of these decorations, either prior to or after their entry in the Coast Guard, or who hold comparable decorations (see 7 Comp. Gen. 77, supra) for which additional pay is authorized, are entitled to receive such additional pay during the period that the Coast Guard operates under the Navy in accordance with law.

With respect to the further questions as to whether such enlisted persons will be entitled to continue to receive such additional pay after the Coast Guard shall have been returned to the jurisdiction of the Treasury Department, it would appear that such questions are not at this time properly the subject of a decision by this office, but on the hypothesis that no change or modification of the existing laws pertinent to the inquiry will have been made at the time of such reversion of jurisdiction, it would appear that negative answers thereto would be required for the reasons set forth in 6 Comp. Gen. 743 as amplified in 7 Comp. Gen. 77.

(B-41046)

CONTRACTS-COST-PLUS-EFFECT OF GUARANTEED MAXIMUM PRICE PROVISION

Where a building contract is fairly entered into by an experienced builder the fact that the work proves to be more expensive than was estimated does not entitle the contractor to any allowance beyond the contract price, so that, in the case of a cost-plus contract, if the cost to be reimbursed thereunder is based on an estimate with a guaranteed maximum, the amount of cost recoverable by the contractor cannot exceed such maximum.

Where a cost-plus-a-fixed-fee construction contract provided that reimbursable items of cost shall include certain items of tools, timber, etc., not entering into the construction of the completed structure, that all material and work covered by partial payments shall become the property of the Government, and that the costs shall not exceed a stipulated guaranteed maximum, the fact that the contractor's costs actually exceeded the guaranteed maximum does not operate to vest in the contractor the right to receive payment for the salvage value of such small tools, etc., disposed of by the Government. Comptroller General Warren to the President, Board of Commissioners of the District of Columbia. April 18, 1944:

I have your letter of March 20, 1944, wherein you request a decision as to the validity of the claim of Charles H. Tompkins Company, Washington, D. C., for the amount of $5,111.84, representing the salvage value of certain materials taken over and disposed of by the District of Columbia during the performance of cost-plus-a-fixed-fee contract No. D. C. F.-14769, entered into December 17, 1941, between the District of Columbia and the said company.

Under the terms of the contract it was mutually agreed that for and in consideration of the compensation stipulated therein the contractor would furnish the material and perform the work for constructing complete, and keeping in repair for a period of one year from the date of completion, a three-span steel and concrete bridge across the Tidal

Basin, near Fourteenth Street, S. W., Washington, D. C., in strict accordance with the drawings, specifications, and conditions-both general and special-forming a part of the contract. Article 1, paragraph (b), and article 16, paragraph (c), of the contract provide, respectively, as follows:

(b) COMPENSATION.-The contractor shall receive for the performance of the aforesaid work the actual "contractor's cost" plus a fixed fee of twenty thousand dollars ($20,000). It being understood and agreed to by and between the parties hereto that the construction cost to be paid the contractor by the District shall not exceed the sum of two hundred and forty thousand, five hundred and eightyone dollars ($240,581) (exclusive of contractor's fixed fee) referred to hereinafter as "outside guaranteed cost," unless the contractor's cost exceeds the outside guaranteed cost due to increase in the quantities set out in the Schedule, or resulting from declaration of War by or against the United States Government. The "contractor's cost" shall consist of the items set forth in the attached Special Conditions.

(c) All material and work covered by partial payments made shall thereupon become the sole property of the District, but this provision shall not be construed as relieving the contractor from the sole responsibility for the care and protection of materials, and work upon which payments have been made or the restoration of any damaged work, or as a waiver of the right of the District to require the fulfillment of all the terms of the contract.

Also, it was provided under paragraph 2 (j) of the Special Conditions that the items for which the contractor would be entitled to receive reimbursement as production cost would include:

(j) SMALL TOOLS, ROPE, CABLE, ETC.-Expenditures made in payment for small tools, rope, cable, timber, etc., and other construction equipment not entering into the construction of the completed structure, and not included in plant rental. For such tools, rope, cable, etc., the contractor shall be paid the actual cost as shown by receipted bills or vouchers. Such tools, cable, equipment, etc., may, with the approval of the Director of Highways, become the property of the contractor upon completion of the work, and he shall allow the District the current market salvage value for such used tools, cables, etc. Prices paid for such items referred to in this section, and amounts allowed for salvage shall be as approved by the Director of Highways.

Summarizing the pertinent facts of the matter as reported in your letter it appears that during the progress of the contract work it became necessary to salvage certain new and used material consisting of lumber, welding equipment, tools and other property which was not consumed in the actual construction of the bridge. Some of this material was removed from the project by the contractor who is stated to have credited the amount of $741.89, representing the salvage value of the same, to the job. A portion of the remainder, having a salvage value of $2,652.80, was stored or used on other jobs by the Government of the District of Columbia and the balance, having a salvage value of $2,459.04, was sold by the District to successful competitive bidders. Apparently, while the partial payments which have been made to date pursuant to the contract total only $236,522.90, the contractor's cost thereunder for the work originally specified exceeded the outside guaranteed cost stipulated in article 1 (b) of the contract. Consequently, the contractor contends that it is entitled to receive credit for

the amount of $5,111.84 on the theory that the District has not paid for the material taken over by it, and that the cost of the material represents no part of the cost actually entering into the cost of the bridge or coming within the outside guaranteed cost.

You state that when the material in question was disposed of by the District it was assumed that title thereto had vested in the District and that, therefore, no charges were raised against the various branches of the District Government for the material turned over to them and the proceeds derived from the material which was sold were covered into the Highway Fund of the District. However, it appears that the District Auditor now entertains some doubt as to the propriety of the action thus taken by the District, since, as hereinbefore stated, it subsequently has developed that the limitation contained in article 1 (b) of the contract has been exceeded, and since paragraph 5 (e) of the special conditions provided that in the event the contractor's cost should exceed such limitation due to necessary increase in the estimated quantities of any of the items set out in the schedule of prices the contractor would be paid the net difference between the total additional cost of the increased quantities and the total deduction cost of decreased quantities, if any.

In the latter connection it is definitely indicated in your letter that said paragraph 5 (e) is not involved here but that, rather, the material which constitutes the subject matter of the claim was "construction equipment" within the meaning of paragraph 2 (j) of the Special Conditions. If so, of course, the provisions of paragraph 5 (e) can have no material bearing on the question as to the validity of the contractor's claim.

The general rule is that where a building contract is fairly entered into by an experienced builder the fact that the work proves to be more expensive than was estimated does not entitle the contractor to any allowance beyond the contract price. In other words, if the cost to be reimbursed under a cost-plus contract is based on an estimate with a guaranteed maximum the amount of cost recoverable by the contractor cannot exceed such maximum. See Gillespie Land & Irrigation Co. v. Hamilton, 29 P. 2d 158, and Crowe v. Boyle, 193 P. 111. Obviously, then, unless the instant contractor's outside guaranteed cost of $240,581 was fixed in consideration of a subsequent credit for the salvage value of the items of material here in question the contractor cannot be said to be entitled to receive payment therefor. However, under a fair and reasonable construction of the contract, considered as a whole, such does not appear to be the case.

As shown by the above-quoted provisions of article 16 (c) the parties agreed, in practical effect, that all material and work for which reimbursement would be made to the contractor would become the

sole property of the District. Hence, the real question for consideration in determining the respective rights of the parties to the salvage value of the items of material covered by the claim is whether payment in accordance with the terms of article 1 (b) properly should be regarded as including reimbursement for the cost of the said items; not whether the items actually entered into the construction of the bridge. While article 1 (b) limited the maximum amount which the contractor would be entitled to receive as reimbursement for its construction costs to the sum of $240,581 it at the same time provided that such costs would consist of the items of expenditure set forth in the attached Special Conditions. Moreover, the Special Conditions, under paragraph 2 (j) thereof, specifically include among the various reimbursable items enumerated therein expenditures made for small tools, materials and construction equipment not entering into the construction of the completed structure. The understanding of the parties thus clearly appears to have been that, irrespective of the extent of the contractor's actual construction costs, reimbursement therefor up to the guaranteed maximum amount of $240,581 would include complete compensation for the items involved and would operate to vest the District of Columbia with title to those items as well as the numerous other reimbursable items listed in the Special Conditions.

Accordingly, I have to advise that, on the present record, neither the fact that the construction costs incurred by the contractor actually did exceed the guaranteed maximum, nor the fact that the materials covered by the contractors' claim did not become a part of the completed structure, can be accepted as affording any valid or legal basis for allowance of the claim.

(B-41137)

DEPARTMENTS AND ESTABLISHMENTS-TRANSFER OF ACTIVITIES_ EFFECT UPON SPECIAL APPROPRIATION PROVISIONS

The general provisions in the National War Agencies Appropriation Act, 1944, granting special authority to the constituent agencies under the Office for Emergency Management-including the War Relocation Authority-for the conduct of the war program of said agencies, constitute, in effect-even though contained in an appropriation act-substantive provisions of law which vest in the War Relocation Authority whatever authority was encompassed in such provisions at the time they were enacted into law, so that, upon subsequent transfer by Executive order of the Authority to the Department of Interior, the powers theretofore vested in the Director of the War Relocation Authority became vested in the Secretary of Interior.

Comptroller General Warren to the Secretary of the Interior, April 18, 1944: I have your letter of March 30, 1944, as follows:

On February 16, 1944, the President issued Executive Order No. 9423, transferring the War Relocation Authority from the Office for Emergency Management of the Executive Office of the President to the Department of the Interior. The

appropriation for the War Relocation Authority for the fiscal year 1944 is contained in the National War Agencies Appropriation Act, 1944. Title I of the Act, in paragraph (e) under the heading "General Provisions," provides as follows:

"The head of any constituent agency may delegate to any official of such agency or in the field offices of the Division of Central Administrative Services the authority to make appointments of personnel and he may also delegate to any official in the agency of which he is the head the authority to make other determinations necessary for the conduct of the administrative management within such agency."

The phrase "any constituent agency" in this provision refers to the several agencies within the Office for Emergency Management (see the opening sentence of subsection (a) under the heading "General Provisions"), and, therefore, at the time of passage of the Act including the War Relocation Authority, which was then one of the constituent agencies.

Your office has held that the quoted provision, in addition to authorizing delegation by the head of a constituent agency of the authority to make appointments of personnel, permits delegation of authority to authorize transfers of official station, and the payment of travel expenses in connection therewith, and to authorize or approve the moving of household effects of Government employees in connection with a change of official station at Government expense in accordance with the Act of October 10, 1940. (See your Decision to the Liaison Officer for Emergency Management, dated May 18, 1943 (B-34392)).

Executive Order No. 9423 specifically provides that "the functions of the Director of the War Relocation Authority are transferred to the Secretary of the Interior." The question arises whether by virtue of such transfer the Secretary of the Interior is now authorized to make such delegations of authority as the Director of the War Relocation Authority was authorized to make under the statutory language quoted above. I submit, for the reasons stated below, that such delegations of authority may be made by the Secretary of the Interior. 1. The term, "constituent agency" was a convenient way of referring to the several agencies within the Office for Emergency Management to which funds were appropriated by the Act. Its use made it unnecessary to list the names of all the agencies when it was necessary to refer to all of them. Therefore, for present purposes, paragraph (e) may be regarded as reading, "The head of the War Relocation Authority may delegate," etc. Since the issuance of Executive Order No. 9423, the head of the War Relocation Authority is the Secretary of the Interior, who, therefore, may make such delegations of authority as are authorized by paragraph (e).

2. The authority contained in paragraph (e) was granted by the Congress for the purpose of expediting the war programs of the agencies involved. (See the legislative history stated in your Decision of May 18, 1943, to the Liaison Officer for Emergency Management.) The transfer of any such agency from the Office for Emergency Management to one of the regular Departments of the Government does not lessen the need for expedition in carrying out the program involved.

3. The administration of a war program is likely to involve a relatively large number of transfers of official station, and certainly requires the making of a large number of "other determinations necessary for the conduct of the administrative management" of the agency. If such matters cannot be delegated to appropriate officers, they will impose an undue burden on the head of the program and require him to divert time to them which can more profitably be spent on other matters. This would seem to be one of the reasons why paragraph (e) was inserted in the Act. This burden is not lessened by a transfer of a war program from the Office for Emergency Management to a regular Department of the Government; nor is it less important that the head of such Department be not unduly burdened by such delegable determinations.

4. When responsibility for the expenditure of an appropriation is transferred from one Government agency to another, limitations applicable to the expenditure of such appropriation usually continue to apply. It is submitted that administrative authority attaching originally to the expenditure of any such appropriation also continues in effect after the transfer in the absence of a clear indication to the contrary. In either case, the result is expenditure of the appropriation in accordance with the intent expressed by the Congress when the appropriation was made available.

Will you advise me whether you concur in the views herein expressed? An early reply will be appreciated.