The granting of annual and sick leave of absence to employees of the Government primarily is an administrative matter, subject to the terms and conditions of the controlling leave statutes and regulations. It follows that the keeping of the record of an individual employee's accrued annual and sick leave is an administrative duty and responsibility, and thus, the administrative determination as to the amount of annual and sick leave an employee has to his credit ordinarily is not for questioning by this office. As having a bearing upon the matter presented, attention is invited to section 11 of the act of March 7, 1942, Public Law 490, 56 Stat. 146, providing as follows:

The head of the department concerned, or such person as he may designate, is authorized to settle the accounts of persons for whose account payments have been made pursuant to the provisions of sections 2 to 7, both inclusive, of this Act, and the accounts of survivors of casualties to ships, station and military installations which result in loss or destruction of disbursing records, and such settlements shall be conclusive upon the accounting officers of the Government in effecting settlements of the accounts of disbursing officers. [Italics supplied.] In the light of the terms of the controlling leave laws and regulations and having regard for the above-quoted provisions of the act of March 7, 1942 (see decision B-28386, dated September 7, 1942, 22 Comp. Gen. 192, to you), this office is not required to object to the acceptance by the War Department of the sworn statement of the involved employee (whose leave record apparently has been lost by the enemy occupation of the Philippine Islands) as a sufficient basis for reestablishing his service and leave records and for making payment of compensation during sick leave administratively granted accordingly, subject, of course, to the limitations fixed by the controlling leave acts. See 21 Comp. Gen. 158. However, in connection with the reestablishment of the service and leave records on the basis indicated, it would appear advisable, if possible, that the employee's affidavit be corroborated by statements from fellow employees or immediate supervisors who may have some knowledge of the employee's leave status.

(B-28322)

CONTRACTS-COST-PLUS-CONTRACTING OFFICER'S EXPENDITURE APPROVAL AUTHORITY; BACK WAGES OF EMPLOYEES DISCHARGED AND REINSTATED

The broad authority vested in a contracting officer by a cost-plus-a-fixed-fee contract to determine what actual expenditures incurred by the contractor in performance of the contract work are to be regarded as reimbursable items of cost is not an unlimited authority, and when he acts in a way contrary to the mandate of the contract or without proper regard for the interests of the United States, it is the duty of this office to question his decision.

A cost-plus-a-fixed-fee contractor who discharged certain of its employees for alleged union activities and subsequently reinstated them with back pay

in order to avoid possible penalties under the provisions of the National Labor Relations Act may not be reimbursed the back wages paid such employees, even though approved by the contracting officer under his contract authority to determine what actual expenditures incurred by the contractor in performance of the contract work are to be regarded as reimbursable items of cost, where the United States was not responsible for the contractor's action and received no tangible benefit from the expenditure.

Comptroller General Warren to Lt. Col. W. Gritz, U. S. Army, October 15, 1942: There has been received, by reference from Headquarters, Services of Supply, Fiscal Division, your letter of July 7, 1942, as follows:

1. Inclosed is a request for advance decision, addressed to the Comptroller General of the United States, supported by Bureau Voucher No. C. O.-830, $509.96, submitted for reimbursement by the Sherwin-Williams Defense Corporation under Cost-Plus-a-Fixed-Fee Contract No. W-ORD-522 DA-W-ORD-18, dated August 18, 1941.

2. Attention is invited to various correspondence attached to the voucher. It will be noted that 2nd Indorsement to letter of the Contractor, dated April 23, 1942, states that the approval of the Field Auditor and the Contracting Officer's Representative as indicated on Form 1034 is subject to the provision that this voucher will be forwarded for an advance decision.

3. Apparently, payment was made by the contractor as the result of a hearing before the Labor Board, but doubt exists as to the propriety of making reimbursement, inasmuch as the voucher covers payment of wages for services which were not performed.

An explanation of the expenditure is set forth by the contractor in a letter dated May 23, 1942, to you, as follows:

1. Reference is made to previous correspondence on this matter commencing with our letter to you dated April 23, 1942.

2. Our voucher in the total amount of $509.96 is herewith attached and represents items of wages paid three (3) employees. Request is hereby made for an advance decision by the Comptroller General on the question of the reimbursement of these items.

3. The three employees involved were terminated on January 20, 1942. The employees, through the United Construction Workers' Organizing Committee, affiliated with the C. I. O., filed a complaint with the National Labor Relations Board, Fourteenth Regional Office, St. Louis, Missouri, in Case No. XIV-C-606. The complaint charged The Sherwin-Williams Defense Corporation with refusal to bargain collectively with union representation and termination of the three employees because of union activity.

4. Investigation of the complaint by the Labor Board developed evidence strongly supporting the charges, and in an informal conference with the Board, because of the evidence, a probable decision in favor of the employees was indicated. In view of such a probable adverse decision, a conference with the union was held and a settlement was tentatively agreed upon, which settlement was approved in writing by the Commanding Officer, Illinois Ordnance Plant, Major Norman E. Gillespie. The terms of the settlement were less onerous than the decision of the Labor Board would have been and for other reasons had strategical value from the standpoint of handling labor problems at the Ordnance Plant, and for that reason it was advisable to enter into the settlement.

5. Payment of lost wages to the three employees involved during the period of severance was one of the conditions of settlement, and accordingly the amounts were determined and payment made as follows:

(1) Wages from January 20, 1942 (Date of termination) to and including March 25, 1942.

(Reinstated as of March 26, 1942)

Less earnings as Fireman for the city of Herrin, Illinois_-‒‒‒‒‒

Net

$318. 82

$232.00

$86.82

(2) Wages from January 20, 1942 (Date of termination) to and including March 25, 1942.

(Reinstated as of March 26, 1942)

Less earnings as Fireman for the city of Marion, Illinois_

Net

$318.82

--- $181. 55

$137.27

(3) Wages from January 20, 1942 (Date of termination) to and including March 25, 1942__

(Reinstated as of March 26, 1942)

$318. 82

Less earnings as Guard at Menard Prison, Chester, Illinois-9 days- $32.95

Net ----

$285. 87

6. It is requested that these payments be approved for reimbursement for the following reasons:

(A) They were paid by virtue of an agreement made necessary because of an impending order of the Labor Board, which order would have been less to the interest of the Plant than the terms of the settlement.

(B) The terms of the settlement were approved by the Commanding Officer before they were concluded.

(C) If the lost earnings had not been paid under the settlement, the case would have gone to decision by the Labor Board, resulting in a delay which would incur increased losses, the payment of which would have been ordered by the Board.

(D) The vouchers have been approved for payment by the Contracting Officer's Representative under paragraph r, Article V-A-1 (page 21) of the Prime Contract, No. W-ORD-522, which reads as follows:

“Such other items as should, in the opinion of the Contracting Officer, be included in 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." 7. As stated above, advance opinion of the Comptroller General as to reimbursement of these items is requested.

By third indorsement of August 1, 1942, to the Chief of Finance, the Ordnance Department made the following statement with respect to the expenditure for which reimbursement is claimed on the voucher:

1. While the Ordnance Department is of the opinion that the item in question is reimbursable under the terms of the contract (No. W-ORD-522DA-WORD-18) it does not, in view of the fact that the question is one of import upon which there is no decision, object to the submission of the case to the Comptroller General. The viewpoint of the Commanding Officer, Illinois Ordnance Plant, expressed in 2nd indorsement dated June 4, 1942, is therefore concurred in.

Contract No. W-ORD-522, DA-W-ORD-18, entered into on a cost-plus-a-fixed-fee basis as authorized by the act of July 2, 1940, 54 Stat. 712, provides under Title I thereof for management service in connection with the designing, construction, and equipping of an ordnance manufacturing plant at or near Carbondale, Illinois; under Title II for determination of the production equipment requirements for the plant and for the procurement of the equipment required therefor; under Title III for training of key personnel; and under Title IV for necessary preparation for the subsequent operation of said plant, including the necessary training of personnel in addition to the key personnel trained pursuant to Title III of the contract, in consideration of the reimbursement by the Government of the contractor's expenditures as provided in the contract, plus stipulated fixed fees.

The voucher submitted is supported by the contractor's original pay roll No. "A", evidencing payment of wages to the employees during the period from January 20 to March 25, 1942, and by receipts signed by the employees as evidence of the receipt by them of the amounts in question. Also, the pay roll contains a statement by the representative of the contracting officer that the voucher was being approved for payment by him under subparagraph r of Article V-A 1 of the contract, which provides, in part, that the contractor shall be reimbursed "Such other items as should, in the opinion of the Contracting Officer, be included in the cost of the work.

With reference to the question presented, there was received for consideration in connection with your submission a letter dated September 28, 1942, from the Secretary of War, in pertinent part, as follows:

That the problem is one of concern is indicated by the fact that the Army and Navy on June 22, 1942, issued a statement of labor policy to be followed in Government-owned, contractor-operated plants, which policy was worked out in collaboration with representatives of the American Federation of Labor, and the Congress of Industrial Organization. This statement of policy emphasized the point that these plants embody a new and unique tripartite relationship among Government, labor and management, the relationship being set up to get maximum production of (Ordnance) materials and supplies.

The pertinent part of such policy with respect to the question now before your office, is contained in Sections 5 and 9 of such statement of policy, reading as follows:

"5. (a) Discharges directed by the War or the Navy Department for suspicion of subversive activities will be handled in accordance with the provisions of the 'Joint Memorandum on Removal of Subversives from National Defense Projects of Importance to Army or Navy Procurement', dated Jan. 10, 1942.

"(b) Discharges directed by the Army or Navy officer in charge in the interest of the plant security will be handled in the following manner: (1) The officer, or his representative, will direct the contractor to suspend the employee in question immediately; (2) the employee will be advised in detail of the specific reasons for his suspension and of his right to a hearing; (3) if requested, a hearing will be held by the officer, or his representative, within a reasonable period, and at such hearing the suspended employee will have an opportunity to produce witnesses and present evidence and to be assisted by counsel; (4) based on such hearing, the officer, or his representative, will direct the reinstatement (with authority to grant back pay) or the discharge of such employee; (5) an employee so discharged will have the right, upon request, to have his case reviewed by the War or Navy Department.

"(c) Discharges effected by the contractor or his representatives for violation of plant rules, inefficiency, or other reasons, will be subject to review through the established grievance procedure.

"9. This statement of policy shall be applicable to all such plants except that where any provision of the statement conflicts with a provision in an existing contract such contract will not be altered except by mutual consent."

Section 5, above quoted, establishes the fact that there will be discharges, sets up a procedure to be followed by the parties if such event occurs, and as a remedy to the aggrieved person in case of a wrongful discharge by the Contracting Officer or his representative, directs reinstatement with authority in the Contracting Officer to grant back pay. In the event the discharge is by the contractor or his representative, it directs action in accordance with the established grievance procedure, and such procedures in the modern type of collective bargaining agreement provide for review of discharges through various steps ending with arbitration. Generally the arbitrators are empowered to award back pay in proper cases.

The grievance procedure followed in the present case appears to be in accordance with that set up in the War-Navy Statement of Policy even though the events in case occurred before this statement issued. In the present case, there was a discharge of certain employees, which employees filed a complaint with the National Labor Relations Board and in the investigation supported their contention that the discharge was wrongful, whereupon the management by conference adjusted the matter and awarded the employees back pay covering the period of severence.

The facts indicate, therefore, that the instant case (Class (c) below) is one in which, under present day labor relations practices, back pay is usually awarded for wrongful layoff or discharge. Such back pay may be required of the employer

(a) Pursuant to awards under the National Labor Relations Act by the National Labor Relations Board where by decision or agreement of settlement a finding is made of unfair labor practice discharge for reasons connected with union activities by the employees involved.

(b) Pursuant to awards made by arbitration tribunals set up under collective bargaining agreements. In these cases the awards would only in rare instances be connected with unfair labor practice discharges. The discharge or layoff will most usually be for alleged inefficiency or other reason, review of which is expressly provided by the collective bargaining contract.

(e) Pursuant to settlement agreements between the contractor and employees (usually acting through union representatives) and consequent to review under a grievance procedure calling for negotiation in successive steps between employee representatives and contractor representatives. In these cases also the issues involved will not usually be concerned with unfair labor practices but almost always with disputes concerning alleged inefficiency or layoffs in violation of seniority rules or the like.

Under the terms of the instant and other cost-plus-a-fixed-fee contracts and looking to Section 5 of the above quoted Army-Navy Labor Policy, the contractor would be entitled to reimbursement for expenditures covering back pay upon payment of the same at the direction of the Contracting Officer, in a case where the discharge had been directed by the Contracting Officer of the plant, and subsequent investigation showed the discharge to be wrongful.

Following the same reasoning, it would appear that there may be cases as the present one where the contractor's representatives determine that the discharge of a certain party is necessary, make it, and upon investigation and a showing that such discharge was wrongful, reinstate the employee and award back pay. In claiming reimbursement for such back pay it is the belief of Ordnance that the contractor is entitled to treatment no less favorable than that which would be given him in the situation where the wrongful discharge was directed by the Contracting Officer. Even if some mere negligence were shown. in the handling of the discharge, nevertheless, the expense is one for which the contractor is entitled to indemnification through reimbursement. Otherwise, he is held to a higher standard of action than that to which the Government acting through the Contracting Officer is held.

It is the belief of Ordnance, too, that negligence should not be inferred as a matter of law solely from the fact that a discharge or layoff is found to have been improper, or is agreed by, a contractor to have been improper, either in the instant situation or those above referred to. This conclusion is reached from consideration of the following:

(a) Each of the Government-owned, privately-operated facilities requires the employment of very large numbers of employees in a type of operation without any background or previous experience. Most of the supervisory personnel had to be trained in a new kind of work. Emphasis in every case was on speed to the end of having each facility produce as quickly as possible and in maximum amounts conducive with safe operation, which is a paramount consideration. There has not been sufficient time, therefore, to educate sufficiently personnel in the obligations and responsibilities imposed upon them in the labor relations field. The necessity for greater production has necessitated the subordination of educational work of this kind. Nevertheless as a matter of law the contractor-operator is held responsible for the improper practices of the lowest levels of supervisory personnel, even though such conduct is not approved by, and indeed may be contrary to express instructions of, topside management. Very frequently the facts establishing unfair labor practices in the handling