To the Administrator, Maritime Administration, July 14, 1961: On June 28, 1961, you requested our decision concerning the entitlement of a Navy officer on detail to the Maritime Administration under the authority of section 201 (f) of the Merchant Marine Act, 1936, 49 Stat. 1985, as amended by section 4 of the act of August 4, 1939, 53 Stat. 1182, 46 U.S.C. 1111, to additional compensation as authorized by that section because of accumulated leave to his credit at the termination of his detail.

Section 201 (f) of the Merchant Marine Act, 1936, 46 U.S.C. 1111 (f) provides in part:

Whenever any officer (not exceeding five in number at any time) of the Army, Navy, Marine Corps, or Coast Guard is detailed to the Board or Secretary, he shall receive from the Board or Secretary, for the period during which he is so detailed, such compensation as added to his pay and allowances as an officer in such service will make his aggregate compensation equal to the pay and allowances he would receive if he were the incumbent of an office or position in such service (or in the corresponding executive department), which, in the opinion of the Board or Secretary, involves the performance of work similar in importance, difficulty, and responsibility to that performed by him while detailed to the Board or Secretary * *

The officer in question was to resign from the detail on June 30, 1961, and retire from the Navy on July 1. At the time the officer was detailed to the Administration he had 45 days of accumulated leave and upon resignation he had 60 days' leave.

You ask the following questions regarding the additional payments. 1. On separation from the service, is the officer entitled to payment for the differential between his Navy pay and allowances and the Classification Act position to which he is detailed covering the period of his accumulated leave? 2. If he is not entitled to the differential for the total amount of accumulated leave, is he entitled to the differential for the approximately 15 days of additional leave that has accumulated during his detail to the Maritime Administration?

3. If your answer to either of the above questions is in the affirmative, as the military leave is on a calendar day basis, while leave for our employees occupying Classification Act positions is paid for a 5-day, 40-hour work week, it is assumed payment for the differential would be for five-sevenths of the accumulated military leave or for the work days occurring during the period covered by his military leave.

The military status of an officer is not changed by the fact that he is detailed or assigned to a civil department or agency of the Government and in the absence of specific statutory authority such officer is entitled only to the pay and allowances which accrue to him as a result of such status. 34 Comp. Gen. 656 and cases cited therein.

The right of the officer in question to payment for accumulated leave is dependent upon his retirement from the Navy and not upon the termination of his detail. Therefore, he may be entitled to a cash settlement under the Armed Forces Leave Act of 1946, 60 Stat. 963, 37 U.S.C. 31a-33 and 34-38, but such settlement would not include. the additional compensation which he was earning while on detail prior to retirement. Rather, it would be computed on his military rate of pay. Your first question is answered in the negative.

We find nothing in section 201 (f) or in its legislative history indicating that Congress intended that military officers on details authorized thereby would be granted the leave privileges of civilian employees in addition to the extra compensation. Therefore, we must hold that section 201 (f) does not authorize or require the payment of additional compensation for leave earned but not used while serving on such a detail. Your second question also is answered in the negative.

In view of the answers to questions 1 and 2 no answer to question 3 is required.

[B-142196]

Military Personnel-Public Health Service Commissioned Personnel-Quarters Allowance-Government Housing Occupancy on a rental basis by Public Health Service commissioned officers of housing at Federal prisons, which housing was not constructed or designated for occupancy without charge by Public Health Service personnel within the meaning of the act of July 2, 1945, 37 U.S.C. 111a, so as to preclude entitlement to quarters allowances, is not proscribed by law or regulation even though the rental paid is substantially less than the amount of quarters allowances received by the officers.

The designation of Government housing facilities for occupancy by Government personnel on a rent-free basis is a matter for administrative determination. Although there is no prohibition against administrative agencies determining the designation of Government-owned quarters on a rent-free basis, consideration of such factors as recruitment difficulties, hours of work, and the isolation of the Government institution is open to question in the absence of a clear showing of economy to the Government.

Although paragraph 3 of Executive Order No. 10204, January 15, 1951, respecting the adequacy of Government quarters or housing facilities furnished military personnel without payment of rental or receipt of basic allowances for quarters is limited to the quarters and housing facilities under the jurisdiction of the uniformed services, the rights of military officers are not increased when substandard or inadequate housing is furnished by other than the military services; therefore, an officer assigned to a civilian agency accepting occupancy of substandard or inadequate housing is not entitled to a basic allowance for quarters.

To the Director, Bureau of Prisons, July 19, 1961:

By letter of June 15, 1961, to the Director, Civil Accounting and Auditing Division of the General Accounting Office, you requested that we provide the answers to five questions related to the current practice of providing Government housing on a rental basis to Public Health Service officers assigned to Federal prisons. Under this practice such officers receive and retain their full quarters allowances notwithstanding that the rentals paid by them for housing under the jurisdiction of the Department of Justice are substantially less than the amount of quarters allowance they receive. The questions presented and the answers thereto are as follows:

1. Does the present practice of paying P.H.S. Officers a quarters allowance in excess of the rental paid to the Bureau of Prisons violate any statute or regulation?

Public Law 120, 79th Cong., approved July 2, 1945, 37 U.S.C. 111a, provides that:

Notwithstanding the provisions of any other law (including any laws restricting the occupancy of housing facilities under the jurisdiction of Government departments or agencies by personnel, and dependents of personnel, of the Army, Navy, Air Force, Marine Corps, and Coast Guard above specified ranks, or by personnel, and dependents of personnel, of the Coast and Geodetic Survey and the Public Health Service), personnel of any of the services mentioned in this section and their dependents may be accepted as tenants in and may occupy on a rental basis any such housing facilities, other than public quarters constructed or designated for assignment to and occupancy without charge by such personnel and their dependents if any, and such personnel shall not be deprived by reason of such occupancy of money allowances to which they are otherwise entitled for rental of quarters.

We understand that the housing in question was not constructed or designated for assignment to and occupancy without charge by Public Health Service personnel. Therefore, under the terms of the statute, the present practice is expressly sanctioned and we are not aware of any regulation which would proscribe the practice.

2. Is the decision to designate quarters for rent free occupancy a matter for administrative determination?

This question is answered in the affirmative.

3. If designation is a matter for administrative determination, is there any prohibition on the agency's considering such matters as difficulty in recruiting, unusual and lengthy hours of work, isolation of institutions, and economy to the government in making its determination?

While question 3 is answered in the negative, the wisdom of continuing the present practice in the absence of a clear showing of economy to the Government is open to question.

4. If free quarters are provided and the quarters allowance withdrawn, are we required to bring our facilities up to the standards prescribed for commissioned officers of the Public Health Service?

5. If only substandard housing is available, may a quarters allowance be paid until such time as standard housing is available?

Paragraph 3, Executive Order No. 10204, January 15, 1951, provides

that:

Any quarters or housing facilities under the jurisdiction of any of the uniformed services in fact occupied without payment of rental charges *** shall be deemed to have been assigned to such member as appropriate and adequate quarters, and no basic allowance for quarters shall accrue to such member under such circumstances unless the occupancy is because of a social visit of a temporary nature.

While the quarters here involved are not under the jurisdiction of the uniformed services, it is not believed that such fact would increase the rights of the officer concerned to a basic allowance for quarters under the Executive order. Although there appears to be no provision of law which requires an officer to occupy assigned Government quarters conceded to be substandard and inadequate, if he

actually occupies such quarters he is not entitled to a basic allowance for quarters. Of course, if more suitable quarters can be obtained from private sources, he may refuse to continue to occupy such quarters unless they are brought up to the standard of adequate quarters. See in this connection the provisions of 42 U.S.C. 1594j and 1594j (g) clearly showing that quarters under the jurisdiction of the Secretaries of Defense and Health, Education, and Welfare are to be either improved or destroyed and not assigned or otherwise occupied on a rentfree basis. However, there is no requirement that such quarters be so improved while they are occupied insofar as the matter of entitlement to a basic allowance for quarters is concerned.

Accordingly, questions 4 and 5 are answered in the negative, it being assumed that the latter refers to a situation where the housing actually is occupied on a rent-free basis. In the event that question 5 involves quarters which are furnished on a rental basis, it is answered in the affirmative. See answer to question 1.

[B-145104]

Contracts-Modification-Fixed-Price

Prior to Contract Execution-Mistakes

Contracts-Events

A fixed-price contract which was negotiated on the basis that an element of cost to the contractor was royalty payments required under certain existing license agreements, although shortly before the execution of the contract but without the knowledge of either party, a Federal court relieved the contractor of liability for the royalty payments, is regarded as a contract negotiated and executed on the basis of a mistake on the part of both parties that a liability existed to pay royalties and, therefore, reformation is proper to permit the Government to retain the amount overstated for royalty fees not legally required to be paid.

To the International Telephone and Telegraph Corp., July 20, 1961:

By your letters dated February 13 and April 28, 1961, with enclosures, reconsideration was requested of our disallowance of December 6, 1960, wherein ITT Federal's claim for $11,950.50, representing an amount withheld by the Department of the Army to recover royalties which, prior to award of contract No. DA-36-039-SC-71467 dated February 14, 1956, were believed to be payable by ITT Federal as part of the cost of performing the contract, when in fact none were payable.

Pursuant to Request For Proposals No. SC-36-039–56–10311–55 dated December 12, 1955, ITT Federal submitted a proposal dated January 2, 1956, to furnish, among other items, certain radio sets to the Signal Supply Agency. ITT Federal's quotation on the radio sets of $7,399 per unit for furnishing 120 to 180 units was considered for negotiation and on January 16, 1956, ITT Federal submitted a revised proposal to reduce the unit price from $7,339 to $5,500. A price

analysis was attached to this revised quotation and showed an item. of cost of 1.75 percent of selling price for sales royalty or $96.25 per unit. A Government Pricing Report dated January 18, 1956, recommended that no provision for price redetermination be incorporated in the contract "because of contractor's long experience in the manufacture of subject item, realistically priced elements of cost as compared to historical manufacturing information; together with adequate competition obtained on all items." Concerning the estimated unit cost of $96.25 for royalty payments, the pricing report stated:

The contractor has included 1.75% of selling price in his bid to cover the cost of a 1% of sales royalty payable to Western Electric Company and .75% of sales royalty payable to Radio Corporation of America. Payment to each company is based on existing royalty agreements which provide for payment at that rate for "point to point equipment." The provision for royalty payments is considered acceptable, subject to the contractor's submission of Report of Royalties, in accordance with ASPR 9-103.

On January 26, 1956, ITT Federal submitted a final written proposal setting forth the price details, including a unit price of $5,500 for 120 radio sets. Attached to this final proposal was your price analysis which showed that a royalty of 1.75 percent of the selling price of the radio set, or $96.25 per set, was included as an item of cost making up the unit price of $5,500.

A notice of award was issued to ITT Federal on February 14, 1956, in the total amount of $694,069.57, the major portion of which ($600,000) covered 120 radio sets. By subsequent contract amendment, the unit price of the radio sets was increased to $5,690.72, making the total revised price for the radio sets amount to $682,886.40. However, on January 24, 1956, before the final proposal and award of the contract, the United States District Court for the District of New Jersey, in the case of United States v. Western Electric, Incorporated, and American Telephone and Telegraph Company, Civil Action No. 17-49, entered a consent decree, denominated as a "Final Judgment," against the defendants which had the effect of relieving ITT Federal of liability for the royalty payments included as an item of cost in the contract. By letter dated October 28, 1957, ITT Federal commented on the effects of the final judgment as follows:

Contractor is licensed under the terms of two license agreements, thereby necessitating two separate reports as follows.

1. Under the terms of a license agreement between International Telephone and Telegraph Corporation and the Western Electric Company, effective as of January 1, 1951, Federal Telephone and Radio Company, as a manufacturing division of International, is required to pay royalties to Western (through International) on licensed equipment and spare parts therefor.

Notwithstanding the agreement, under the terms of the Final Judgment in Civil Action No. 17-49 between the United States of America, as Plaintiff, and Western Electric Company, Inc. and American Telephone and Telegraph Company, as Defendants, no royalties are payable to the Western Electric Company on sales of equipment manufactured on or after January 24, 1956 unless the equipment resulting from said manufacture employs the invention of a Western patent which issued on or subsequent to the date of the Final Judgment. Since the subject contract was entered into as of February 14, 1956 subsequent to the

645-668 O-63-5