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B-203670 1 (1981-10-28)

handle is hein.gao/gaobabjav0001 and id is 1 raw text is: AA Ci tif- COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON D.C. 200 L-203670 OCT 2 8 98 Do at m~e aailbl to Public readlng 3 The honorable Joseph P. Addabbo . ...... Chair-.an, Subcommittee on Defense Committee on Appropriations louse of Representatives Dear i.r. Chairman: This letter responds to your recent request for further com- ments on the scope of language in the Supplemental Appropriations and Rescission Act of 1981 that limits the type of co-mercial insurance for which the Navy may reimburse shipbuilders. 1/ We discussed our interpretation of the general scope of the provi- sion in a letter to you dated july 22, 1981. You have now asked us to expand our analysis based on additional material your staff provided us. In our first letter, we discussed the effect of the distinc- tion in the law between casualty or fortuitous losses caused by defective workmanship or materials, and losses incident to the normal course of construction, such as the cost of repairing or replacing jetective workrnanship or raaterials, but which -o not involve casualties or tortuitous events. As we noted in our July 22 letter, the scope of commercial insurance coverage avail- able to shipbuilders is significant to determining the practical .j/ The Act provides in pertinent part: None of the funds appropriated to the Department of Defense for fiscal year 1981 and hereafter shall be available for obli- gation to reimburse a contractor for the cost of commercial insurance (other th.an insurance normally .taintained by the con- tractor i~n connection with the general con- duct of his business) that would protect against the costs of the contractor for correction of the contractor's own defects in materials or workmanship incident to the normal course of construction (those defects in materials or workmianship which do riot constitute a fortuitous or casualty loss). Pub. L. No. 97-12, 95 Stat. 14, 29- 30.

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