The total amount, including all the preceding items, amounts to: Profit at 25% Grand total_____ $18, 043.00 4,500.00 22, 543.00 In consideration of these changes being made for the convenience of the Government, payment in the amount of $22,500.00 under this order will be made, as follows: 25% of contract price to be paid when it has been decided by the Army inspector that the material is 25% complete; 25% when 50% complete; 25% when 75% complete; and the remaining 25% to be paid upon final completion and acceptance. Inasmuch as delivery has not been made within the required time, due to the changes as designated above, the time for delivery is hereby waived, but same must be made within a reasonable time, which the Government deems to be on or about May 1, 1922. If you find that delivery can not be completed by date above specified, you are requested to advise this office at least five days prior to the expiration of said extended time limit. Very respectfully, R. M. JONES, Major, Air Service, Chief, Procurement Section. The supplemental contract dated February 6, 1922, provided: AIR SERVICE-UNITED STATES ARMY. SUPPLEMENTAL CONTRACT. This supplemental contract, made and concluded this the 6th day of February, 1922, by and between the Witteman Aircraft Corporation, a corporation transacting business at Hasbrouck Heights, New Jersey (hereinafter called the "contractor "), party of the first part, and the United States of America (hereinafter called the "Government"), represented by R. M. Jones, major, Air Service, United States Army, acting by authority of the Secretary of War, party of the second part. Whereas, heretofore, to wit, on the 30th day of June, 1921, a contract in writing, known as contract No. 7283, and hereinafter referred to as the "original contract was entered into by and between the contractor and the Government, represented by C. G. Hall, colonel, Air Service, United States Army, which provided for the sale and purchase of one complete set of control surfaces for Zodiac airship under the terms and conditions of Air Service order No. 520135; and Whereas it is to the interest of the Government to substitute duralumin tubing instead of steel tubing, as called for in the original contract; and Whereas the contractor has agreed to substitute duralumin tubing for steel tubing, Provided that the consideration called for in the original contract, together with the additional cost of the said substitution of duralumin tubing instead of steel tubing, be paid in four (4) equal payments and at four (4) specified periods as hereinafter set forth; and Whereas, Article I of said original contract No. 7283 provides that changes may be made at any time by mutual agreement between the contracting officer and the contractor: Now, therefore, this contract witnesseth, that for and in consideration of the premises and of the terms and conditions hereinafter set forth, the contractor and the Government hereby covenant and agree as follows: ARTICLE I. The contractor hereby sells to the Government, and the Government hereby purchases, one (1) complete set of control surfaces for the Zodaic airship, having duralumin tubing substituted for steel tubing, which was specified in the original contract, No. 7283. This substitution of material shall be made in accordance with itemized list of actual cost of material and labor written into the amendment to Air Service order No. 520135-A, forwarded herewith, and in accordance with blue prints furnished by the contractor, Nos. 1835-1, 1835-4, 1835-5, 1835-6, and 1835-10, all of which are hereby attached and made a part of this supplemental contract. ARTICLE II. For and in consideration of the faithful performance of the terms and conditions of this contract, the Government hereby agrees to pay to the contractor the sum of twenty-two thousand, five hundred dollars ($22,500.00), which amount is an increase of thirteen thousand seven hundred fifty dollars, ($13,750.00), over the consideration set forth in the original contract, and covers the extra cost of material and labor in carrying out the changes stipulated in Article I hereof. Partial payments shall be made to the contractor, as one of the considerations for making the changes, as follows: Twenty-five per cent (25%) of contract price to be paid when it has been decided by the Army inspector that the material is twenty-five per cent (25%) complete. Twenty-five per cent (25%) when fifty per cent (50%) complete. The parts paid for under the system of partial payments above specified shall become thereby the sole property of the Government, but this provision shall not be interpreted as relieving the contractor from the sole responsibility for the proper care and protection of said parts prior to delivery of the material to the Government, or from any other provisions of these specifications. ARTICLE III. It is further mutually agreed that inasmuch as delivery has not been made within the time originally specified, and by reason of the changes specified, approved and directed by the Government, the time for the completion of the original contract is hereby extended to and to include the first day of May, 1922. ARTICLE IV. The parties hereto mutually covenant and agree that this contract shall be supplemental to the aforesaid original contract to the same extent as if its terms and conditions had been specifically written into said contract when originally made, but that otherwise, all covenants, agreements, terms, and conditions thereof shall be in full force and effect. In witness whereof, the party of the first part has caused this contract to be executed by its proper officer duly authorized so to do, and the United States of America has caused this contract to be executed by the undersigned contracting officer, duly authorized so to do. Major General, U. S. Army, Chief of Air Service. The Chief of Finance, indorsement of February 14, 1922, to the finance officer at Boston, Mass., stated: 1. The proposed amendment to the original contract in this case does not appear to be in the interest of the United States. 2. With the exception of the substitution of duralumin tubing instead of steel tubing, as originally contracted for, the amendment seems to make no change, as the several drawings recited in the original contract are to be used in carrying out the provisions of the amendment. 3. This office would suggest that upon the submission of the invoices covering performance under the contract as amended that same be submitted to the Comptroller General for an advance decision as to whether or not payment is authorized. The disbursing officer in his submission states: (a) The supplemental contract of Jan. 30, 1922, substitutes duralumin tubing for steel tubing, for which change, accord ng to the terms of supplemental contract, the contractor is to be paid $22,500.00 instead of $8,750.00, as provided in the original contract. This increase is viewed by this office to be without sufficient consideration for the reason that it is shown by itemized list attached hereto that the actual cost of th s tubing is $880.00, and it would appear to be unreasonable to assume that this change in specifications would increase the cost of the material to be delivered under the original order in the amount mentioned above, which, as it will be noted, is approximately 275%. (b) The amendment of Jan. 30, 1922, further changes the original contract, which was let on a fixed-price basis, to a cost-plus basis, and provides for a profit of 25%, which profit, in view of the allowance of 100% overhead, is deemed by this office to be excessive. Further, it is not believed that the contracting officer had the power to change the terms of an existing legally signed contract providing for a fixed price to a supplemental providing for a cost-plus method of reimbursement. (c) The supplemental contract submitted herewith provides further for making partial payments, which concession was not a part of the original contract, and which is now apparently inserted without consideration moving to the Government therefor. On the data submitted the obligations sought to be imposed on the United States by the terms of the supplemental contract are so out of proportion to the benefits to be derived from what appears to be but a simple change, a substitution of a small amount of material of a certain character for material of a different character, as to be unconscionable. But however that may be, there is no showing that the terms of the original contract have been complied with in the procedure to be followed in determining the amount of any increase or decrease in the price or compensation. Article 1 provides that such increases or decreases shall be determined by a board as provided in article 5, but there is no intimation that such procedure was followed in this matter. Whether under any circumstances, with respect to a contract for a fixed price (such price to be paid upon completion and delivery of the work) wherein by the terms thereof is provided a method for determining increases or decreases thereunder due to authorized changes, the plan of payment properly may be so radically changed as to transform the contract from a fixed price to a costplus basis, is as doubtful as seemingly it is unnecesary and uneconomical from the standpoint of the Government's interests. It is sufficient to say in answer to the present submission that a contract that originally called for an outlay of $8,750 can not by amendments, changes, or in any manner, be made to provide for an expenditure more than two and a half times greater. If such a condition exists as should call for such a greater outlay, the original proposition must be considered as no longer feasible of being carried out and that it must be terminated. The law must be understood as requiring strict conformity to the terms of a contract entered into after competition has been obtained and there is no justification for proceeding to greater expenditures than originally contemplated in connection with the project submitted for competition of contracting bidders. See sections 3709 and 3744, Revised Statutes. А сору of this decision will be transmitted to the Secretary of War for his information. You are not authorized to pay the voucher presented. TELEPHONE SERVICE INCREASED RATES. A contract for telephone service for a specified period which contains no provision for an increase of rates is not affected by an increase authorized by the State Utilities Commission or by the Postmaster General of the United States. Decision by Comptroller General McCarl, May 13, 1922: Michigan State Telephone Co., Detroit, Mich., applied for a review of settlement dated March 24, 1922, certificate T-89884, Treasury Department Division, this office, disallowing claim for $34.41 alleged to be due it as accrued balance for telephone service furnished assistant custodian and engineer (Main 1945 and Main 1991), post office building, Detroit, Mich., from January 1 to December 31, 1919. It appears that by proposal and acceptance the telephone company contracted to furnish the telephone service during the fiscal year 1919 for $12 per month; and that for the fiscal year 1920 rates were quoted on Form 971, "Application for service at Detroit exchange," which rates were accepted for the fiscal year 1920, as follows: Allowance of 67 local messages per month, $4 per month for each telephone; additional messages-first 33 at 4 cents each, next 50 at 4 cents each. additional messages at 3 cents each. It further appears that for the period January 1 to December 31, 1919 (covering six months of fiscal year 1919 and six months of fiscal year 1920) payment was made on duly executed vouchers for the service in accordance with the prices thus respectively contracted for. The amount in question is for an accrued balance which the telephone company contends is due it by reason of the new schedule of rates established for the Detroit exchange by the Postmaster General, effective December 1, 1918, and the rates established by the Michigan Public Utilities Commission. It does not appear that in contracting for the service for the period in question any provision was made for any change in the rates that might be made by authority of the Postmaster General or of any public utilities commission, and in the absence of any such provision the rights of the United States under the contracts could not be decreased or its obligations increased without consideration therefor moving to it. See 24 Comp. Dec., 280. Upon a review of the matter no differences are found and the settlement is sustained. DRILL PAY-NATIONAL GUARD OFFICERS. Payment to officers for attendance at drills of National Guard organizations may be made if 60 per cent of the enlisted strength, exclusive of the band, and 50 per cent of the officers, attend and participate as required by section 109 of the national defense act, 41 Stat., 783, provided the strength of the company, including the band, is not less than that prescribed for Federal recognition as a properly organized National Guard unit. Comptroller General McCarl to the Secretary of War, May 15, 1922: I have your letter of April 19, 1922, requesting decision as to the strength required in order that officers of the headquarters companies of the National Guard may qualify for armory drill pay, and the necessary attendance at such drills. Included among the papers is a letter dated March 3, 1922, addressed to this office by Maj. P. G. Hoyt, Finance Department, transmitting a supplemental pay roll for the service company, One Hundred and First Infantry, Massachusetts National Guard, covering claim of certain of the officers of the company for armory drill pay for assemblies of the company exclusive of the band, August 27 and 28, 1921. There was not inclosed the communication of the Chief of the Militia Bureau relative to the respective decisions of May 6, 1921, 27 Comp. Dec., 953, holding that the band, although administratively a part of the headquarters company, constituted an organization. within the meaning of section 110 of the national defense act; and decision of February 24, 1922, 6 MS. Comp. Gen., 1472, holding that until July 1, 1921, a company minimum strength of 50 was necessary under section 60 of the national defense act, as amended by the act of June 4, 1920, 41 Stat., 780, before company officers could qualify for drill pay. The decision of February 24, 1922, considered the armory drill pay to which the captain of the headquarters company, Sixth Infantry, Minnesota National Guard, was entitled during the period March 15 to June 30, 1921. It was presumed that at that time the National Guard had been reorganized in conformity with the new Tables of Organization and section 60 of the national defense act; and there was no suggestion in the papers submitted that there were any members of the headquarters company in addition to those shown on the roll then presented for consideration. Under Tables of Organization, No. 25-P, dated November 23, 1920, the band is not part of headquarters company of an Infantry regiment but is a part of the service company. The enlisted strength |