Reserve and the National Guard."

2. It is requested that a decision be obtained from the Comptroller General as to whether enlisted men assigned or transferred to the Fleet Reserve prior to completion of the maximum service which may be counted for pay purposes may count the service included in the Act of May 4, 1942 for purpose of determining date of completion of an increment of service for longevity pay.

3. It is also requested that a decision be obtained from the Comptroller General as to whether warrant officers and enlisted men of the Naval Reserve transferred to the honorary retired list prior to the completion of the maximum period of service which may be counted for pay purposes are entitled to include the time on the honorary retired list for longevity pay purposes under the act of May 4, 1942. 4. It is further requested that a decision be obtained from the Comptroller General whether enlisted men transferred to the Fleet Reserve after completion of 16 or 20 years' service and who are subsequently placed on the Retired List of the Regular Navy for physical disability prior to the completion of the maximum period of service which may be counted for pay purposes are entitled to include time on the retired list for longevity pay purposes under the act of May 4, 1942. Section 1 of Public Law 538, approved May 4, 1942, 56 Stat. 266, provides:

That hereinafter warrant officers and enlisted men of the Naval Reserve, Marine Corps Reserve, and the National Guard of the United States shall be credited with longevity for pay purposes on the basis of full time for all service since June 30, 1925, both active and inactive, in the Naval Reserve, Marine Corps Reserve, and the National Guard: Provided, That warrant officers and enlisted men of the National Guard of the United States shall not be credited for this purpose with time served in the inactive National Guard not in the active Federal service.

By section 1 of the Naval Reserve Act of 1938, 52 Stat. 1175, 34

U. S. C. 853, there was created and established as a component part of the United States Navy:

* a Naval Reserve which shall consist of the Fleet Reserve, the Organized Reserve, the Merchant Marine Reserve, and the Volunteer Reserve: Provided, That all men who on the date of this Act are members of the Fleet Naval Reserve as the result of sixteen or more years of active naval service, are hereby transferred to the Fleet Reserve created by this Act, and shall continue to receive the same pay, allowances, and benefits which they were legally entitled to receive at the time of approval of this Act *

Title II of the Naval Reserve Act, pertaining to the Fleet Reserve in section 201, 52 Stat. 1178, provides:

The Fleet Reserve shall be composed of officers and enlisted men transferred or assigned thereto in accordance with the provisions of this Act: Provided, That subject to their own consent, ex-officers and ex-enlisted men of the Regular Navy who have been honorably discharged therefrom after not less than four years' service therein, may, in the discretion of the Secretary of the Navy, be appointed or enlisted in the Naval Reserve in the ranks or ratings last held by them in the Regular Navy, and assigned to the Fleet Reserve created by this Act.

In section 205 of the act, 52 Stat. 1179, the Secretary of the Navy was authorized to require enlisted men of the Regular Navy to obligate themselves to serve in the Fleet Reserve and provided for the advance payment to them of $20 per annum during such assignment or transfer to the Fleet Reserve. Section 203 of the act 52 Stat. 1178, contains provisions for the transfer to the Fleet Reserve of men in the Navy prior to July 1, 1925, on the completion of 16 or 20 years' or more service at one-third or one-half the base pay they were receiving at the time of transfer plus all permanent additions thereto and section 204 makes somewhat similar provisions for enlisted men of the Navy who first enlisted after July 1, 1925, for transfer to the Fleet Reserve after 20 years' naval service. Under section 1, the Fleet Reserve referred to in title II of the Naval Reserve Act of 1938 is a part of the Naval Reserve and members thereof are entitled to count their inactive time as reservists for longevity pay purposes under the act of May 4, 1942, only when on active duty. When not on active duty the pay specifically provided by statute in that situation is not modified by the act of May 4, 1942. The first question is answered accordingly.

Section 204 of the Naval Reserve Act, above referred to, provides in part as follows:

That all enlisted men transferred to the Fleet Reserve in accordance with the provisions of Sections 1 and 203 of this Act shall, upon completion of thirty years' service, be transferred to the retired list of the Regular Navy, with the pay they were then legally entitled to receive and the allowances to which enlisted men of the Regular Navy are entitled on retirement after thirty years' service: And provided further, That all enlisted men transferred to the Fleet Reserve in accordance with the provisions of this section shall, upon completion of thirty years' service, be transferred to the retired list of the Regular Navy, with the pay they were then legally entitled to receive, plus all permanent additions thereto, and the allowances to which enlisted men of the Regular Navy are entitled on retirement after thirty years' service.

See, also, section 206 relative to the retirement of transferred Fleet Reservists who are found not physically qualified.