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United States Government Accountability Office: 
GAO: 

March 2012: 

Office of the General Counsel: 

Principles Of Federal Appropriations Law: 

Annual Update of the Third Edition: 

GAO-12-413SP: 

Preface: 

We are pleased to present the annual update of the third edition of 
Principles of Federal Appropriations Law. Our objective in this 
publication is to present a cumulative supplement to the published 
third edition text that includes all relevant decisions from January 1 
to December 31, 2011. 

The annual update is posted electronically on GAO’s Web site 
[hyperlink, http://www.gao.gov]. These annual updates are not issued 
in hard copy and should be used as electronic supplements. Users 
should retain hard copies of the third edition volumes and refer to 
the cumulative updates for newer material. The page numbers identified 
in the annual update as containing new material are the page numbers 
in the hard copy of the third edition and the new, updated information 
appears as bolded text. 

[End of section] 

Volume 1: 
Forward: 
Chapter 1 – Introduction: 
Chapter 2 – The Legal Framework: 
Chapter 3 – Agency Regulations and Administrative Discretion: 
Chapter 4 – Availability of Appropriations: Purpose: 
Chapter 5 – Availability of Appropriations: Time: 

Volume 2: 
Chapter 6 – Availability of Appropriations: Amount: 
Chapter 7 – Obligation of Appropriations: 
Chapter 8 – Continuing Resolutions: 
Chapter 9 – Liability and Relief of Accountable Officers: 
Chapter 10 – Federal Assistance: Grants and Cooperative Agreements: 
Chapter 11 – Federal Assistance: Guaranteed and Insured Loans: 

Volume 3: 
Chapter 12 – Acquisition of Goods and Services: 
Chapter 13 – Real Property: 
Chapter 14 – Claims against and by the Government: 
Chapter 15 – Miscellaneous Topics: 

[End of section] 

Forward: 

Page i – Insert the following as footnote number 1 at the end of the 
first paragraph (after “GAO Legal Products.” 1): 

1 Section 8 of the GAO Human Capital Reform Act of 2004, Pub. L. No. 
108-271, 118 Stat. 811, 814 (July 7, 2004), 31 U.S.C. § 702 note, 
changed GAO’s name to the “Government Accountability Office.” This 
change was made to better reflect GAO’s current mission. See S. Rep. 
No. 108-216, at 8 (2003); H.R. Rep. No. 108-380, at 12 (2003). 
Therefore, any reference in this volume to the “General Accounting 
Office” should be read to mean “Government Accountability Office.” The 
acronym “GAO” as used in the text now refers to the Government 
Accountability Office. 

[End of section] 

Chapter 1: Introduction: 

A. The Congressional "Power of the Purse": 

Page 1-4 - Replace footnote number 6 with the following: 

[6] Numerous similar statements exist. See, e.g., Knote v. United 
States, 95 U.S. 149, 154 (1877); Marathon Oil Co. v. United States, 
374 F.3d 1123, 1133-34 (Fed. Cir. 2004), cert. denied, 544 U.S. 1031 
(2005); Gowland v. Aetna, 143 F.3d 951, 955 (5th Cir. 1998); Hart's 
Case, 16 Ct. Cl. 459, 484 (1880), aff'd, Hart v. United States, 118 
U.S. 62 (1886); Jamal v. Travelers Lloyds of Texas Insurance Co., 131 
F. Supp. 2d 910, 919 (S.D. Tex. 2001); Doe v. Mathews, 420 F. Supp. 
865, 870-71 (D. N.J. 1976). 

Page 1-5 - Insert the following after the second paragraph: 

For example, in Rumsfeld v. Forum for Academic and Institutional 
Rights, Inc., 547 U.S. 47 (2006), the Supreme Court reversed a lower 
court decision, 390 F.3d 219 (3RD Cir. 2004), and upheld the 
constitutionality of the so-called "Solomon Amendment." Originally 
enacted as an appropriation rider and now codified as amended at 10 
U.S.C. § 983, the Solomon Amendment generally prohibits the receipt of 
certain federal funds by institutions of higher education that deny 
military recruiters the same access they provide to other recruiters 
on their campuses. The Forum for Academic and Institutional Rights 
(FAIR), an association of law schools and faculty members, maintained 
that the Solomon Amendment attached an unconstitutional condition to 
their receipt of federal funds and, thus, exceeded congressional 
constitutional authority under the so-called "Spending Clause" in 
article I, section 8. Specifically, FAIR alleged that the statute 
violated their First Amendment rights to oppose federal policies 
regarding homosexuals in the military. In an 8-0 opinion by Chief 
Justice Roberts, the Supreme Court rejected these arguments. Quoting 
from Grove City College v. Bell, 465 U.S. 555, 575-76 (1984), the 
Court noted that under the Spending Clause, "Congress is free to 
attach reasonable and unambiguous conditions to federal financial 
assistance that educational institutions are not obliged to accept." 
Rumsfeld, 547 U.S. at 59. In essence, the Court reasoned that funding 
conditions such as the Solomon Amendment cannot violate the Spending 
Clause if Congress could constitutionally impose the same requirements 
through direct legislation. The Court went on to hold that Congress 
could enact legislation that directly mandated the Solomon Amendment's 
requirements without running afoul of the First Amendment. Id. at 59-
60. The Court observed that Congress could use its authority under 
article I, section 8, clauses 1 and 12-13 of the Constitution to 
provide for the common defense and to raise and support armies, etc., 
as a basis for directly legislating the Solomon Amendment's 
requirements for equal access by military recruiters so long as the 
legislation was otherwise constitutional. It then held that the 
Solomon Amendment's requirements did not implicate First Amendment 
rights, dismissing each of FAIR's arguments to the contrary. The 
opinion stated by way of summary: 

"The Solomon Amendment neither limits what law schools may say nor 
requires them to say anything.... As a general matter, the Solomon 
Amendment regulates conduct, not speech. It affects what law schools 
must do--afford equal access to military recruiters--not what they may 
or not say." 

Id. at 60 (emphasis in original). 

Page 1-7 - Insert the following after the last paragraph: 

In a 2007 decision, GAO declined to interpret the voluntary services 
prohibition of the Antideficiency Act to prohibit the President from 
exercising his constitutional power to make a recess appointment to an 
individual who was barred by statute from receiving compensation. 
[Hyperlink, http://www.gao.gov/cgi-bin/redbook?BN=B-
309301%20June%208%202007] B-309301, June 8, 2007. GAO noted that 
"serious constitutional issues would arise if [the statutory bar on 
compensation], in conjunction with the voluntary services prohibition, 
were read to directly restrict the President from making a recess 
appointment." Id. at 6. 

Page 1-9 - Replace the first paragraph with the following: 

In Kansas v. United States, 214 F.3d 1196, 1201-02, n.6 (10TH Cir. 
2000), cert. denied, 531 U.S. 1035 (2000), the court noted that there 
were few decisions striking down federal statutory spending 
conditions.9 However, there are two recent interesting examples of 
situations in which courts invalidated a spending condition on First 
Amendment grounds. In Legal Services Corp. v. Velasquez, 531 U.S. 533 
(2001), a conditional provision (contained in the annual 
appropriations for the Legal Service Corporation (LSC) since 1996) was 
struck down as inconsistent with the First Amendment. This provision 
prohibited LSC grantees from representing clients in efforts to amend 
or otherwise challenge existing welfare law. The Supreme Court found 
this provision interfered with the free speech rights of clients 
represented by LSC-funded attorneys.10 In American Civil Liberties 
Union (ACLU) v. Mineta, 319 F. Supp. 2d 69 (D.D.C. 2004), the court 
declared unconstitutional an appropriation provision forbidding the 
use of federal mass transit grant funds for any activity that promoted 
the legalization or medical use of marijuana, for example, posting an 
advertisement on a bus. Relying on Legal Services Corp., the court 
held that the provision constituted "viewpoint discrimination" in 
violation of the First Amendment. ACLU, 319 F. Supp. 2d at 83-87. 

Page 1-10 - Insert the following after the first partial paragraph: 

There have been some recent court cases upholding congressional 
actions attaching conditions to the use of federal funds that require 
states to waive their sovereign immunity from lawsuits under the 
Eleventh Amendment. In these cases, courts found the condition a 
legitimate exercise of Congress's spending power. For example, the 
court in Barbour v. Washington Metropolitan Transit Authority, 374 
F.3d 1161 (D.C. Cir. 2004), cert. denied, 544 U.S. 904 (2005), upheld 
a statutory provision known as the "Civil Rights Remedies Equalization 
Act," 42 U.S.C. § 2000d-7, which clearly conditioned a state's 
acceptance of federal funds on its waiver of its Eleventh Amendment 
immunity to suits under various federal antidiscrimination laws. Among 
other things, the court rejected an argument based on Dole that the 
condition was not sufficiently related to federal spending. The 
opinion observed that the Supreme Court has never overturned Spending 
Clause legislation on "relatedness grounds." Barbour, 374 F.3d at 1168. 

Similarly, two courts rejected challenges to section 3 of the 
Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), 
42 U.S.C. § 2000cc-1, which limits restrictions on the exercise of 
religion by persons institutionalized in a program or activity that 
receives federal financial assistance. Charles v. Verhagen, 348 F.3d 
601 (7TH Cir. 2003); Williams v. Bitner, 285 F. Supp. 2d 593 (M.D. Pa. 
2003), aff'd in part, remanded in part 455 F.3d 186 (3RD Cir. 2006). 
In Charles, the court held that RLUIPA "falls squarely within 
Congress' pursuit of the general welfare under its Spending Clause 
authority." Charles, 348 F.3d at 607. The court also rejected the 
argument that the statute's restrictions could not be related to a 
federal spending interest because the state corrections program at 
issue received less than 2 percent of its budget from federal funding: 
"Nothing within Spending Clause jurisprudence, or RLUIPA for that 
matter, suggests that States are bound by the conditional grant of 
federal money only if the State receives or derives a certain 
percentage ... of its budget from federal funds." Id. at 609. 

Page 1-10 - Replace the second paragraph with the following: 

For some additional recent cases upholding statutory funding 
conditions, see Biodiversity Associates v. Cables, 357 F.3d 1152 (10TH 
Cir.), cert. denied, 543 U.S. 817 (2004) (upholding an appropriations 
rider that explicitly superseded a settlement agreement the plaintiffs 
had reached with the Forest Service in environmental litigation); 
Kansas v. United States, 214 F.3d 1196 (10TH Cir.), cert. denied, 531 
U.S. 1035 (2000) (upholding the statutory requirement conditioning 
receipt of federal block grants used to provide cash assistance and 
other supportive services to low income families on a state's 
participation in and compliance with a federal child support 
enforcement program); Litman, 186 F.3d 544 (state university's receipt 
of federal funds was validly conditioned upon waiver of the state's 
Eleventh Amendment immunity from federal antidiscrimination lawsuits); 
California v. United States, 104 F.3d 1086, 1092 (9TH Cir. 1997) 
(acknowledging that although it originally agreed to the condition for 
receipt of federal Medicaid funds on state provision of emergency 
medical services to illegal aliens, California now viewed that 
condition as coerced because substantial increases in illegal 
immigration left California with no choice but to remain in the 
program to prevent collapse of its medical system; the complaint was 
dismissed for failure to state a claim upon which relief could be 
granted); and Armstrong v. Vance, 328 F. Supp. 2d 50 (D.D.C. 2004) and 
Whatley v. District of Columbia, 328 F. Supp. 2d 15 (D.D.C. 2004), 
aff'd, 447 F.3d 814 (D.C. Cir. 2006) (two related decisions upholding 
appropriations provisions that imposed a cap on the District of 
Columbia's payment of attorney fees awarded in litigation under the 
Individuals with Disabilities Education Act, 20 U.S.C. §§ 1400-1490). 
See also Richard W. Garnett, The New Federalism, the Spending Power, 
and Federal Criminal Law, 89 Cornell L. Rev. 1 (Nov. 2003), an article 
that provides more background on this general subject. 

Page 1-12 - Replace the second bullet in the first paragraph with the 
following: 

* Agencies may not spend, or commit themselves to spend, in advance of 
or in excess of appropriations. 31 U.S.C. § 1341 (Antideficiency Act). 
GAO has said that because the Antideficiency Act is central to 
Congress's core constitutional power of the purse, GAO will not 
interpret general language in another statute, such as the 
"notwithstanding any other provision of law" clause, to imply a waiver 
of the Act without some affirmative expression of congressional intent 
to give the agency the authority to obligate in advance or in excess 
of an appropriation. [Hyperlink, http://www.gao.gov/cgi-
bin/redbook?BN=B-303961%20Dec.%206%202004] B-303961, Dec. 6, 2004. 

D. "Life Cycle" of an Appropriation: 

2. Congressional Action: 

Page 1-29 - Insert the following after the end of the second full 
paragraph: 

To reduce the federal deficit, the Budget Control Act of 2011 enacted 
limits on discretionary spending for each fiscal year beginning with 
fiscal year 2012 through fiscal year 2021. Pub. L. No. 112-25, § 101, 
125 Stat. 240, 245 (Aug. 2, 2011) (amending § 251 of the Balanced 
Budget and Emergency Deficit Control Act of 1985, Pub. L. No. 99-177, 
99 Stat. 1037, 1063-1072 (Dec. 12, 1985), 2 U.S.C. § 901). The Act 
also established the Joint Select Committee on Deficit Reduction to 
propose by November 23, 2011, legislation to reduce the deficit by at 
least $1.5 trillion over that same period. Pub. L. No. 112-25, § 
401(b)(2), (b)(3)(B)(i), 125 Stat. at 259-60. The Act provides that 
unless a joint committee bill achieving an amount greater than $1.2 
trillion in deficit reduction is enacted by January 15, 2012, the 
limits on discretionary spending set forth in section 251(c) shall be 
revised as set out in the new section 251A. Pub. L. No. 112-25, § 
302(a), 125 Stat. at 256-59 (adding section 251A to the Balanced 
Budget and Emergency Deficit Control Act of 1985, 2 U.S.C. § 901a). 
The joint committee did not report proposed legislation by the 
statutory deadline; consequently, no bill was enacted in January 2012. 
The Act enforces the spending limits through sequestration, which is 
the cancellation of previously enacted budget authority. Section 
251A(3) provides a formula for OMB to use to calculate the total 
deficit reduction required for each fiscal year from fiscal years 2013 
through 2021. 125 Stat. at 257. Section 251A(4) provides that OMB 
shall allocate on January 2, 2013 the total deficit reduction for 
fiscal year 2013 to defense and nondefense functions. Id., 2 U.S.C. § 
901a(4). 

3. Budget Execution and Control: 

Page 1-32 - Replace the first full paragraph with the following: 

While an agency's basic mission is to carry out its programs with the 
funds Congress has appropriated, there is also the possibility that, 
for a variety of reasons, the full amount appropriated by Congress 
will not be expended or obligated by the administration. Under the 
Impoundment Control Act of 1974, an impoundment is an action or 
inaction by an officer or employee of the United States that delays or 
precludes the obligation or expenditure of budget authority provided 
by Congress. 2 U.S.C. §§ 682(1), 683.60 The Act applies to "Salaries 
and Expenses" appropriations as well as program appropriations. See, 
e.g., B-320091, July 23, 2010; 64 Comp. Gen. 370, 375-76 (1985). 

Page 1-33 - Replace the first full paragraph with the following: 

A rescission involves the cancellation of budget authority previously 
provided by Congress (before that authority would otherwise expire), 
and can be accomplished only through legislation. See, e.g., B-319084, 
May 14, 2010 (update of statistical data concerning rescissions 
proposed and enacted since the passage of the Impoundment Control Act 
of 1974 through fiscal year 2009); GAO, Impoundment Control Act: Use 
and Impact of Rescission Procedures, [Hyperlink, 
http://www.gao.gov/products/GAO-10-320T] (Dec. 16, 2009) (testimony 
containing useful charts and reflections on the use of rescissions as 
a budget tool). The President must advise Congress of any proposed 
rescissions, again in a special message. The President is authorized 
to withhold budget authority that is the subject of a rescission 
proposal for a period of 45 days of continuous session following 
receipt of the proposal. Unless Congress acts to approve the proposed 
rescission within that time, the budget authority must be made 
available for obligation. 2 U.S.C. §§ 682(3), 683, 688.63: 

Page 1-34 - Insert the following after the first partial paragraph: 

In 2006, GAO reported to Congress that in 13 instances executive 
agencies had impounded funds that the President had proposed for 
cancellation. B-308011, Aug. 4, 2006; B-307122.2, Mar. 2, 2006. When 
the President proposed cancellation of these funds, the Administration 
had not submitted reports of impoundments under the Impoundment 
Control Act because, officials explained, the Administration was not 
withholding funds from obligation. In all 13 instances, the agencies 
released impounded funds as a result of GAO's inquiries. Id. 

E. The Role of the Accounting Officers: Legal Decisions: 

2. Decisions of the Comptroller General: 

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There is no specific procedure for requesting a decision from the 
Comptroller General. A simple letter is usually sufficient. The 
request should, however, include all pertinent information or 
supporting material and should present any arguments the requestor 
wishes to have considered. See GAO, Procedures and Practices for Legal 
Decisions and Opinions, [Hyperlink, 
http://www.gao.gov/products/GAO-06-1064SP] (Washington, D.C.: Sept. 
2006), available at [Hyperlink, 
http://www.gao.gov/legal/resources.html]. 

Page 1-41 - Replace the last partial paragraph with the following: 

An involved party or agency may request reconsideration of a decision. 
The standard applied is whether the request demonstrates error of fact 
or law (e.g., B-184062, July 6, 1976) or presents new information not 
considered in the earlier decision. See B-306666.2, Mar. 20, 2009; B-
271838.2, May 23, 1997. While the Comptroller General gives 
precedential weight to prior decisions,70 a decision may be modified 
or overruled by a subsequent decision. In overruling its decisions, 
GAO tries to follow the approach summarized by the Comptroller of the 
Treasury in a 1902 decision: 

"I regret exceedingly the necessity of overruling decisions of this 
office heretofore made for the guidance of heads of departments and 
the protection of paying officers, and fully appreciate that certainty 
in decisions is greatly to be desired in order that uniformity of 
practice may obtain in the expenditure of the public money, but when a 
decision is made not only wrong in principle but harmful in its 
workings, my pride of decision is not so strong that when my attention 
is directed to such decision I will not promptly overrule it. It is a 
very easy thing to be consistent, that is, to insist that the horse is 
16 feet high, but not so easy to get right and keep right." 

8 Comp. Dec. 695, 697 (1902). 

Page 1-42 - Replace the third full paragraph with the following: 

For example, as we discussed earlier in this chapter, effective June 
30, 1996, Congress transferred claims settlement authority under 31 
U.S.C. § 3302 to the Director of the Office of Management and Budget 
(OMB). Congress gave the director of OMB the authority to delegate 
this function to such agency or agencies as he deemed appropriate. 
See, e.g., May 21, 2004 (GAO no longer has authority to settle a claim 
for severance pay); B-278805, July 21, 1999 (the International Trade 
Commission was the appropriate agency to resolve the subject claims 
request). 

Page 1-42 - Replace the fourth full paragraph with the following: 

Other areas where the Comptroller General will decline to render 
decisions include questions concerning which the determination of 
another agency is by law "final and conclusive." Examples are 
determinations on the merits of a claim against another agency under 
the Federal Tort Claims Act (28 U.S.C. § 2672) or the Military 
Personnel and Civilian Employees' Claims Act of 1964 (31 U.S.C. § 
3721). See, e.g., B-300829, Apr. 4, 2004 (regarding the Military 
Personnel and Civilian Employees' Claims Act). Another example is a 
decision by the Secretary of Veterans Affairs on a claim for veterans' 
benefits (38 U.S.C. § 511). See B-266193, Feb. 23, 1996; 56 Comp. Gen. 
587, 591 (1977); B-226599.2, Nov. 3, 1988 (nondecision letter). 

Page 1-44 - Replace the second paragraph with the following: 

Another long-standing GAO policy concerns the constitutionality of 
acts of Congress. As an agent of Congress, GAO recognizes that it is 
neither our role nor our province to opine on or adjudicate the 
constitutionality of duly enacted statutes. See, e.g., B-321982, Oct. 
11, 2011, at 4. Such laws come to GAO with a heavy presumption in 
favor of their constitutionality and, like the courts, GAO will 
construe statutes narrowly to avoid constitutional issues.77 
Immigration & Naturalization Service v. St. Cyr, 553 U.S. 289, 299 
n.12 (2001); B-300192, Nov. 13, 2002 (regarding a provision in the 
fiscal year 2003 Continuing Resolution, Pub. L. No. 107-229, § 117, 
116 Stat. 1465, 1468 (Sept. 30, 2002), prohibiting the use of 
appropriations to acquire private sector printing and specifically 
prohibiting the use of appropriations to pay for printing the 
President's Budget other than through the Government Printing Office: 
"Given our authority to settle and audit the accounts of the 
government ..., we will apply laws as we find them absent a 
controlling opinion that such laws are unconstitutional"). GAO will, 
however, express its opinion, upon the request of a Member or 
committee of Congress, on the constitutionality of a bill prior to 
enactment. E.g., B-360241, Mar. 18, 2003; B-300192, supra; B-228805, 
Sept. 28, 1987. 

3. Other Relevant Authorities: 

Page 1-48 - Replace paragraph number 7 with the following: 

7. A Glossary of Terms Used in the Federal Budget Process, [Hyperlink, 
http://www.gao.gov/products/GAO-05-734SP] (Washington, D.C.: Sept. 
2005)--This publication contains standard definitions of fiscal and 
budgetary terms. It is published by GAO as required by 31 U.S.C. § 
1112(c), and is updated periodically. 

[End of section] 

Chapter 1: The Legal Framework: 

[End of section] 

B. Some Basic Concepts: 

1. What Constitutes an Appropriation: 

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Subsequent to the Core Concepts and AINS decisions, the Third Circuit 
Court of Appeals had occasion to weigh in on the issue of revolving 
funds in a non-Tucker Act situation in American Federation of 
Government Employees (AFGE) v. Federal Labor Relations Authority 
(FLRA), 388 F.3d 405 (3RD Cir. 2004). In that case, AFGE, representing 
Army depot employees, had proposed an amendment to the employees' 
collective bargaining agreement that would have required the Army to 
pay reimbursements of personal expenses incurred by the depot 
employees as a result of canceled annual leave from a defense working 
capital fund. When the Army objected that it had no authority to use 
the working capital fund for personal expenses, AFGE appealed to FLRA. 
FLRA agreed with the Army and ruled that the provision was 
"nonnegotiable." Citing FLRA decisions, Comptroller General decisions, 
and federal court cases, FLRA concluded that the working capital fund, 
a revolving fund, is treated as a continuing appropriation and, as 
such, the fund was not available for reimbursement of personal 
expenses. 

The court agreed with FLRA that the defense working capital fund 
consists of appropriated funds and is thus not available to pay the 
personal expenses of Army employees. The court, however, rejected what 
it called "FLRA's blanket generalization that revolving funds are 
always appropriations." AFGE, 388 F.3d at 411. Instead, the court 
applied a standard used by the Federal Circuit and the Court of 
Federal Claims when addressing the threshold issue of Tucker Act 
jurisdiction, a "clear expression" standard; that is, funds should be 
regarded as "appropriated" absent a "clear expression by Congress that 
the agency was to be separated from the general federal revenues." Id. 
at 410. The court observed in this regard: 

"While that 'clear expression' standard arises in the context of 
Tucker Act jurisprudence, we think it accurately reflects the broader 
principle that one should not lightly presume that Congress meant to 
surrender its control over public expenditures by authorizing an 
entity to be entirely self-sufficient and outside the appropriations 
process.... For this reason, the courts have sensibly treated agency 
money as appropriated even when the agency is fully financed by 
outside revenues, so long as Congress has not clearly stated that it 
wishes to relinquish the control normally afforded through the 
appropriations process. 

"... We think the correct rule is that the characterization of a 
government fund as appropriated or not depends entirely on Congress' 
expression, whatever the actual source of the money and whether or not 
the fund operates on a revolving rather than annualized basis." 

Id. at 410-11. In applying this standard to the particular funding 
arrangement at issue, the court determined that the defense working 
capital fund was not a nonappropriated fund instrumentality and upheld 
the FLRA decision. "What matters is how Congress wishes to treat 
government revenues, not the source of the revenues." Id. at 413. 

2. Specific versus General Appropriation: 

Page 2-21 - Replace footnote number 38 with the following: 

[38] A few are B-318426, Nov. 2, 2009; B-289209, May 31, 2002; B-
290011, Mar. 25, 2002; 64 Comp. Gen. 138 (1984); 36 Comp. Gen. 526 
(1957); 17 Comp. Gen. 974 (1938); 5 Comp. Gen. 399 (1925). But see 
also B-317139, June 1, 2009, at n.5. 

3. Transfer and Reprogramming: 

Page 2-24 - Replace footnote number 40 with the following: 

[40] 7 Comp. Gen. 524 (1928); 4 Comp. Gen. 848 (1925); 17 Comp. Dec. 
174 (1910). Cases in which adequate statutory authority was found to 
exist are B-302760, May 17, 2004 (the transfer of funds from the 
Library of Congress to the Architect of the Capitol for construction 
of a loading dock at the Library is authorized) and B-217093, Jan. 9, 
1985 (the transfer from the Japan-United States Friendship Commission 
to the Department of Education to partially fund a study of Japanese 
education is authorized). 

Page 2-25 - Insert the following after the first full paragraph: 

In 2007, GAO found that the Department of Homeland Security's (DHS) 
Preparedness Directorate had authority pursuant to 31 U.S.C. § 1534, 
the "account adjustment statute," to fund shared services that 
benefited the directorate as a whole by initially obligating the 
services against one appropriation within the directorate and then 
allocating the costs to the benefiting appropriations. However, the 
Directorate did not appear to properly allocate the costs. To the 
extent it did not properly record its obligations prior to the end of 
the fiscal year against each benefiting appropriation for the 
estimated value of the services each appropriation received, as 
required by the account adjustment statute, the Directorate improperly 
augmented its appropriations. B-308762, Sept. 17, 2007. 

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As mentioned above, Congress may also authorize one agency to transfer 
funds to another agency. For example, under 49 U.S.C. § 5309(m)(6), 
the Federal Transit Administration (FTA) is required to make a 
designated amount of funds appropriated to its capital investment 
grant program available to the Denali Commission. This authority is 
discussed in B-319189, Nov. 12, 2010 (finding that, because FTA has 
specific direction to transfer the funds, these transfers should be 
made using the Department of Treasury's nonexpenditure transfer 
procedures, not the Economy Act or other interagency agreements). 

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The FEDLINK decision references a situation that GAO addressed in 1944 
with regard to a no-year revolving fund called the Navy Procurement 
Fund. 23 Comp. Gen. 668 (1944). The Navy incorrectly believed that 
because the revolving fund was not subject to fiscal year limitation, 
advances to the fund made from annual appropriations were available 
until expended. A number of other GAO decisions, several predating the 
enactment of 31 U.S.C. § 1532, have made essentially the same point--
that, except to the extent the statute authorizing a transfer provides 
otherwise, transferred funds are available for purposes permissible 
under the donor appropriation and are subject to the same limitations 
and restrictions applicable to the donor appropriation. An example of 
this is the Economy Act, 31 U.S.C. § 1535.44 See also B-317878, Mar. 
3, 2009 (amounts appropriated to the United States Postal Service 
Office of Inspector General (OIG) "to be derived by transfer from the 
Postal Service Fund" retain their no-year character and remain 
available for OIG obligations without fiscal year limitation). 

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footnote number 44a, after the first full paragraph: 

In another case, GAO found that the Department of Defense (DOD) 
improperly "parked" DOD funds when it transferred the funds to a 
Department of the Interior franchise fund, GovWorks.44A July 17, 2007. 
"Parking" is a term used to describe a transfer of appropriations to a 
revolving fund to extend the availability of the appropriations. 
GovWorks is a revolving fund established to provide common 
administrative services to Interior and other agencies by procuring 
goods and services from vendors on behalf of federal agencies on a 
competitive basis. DOD used Military Interdepartmental Purchase 
Requests (MIPRs) to transfer funds to GovWorks but did not identify 
the specific items or services that DOD wanted GovWorks to acquire on 
its behalf until after the funds had expired. DOD subsequently 
improperly directed GovWorks to use expired DOD funds for contracts in 
violation of the bona fide needs rule. 

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[44A] GovWorks is officially known as the Acquisition Services 
Directorate. See [hyperlink, http://www.aqd.nbc.gov] (last visited 
Dec. 30, 2010). 

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insert new footnote number 48a as follows: 

Thus, as a matter of law, an agency is free to reprogram unobligated 
funds as long as the expenditures are within the general purpose of 
the appropriation and are not in violation of any other specific 
limitation or otherwise prohibited. E.g., B-279338, Jan. 4, 1999; B-
123469, May 9, 1955. This is true even though the agency may already 
have administratively allotted the funds to a particular object. 20 
Comp. Gen. 631 (1941). In some situations, an agency may be required 
to reprogram funds to satisfy other obligations. E.g., Cherokee Nation 
of Oklahoma v. Leavitt, 543 U.S. 631, 641-43 (2005) (government must 
reprogram unrestricted funds to cover contractual obligations);48A 
Blackhawk Heating & Plumbing, 622 F.2d at 552 n.9 (satisfaction of 
obligations under a settlement agreement). 

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[48]In this case, the government had argued that its contracts with 
Indian tribes were not "ordinary procurement contracts," so it was not 
legally bound to pay certain contract costs unless Congress 
appropriated sufficient funds for that purpose. The Court found the 
tribal contracts to be binding in the same way as ordinary contractual 
promises and that the government would have to reprogram 
appropriations to fulfill its contractual obligations to the tribes, 
notwithstanding that the government may have planned to use those 
appropriations for other purposes that the government felt were 
critically important. 

4. General Provisions: When Construed as Permanent Legislation: 

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Since an appropriation act is made for a particular fiscal year, the 
starting presumption is that everything contained in the act is 
effective only for the fiscal year covered. Thus, the rule is: A 
provision contained in an annual appropriation act is not to be 
construed to be permanent legislation unless the language used therein 
or the nature of the provision makes it clear that Congress intended 
it to be permanent. The presumption can be overcome if the provision 
uses language indicating futurity or if the provision is of a general 
character bearing no relation to the object of the appropriation. B-
319414, June 9, 2010; 65 Comp. Gen. 588 (1986); 62 Comp. Gen. 54 
(1982); 36 Comp. Gen. 434 (1956); 32 Comp. Gen. 11 (1952); 24 Comp. 
Gen. 436 (1944); 10 Comp. Gen. 120 (1930); 5 Comp. Gen. 810 (1926); 7 
Comp. Dec. 838 (1901). 

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Words of futurity other than hereafter have also been deemed 
sufficient. Thus, there is no significant difference in meaning 
between hereafter and "after the date of approval of this act." 65 
Comp. Gen. at 589; 36 Comp. Gen. at 436; B-209583, Jan. 18, 1983. 
Similarly, an appropriations provision requiring an agency action "not 
later than one year" after enactment of the appropriations act, which 
would occur after the end of the fiscal year, is permanent because 
that prospective language indicates an intention that the provision 
survive past the end of the fiscal year. B-319414, June 9, 2010. Using 
a specific date rather than a general reference to the date of 
enactment produces the same result. B-287488, June 19, 2001; 
"Henceforth" may also do the job. B-209583. So may specific references 
to future fiscal years. B-208354, Aug. 10, 1982. On the other hand, 
the word "hereinafter" was not considered synonymous with hereafter by 
the First Circuit Court of Appeals and was not deemed to establish a 
permanent provision. Atlantic Fish Spotters Ass'n, 321 F.3d 220. 
Rather, the court held that hereinafter is understood to refer only to 
what follows in the same writing (i.e., statute). Id. at 225-26. 

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The words "this or any other act" may be used in conjunction with 
other language that makes the result, one way or the other, 
indisputable. The provision is clearly not permanent if the phrase 
"during the current fiscal year" is added. Norcross v. United States, 
142 Ct. Cl. 763 (1958). Addition of the phrase "with respect to any 
fiscal year" would indicate, all other potential considerations aside, 
that Congress intended the provision to be permanent. B-230110, Apr. 
11, 1988. For example, in the 2006 Department of Justice 
Appropriations Act, as part of the language of ATF's Salaries and 
Expenses appropriation, Congress included a proviso stating that "no 
funds appropriated under this or any other Act with respect to any 
fiscal year may be used to disclose part or all of the contents of the 
Firearms Trace System database" to anyone other than a law enforcement 
agency or a prosecutor in connection with a criminal investigation or 
prosecution. Pub. L. No. 109-108, title I, 119 Stat. 2290, 2295 (Nov. 
22, 2005). In B-309704, Aug. 28, 2007, GAO determined that the proviso 
constituted permanent legislation because the forward-looking effect 
of the phrase "this or any other Act" coupled with the phrase "with 
respect to any fiscal year" indicates Congress's intention that the 
provision be permanent. See also B-316510, July 15, 2008 (a similar 
proviso in ATF's 2008 appropriation, using the phrase "beginning in 
fiscal year 2008 and thereafter," is also permanent law). 

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The inclusion of a provision in the United States Code is relevant as 
an indication of permanence but is not controlling. B-319414, June 9, 
2010; 36 Comp. Gen. 434; 24 Comp. Gen. 436. Failure to include a 
provision in the Code would appear to be of no significance. A 
reference by the codifiers to the failure to reenact a provision 
suggests nonpermanence. 41 Op. Att'y Gen. at 280-81. 

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The degree of relationship between a given provision and the object of 
the appropriation act in which it appears or the appropriating 
language to which it is appended is a factor to be considered. If the 
provision bears no direct relationship to the appropriation act in 
which it appears, this is an indication of permanence. For example, a 
provision prohibiting the retroactive application of an energy tax 
credit provision in the Internal Revenue Code was found sufficiently 
unrelated to the rest of the act in which it appeared, a supplemental 
appropriations act, to support a conclusion of permanence. B-214058, 
Feb. 1, 1984. See also B-319414, June 9, 2010; 62 Comp. Gen. at 56; 32 
Comp. Gen. 11; 26 Comp. Gen. at 357; B-37032, Oct. 5, 1943; A-88073, 
Aug. 19, 1937. The closer the relationship, the less likely it is that 
the provision will be viewed as permanent. A determination under rules 
of the Senate that a proviso is germane to the subject matter of the 
appropriation bill will negate an argument that the proviso is 
sufficiently unrelated as to suggest permanence. B-208705, Sept. 14, 
1982. 

The phrasing of a provision as positive authorization rather than a 
restriction on the use of an appropriation is an indication of 
permanence, but usually has been considered in conjunction with a 
finding of adequate words of futurity. B-319414, June 9, 2010; 36 
Comp. Gen. 434; 24 Comp. Gen. 436. An early decision, 17 Comp. Dec. 
146 (1910), held a proviso to be permanent based solely on the fact 
that it was not phrased as a restriction on the use of the 
appropriation to which it was attached, but this decision seems 
inconsistent with the weight of authority and certainly with the 
Supreme Court’s decision in Minis v. United States, cited above. 

Finally, a provision may be construed as permanent if construing it as 
temporary would render the provision meaningless or produce an absurd 
result. 65 Comp. Gen. 352 (1986); 62 Comp. Gen. 54; B-200923, Oct. 1, 
1982. These decisions dealt with a general provision designed to 
prohibit cost-ofliving pay increases for federal judges “except as may 
be specifically authorized by Act of Congress hereafter enacted.” Pub. 
L. No. 97-92, § 140, 95 Stat. 1183, 1200 (Dec. 15, 1981). The 
provision appeared in a fiscal year 1982 continuing resolution, which 
expired on September 30, 1982. The next applicable pay increase would 
have been effective October 1, 1982. Thus, if the provision were not 
construed as permanent, it would have been meaningless “since it would 
have been enacted to prevent increases during a period when no 
increases were authorized to be made.” 62 Comp. Gen. at 56–57.55 
Similarly, a provision was held permanent in 9 Comp. Gen. 248 
(1929) although it contained no words of futurity, because it was to 
become effective on the last day of the fiscal year and an alternative 
construction would have rendered it effective for only one day, 
clearly not the legislative intent. See also B-319414, June 9, 2010; B-
270723, Apr. 15, 1996; 65 Comp. Gen. at 590; B-214058, Feb. 1, 1984. 

C. Relationship of Appropriations to Other Types of Legislation: 

2. Specific Problem Areas and the Resolution of Conflicts: 

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Second, Congress is free to amend or repeal prior legislation as long 
as it does so directly and explicitly and does not violate the 
Constitution. It is also possible for one statute to implicitly amend 
or repeal a prior statute, but it is firmly established that “repeal 
by implication” is disfavored, and statutes will be construed to avoid 
this result whenever reasonably possible. E.g., Tennessee Valley 
Authority v. Hill, 437 U.S. 153, 189–90 (1978); Morton v. Mancari, 417 
U.S. 535, 549 (1974); Posadas v. National City Bank of New York, 296 
U.S. 497, 503 (1936); B-307720, Sept. 27, 2007; B-290011, Mar. 
25, 2002; B-261589, Mar. 6, 1996; 72 Comp. Gen. 295, 297 (1993); 68 
Comp. Gen. 19, 22–23 (1988); 64 Comp. Gen. 143, 145 (1984); 58 
Comp. Gen. 687, 691–92 (1979); B-258163, Sept. 29, 1994; B-236057, 
May 9, 1990. Repeals by implication are particularly disfavored in the 
appropriations context. Robertson v. Seattle Audubon Society, 503 U.S. 
429, 440 (1992). 

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A corollary to the “cardinal rule” against repeal by implication, or 
perhaps another way of saying the same thing, is the rule of 
construction that statutes should be construed harmoniously so as to 
give maximum effect to both wherever possible. E.g., Posadas, 296 U.S. 
at 503; Strawser v. Atkins, 290 F.3d 720 (4th Cir.), cert. denied, 537 
U.S. 1045 (2002); B-290011, Mar. 25, 2002; 53 Comp. Gen. 853, 856 
(1974); B-208593.6, Dec. 22, 1988. See B-307720, Sept. 27, 2007, and B-
258000, Aug. 31, 1994, for examples of harmonizing ambiguous 
appropriation and authorization provisions in order to effectuate 
congressional intent. 

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Third, if two statutes are in irreconcilable conflict, the more recent 
statute, as the latest expression of Congress, governs. As one court 
concluded in a statement illustrating the eloquence of simplicity, 
“the statutes are thus in conflict, the earlier permitting and the 
later prohibiting,” so the later statute supersedes the earlier. 
Eisenberg v. Corning, 179 F.2d 275, 277 (D.C. Cir. 1949). In a sense, 
the “last in time” rule is yet another way of expressing the repeal by 
implication principle. We state it separately to highlight its 
narrowness: it applies only when the two statutes cannot be reconciled 
in any reasonable manner, and then only to the extent of the conflict. 
E.g., B-308715, Apr. 20, 2007 (“It is well established that a later 
enacted, specific statute will typically supersede a conflicting 
previously enacted, general statute to the extent of the inconsistency.”
). See also Posadas, 296 U.S. at 503; B-255979, 
Oct. 30, 1995; B-226389, Nov. 14, 1988; B-214172, July 10, 1984, aff’d 
upon reconsideration, 64 Comp. Gen. 282 (1985). 

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By 1971, however, Congress was enacting (and continues to enact) a 
general provision in all appropriation acts: “no part of any 
appropriation contained in this Act shall remain available for 
obligation beyond the current fiscal year unless expressly so provided 
herein.” Now, if an appropriation act contains the provision quoted in 
the preceding paragraph, it will not be sufficient for an 
appropriation contained in that act to merely incorporate a multiple 
year or no-year authorization by reference. The effect of this general 
provision is to require the appropriation language to expressly 
provide for availability beyond one year in order to overcome the 
enacting clause. B-319734, July 26, 2010; 50 Comp. Gen. 857 (1971). 

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For purposes of the rule of 50 Comp. Gen. 857 and its progeny, it 
makes no difference whether the authorization is in an annual 
authorization of appropriations act or in permanent enabling 
legislation. It also appears to make no difference whether the 
authorization merely authorizes the longer period of availability or 
directs it. See, for example, 58 Comp. Gen. 321, in which the general 
provision restricting availability to the current fiscal year, as the 
later expression of congressional intent, was held to override 25 
U.S.C. § 13a, which provides that the unobligated balances of certain 
Indian assistance appropriations “shall remain available for 
obligation and expenditure” for a second fiscal year. See also B-
319734, July 26, 2010; 71 Comp. Gen. 39, 40 (1991); B-249087, June 25, 
1992. Similarly, in Dabney v. Reagan, No. 82 Civ. 2231-CSH (S.D. N.Y. 
June 6, 1985), the court held that a two-year period of availability 
specified in appropriation acts would override a “mandatory” no-year 
authorization contained in the Solar Energy and Energy Conservation 
Bank Act. 

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reference to new footnote number 60a, after the first full paragraph: 

In 2004, two courts interpreted appropriation restrictions to avoid 
repeal by implication: City of Chicago v. Department of the 
Treasury, 384 F.3d 429 (7th Cir. 2004), and City of New York v. 
Beretta U.S.A. Corp., 222 F.R.D. 51 (E.D. N.Y. 2004). In the first 
case, the City of Chicago had sued the former Bureau of Alcohol, 
Tobacco, and Firearms under the Freedom of Information Act (FOIA), 5 
U.S.C. § 552, to obtain access to certain information from the agency’
s firearms databases. The Court of Appeals for the Seventh Circuit 
held that the information was not exempt from disclosure under FOIA. 
City of Chicago v. Department of the Treasury, 287 F.3d 628 (7th Cir. 
2002). The agency then appealed to the Supreme Court. While the appeal 
was pending, Congress enacted appropriations language for fiscal years 
2003 and 2004 providing that no funds shall be available or used to 
take any action under FOIA or otherwise that would publicly disclose 
the information. Pub. L. No. 108-7, div. J, title VI, § 644, 117 Stat. 
11, 473 (Feb. 20, 2003); Pub. L. No. 108-199, div. B, title I, 118 
Stat. 3, 53 (Jan. 23, 2004). The Supreme Court remanded the case to 
the Seventh Circuit to consider the impact, if any, of the 
appropriations language. Department of Justice v. City of Chicago, 537 
U.S. 1229 (2003). In City of Chicago v. Department of the Treasury, 
384 F.3d 429 (7th Cir. 2004), the court decided that the 
appropriations language had essentially no impact on the case. Citing 
a number of cases on the rule disfavoring implied repeals particularly 
by appropriations act), the court held that the appropriations rider 
did not repeal FOIA or otherwise affect the agency’s legal obligation 
to release the information in question. The court concluded that “FOIA 
deals only peripherally with the allocation of funds—its main focus is 
to ensure agency information is made available to the public.” City of 
Chicago, 384 F.3d at 435. In this regard, the court repeatedly 
emphasized the minimal costs entailed in complying with the access 
request and concluded that “there is no ‘irreconcilable conflict’ 
between prohibiting the use of federal funds to process the request 
and granting the City access to the databases.” Id. After the 2004 
decision, the agency filed a request for rehearing. Before the 
rehearing, Congress passed the Consolidated Appropriations Act of 2005 
specifying that no funds be used to provide the data sought by the 
City, and further provided that the data be “immune from judicial 
process.” Pub. L. No. 108-447, div. B, title I, 118 Stat. 2809, 2859 
(Dec. 8, 2004). The court determined that this statutory language 
showed that Congress’s “obvious intention ... was to cut off all 
access to the databases for any reason.” City of Chicago v. Department 
of the Treasury, 423 F.3d 777, 780 (7th Cir. 2005). 

The second case, City of New York v. Beretta U.S.A. Corp., 222 F.R.D. 
51 (E.D. N.Y. 2004), concerned access to firearms information that was 
subject to the same appropriations language for fiscal year 2004 in 
Public Law 108-199.60a In this case, the demand for access took the 
form of subpoenas seeking discovery of the records in a tort suit by 
the City of New York and others against firearms manufacturers and 
distributors. The court in City of New York denied the agency’s motion 
to quash the subpoenas, which was based largely on the appropriations 
language. The court held that the appropriations language, which 
prohibited public disclosure, was inapplicable by its terms since 
discovery could be accomplished under a protective order that would 
keep the records confidential. City of New York, 222 F.R.D. at 56–65. 

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60a The litigation did not address whether the provisions were to be 
read as temporary or permanent. B-309704, Aug. 28, 2007, at 2 n.1. See 
also B-316510, July 15, 2008. 

D. Statutory Interpretation: Determining Congressional Intent: 

1. The Goal of Statutory Construction: 

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Of course, there are those rare occasions when two statutory 
provisions are just irreconcilable. Even then there is a statutory 
construction principle called the “last-in-time” rule. For example, in 
B-303268, Jan. 3, 2005, at issue was what Congress intended in 
enacting a “notwithstanding” clause in the State Department’s fiscal 
year 2004 appropriations. Congress had appropriated a lump sum of $35 
million to the Economic Support Fund for assistance to Lebanon, 
available “notwithstanding any other provision of law.” Pub. 
L. No. 108-7, div. E, title V, § 534(a), 117 Stat. 11, 193 (Feb. 20, 
2003). Five months earlier, in the 2003 Foreign Relations 
Authorization Act, Congress had included a provision, “notwithstanding 
any other provision of law,” restricting from obligation $10 million “
made available in fiscal year 2003 or any subsequent fiscal year” to 
the Economic Support Fund for assistance to Lebanon until the 
President submitted certain findings to Congress. Pub. L. No. 107-228, 
§ 1224, 116 Stat. 1350, 1432 (Sept. 30, 2002). The two “notwithstanding”
clauses presented an irreconcilable conflict that GAO resolved by 
applying the “last-in-time” rule of construction—that is, we presume 
that the later-enacted statute represents Congress’s current 
expression of the law (i.e., Congress’s “last word”). Consequently, 
the “notwithstanding” clause of the appropriation act superseded the 
authorization act’s “notwithstanding” clause. However, in this case 
the appropriation act’s “notwithstanding” clause had effect only for 
fiscal year 2004. The authorization act’s clause was permanent law. 
Thus the appropriation act’s clause superseded the authorization act’s 
clause only for fiscal year 2004, unless similar appropriation act 
provisions were enacted for subsequent fiscal years. 

The last-in-time rule was also applied in B-316510, July 15, 2008. 
That case involved two provisos, contained in the fiscal years 2006 
and 2008 appropriations acts, regarding the disclosure of certain 
information maintained by the Bureau of Alcohol, Tobacco, Firearms, 
and Explosives (ATF), both of which contained the necessary words of 
futurity to make them permanent law. The 2008 proviso specifically 
authorized disclosure in some circumstances that would not be 
permitted under the 2006 proviso. Because it was passed later in time, 
GAO concluded that the 2008 proviso superseded the 2006 proviso with 
respect to those particular disclosures. 

2. The “Plain Meaning” Rule: 

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By far the most important rule of statutory construction is this: You 
start with the language of the statute. Countless judicial decisions 
reiterate this rule. E.g., Carcieri v. Salazar, 555 U.S. 379, 129 S. 
Ct. 1058 (2009); BedRoc Limited, LLC v. United States, 541 U.S. 176 
(2004); Lamie v. United States Trustee, 540 U.S. 526 (2004); Hartford 
Underwriters Insurance Co. v. Union Planters Bank, N.A., 530 U.S. 1 
(2000); Robinson v. Shell Oil Co., 519 U.S. 337 (1997); Connecticut 
National Bank v. Germain, 503 U.S. 249 (1992); Mallard v. United 
States District Court for the Southern District of Iowa, 490 U.S. 296, 
300 (1989). The primary vehicle for Congress to express its intent is 
the words it enacts into law. As stated in an early Supreme Court 
decision: “The law as it passed is the will of the majority of both 
houses, and the only mode in which that will is spoken is in the act 
itself; and we must gather their intention from the language there 
used.” Aldridge v. Williams, 44 U.S. (3 How.) 9, 24 (1845). 
A somewhat better known statement is from United States v. American 
Trucking Ass’ns, 310 U.S. 534, 543 (1940): “There is, of course, no 
more persuasive evidence of the purpose of a statute than the words by 
which the legislature undertook to give expression to its wishes.” 

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68a as follows: 

The extent to which sources outside the statute itself, particularly 
legislative history, should be consulted to help shed light on the 
statutory scheme has been the subject of much controversy in recent 
decades.68a One school of thought, most closely identified with 
Supreme Court Justice Antonin Scalia, holds that resort to legislative 
history is never appropriate. This approach is sometimes viewed as a 
variant of the plain meaning rule.69 A more widely expressed statement 
of the plain meaning rule is that legislative history can be consulted 
but only if it has first been determined that the statutory language 
is “ambiguous”-—that is, that there is no plain meaning. 

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68a This discussion does not include outside sources that the statute 
specifically incorporates by reference, which are generally viewed as 
part of the statutory scheme. See, e.g., B-316010, Feb. 25, 2008 
(various provisions of an appropriation act incorporated by reference 
specified passages of an explanatory statement of the House Committee 
on Appropriations that was printed in the Congressional Record and 
contained specific allocations, which the agencies were required to 
follow). For more on incorporation by reference, see section D.6.a of 
this chapter. 

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Whether the language of the statute is sufficiently ambiguous that a 
court should look beyond it to legislative history can be difficult to 
discern. In Zuni Public School District No. 89 v. Department of 
Education, 550 U.S. 81 (2007), the Court was faced with interpreting 
statutory language setting out a formula to be used by the Department 
of Education in connection with state funding of school districts. In 
a 5–4 decision, a majority of the court found the language in the 
statute to be sufficiently ambiguous to permit it to consider other 
indicators of congressional intent. The majority acknowledged that if 
the intent of Congress was clearly and unambiguously expressed by the 
statutory language, that would be the end of the Court’s analysis. 

3. The Limits of Literalism: Errors in Statutes and “Absurd 
Consequences”: 

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The Supreme Court’s decision in Lamie v. United States Trustee, 540 
U.S. 526 (2004), contained an interesting discussion of drafting 
errors and what to do about them. For reasons that are described at 
length in the opinion but need not be repeated here, the Court found 
an “apparent legislative drafting error” in a 1994 statute. Lamie, 540 
U.S. at 530. Nevertheless, the Court held that the amended language 
must be applied according to its plain terms. While the Court in Lamie 
acknowledged that the amended statute was awkward and ungrammatical, 
and that a literal reading rendered some words superfluous and could 
produce harsh results, none of these defects made the language 
ambiguous. Id. at 534–36. The Court determined that these flaws did 
not “lead to absurd results requiring us to treat the text as if it 
were ambiguous.” Id. at 536. The Court also drew a distinction between 
construing a statute in a way that, in effect, added missing words as 
opposed to ignoring words that might have been included by mistake. 
Id. at 538. 

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Recent Supreme Court decisions likewise reinforce the need for caution 
when it comes to departing from statutory language on the basis of its 
apparent “absurd consequences.” See Lamie v. United States Trustee, 
540 U.S. 526, 537–38 (2004) (“harsh” consequences are not the 
equivalent of absurd consequences); Barnhart v. Thomas, 540 U.S. 20, 
28–29 (2003) (“undesirable” consequences are not the equivalent of 
absurd consequences). 

4. Statutory Aids to Construction: 

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Occasionally, the courts use the Dictionary Act to assist in resolving 
questions of interpretation. E.g., Carr v. United States, ___ U.S. 
___, 130 S. Ct. 2229, 2236 (2010) (Dictionary Act’s provision that 
statutory “words used in the present tense include the future as well 
as the present,” 1 U.S.C. § 1, interpreted to mean that the present 
tense generally does not include the past tense); Gonzalez 
v. Secretary for the Department of Corrections, 366 F.3d 1253, 1263–64 
(11th Cir. 2004) (applying the Dictionary Act’s general rule that “
words importing the singular include and apply to several persons, 
parties, or things,” 1 U.S.C. § 1); United States v. Reid, 206 F. 
Supp. 2d 132 (D. Mass. 2002) (an aircraft is not a “vehicle” for 
purposes of the USA PATRIOT Act); United States v. Belgarde, 148 F. 
Supp. 2d 1104 (D. Mont.), aff’d, 300 F.3d 1177 (9th Cir. 2002) (a 
government agency, which the defendant was charged with burglarizing, 
is not a “person” for purposes of the Major Crimes Act). Courts also 
hold on occasion that the Dictionary Act does not apply. See Rowland 
v. California Men’s Colony, 506 U.S. 194 (1993) (context refutes 
application of the title 1, United States Code, definition of 
“person”); United States v. Ekanem, 383 F.3d 40 (2nd Cir. 2004) 
(“victim” as used in the Mandatory Victims Restitution Act (MVRA) is 
not limited by the default definition of “person” in the Dictionary 
Act since that definition does not apply where context of MVRA 
indicates otherwise). 

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Congress regularly passes laws that “codify,” or enact into positive 
law, the contents of various titles of the United States Code. The 
effect of such codifications is to make that United States Code title 
the official evidence of the statutory language it contains.74 
Codification acts typically delete obsolete provisions and make other 
technical and clarifying changes to the statutes they codify. 
Codification acts usually include language stating that they should 
not be construed as making substantive changes in the laws they 
replace. See, e.g., Pub. L. No. 97-258, § 4(a), 96 Stat. 877, 1067 
(1982) (codifying title 31 of the United States Code). See also 
Scheidler v. National Organization for Women, 547 U.S. 9 (2006); 69 
Comp. Gen. 691 (1990).75 

5. Canons of Statutory Construction: 

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Like all other courts, the Supreme Court follows this venerable canon. 
E.g., United States v. Cleveland Indians Baseball Co., 532 U.S. 200, 
217 (2001) (“it is, of course, true that statutory construction ‘is a 
holistic endeavor’ and that the meaning of a provision is ‘clarified 
by the remainder of the statutory scheme’”); FDA v. Brown & Williamson 
Tobacco Corp., 529 U.S. 120 (2000); Gustafson v. Alloyd Co., Inc., 513 
U.S. 561, 569 (1995) (“the Act is to be interpreted as a symmetrical 
and coherent regulatory scheme, one in which the operative words have 
a consistent meaning throughout”); Brown v. Gardner, 513 U.S. 115, 118 
(1994) (“ambiguity is a creature not of definitional possibilities but 
of statutory context”). See also Hibbs v. Winn, 542 U.S. 88, 101 
(2004) (courts should construe a statute so that “effect is given to 
all its provisions, so that no part will be inoperative or 
superfluous, void or insignificant”); General Dynamics Land Systems, 
Inc. v. Cline, 540 U.S. 581, 598 (2004) (courts should not ignore “the 
cardinal rule that statutory language must be read in context since a 
phrase gathers meaning from the words around it”); B-321685, Mar. 14, 
2011, at 4 (interpreting amendments to section 313 of the Clean Water 
Act, 33 U.S.C. § 1323, enacted by Pub. L. No. 111-378: “The Supreme 
Court has indicated that the meaning of a statute is to be determined 
not just ‘by reference to the language itself,’ but also by reference 
to ‘the specific context in which that language is used and the 
broader context of the statute as a whole.’”). 

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the following: 

B-287158, Oct. 10, 2002 (citations omitted).77 See also B-318897, Mar. 
18, 2010. 

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revise the first bullet as follows: 

* B-302335, Jan. 15, 2004: When read as a whole, the Emergency Steel 
Loan Guarantee Act of 1999, 15 U.S.C. § 1841 note, clearly 
appropriated loan guarantee programs funds to the Loan Guarantee Board 
and not the Department of Commerce. 

* B-316533, July 31, 2008: Reading the Homeland Security Act, Pub. L. 
No. 107-296, 116 Stat. 2135 (Nov. 25, 2002), as a whole, GAO construed 
the reorganization and congressional notification provisions in 
section 872 as a limitation on any general or inherent authority of 
the Secretary to reorganize the Department of Homeland Security that 
may otherwise be inferred from sections 102(a)(2) and (a)(3). 

* B-303961, Dec. 6, 2004: Despite use of the phrase “notwithstanding 
any other provision of law” in a provision of an appropriation act, 
nothing in the statute read as a whole or its legislative history 
suggested an intended waiver of the Antideficiency Act. See also B-
290125.2, B-290125.3, Dec. 18, 2002 (redacted) (viewed in isolation, 
the phrase “notwithstanding any other provision of law” might be read 
as exempting a procurement from GAO’s bid protest jurisdiction under 
the Competition in Contracting Act; however, when the statute is read 
as a whole, as it must be, it does not exempt the procurement from the 
Act). 

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* Hibbs v. Winn, 542 U.S. 88, 101 (2004): “The rule against 
superfluities complements the principle that courts are to interpret 
the words of a statute in context.” 

* Alaska Department of Environmental Conservation v. EPA, 540 
U.S. 461, 489 n.13 (2004): A statute should be construed so that, “if 
it can be prevented, no clause, sentence, or word shall be 
superfluous, void, or insignificant.” 

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Although frequently invoked, the no surplusage canon is less absolute 
than the “whole statute” canon. One important caveat, previously 
discussed, is that words in a statute will be treated as surplus and 
disregarded if they were included in error. E.g., Chickasaw Nation v. 
United States, 534 U.S. 84, 94 (2001) (emphasis in original): “The 
canon requiring a court to give effect to each word ‘if possible’ is 
sometimes offset by the canon that permits a court to reject words ‘as 
surplusage’ if ‘inadvertently inserted or if repugnant to the rest of 
the statute.’” Citing Chickasaw Nation, the Court also observed that 
the canon of avoiding surplusage will not be invoked to create 
ambiguity in a statute that has a plain meaning if the language in 
question is disregarded. Lamie v. United States 
Trustee, 540 U.S. 526, 536 (2004). 

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When words used in a statute are not specifically defined, they are 
generally given their “plain” or ordinary meaning rather than some 
obscure usage. E.g., Carcieri v. Salazar, 555 U.S. 379, 129 S. Ct. 
1058 (2009); Engine Manufacturers Ass’n v. South Coast Air Quality 
Management District, 541 U.S. 246 (2004); BedRoc Limited, LLC v. 
United States, 541 U.S. 176 (2004); Asgrow Seed Co. v. Winterboer, 513 
U.S. 179, 187 (1995); Federal Deposit Insurance Corp. v. Meyer, 510 
U.S. 471, 476 (1994); Mallard v. United States, 490 U.S. 296, 301 
(1989); B-261193, Aug. 25, 1995; 70 Comp. Gen. 705 (1991); 38 Comp. 
Gen. 812 (1959). 

One commonsense way to determine the plain meaning of a word is to 
consult a dictionary. E.g., Carcieri, 129 S. Ct. at 1064; Mallard, 490 
U.S. at 301; American Mining Congress v. EPA, 824 F.2d 1177, 1183–84 & 
n. 7 (D.C. Cir. 1987). Thus, the Comptroller General relied on the 
dictionary in B-251189, Apr. 8, 1993, to hold that business suits did 
not constitute “uniforms,” which would have permitted the use of 
appropriated funds for their purchase. See also B-302973, Oct. 6, 
2004; B-261522, Sept. 29, 1995. 

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Also, if a word has a specific legal meaning, courts tend to apply 
that meaning when interpreting a statute. United States v. Nason, 269 
F.3d 10, 16 (1st Cir. 2001) (stating that “we presume, absent evidence 
to the contrary, that Congress knew and adopted the widely accepted 
legal definition of meanings associated with the specific words 
enshrined in the statute,” and referring to Black’s Law Dictionary for 
the “most widely accepted legal meaning” of a term). GAO used this 
rule of statutory construction to construe a prohibition in a fiscal 
year 2010 appropriations act, which prohibited the distribution of 
federal funds to “affiliates,” “subsidiaries,” and “allied 
organizations” of the Association of Community Organizations for 
Reform Now (ACORN). NeighborWorks, a federally chartered entity, asked 
if one of its grantees, Affordable Housing Centers of America (AHCOA), 
fell within the scope of this provision. As the First Circuit Court of 
Appeals did when interpreting federal statutes, GAO used Black’s Law 
Dictionary, federal statutes, and federal regulations to find the 
plain legal meaning of these terms. B-320329, Sept. 29, 2010. 

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Several different canons of construction revolve around these 
seemingly straightforward notions. Before discussing some of them, it 
is important to note once more that these canons, like most others, 
may or may not make sense to apply in particular settings. Indeed, the 
basic canon that the same words have the same meaning in a statute is 
itself subject to exceptions. In Cleveland Indians Baseball Club, the 
Court cautioned: “Although we generally presume that identical words 
used in different parts of the same act are intended to have the same 
meaning, ... the presumption is not rigid, and the meaning [of the 
same words] well may vary with the purposes of the law.” Cleveland 
Indians Baseball Club, 532 U.S. at 213 (citations and quotation marks 
omitted). To drive the point home, the Court quoted the following 
admonition from a law review article: 

Id. See also General Dynamics Land Systems, Inc. v. Cline, 540 U.S. 
581, 594–96 and fn. 8 (2004) (quoting the same law review passage, 
which it notes “has become a staple of our opinions”). Of course, all 
bets are off if the statute clearly uses the same word differently in 
different places. See Robinson v. Shell Oil Co., 519 U.S. 337, 343 
(1997) (“once it is established that the term ‘employees’ includes 
former employees in some sections, but not in others, the term 
standing alone is necessarily ambiguous”). 

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In 2007, the Court applied the exception described in the Cleveland 
Indians Baseball Club case in Environmental Defense v. Duke Energy 
Corp., 549 U.S. 561 (2007) (upholding differing regulatory definitions 
of the same statutory term contained in two sections of the Clean Air 
Act). Rejecting the lower court’s holding that there is an “
effectively irrebuttable” presumption that the same defined term in 
different provisions of the same statute must be “interpreted 
identically,” the Court pointed out simply that “context counts.” 
Environmental Defense, 549 U.S. at 575–76. 

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Two canons are frequently applied to the use of similar—but not 
identical—words in a statute when they are part of the same phrase. 
These canons are known as “ejusdem generis,” or “of the same kind,” 
and “noscitur a sociis,” loosely meaning that words are known by the 
company they keep. See, e.g., B-320329, Sept. 29, 2010 (applying the 
principle of ejusdem generis to construe the term “allied organization”
to be in the same class as “affiliates” and “subsidiaries” in an 
appropriations act provision). 

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language before the first full paragraph: 

The Court has cautioned, however, that a canon of construction like 
noscitur a sociis cannot modify the meaning of a term that is 
specifically defined in a statute. See Schwab v. Reilly, ___ U.S. ___, 
130 S. Ct. 2652, 2662 (2010) (“Although we look to dictionaries and 
the Bankruptcy Rules to determine the meaning of words the [United 
States] Code does not define, ... the Code’s definition of the 
‘property claimed as exempt’ in this case is clear.”). 

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Likewise, a statute’s grammatical structure is useful but not 
conclusive. Lamie v. United States Trustee, 540 U.S. 526, 534–35 
(2004) (the mere fact that a statute is awkwardly worded or even 
ungrammatical does not make it ambiguous). Nevertheless, the Court 
sometimes gives significant weight to the grammatical structure of a 
statute. For example, in Barnhart v. Thomas, 540 U.S. 20, 26 (2003), 
the Court rejected the lower court’s construction of a statute in part 
because it violated the grammatical “rule of the last antecedent.” 
Also, in Arcadia, Ohio v. Ohio Power Co., 498 U.S. 73 (1991), the 
Court devoted considerable attention to the placement of the word “or” 
in a series of clauses. It questioned the interpretation proffered by 
one of the parties that would have given the language an awkward 
effect, noting: “In casual conversation, perhaps, such absentminded 
duplication and omission are possible, but Congress is not presumed to 
draft its laws that way.” Arcadia, 498 U.S. at 79. By contrast, in 
Nobelman v. American Savings Bank, 508 U.S. 324, 330 (1993), the Court 
rejected an interpretation, noting: “We acknowledge that this reading 
of the clause is quite sensible as a matter of grammar. But it is not 
compelled.” 

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paragraph: 

The heading of a particular section of a statute may also be relevant. 
See, e.g., B-321823, Dec. 6, 2011, at 4 (the heading of a particular 
statutory provision among the factors considered in construing that 
provision). 

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The same considerations apply to a statute’s popular name and to the 
headings, or titles, of particular sections of the statute. See Intel 
Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 242 (2004) (“A 
statute’s caption ... cannot undo or limit its text’s plain meaning”). 
See also Immigration & Naturalization Service v. St. Cyr, 533 U.S. 289, 
308–09 (2001); Pennsylvania Department of Corrections v. Yeskey, 524 
U.S. 206, 212 (1998). In St. Cyr, the Supreme Court concluded that a 
section entitled “Elimination of Custody Review by Habeas Corpus” did 
not, in fact, eliminate habeas corpus jurisdiction. It found that the 
substantive terms of the section were less definitive than the title. 
See also McConnell v. Federal Election Commission, 540 U.S. 93, 180 
(2003). 

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Preambles. Federal statutes often include an introductory “preamble” 
or “purpose” section before the substantive provisions in which 
Congress sets forth findings, purposes, or policies that prompted it 
to adopt the legislation. Such preambles have no legally binding 
effect. However, they may provide indications of congressional intent 
underlying the law. Sutherland states with respect to preambles: 

2A Sutherland, § 47:04 at 221–22.80 For an example in which the Court 
used statutory findings to inform its interpretation of congressional 
intent, see General Dynamics Land Systems, Inc. v Cline, 540 U.S. 581, 
589–91 (2004). 

6. Legislative History: 

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81 The majority opinion in Association of American Physicians & 
Surgeons placed heavy reliance on Public Citizen, noting that “[t]he 
Court adopted, we think it is fair to say, an extremely strained 
construction of the word ‘utilized’ in order to avoid the 
constitutional question.” Association of American Physicians & 
Surgeons, 997 F.2d at 906. Both Public Citizen and Association of 
American Physicians & Surgeons drew strongly worded concurring 
opinions along the same lines. The concurring opinions maintained that 
FACA clearly applied by its plain terms to the respective groups, but 
that its application was unconstitutional as so applied. The District 
of Columbia Circuit Court of Appeals clarified its holding in American 
Physicians & Surgeons in 2005. In re Cheney, 406 F.3d 723 (D.C. Cir. 
2005). There, in order to avoid “severe separation-of-powers problems” 
in applying FACA on the basis that private parties were involved with 
a committee in the Executive Office of the President, the court held 
that for purposes of FACA “a committee is composed wholly of federal 
officials if the President has given no one other than a federal 
official a vote in or, if the committee acts by consensus, a veto over 
the committee’s decisions.” Id. at 728. 

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The use becomes improper when the line is crossed from using 
legislative history to resolve things that are not clear in the 
statutory language to using it to rewrite the statute. E.g., Shannon 
v. United States, 512 U.S. 573, 583 (1994) (declining to give effect 
to “a single passage of legislative history that is no way anchored in 
the text of the statute”); Ratzlaf v. United States, 510 U.S. 135, 147–
48 (1994) (declining to “resort to legislative history to cloud a 
statutory text that is clear”); Brill v. Countrywide Home Loans, Inc., 
427 F.3d 446, 448 (7th Cir. 2005) (noting that “when the legislative 
history stands by itself, as a naked expression of ‘intent’ 
unconnected to any enacted text, it has no more force than an opinion 
poll of legislators—less, really, as it speaks for fewer”). The 
Comptroller General put it this way, “as a general proposition, there 
is a distinction to be made between utilizing legislative history for 
the purpose of illuminating the intent underlying language used in a 
statute and resorting to that history for the purpose of writing into 
the law that which is not there.” 55 Comp. Gen. 307, 325 (1975). 

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(including the quoted language): 

Legislative history versus incorporation by reference 

At this point in the discussion a distinction should be made between 
legislative sources being consulted in the manner described previously 
and an outside source to which a statutory provision expressly refers. 
Incorporation by reference is the use of legislative language to make 
extra-statutory material part of the legislation by indicating that 
the extra-statutory material should be treated as if it were written 
out in full in the legislation. See generally Black’s Law Dictionary 
781 (8th ed. 2004). For example, in a 2001 decision, the United States 
District Court for the District of Columbia upheld the incorporation 
by reference of an unenacted bill into an appropriations law. Hershey 
Foods Corp. v. United States Department of Agriculture, 158 F. Supp. 
2d 37 (D.D.C. 2001), aff’d, 293 F.3d 520 (D.C. Cir. 2002). In that 
case, the Consolidated Appropriations Act for fiscal year 2000 
provided that “H.R. 3428 of the 106th Congress, as introduced on 
November 17, 1999” is “hereby enacted into law.” Id. at 38. The 
unenacted bill that was incorporated into the appropriations law had 
been published in the Congressional Record. The court said that “
Congress may incorporate by cross-reference in its bills if it chooses 
to legislate in that manner.” Id. at 41. 

Incorporation by reference is a well-accepted legislative tool. Id. (“
Laws containing cross-references do not appear to be uncommon.”). 
Indeed, there are numerous instances in which the Supreme Court, for 
more than 100 years, has accepted incorporation by reference without 
objection. See, e.g., Tennessee v. Lane, 541 U.S. 509, 517 (2004); 
United States v. Sharpnack, 355 U.S. 286, 293 (1958); In re Heath, 144 
U.S. 92, 94 (1892). In all of these cases, the language of the 
statutes evidenced clear congressional intent to incorporate by 
reference, and the referenced material was specifically ascertainable 
from the legislative language so all would know with certainty the 
duties, terms, conditions, and constraints enacted into law. 

In a 2008 decision, GAO considered the legal effect of seven 
appropriations provisions in the Consolidated Appropriations Act, 
2008, Pub. L. No. 110-161, 121 Stat. 1844 (Dec. 26, 2007), which 
incorporated by reference specified passages of an explanatory 
statement of the House Committee on Appropriations that was printed in 
the Congressional Record on December 17, 2007. B-316010, Feb. 25, 
2008. This explanatory statement contained more specific allocations 
for the agencies affected. After reviewing the language of the seven 
provisions, GAO determined that: 

Id. at 8. GAO thus concluded that the affected agencies were required 
to obligate and expend amounts appropriated in the seven provisions in 
accordance with the referenced allocations in the explanatory 
statement. See also B-319009, Apr. 27, 2010 (incorporation by 
reference for purposes of reprogramming requirement). 

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However, material in committee reports, even a conference report, will 
ordinarily not be used to controvert clear statutory language. 
Squillacote, 739 F.2d at 1218; Hart v. United States, 585 F.2d 1025 
(Ct. Cl. 1978); B-278121, Nov. 7, 1997; B-33911, B-62187, July 15, 
1948. Also, it will not be used to add requirements that Congress did 
not include in the statute itself. For example, where Congress 
appropriates lump sum amounts without statutorily restricting the use 
of those funds, “a clear inference arises that it does not intend to 
impose legally binding restrictions, and indicia in committee reports 
and other legislative history as to how the funds should or are 
expected to be spent do not establish any legal requirements” on the 
agency. 55 Comp. Gen. 307, 319 (1975); see also Hein v. Freedom From 
Religion Foundation, Inc., 551 U.S. 587, 608 n.7 (2007); Lincoln v. 
Vigil, 508 U.S. 182, 192 (1993). Also, such material is not entitled 
to any weight as legislative history if the statement in the report is 
different from or unrelated to any language in the act itself. Abrego 
Abrego v. Dow Chemical Co., 443 F.3d 676 (9th Cir. 2006); Brill v. 
Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005); B-320091, 
July 23, 2010, at n.4. 

An interesting example of the weight accorded report language which 
alters the plain meaning and effect of the statutory language is in 
Arlington Central School District Board of Education v. Murphy, 548 
U.S. 291 (2006). In this case the issue was whether a provision of the 
Individuals with Disabilities Education Act (IDEA) authorizing the 
award of attorney fees and costs to parents who prevailed in lawsuits 
under the act extended to costs incurred for experts. The Court 
approached the issue by noting that the conditions Congress attaches 
to the receipt of federal funds by states are contractual in nature 
and must therefore be expressed “unambiguously” in order to give 
states adequate notice of what they are accepting. Arlington Central, 
548 U.S. at 296. It went on to hold that the IDEA statute did not 
clearly indicate that expert fees were covered by its fee-shifting 
provision. On the contrary, the Court concluded that the language of 
the fee-shifting provision and other IDEA provisions strongly 
suggested that expert fees were not covered. The Court was influenced 
by the judicial rule that the term “costs” in fee-shifting provisions 
is a term of art that generally does not include expert fees. Id. The 
most striking aspect of the Court’s opinion was its rejection of 
legislative history from the conference report that explicitly stated 
the intent to include expert costs in IDEA’s fee-shifting provision. 
The conference report, quoted in the opinion, could not have been 
clearer: “The conferees intend that the term ‘attorneys’ fees as part 
of the ‘costs’ include reasonable expenses and fees of expert 
witnesses and the reasonable costs of any test or evaluation which is 
found to be necessary for the preparation of the ... case.” Id. at 
304. Nevertheless, the Court concluded: 

“Whatever weight this legislative history would merit in another 
context, it is not sufficient here. Putting the legislative history 
aside, we see virtually no support for respondents’ position. Under 
these circumstances, where everything other than the legislative 
history overwhelmingly suggests that expert fees may not be recovered, 
the legislative history is simply not enough.” 

Id. Thus, the conference report statement could not make up for the 
absence of any statutory language making expert fees reimbursable. Cf. 
B-307767, Nov. 13, 2006 (floor statement is not entitled to weight as 
legislative history when the statute is clear on its face since the 
statement provides an individual member’s views and does not 
necessarily represent the meaning and purpose of the lawmaking body 
collectively). 

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Statements by the sponsor of a bill are also entitled to somewhat more 
weight. E.g., Schwegmann Brothers v. Calvert Distillers Corp., 341 
U.S. 384, 394–95 (1951); Ex Parte Kawato, 317 U.S. 69, 77 (1942). 
However, they are not controlling. General Dynamics Land Systems, Inc. 
v. Cline, 540 U.S. 581, 597–99 (2004); Chrysler Corp. v. Brown, 441 
U.S. 281, 311 (1979). 

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GAO naturally follows the principle that post-enactment statements do 
not constitute legislative history. E.g., 72 Comp. Gen. 317 (1993); 54 
Comp. Gen. 819, 822 (1975). Likewise, the Office of Legal Counsel has 
virtually conceded that presidential signing statements fall within 
the realm of postenactment statements that carry no weight as 
legislative history. See 17 Op. Off. Legal Counsel 131 (1993).85 In 
2007, GAO examined how the federal courts have treated signing 
statements in their published decisions. A search of all federal case 
law since 1945 found fewer than 140 cases that cited presidential 
signing statements, most commonly to supplement legislative history 
such as committee reports. Courts also have cited signing statements 
to establish the date of signing, provide a short summary of the 
statute, explain the purpose of the statute, or describe the 
underlying policy behind the statute. GAO concluded that, overall, 
federal courts infrequently cite or refer to signing statements in 
their published opinions. B-308603, June 18, 2007, Enclosure IV. See 
also B-309928, Dec. 20, 2007, for additional discussion on signing 
statements. 

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85 While this opinion stopped short of attempting “finally to decide” 
the matter, it presented several powerful arguments against the 
validity of signing statements as legislative history but no arguments 
in favor of their use for this purpose. On June 27, 2006, the Senate 
Judiciary Committee held a hearing on the subject of presidential 
signing statements. Background on the hearing, including witness 
statements, can be found at [hyperlink, 
http://judiciary.senate.gov/hearings/hearing.cfm?id=1969] (last 
visited Dec. 30, 2010). 

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* Doe v. Chao, 540 U.S. 614, 621–23 (2004): Congress deleted from the 
bill language that would have provided for the type of damage award 
sought by the petitioner. 

See also F. Hoffman-La Roche Ltd v. Empagran S.A., 542 U.S. 155 
(2004); Resolution Trust Corp. v. Gallagher, 10 F.3d 416 423 (7th Cir. 
1993); Davis v. United States, 46 Fed. Cl. 421 (2000). 

7. Presumptions and “Clear Statement” Rules: 

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The Court reaffirmed the presumption against retroactivity of statutes 
in several recent decisions. E.g., AT&T Corp. v. Hulteen, ___ U.S. ___, 
129 S. Ct. 1962 (2009); Immigration & Naturalization Service v. St. 
Cyr, 533 U.S. 289 (2001); Martin v. Hadix, 527 U.S. 343 (1999); Lindh 
v. Murphy, 521 U.S. 320 (1997); Landgraf v. USI Film Products, 511 
U.S. 244 (1994). In Landgraf, the Court elaborated on the policies 
supporting the presumption against retroactivity: 

Landgraf, 511 U.S. at 272–73. 

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There is a strong presumption against waiver of the federal 
government’s immunity from suit. The courts have repeatedly held that 
waivers of sovereign immunity must be “unequivocally expressed.” E.g., 
United States v. Nordic Village, Inc., 503 U.S. 30 (1992); Marathon 
Oil Co. v. United States, 374 F.3d 1123, 1127 (Fed. Cir. 2004), cert. 
denied, 544 U.S. 1031 (2005); Shoshone Indian Tribe of the Wind River 
Reservation, Wyoming v. United States, 51 Fed. Cl. 60 (2001), aff’d, 
364 F.3d 1339 (Fed. Cir. 2004), cert. denied, 544 U.S. 973 (2005). 
Legislative history does not help for this purpose. The relevant 
statutory language in Nordic Village was ambiguous and could have been 
read, evidently with the support of the legislative history, to impose 
monetary liability on the United States. The Court rejected such a 
reading, applying instead the same approach as described above in its 
federalism jurisprudence: 

Nordic Village, 503 U.S. at 37. 

Chapter 3: Agency Regulations and Administrative Discretion: 

A. Agency Regulations Page 3-2 – Replace the second paragraph with the 
following: 

As a conceptual starting point, agency regulations fall into three 
broad categories. First, every agency head has the authority, largely 
inherent but also authorized generally by 5 U.S.C. § 301,1 to issue 
regulations to govern the internal affairs of the agency. Regulations 
in this category may include such subjects as conflicts of interest, 
employee travel, and delegations to organizational components. This 
statute is nothing more than a grant of authority for what are called 
“housekeeping” regulations. Chrysler Corp. v. Brown, 441 U.S. 281, 309 
(1979); Smith v. Cromer, 159 F.3d 875, 878 (4th Cir. 1998), cert. 
denied, 528 U.S. 826 (1999); NLRB v. Capitol Fish Co., 294 F.2d 868, 
875 (5th Cir. 1961). It confers “administrative power only.” United 
States v. George, 228 U.S. 14, 20 (1913); B-302582, Sept. 30, 2004; 54 
Comp. Gen. 624, 626 (1975). Thus, the statute merely grants agencies 
authority to issue regulations that govern their own internal affairs; 
it does not authorize rulemaking that creates substantive legal 
rights. Schism v. United States, 316 F.3d 1259, 1278–84 (Fed. Cir. 
2002), cert. denied, 539 U.S. 910 (2003). 

1. The Administrative Procedure Act: 

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from page 3-5 with the following paragraph: 

Richard J. Pierce, Jr., Administrative Law Treatise, § 7.4 at 442 (4th 
ed.2000) (citations omitted). Two decisions make clear that the courts 
will insist upon at least some ascertainable and coherent rationale: 
Northeast Maryland Waste Disposal Authority v. EPA, 358 F.3d 936, 948 
(D.C. Cir. 2004) (the court remanded a rule to the agency because it 
was “frankly, stunned to find” that the agency had provided “not one 
word in the proposed or final rule” (emphasis in original) to explain 
a key aspect of its rule), and International Union, United Mine 
Workers of America v. Department of Labor, 358 F.3d 40, 45 (D.C. Cir. 
2004) (finding that the agency’s stated rationale to withdraw a 
proposed rule was disjointed and conclusory, the court returned the 
matter to the agency “so that it may either proceed with the ... 
rulemaking or give a reasoned account of its decision not to do so”). 

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As a starting point, anything that falls within the definition of a “
rule” in 5 U.S.C. § 551(4) and for which formal rulemaking is not 
required, is subject to the informal rulemaking procedures of 5 U.S.C. 
§ 553 unless exempt. This statement is not as encompassing as it may 
seem, since section 553 itself provides several very significant 
exemptions. These exemptions, according to a line of decisions by the 
U.S. Court of Appeals for the District of Columbia Circuit, will be 
“narrowly construed and only reluctantly countenanced.” Jifry v. 
Federal Aviation Administration, 370 F.3d 1174, 1179 (D.C. Cir. 2004), 
cert. denied, 543 U.S. 1146 (2005); Utility Solid Waste Activities 
Group v. EPA, 236 F.3d 749, 754 (D.C. Cir. 2001); Asiana Airlines v. 
Federal Aviation Administration, 134 F.3d 393, 396–97 (D.C. Cir. 
1998); Tennessee Gas Pipeline Co. v. Federal Energy Regulatory 
Commission, 969 F.2d 1141, 1144 (D.C. Cir. 1992); New Jersey 
Department of Environmental Protection v. EPA, 626 F.2d 1038, 
1045 (D.C. Cir. 1980).8 Be that as it may, they appear in the statute 
and cannot be disregarded. For example, section 553 does not apply to 
matters “relating to agency management or personnel or to public 
property, loans, grants, benefits, or contracts.” 5 U.S.C. § 553(a)(2). 

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8 In Utility Solid Waste Activities Group, 236 F.3d at 
754–55, the court held that the “good cause” exemption in section 
553(b) does not allow an agency to forego notice and comment when 
correcting a technical error in a regulation. Likewise, the court held 
that agencies have no “inherent power” to correct such technical 
errors outside of the APA procedures. Utility Solid Waste Activities 
Group, 236 F.3d at 752–54. The decision in Jifry provides an example 
of a case upholding an agency’s use of the good cause exemption based 
on emergency conditions involving potential security threats. Jifry, 
370 F.3d at 1179. 

4. Waiver of Regulations: 

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Sometimes legislative regulations or the statutes they implement do 
explicitly authorize “waivers” in certain circumstances. Here, of 
course, the waiver authority is an integral part of the underlying 
statutory or regulatory scheme. Accordingly, courts give effect to 
such waiver provisions and, indeed, they may even hold that an agency’
s failure to consider or permit waiver is an abuse of discretion. 
However, the courts usually accord considerable deference to agency 
decisions on whether or not to grant discretionary waivers. For 
illustrative cases, see BDPCS, Inc. v. FCC, 351 F.3d 1177 (D.C. Cir. 
2003); People of the State of New York & Public Service Commission of 
the State of New York v. FCC, 267 F.3d 91 (2nd Cir. 2001); BellSouth 
Corporation v. FCC, 162 F.3d 1215 (D.C. Cir. 1999); Rauenhorst v. 
United States Department of Transportation, 95 F.3d 715 (8th Cir. 
1996). 

B. Agency Administrative Interpretations: 

1. Interpretation of Statutes: 

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In what is now recognized as one of the key cases in determining how 
much “deference” is due an agency interpretation, Chevron, Inc. v. 
Natural Resources Defense Council, 467 U.S. 837 (1984), the Court 
formulated its approach to deference in terms of two questions. The 
first question is “whether Congress has directly spoken to the precise 
question at issue.” Chevron, 467 U.S. at 842. If it has, the agency 
must of course comply with clear congressional intent, and regulations 
to the contrary will be invalidated. Thus, before you ever get to 
questions of deference, it must first be determined that the 
regulation is not contrary to the statute, a question of delegated 
authority rather than deference. “If a court, employing traditional 
tools of statutory construction, ascertains that Congress had an 
intention on the precise question at issue, that intention is the law 
and must be given effect.” Id. at 843 n.9. An example is General 
Dynamics Land Systems, Inc. v. Cline, 540 U.S. 581 (2004), in which 
the Court declined to give Chevron deference, or any lesser degree of 
deference, to an agency interpretation that it found to be “clearly 
wrong” as a matter of statutory construction, since the agency 
interpretation was contrary to the act’s text, structure, purpose, 
history, and relationship to other federal statutes. 

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29 GAO’s desire for agency comments applies to audit reports as well 
as legal decisions. However, in view of the fundamental differences 
between the two products, the process differs. For GAO’s policy for 
audit reports, see GAO’s Agency Protocols, GAO-03-232SP (Washington, 
D.C.: Dec. 2, 2002). For a legal decision, GAO’s typical practice is 
to solicit the agency’s position on the legal issue(s) involved before 
a draft is ever written. A “development letter” is used to document 
facts, refine legal issues, and obtain the agency’s perspective on the 
law and its implementation. Accordingly, draft legal decisions are not 
submitted for comment. See GAO, Procedures and Practices for Legal 
Decisions and Opinions, GAO-06-1064SP (Washington, D.C.: Sept. 2006), 
available at [hyperlink, http://www.gao.gov/legal/resources.html]. 

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insert new footnote number 30a as follows: 

When the agency’s interpretation is in the form of a regulation with 
the force and effect of law, the deference, as we have seen, is at its 
highest.30 The agency’s position is entitled to Chevron deference and 
should be upheld unless it is arbitrary or capricious. There should be 
no question of substitution of judgment.30a If the agency position can 
be said to be reasonable or to have a rational basis within the 
statutory grant of authority, it should stand, even though the 
reviewing body finds some other position preferable. See, e.g., 
Household Credit Services, Inc. v. Pfennig, 541 U.S. 232 (2004); 
Barnhart v. Thomas, 540 U.S. 20 (2003); Yellow Transportation, Inc. v. 
Michigan, 537 U.S. 36 (2002); Shalala v. Illinois Council on Long Term 
Care, Inc., 529 U.S. 1, 20–21 (2000); American Telephone & Telegraph 
Corp. v. Iowa Utility Board, 525 U.S. 366 (1999). Chevron deference is 
also given to authoritative agency positions in formal adjudication. 
See Immigration & Naturalization Service v. Aguirre-Aguirre, 526 U.S. 
415 (1999) (holding that a Bureau of Indian Affairs statutory 
interpretation developed in case-by-case formal adjudication should be 
accorded Chevron deference). For an extensive list of Supreme Court 
cases giving Chevron deference to agency statutory interpretations 
found in rulemaking or formal adjudication, see United States v. Mead 
Corp., 533 U.S. 218, 231 at n.12 (2001). 

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30a This is true even if the statute in question has been construed 
previously by a court, unless the court interpreted the statute 
according to “the unambiguous terms of the statute[, leaving] no room 
for agency discretion.” National Cable & Telecommunications Ass’n v. 
Brand X Internet Services, 545 U.S. 967 (2005). This result stems from 
the policy underlying Chevron deference, that is, the presumption that 
Congress, when it leaves ambiguity in a statute, means for the agency 
to resolve the ambiguity, exercising whatever degree of discretion the 
ambiguity allows. “[I]t is for agencies, not courts, to fill statutory 
gaps.” Id. 

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* Evidence (or lack thereof) of congressional awareness of, and 
acquiescence in, the administrative position. United States v. 
American Trucking Ass’n, 310 U.S. 534, 549–50 (1940); Helvering v. 
Winmill, 305 U.S. 79, 82–83 (1938); Norwegian Nitrogen Products Co. 
v. United States, 288 U.S. 294, 313–15 (1933); Collins v. United 
States, 946 F.2d 864 (Fed. Cir. 1991); Davis v. Director, Office of 
Workers’ Compensation Programs, Department of Labor, 936 F.2d 1111, 
1115–16 (10th Cir. 1991); 41 Op. Att’y Gen. 57 (1950); B-114829-O.M., 
July 17, 1974. Interestingly, in Coke v. Long Island Care At Home, 
Ltd., 376 F.3d 118 (2nd Cir. 2004), the court acknowledged the 
potential relevance of congressional acquiescence to a 30-year-old 
regulation, noting that Congress had amended the applicable statute 
seven times over the life of the regulation without expressing any 
disapproval of it. However, the court ultimately rejected the 
congressional acquiescence argument—according to the court, “
affectionately known as the ‘dog didn’t bark canon’”—and held the 
regulation invalid. Coke, 376 F.3d at 130 and n.5. 

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More recent decisions further indicate that Chevron deference may 
extend beyond legislative rules and formal adjudications. Most 
notably, the Supreme Court observed in dicta in Barnhart v. Walton, 
535 U.S. at 222, that Mead Corp. “denied [any] suggestion” in 
Christensen that Chevron deference was limited to interpretations 
adopted through formal rulemaking. The Barnhart opinion went on to say 
that: 

“In this case, the interstitial nature of the legal question, the
related expertise of the Agency, the importance of the question to the 
administration of the statute, the complexity of that administration, 
and the careful consideration the Agency has given the question over a 
long period of time all indicate that Chevron provides the appropriate 
legal lens through which to view the legality of the Agency 
interpretation here at issue.” 

Barnhart, 535 U.S. at 222.33 See also General Dynamics Land Systems, 
Inc. v. Cline, 540 U.S. 581 (2004); Edelman v. Lynchburg College, 535 
U.S. 106, 114 (2002). Two additional decisions are instructive in 
terms of the limits of Chevron. In both cases the Court found that the 
issuances containing agency statutory interpretations were entitled to 
some weight, but not Chevron deference. Raymond B. Yates, M.D., P.C., 
Profit Sharing Plan v. Hendon, 541 U.S. 1 (agency advisory opinion); 
Alaska Department of Environmental Conservation v. EPA, 540 U.S. 461 
(2004) (internal agency guidance memoranda). 

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Circuit court decisions have added to the confusion. See Coke, 376 
F.3d 118 (the court found that a regulation was not entitled to 
Chevron deference, despite congressional acquiescence and even though 
the statute was ambiguous and the regulation was issued through notice 
and comment rulemaking, because evidence showed the agency intended 
the regulation to be only an “interpretive” as opposed to a 
“legislative” rule); Doe v. United States, 372 F.3d 1347, 1357–59 
(Fed. Cir. 2004), cert. denied, 544 U.S. 904 (2005) (court applied 
Chevron deference to an Office of Personnel Management regulation 
issued under general rulemaking authority); James v. Von Zemenszky, 
301 F.3d 1364 (Fed. Cir. 2002) (ignoring Barnhart factors because the 
agency statutory interpretation contained in a directive and handbook 
“fell within the class of informal agency interpretations that do not 
ordinarily merit Chevron deference”); Federal Election Commission v. 
National Rifle Ass’n, 254 F.3d 173 (D.C. Cir. 2001) (holding that 
Federal Election Committee (FEC) advisory opinions are entitled to 
Chevron deference); Matz v. Household International Tax Reduction 
Investment Plan, 265 F.3d 572 (7th Cir. 2001), cert. denied, 535 U.S. 
954 (2002) (holding that an Internal Revenue Service (IRS) statutory 
interpretation in an amicus brief, supported by an IRS Revenue Ruling 
and agency manual, was not entitled to Chevron deference); Klinedinst 
v. Swift Investments, Inc., 260 F.3d 1251 (11th Cir. 2001) (holding 
that a Department of Labor handbook was not due Chevron deference); 
TeamBank v. McClure, 279 F.3d 614 (8th Cir. 2002) (holding that Office 
of the Controller of the Currency informal adjudications are due 
Chevron deference); In re Sealed Case, 223 F.3d 775 (D.C. Cir. 2000) 
(holding that FEC’s probable cause determinations are entitled to 
Chevron deference). As Professor Pierce notes: 

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The deference principle does not apply to an agency’s interpretation 
of a statute that is not part of its program or enabling legislation 
or is a statute of general applicability. See Adams v. SEC, 287 F.3d 
183 (D.C. Cir. 2002); Association of Civilian Technicians v. Federal 
Labor Relations Authority, 200 F.3d 590 (9th Cir. 2000); Contractor’s 
Sand & Gravel v. Federal Mine Safety & Health Commission, 199 F.3d 
1335 (D.C. Cir. 2000). In “split-jurisdiction” situations, where 
multiple agencies share specific statutory responsibility, courts have 
determined that Chevron deference is due to the primary executive 
branch enforcer and the agency accountable for overall administration 
of the statutory scheme. See Martin v. Occupational Safety and Health 
Review Commission, 499 U.S. 144 (1991); Collins v. National 
Transportation Safety Board, 351 F.3d 1246 (D.C. Cir. 2003). 

2. Interpretation of Agency’s Own Regulations: 

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top of the page: 

Recent cases according Seminole Rock deference to agency 
interpretations of their regulations include: Entergy Services, Inc. 
v. Federal Energy Regulatory Commission, 375 F.3d 1204, 1209 (D.C. 
Cir. 2004); Castlewood Products, L.L.C. v. Norton, 365 F.3d 1076, 1079 
(D.C. Cir. 2004); In re Sullivan, 362 F.3d 1324, 1328 (Fed. Cir. 
2004). In WHX Corp. v. SEC, 362 F.3d 854, 860 (D.C. Cir. 2004), the 
court did not defer to an agency interpretation because the 
interpretation rested entirely on staff advice and there was no 
formal agency precedent or official interpretative guideline on point. 

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Recently the Court held than an agency’s interpretation of its own 
regulation is entitled to Auer deference only when the regulation 
interpreted is itself a product of the agency’s expertise and 
authority in a given area. In Gonzales v. Oregon, 546 U.S. 243 (2006), 
the Court examined an interpretive rule issued by the Attorney 
General, which stated that assisting suicide was not a “legitimate 
medical purpose” for which doctors could prescribe drugs, and doctors 
doing so would violate the Controlled Substance Act (CSA). Gonzales, 
546 U.S. at 254. The Attorney General argued that the rule was 
entitled to Auer deference because it interpreted the term “legitimate 
medical purpose” as that term was used in a 1971 regulation issued by 
the Attorney General under the CSA. 

However, the Court found Auer deference unwarranted, because rather 
than reflecting the Attorney General’s deliberation and imprimatur, 
the 1971 regulation merely mimicked the language of the CSA. The Court 
stated: 

“In Auer, the underlying regulations gave specificity to a statutory 
scheme ... and reflected the considerable experience and expertise the
Department of Labor had acquired over time with respect to the 
complexities of the [statutory scheme]. Here, on the other hand, the 
underlying regulation does little more than restate the terms of the 
statute itself. The language the Interpretive Rule addresses comes 
from Congress, not the Attorney General, and the near-equivalence of 
the statute and regulation belies the Government’s argument for Auer
deference.” 

Gonzales, 546 U.S. at 256–57. 

In contrast to some of the more muddled deference cases discussed 
previously, Gonzales draws a bright line when it comes to an agency’s 
interpretation of its own regulation. “An agency does not acquire 
special authority to interpret its own words when, instead of using 
its expertise and experience to formulate a regulation, it has elected 
merely to paraphrase the statutory language.” Id. at 257. 

C. Administrative Discretion: 

1. Introduction: 

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Under the Administrative Procedure Act (APA), action that is “
committed to agency discretion by law” is not subject to judicial 
review. 5 U.S.C. § 701(a)(2). As the Supreme Court has pointed out, 
this is a “very narrow exception” applicable in “rare instances” 
where, quoting from the APA’s legislative history, “statutes are drawn 
in such broad terms that in a given case there is no law to apply.” 
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410 
(1971). As noted, the “no law to apply” exception is uncommon, and 
most exercises of discretion will be found reviewable at least to some 
extent.37 See Raymond Proffitt Foundation v. Corps of Engineers, 343 
F.3d 199, 207 (3rd Cir. 2003); City of Los Angeles v. Department of 
Commerce, 307 F.3d 859 (9th Cir. 2002); Drake v. Federal Aviation 
Administration, 291 F.3d 59 (D.C. Cir. 2002), cert. denied, 537 U.S. 
1193 (2003); Fox Television Stations, Inc. v. FCC, 280 F.3d 1027 (D.C. 
Cir. 2002); Diebold v. United States, 947 F.2d 787 (6th Cir. 1991). 

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37 However, agency inaction in declining to initiate enforcement or 
other regulatory action is subject to “a presumption of 
unreviewability," although that presumption is rebuttable. Heckler v. 
Chaney, 470 U.S. 821 (1985). Another obvious exception is if a statute 
explicitly precludes judicial review. See Jordan Hospital, Inc. v. 
Shalala, 276 F.3d 72 (1st Cir.), cert. denied, 537 U.S. 812 (2002); 
National Coalition to Save Our Mall v. Norton, 269 F.3d 1092 (D.C. 
Cir. 2001), cert. denied, 537 U.S. 813 (2002) (construction of World 
War II memorial); Ismailov v. Reno, 263 F.3d 851 (8th Cir. 2001) 
(refusal to extend deadline for asylum application). See also Ohio 
Public Interest Research Group, Inc. v. Whitman, 386 F.3d 792 (6th 
Cir. 2004); Godwin v. Secretary of Housing and Urban Development, 356 
F.3d 310 (D.C. Cir. 2004). 

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bulleted paragraph: 

Even where the APA does not flatly preclude judicial review, the 
courts will entertain a lawsuit under the Act only if it involves an 
“agency action” that is subject to redress under the Act. In Norton 
v. Southern Utah Wilderness Alliance, 542 U.S. 55 (2004), the Court 
rejected a suit under the APA to compel the Interior Department to 
regulate the use of off-road vehicles on certain federal wilderness 
lands. The Court concluded that there was no legal mandate requiring 
the agency to take such action. The Court described the jurisdictional 
parameters of the APA as follows: 

“The APA authorizes suit by ‘a person suffering legal wrong because of 
agency action, or adversely affected or aggrieved by agency action 
within the meaning of a relevant statute.’ 5 U.S.C. § 702. Where no 
other statute provides a private right of action, the ‘agency action’ 
complained of must be ‘final agency action.’ § 704 (emphasis added). 
‘Agency action’ is defined in § 551(13) to include ‘the whole or a 
part of an agency rule, order, license, sanction, relief, or the 
equivalent or denial thereof, or failure to act.’ (Emphasis added.)
The APA provides relief for a failure to act in § 706(1): ‘The 
reviewing court shall ... compel agency action unlawfully withheld or 
unreasonably delayed.’ “Sections 702, 704, and 706(1) all insist upon an
‘agency action,’ either as the action complained of (in §§ 702 and 
704) or as the action to be compelled (in § 706(1)).” 

Norton, 542 U.S. at 61–62. Thus, the Court held that in order to be 
viable, an APA claim seeking to compel an agency to act must point to 
“a discrete agency action that it is required to take.” Id. at 64 
(emphasis in original). This standard precludes “broad programmatic 
attack[s].” Id. The Court added: 

“The principal purpose of the APA limitations we have discussed—-and 
of the traditional limitations upon mandamus from which they were 
derived—-is to protect agencies from undue judicial interference
with their lawful discretion, and to avoid judicial entanglement in 
abstract policy disagreements which courts lack both expertise and 
information to resolve.” 

Id. 

2. Discretion Is Not Unlimited: 

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In Lincoln v. Vigil, 508 U.S. 182 (1993), the Supreme Court concluded 
that, absent statutory elaboration, decisions about how to allocate 
funds within a lump-sum appropriation are committed to agency 
discretion by law. The Court noted that “the very point of a lump-sum 
appropriation is to give an agency the capacity to adapt to changing 
circumstances and meet its statutory responsibilities in what it sees 
as the most effective or desirable way.” Lincoln, 508 U.S. at 191. 
Therefore, the Court held that judicial review of the agency’s 
decision to discontinue a program that had been previously funded 
through a lump-sum appropriation was precluded. (See Chapter 6 for a 
more detailed discussion of the availability of appropriations.) See 
also Hein v. Freedom From Religion Foundation, Inc., 551 U.S. 587 
(2007); 55 Comp. Gen. 307 (1975); B-278121, Nov. 7, 1997. 

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Discretion must be exercised before the obligation is incurred. 
Approval after the fact is merely a condoning of what has already been 
done and does not constitute the exercise of discretion. 22 Comp. Gen. 
1083 (1943); 14 Comp. Gen. 698 (1935); A-57964, Jan. 30, 1935. (This 
point should not be confused with an agency’s occasional ability to 
ratify an otherwise unauthorized act. See, e.g., B-306353, Oct. 26, 
2005.) 

4. Regulations May Limit Discretion: 

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For additional authority on the proposition that an agency can, by 
regulation, restrict otherwise discretionary action, see United States 
v. Nixon, 418 U.S. 683 (1974); Vitarelli v. Seaton, 359 U.S. 535 1959); 
Service v. Dulles, 354 U.S. 363 (1957); United States v. Morgan, 193 
F.3d 252 (4th Cir. 1999); Clarry v. United States, 85 F.3d 1041 (2nd 
Cir. 1996); Waldron v. Immigration & Naturalization Service, 17 F.3d 
511, 519 (2nd Cir. 1994); Montilla v. Immigration & Naturalization 
Service, 926 F.2d 162 (2nd Cir. 1991). See also B-316381, July 18, 
2008; 67 Comp. Gen. 471 (1988). 

Chapter 4: Availability of Appropriations: Purpose Chapter 1 Page 4-
3 – Replace part of the index for section 11 as follows: 

11. Lobbying, Publicity or Propaganda, and Related Matters: 

a. Introduction: 
b. Penal Statutes: 
c. Appropriation Act Restrictions: 
(1) Origin and general considerations: 
(2) Self-aggrandizement: 
(3) Covert propaganda: 
(4) Purely partisan materials: 
(5) Pending legislation: Overview: 
(6) Cases involving “grassroots” lobbying violations: 
(7) Pending legislation: Cases in which no violation was found: 
(8) Pending legislation: Providing assistance to private lobbying 
groups: 
(9) Promotion of legislative proposals: Prohibited activity short of 
grass roots lobbying: 
(10) Federal employees’ communications with Congress: 

A. General Principles: 

1. Introduction: 31 U.S.C. § 1301(a): 

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Simple, concise, and direct, this statute was originally enacted in 
1809 (ch. 28, § 1, 2 Stat. 535, (Mar. 3, 1809)) and is one of the 
cornerstones of congressional control over the federal purse. Because 
money cannot be paid from the Treasury except under an appropriation 
(U.S. Const. art. I, § 9, cl. 7), and because an appropriation must be 
derived from an act of Congress, it is for Congress to determine the 
purposes for which an appropriation may be used. Simply stated, 31 
U.S.C. § 1301(a) says that public funds may be used only for the 
purpose or purposes for which they were appropriated. It prohibits 
charging authorized items to the wrong appropriation, and unauthorized 
items to any appropriation. See, e.g., B-302973, Oct. 6, 2004 (agency 
could not charge authorized activities such as cost comparison studies 
to an appropriation that specifically prohibits its use for such 
studies). Anything less would render congressional control largely 
meaningless. An earlier Treasury Comptroller was of the opinion that 
the statute did not make any new law, but merely codified what was 
already required under the Appropriations Clause of the Constitution. 
4 Lawrence, First Comp. Dec. 137, 142 (1883). 

2. Determining Authorized Purposes: 

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Once the purposes have been determined by examining the various pieces 
of legislation, 31 U.S.C. § 1301(a) comes into play to restrict the 
use of the appropriation to these purposes only, together with one 
final generic category of payments—payments authorized under general 
legislation applicable to all or a defined group of agencies and not 
requiring specific appropriations. For example, legislation enacted in 
1982 amended 12 U.S.C. § 1770 to authorize federal agencies to provide 
various services, including telephone service, to employee credit 
unions. Pub. L. No. 97-320, § 515, 96 Stat. 1469, 1530 (Oct. 15, 
1982). Prior to this legislation, an agency would have violated 31 
U.S.C. § 1301(a) by providing telephone service to a credit union, 
even on a reimbursable basis, because this was not an authorized 
purpose under any agency appropriation. 60 Comp. Gen. 653 (1981). The 
1982 amendment made the providing of special services to credit unions 
an authorized agency function, and hence an authorized purpose, which 
it could fund from unrestricted general operating appropriations. 66 
Comp. Gen. 356 (1987). Similarly, a recently enacted statute gives 
agencies the discretion to use appropriated funds to pay the expenses 
their employees incur for obtaining professional credentials. 5 
U.S.C. § 5757(a); B-289219, Oct. 29, 2002. See also B-302548, Aug. 20, 
2004 (section 5757(a) does not authorize the agency to pay for an 
employee’s membership in a professional association unless membership 
is a prerequisite to obtaining the professional license or 
certification). Prior to this legislation, agencies could not use 
appropriated funds to pay fees incurred by their employees in 
obtaining professional credentials. See, e.g., 47 Comp. Gen. 
116 (1967). Other examples are interest payments under the Prompt 
Payment Act (31 U.S.C. §§ 3901–3907) and administrative settlements 
less than $2,500 under the Federal Tort Claims Act (28 U.S.C. §§ 2671–
2680). 

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Where an appropriation specifies the purpose for which the funds are 
to be used, 31 U.S.C. § 1301(a) applies in its purest form to restrict 
the use of the funds to the specified purpose. For example, an 
appropriation for topographical surveys in the United States was not 
available for topographical surveys in Puerto Rico. 5 Comp. Dec. 493 
(1899). Similarly, an appropriation to install an electrical 
generating plant in the customhouse building in Baltimore could not be 
used to install the plant in a nearby post office building, even 
though the plant would serve both buildings and thereby reduce 
operating expenses. 11 Comp. Dec. 724 (1905). An appropriation for the 
extension and remodeling of the State Department building was not 
available to construct a pneumatic tube delivery system between the 
State Department and the White House. 42 Comp. Gen. 226 (1962). In 
another example involving a line-item appropriation for a grant 
project, because the funds were made available for a specific grantee 
in a specific amount to accomplish a specific purpose, the agency 
could not grant less than Congress has directed by using some of the 
appropriation to pay its administrative costs. 72 Comp. Gen. 317 
(1993); 69 Comp. Gen. 660, 662 (1990). An appropriation to the 
Department of Labor for payment to the New York Workers’ Compensation 
Board for the processing of claims related to the September 11, 2001, 
terrorist attack on the World Trade Center was not available to make 
payments to other New York State entities. B-303927, June 7, 2005. 
And, as noted previously, an appropriation for the “replacement” of 
state roads could not be used to make improvements on them. 41 Comp. 
Gen. 255 (1961). 

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It is well settled, but warrants repeating, that even an expenditure 
that may be reasonably related to a general appropriation may not be 
paid out of that appropriation where the expenditure falls 
specifically within the scope of another appropriation. 63 Comp. Gen. 
422 (1984); B-300325, Dec. 13, 2002; B-290005, July 1, 2002. It is 
also well settled that when two appropriations are available for the 
same purpose, the agency must select which to use, and that once it 
has made an election, the agency must continue to use the same 
appropriation for that purpose unless the agency, at the beginning of 
the fiscal year, informs Congress of its intent to change for the next 
fiscal year. B-307382, Sept. 5, 2006; B-272191, Nov. 4, 1997. See also 
68 Comp. Gen. 337 (1989); 59 Comp. Gen. 518 (1980). An exception to 
this requirement is when Congress specifically authorizes the use of 
two appropriation accounts. B-272191 (statutory language makes clear 
that Congress intended that the “funds appropriated to the Secretary 
[of the Army] for operation and maintenance” in the fiscal year 1993 
Defense Appropriations Act are “[i]n addition to ... the funds 
specifically appropriated for real property maintenance under the 
heading [RPM,D]” in that appropriation act). 

3. New or Additional Duties: 

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Similarly, the Bureau of Land Management could use current 
appropriations to determine fair market value and to initiate 
negotiations with owners in connection with the acquisition of mineral 
interests under the Cranberry Wilderness Act,9 even though actual 
acquisitions could not be made until funding was provided in 
appropriation acts. B-211306, June 6, 1983. See also B-290011, Mar. 
25, 2002; B-211306, June 6, 1983; B-153694, Oct. 23, 1964. Of course, 
an appropriation is not available if Congress has prohibited the 
agency from using it. In B-308715, Apr. 20, 2007, the Department of 
Energy is specifically barred under 42 U.S.C. § 7278 from using funds 
made available under an Energy and Water Development Appropriations 
Act to implement or finance any authorized loan guarantee program 
unless specific provision has been made for that program in an 
appropriations act. Since no provision was made, Energy could not use 
the Energy and Water appropriation to begin implementing the loan 
guarantee program. 

B. The “Necessary Expense” Doctrine: 

1. The Theory Page 4-21 – Replace the third paragraph with the 
following: 

In addition to recognizing the differences among agencies when 
applying the necessary expense rule, we act to maintain a vigorous 
body of case law responsive to the changing needs of government. In 
this regard, our decisions indicate a willingness to consider changes 
in societal expectations regarding what constitutes a necessary 
expense. This flexibility is evident, for example, in our analysis of 
whether an expenditure constitutes a personal or an official expense. 
As will be discussed more fully later in the chapter, use of 
appropriations for such an expenditure is determined by continually 
weighing the benefit to the agency, such as the productivity, safety, 
recruitment, and retention of a dynamic workforce and other 
considerations enabling efficient, effective, and responsible 
government. We recognize, however, that these factors can change over 
time. B-302993, June 25, 2004 (modifying earlier decisions to reflect 
determination that purchase of kitchen appliances for use by agency 
employees in an agency facility is reasonably related to the efficient 
performance of agency activities, provides other benefits such as 
assurance of a safe workplace, and primarily benefits the agency, even 
though employees enjoy a collateral benefit); B-286026, June 12, 
2001(overruling GAO’s earlier decisions based on reassessment of the 
training opportunities afforded by examination review courses); B-
280759, Nov. 5, 1998 (overruling GAO’s earlier decisions on the 
purchase of business cards). See also 71 Comp. Gen. 527 (1992) 
(eldercare is not a typical employee benefit provided to the 
nonfederal workforce and not one that the federal workforce should 
expect); B-288266, Jan. 27, 2003 (GAO explained it remained “willing 
to reexamine our case law” regarding light refreshments if it is shown 
to frustrate efficient, effective, and responsible government). 

Page 4-22 – Replace the citations after the numbered paragraph 3 with 
the following: 

E.g., B-303170, Apr. 22, 2005; 63 Comp. Gen. 422, 427–28 (1984); B-
240365.2, Mar. 14, 1996; B-230304, Mar. 18, 1988. 

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For example, in August 2004, in response to an elevated national 
security threat level with respect to Washington, D.C., the Capitol 
Police established the Security Traffic Checkpoint Program (STCP), 
which consisted of 14 security traffic checkpoints intended to secure 
all streets to the two main avenues leading to the Capitol building. 
Under this program, Capitol Police officers were required to staff the 
14 checkpoints on a 24-hour, 7-days-a-week basis, with each officer 
working 12-hour shifts. During the STCP’s operation from August 2, 
2004, until November 23, 2004, the Capitol Police incurred 
approximately $1.3 to $1.5 million in overtime expenses every pay 
period. The Capitol Police financed the overtime expenses related to 
the program with money transferred to it from the Emergency Response 
Fund (ERF) established by Congress to, among other things, fund 
counterterrorism measures and support national security. Pub. L. No. 
107-38, 115 Stat. 220 (Sept. 18, 2001). GAO was asked whether the use 
of the ERF for the STCP overtime payments was a proper use of the ERF 
appropriation. In finding that there was a reasonable nexus between 
the overtime expenditure and ERF appropriation charged, GAO stated: 

“Law enforcement agencies are entitled to discretion in deciding how 
best to protect our national institutions, such as the United States 
Congress, its Members, staff, and facilities. Here, the Capitol Police 
implemented the STCP in reaction to the heightened terror alert in 
August 2004 due to intelligence information suggesting the strong
possibility of a terrorist attack at the Capitol Complex ... The STCP 
checkpoints, clearly, were a counterterrorism measure, and certainly 
fall within the very broad scope of ‘supporting national security.’ 
... So long as the agency’s use of the appropriation serves one of the 
... purposes for which the appropriation was enacted, the agency 
cannot be said to have used the appropriation improperly.” 

B-303964, Feb. 3, 2005, at 5. 

Page 4-25 – Insert the following after the third paragraph: 

Conference-related expenses may also be authorized as necessary 
expenses where the agency is authorized to host the conference. B-
300826, Mar. 3, 2005. Cf. B-306424, Mar. 24, 2006 (Congress authorized 
the Presidio Trust to lease Presidio property as a venue for public 
and private events; thus the Trust’s appropriations were available to 
cover expenses, such as the costs of providing audio equipment and 
related services, incurred during the National Academy of Public 
Administration’s use of the Presidio’s facilities for its 2005 annual 
Board of Directors meeting.) 

Page 4-26 – Replace the first full paragraph with the following: 

However, specific statutory authority is not essential. If 
participation is directly connected with and is in furtherance of the 
purposes for which a particular appropriation has been made, and an 
appropriate administrative determination is made to that effect, the 
appropriation is available for the expenditure. B-290900, Mar. 18, 
2003 (Bureau of Land Management (BLM) may use its appropriated funds 
to pay its share of the cost to produce a brochure that educates the 
public regarding lighthouse preservation because the brochure supports 
BLM in meeting its responsibility under its lighthouse preservation 
program); B-286457, Jan. 29, 2001 (demolition of old air traffic 
control tower that would obstruct the view from the new one is 
directly connected with and in furtherance of the construction of a 
new tower such that the demolition expenses are covered by Federal 
Aviation Administration’s appropriation act for tower construction); B-
280440, Feb. 26, 1999 (Immigration and Naturalization Service’s (INS) 
Salaries and Expenses appropriation is available to purchase medals to 
be worn by uniformed employees of the Border Patrol division of INS to 
commemorate the division’s 75th anniversary). See also 16 Comp. Gen. 
53 (1936); 10 Comp. Gen. 282 (1930); 7 Comp. Gen. 357 (1927); 4 Comp. 
Gen. 457 (1924).15 Authority to disseminate information will generally 
provide adequate justification. E.g., 7 Comp. Gen. 357; 4 Comp. Gen. 
457. In addition, an agency may use appropriated funds to provide 
prizes or incentives to individuals to further the collection of 
information necessary to accomplish the agency’s statutory mandate.16 
See, e.g., B-310981, Jan. 25, 2008; B-304718, Nov. 9, 2005; B-286536, 
Nov. 17, 2000; 70 Comp. Gen. 720 (1991); B-230062, Dec. 22, 1988. 

Page 4-29 – Insert the following after the third full paragraph: 

Also, the Army could not use its Other Procurement, Army appropriation 
to pay contractors for logistical planning and plan implementation 
services related to the medical equipment items acquired using that 
appropriation because such services are not procurement activities and 
the Army’s Operation and Maintenance appropriation was available and 
should be charged for such services. B-303170, Apr. 22, 2005. 

2. General Operating Expenses: 

Page 4-34 – Replace the third full paragraph with the following: 

The Salaries and Expenses appropriation of the Internal Revenue 
Service (IRS) could be used to procure credit bureau reports if 
administratively determined to be necessary in connection with 
investigating applicants for employment with the IRS. B-117975, Dec. 
29, 1953. However, the Customs and Border Protection’s (CBP) Salaries 
and Expenses appropriation was not available to pay for credit 
monitoring services for its employees in the New Orleans area who, as 
a result of Hurricane Katrina, were victims of identity theft. Neither 
government action nor inaction compromised the employees’ identities, 
and in this case the CBP employees individually, not the government, 
would be the primary beneficiaries of the proposed credit monitoring, 
which was considered part of the employees’ overall management of 
their personal finances. B-309604, Oct. 10, 
2007. 

GAO considered different circumstances in B-310865, Apr. 14, 2008, 
where the proposed purchase of credit monitoring services related to a 
data breach caused by government action or inaction that compromised 
employees’ or private citizens’ identities. The Nuclear Regulatory 
Commission (NRC) asked whether, in the event of such a breach, payment 
for credit monitoring services would be permissible as a cost-
effective means of addressing the adverse consequences resulting from 
the government’s mistaken disclosure of an employee’s or private citizen
’s personal information. Recognizing that Congress has required 
agencies to address breaches and mitigate risks when government action 
or inaction mistakenly compromises personal information, GAO concluded 
that the purchase of credit monitoring services for affected 
individuals would constitute a means of mitigating the risks as long 
as the agency determined that it was necessary under the particular 
circumstances. 

Page 4-34 – Replace the fifth full paragraph with the following: 

Outplacement assistance to employees may be regarded as a legitimate 
matter of agency personnel administration if the expenditures are 
found to benefit the agency and are reasonable in amount. 68 Comp. 
Gen. 127 (1988); B-272040, Oct. 29, 1997. The Government Employees 
Training Act authorizes training in preparation for placement in 
another federal agency under conditions specified in the statute. 5 
U.S.C. § 4103(b). Similarly, employee retirement education and 
retirement counseling, including individual financial planning for 
retirement, fall within the legitimate range of an agency’s discretion 
to administer its personnel system and therefore are legitimate agency 
expenses. B-301721, Jan. 16, 2004. 

C. Specific Purpose Authorities and Limitations: 

1. Introduction Page 4-36 – Replace the full first paragraph with the 
following: 

A common source of purpose restrictions is the appropriation act 
itself. Restrictions are often included as provisos to the 
appropriating language or as general provisions or “riders.” For 
example, B-321982, Oct. 11, 2011, involved the application of section 
1340 of the Full-Year Continuing Appropriations Act, 2011, which 
prohibited the Office of Science and Technology Policy (OSTP) from 
using funds appropriated to, among other things, engage in bilateral 
activities with the government of the People's Republic of China or 
Chinese-owned companies unless specifically authorized. In May 2011, 
OSTP incurred costs by participating in the U.S.-China Dialogue on 
Innovation Policy and the U.S.-China Strategic and Economic Dialogue. 
GAO concluded because OSTP was prohibited from using appropriated 
funds to participate in the May 2011 meetings, OSTP violated section 
1340 and the Antideficiency Act. See also B-277905, Mar. 17, 1998 
(expenditure for installation and maintenance of water pipeline to 
support a military base golf course not permissible because such 
expenditure is specifically prohibited by 10 U.S.C. § 2246, which 
prohibits the use of appropriated funds to “equip, operate, or maintain”
 a golf course); B-247348, June 22, 1992 (detail of Government 
Printing Office employee to Library of Congress not permissible 
because 44 U.S.C. § 316 prohibits details for “duties not pertaining 
to the work of public printing and binding). 

3. Attorney’s Fees Page 4-79 – Replace the first paragraph with the 
following: 

The award includes “fees and other expenses.” “Fees” means a 
reasonable attorney’s fee, generally capped at $125 per hour unless 
the agency determines by regulation that cost-of-living increases or 
other special factors justify a higher rate.39 5 U.S.C. § 
504(b)(1)(A). The Supreme Court held that “fees” includes any 
paralegal fees that the prevailing party incurred either through its 
litigating attorney or independently, so the prevailing party is 
entitled to recover fees for the paralegal services at the market rate 
for such services. Richlin Security Service Co. v. Chertoff, 553 U.S. 
571 (2008). “Other expenses” include such items as expert witness 
expenses and the necessary cost of studies, analyses, engineering 
reports, etc. 5 U.S.C. § 504(b)(1)(A). 

5. Entertainment – Recreation – Morale and Welfare: 

Page 4-104 – Replace the first full paragraph with the following: 

While feeding employees may not be regarded as a “necessary expense” 
as a general proposition, it may qualify when the agency is carrying 
out some particular statutory function where the necessity 
relationship can be established. Thus, in B-300826, Mar. 3, 2005, the 
National Institutes of Health (NIH) could use appropriated funds to 
provide meals and light refreshments to federal government (as well as 
nonfederal) attendees and presenters at an NIH-sponsored conference to 
coordinate and discuss Parkinson’s disease research efforts within the 
scientific community. The conference was held in furtherance of NIH’s 
statutory mission in 42 U.S.C. § 281 to “conduct and support” research 
with respect to particular diseases, and it was therefore within NIH’s 
authority to pay for all legitimate, reasonable costs of hosting the 
formal conference. GAO determined that providing meals and 
refreshments was an allowable conference cost so long as the meals and 
refreshments were incidental to the conference, attendance at the 
meals was important to ensure full participation in the conference, 
and the meals and refreshments were part of a formal conference that 
included substantial functions occurring separately from when the food 
is served. 

In another case GAO concluded that it was a permissible implementation 
of a statutory accident prevention program for the Marine Corps to set 
up rest stations on highways leading to a Marine base to serve coffee 
and doughnuts to Marines returning from certain holiday weekends. B-
201186, Mar. 4, 1982. See also 65 Comp. Gen. 738 (1986) (refreshments 
at awards ceremonies), discussed later in this section. A related 
example is B-235163.11, Feb. 13, 1996, in which GAO determined that 
appropriated funds could be used to pay for the dinner of a nonfederal 
award recipient and her spouse at a National Science Foundation awards 
ceremony because of the statutory nature of the award. Exceptions of 
this type illustrate the relativity of the necessary expense doctrine 
pointed out earlier in our general discussion. 

Page 4-116 – Insert the following after the first full paragraph: 

In another case, GAO determined that food could be a proper training 
expense for federal civilian employees and military members where the 
food was necessary for the employees and members to obtain the full 
benefit of an antiterrorism training exercise conducted by the U.S. 
Army Garrison Ansbach. B-317423, Mar. 9, 2009. The purpose of the 
training was to simulate realistic antiterrorism scenarios, which 
could very well require nonstop participation through mealtimes in 
order to protect life and property. Id. 

Page 4-116 – Replace the last paragraph with the following: 

General operating appropriations may be used to provide refreshments 
at award ceremonies under the Government Employees Incentive Awards 
Act, 5 U.S.C. §§ 4501–4506. 65 Comp. Gen. 738 (1986)); B-271511, Mar. 
4, 1997. The Act authorizes an agency to use its operating 
appropriations to cover the “necessary expense for the honorary 
recognition of” the employee or employees receiving the awards. 5 
U.S.C. § 4503. The Act directs the Office of Personnel Management to 
prescribe regulations and instructions to govern agency awards 
programs. 5 U.S.C. § 4506. 

Page 4-119 – Replace the third paragraph with the following: 

The purchase of equipment for use in other than an established 
cafeteria may also be authorized when the agency determines that the 
primary benefit of its use accrues to the agency by serving a valid 
operational purpose, such as providing for an efficient working 
environment or meeting health needs of employees, notwithstanding a 
collateral benefit to the employees. In B-302993, June 25, 2004, GAO 
approved the purchase of kitchen appliances, ordinarily considered to 
be personal in nature, for common use by employees in an agency 
facility. The appliances included refrigerators, microwaves, and 
commercial coffee makers. The agency demonstrated that equipping the 
workplace with these appliances was reasonably related to the 
efficient performance of agency activities and provided other benefits 
to the agency, including the assurance of a safe workplace. GAO also 
advised the agency that it should establish policies for uniform 
procurement and use of such equipment. In developing a policy, the 
agency should address the ongoing need for specific equipment 
throughout the building, the amount of the agency’s appropriation 
budgeted for this purpose, price limitations placed on the equipment 
purchases, and whether the equipment should be purchased centrally or 
by individual units within headquarters. It is important that the 
policy ensure that appropriations are not used to provide any 
equipment for the sole use of an individual, and that the agency 
locate refrigerators, microwaves, and coffee makers acquired with 
appropriated funds only in common areas where they are available for 
use by all personnel. It should also be clear that appropriated funds 
will not be used to furnish goods, such as the coffee itself or 
microwaveable frozen foods, to be used in the kitchen area. These 
remain costs each employee is expected to bear. 

The decision in B-302993, June 25, 2004, represented a departure from 
earlier cases which permitted such purchases under more restrictive 
circumstances where the agency could identify a specific need: 

* B-180272, July 23, 1974: purchase of a sink and refrigerator to 
provide lunch facilities for the Occupational Safety and Health Review 
Commission where there was no government cafeteria on the premises. 

* B-210433, Apr. 15, 1983: purchase of microwave oven by Navy facility 
to replace nonworking stove. Facility was in operation seven days a 
week, some employees had to remain at their duty stations for 24-hour 
shifts, and there were no readily accessible eating facilities in the 
area during nights and weekends. 

* B-276601, June 26, 1997: purchase of a refrigerator for personal 
food items of Central Intelligence Agency (CIA) employees. CIA 
headquarters facility was relatively distant from private eating 
establishments, the CIA did not permit delivery service to enter the 
facility due to security concerns, and the cafeteria served only 
breakfast and lunch. 

* B-173149, Aug. 10. 1971: purchase of a set of stainless steel 
cooking utensils for use by air traffic controllers to prepare food at 
a flight service station where there were no other readily accessible 
eating facilities and the employees were required to remain at their 
post of duty for a full 8-hour shift. 

Page 4-122 – Replace the first full paragraph with the following: 

The decision at 60 Comp. Gen. 303 was expanded in B-199387, Mar. 23, 
1982, to include small “samples” of ethnic foods prepared and served 
during a formal ethnic awareness program as part of the agency’s equal 
employment opportunity program. In the particular program being 
considered, the attendees were to pay for their own lunches, with the 
ethnic food samples of minimal proportion provided as a separate 
event. Thus, the samples could be distinguished from meals or 
refreshments, which remain unauthorized. (The decision did not specify 
how many “samples” an individual might consume in order to develop a 
fuller appreciation.) Compare that situation to the facts in B-301184, 
Jan. 15, 2004, where GAO found that the U.S. Army Corps of Engineers’ 
appropriation was not available to pay for the costs of food offered 
at the Corps’ North Atlantic Division’s February 2003 Black History 
Month program. The evidence in the record, including the time of the 
program, the food items served, and the amounts available, indicated 
that a meal, not a sampling of food, was offered. 

Page 4-123 – Insert the following after the first full paragraph: 

Similarly, GAO advised that serving refreshments purchased with 
appropriated funds to local children as part of the forest service’s “
kid’s fishing day” did not promote cultural awareness. While it may 
have been important that children learn to fish and appreciate the 
outdoors, such a goal did not advance federal EEO objectives. B-
302745, July 19, 2004. 

Page 4-123 – Replace the second and third full paragraphs with the 
following: 

Just as the entertainment of government personnel is generally 
unauthorized, the entertainment of nongovernment personnel is equally 
impermissible. The basic rule is the same regardless of who is being 
fed or entertained: Appropriated funds are not available for 
entertainment, including free food, except under specific statutory 
authority. Because of the clear potential for abuse, we find 
exceptions to the general rule only rarely. In cases such as this, the 
issue presented is the availability of the public’s money to supply 
goods and services that inure to the benefit of individuals. We 
generally resolve this issue by assessing the benefits to the agency 
from any such expenditure. 

The determining factor is whether, on balance, the agency or the 
individual receives the primary benefit. B-309604, Oct. 10, 2007; B-
302993, June 25, 2004. We will consider exceptions to the general rule 
only after careful consideration of the particular factual 
circumstances. Any exception, therefore, is necessarily case-specific. 
B-318499, Nov. 19, 2009. 

Two of the most frequently cited decisions for the general rule are 5 
Comp. Gen. 455 (1925) and 26 Comp. Gen. 281 (1946). In 5 Comp. Gen. 
455, expenditures by two Army officers for entertaining officials of 
foreign governments while making arrangements for an around-the-world 
flight were disallowed. In 26 Comp. Gen. 281, appropriations were held 
unavailable for dinners and luncheons for “distinguished guests” given 
by a commissioner of the Philippine War Damage Commission. Other early 
decisions on point are: 5 Comp. Gen. 1018 (1926); B-85555, June 6, 
1949; and A-10221, Oct. 8, 1925. A limited exception was recognized in 
B-22307, Dec. 23, 1941, to permit entertainment of officials of 
foreign governments incident to the gathering of intelligence for 
national security. 

Page 4-124 – Replace the last paragraph with the following: 

In a 1979 decision, appropriations of the Equal Employment Opportunity 
Commission were found not available to host a reception for Hispanic 
leaders in conjunction with a planning conference. B-193661, Jan. 19, 
1979. The case fell squarely within the general rule. So did B-205292, 
June 2, 1982, involving a Fourth of July fireworks display by a Navy 
station, justified as a community relations measure. While good 
community relations may be desirable for all government agencies, 
fireworks are not necessary to the operation and maintenance of the 
Navy. See also B-310023, Apr. 17, 2008 (providing light refreshments 
to attendees of National Trails Day events does not contribute 
materially to the accomplishment of an authorized U.S. Forest Service 
function). 

Page 4-125 – Insert the following, including the reference to new 
footnote number 72a, after the first paragraph: 

An agency was found to have the requisite statutory authority to 
provide meals and refreshments to nonfederal personnel in B-300826, 
Mar. 3, 2005. In that case, GAO considered whether the National 
Institutes of Health (NIH) could use appropriated funds to provide 
meals and light refreshments to both federal and nonfederal attendees 
and presenters at a conference NIH was hosting on the latest 
scientific advances in treating Parkinson’s disease. After reviewing NIH
’s statutory authority to conduct and support research to further the 
treatment of diseases, GAO concluded that NIH had the requisite 
authority to host the conference to which NIH had invited experts from 
the private sector as well as from other federal agencies, in addition 
to researchers from its own research institutes. NIH was not barred by 
the prohibition of 31 U.S.C. § 1345 from providing food to nonfederal 
personnel. As GAO explained, section 1345 has limited application, 
addressing only those conventions and other forms of assemblages or 
gatherings that private organizations seek to hold at government 
expense. B-300826, at 4 n.5. The decision cited 72 
Comp. Gen. 229 (1993), which effectively overruled prior GAO decisions 
that applied section 1345 to meetings and conferences other than 
assemblages and gatherings that private organizations sought to hold 
at government expense.72a 72 Comp. Gen. at 231. 

To determine whether the costs of meals and refreshments at such an 
agency-hosted conference are necessary to achieve the conference 
objectives, GAO established the following criteria: (1) 
the meals and refreshments are incidental to the formal conference, (2) 
attendance at the meals and when refreshments are served is important 
for the host agency to ensure attendees’ full participation in 
essential discussion, lectures, or speeches concerning the purpose of 
the formal conference, and (3) the meals and refreshments are part of 
a formal conference that includes substantial functions occurring 
separately from when the food is served. Since the NIH proposal met 
these criteria, NIH could provide meals and refreshments at the 
Parkinson’s disease conference. In so finding, GAO noted that the 
listed criteria must be applied on a case-by-case basis and advised 
federal agencies to develop procedures to ensure that the provision of 
meals and refreshments meet the criteria. 

Another aspect of hosting a conference addressed in B-300826 concerned 
whether NIH could charge an attendance fee at the conference and 
retain the proceeds, or permit its contractor to do so. GAO held that 
without specific statutory authority an agency hosting a conference 
may not charge and retain an attendance fee, and the agency may not 
cure that lack of authority by engaging a contractor to do what it may 
not do. A contractor in this situation is “receiving money for the 
Government,” and the miscellaneous receipts statute, 31 U.S.C. § 
3302(b), requires that such funds must be deposited in the Treasury. 
This decision in B-300826 was affirmed in B-306663, Jan. 4, 2006. For 
more on the miscellaneous receipts statute, see Chapter 6, section E.2. 

In 2006, Congress provided the Department of Defense (DOD) with 
specific authority to accept and retain fees from any individual or 
commercial participant in conferences, seminars, exhibitions, 
symposiums, or similar meetings conducted by DOD. Pub. L. No. 
109-364, 120 Stat. 2083, 2395–96 (Oct. 17, 2006), codified at 10 
U.S.C. § 2262. DOD may arrange for the collection of such fees either 
directly or through a contractor, and the fees may be collected in 
advance of the conference. 10 U.S.C. § 2262(a)(2). Amounts collected 
under this provision are credited to the appropriation or account from 
which the costs of the conference are paid, but any amount exceeding 
those costs must be deposited into the Treasury as miscellaneous 
receipts. 10 U.S.C. §§ 2262(b), (c). DOD is required to report 
annually on the number of conferences for which fees were collected, 
the amount of fees collected, and the actual costs of the conferences, 
including costs associated with any conference coordinators. 10 U.S.C. 
§ 2262(d). 

Page 4-125 – Insert the following as new footnote number 72a: 

72a The Department of Justice Office of Legal Counsel (OLC) has stated 
that it disagrees with our decision in B-300826, Mar. 3, 2005, insofar 
as it permits agencies to provide meals and light refreshments to 
nonfederal personnel. Memorandum Opinion for the General Counsel, 
Environmental Protection Agency, Use of Appropriated Funds to Provide 
Light Refreshments to Non-Federal Participants at EPA Conferences, OLC 
Opinion, Apr. 5, 2007. 

Page 4-125 – Insert the following after the third paragraph: 

The Veterans Benefits Administration (VBA) of the Department of 
Veterans Affairs (VA) inquired whether it may use appropriated funds 
to pay for incentives in the form of refreshments or light meals to 
increase participation in and the effectiveness of focus groups. Under 
38 U.S.C. § 527(a), the VA is required to “measure and evaluate” its 
programs, and the VBA has been tasked with collecting this 
information. While VBA obtains information from a variety of sources, 
including mail or internet surveys and telephone interviews, VBA has 
determined that the use of focus groups is the best method of 
gathering this feedback and that the provision of refreshments to the 
participants is very helpful both in attracting these participants and 
getting useful information from the focus groups. Focus group 
participants are not VBA employees but are veterans and family members 
of veterans served by VBA. GAO concluded that, to the extent VBA 
determines that it needs to offer refreshments and light meals as an 
incentive to maximize participation by nonemployee veterans and their 
families in focus groups to fulfill its statutory requirement, VBA 
could use its appropriated funds to do so. However, GAO cautioned that 
VBA should provide such incentives pursuant to an appropriate, 
enforceable policy with procedures for approval to ensure that 
incentives are only provided when necessary and are used strictly for 
nonemployee focus groups. B-304718, Nov. 9, 2005. Compare B-318499, 
Nov. 19, 2009 (a Navy command which did not identify a specific 
statutory objective may not use appropriated funds to pay for lunch 
for nonfederal participants of a focus group on readiness and quality 
of life issues). 

The U.S. Army Garrison Ansbach (Ansbach) asked whether its 
appropriated funds could be used to purchase food for nonfederal 
participants at annual antiterrorism training exercises conducted by 
Ansbach. These exercises are conducted pursuant to Department of 
Defense and Department of the Army requirements and are intended to 
help identify and reduce antiterrorism vulnerabilities and test 
antiterrorism response plans and procedures. The role of the 
nonfederal participants, which could include contract installation 
guards and host nation police, fire department, local Red Cross, and 
city officials, is to provide a real world response to the simulated 
terrorist incident. GAO had no objection to the Ansbach commander’s 
determination to use appropriations to provide food to the federal 
participants in the training because an actual antiterrorism response 
could very well require nonstop participation. GAO, recognizing the 
importance of local cooperation in responding to emergency situations, 
concluded that Ansbach could provide food to nonfederal personnel so 
long as the Ansbach commander determined that their participation in 
the training is essential to accomplishing the required training of 
Department of Defense and Army employees and to simulating realistic 
antiterrorism scenarios. B-317423, Mar. 9, 2009. GAO suggested that, 
in order to enhance the simulated nature of the exercise and to test 
the delivery apparatus, Ansbach would want the food to resemble those 
types of meals and snacks that one would expect to be provided during 
an actual antiterrorism response. Id. 

Page 4-130 – Replace footnote number 76 with the following: 

76 The statutes and cases discussed in this section concern the use of 
appropriated funds for federal child care facilities. They do not 
concern child care expenses incurred by federal employees as travel 
costs. See, e.g., B-246829, May 18, 1992 (“Our decisions have clearly 
held that fees for child care are not reimbursable expenses in 
connection with an employee’s travel or relocation since neither the 
governing statutes nor the [Federal Travel Regulations] authorize such 
an entitlement.”). 

7. Firefighting and Other Municipal Services: 

Page 4-154 – Insert the following after the first full paragraph: 

In another case, GAO found the District of Columbia’s 9-1-1 
emergency telephone system surcharge as originally enacted to be an 
impermissible tax on the federal government because the legal 
incidence of the tax fell on the federal government. Subsequently, the 
District of Columbia amended its law such that the legal incidence of 
the tax falls on the providers of telephone service, not the users of 
telephone service. Thus, federal agencies could pay bills that itemize 
the surcharge that the vendors must pay. B-302230, Dec. 30, 2003. 

8. Gifts and Awards: 

Page 4-155 – Replace the second full paragraph with the following: 

An agency frequently wants to use gifts to attract attention to the 
agency or to specific programs. For example, gifts can be used as 
recruiting and retention tools, to commemorate an event, or to inform 
the public or agency employees about the agency. Appropriated funds 
may not be used for personal gifts, unless, of course, there is 
specific statutory authority. B-307892, Oct. 11, 2006 (under 10 U.S.C. 
§ 2261, Navy may use appropriated funds to purchase gifts for sailors 
to commemorate their reenlistment subject to regulations issued by the 
Secretary of Defense). See also 68 Comp. Gen. 226 (1989). To state the 
rule in this manner is to make it appear rather obvious. If, for 
example, a General Counsel decided it would be a nice gesture and 
improve employee morale to give each lawyer in the agency a 
Thanksgiving turkey, few would argue that the expense should be borne 
by the agency’s appropriations. Appropriated funds could not be used 
because the appropriation was not made for this purpose (assuming, of 
course, that the agency has not received an appropriation for 
Thanksgiving turkeys) and because giving turkeys to lawyers is not 
reasonably necessary to carry out the mission at least of any agency 
that now exists. Most cases, however, are not quite this obvious or 
simple. 

Page 4-159 – Insert the following after the third full paragraph: 

In B-310981, Jan. 25, 2008, GAO determined that the National 
Telecommunications and Information Administration (NTIA) may use 
appropriated funds to purchase $25 gift cards as an incentive to 
encourage 220 individuals participating in a pilot test to complete 
and return a survey. The survey was designed to gather information 
about NTIA’s statutorily required converter box coupon program. NTIA 
deemed this information essential to the success of the $1.5 billion 
program. GAO agreed that there was a direct connection between the use 
of the gift cards and the production of information important to 
carrying out NTIA’s statutory duties, and the amount involved was 
modest, so the primary beneficiary of the expenditure was the 
government. 

Page 4-160 – Insert the following after the first partial paragraph: 

In B-318386, Aug. 12, 2009, GAO considered the use of appropriations 
for items that would contain images of protected waterfowl as part of 
an ongoing conservation strategy under the Endangered Species Act, 
when other conservation strategies had failed. The U.S. Fish and 
Wildlife Service (FWS) is responsible for implementing programs for 
the conservation of threatened species. The population of two 
threatened waterfowl species had been declining in Alaska for a number 
of years as a result of hunting, partially due to the hunters’ 
inability to distinguish the protected species from those related 
waterfowl that are legal to hunt, notwithstanding numerous FWS 
education efforts. Having had no impact on mortality rates in past 
years, FWS proposed to undertake an aggressive education strategy that 
would include purchasing caps and other items that contain images of 
the protected waterfowl and simple conservation messages, and then 
distributing these items at public outreach meetings where agency 
staff are speaking about waterfowl conservation. GAO did not object to 
the use of appropriated funds to purchase these items in these 
circumstances because distribution of the items advances FWS’s 
objective of protecting threatened species by educating the recipients 
of the items, as well as others who view those items even though they 
may not have attended an outreach meeting, and because of FWS’s past 
lack of success. 

Page 4-161 – Insert the following after the third full paragraph: 

In another case, a Natural Resources Conservation Service (NRCS) 
employee sought reimbursement of fees he incurred when he entered NRCS 
publications in an awards contest that recognizes professional skill 
and excellence in developing public outreach materials, and employs 
communications professionals as judges to provide critique and 
detailed feedback. The contest made awards in the name of the agency 
for six of the nine NRCS entries. GAO determined that NCRS has 
statutory authority to disseminate information, so participation in 
the contest and the feedback provided could aid in NCRS’s review of 
its outreach programs. B-317891, May 26, 2009. Therefore, appropriated 
funds could be used to reimburse the employee for the contest fees if 
NRCS makes an administrative determination that participation in the 
contest serves the agency’s mission. Id. 

Page 4-166 – Replace the first full paragraph with the following: 

The Incentive Awards Act applies to civilian agencies, civilian 
employees of the various armed services and specified legislative 
branch agencies. 5 U.S.C. § 4501. Within the judicial branch, it 
applies to the United States Sentencing Commission. Id.103 While it 
does not apply to members of the armed forces, the Defense Department 
has very similar authority for military personnel in 10 U.S.C. § 1124. 

Page 4-166 – Replace footnote number 103 with the following: 

103 The Sentencing Commission had not been covered prior to a 1988 
amendment to the statute. See 66 Comp. Gen. 650 (1987). The 
Administrative Office of the United States Courts is no longer covered 
by the statute. Pub. L. No. 101-474, § 5(f), 104 Stat. 1100 (Oct. 30, 
1990). The District of Columbia also is no longer covered. When the 
District of Columbia Home Rule Act was enacted into law, Pub. L. No. 
93-198, 87 Stat. 777 (Dec. 24, 1973), the Act provided for the 
continuation of federal laws applicable to the District of Columbia 
government and its employees (that for the most part were in title 5 
of the United States Code) until such time as the District enacted its 
own laws covering such matters. The District has adopted a number of 
laws exempting its employees from various provisions of title 5, and 
sections 4501 through 4506 are specifically superseded. See D.C. 
Official Code, 2001 ed. §1-632.02. 

10. Insurance: 

Page 4-179 – Replace the first full paragraph with the following: 

Another type of insurance which may not be paid for from appropriated 
funds is flight or accident insurance for employees on official 
travel. If a federal employee traveling by air on official business 
wishes to buy flight insurance, it is considered a personal expense 
and not reimbursable. B-309715, Sept. 25, 2007; 47 Comp. Gen. 319 
(1967); 40 Comp. Gen. 11 (1960). Similarly nonreimbursable is trip 
cancellation insurance. 58 Comp. Gen. 710 (1979). 

11. Lobbying and Related Matters: 

Page 4-188 – Replace the title of section 11 with the following: 

11. Lobbying, Publicity or Propaganda, and Related Matters: 

Page 4-189 – Insert the following after the first full paragraph: 

In addition to restrictions on lobbying, this section will explore 
restrictions on publicity or propaganda. Since 1951, appropriation 
acts have included provisions precluding the use of the appropriations 
for “publicity or propaganda.” While Congress has never defined the 
meaning of publicity or propaganda, GAO has recognized three types of 
activities that violate the publicity or propaganda prohibitions: self-
aggrandizement, covert propaganda, and materials that are purely 
partisan in nature. 

Page 4-196 – Insert the following as the first paragraph under “(1) 
Origin and general considerations”: 

In addition to penal statutes imposing restrictions on lobbying, 
lobbying restrictions are found in appropriations acts. Restrictions 
on publicity or propaganda are found only in appropriations acts. 

Page 4-197 – Replace the first paragraph and quotation with the 
following: 

The publicity or propaganda prohibition made its first appearance in 
1951. Members of Congress expressed concern over a speaking campaign 
promoting a national healthcare plan undertaken in the early 1950s by 
Oscar R. Ewing, the Administrator of the Federal Security Agency, a 
predecessor to the Department of Health and Human Services and the 
Social Security Administration. In reaction to this activity, 
Representative Lawrence R. Smith introduced the following provision, 
which was enacted in the Labor-Federal Security appropriation for 
1952, Pub. L. No. 134, ch. 373, § 702, 65 Stat. 209, 223 (Aug. 31, 
1951): “No part of any appropriation contained in this Act shall be 
used for publicity or propaganda purposes not heretofore authorized by 
the Congress.” Later versions of this provision prohibit activity 
throughout the government: “No part of any appropriation contained in 
this or any other Act shall be used for publicity or propaganda 
purposes within the United States not heretofor authorized by the 
Congress.”117 

Page 4-197 – Replace footnote number 117 with the following: 

117 See, e.g., the Transportation, Treasury, and related agencies’ 
appropriations for 2005, Pub. L. No. 108-447, div. H, title VI, § 624, 
118 Stat. 2809, 3278 (Dec. 8, 2004) (emphasis added). 

Page 4-198 – Insert the following after the quotation and before the 
second full paragraph: 

Although the publicity and propaganda prohibition has appeared in some 
form in the annual appropriations acts since 1951, the prohibitions 
themselves provide little definitional guidance as to what specific 
activities are publicity or propaganda. GAO has identified three 
activities that are prohibited by the publicity or propaganda 
prohibition—self-aggrandizement, covert propaganda, and purely 
partisan materials. 

Page 4-198 – Replace the second full paragraph with the following: 

In evaluating whether a given action violates a publicity or 
propaganda provision, GAO will rely heavily on the agency’s 
administrative justification. In other words, the agency gets the 
benefit of any legitimate doubt. GAO will not accept the agency’s 
justification where it is clear that the action falls into one of 
these categories. Before discussing these categories, two threshold 
issues must be noted. 

Page 4-199 – Replace the first three paragraphs under “(2) Self-
aggrandizement” and move the heading as follows: 

As noted above, the broadest form of the publicity and propaganda 
restriction prohibits the use of appropriated funds “for publicity or 
propaganda purposes not authorized by Congress.” A fiscal year 2005 
governmentwide variation limits these restrictions to activities “
within the United States.”121 

(2) Self-aggrandizement : 

The Comptroller General first had occasion to construe this provision 
in 31 Comp. Gen. 311 (1952). The National Labor Relations Board asked 
whether the activities of its Division of Information amounted to a 
violation. Reviewing the statute’s scant legislative history, the 
Comptroller General concluded that it was intended “to prevent 
publicity of a nature tending to emphasize the importance of the 
agency or activity in question.” 31 Comp. Gen. at 313. Therefore, the 
prohibition would not apply to the “dissemination to the general 
public, or to particular inquirers, of information reasonably 
necessary to the proper administration of the laws” for which an 
agency is responsible. Id. at 314. Based on this interpretation, GAO 
concluded that the activities of the Board’s Division of Information 
were not improper. The only thing GAO found that might be 
questionable, the decision noted, were certain press releases 
reporting speeches of members of the Board. 

Thus, 31 Comp. Gen. 311 established the important proposition that the 
statute does not prohibit an agency’s legitimate informational 
activities. See also B-319075, Apr. 23, 2010; B-302992, Sept. 10, 
2004; B-302504, Mar. 10, 2004; B-284226.2, Aug. 17, 2000; B-223098.2, 
Oct. 10, 1986. It also established that the publicity or propaganda 
restriction prohibits “publicity of a nature tending to emphasize the 
importance of the agency or activity in question.” 31 Comp. Gen. at 
313. See also B-302504, Mar. 10, 2004; B-212069, Oct. 6, 1983. 
Such activity has become known as “self-aggrandizement.” 

Page 4-199 – Replace footnote number 121 with the following: 

121 Pub. L. No. 108-447, div. H, title VI, § 624, 118 Stat. 2809, 3278 
(Dec. 8, 2004). 

Page 4-200 – Replace the first full paragraph with the following: 

In B-302504, Mar. 10, 2004, GAO considered a flyer and television and 
print advertisements that the Department of Health and Human Services 
(HHS) produced and distributed to inform Medicare beneficiaries of 
recently enacted changes to the Medicare program. While the materials 
had notable factual omissions and other weaknesses, GAO concluded that 
the materials were not self-aggrandizement because they did not 
attribute the enactment of new Medicare benefits to HHS or any of its 
agencies or officials. 

There was also no violation found in B-303495, Jan. 4, 2005, which was 
affirmed in B-303495.2, Feb. 15, 2005. In this case, the Office of 
National Drug Control Policy used the term “Drug Czar” to describe its 
director in video news releases it issued under the Drug-Free Media 
Campaign Act of 1998. The term had common, widespread, and long-
standing usage by the media and members of Congress, and was not being 
used by the agency to persuade the public of the importance of the 
director. Rather, it was used as “nothing more than a sobriquet.” B-
303495, at 15. 

Page 4-200 – Replace the third full paragraph with the following: 

Other cases, in which GAO specifically found no self-aggrandizement, 
are B-320482, Oct. 19, 2010 (Department of Health and Human Services’ 
(HHS) contracts for technical assistance and production and airing of 
a television advertisement); B-319834, Sept. 9, 2010 (HHS’s 
preparation and distribution of a brochure informing Medicare 
recipients about changes in Medicare); B-319075, Apr. 23, 2010 (HHS’s 
creation and operation of its HealthReform.gov Web site and the State 
Your Support Web page); B-284226.2, Aug. 17, 2000 (Department of 
Housing and Urban Development report and accompanying letter providing 
information to agency constituents about the impact of program 
reductions being proposed in Congress); B-212069, Oct. 6, 1983 (press 
release by Director of Office of Personnel Management excoriating 
certain Members of Congress who wanted to delay a civil service 
measure the administration supported); and B-161686, June 30, 1967 
(State Department publications on Vietnam War). In none of these cases 
were the materials designed to glorify the issuing agency or official. 

Page 4-202 – Replace the first paragraph under the heading “(3) Covert 
propaganda” with the following: 

Another type of activity that GAO has construed as prohibited by the “
publicity or propaganda not authorized by Congress” statute is “covert 
propaganda,” defined as “materials such as editorials or other 
articles prepared by an agency or its contractors at the behest of the 
agency and circulated as the ostensible position of parties outside 
the agency.” B-229257, June 10, 1988. A critical element of the 
violation is concealment from the target audience of the agency’s role 
in sponsoring the material. Id.; B-305368, Sept. 30, 2005; B-304228, 
Sept. 30, 2005; B-303495, Jan. 4, 2005; B-302710, May 19, 2004; B-
306349, Sept. 30, 2005 
(nondecision letter). 

Page 4-202 – Insert the following after the second full paragraph: 

In B-302710, May 19, 2004, GAO found that the Department of Health and 
Human Services (HHS) violated the prohibition when it produced and 
distributed prepackaged video news stories that did not identify the 
agency as the source of the news stories. Prepackaged news stories, 
ordinarily contained in video news releases, or “VNRs,” have become a 
popular tool in the public relations industry. The prepackaged news 
stories may be accompanied by a suggested script, video clips known as “
B-roll” film which news organizations can use either to augment their 
presentation of the prepackaged news story or to develop their own 
news reports in place of the prepackaged story, and various other 
promotional materials. These materials are produced in the same manner 
in which television news organizations produce materials for their own 
news segments, so they can be reproduced and presented as part of a 
newscast by the news organizations. The HHS news stories were part of 
a media campaign to inform Medicare recipients about new benefits 
available under the recently enacted Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003. HHS designed its 
prepackaged video news stories to be indistinguishable from video 
segments produced by private news broadcasters, allowing broadcasters 
to incorporate them into their broadcasts without alteration. The 
suggested anchor lead-in scripts included in the package facilitated 
the unaltered use of the prepackaged news stories, announcing the 
package as a news story by fictional news reporters. HHS, however, did 
not include any statement in the news stories to advise the television 
viewing audience, the target of the purported news stories, that the 
agency wrote and produced the prepackaged news stories, and the 
television viewing audiences did not know that the stories they 
watched on television news programs about the government were, in 
fact, prepared by the government. See also B-304228, Sept. 30, 2005 
(prepackaged news story produced by consultant hired by the Department 
of Education did not reveal to the target audience the Department’s 
role so it was covert propaganda in violation of the prohibition); B-
303495, Jan. 4, 2005 (prepackaged news stories produced by the Office 
of National Drug Control Policy were covert propaganda in violation of 
the prohibition). Cf. B-307917, July 6, 2006 (newspaper article). 

Page 4-202 – Replace the third full paragraph with the following: 

A similar holding is 66 Comp. Gen. 707 (1987), involving newspaper 
articles and editorials in support of Central American policy. The 
materials were prepared by paid consultants at government request, and 
published as the work of nongovernmental parties. The decision also 
found that media visits by Nicaraguan opposition leaders, arranged by 
government officials but with that fact concealed, constituted another 
form of “covert propaganda.” See also B-305368, Sept. 30, 2005 
(Department of Education contract with radio and television 
personality to comment regularly on the No Child Left Behind Act 
without assuring that the Department’s role was disclosed to the 
targeted audiences violated the publicity and propaganda prohibition); 
B-129874, Sept. 11, 1978 (“canned editorials” and sample letters to 
the editor in support of Consumer Protection Agency legislation, had 
they been prepared, would have violated the law); B-306349, Sept. 30, 
2005 (nondecision letter) (Department of Education urged to review 
newspaper article written by a Department of Education contractor 
which did not disclose the agency’s involvement in its writing for 
possible publicity or propaganda violations). Compare B-320482, Oct. 
19, 2010 (a Department of Health and Human Services’s contract with an 
economist for technical assistance did not violate the prohibition 
since the economist acted on his own behalf in writing opinion pieces, 
testifying, or otherwise speaking on health reform; HHS did not 
contract for or have any involvement with these activities); B-316443, 
July 21, 2009 (Department of Defense (DOD) outreach to retired 
military officers (RMOs) who served as media analysts did not violate 
the prohibition because there was no evidence that DOD attempted to 
conceal its outreach from the public nor was there evidence that DOD 
contracted with or paid RMOs for positive commentary or analysis); B-
304716, Sept. 30, 2005 (services provided by expert consultant hired 
by the Department of Health and Human Services, Administration for 
Children and Families (ACF), did not violate the publicity or 
propaganda prohibition since the one published article prepared by the 
consultant under the contract was published under the signature of the 
assistant secretary of ACF and the contract did not call for the 
consultant to write articles under her own name). 

Page 4-202 – Insert the following after the last paragraph: 

In B-302992, Sept. 10, 2004, the Forest Service produced video and 
print materials to explain and defend its controversial land and 
resource management plan for the Sierra Nevada Forest. Because the 
video and print materials clearly identified the Forest Service and 
the Department of Agriculture as the source of the materials, GAO 
concluded that they did not constitute covert propaganda. See also B-
301022, Mar. 10, 2004 (the Office of National Drug Control Policy was 
clearly identified as the source of materials sent to members of the 
National District Attorneys Association concerning the debate over the 
legalization of marijuana). 

In reaction to the growing use of prepackaged news stories within the 
government, GAO issued a circular letter to the heads of departments, 
agencies, and others concerned entitled Prepackaged News Stories, B-
304272, Feb. 17, 2005. The letter fully explains the limitations 
imposed by the publicity or propaganda prohibition on the use of 
prepackaged news stories. It also explains when agencies are allowed 
to use prepackaged news stories, noting in particular that such use is 
valid so long as there is clear disclosure to the viewing audience 
that the material presented was prepared by or in cooperation with a 
government agency. 

In May 2005, Congress enacted section 6076 of the Emergency 
Supplemental Appropriations Act for Defense, the Global War on Terror, 
and Tsunami Relief, 2005, Pub. L. No. 109-13, 110 Stat. 231, 301 (May 
11, 2005). Section 6076 provided that no appropriations “may be used 
by an executive branch agency to produce any prepackaged news story 
intended for broadcast or distribution unless the story includes a 
clear notification within the text or audio of the prepackaged news 
story that the prepackaged news story was prepared or funded by that 
executive branch agency.” Id. In the conference report submitted to 
both houses of Congress the conferees specifically noted GAO’s 
analysis of covert propaganda and stated that section 6076 “confirms 
the opinion of the Government Accountability Office dated February 17, 
2005 (B-304272).” H.R. Conf. Rep. No. 109-72, at 158–59 (2005) 
(emphasis added). The opinion to which the report was referring was 
the Comptroller General’s circular letter which clearly stated that 
the critical element in determining whether prepackaged news stories 
constitute covert propaganda is whether the intended audience is 
informed of the source of the materials. B-304272, Feb. 17, 2005. 
Inasmuch as section 6076 “confirms” GAO’s opinion, the section did not 
create new law or impose a new requirement. “Congress enacted section 
6076 to emphasize that the publicity or propaganda prohibition always 
restricted the use of appropriations to disseminate information 
without proper source attribution.” B-307917, July 6, 2006, at 2 
(concerning newspaper article without source attribution that agency 
contracted for before passage of section 6076). Therefore, 
transactions entered into before the date of enactment of section 6076 
are held to the same requirement for source attribution. Id. 

(4) Purely partisan materials: 

A third category of materials identified in GAO case law as violating 
the publicity or propaganda prohibition is purely partisan materials. 
To be characterized as purely partisan in nature, the offending 
materials must be found to have been “designed to aid a political 
party or candidate.” B-147578, Nov. 8, 1962. It is axiomatic that 
funds appropriated to carry out a particular program would not be 
available for political purposes. See B-147578, Nov. 8, 1962. 

It is often difficult to determine whether materials are political or 
not because “the lines separating the nonpolitical from the political 
cannot be precisely drawn.” Id.; B-144323, Nov. 4, 1960. See also B-
130961, Oct. 26, 1972. An agency has a legitimate right to explain and 
defend its policies and respond to attacks on that policy. B-319834, 
Sept. 9, 2010; B-319075, Apr. 23, 2010; B-302504, Mar. 10, 2004. A 
standard GAO applies is that the use of appropriated funds is improper 
only if the activity is “completely devoid of any connection with 
official functions.” B-147578, Nov. 8, 1962. As stated in B-144323, 
Nov. 4, 1960: 

“[The question is] whether in any particular case a speech or a 
release by a cabinet officer can be said to be so completely devoid of 
any connection with official functions or so political in nature that 
it is not in furtherance of the purpose for which Government funds 
were appropriated, thereby making the use of such funds ... 
nauthorized. This is extremely difficult to determine in most cases as 
the lines separating the nonpolitical from the political cannot be 
precisely drawn. 

“... As a practical matter, even if we were to conclude that the use 
of appropriated funds for any given speech or its release was 
unauthorized, the amount involved would be small, and difficult to 
ascertain; and the results of any corrective action might well be
more technical than real.” 

While GAO has reviewed materials to determine whether they are 
partisan in nature, to date there are no opinions or decisions of the 
Comptroller General concluding that an agency’s informational 
materials were so purely partisan as to constitute impermissible 
publicity or propaganda. In 2000, GAO concluded that an information 
campaign by the Department of Housing and Urban Development (HUD) 
using a widely disseminated publication, entitled Losing Ground: The 
Impact of Proposed HUD Budget Cuts on America’s Communities, had not 
violated the prohibition. B-284226.2, Aug. 17, 2000. In the 
publication, HUD criticized what it called “deep cuts” in 
appropriations that were proposed by the House Appropriations 
Committee for particular HUD programs. The publications stated that, 
if enacted, the “cuts would have a devastating impact on families and 
communities nationwide.” GAO found that this publication was a 
legitimate exercise of HUD’s duty to inform the public of government 
policies, and that HUD had a right to justify its policies to the 
public and rebut attacks against those policies. 

In B-302504, Mar. 10, 2004, GAO examined a flyer and print and 
television advertisements about changes to Medicare enacted by the 
Medicare Prescription Drug, Improvement, and Modernization Act of 
2003, Pub. L. No. 108-173, 117 Stat. 2066 (Dec. 8, 2003). The flyer 
contained information about new prescription drug benefits and price 
discount cards. GAO noted that while the materials contained opinion 
and notable factual omissions, the materials did not constitute 
impermissible publicity or propaganda. GAO explained: 

“To restrict all materials that have some political content or express 
support of an Administration’s policies would significantly curtail 
the recognized and legitimate exercise of the Administration’s authority
to inform the public of its policies, to justify its policies and to 
rebut attacks on its policies. It is important for the public to 
understand the philosophical underpinnings of the policies advanced
by elected officials and their staff in order for the public to 
evaluate and form opinions on those policies.” 

B-302504, at 10. See also B-320842, Oct. 19, 2010 (Department of 
Health and Human Services’ (HHS) television advertisement describing 
changes to Medicare are not purely partisan despite some overstatement 
of the benefits); B-319834, Sept. 9, 2010 (although an HHS brochure 
contained instances in which HHS presented abbreviated information and 
a positive view of recent changes to Medicare that are not universally 
shared, nothing in the brochure constituted communication that is 
purely partisan); B-319075, Apr. 23, 2010 (while HHS’s 
HealthReform.gov Web site and State Your Support Web page contained 
statements that may be characterized as having political content, GAO 
found no statements that are purely partisan). 

In B-302992, Sept. 10, 2004, GAO upheld the Forest Service’s right to 
produce and distribute a brochure and video materials regarding its 
controversial policy on managing wildfire in the Sierra Nevada Forest. 
Because the materials sought to explain hundreds of pages of 
scientific data, official opinions, and documents of the Forest 
Service, they were not comprehensive and did not explain all the 
positive and negative aspects of the thinning policies adopted in its 
regional forest plan. GAO concluded that the Forest Service had the 
authority to disseminate information about its programs and policies 
and to defend those policies. 

Apart from considerations of whether any particular law has been 
violated, GAO has taken the position in two audit reports that the 
government should not disseminate misleading information. In 1976, the 
former Energy Research and Development Administration (ERDA) published 
a pamphlet entitled Shedding Light On Facts About Nuclear Energy. 
Ostensibly created as part of an employee motivational program, ERDA 
printed copies of the pamphlet far in excess of any legitimate program 
needs, and inundated the state of California with them in the months 
preceding a nuclear safeguards initiative vote in that state. While 
the pamphlet had a strong pronuclear bias and urged the reader to “Let 
your voice be heard,” the pamphlet did not violate any anti-lobbying 
statute because applicable restrictions did not extend to lobbying at 
the state level. B-130961-O.M., Sept. 10, 1976. However, GAO’s review 
of the pamphlet found it to be oversimplified and misleading. GAO 
characterized it as propaganda not suitable for distribution to 
anyone, employees or otherwise, and recommended that ERDA cease 
further distribution and recover and destroy any undistributed copies. 
See GAO, Evaluation Of the Publication and Distribution Of “Shedding 
Light On Facts About Nuclear Energy,” EMD-76-12 (Washington, D.C.: 
Sept. 30, 1976). 

In a later report, GAO reviewed a number of publications related to 
the Clinch River Breeder Reactor Project, a cooperative 
government/industry demonstration project, and found several of them 
to be oversimplified and distorted propaganda, and as such 
questionable for distribution to the public. However, the publications 
were produced by the private sector components of the Project and paid 
for with utility industry contributions and not with federal funds. 
GAO recommended that the Department of Energy work with the private 
sector components in an effort to eliminate this kind of material, or 
at the very least ensure that such publications include a prominently 
displayed disclaimer statement making it clear that the material was 
not government approved. GAO, Problems With Publications Related To 
The Clinch River Breeder Reactor Project, EMD-77-74 (Washington, D.C.: 
Jan. 6, 1978). 

Page 4-203 – Renumber section (4) as follows: 

(5) Pending legislation: Overview Page 4-207 – Renumber section (5) as 
follows: 

(6) Cases involving “grassroots” lobbying violations Page 4-210 – 
Renumber section (6) as follows: 

(7) Pending legislation: Cases in which no violation was found Page 4-
212 – Insert the following after the first paragraph: 

In another case, the Social Security Administration (SSA), in its 
annual mailing of employment benefit reports to American workers, 
included material concerning the Social Security system’s potential 
financial problems and legislative initiatives to reform the Social 
Security program. Since none of the material called on the public to 
contact Congress and urge it to support SSA’s position on this or any 
other matter, GAO determined that there was no violation of the 
grassroots lobbying prohibition. GAO rejected the suggestion that the 
standard ought to be an assessment of the agency’s intent and whether 
the agency’s message would be likely to influence the public to 
contact Congress. The standard requiring evidence of a clear appeal by 
the agency to the public to contact congressional members to urge them 
to support the agency’s position is based upon the language and 
legislative history of the grassroots lobbying provisions. Moreover, 
the standard is consistent with a proper respect for the right and 
responsibility of federal agencies to communicate with the public and 
Congress regarding policies and activities. GAO stated: 

“We have no reason to think that Congress meant to preclude government 
officials from saying anything that might possibly cause the public to 
think about or take positions on the issues of the day and, as a result,
contact their elected representatives. To the contrary, we see the 
free and open exchange of ideas and views as central to our political 
system and, accordingly, remain reluctant to construe these laws in 
such a way that would unnecessarily or excessively constrain agency 
communications with the public or Congress.” 

B-304715, Apr. 27, 2005. See also B-319075, Apr. 23, 2010 (GAO’s 
review of the Department of Health and Human Service’s 
HealthReform.gov Web site, State Your Support Web page, and materials 
regarding subsequent contacts with Web users found no explicit or 
direct appeal to the public to contact Members of Congress in support 
of pending legislation). 

Page 4-213 – Renumber section (7) as follows: 

(8) Pending legislation: Providing assistance to private lobbying 
groups 

Page 4-215 – Renumber section (8) as follows: 

(9) Promotion of legislative proposals: Prohibited activity short of 
grassroots lobbying Pages 4-218 to 4-219 – Delete the entire section 
(9) entitled “Dissemination of political or misleading information”; 
the information contained therein has been integrated into the new 
section “(4) Purely partisan materials,” above. 

Page 4-219 – Insert the following after the third paragraph as a new 
section 11.c.(10): 

(10)Federal employees’ communications with Congress Since 1998, annual 
appropriations acts each year have contained a governmentwide 
prohibition on the use of appropriated funds to pay the salary of any 
federal official who prohibits or prevents another federal employee 
from communicating with Congress. See Pub. L. No. 105-61, § 640, 111 
Stat. 1272, 1318 (Oct. 10, 1997). Specifically, this provision states: 

“No part of any appropriation contained in this or any other Act shall 
be available for the payment of the salary of any officer or employee 
of the Federal Government, who ... prohibits or prevents, or attempts 
or threatens to prohibit or prevent, any other officer or employee of 
the Federal Government from having any direct oral or written 
communication or contact with any Member, committee, or subcommittee 
of the Congress in connection with any matter pertaining to the 
employment of such other officer or employee or pertaining to the 
department or agency of such other officer or employee in any way, 
irrespective of whether such communication or contact is at the 
initiative of such other officer or employee or in response to the 
request or inquiry of such Member, committee, or subcommittee.” 

Pub. L. No. 108-199, div. F, title VI, § 618, 188 Stat. 3, 354 (Jan. 
23, 2004); see also Pub. L. No. 108-7, div. J, title VI, § 620, 117 
Stat. 11, 468 (Feb. 20, 2003). This provision has its antecedents in 
several older pieces of legislation, including section 6 of the Lloyd-
La Follette Act of 1912, Pub. L. No. 336, ch. 389, 66 Stat. 539, 540 
(Aug. 24, 1912), which stated: “The right of persons employed in the 
civil service of the United States, either individually or 
collectively, to petition Congress, or any Member thereof, or to 
furnish information to either House of Congress, or to any committee 
or member thereof, shall not be denied or interfered with.” 

Congress enacted section 6 in response to concern over executive 
orders by Presidents Theodore Roosevelt and Howard Taft that 
prohibited federal employees from contacting Congress except through 
the head of their agency. The legislative history of this provision 
indicates that Congress intended to advance two goals: to preserve the 
First Amendment rights of federal employees regarding their working 
conditions and to ensure that Congress had access to programmatic 
information from frontline federal employees. See H.R. Rep. No. 62-
388, at 7 (1912); 48 Cong. Rec. 5634, 10673 (1912). 

In B-302911, Sept. 7, 2004, GAO concluded that the Department of 
Health and Human Services violated this provision by paying the salary 
of the Director of the Centers for Medicare & Medicaid Services (CMS) 
who prohibited the CMS Chief Actuary from providing certain cost 
estimates of Medicare legislation to Congress. The Director 
specifically instructed the Chief Actuary not to respond to any 
requests for information and advised that there would be adverse 
consequences if he released any information to Congress. GAO 
recognized that certain applications of the provision could raise 
constitutional separation of powers concerns; however, there was no 
controlling judicial opinion declaring the provision unconstitutional. 
GAO found that the provision, as applied to the facts in this case, 
precluded the payment of the CMS Director’s salary because he 
specifically prevented another employee from communicating with 
Congress, particularly in light of the narrow, technical nature of the 
information requested by Congress and Congress’s need for the 
information in carrying out its constitutional legislative duties. 

Page 4-221 – Replace the first full paragraph with the following, 
including the reference to new footnote number 138a: 

GAO has addressed the application of the Byrd Amendment to federal 
contractors in the context of bid protests. See, e.g., 71 Comp. Gen. 
281 (1992) (communication between bidder’s “regularly employed” 
employee and government engineer was not an attempt to influence 
procuring agency in connection with a federal contract and therefore 
did not violate the Byrd Amendment); 71 Comp. Gen. 81 (1991) (Byrd 
Amendment does not require disclosure of reasonable compensation to 
regularly employed employees); 69 Comp. Gen. 604 (1990) (contractor 
lobbying activity was not directed at award of current contract and 
therefore was not required to be disclosed under the Byrd Amendment); 
B-246304.8, B-246304.9, May 4, 1993 (bidder’s lobbying to have 
legislation changed, regardless of how funded, did not violate the 
Byrd Amendment). GAO has had one occasion to consider the Byrd Amendment
’s application to federal grant recipients in a case involving the 
Denali Commission. B-317821, June 30, 2009. Some Denali Commissioners 
are also officials of organizations who receive federal grants from 
the agency or whose members receive federal grants. GAO determined 
that the Byrd Amendment prohibits Commissioners and their personal 
staff, when acting in their role as grantees, from using grant funds 
to lobby Members of Congress and their staff in connection with the 
making of a grant.138a Id. 

Page 4-221 – Insert the following as new footnote number 138a: 

138a The decision in B-317821 notes, however, that the Byrd Amendment 
does not apply when Commissioners are acting in their role as 
commissioners. In that instance, anti-lobbying restrictions apply (see 
the anti-lobbying discussion in section C.11.c of this chapter). 

Page 4-221 – Replace footnote number 139 with the following: 

139 Pub. L. No. 104-65, 109 Stat. 691 (Dec. 19, 1995). For a 
discussion of the constitutionality of the Byrd Amendment in the grant 
context after passage of Public Law 104-65, see United States v. 
National Training & Information Center, 532 F. Supp. 2d 946 (N.D. Ill. 
2007). 

Page 4-227 – Replace the third full paragraph with the following: 

A 1983 decision illustrates another form of information dissemination 
that is permissible without the need for specific statutory support. 
Military chaplains are required to hold religious services for the 
commands to which they are assigned. 10 U.S.C. § 3547. Publicizing 
such information as the schedule of services and the names and 
telephone numbers of installation chaplains is an appropriate 
extension of this duty. Thus, GAO advised the Army that it could 
procure and distribute calendars on which this information was 
printed. 62 Comp. Gen. 566 (1983). Applying a similar rationale, the 
decision also held that information on the Community Services program, 
which provides various social services for military personnel and 
their families, could be included. See also B-301367, Oct. 
23, 2003 (affixing decals of the major units assigned to an Air Force 
base onto a nearby utility company water tower to inform the public of 
military activity in the area is a permissible use of appropriated 
funds); B-290900, Mar. 18, 2003 (approving the Bureau of Land 
Management’s use of appropriated funds to pay its share of the costs 
of disseminating information under a cooperative agreement); B-280440, 
Feb. 26, 1999 (allowing the Border Patrol’s use of appropriated funds 
to purchase uniform medals that, in part, served to advance “knowledge 
and appreciation for the agency’s history and mission”). 

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A statute originally enacted in 1913, now found at 5 U.S.C. § 3107, 
provides: “Appropriated funds may not be used to pay a publicity 
expert unless specifically appropriated for that purpose.” This 
provision applies to all appropriated funds. GAO has consistently 
noted certain difficulties in enforcing the statute. In GAO’s first 
substantive discussion of 5 U.S.C. § 3107, the Comptroller General 
stated “in its present form, the statute is ineffective.” A-61553, May 
10, 1935. The early cases151 identified three problem areas, 
summarized in B-181254(2), Feb. 28, 1975. 

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The legislative history of section 3107 provides some illumination. 
While it is not clear what was meant by “publicity expert,” there are 
indications that the provision would prohibit the use of press agents “
to extol or to advertise” the agency or individuals within the agency. 
See, e.g., 50 Cong. Rec. 4410 (1913) (comments of Representative 
Fitzgerald, chairman of the committee that reported the bill)). There 
are also indications that the provision should not interfere with 
legitimate information dissemination regarding agency work or 
services. When some members expressed concern that the provision may 
affect the hiring of experts to “make our farm bulletins more readable 
to the public and more practical in their make-up,” supporters 
indicated that such activities would not be restricted by passage of 
the provision. Id. at 4410 (colloquy between Representatives Lever and 
Fitzgerald). 

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GAO revisited the statute in B-302992, Sept. 10, 2004. The Forest 
Service had hired a public relations firm to help produce and 
distribute materials regarding its controversial land and resource 
management plan in the Sierra Nevada Forest, a plan consisting of 
hundreds of pages of scientific data and opinions. The Forest Service 
had hired the public relations firm to help make the plan’s scientific 
content more understandable to the public and media. GAO concluded 
that the Forest Service had not violated section 3107. GAO said that 
section 3107 was not intended to impede legitimate informational 
functions of agencies and does not prohibit agencies from paying press 
agents and public affairs officers to facilitate and manage 
dissemination of agency information. GAO stated: “Instead, what 
Congress intended to prohibit with section 3107 is paying an 
individual ‘to extol or to advertise’ the agency, an activity quite 
different from disseminating information to the citizenry about the 
agency, its policies, practices, and products.” B-302992, Sept. 10, 
2004. 

In 2005, GAO considered whether the Social Security Administration’s 
(SSA) use of the Gallup Organization to poll the public on Social 
Security program issues violated 5 U.S.C. § 3107. Citing to the 
discussion of the legislative history of section 3107 in B-302992, 
Sept. 10, 2004, GAO determined that SSA did not hire Gallup to—nor did 
Gallup in fact—extol or advertise SSA or individuals within SSA. 
Rather, SSA hired Gallup to engage in the legitimate agency activity 
of collecting information that the agency needed in order to carry out 
its Social Security program. SSA’s authority to survey the general 
public on its knowledge of the Social Security program and programs 
financing is inherent in the agency’s authority to administer that 
program, 42 U.S.C. § 901(b). Since Gallup was assisting SSA in this 
endeavor, Gallup was not a “publicity expert” within the meaning of 
section 3107. B-305349, Dec. 20, 2005. 

12. Membership Fees: 

Page 4-234 – Replace the first full paragraph with the following and 
insert new footnote number 152a as follows: Appropriated funds may not 
be used to pay membership fees of an employee of the United States in 
a society or association. 5 U.S.C. § 5946. The prohibition does not 
apply if an appropriation is expressly available for that purpose, or 
if the fee is authorized under the Government Employees Training Act. 
Under the Training Act, membership fees may be paid if the fee is a 
necessary cost directly related to the training or a condition 
precedent to undergoing the training. 5 U.S.C. § 4109(b).152a 

Page 4-234 – Insert the following for new footnote number 152a: 

152a The District of Columbia has specifically exempted its employees 
from the provisions of 5 U.S.C. § 5946 as well as the Government 
Employees Training Act, 5 U.S.C. ch. 41. See D.C. 
Official Code, 2001 ed. § 1-632.02. 

Page 4-236 – Replace the first full paragraph with the following: 

As noted, an agency may purchase membership in its own name in a 
society or association since 5 U.S.C. § 5946 prohibits only 
memberships for individual employees. The distinction, however, is not 
a distinction in name only. An expenditure for an agency membership 
must be justified on a “necessary expense” theory. To do this, the 
membership must provide benefits to the agency itself. For example, in 
31 Comp. Gen. 398 (1952), the Economic Stabilization Agency was 
permitted to become a member of a credit association because members 
could purchase credit reports at reduced cost and the procurement of 
credit reports was determined to be necessary to the enforcement of 
the Defense Production Act. In 33 Comp. Gen. 126 (1953), the Office of 
Technical Services, Commerce Department, was permitted to purchase 
membership in the American Management Association. The appropriation 
involved was an appropriation under the Mutual Security Act to conduct 
programs including technical assistance to Europe, and the membership 
benefit to the agency was the procurement of Association publications 
for foreign trainees and foreign productivity centers. See also B-
305095, Dec. 8, 2005 (the United States Chemical Safety and Hazard 
Investigation Board appropriation is available to pay the membership 
fee for the Board to become a corporate associate member of the Risk 
Management and Decision Processes Center of the Wharton School, 
University of Pennsylvania, since the Board has determined that such 
membership will assist the Board in carrying out its duties under 42 
U.S.C. § 7412(r)(6)); 70 Comp. Gen. 190 (1991) (prohibition in 5 
U.S.C. § 5946 does not prohibit an agency from using appropriated 
funds to purchase access for its employees to a private fitness center’
s exercise facilities as part of the agency’s health service program 
as authorized by 5 U.S.C. § 7901); B-241706, June 19, 1991 (Public 
Health Service may reimburse physicians for annual medical staff dues 
since hospital privileges are essential to the performance of the agency
’s business); B-236763, Jan. 10, 1990 (GAO may pay fees for agency 
membership in certain professional organizations and designate 
appropriate GAO employees to attend functions for recruitment 
purposes). 

Page 4-239 – Replace the second paragraph with the following: 

Compare that case with the decision in B-286026, June 12, 2001, in 
which the Pension Benefit Guaranty Corporation (PBGC) asked whether it 
could use appropriated funds to pay, as training costs, fees for 
actuary accreditation. PBGC employs a number of actuaries to calculate 
pension benefits. Although actuaries do not need a professional 
license for employment, as part of a collective bargaining agreement 
PBGC proposed to use training funds to send actuaries to the 
examination review courses, provide on-the-job study time, and pay for 
the accreditation examinations. PBGC determined that this course of 
study and testing would enhance the ability of the PBGC actuaries to 
carry out their assignments. PBGC has the discretion under the 
Government Employees Training Act to determine that the review courses 
constitute appropriate training for its actuaries. Accordingly, GAO 
agreed that PBGC has authority, under 5 U.S.C. § 4109(a), to use 
appropriated funds for review courses and on-the-job study time. 
However, there was no authority to pay the cost of the accreditation 
examination itself, since a licensing accreditation examination does 
not fall within the Government Employees Training Act’s definition of 
training. In the absence of statutory authority, an agency may not pay 
the costs of its employees taking licensing examinations since 
professional accreditation is personal to the employee and should be 
paid with personal funds. Here, the actuarial accreditation belongs to 
the employee personally and would remain so irrespective of whether 
the employee remains with the federal government. 

The PBGC decision, B-286026, June 12, 2001, predated enactment of 5 
U.S.C. § 5757, which gave agencies the discretionary authority to 
reimburse employees for expenses incurred in obtaining professional 
credentials, including the costs of examinations. In B-302548, Aug. 
20, 2004, GAO determined that under 5 U.S.C. § 5757, an agency may pay 
only the expenses required to obtain the license or official 
certification needed to practice a particular profession. In that 
case, an employee who was a certified public accountant (CPA) asked 
her agency to pay for her membership in the California Society of 
Certified Public Accountants, which is voluntary and not a 
prerequisite for obtaining a CPA license in California. GAO held that 
payment for voluntary memberships in organizations of already 
credentialed professionals is prohibited under 5 U.S.C. § 5946, and 
section 5757 does not provide any authority to pay such fees where the 
membership in the organization is not a prerequisite to obtaining the 
professional credential. Section 5757 is discussed in more detail in 
this chapter in the next section on attorneys’ expenses related to 
admission to the bar, and in section C.13.e on professional 
qualification expenses. 

Page 4-242 – Replace the first paragraph with the following: 

In 2001, section 1112 of the National Defense Authorization Act for 
Fiscal Year 2002, Pub. L. No. 107-107, 115 Stat. 1238 (Dec. 28, 2001) 
amended title 5, United States Code, by adding a new section 5757. 
Under 5 U.S.C. § 5757(a), agencies may, at their discretion, use 
appropriated funds to pay expenses incurred by employees to obtain 
professional credentials, state-imposed and professional licenses, 
professional accreditations, and professional certifications, 
including the costs of examinations to obtain such credentials. This 
authority is not available to pay such fees for employees in or 
seeking to be hired into positions excepted from the competitive 
service because of the confidential, policy-determining, policymaking, 
or policy-advocating character of the position. 5 U.S.C. § 5757(b). 
Nothing in the statute or its legislative history defines or limits 
the terms “professional credentials,” “professional accreditation,” or 
“professional certification.” Agencies have the discretion to 
determine whether resources permit payment of credentials, and what 
types of professional expenses will be paid under the statute. Thus, 
if an agency determines that the fees its attorneys must pay for 
admission to practice before federal courts are in the nature of 
professional credentials or certifications, the agency may exercise 
its discretion under 5 U.S.C. § 5757 and pay those fees out of 
appropriated funds. B-289219, Oct. 29, 2002. Also, GAO has stated that 
under 5 U.S.C. § 5757 an agency may pay the expenses of employees’ 
memberships in state bar associations when membership is required to 
maintain their licenses to practice law. See B-302548, Aug. 20, 2004 
(note that this decision concerned membership in a certified public 
accountants’ (CPA) professional organization that was not required as 
a condition of the CPA license). 

13. Personal Expenses and Furnishings: 

Page 4-253 – Replace the third paragraph with the following: 

Another related line of decisions addresses the purchase of bottled 
drinking water for use in federal work facilities where the safety of 
municipal or locally provided water is at issue. Generally, 
appropriated funds are not available to pay for bottled water for the 
personal use of employees. GAO has made an exception where a building’
s water supply is unhealthy or unpotable. See, for example, B-247871, 
Apr. 10, 1992, where a problem with the water supply system in a 
building caused lead content to exceed the maximum contaminant level 
and justified the purchase of bottled water for employees until the 
problems with the system could be resolved. Compare B-303920, Mar. 21, 
2006 (relief denied to certifying officer who improperly approved 
payments for bottled water for employees where there was no evidence 
that drinking water in the building was unhealthy). For remote work 
sites that have no access to potable water, GAO has also determined 
that it is within the agency’s discretion to decide how best to 
provide its employees with access to potable water, whether by 
providing coolers or jugs for transporting water or by providing 
bottled water. B-310502, Feb. 4, 2008. See also B-318588, Sept. 29, 
2009. 

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In another case, the cost of local lodging was not considered a 
reasonable accommodation under the Rehabilitation Act. B-318229, Dec. 
22, 2009. An employee who suffered from chronic lower back pain, a 
condition that made it very difficult for the employee to sit for long 
periods of time, had to travel to local work sites within the local 
travel area of the employee’s official duty station. The employee 
asked for reimbursement for lodging near the work sites to minimize 
the time driving back and forth from the employee’s home, where the 
employee teleworked, to the work sites. GAO pointed out that there is, 
however, a statutory limitation on local lodging, and that this travel 
is more akin to a commute, which is not covered by the Rehabilitation 
Act. GAO concluded that the agency’s appropriations were not available 
to pay for local lodging as a reasonable accommodation under the 
Rehabilitation Act, and suggested that the agency consider other 
available accommodations that would not require the employee to drive 
and that would not require the agency to circumvent statutory lodging 
limitations. Id. 

Page 4-259 – Insert the following before the last paragraph: 

A different type of situation arose in B-307316, Sept. 7, 2006. An 
Army captain held dual citizenship with the United States and with 
Turkey. In order to obtain a security clearance required for his 
assignment to the United States Army Center for Health Promotion and 
Preventive Medicine (Army Center), he had to renounce his Turkish 
citizenship. GAO determined that the expenses incurred for the 
renunciation of Turkish citizenship in order to obtain the security 
clearance were primarily for the benefit of the government since the 
required security clearance provided assurance to the government that 
sensitive information will be safe and the renunciation facilitated 
the granting of the clearance. Any personal benefit the captain would 
receive from the renunciation was incidental to the performance of his 
duties. Therefore, the Army Center could reimburse the captain for the 
renunciation expenses. 

Page 4-260 – Replace the first paragraph with the following: 

Neither the statute nor its legislative history defines the terms “
professional credentials,” “professional accreditation,” and “
professional certification.” The statute and the 1994 decision 
together appear to cover many, if not most, qualification expenses 
that GAO previously found to be personal to the employee, including 
actuarial accreditation (B-286026, June 12, 2001), licenses to 
practice medicine (B-277033, June 27, 1997), a Certified Government 
Financial Manager designation (B-260771, Oct. 11, 1995), and 
professional engineering certificates (B-248955, July 24, 1992). See 
also B-302548, Aug. 20, 2004 (certified public accountant fees) and 
section C.12.b of this chapter for a discussion of attorneys’ bar 
membership fees. 

Page 4-264 – Replace the last partial paragraph with the following: 

In 56 Comp. Gen. 81 (1976), the rationale of these cases was extended 
to Armed Forces change of command ceremonies. The decision held that 
the cost of printing invitations to a change of command ceremony for a 
Coast Guard vessel could be paid from the Coast Guard’s appropriations 
for operating expenses. In view of the traditional role of change of 
command ceremonies in the military, the Comptroller General concluded 
that the invitations were not inherently personal. (The case was 
therefore distinguishable from the decisions previously discussed 
prohibiting the use of public funds for greeting cards.) In another 
case, the expenditure of official reception and representation (OR&R) 
funds for costs of a change of command reception were determined to be 
payable from OR&R funds because the reception met the prerequisites 
for an “official reception for an incoming commander.” 69 Comp. Gen. 
242 (1990). (See section C.5 of this chapter for a more general 
discussion of related subject matter.) 

Page 4-272 – Insert the following, including the reference to new 
footnote number 166a, after the first partial paragraph: 

As a general rule, then, employees must bear the costs of 
transportation between their residences and official duty locations, 
even when unusual conditions may increase commuting costs. 60 
Comp. Gen. 633, 635 (1981). Congress has authorized agencies to use 
appropriations for “the maintenance, operation, or repair of any 
passenger carrier,” but “only to the extent that such carrier is used 
to provide transportation for official purposes.” 31 U.S.C. § 
1344(a)(1). It has specified that “transporting any individual ... 
between such individual’s residence and such individual’s place of 
employment is not transportation for an official purpose.” Id. 

For example, in B-305864, Jan. 5, 2006, GAO held that the United 
States Capitol Police (USCP) could not use appropriated funds for a 
shuttle bus service from its parking lot to a new USCP facility or any 
other USCP building, where the only purpose of the shuttle service is 
to facilitate the commutes of USCP employees. The employee’s arrival 
at the parking lot is viewed as an intermediate stop—like a subway or 
bus stop—within the totality of the commute from home to office. 
Therefore, the trip from the parking lot to the new USCP facility is 
part of the employee’s commute and a personal expense. GAO noted that 
there would be no objection to the use of appropriated funds for a 
shuttle bus from USCP headquarters to the new facility and other USCP 
buildings, so long as USCP established a legitimate operational need 
to shuttle persons among those buildings and its purpose is not to aid 
employees’ commutes. If USCP established a legitimate operational need 
for shuttle service among USCP buildings, there would also be no 
objection to any incidental use of the service by USCP employees to 
complete their home-to-work commutes, provided, of course, that there 
is no additional expenditure of time or money by the government in 
order to accommodate these riders. B-305864. See also B-320116, Sept. 
15, 2010 (appropriations are not available to pay for vehicle battery 
recharging stations for the privately owned hybrid or electric 
vehicles of employees or Members of Congress without legislative 
authority; recharging stations would facilitate commuting between home 
and work, which is a personal expense); B-318229, Dec. 
22, 2009 (agency appropriations were not available to pay for local 
lodging as a reasonable accommodation under the Rehabilitation Act 
since the local travel was more akin to a commute, which is not 
covered by the act). 

Although generally agencies may not pay commuting costs, agencies may 
exercise administrative discretion and provide transportation on a 
temporary basis when there is a clear and present danger to government 
employees or an emergency threatens the performance of vital 
government functions. 62 Comp. Gen. 438, 445 (1983). Under 31 U.S.C. § 
1344(b)(9), an agency may provide for home-to-work transportation for 
an employee if the agency head determines that “highly unusual 
circumstances present a clear and present danger, that an emergency 
exists, or that other compelling operational considerations make such 
transportation essential to the conduct of official business.” Section 
1344(b)(9) also stipulates, however, that exceptions granted under it 
must be “in accordance with” 31 U.S.C. § 1344(d), which limits 
emergency exceptions to periods of up to 15 calendar days, subject to 
periodic renewal for up to a total of 180 additional calendar days, 
under specified detailed procedures.166a 

GAO had occasion to consider the provisions in 31 U.S.C. § 1344 in 
B-307918, Dec. 20, 2006. The National Logistic Support Center (NLSC) 
was created by the National Oceanic and Atmospheric Administration to 
maintain a stockpile warehouse and ship replacement parts and 
equipment crucial to ensuring the proper functioning of equipment in 
the weather forecasting stations across the country. Since NLSC 
receives between 200 and 400 requests each year for emergency service 
outside of normal office hours, NLSC schedules employees to attend to 
these emergency, after-hours service requests on an “on-call” basis. 
When NLSC receives a request for after-hours emergency service, it 
notifies the on-call employees who return from their homes to their 
NLSC offices to respond to the requests, prepare the required parts 
for shipment to the affected weather station, deliver them to the 
shipping vendor, and return home. GAO determined that the prohibition 
in 31 U.S.C. § 1344(a)(1) precluded NLSC from using appropriated funds 
to reimburse its employees for the mileage between their residences 
and their NLSC offices since the statute precludes the payment of 
commuting expenses regardless of whether it is incident to a regular 
work schedule or the on-call work schedule described here. The 
emergency exception recognized in 31 U.S.C. §§ 1344(b)(9) and 
(d) did not apply because it is limited to brief, specific periods and 
NLSC’s proposal contemplated reimbursing the on-call employees for 
commuting costs on a continual basis—without limit or end date. 

Page 4-272 – Insert the following text for new footnote number 166a: 

166a The detailed procedures require agencies to make written 
determinations that name the specific employees, explain the reasons 
for their exemption, and specify the duration of their exemptions; 
they preclude agency heads from delegating this authority to another; 
and they require congressional notification of the above information 
for each exemption granted. 31 U.S.C. § 1344(d). Other subsections 
require the General Services Administration to promulgate 
governmentwide regulations and require agencies to maintain logs 
detailing all home-to-work transportation provided by the agency. 31 
U.S.C. §§ 1344(e), 1344(f). 

Page 4-273 – Replace the first full paragraph with the following: 

The purposes of this authority are to improve air quality and reduce 
traffic congestion. 5 U.S.C. § 7905 note. Programs established under 
section 7905 may include such options as: transit passes or cash 
reimbursements for transit passes; furnishing space, facilities, or 
services to bicyclists; and nonmonetary incentives. 5 U.S.C. § 
7905(b)(2). See also B-318325, Aug. 12, 2009 (agency may use its 
authority under 5 U.S.C. § 7905 to provide a cash reimbursement to 
those employees who commute to and from work by bicycle). On April 21, 
2000, the President issued Executive Order No. 13150, set out at 5 
U.S.C. § 7905 note, requiring federal agencies to implement a 
transportation fringe benefit program under the authority of section 
7905 no later than October 1, 2000. For a discussion of one such 
program, see B-316381, July 18, 2008. Compare B-320116, Sept. 15, 2010 
(the authority in 5 U.S.C. § 7905 does not permit an agency to install 
and operate recharging stations for employees’ privately owned hybrid 
vehicles). 

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In 2007, GAO considered whether an agency may use its appropriated 
funds to reimburse employees for home high-speed internet access under 
its telecommuting program. Public Law 104-52 requires that the agency 
ensure that adequate safeguards against private misuse exist and that 
the service is necessary for direct support of the agency’s mission. 
Pub. L. No. 104-52, § 620. As part of its program, the Patent and 
Trademark Office (PTO) would require telecommuting employees to 
maintain high speed internet access that meets certain minimum 
technical requirements at their residence or other designated 
alternative work site, and it proposed to reimburse participating 
employees for the costs incurred in their use of the internet access 
related to PTO work. Employees would be eligible for 50 or 100 percent 
reimbursement (up to a maximum of $100 per month) depending on the 
amount of monthly business use of the internet service. To obtain 
reimbursement, employees each month would be required to submit copies 
of invoices from the internet service provider and to attest to the 
appropriate percentage of internet service used for work-related 
purposes. GAO determined that PTO could use its appropriated funds to 
reimburse telecommuting employees for the costs of the high-speed 
internet access service since such service, “an essential tool in today’
s workplace,” is related or “necessary equipment” authorized by Public 
Law 104-52. B-308044, Jan. 10, 2007. In doing so, GAO recommended that 
PTO periodically review the reimbursements to ensure that it has 
adequate safeguards against private misuse and it is reimbursing 
employees for home internet service used for official purposes. Id. 

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The Department of Homeland Security, Customs and Border Protection 
(Customs), asked whether it could use its Salaries and Expenses 
appropriations to pay for relocation expenses its employees who 
currently reside in Canada or Mexico would incur in order to comply 
with a new agency directive that their primary residence be in the 
United States. The employees work at border stations within the United 
States. In response to heightened security concerns, Customs issued a 
directive requiring employees assigned to duty stations in the United 
States to maintain their primary residence in the United States. The 
Federal Travel Regulation, 41 C.F.R. chapters 300–304, does not 
address the question of benefits for employees’ relocations that do 
not involve a change in duty station. Recognizing Customs’ 
determination that U.S. residency enables its border workforce to 
better carry out is mission, GAO determined that Customs’ Salaries and 
Expenses appropriations were available to pay the relocation expenses 
if the agency chose to do so. B-306748, July 6, 2006. 

15. State and Local Taxes: 

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The complexity can be seen in a 2006 decision in which GAO considered 
whether a county “surface water management (SWM)” fee was a 
permissible fee for a service provided or an impermissible tax against 
the federal government. B-306666, June 5, 2006. See also B-306666.2, 
Mar. 20, 2009. A county assessed SWM fees to implement management 
programs for controlling runoff pollution under the federal Clean 
Water Act. 33 U.S.C. § 1329. The Clean Water Act also requires federal 
agencies to comply with state and local water pollution requirements, “
including the payment of reasonable service charges.” 33 U.S.C. § 
1323(a). We concluded that the SWM fee was not a service charge but 
actually a tax because the county’s storm water management was more 
like a core government service providing undifferentiated benefits to 
the entire public than a narrowly circumscribed benefit incident to a 
voluntary act or a service or convenience provided. B-306666, June 
5, 2006. Although the Clean Water Act waived sovereign immunity from 
certain state and local environmental regulations and fees, it did not 
waive immunity from taxation. Such a waiver must clearly and expressly 
confer the privilege of taxing the federal government. Id. at 11; see 
also B-320998, May 4, 2011 (California e-waste recycling fee is not 
covered by the waiver of sovereign immunity contained in section 
6001(a) of the Resource Recovery and Conservation Act of 1976, 42 
U.S.C. § 6961(a)). In January 2011, amendments to section 313 of the 
Clean Water Act were enacted to waive sovereign immunity for the 
payment of certain “reasonable” stormwater fees, “regardless of 
whether [the fee] ... is denominated a tax.” Pub. L. No. 111-378, 124 
Stat. 2148 (Jan. 4, 2011). 

Page 4-289 – Replace the second paragraph with the following: 

The rule that the government is constitutionally immune from a “vendee 
tax” but may pay a valid “vendor tax”—even if the government 
ultimately bears its economic burden—has been recognized and applied 
in numerous Comptroller General decisions. E.g., B-320998, May 4, 
2011; B-302230, Dec. 30, 2003; B-288161, Apr. 8, 2002; 46 Comp. Gen. 
363 (1966); 24 Comp. Gen. 150 (1944); 23 Comp. Gen. 957 (1944); 21 
Comp. Gen. 1119 (1942); 21 Comp. Gen. 733 (1942). The same rule 
applies to state tax levies on rental fees. See 49 Comp. Gen. 204 
(1969); B-168593, Jan. 13, 1971; B-170899, Nov. 16, 1970. 

Page 4-295 – Replace the first full paragraph with the following: 

As with any other occupant of a building, the federal government is a 
consumer of services from public utilities. A utility bill may include 
various elements in addition to the basic charge for services used. 
Some of these elements may be taxes the federal government may 
properly pay; others may be taxes, whether presented as a “tax” or an 
additional “charge,” from which the government is immune; still others 
may not be taxes at all. 

An example of a utility “charge” determined to be a tax for which 
sovereign immunity has not been waived is the stormwater fee itemized 
on the District of Columbia Water and Sewer Authority’s (D.C. Water) 
bill for water and sewer services. The fee, while collected by D.C 
Water, is assessed by the District of Columbia government to be 
credited to a fund administered by the District Department of the 
Environment to defray the District’s costs of activities required by 
an Environmental Protection Agency permit, such as planting trees and 
cleaning streets. The fee is not collected to defray D.C. Water’s 
costs of delivering water and sewer services and, therefore, is a tax. 
Under the Supremacy Clause of the U.S. Constitution, the United States 
and its instrumentalities are immune from direct taxation by state and 
local governments. U.S. Const. art. VI, cl. 2. Appropriated funds, 
therefore, are not available to pay for tax assessments without a 
specific act of Congress waiving sovereign immunity. In this case, 
while section 313(a) of the Clean Water Act, 33 U.S.C. § 1323(a), 
waives sovereign immunity from many state and local environmental 
requirements, it does not waive the federal government’s sovereign 
immunity from taxation by state and local governments. B-320795, Sept. 
29, 2010. Compare B-319556, Sept. 29, 2010 (D.C. Water’s Impervious 
Surface Area charge is a component of the utility rate customers pay 
for water and sewer services and may be paid using appropriated funds; 
funds collected are used to recover costs of construction projects 
directed at reducing and controlling stormwater damage). 

Page 4-298 – Replace the first full paragraph with the following: 

Naturally, the determination of whether a particular assessment can be 
paid does not depend on the taxing authority’s characterization of the 
assessment. Thus, payment has been denied where the assessment was 
termed a “service charge” (B-306666, June 5, 2006), a “benefit 
assessment” (B-168287, Nov. 9, 1970), a “systems development charge” 
(B-183094, May 27, 1975), or an “invoice for services” (49 Comp. Gen. 
72 (1969)). 

[End of Chapter 4] 

Chapter 5: Availability of Appropriations: Time: 

Page 5-1 – Replace part of the index for section B.1 as follows: 

B. The Bona Fide Needs Rule: 
1. Background; 
a. Introduction; 
b. The Concept; 
c. “Parking” or “Banking” Funds. 

A. General Principles—-Duration of Appropriations: 

2. Types of Appropriations: 

Page 5-7 – Insert the following after the second full paragraph: 

A multiple year appropriation is available by its very terms for the 
bona fide needs of the agency arising during that multiple year 
period. Consequently, an agency using a multiple year appropriation 
would not violate the bona fide needs rule, discussed in more detail 
in section B of this chapter, if it enters into a severable services 
contract for more than one year as long as the period of contract 
performance does not exceed the period of availability of the multiple 
year appropriation. B-317636, Apr. 21, 2009. 

Page 5-8 – Replace the first full paragraph with the following: 

Unless canceled in accordance with 31 U.S.C. § 1555 or rescinded by 
another law, there are no time limits as to when no-year funds may be 
obligated and expended and the funds remain available for their 
original purposes until expended. 43 Comp. Gen. 657 (1964); 40 Comp. 
Gen. 694 (1961). This includes earmarks applicable to the use of no-
year funds since they are coextensive with, and inseparable from, the 
period of availability of the no-year appropriation to which they 
relate. B-274576, Jan. 13, 1997. Also, the bona fide needs rule, which 
provides that an appropriation limited to obligation for a definite 
period may be obligated only to meet a legitimate need arising during 
the availability of the appropriation, does not apply to no-year 
funds, which are not so limited. B-317636, Apr. 21, 2009. See section 
B of this chapter for a further discussion of the bona fide needs rule. 

B. The Bona Fide Needs Rule: 

1. Background Page 5-13 – Replace the first full paragraph with the 
following: 

While the rule itself is universally applicable, determination of what 
constitutes a bona fide need of a particular fiscal year depends 
largely on the facts and circumstances of the particular case. B-
308010, Apr. 20, 2007; 70 Comp. Gen. 469, 470 (1991); 44 Comp. Gen. 
399, 401 (1965); 37 Comp. Gen. at 159. 

Page 5-15 – Insert the following new section c., including the 
references to new footnote numbers 8a, 8b, 8c, and 8d, after the first 
full paragraph: 

c. “Parking” or “Banking” Funds: 

“Parking” or “banking” funds are terms used to describe a transfer of 
funds to a revolving fund through an interagency agreement in an 
attempt to keep funds available for new work after the period of 
availability for those funds expires.8a Parking usually occurs when an 
agency transfers fixed-year funds to a revolving or franchise fund in 
the mistaken belief that, by doing so, the funds lose their fixed-year 
character and remain available indefinitely. However, an agency may 
not extend the availability of its appropriations by transferring them 
to another agency. B-288142, Sept. 6, 2001. Use of these expired 
parked funds violates the bona fide needs rule. An interagency 
agreement must be based upon a legitimate, specific, and adequately 
documented requirement representing a bona fide need of the year in 
which the order is made. 

GAO has reported on the parking of funds through interagency 
agreements, and, over a period of several years, Department of Defense 
(DOD) officials, including the Comptroller, warned against the misuse 
of interagency agreements to park or bank funds.8b In addition, the 
Inspectors General for DOD and the Department of the Interior 
(Interior) have faulted their agencies for misusing interagency 
transactions in this fashion.8c In October 2006, the Treasury issued a 
bulletin instructing ordering agencies to monitor the activity and age 
of an interagency order and where there has been no activity for more 
than 180 days, the ordering agency “shall determine the reasons for 
the lack of activity on the order.” I TFM Bulletin No. 2007-03, 
Attachment I, ¶ III.B.2 (Oct. 1, 2006). 

In a 2007 decision, GAO found that DOD improperly parked funds when it 
transferred fiscal year appropriations to an Interior franchise fund, 
GovWorks.8d B-308944, July 17, 2007. GovWorks was established to 
provide common administrative services to Interior and other agencies 
by procuring goods and services from vendors on behalf of federal 
agencies on a competitive basis. DOD used Military Interdepartmental 
Purchase Requests (MIPRs) to transfer funds to GovWorks but did not 
identify the specific items or services that DOD wanted GovWorks to 
acquire on its behalf until after the funds had expired. GAO concluded 
that DOD had improperly parked funds with GovWorks by transferring 
funds from one fiscal year for use by GovWorks for goods and services 
after the period of availability for those funds had expired. GAO 
pointed out that, by doing so, “officials of both agencies acted in 
disregard of ... the bona fide needs rule.” Id. at 13. See also B-
318425, Dec. 8, 2009 (the Chemical Safety and Hazard Investigation Board
’s appropriation is not available to fund a proposed interagency 
agreement for identity cards and related maintenance services because 
the agreement did not specify a period of performance for the 
agreement, thus creating an open-ended obligation); B-317249, July 1, 
2009 (because an order submitted through the General Services 
Administration’s AutoChoice Summer Program is not finalized until 
October, the Natural Resources Conservation Service (NRCS) does not 
incur an obligation until October; NRCS may not obligate the 
appropriation current when it submits the order). 

Page 5-15 – Insert the following as new footnote number 8a: 

8a DOD, Undersecretary of Defense, Comptroller, Memorandum for the 
Assistant Secretary of the Army (Financial Management and 
Comptroller), et al., Proper Use of Interagency Agreements for Non-
Department of Defense Contracts Under Authorities Other than the 
Economy Act, Mar. 24, 2005 (2005 DOD Memorandum). 

Page 5-15 – Insert the following as new footnote number 8b: 

8b See GAO, Interagency Contracting: Improved Guidance, Planning, and 
Oversight Would Enable the Department of Homeland Security to Address 
Risks, GAO-06-996 (Washington, D.C.: Sept. 27, 2006); Improper Use of 
Industrial Funds By Defense Extended the Life of Appropriations Which 
Otherwise Would Have Expired, GAO/AFMD-84-34 (Washington, D.C.: June 
5, 1984); 2005 DOD Memorandum; DOD, Undersecretary of Defense, 
Memorandum for the Chairman of the Joint Chiefs of Staff, et al., 
Fiscal Principles and Interagency Agreements, Sept. 25, 2003. 

Page 5-15 – Insert the following as new footnote number 8c: 

8c DOD, Office of Inspector General, FY 2005 DOD Purchases Made 
Through the Department of the Interior, No. D-2007-044 (Jan. 16, 
2007); Interior, Office of the Inspector General, FY 2005 
Department of the Interior Expenses Made on Behalf of the Department 
of Defense, No. X-IN-MOA-0018-2005 (Jan. 9, 2007). 

Page 5-15 – Insert the following as new footnote number 8d: 

8d GovWorks is officially known as the Acquisition Services 
Directorate. See [hyperlink, http://www.aqd.nbc.gov] (last visited 
Dec. 30, 2010). 

2. Future Years’ Needs: 

Page 5-17 – Insert the following after the first partial paragraph: 

An interesting situation involving a contract with renewable options 
arose in B-308026, Sept. 14, 2006. The National Labor Relations Board 
(NLRB) entered into a contract with Electronic Data Systems for the 
acquisition of ongoing operational and technical support for its 
automated Case Activity Tracking System. The contract’s initial 
performance period was October 1, 2001, through September 30, 2002, 
with options through September 30, 2015. On September 30, 2005, NLRB 
exercised option four, specifying a performance period of October 1, 
2005, through September 30, 2006, and charged the obligation to its 
fiscal year 2005 appropriation. In a June 2006 report, the NLRB 
Inspector General concluded that NLRB had improperly obligated its 
fiscal year 2005 appropriation because obligating the fiscal year 2005 
appropriation for the performance of severable services that would 
occur entirely in fiscal year 2006 was a violation of the bona fide 
needs rule. The Inspector General said that NLRB should charge the 
obligation against its fiscal year 2006 appropriation. NLRB proposed 
to remedy its improper obligation by modifying the contract to have 
the performance period of the contract run from September 30, 2005, 
through September 29, 2006, instead of October 1, 2005, through 
September 30, 2006. NLRB explained that it had intended a performance 
period commencing September 30, 2005, but due to an inadvertent 
ministerial error this was not reflected in the contract. GAO agreed 
with the Inspector General. GAO said that, given the terms of the 
contract, NLRB had incurred an obligation against its fiscal year 2006 
appropriation and that NLRB should adjust its accounts accordingly. 
NLRB could not remedy its improper obligation by adjusting its contract’
s performance period instead of its accounts. 

B-308026, Sept. 14, 2006, at 5–6 (footnote omitted). 

Page 5-17 – Insert the following after the first full paragraph: 

In 2007, GAO considered how this related to seven end-of-the-fiscal 
year subscription renewals. The National Labor Relations Board (NLRB) 
purchased seven Web site database subscriptions to support the work of 
its attorneys and other professionals. B-309530, Sept. 17, 2007. In 
September 2006, NLRB placed orders to renew each of these 
subscriptions with the respective vendors, stating that it needed to 
have the orders placed for the renewal before the existing 
subscriptions expired in order to ensure uninterrupted delivery. Each 
order placed was for a period of one year beginning on the day 
following the expiration of the existing subscription and, for each, 
the agency obligated its fiscal year 2006 annual appropriation. For 
five subscriptions, the performance period was from October 1, 2006, 
to September 30, 2007; for two subscriptions, the performance period 
was from November 1, 2006, to October 31, 2007. Id. GAO determined 
that NLRB did not violate the bona fide needs rule for the five Web 
site database subscription renewals that it needed to have in place on 
October 1, 2006, the first day of fiscal year 2007. Even though 
delivery of the renewed subscriptions would occur entirely in fiscal 
year 2007, NLRB reasonably determined that the renewal orders needed 
to be placed in fiscal year 2006 to ensure continued receipt of the 
subscriptions past the expiration of the existing subscriptions on 
September 30, 2006. Id. However, NLRB violated the bona fide needs 
rule when it obligated fiscal year 2006 funds to renew the two Web 
site database subscriptions that were not due to expire until October 
31, 2006. These subscription renewals were a bona fide need of fiscal 
year 2007 for which fiscal year 2007 appropriations should have been 
used. Id. 

5. Services Rendered beyond the Fiscal Year: 

Page 5-24 – Replace the second paragraph after the quote with the 
following: 

The rationale of 23 Comp. Gen. 370 was applied in 59 Comp. Gen. 386 
(1980) (requisition for printing accompanied by manuscript sufficient 
for Government Printing Office to proceed with job). See, e.g., B-
317139, June 1, 2009 (contract for the design, development, and 
deployment of a financial intelligence data retrieval system); 65 
Comp. Gen. 741 (1986) (contract for study and final report on 
psychological problems among Vietnam veterans); B-257977, Nov. 15, 
1995 (contract for two-year intern training program since interns are 
required to complete entire training program to be eligible for 
noncompetitive Presidential Management Intern appointment). See also B-
305484, June 2, 2006 (appointment of an arbitrator to hear a case is 
in the nature of a nonseverable service and the National Mediation 
Board should record an obligation of the current appropriation based 
on the estimated cost of paying the arbitrator to submit an award); 73 
Comp. Gen. 77 (1994) (subsequent modifications to Fish and Wildlife 
Service research work orders should be charged to the fiscal year 
current when the work orders were issued since the purpose of the 
research is to provide a final research report and the services under 
the contract are nonseverable). The last two decisions are noteworthy 
because they pointed out that limitation of funds clauses or subject 
to availability clauses do not affect the application of the bona fide 
needs rule and the severable test. B-305484; 73 Comp. Gen. at 80. 

Page 5-27 – Replace the first full paragraph with the following: 

As a general matter, the relevant date to ascertain whether training 
is a bona fide need of a particular fiscal year is the date that the 
training is delivered. B-321296, July 13, 2011. Thus, the cost of 
training ordinarily is properly charged to the appropriation available 
in the fiscal year in which the training is delivered. However, in 
some limited circumstances, training may be a bona fide need of the 
fiscal year prior to the fiscal year in which the training is 
delivered. 70 Comp. Gen. 296 (1991). For example, the prior year’s 
appropriation may be used for training occurring in the subsequent 
fiscal year, where the training provider requires the agency to 
register during the expiring fiscal year, the training date offered is 
the only one available, and the time between the registration and the 
training is not excessive. Id. In 70 Comp. Gen. 296, training that 
began the first day of fiscal year 1990 was held chargeable to 1989 
appropriations where the training had been identified as a need for 
1989. Compare B-321296 (where training was delivered in January 2011 
and registration not required until October 15, 2010, such training 
was a bona fide need of fiscal year 2011 even though the need for 
training was identified in fiscal year 2010). Training also tends to 
be nonseverable. Thus, where a training obligation is incurred in one 
fiscal year, the entire cost is chargeable to that year, regardless of 
the fact that training may extend into the following year. B-233243, 
Aug. 3, 1989; B-213141-O.M., Mar. 29, 1984. 

7. Contract Modifications and Amendments Affecting Price: 

Page 5-36 – Replace the last paragraph with the following: 

As noted above, there is an important exception or qualification to 
the antecedent liability rule. In cost reimbursement contracts, 
discretionary cost increases (i.e., increases which are not 
enforceable by the contractor), which exceed funding ceilings 
established by the contract may be charged to funds currently 
available when the discretionary increase is granted by the 
contracting officer. 61 Comp. Gen. 609 (1982). It would be 
unreasonable, the decision pointed out, to require the contracting 
officer to reserve funds in anticipation of increases beyond the 
contract’s ceiling. Id. at 612. Changes that do not exceed the 
stipulated ceiling continue to be chargeable to funds available when 
the contract was originally made (id. at 611), as do amounts for final 
overhead in excess of the ceiling where the contractor has an 
enforceable right to those amounts (id. at 612). Since prior decisions 
such as 59 Comp. Gen. 518 had not drawn the below-ceiling/above-
ceiling distinction, 61 Comp. Gen. 609 modified them to that extent. 
Other cases applying this approach are B-317139, June 1, 2009 and 65 
Comp. Gen. 741 (1986). 

8. Multiyear Contracts: 

Page 5-39 – Replace the first sentence of the second full paragraph 
with the following: 

If an agency does not have specific multiyear contracting authority 
but enters into a multiyear contract solely under authority of a 
multiple year or no-year appropriation, the full contract amount must 
be obligated at the time of contract award. See, e.g., B-322160, Oct. 
2, 2011; B-195250, July 11, 1979. 

Page 5-41 – Replace the first full paragraph with the following: 

If an agency is contracting with fiscal year appropriations and does 
not have multiyear contracting authority, one course of action, apart 
from a series of separate fiscal year contracts, is a fiscal year 
contract with renewal options, with each renewal option (1) contingent 
on the availability of future appropriations and (2) to be exercised 
only by affirmative action on the part of the government (as opposed 
to automatic renewal unless the government refuses). Leiter v. United 
States, 271 U.S. 204 (1926); 66 Comp. Gen. 556 (1987); 36 Comp. Gen. 
683 (1957); 33 Comp. Gen. 90 (1953); 29 Comp. Gen. 91 (1949); 28 Comp. 
Gen. 553 (1949); B-88974, Nov. 10, 1949. The inclusion of a renewal 
option is key; with a renewal option, the government incurs a 
financial obligation only for the fiscal year, and incurs no financial 
obligation for subsequent years unless and until it exercises its 
right to renew. The government records the amount of its obligation 
for the first fiscal year against the appropriation current at the 
time it awards the contract. The government also records amounts of 
obligations for future fiscal years against appropriations current at 
the time it exercises its renewal options. The mere inclusion of a 
contract provision conditioning the government’s obligation on future 
appropriations without also subjecting the multiyear contract to the 
government’s renewal option each year would be insufficient. Cray 
Research, Inc. v. United States, 44 Fed. Cl. 327, 332 (1999). Thus, in 
42 Comp. Gen. 272 (1962), the Comptroller General, while advising the 
Air Force that under the circumstances it could complete that 
particular contract, also advised that the proper course of action 
would be either to use an annual contract with renewal options or to 
obtain specific multiyear authority from Congress. 42 Comp. Gen. at 
278. 

Page 5-43 – Insert the following after the quoted language in the 
first partial paragraph: 

Another course of action for an agency with fiscal year money to cover 
possible needs beyond that fiscal year is an indefinite-delivery/ 
indefinite-quantity (IDIQ) contract. An IDIQ contract is a form of an 
indefinite-quantity contract, which provides for an indefinite 
quantity of supplies or services, within stated limits, during a fixed 
period. 48 C.F.R. § 16.504(a). Under an IDIQ contract, actual 
quantities and delivery dates remain undefined until the agency places 
a task or delivery order under the contract. When an agency executes 
an indefinite-quantity contract such as an IDIQ contract, the agency 
must record an obligation in the amount of the guaranteed minimum 
purchase. At the time of award, the government commits itself to 
purchase only a minimum amount of supplies or services and has a fixed 
liability for the amount to which it committed itself. See 48 C.F.R. 
§§ 16.501-2(b)(3) and 16.504(a)(1). The agency has no liability beyond 
its minimum commitment unless and until it places additional orders. 
An agency is required to record an obligation at the time it incurs a 
legal liability. 65 Comp. Gen. 4, 6 (1985); B-242974.6, Nov. 26, 1991. 
Therefore, for an IDIQ contract, an agency must record an obligation 
for the guaranteed minimum amount at the time of contract execution. 
See, e.g., B-318046, July 7, 2009 (in the absence of reliable 
historical usage data, an agency may use $500 as the guaranteed 
minimum for IDIQ contracts, which amount must be obligated at the time 
of award). In B-302358, Dec. 27, 2004, GAO determined that the Bureau 
of Customs and Border Protection’s (Customs) Automated Commercial 
Environment contract was an IDIQ contract. As such, Customs incurred a 
legal liability of $25 million for its minimum contractual commitment 
at the time of contract award. However, Customs failed to record its 
$25 million obligation until five months after contract award. GAO 
determined that to be consistent with the recording statute, 31 U.S.C. 
§ 1501(a)(1), Customs should have recorded an obligation for the 
contract minimum of $25 million against a currently available 
appropriation for the authorized purpose at the time the IDIQ contract 
was awarded. 

In establishing the guaranteed minimum quantity in an IDIQ contract, 
an agency must consider both contracting and appropriations law 
principles. The guaranteed minimum must not only constitute sufficient 
consideration to make the contract binding, but also reflect the bona 
fide needs of the agency at the time of execution of the contract. B-
321640, Sept. 19, 2011, at 6. 

9. Specific Statutes Providing for Multiyear and Other Contracting 
Authorities: 

Page 5-44 – Replace the last paragraph with the following: 

There are several general authorities to contract across a fiscal year 
or to enter into multiyear contracts. For example, 41 U.S.C. § 
253l authorizes the heads of executive agencies to enter into 
procurement contracts for severable services for periods beginning in 
one fiscal year and ending in the next fiscal year as long as the 
contracts do not exceed one year. It permits agencies to obligate the 
total amount of the contract to appropriations of the first fiscal 
year. Without specific statutory authority such as this, such action 
would violate the bona fide needs rule (see section B.5 of this 
chapter). Section 253l, in effect, redefines for an agency that elects 
to contract under authority of section 253l its bona fide need for the 
severable services for which it is contracting. Related statutes 
extend this authority to various legislative branch entities.29 
Similarly, 10 U.S.C. § 2410a authorizes the military departments to 
use current fiscal year appropriations to finance severable service 
contracts into the next fiscal year for a total period not to exceed 
one year. GAO states in B-259274, May 22, 1996, that “[t]he purpose of 
10 U.S.C. § 2410a is to overcome the bona fide needs rule,” which is 
another way of saying that Congress has provided the military 
departments with authority to properly enter into a contract not to 
exceed one year that crosses fiscal years. The statute specifically 
authorizes the departments to obligate “funds made available for a 
fiscal year ... for the total amount of a contract entered into” under 
section 2410a(a). Cf. B-317636, Apr. 21, 2009 (an agency using 
multiple year or no-year appropriations rather than fiscal year 
appropriations to fund a severable services contract does not need to 
refer to 41 U.S.C. § 253l or 10 U.S.C. § 2410a to achieve this same 
flexibility). 

Page 5-46 – Replace the last paragraph with the following: 

The Federal Acquisition Streamlining Act of 1994 (FASA) and related 
statutes extended multiyear contracting authority with annual funds to 
nonmilitary departments.30 FASA authorizes an executive agency to 
enter into a multiyear contract for the acquisition of property, which 
includes leases of real property, or services for more than one, but 
not more than five years, if the agency makes certain administrative 
determinations. 41 U.S.C. § 254c; B-316860, Apr. 29, 2009. Related 
laws extend this authority to various legislative branch agencies.31 
Through FASA and the related laws, Congress has relaxed the 
constraints of the bona fide needs rule by giving agencies the 
flexibility to structure contracts to fund the obligations up front, 
incrementally, or by using the standard bona fide needs rule approach. 
B-277165, Jan. 10, 2000. To the extent an agency elects to obligate a 
five-year contract incrementally, it must also obligate termination 
costs. Cf. B-302358, Dec. 27, 2004 (since the contract at issue was an 
indefinite-delivery, indefinite-quantity contract, it was not subject 
to the requirements of 41 U.S.C. § 254c and the agency did not need to 
obligate estimated termination costs at the time of contract award). 

C. Advance Payments: 

1. The Statutory Prohibition: 

Page 5-53 – Insert the following before the first full paragraph: 

Another example of a statutory exception was considered in B-306975, 
Feb. 27, 2006. The National Archives and Records Administration (NARA) 
stores temporary and pre-archival records that belong to it and other 
federal agencies in its Records Center Programs Facilities. Other 
federal agencies may enter into agreements with NARA to transfer and 
store records at the NARA records centers. The Treasury and General 
Appropriations Act, 2000, established the Records Center Revolving 
Fund to pay for expenses and equipment necessary to provide the 
storage and authorized agencies to make advance payments to the 
Revolving Fund. Pub. L. No. 106-58, title IV, 113 Stat. 430, 460–61 
(Sept. 29, 1999). GAO had no objection, therefore, to NARA’s proposal 
to bill its customers at the beginning of each month based on its 
estimate of services it will provide that month and to adjust the next 
month’s bill to reflect actual costs of services rendered. However, if 
a customer advances fiscal year funds for September’s estimated costs, 
NARA may not credit excess amounts in adjusting October’s bill but 
rather must return the excess to the customers. These funds would not 
be available for obligation of the next fiscal year commencing October 
1. Likewise, if a customer agency owes more than the amount advanced 
in September, the customer must cover the underpayment from the 
previous fiscal year’s funds. B-306975. 

D. Disposition of Appropriation Balances: 

3. Expired Appropriations Accounts: 

Page 5-72 – Replace footnote number 50 with the following: 

50 This is similar to the treatment of the balances during the first 
two post-expiration fiscal years under the 1956 legislation. A 
different account closing law applies to the United States Capitol 
Police (USCP), although it is virtually identical to what is provided 
in title 31. 2 U.S.C. § 1907(d). For example, USCP’s fiscal year 2003 
expired appropriations remained available for a five-year period to 
advance amounts to, and cover costs incurred by, the Department of 
Transportation’s Volpe Center for purchase orders properly obligated 
by USCP in fiscal year 2003. However, the 2003 appropriation was 
canceled by operation of law on September 30, 2008, and thus USCP and 
Volpe Center may not use amounts of fiscal year 2003 advances in 
fiscal year 2009. B-319349, June 4, 2010. 

Page 5-72 – Replace the last partial paragraph with the following: 

Unobligated balances in the expired account cannot be used to satisfy 
an obligation properly chargeable to current appropriations (B-308944, 
July 17, 2007; 50 Comp. Gen. 863 (1971)), or to any other expired 
account.52 See Chapter 5, section B.1.c. The authority of 31 U.S.C. § 
1553(a) is intended to permit agencies to adjust their accounts to 
more accurately reflect obligations and liabilities actually incurred 
during the period of availability. 63 Comp. Gen. 525, 528 (1984). 
However, arbitrary deobligation in reliance upon the authority to make 
subsequent adjustments is not consistent with the statutory purpose. B-
179708, July 10, 1975. 

4. Closed Appropriation Accounts: 

Page 5-73 – Replace the third full paragraph with the following: 

Once an account has been closed: 

“Obligations and adjustments to obligations that would have been 
properly chargeable to that account, both as to purpose and in amount, 
before closing and that are not otherwise chargeable to any current 
appropriation account of the agency may be charged to any current 
appropriation account of the agency available for the same purpose.” 

31 U.S.C. § 1553(b)(1). See also B-301561, June 14, 2004. 

Page 5-74 – Replace the second full paragraph with the following: 

The authority to use current year appropriations to pay obligations 
chargeable to closed accounts is not unlimited, however. The 
cumulative total of old obligations payable from current 
appropriations may not exceed the lesser of 1 percent of the current 
appropriation or the remaining balance (whether obligated or 
unobligated) canceled when the appropriation account is closed. 31 
U.S.C. § 1553(b). See, e.g., B-318831, Apr. 28, 2010. In view of the 
limitations on the amount of current appropriations that may be used 
to pay obligations properly charged to closed accounts, agencies must 
maintain records of the appropriation balances canceled beyond the end 
of the five-year period and adjust these balances as subsequently 
presented obligations are liquidated. 73 Comp. Gen. 338, 341–42 
(1994). Otherwise, there is no way for agencies to ensure that 
payments do not exceed the original appropriation. 

5. Exemptions from the Account Closing Procedures: 

Page 5-76 – Replace the second full paragraph with the following: 

To the extent of its applicability, the statutory scheme found at 31 
U.S.C. §§ 1551–1558 provides the exclusive method for the payment of 
obligations chargeable to expired appropriations. B-101860, Dec. 5, 
1963. Thus, there is generally no authority to transfer appropriations 
to some form of trust fund or working fund for the purpose of 
preserving their availability. Id.; B-319349, June 4, 2010 (United 
States Capitol Police (USCP) and Department of Transportation’s Volpe 
Center may not use amounts advanced from USCP’s fiscal year 2003 
appropriation to pay costs incurred by the Volpe Center in fiscal year 
2009 after appropriation was canceled by operation of law); B-308944, 
July 17, 2007 (the Department of Defense transferred fiscal year funds 
to a franchise fund in an attempt to impermissibly extend the funds’ 
availability). See Chapter 5, section B.1.c. See also 31 U.S.C. § 
1532, which prohibits the transfer of appropriations to a working fund 
without statutory authority. In B-288142, Sept. 6, 2001, customer 
agencies made advances from their fixed period appropriations to the 
Library of Congress for deposit to the credit of the no-year FEDLINK 
revolving fund. The advances were used by the Library of Congress to 
pay the cost of service provided to the agencies by Library of 
Congress contractors. Once the service was provided and the cost 
determined, the Library discovered that some agencies had advanced 
amounts in excess of the cost of the service ordered. We determined 
that the Library of Congress lacked authority to apply the excess 
amount to pay for orders for service placed after the expiration of 
the fixed period appropriation charged with the advance. 

[End of Chapter 5] 

[End of Volume 1] 

Office of the General Counsel 

Volume 2: 

Chapter 6 – Availability of Appropriations: Amount; 
Chapter 7 – Obligation of Appropriations; 
Chapter 8 – Continuing Resolutions; 
Chapter 9 – Liability and Relief of Accountable Officers; 
Chapter 10 – Federal Assistance: Grants and Cooperative Agreements; 
Chapter 11 – Federal Assistance: Guaranteed and Insured Loans. 

Chapter 6: Availability of Appropriations: Amount: 

B. Types of Appropriation Language: 

1. Lump-Sum Appropriations: 

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The answer to these questions is one of the most important principles 
of appropriations law. The rule, simply stated, is this: Restrictions 
on a lump sum appropriation contained in the agency’s budget request 
or in legislative history are not legally binding on the department or 
agency unless they are carried into (specified in) the appropriation 
act itself, or unless some other statute restricts the agency’s 
spending flexibility. See Hein v. Freedom From Religion Foundation, 
Inc., 551 U.S. 587, 608 n.7 (2007) and cases cited. This is an 
application of the fundamental principle of statutory construction 
that legislative is not law and carries no legal significance unless “
anchored in the text of the statute.” Shannon v. United States, 512 
U.S. 573, 583 (1994).5 Of course, the agency cannot exceed the total 
amount of the lump-sum appropriation, and its spending must not 
violate other applicable statutory restrictions.6 The rule applies 
equally whether the legislative history is mere acquiescence in the 
agency’s budget request or an affirmative expression of intent. 

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The Court noted that while the agency had repeatedly informed Congress 
about the program in question, “as we have explained, these 
representations do not translate through the medium of legislative 
history into legally binding obligations.” Id. at 194. Subsequent 
judicial decisions have, of course, followed this approach. E.g., Hein 
v. Freedom From Religion Foundation, Inc., 551 U.S. 587, 608 n.7 
(2007); State of California v. United States, 104 F.3d 1086, 1093–94 
(9th Cir. 1997), cert. denied, 522 U.S. 806 (1997); State of New 
Jersey v. United States, 91 F.3d 463, 470–71 (3rd Cir. 1996); Vizenor 
v. Babbitt, 927 F. Supp. 1193 (D. Minn. 1996); Allred v. United 
States, 33 Fed. Cl. 349 (1995). But see Ramah Navajo School Board, 
Inc. v. Babbitt, 87 F.3d 1338 (D.C. Cir. 1996).19 

C. The Antideficiency Act: 

2. Obligation/Expenditure in Excess or Advance of Appropriations: 

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Some government corporations are also classified as agencies of the 
United States government, and their officials are therefore “officers 
and employees of the United States.” To the extent they operate with 
funds which are regarded as appropriated funds, they too are subject 
to 31 U.S.C. § 1341(a)(1). E.g., B-223857, Feb. 27, 1987 (Commodity 
Credit Corporation); B-135075-O.M., Feb. 14, 1975 (Inter-American 
Foundation). It follows that section 1341(a)(1) does not apply to a 
corporation that, although established by federal statute, is not an 
agency of the United States government. E.g., B-308037, Sept. 14, 2006 
(Legal Services Corporation); B-175155-O.M., July 26, 1976 (Amtrak). 
These principles are, of course, subject to variation if and to the 
extent provided in the relevant organic legislation. 

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In B-308715, Apr. 20, 2007, the Department of Energy (DOE) violated 
the Antideficiency Act when it obligated and spent appropriated funds 
in advance and in excess of available appropriations. DOE is 
statutorily barred from using any funds provided by Energy and Water 
Development appropriation acts “to implement or finance authorized ... 
loan guarantee programs unless specific provision is made for such 
programs in an appropriation Act.” 42 U.S.C. § 7278. DOE used 2006 and 
2007 appropriations for a loan guarantee program even though Congress 
had not enacted the appropriations for that purpose. Consequently, DOE 
violated the Antideficiency Act, as well as the purpose statute, 31 
U.S.C. § 1301(a) (appropriation “shall be applied only to the objects 
for which the appropriations were made”), discussed in Chapter 4. 

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In simple terms, once an appropriation is exhausted, the making of any 
further payments, apart from using expired balances to liquidate or 
make adjustments to valid obligations recorded against that 
appropriation, violates 31 U.S.C. § 1341. When the appropriation is 
fully expended, no further payments may be made in any case. If an 
agency finds itself in this position, unless it has transfer authority 
or other clear statutory basis for making further payments, it has 
little choice but to seek a deficiency42 or supplemental appropriation 
from Congress, and to adjust or curtail operations as may be 
necessary. E.g., B-285725, Sept. 29, 2000; 61 Comp. Gen. 661 (1982); 
38 Comp. Gen. 501 (1959). See also B-319009, Apr. 27, 2010 (U.S. 
Secret Service violated the Antideficiency Act when it failed to 
timely notify Congress of a reprogramming necessitated by conference 
report limitations incorporated by reference into the appropriations 
act). For example, when the Corporation for National and Community 
Service obligated funds in excess of the amount available to it in the 
National Service Trust, the Corporation suspended participant 
enrollment in the AmeriCorps program and requested a deficiency 
appropriation from Congress.43 

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Also, in many situations, the amount of the government’s liability is 
not definitely fixed at the time the obligation is incurred. An 
example is a contract with price escalation provisions. A violation 
would occur if sufficient budget authority is not available when an 
agency must adjust a recorded obligation. See also B-318724, June 22, 
2010 (an agency violates the Antideficiency Act if adequate budget 
authority is not available when the agency adjusts an estimated 
obligation); B-240264, Feb. 7, 1994 (an agency would incur an 
Antideficiency Act violation if it must adjust an obligation for an 
incrementally funded contract to fully reflect the extent of the bona 
fide need contracted for and sufficient appropriations are not 
available to support the adjustment). 

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To illustrate, an agency’s acceptance of an offer to install automatic 
telephone equipment for $40,000 when the unobligated balance in the 
relevant appropriation was only $20,000 violated the Antideficiency 
Act. 35 Comp. Gen. 356 (1955). In addition, when other legislation 
limits the availability of an appropriation, the agency may not exceed 
the limitation. In B-307720, Sept. 27, 2007, the Department of 
Agriculture made payments to participants of the Conservation Security 
Program in excess of annual limits on such payments imposed by the 
program’s authorizing legislation, 16 U.S.C. § 3838–3838c. 
Notwithstanding that the amount of the department’s appropriation was 
adequate otherwise to cover the amount of the payments, the department 
could not ignore the statutory limitation on such payments. 

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In another case, where an agency had insufficient funds for a data 
retrieval contract, the agency attempted to incrementally fund the 
nonseverable services contract, which was not separated for 
performance by fiscal year, without statutory authority to do so. The 
agency attempted to avoid obligating the full amount of the contract, 
$8.9 million, to the fiscal year current at the time of award, by 
inserting an incremental funding clause purporting to limit the agency’
s liability to $2 million at the time it awarded the contract, the 
amount available in the current fiscal year appropriation. By so 
doing, the agency was trying to avoid an Antideficiency Act violation 
by charging its current year obligation to subsequent fiscal years, 
which instead resulted in a violation of the bona fide needs rule. B-
317139, June 1, 2009. 

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An agreement to pay “special termination” costs under an incrementally 
funded contract creates a firm obligation, not a contingent liability, 
to pay the contractor because the contracting agency remains liable 
for the costs even if it decides not to fund the contract further. B-
238581, Oct. 31, 1990. See also B-320091, July 23, 2010. 

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The Federal Acquisition Streamlining Act of 1994 (FASA) supplied the “
specific authority of law” missing in Leiter to enable agencies to 
enter into multiyear contracts using fiscal year funds.53 The 
multiyear contracts provision, codified at 41 U.S.C. § 254c, 
authorizes executive agencies, using fiscal year funds, to enter into 
multiyear contracts (defined as contracts for more than one but not 
more than five years) for the acquisition of property or services. GAO 
has determined that an agency with independent statutory leasing 
authority may use 41 U.S.C. § 254c as the basis for obligating its 
fiscal year appropriations to fund multiyear real property leases, so 
long as it complies with the terms and conditions set forth in section 
254c. B-316860, Apr. 29, 2009. 

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Importantly, FASA does not apply to all contracts that are intended to 
meet the needs of more than one fiscal year. Obviously, if multiple 
year or no year appropriations are legally available for the full 
contract period, an agency need not rely on FASA. Also, certain 
contract forms do not constitute multiyear contracts within the scope 
of FASA. For example, in B-302358, Dec. 27, 2004, GAO determined that 
a Bureau of Customs and Border Protection procurement constituted an “
indefinite-delivery, indefinite-quantity” (IDIQ) contract that was not 
subject to FASA. The decision explained that, unlike a contract 
covered by FASA, an IDIQ contract does not obligate the government 
beyond its initial year. Rather, it obligates the government only to 
order a guaranteed minimum amount of supplies or services. The cost of 
that guaranteed minimum amount is recorded as an obligation against 
the appropriation current when the contract is entered into.54 See 
also B-318046, July 7, 2009 (in the absence of reliable historical 
usage data, an agency may use $500 as the guaranteed minimum for IDIQ 
contracts, which amount must be obligated at the time of award); B-
308969, May 31, 2007 (agency failed to obligate the entire minimum 
amount of an IDIQ contract against the appropriated funds for the 
fiscal year in which the contract was awarded). 

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The Federal Circuit reversed in E.I. DuPont De Nemours & Company, 
Inc., 365 F.3d 1367. The court did not question the general rule 
against open-ended indemnity provisions; nor did it dispute the lower 
court’s conclusion that the indemnity clause in the DuPont contract 
was originally invalid under that rule. However, the court concluded 
that the government in effect ratified the clause through actions 
taken under a subsequent statute—-the Contract Settlement Act of 1944, 
at 41 U.S.C. §§ 101, 120(a)—-that did permit such indemnity 
provisions. Thus, the court reasoned, the indemnity clause in this 
case satisfied the “otherwise authorized by law” exception in the 
Antideficiency Act, 31 U.S.C. § 1341(a)(1)(B). E.I. DuPont De Nemours 
& Company, Inc., 365 F.3d at 1375–80. See also Shell Oil Co. v. United 
States, 80 Fed. Cl. 411, 418–20 (2008) (similar indemnity clause in 
World War II contracts for the supply of aviation gasoline was 
authorized by the First War Powers Act of 1941 and the National 
Defense Act of 1916, so the government was liable to reimburse the 
contractors for cleanup costs under CERCLA). 

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The Court of Federal Claims applied the rule against open-ended 
indemnity agreements in a 2007 case involving a mushroom grower 
seeking indemnification from the government for losses it had incurred 
as a result of operating a defective waste facility that had been 
designed by the Department of Agriculture’s National Resource 
Conservation Service (NRCS). Rick’s Mushroom Service, Inc. v. United 
States, 76 Fed. Cl. 250 (2007), aff’d, 521 F.3d 1338 (Fed. Cir. 2008). 
Pursuant to a cooperative agreement with NRCS, the facility had been 
constructed in accordance with detailed plans and specifications 
drafted by NRCS. The plaintiff argued that the cooperative agreement 
was a contract that created an implied warranty under the rule known 
as the Spearin doctrine. The government asserted that the 
Antideficiency Act precludes any employee of the NRCS from possessing 
the authority to bind the government to “an open-ended indemnity 
contract in the absence of specific authorization for the undertaking.”
 Id. at 260. The government cited to the statement in Hercules, 516 
U.S. at 427–28, that “the contracting officer’s presumed knowledge of 
[the Antideficiency Act’s] prohibition [is] strong evidence that the 
officer would not have provided, in fact, the contractual 
indemnification claimed.” The Federal Claims court in Rick’s Mushroom 
agreed, noting that the Supreme Court in Hercules relied upon the fact 
that the Comptroller General has repeatedly ruled that government 
procurement agencies may not enter into the type of open-ended 
indemnity for third-part liability that petitioner claims to have 
implicitly received. Rick’s Mushroom, 76 Fed. Cl. at 260. On appeal, 
the Federal Circuit affirmed the lower court’s findings and added that 
“such an implied indemnification term would indeed be ‘open-ended’ 
since the amount of the government’s obligation to third parties would 
not have been known at the time the parties entered into the cost-
share agreement.” Rick’s Mushroom, 521 F.3d at 1346. 

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Other cases illustrating or applying this principle are B-318831, Apr. 
28, 2010 (Election Assistance Commission should have charged 
obligations for poll worker grants to its salaries and expenses 
appropriation instead of its requirements payments appropriation); 57 
Comp. Gen. 459 (1978) (grant funds charged to wrong fiscal year); B-
224702, Aug. 5, 1987 (contract modifications charged to expired 
accounts rather than current appropriations); and B-208697, Sept. 28, 
1983 (items charged to General Services Administration Working Capital 
Fund which should have been charged to other operating 
appropriations). Actually, the concept of “curing” a violation by 
making an appropriate adjustment of accounts is not new. See, e.g., 16 
Comp. Dec. 750 (1910); 4 Comp. Dec. 314, 317 (1897). The Armed 
Services Board of Contract Appeals also has followed this principle. 
New England Tank Industries of New Hampshire, Inc., ASBCA No. 26474, 
88-1 BCA ¶ 20,395 (1987).87 

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The final situation—and from this point on, the law gets a bit murky—
is an obligation or expenditure for an object that is prohibited or 
simply unauthorized. In a 2007 memorandum for the General Counsel of 
the Environmental Protection Agency, the Justice Department’s Office 
of Legal Counsel (OLC) opined that when an agency obligation or 
expenditure violates a statutory prohibition on the use of 
appropriated funds, the agency violates the Antideficiency Act only if 
the prohibition was enacted in the appropriations act from which the 
appropriations were obligated. Memorandum for the General Counsel, 
Environmental Protection Agency, Use of Appropriated Funds to Provide 
Light Refreshments to Non-Federal Participants at EPA Conferences, OLC 
Opinion, Apr. 5, 2007. See also Letter from Deputy Assistant Attorney 
General, Office of Legal Counsel, to Chief Counsel, Federal Aviation 
Administration, Re: Whether the Federal Aviation Administration’s 
Finalizing and Implementing of Slot Auction Regulations Would Violate 
the Anti-Deficiency Act, Oct. 7, 2008. OLC based its conclusion on the 
language in 31 U.S.C. § 1341(a)(1)(A) prohibiting the making or 
authorizing of an expenditure or obligation exceeding the amount 
available “in an appropriation” for that expenditure or obligation. In 
a 2009 opinion, GAO disagreed with OLC’s position because OLC’s focus 
on the phrase “in an appropriation” gives it a disproportionate 
effect: “When the phrase is read in the context of the entire 
provision ... its meaning is apparent: ‘an amount available in an 
appropriation’ refers to an amount that Congress has provided to an 
agency for some legally permissible purpose.” B-317450, Mar. 23, 2009, 
at 5. The reach of the Antideficiency Act extends to all provisions of 
law that implicate the use of agency appropriations, which include 
both purpose and time limitations. GAO pointed to a number of examples 
in the legislative history of the Antideficiency Act recognizing that 
the Act would extend to the use of appropriations for unauthorized 
purposes and stated: “Nothing in the statutory history or evolution of 
the Act suggests that legislated expressions of purpose availability 
are less deserving for purposes of the Antideficiency Act if they are 
enacted in an authorizing statute or other law rather than in an 
appropriations act.” Id. at 7. Consequently, if there are no funds 
available because of a statutory prohibition or restriction—whether 
enacted as part of the appropriations act or in other law—any 
obligation or expenditure would be in excess of the amount available 
for the obligation or expenditure in violation of the Antideficiency 
Act. 

The 2009 opinion follows a long line of decisions applying the same 
principle. In 60 Comp. Gen. 440 (1981), a proviso in the Customs 
Service’s 1980 appropriation expressly prohibited the use of the 
appropriation for administrative expenses to pay any employee overtime 
pay in an amount in excess of $20,000. By allowing employees to earn 
overtime pay in excess of that amount, the Customs Service violated 31 
U.S.C. § 1341. The Comptroller General explained the violation as 
follows: 

“When an appropriation act specifies that an agency’s appropriation is 
not available for a designated purpose, and the agency has no other 
funds available for that purpose, any officer of the agency who 
authorizes an obligation or expenditure of agency funds for that 
purpose violates the Antideficiency Act. Since the Congress has not
appropriated funds for the designated purpose, the obligation may be 
viewed either as being in excess of the amount (zero) available for 
that purpose or as in advance of appropriations made for that purpose. 
In either case the Antideficiency Act is violated.” 

60 Comp. Gen. at 441. 

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More recent GAO decisions likewise consistently apply the principle 
that the use of appropriated funds for unauthorized or prohibited 
purposes violates the Antideficiency Act (absent an alternative 
funding source) since zero funds are available for that purpose. B-
319009, Apr. 27, 2010 (use of reprogrammed funds in violation of 
statutory requirement for congressional notification before obligating 
funds); B-302710, May 19, 2004 (use of funds in violation of statutory 
prohibition against publicity or propaganda); B-300325, Dec. 13, 2002 
(appropriations used for unauthorized technical assistance purposes); 
B-300192, Nov. 13, 2002 (violation of appropriation rider prohibiting 
use of funds to implement an Office of Management and Budget 
memorandum); B-290005, July 1, 2002 (appropriation used to procure 
unauthorized legal services); 71 Comp. Gen. 402, 406 (1992) 
(unauthorized use of Training and Employment Services appropriation); 
B-246304, July 31, 1992 (potential violation of appropriation act “Buy 
American” provision); B-248284, Sept. 1, 1992 (nondecision letter) 
(reprogramming of funds to an unauthorized purpose). Cf. B-309181, 
Aug. 17, 2007 (although the Department of Defense, without a 
delegation of lease authority from the General Services 
Administration, improperly entered into a lease, it did not incur an 
Antideficiency Act violation because it had an appropriation available 
to make lease payments). 

3. Voluntary Services Prohibition: 

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paragraph: 

See, e.g., GAO, Food and Drug Administration: Response to Heparin 
Contamination Helped Protect Public Health; Controls That Were Needed 
for Working With External Entities Were Recently Added, GAO-11-95 
(Washington D.C.: Oct. 29, 2010), at 25–32 (Food and Drug 
Administration exposed the government to risk of claims from 
individuals and entities when it requested and accepted uncompensated 
consulting services from them without the execution of a waiver.) 

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More recently, in B-321744, June 23, 2011, GAO held that the Chief 
Information Officer of the Federal Election Commission could 
simultaneously serve in the statutory position of Staff Director 
without additional compensation. 

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An interesting 2007 case explored the applicability of the voluntary 
services prohibition in the context of a recess appointment. B-309301, 
June 8, 2007. Exercising his constitutional power to make a recess 
appointment, the President appointed an individual as ambassador to 
Belgium whose nomination to that same position he had previously 
withdrawn from Senate consideration. The individual was denied a 
salary by the State Department under 5 U.S.C. § 5503, which prohibits 
payment for services: 

“to an individual appointed during a recess of the Senate to fill a 
vacancy in an existing office, if the vacancy existed while the Senate 
was in session and was by law required to be filled by and with the 
advice and consent of the Senate, until the appointee has been 
confirmed by the Senate.” 

Nonetheless, the individual was willing to serve as ambassador, which 
raised the question of whether the State Department could accept the 
uncompensated services he was willing to provide. GAO noted that the 
voluntary services prohibition was enacted to prevent coercive 
deficiencies and future equitable claims against the government. Since 
there was a statutory prohibition barring the State Department from 
paying his salary, this was not a situation in which a coercive 
deficiency might occur. Similar to the situation in which an 
individual gratuitously waives his salary in advance, the recess 
appointee accepted the position knowing that he would not receive 
compensation for his services. Id. Even if he were to file a claim 
against the government for compensation, there is a statutory 
prohibition to payment of his salary. 5 U.S.C. § 5503. Therefore, the 
voluntary services prohibition did not apply in this situation, and 
the Department of State could allow him to serve as ambassador to 
Belgium without compensation. GAO stated: “We are also led to this 
interpretation by the fact that serious constitutional issues would 
arise if section 5503, in conjunction with the voluntary services 
prohibition, were read to directly restrict the President from making 
a recess appointment.” B-309301, at 6. See also B-321744, June 23, 
2011 (voluntary services prohibition not applicable to employee’s 
uncompensated service for one of his two positions because the 
uncompensated service is compelled by the dual compensation statute, 
31 U.S.C. § 5533). 

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(between “Id. at 7” and “d. Exceptions”): 

In a similar case, GAO was asked to review a model no-cost contract 
offered by National Conference Services, Inc. (NCSI) for conference, 
event, and trade show planning services. The proposed NCSI contract 
provided: 

“The Contractor [NCSI] may choose to provide for all services as 
required by the task order at no cost to the Government. The 
Contractor is entitled to all of the registration, exhibition, 
sponsorship and/or other fees collected as payment for performance 
under the task order if there is no cost to the Government. In this
case, the Contractor is liable for all costs related to the 
performance of the task order as defined in the task order and the 
government’s liability for payment of services under this task order 
is ‘zero.’” 

B-308968, Nov. 27, 2007, at 2. GAO found that an agency agreeing to 
these terms would have no financial liability to NCSI, nor would NCSI 
have any expectation of payment from the government. Applying the same 
analysis as in the GSA case, GAO determined that an agency entering 
into the NCSI contract would neither augment its appropriation nor run 
afoul of the voluntary services prohibition. GAO advised that there 
are other considerations beyond compliance with fiscal laws that an 
agency should take into account before agreeing to a no-cost contract 
such as the one proffered by NCSI, including weighing the value of the 
services received from the contractor with that of the concession 
given to the contractor. For example, an agency should consider the 
ultimate cost to the government as a whole when most attendees are 
expected to be government employees. Agency officials also should 
consider possible conflicts of interest before signing a no-cost 
contract, keeping in mind that control of the agenda, selection of 
speakers, and other matters concerning content should serve the 
government’s, not the contractor’s, purpose. In addition, agencies 
should ensure an open, transparent selection process before entering 
into no-cost contracts. GAO said, “Ultimately, an agency must not lose 
sight of its objectives for a particular event and should ensure that 
in avoiding costs to the agency, it does not take actions that 
compromise the effectiveness of its conference, undermine the 
achievement of agency goals, or violate ethics rules.” Id. at 5–6. 

When an agency accepts gratuitous services, it is important that the 
agency, to eliminate the risk of claims against the government, enter 
into a written agreement confirming that the services are being 
provided without expectation of compensation. GAO found that the Food 
and Drug Administration (FDA) exposed the agency to the risk of claims 
for payment when it accepted, without a documented agreement, 
technical and factual advice from scientists. GAO, Food and Drug 
Administration: Response to Heparin Contamination Helped Protect 
Public Health; Controls That Were Needed for Working with External 
Entities Were Recently Added, GAO-11-95 (Washington, D.C.: Oct. 29, 
2010). FDA could have eliminated this risk by obtaining documentation 
from the scientists that they expected no compensation and would waive 
any future claims against the government for payment for their 
services. 

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paragraph: 

See also, GAO-11-95, at 25–32 (Food and Drug Administration exposed 
the government to risk of claims from individuals and entities when it 
requested and accepted uncompensated consulting services from them 
without the execution of a waiver. The fact that such services were 
accepted in connection to FDA’s response to the contamination of the 
drug heparin did not alleviate that risk.) 

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language with the following: 

Recent GAO decisions have considered the emergency exception to 31 
U.S.C. § 1342 (including its 1990 amendment) in a context other than a 
funding gap. See, e.g., B-310108, Feb. 6, 2008. For example, the 
question in B-262069, Aug. 1, 1995, was whether the District of 
Columbia could exceed its appropriation for certain programs, 
including Aid to Families with Dependent Children and Medicaid, 
without violating the Antideficiency Act. The main issue in that 
decision was whether the “unless authorized by law exception” to the 
Antideficiency Act in 31 U.S.C. § 1341(a)(1)(A) applied. GAO held that 
it did not. The decision also noted the existence of the emergencies 
exception to 31 U.S.C. § 1342, but held that it was likewise 
inapplicable: 

“An ‘emergency’ under section 1342 ‘does not include ongoing, regular 
functions of government the suspension of which would not imminently 
threaten the safety of human life or the protection of property.’ We 
are not presently aware of any facts or circumstances that would make 
this limited exception available to the District. See, 5 Op. O.L.C. 1, 
7–11 (1981).” 

B-262069 at 3, fn. 1. 

4. Apportionment of Appropriations: 

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The “emergency” exceptions in section 1515(b)(1)(B) have been 
considered in only one GAO decision, although a 1989 internal 
memorandum suggested that the exception may apply to Forest Service 
appropriations for fighting forest fires. B-230117-O.M., Feb. 8, 1989. 
A 2008 decision addressing section 1515 also suggested that fighting 
forest fires would be the type of activity that could constitute an 
emergency; however, because a deficiency or supplemental appropriation 
was not required, the section was not applicable. B-310108, Feb. 6, 
2008. GAO stated that it is incumbent on Forest Service officials with 
funds control responsibilities, who should be aware of the 
apportionment limitation and how close the agency is to exceeding that 
limitation, to utilize OMB’s procedures for time-critical 
reapportionments by telephoning OMB to request an emergency 
reapportionment before the agency exceeds the limitation. Id. See OMB 
Cir. No. A-11, at § 120.37. 

The emergency exceptions for safety of human life and protection of 
property in 31 U.S.C. § 1515(b) appear to be patterned after identical 
exceptions in 31 U.S.C. § 1342, so the case law under that section, 
some of which is discussed in section C.3.d of this chapter, would 
likely be relevant for construing the scope of the exceptions under 
section 1515(b). See 5 Op. Off. Legal Counsel 1, 9–10 (1981) (“as 
provisions containing the same language, enacted at the same time, and 
aimed at related purposes, the emergency provisions of” sections 1342 
and 1515(b)(1)(B) “should be deemed in pari materia and given a like 
construction”); Memorandum for the General Counsel, United States 
Marshals Service, Continuation of Federal Prisoner Detention Efforts 
in the Face of a USMS Appropriation Deficiency, OLC Opinion, Apr. 5, 
2000 (“we think it clear that, if an agency’s functions fall within § 
1342’s exception for emergency situations, the standard for the ‘
emergency’ exception under § [1515(b)(1)(B)] also will be met”). See 
also Memorandum for the Director, Office of Management and Budget, 
Government Operations in the Event of a Lapse in Appropriations, OLC 
Opinion, Aug. 16, 1995, at 7, fn. 6. 

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In 2008, GAO addressed whether the Forest Service had violated the 
Antideficiency Act when it exceeded an apportionment limitation of 
$100 million for aviation resources to be used for forest fire 
suppression activities. B-310108, Feb. 6, 2008. For fiscal year 2006, 
the Forest Service received an appropriation of $1,779,395,000, to 
remain available until expended, for wildland fire management. Pub. L. 
No. 109-54, title III, 199 Stat. 499, 533 (Aug. 2, 2005). When the 
Office of Management and Budget (OMB) apportioned these funds, the 
relevant apportionment schedules contained a footnote limiting the 
availability of suppression funds for the acquisition of aviation 
resources to “not more than $100,000,000.” B-310108, at 4. However, 
July turned out to be a catastrophic month for wildland fire activity, 
and fire suppression expenditures, including those for aviation 
resources, increased significantly. By the end of July, the Forest 
Service had obligated approximately $118 million for aviation 
resources, thus exceeding the apportionment limitation. GAO concluded 
that, despite the emergency nature of the actions, the Forest Service 
violated the Antideficiency Act when it incurred obligations for the 
acquisition of aviation resources in excess of the $100 million 
apportionment limitation. Id. at 6–7. 

Page 6-141 – Replace the first paragraph with the following: 

Since the Antideficiency Act requires an apportionment before an 
agency can obligate the appropriation, 31 U.S.C. § 1512(a), an 
obligation in advance of an apportionment violates the Act. See B-
255529, Jan. 10, 1994. In other words, if zero has been apportioned, 
zero is available for obligation or expenditure.136 When an agency 
anticipates a need to obligate appropriations upon their enactment, it 
may request (but not receive) an apportionment before a regular 
appropriation or continuing resolution has been enacted. Typically, 
for regular appropriation acts, agencies submit their apportionment 
requests to OMB by August 21 or within 10 calendar days after 
enactment of the appropriation, whichever is later. See OMB Circular 
No. A-11, Preparation, Submission, and Execution of the Budget, § 
120.30 (Aug. 7, 2009). OMB permits agencies to submit requests on the 
day Congress completes action on the appropriation bill. Id. § 120.35. 
OMB encourages agencies to begin their preparation of apportionment 
requests as soon as the House and Senate have reached agreement on 
funding levels (id. § 120.30) and to discuss the proposed request with 
OMB representatives (id. § 120.35). OMB will entertain expedited 
requests and, for emergency funding needs, may approve the 
apportionment request by telephone. Id. § 120.37. See, e.g., B-310108, 
Feb. 6, 2008, at 7. For continuing resolutions, OMB typically 
expedites the process by making “automatic” apportionments under 
continuing resolutions. See B-255529, Jan. 10, 1994; OMB Circ. No. A-
11, § 123.5. 

Page 6-143 – Replace the first full paragraph with the following: 

For further illustration, see 35 Comp. Gen. 356 (1955) (over-
obligation of allotment stemming from misinterpretation of 
regulations); B-95136, Aug. 8, 1979 (over-obligation of regional 
allotments would constitute reportable violation unless sufficient 
unobligated balance existed at central account level to adjust the 
allotments); B-179849, Dec. 31, 1974 (over-obligation of allotment 
held a violation of section 1517(a) where agency regulations specified 
that allotment process was the “principal means whereby responsibility 
is fixed for the conduct of program activities within the funds 
available”); B-114841.2-O.M., Jan. 23, 1986 (no violation in exceeding 
allotment subdivisions termed “work plans”); B-242974.6, Nov. 26, 1991 
(nondecision memorandum) (under Defense Department regulations, 
overobligations of administrative subdivisions of funds that are 
exempt from apportionment do not constitute Antideficiency Act 
violations). See also B-318724, June 22, 2010 (for better funds 
control, agency may wish to consider providing program managers with 
administrative subdivisions of the account that they may not exceed). 

5. Penalties and Reporting Requirements: 

Page 6-146 – Replace the first full paragraph and insert new footnote 
number 138a as follows: 

What if GAO uncovers a violation but the agency thinks GAO is wrong? 
The agency must still make the required reports, and must include an 
explanation of its disagreement. OMB Cir. No. A-11, § 145. See also 
GAO, Anti-Deficiency Act: Agriculture’s Food and Nutrition Service 
Violates the Anti-Deficiency Act, GAO/AFMD-87-20 (Washington, D.C.: 
Mar. 17, 1987). Should an agency fail to make the required report 
within a reasonable period of time, GAO will advise Congress that the 
agency violated the Antideficiency Act but has not yet reported the 
violation. See B-308715, Nov. 13, 2007.138a 

Page 6-146 – Insert the following as new footnote number 138a: 

138a GAO advised Congress that the Department of Energy (DOE) had 
violated the Antideficiency Act in fiscal years 2006 and 2007 but had 
not reported the violations to Congress more than six 
months after GAO found the violations. Subsequently, two months after 
GAO notified Congress, the department made the required reports and 
provided copies to GAO. Letter from the Secretary, DOE, to the 
Comptroller General of the United States, Jan. 14, 2008. 

D. Supplemental and Deficiency Appropriations: 

Page 6-162 – Replace the first full paragraph with the following: 

A supplemental appropriation also may add funds to a lump-sum 
appropriation for a specific object. If the original lump-sum 
appropriation is also available for that specific object, both the 
lump-sum appropriation and the supplemental appropriation are 
available for that object. B-322062, Dec. 5, 2011. However, if the 
original appropriation was not available for that object, then the 
supplemental amounts to a new appropriation, that is, in effect, 
distinct from the lump-sum appropriation. For example, the fiscal year 
1957 supplemental appropriation for the Maritime Administration 
provided $18 million for a nuclear-powered merchant ship under the 
heading “ship construction.” Funds for the nuclear-powered ship had 
been under the regular “ship construction” lump-sum appropriation for 
fiscal year 1957, but had been denied. Under the circumstances, the 
Comptroller General found that the supplemental appropriation amounted 
to a specifically earmarked maximum for the vessel, and that the 
agency could not exceed the $18 million by using funds from the 
regular appropriation. 36 Comp. Gen. 526 (1957). 

E. Augmentation of Appropriations: 

2. Disposition of Moneys Received: Repayments and Miscellaneous 
Receipts: 

Page 6-170 – Replace the first bulleted paragraph with the following: 

* An agency may retain moneys it receives if it has statutory 
authority to do so. In other words, the requirement to deposit such 
funds into the general fund of the Treasury will not apply. E.g., 72 
Comp. Gen. 164, 165–66 (1993) and cases cited.157 However, the 
requirement for deposit “as soon as practicable without deduction for 
any charge or claim” applies whether the correct account for deposit 
is the general fund of the Treasury or some other account authorized 
by statute. B-321387, Mar. 30, 2011, at 11 and cases cited. 

Page 6-170 – Insert the following before the second full paragraph: 

Failure to comply with a statutory exception may also constitute a 
violation of 31 U.S.C. § 3302(b). An example of this is B-321387, Mar. 
30, 2011. In that decision, GAO found that a lessee’s deposit of cash 
rent payments into an escrow account under the control of the 
Department of the Army rather than into a special account in the 
Treasury, as required by 10 U.S.C. § 2667(e), constituted a violation 
of 31 U.S.C. § 3302(b). 

Page 6-170 – Replace footnote number 157 with the following: 

157 In addition to instances described elsewhere in the text, the 
following are examples of statutory exceptions to section 3302(b): 10 
U.S.C.§ 2667(e)(1)(A)(i) (money rentals received pursuant to certain 
leases entered into under 10 U.S.C. § 2667(a)), discussed in B-321387, 
Mar. 30, 2011; 39 U.S.C. § 410(a) (revenue of the United States Postal 
Service and its components in the general exercise of its powers), 
discussed in B-317022, Sept. 25, 2008; 42 U.S.C. § 8287 (measured 
savings from energy savings performance contracts), discussed in B-
287488, June 19, 2001; 42 U.S.C. § 8256 and note (rebates received by 
federal agencies from utility companies on account of energy-saving 
measures), discussed in B-265734, Feb. 13, 1996; and 38 U.S.C. § 1729A 
(compensatory settlement amounts under the Federal Medical Care 
Recovery Act stemming from care provided at Department of Veterans 
Affairs facilities), discussed in Memorandum Opinion for the Assistant 
Attorney General, Civil Division, Miscellaneous Receipts Act Exception 
for Veterans’ Health Care Recoveries, OLC Opinion, Dec. 3, 1998. 

Page 6-172 – Insert the following after the first full paragraph: 

In B-305402, Jan. 3, 2006, GAO refused to classify as a refund an 
amount that did not represent the return of an overpayment to the 
agency. That case concerned the proper treatment of demutualization 
compensation that the National Aeronautics and Space Administration 
(NASA) received from its contractor, California Institute of 
Technology (Caltech). Caltech had received the demutualization 
compensation in the form of stock as a policyholder of Prudential Life 
Insurance Company policies that Caltech held for some employees 
operating the Jet Propulsion Laboratory for NASA. Caltech notified 
NASA of the compensation, and NASA instructed Caltech to liquidate the 
stock and place the proceeds in an interest-bearing account. GAO found 
that these proceeds do not constitute a refund that NASA could credit 
to its appropriation because they do not represent a repayment of 
funds that were “in excess of what was actually due”; that is, the 
proceeds do not reflect a repayment from Caltech of an amount that 
NASA had previously overpaid Caltech. At the time NASA paid allocable 
costs of the defined benefit retirement plan, the amounts were 
correct, and the fact that the moneys NASA received as a result of the 
demutualization are related to the terminated retirement plans does 
not make the proceeds a refund. Since the demutualization compensation 
cannot be properly characterized as a refund, the proceeds from the 
sale of the demutualization compensation must be deposited in the 
general fund of the Treasury as miscellaneous receipts. 

Page 6-173 – Replace the first full paragraph (after the quoted 
language) with the following: 

B-302366, at 5. In this regard, the decision rejected the department’s 
suggestion that the interest payment could be regarded as merely 
restoring the appropriation to an amount adjusted for inflation. The 
decision noted that Congress does not appropriate on a net present 
value basis. Likewise, GAO has held that agencies may retain and 
credit to their appropriations refunds in the form of recoveries under 
the False Claims Act (31 U.S.C. § 3729) to the extent that they 
represent compensatory damages to reimburse erroneous payments, but 
not “exemplary” damages in the nature of penalties. B-281064, Feb. 14, 
2000; 69 Comp. Gen. 260 (1990). See also B-310725, May 20, 2008 (the 
Inspector General (IG) of the National Science Foundation may not 
credit to its appropriation amounts recovered by the Justice 
Department under the False Claims Act to reimburse investigative costs 
incurred by the IG’s office that are specifically provided for in its 
appropriation). 

Page 6-176 – Replace the fourth full paragraph with the following: 

The deposit timing requirements of 31 U.S.C. § 3302(c) and the 
implementing Treasury regulations apply as well when public moneys are 
held by nonfederal custodians. Thus, GAO found that these requirements 
were violated where the Department of Veterans Affairs (VA) allowed 
contractors to hold payments it collected on VA loans in an interest-
bearing account for 30 days or more before transferring the payments 
to the Treasury. See GAO, Internal Controls: VA Lacked Accountability 
Over Its Direct Loan and Loan Sale Activities, GAO/AIMD-99-24 
(Washington, D.C.: Mar. 24, 1999), at 16–18. See also B-305402, Jan. 
3, 2006 (the National Aeronautics and Space Administration should have 
deposited amounts received from its contractor in the Treasury the day 
following the receipt of those amounts). 

Page 6-177 – Replace the partial paragraph after the quoted language 
with the following: 

B-303413, Nov. 8, 2004. See also B-300826, Mar. 3, 2005, at 6, noting 
that an agency cannot avoid section 3302(b) by authorizing a 
contractor to charge fees to outside parties and keep the payments in 
order to offset costs that would otherwise be borne by agency 
appropriations. The decision in B-300826 was affirmed in B-306663, 
Jan. 4, 2006. See also B-307137, July 12, 2006 (the Department of 
Energy (DOE) violated 31 U.S.C. § 3302(b) and augmented its 
appropriations when it authorized the United States Enrichment 
Corporation to hold, invest, and use the proceeds from public sales of 
government-owned uranium on behalf of DOE prior to the enactment of 
specific statutory authority exempting the proceeds of those uranium 
sales from section 3302(b)). 

Page 6-182 – Insert the following citation after the end of the first 
full paragraph: 

See also B-321729, Nov. 2, 2011 (funds received by the federal 
government on behalf of a private party in the settlement of two 
litigation actions do not represent “money for the government,” and 
such funds may be disbursed to the private party without the need for 
an appropriation). 

Page 6-183 – Insert the following after the first full paragraph: 

A recent situation involved fees collected by a government 
corporation. Congress established the State Justice Institute as a 
private, nonprofit corporation to further “the development and 
adoption of improved judicial administration in State courts in the 
United States.” 42 U.S.C. § 10702(a). Although the Institute receives 
an annual appropriation from Congress, the Institute is not a 
government agency or instrumentality except for limited purposes 
specified in its authorizing statute, and its employees are not to be 
considered employees of the United States. 42 U.S.C. § 10704. The 
Executive Director of the Institute asked whether the Institute could 
retain fees the Institute obtains for the use of advertising space in 
its semiannual newsletter, or whether the fees must be treated as 
miscellaneous receipts under 31 U.S.C. § 3302(b) and deposited in the 
Treasury. The Institute is not a government agency, and GAO stated 
that “although Congress imposed on the Institute certain requirements 
typically applicable to a federal agency, it did so selectively, 
against the general backdrop of a private corporate entity. 42 U.S.C. 
§ 10702(a).” B-307317, Sept. 13, 2006, at 3. GAO found nothing 
explicitly or implicitly in the Institute’s authorizing statute that 
would suggest or require application of the miscellaneous receipts 
statute to the Institute. Therefore, GAO concluded that in accepting 
the advertising fees the Institute was not “receiving money for the 
Government,” and so the Institute could retain the fees without 
violating the miscellaneous receipts statute. Id. (GAO cautioned, 
however, that in retaining such fees the Institute should be cognizant 
of the legal constraints and policy considerations regarding 
advertising it chooses to carry). 

Page 6-197 –Replace the last partial paragraph with the following: 

The decision in B-302962 held that the exception to the 
interdepartmental waiver doctrine applied in the case of damage to 
facilities of the National Archives and Records Administration (NARA) 
whose operations were financed by a revolving fund. Thus, NARA should 
collect from other federal agencies, their contractors, or NARA’s own 
contractors, as the case may be, amounts sufficient to repair damages 
they caused to NARA’s facilities and deposit those amounts into the 
revolving fund. 

In other circumstances, however, GAO concluded that NARA’s funds were 
available to cover the damage. In B-308822, May 2, 2007, a building 
failure caused water damage to records NARA stored for its federal 
agency customers in a federal building owned and maintained by the 
General Services Administration (GSA). Here, the Federal Property 
Administrative Services Act of 1949, as amended, governs the 
relationship between GSA and its federal agency customers who occupy 
GSA-owned and operated buildings. Both GSA’s management of federal 
buildings and NARA records centers operate out of revolving funds. 
Requiring GSA to reimburse another agency for damages it incurred or 
reduce the rental charges to cover the damages would reduce amounts 
available to finance new construction, undermining one of the purposes 
of the Act. Accordingly, GAO concluded that GSA was not required to 
reimburse NARA for property damage. 

Page 6-199 – Replace the second paragraph with the following: 

Federal agencies must have statutory authority both (1) to charge fees 
for their programs and activities in the first instance and (2), even 
if they have fee-charging authority, to retain in their appropriations 
and use the amounts collected. See, e.g., B-306663, Jan. 4, 2006; B-
300826, Mar. 3, 2005; B-300248, Jan. 15, 2004. Thus, fees and 
commissions paid either to the government itself or to a government 
employee for activities relating to official duties must be deposited 
in the Treasury as miscellaneous receipts, absent statutory authority 
to the contrary. 

Page 6-199 – Replace the last paragraph with the following: 

Of course, if and to the extent expressly authorized by statute an 
agency may retain fees and use them to offset operating costs. See, 
e.g., 2 U.S.C. § 68-7(b) (fees and other charges collected for 
services provided by the Senate Office of Public Records); 7 U.S.C. § 
7333(k)(3) (fees for certain services collected by the Commodity 
Credit Corporation); 10 U.S.C. § 2262 (fees collected from 
participants to defray Department of Defense costs of hosting 
conferences); 28 U.S.C. § 1921(e) (fees collected by the United States 
Marshals Service for service of civil process and judicial execution 
seizures and sales, to the extent provided in advance in appropriation 
acts); 28 U.S.C. § 1931 (specified portions of filing fees paid to the 
clerk of court). The relevant legislation will determine precisely 
what may be retained. E.g., 34 Comp. Gen. 58 (1954). For example, 
amounts collected under 10 U.S.C. § 2262 with respect to a Department 
of Defense-hosted conference can be credited to the appropriation from 
which the costs of the conference are paid to reimburse the Department 
for the costs incurred, but if the amount collected ends up being 
greater than the actual costs of the conference, the excess amount is 
to be deposited into the Treasury as miscellaneous receipts. 10 U.S.C. 
§§ 2262(b), (c). 

Page 6-202 – Replace footnote number 177 with the following: 

177 See section B.1 of Chapter 15 for a more detailed discussion of 
the Economy Act. Chapter 15 also discusses a variety of other 
interagency ordering authorities including working capital funds, 
special revolving funds, franchise funds, and program-specific funds. 
Note however that, where one agency has a specific statutory direction 
to transfer funds appropriated to that agency to another agency, these 
transfers should not be made using Economy Act agreements. B-319189, 
Nov. 12, 2010. 

Page 6-212 – Insert the following after the first paragraph: 

In B-306860, Feb. 28, 2006, GAO concluded that the terms of a 
settlement agreement entered into between the Office of Federal 
Housing Enterprise Oversight (OFHEO) and the Federal Home Loan 
Mortgage Corporation (Freddie Mac) would not augment OFHEO’s 
appropriation. In this case, the settlement agreement was intended to 
resolve an administrative proceeding, including production of 
documents, brought by OFHEO against Freddie Mac pursuant to OFHEO’s 
regulatory oversight authority. As part of the settlement, Freddie Mac 
agreed to provide the documents and to pay a vendor up to $1 million 
to electronically format and code certain documents for OFHEO’s use. 
The settlement agreement satisfied a prosecutorial objective, that is, 
the production of documents, and there was no contractual relationship 
between OFHEO and the vendor. Instead, the contract was between 
Freddie Mac and the vendor, and it was Freddie Mac, not OFHEO, who was 
contractually obligated to pay the vendor. Thus, the costs of 
formatting the documents were Freddie Mac’s costs and not OFHEO’s, and 
Freddie Mac’s payment of the formatting costs did not constitute a de 
facto augmentation of OFHEO’s appropriation. 

The OFHEO decision was explained in B-308476, Dec. 20, 2006, in 
which GAO determined that the Federal Motor Carrier Safety 
Administration (FMCSA) did not have authority to retain an award of 
criminal restitution that a federal district court ordered to be paid 
to FMCSA. In carrying out its mission to improve the safety of 
commercial vehicle operations, FMCSA issues and enforces motor carrier 
safety regulations concerning specified commercial trucking and bus 
operations. See 49 U.S.C. § 113. A trucking company’s officers pleaded 
guilty to violating both the agency regulations and a criminal statute 
concerning conspiracy to commit false statement offenses. In accepting 
the plea, the court ordered, among other penalties, the defendants to 
pay restitution to FMCSA in the amount of $20,000 to compensate FMCSA 
for the costs of the investigation and prosecution of the case. Unlike 
the situation in the OFHEO case, if FMCSA retained the $20,000 in 
restitution, the agency would improperly augment its appropriation. 
FMCSA receives an appropriation each year to pay for costs of 
investigations such as the one conducted in the trucking company’s 
case—such costs are necessary expenses of enforcing the agency’s 
safety regulations and are obligations of FMCSA. As such, crediting 
the restitution award to FMCSA’s appropriation would improperly 
contribute financial resources that supplement those already provided 
for the agency by Congress. Therefore, FMCSA was required to remit the 
awarded funds to the Treasury as miscellaneous receipts. See also B-
310725, May 20, 2008 (amounts recovered pursuant to the False Claims 
Act to reimburse investigative costs incurred by the Inspector General 
(IG) of the National Science Foundation should be deposited into the 
Treasury as miscellaneous receipts because Congress appropriates a 
specific amount to the IG to cover these investigative costs). 

Page 6-214 – Insert the following after the first full bullet at the 
top of the page: 

* Proceeds from the sale of government-owned uranium used to 
compensate the United States Enrichment Corporation (USEC) for 
expenses it incurred on behalf of the Department of Energy (DOE). 
Here, DOE arranged for an independent revenue stream not appropriated 
to it by Congress; had no authority to retain the proceeds of that 
revenue stream if received directly; and arranged for its agent, USEC, 
to receive the proceeds of the unauthorized revenue stream and use 
those amounts to pay for expenses incurred on behalf of DOE. As DOE’s 
agent, USEC received “money for the government” but failed to deposit 
the money in the Treasury. Therefore, DOE violated the miscellaneous 
receipts statute and augmented its appropriations. B-307137, July 12, 
2006. 

Page 6-218 – Replace the second paragraph with the following: 

Examples of cases in which use of the “Moneys Erroneously Received and 
Covered” appropriation was found authorized are Reynolds v. Alabama 
Department of Transportation, Civ. A. No. 2:85cv665-MHT (M.D. Ala. 
Jan. 2, 2008) (contempt fines collected incident to a consent decree 
erroneously deposited to the U.S. Treasury miscellaneous receipts 
account by the Clerk of Court; funds returned to the court’s 
registry); 71 Comp. Gen. 464 (1992) (refund to investment company of 
late filing fee upon issuance of order by Securities and Exchange 
Commission exempting company from filing deadline for fiscal year in 
question); 63 Comp. Gen. 189 (1984) (Department of Energy deposited 
overcharge recoveries from oil companies into general fund instead of 
first attempting to use them to make restitution refunds); B-217595, 
Apr. 2, 1986 (interest collections subsequently determined to have 
been erroneous). 

3. Gifts and Donations to the Government: 

Page 6-224 – Replace the first full paragraph with the following: 

A number of departments and agencies have statutory authority to 
accept gifts. A partial listing is contained in B-149711, Aug. 20, 
1963 (although dated, B-149711 is still useful since there is no more 
recent comprehensive compilation of these authorities). The statutory 
authorizations contain varying degrees of specificity as to precisely 
what may be accepted (money, property, services, etc.). For example, 
the State Department’s general gift statute, 22 U.S.C. § 2697, 
authorizes the State Department to accept gifts of money or property, 
real or personal, and, in the Secretary’s discretion, conditional 
gifts. Compare B-319246, Sept. 1, 2010 (the Denali Commission has 
statutory authority to accept gifts but this authority does not 
specify, and therefore does not extend to, conditional gifts). A case 
discussing 22 U.S.C. § 2697 is 67 Comp. Gen. 90 (1987) (United States 
Information Agency may accept donations of radio programs prepared by 
private syndicators for broadcast over Voice of America facilities). 
Another is 70 Comp. Gen. 413 (1991) (United States Information Agency 
may accept donations of foreign debt). Authority to accept voluntary 
services does not include donations of cash. A-86115, July 15, 1937; A-
51627, Mar. 15, 1937. For a further discussion of voluntary services, 
see section C.3 of this chapter. 

4. Other Augmentation Principles and Cases: 

Page 6-239 – Insert the following after the third bullet: 

* The Office of Compliance may not accept reimbursements of its costs 
of investigating and prosecuting alleged violations of section 5 of 
the Occupational Safety and Health Act (29 U.S.C.§ 654), and its costs 
of monitoring planned abatement actions, from legislative branch 
agencies since the Office of Compliance receives an annual 
appropriation to fund these activities. B-308774, Mar. 15, 2007. 

* The Pension Benefit Guaranty Corporation may not retain a 
reimbursement for financial analysis services associated with a 
request for waiver from claims arising under title IV of the Employee 
Retirement Income Security Act. B-307849, Mar. 1, 2007. The 
miscellaneous receipts statute, 31 U.S.C. § 3302(b), requires 
government corporations to deposit amounts received into the general 
fund of the Treasury, absent statutory authority to the contrary. Id. 

[End of Chapter 7] 

Chapter 8: Obligation of Appropriations: 

B. Criteria for Recording Obligations (31 U.S.C. § 1501): 

1. Section 1501(a)(1): Contracts: 

Page 7-18 – Replace the last paragraph with the following: 

Claims against the government resulting from unauthorized commitments 
raise obligation questions in two general situations. If the 
circumstances surrounding the unauthorized commitment are sufficient 
to give rise to a contract implied-in-fact, it may be possible for the 
agency to ratify the unauthorized act. If the ratification occurs in a 
subsequent fiscal year, the obligation is chargeable to the prior 
year, that is, the year in which the need presumably arose and the 
claimant performed. B-208730, Jan. 6, 1983. See also B-317413, Apr. 
24, 2009. However, before an agency chooses to ratify the obligation, 
it first must assure that sufficient prior year unobligated funds 
remain available to cover the ratification. Id.; B-290005, July 
1, 2002. If ratification is not available for whatever reason, the 
only remaining possibility for payment is a quantum meruit recovery 
under a theory of contract implied-in-law. The quantum meruit theory 
permits payment in limited circumstances even in cases where there was 
no valid obligation, for example, where the contractor has made 
partial delivery operating under what he believed to be a valid 
contract. B-303906, Dec. 7, 2004; B-251668, May 13, 1993; B-118428, 
Sept. 21, 1954. See also 67 Comp. Gen. 507 (1988). The obligational 
impact is the same as for ratification— payment is chargeable to the 
fiscal year in which the claimant performed. B-210808, May 24, 1984; B-
207557, July 11, 1983. 

Page 7-21 – Replace first full paragraph with the following: 

What does all this signify from the perspective of obligating 
appropriations? As we noted at the outset, the obligational impact of 
a variable quantity contract depends on exactly what the government 
has bound itself to do. A fairly simple generalization can be deduced 
from the decisions: In a variable quantity contract (requirements or 
indefinite-quantity), any required minimum purchase must be obligated 
when the contract is executed; subsequent obligations occur as work 
orders or delivery orders are placed, and are chargeable to the fiscal 
year in which the order is placed. B-308969, May 31, 2007 (agency 
should have obligated the $1 million required minimum purchase under 
an IDIQ contract against the appropriation for the fiscal year in 
which the contract was executed). See also B-302358, Dec. 27, 2004. Of 
course, the bona fide needs rule applies both at the time the agency 
enters into the contract (i.e., the agency must have a bona fide need 
for the guaranteed minimum in the IDIQ contract) and when the agency 
subsequently places task or work orders. B-318046, July 7, 2009. (For 
more on the bona fide needs rule, see Chapter 5, section B.) 

Page 7-23 – Replace the first full paragraph with the following: 

As noted previously, where the precise amount of the government’s 
liability is defined at the time the government enters into the 
contract, that is the amount to be recorded against funds available at 
the time of contract execution. For example, in the simple firm fixed-
price contract, the contract price is the recordable obligation. 
Statutory authority to record an obligation at the time of contract 
execution for an amount less than the full amount of the government’s 
contractual obligation must be explicit. B-322160, Oct. 3, 2011; B-
195260, July 11, 1979. For example, the Securities and Exchange 
Commission (SEC), using no-year appropriations, entered into a 
multiyear lease for real property. Without authority otherwise, SEC 
was required to record an obligation at the time it signed the lease 
for the government’s total liability under the terms of the lease. B-
322160. When an agency uses the Federal Acquisition Streamlining Act 
or other similar authority, that authority may permit the agency to 
obligate its appropriations differently. We discuss the Federal 
Acquisition Streamlining Act and other examples of multiyear 
contracting authorities in section B.9 of Chapter 5. 

For many types of obligations, the precise amount of the government’s 
liability cannot be known at the time the liability is incurred. As 
summarized in our preliminary discussion of 31 U.S.C. § 1501(a), some 
initial amount must still be recorded. See, e.g., B-321296, July 13, 
2011 (NLRB properly recorded an obligation representing an estimate, 
based on past practices and trends, of the total amount of court 
reporting services it would need under a particular contract). The 
agency should then adjust this initial obligation up or down 
periodically, as more precise information becomes available.12 

Page 7-27 – Insert the following after the first partial paragraph: 

A recent case reaffirmed that an agency decision to rely on estimated 
obligations did not relieve it of responsibility for complying with 
fiscal laws. B-318724, June 22, 2010. In fiscal year 2008, the Army 
used estimates to monitor the budget execution of many personnel 
expenses. After the end of the fiscal year, the Army identified a $200 
million shortfall in its personnel appropriation and had to transfer 
funds into the account to cover its obligations. GAO explained that 
the Army had available to it either the exact or highest amount for 
each obligation at the time it was incurred. The Army failed to take 
the necessary steps to ensure that it had adequate budget authority 
and, consequently, violated the Antideficiency Act. Id. 

Page 7-27 – Replace the first full paragraph with the following: 

The core issue in many of the previously discussed cases has been when 
a given transaction ripens into a recordable obligation, that is, 
precisely when the “definite commitment” occurs. Many of the cases do 
not fit neatly into categories. Rather, the answer must be derived by 
analyzing the nature of the contractual or statutory commitments in 
the particular case. See, e.g., B-320091, July 23, 2010 (with a cost 
reimbursement contract, an agency incurs, and must record, an 
obligation for the full amount it committed to in the contract’s 
“limitation of funds” clause; the agency incurs a new obligation, 
recordable against a current appropriation, if it modifies the 
contract, increasing the cost ceiling of the “limitation of funds” 
clause). 

Page 7-27 – Insert the following after the last paragraph: 

Another case involved the proper obligation of a settlement executed 
in fiscal year 2007 of cost overruns incurred in fiscal year 2006 as a 
result of an unauthorized contract modification during the performance 
of a contract. The agency charged the settlement amount to its fiscal 
year 2006 appropriation. GAO disagreed, however, concluding that the 
settlement created a new obligation in fiscal year 2007 and should 
have been charged against the agency’s fiscal year 2007 appropriation. 
B-317413, Apr. 24, 2009. 

Page 7-28 – Replace the last paragraph with the following including 
the reference to new footnote number 16a: 

It is not uncommon for federal agencies to provide goods or services 
to other federal agencies. Section 1501 addresses these interagency 
transactions in two places. Subsection (a)(3) addresses interagency 
orders required by law.16a We discuss these transactions in section 
B.3 of this chapter. Subsection (a)(1) addresses the obligational 
requirements of all other interagency transactions: “a binding 
agreement between an agency and another person (including an agency)” 
(emphasis added). To distinguish these other transactions from those 
required by law, these transactions are often referred to as 
“voluntary orders.” This section discusses voluntary orders. Because 
voluntary orders are covered by section 1501(a)(1), obligations for 
many voluntary orders are recorded in the same manner as for 
contracts. However, the authority that governs the interagency 
transaction, not contract practices, determines the obligational 
treatment of a voluntary order. 

Page 7-28 – Insert the following as new footnote number 16a: 

16a Interagency transactions required by law should not be confused 
with statutory directions for one agency to transfer funds to another 
agency. See B-319189, Nov. 12, 2010. 

Page 7-31 – Replace the second full paragraph with the following: 

The Army Corps of Engineers entered into agreement with Department of 
Housing and Urban Development (HUD) to perform flood insurance studies 
pursuant to orders placed by HUD. Since the agreement presumably 
required the Corps to perform as HUD placed the orders, a recordable 
obligation would arise when HUD placed an order under the agreement. 
Since the agreement was authorized by the National Flood Insurance 
Act,19 rather than the Economy Act, funds obligated by an order would 
remain obligated even though the Corps did not complete performance 
(or contract out for it) until following the fiscal year. B-167790, 
Sept. 22, 1977. See also B-318425, Dec. 8, 2009 (the Chemical Safety 
and Hazard Investigation Board’s appropriation is not available to 
fund a proposed interagency agreement for identity cards and related 
maintenance services because the agreement did not specify a period of 
performance for the agreement, thus creating an open-ended 
obligation); B-317249, July 1, 2009 (because an order submitted 
through the General Services Administration’s AutoChoice Summer 
Program is not finalized until October, the Natural Resources 
Conservation Service (NRCS) does not incur an obligation until 
October; NRCS may not obligate the appropriation current when it 
submits the order). 

5. Section 1501(a)(5): Grants and Subsidies: 

Page 7-41 – Replace the first full paragraph with the following: 

Applying the above principles, the Comptroller General found that a 
document entitled “Approval and Award of Grant” used by the Economic 
Development Administration was sufficient for recording grant 
obligations under the local public works program because it “reflects 
the Administration’s acceptance of a grant application; specifies the 
project approved and the amount of funding; and imposes a deadline for 
affirmation by the grantee.” B-126652, Aug. 30, 1977. See also B-
316372, Oct. 21, 2008 (similar language in a financial assistance 
award had the same key terms that established an obligation). Once the 
appropriation has been properly obligated, performance by the grantee 
and the actual disbursement of funds may extend beyond the period of 
obligational availability. B-300480, Apr. 9, 2003, aff’d, B-300480.2, 
June 6, 2003; B-289801, Dec. 30, 2002; 31 Comp. Gen. 608, 610 (1952); 
20 Comp. Gen. 370 (1941); B-37609, Nov. 15, 1943; B-24827, Apr. 3, 
1942; B-124374-O.M., Jan. 26, 1956. 

Page 7-41 – Replace the last partial paragraph with the following: 

In other situations, the obligating action for purposes of 31 U.S.C. § 
1501(a)(5)(A) may take place by operation of law under a statutory 
formula grant or by virtue of actions authorized by law to be taken by 
others that are beyond the control of the agency (even when the 
precise amount of the obligation is not determined until a later 
time). When this occurs, the documentary evidence used to support the 
accounting charge against the appropriation is a reflection of, not 
the creation of, the obligation under the particular law and usually 
is generated subsequent to the time that the actual obligation arose. 
63 Comp. Gen. 525 (1984); B-164031(3).150, Sept. 5, 1979. Thus where 
an agency is required to allocate funds to states on the basis of a 
statutory formula, the formula establishes the obligation to each 
recipient rather than the agency’s allocation since, if the allocation 
is erroneous, the agency must adjust the amounts paid each recipient. 
41 Comp. Gen. 16 (1961); B-164031(3).150, Sept. 5, 1979. See also B-
316915, Sept. 25, 2008 (under a statutory program to provide funds to 
states to assist in the administration of federal elections, a 
precondition that a state certify to the agency compliance with 
various requirements does not affect the fact that the payments are 
“required to be paid” within the meaning of 31 U.S.C. § 1501(a)(5)(a) 
and are thus obligated by operation of law, since the state may 
fulfill the precondition and be entitled to receipt of the funds 
through no actions on the part of the agency). 

7. Section 1501(a)(7): Employment and Travel: 

Page 7-46 – Replace the third paragraph with the following: 

For persons compensated on an actual expense basis, it may be 
necessary to record the obligation as an estimate, to be adjusted when 
the services are actually performed. Documentation requirements to 
support the obligation or subsequent claims are up to the agency. For 
example, the National Mediation Board (NMB) incurs an obligation when 
it appoints a neutral arbitrator to a grievance adjustment board to 
hear a specific case or a specified group of related cases. Because 
NMB does not control the number of days an arbitrator will work before 
submitting an award, NMB should record an obligation based on its best 
estimate of the costs of paying the arbitrator and adjust the 
obligation up or down as more information becomes available. B-305484, 
June 2, 2006. NMB should liquidate the obligation from the 
appropriation current at the time NMB incurs the obligation, 
notwithstanding that the arbitrator’s performance may extend into the 
next fiscal year. Id. To the extent GAO indicated in two prior 
decisions, B-217475, Dec. 24, 1986, and B-217475, May 5, 1986, that 
NMB may record obligations month-to-month based on the anticipated 
expenditures it approves in monthly compensation requests, those 
decisions were overruled by B-305484. 

Page 7-47 – Replace the second full paragraph with the following: 

Bonuses such as performance awards or incentive awards obligate 
appropriations current at the time the awards are made. Thus, for 
example, where performance awards to Senior Executive Service 
officials under 5 U.S.C. § 5384 were made in fiscal year 1982 but 
actual payment had to be split between fiscal year 1982 and fiscal 
year 1983 to stay within statutory compensation ceilings, the entire 
amount of the awards remained chargeable to fiscal year 1982 funds. 64 
Comp. Gen. 114, 115 n. 2 (1984). The same principle would apply to 
other types of discretionary payments; the administrative 
determination creates the obligation. See, e.g., B-318724, June 22, 
2010; B-80060, Sept. 30, 1948. 

Page 7-52 – Replace the third full paragraph with the following: 

The leading case on the obligation of employee transfer expenses is 64 
Comp. Gen. 45 (1984). The rule is that “for all [reimbursable] travel 
and transportation expenses of a transferred employee, the agency 
should record the obligation against the appropriation current when 
the employee is issued travel orders.” 64 Comp. Gen. at 48. See also B-
318724, June 22, 2010. This treatment applies to expenses stemming 
from employee transfers; it does not apply to expenses stemming from 
temporary duty. 70 Comp. Gen. 469 (1991). 

C. Contingent Liabilities: 

Page 7-56 – Replace the second full paragraph with the following: 

Contingent liabilities are not recordable as obligations under section 
1501 of title 31.34 Rather, a contingent liability ripens into a 
recordable obligation for purposes of section 1501 only if and when 
the contingency materializes. E.g., B-305484, June 2, 2006; 62 Comp. 
Gen. 143, 145–46 (1983); 37 Comp. Gen. 691–92 (1958); GAO, Policy and 
Procedures Manual for Guidance of Federal Agencies, title 7, § 3.5.C 
(Washington, D.C.: May 18, 1993) (hereafter GAO-PPM). 

E. Deobligation: 

Page 7-59 – Replace the bulleted paragraph with the following: 

* Liquidation in amount less than amount of original obligation. E.g., 
B-321297, Aug. 2, 2011 (statute required agency to offset any civil 
penalties collected as a result of an audit against amounts owed to 
States and Indian Tribes for conducting the audit); B-207433, Sept. 
16, 1983 (cost under run); B-183184, May 30, 1975 (agency called for 
less work than maximum provided under level-of-effort contract). 

[End of Chapter 8] 

Chapter 9: Continuing Resolutions: 

A. Introduction: 

1. Definition and General Description: 

Page 8-3 – Replace the first paragraph and insert the reference to new 
footnote number 3a as follows: 

In 29 of the fiscal years between fiscal years 1977 and 2010, Congress 
and the President did not complete action on a majority of the 13 
regular appropriations by the start of the fiscal year and thus 
necessitated continuing resolutions.3a For the period from fiscal year 
1998 through 2010, a total of 79 continuing resolutions were enacted 
into law. The average number of such measures enacted per year was 
about 6, the actual number ranged from 2 measures (for fiscal years 
2009 and 2010) to 21 (for fiscal year 2001).4 GAO has discussed the 
problems inherent in this situation in several reports. See, e.g., 
GAO, Continuing Resolutions: Uncertainty Limited Management Options 
and Increased Workload in Selected Agencies, GAO-09-879 (Sept. 
24, 2009); Updated Information Regarding Funding Gaps and Continuing 
Resolutions, GAO/PAD-83-13 (Washington, D.C.: Dec. 17, 1982); Funding 
Gaps Jeopardize Federal Government Operations, PAD-81-31 (Washington, 
D.C.: Mar. 3, 1981). 

Page 8-3 – Insert the following as new footnote number 3a: 

3a The number of regular appropriations has varied from Congress to 
Congress. For example, for the 111th Congress, there were 12. From 
1971 to 2004, there were 13. See Library of Congress, Congressional 
Research Service, Appropriations Subcommittee Structure: History of 
Changes from 1920–2007, No. RL31572 (Jan. 
31, 2007). 

Page 8-3 – Replace footnote number 4 with the following: 

4 Library of Congress, Congressional Research Service (CRS), The 
Congressional Appropriations Process: An Introduction, No. 97-684 (Dec. 
2, 2008), at 12–14; CRS, Duration of Continuing Resolutions in Recent 
Years, No. RL32614 (Aug. 25, 2010), at 6. See also CRS, Continuing 
Appropriations Acts: Brief Overview of Recent Practices, No. 
RL30343 (Jan. 10, 2005). 

B. Rate for Operations: 

1. Current Rate Page 8-11 – Insert after the first partial paragraph: 

GAO considered the distinction between transferred and reprogrammed 
funds when calculating the current rate for operations under a 
continuing resolution at the request of the United States Capitol 
Police (USCP). Specifically, the USCP asked whether $10 million of 
unobligated no-year and multiyear balances that it had made available 
through reprogrammings and transfers to its fiscal year 2006 “General 
Expenses” appropriation should be included in calculating the current 
rate under the continuing resolution for its 2007 General Expenses 
appropriation. USCP had made that amount available for fiscal year 
2006 operational needs via a combination of reprogrammings within its 
General Expenses appropriation and a transfer from its Salaries 
appropriation to its General Expenses appropriation. GAO stated that 
in determining the current rate the amount reprogrammed must be 
distinguished from the amount transferred because reprogrammings and 
transfers are fundamentally different transactions. A reprogramming is 
the movement of funds already in an appropriation from one use to 
another. Unless otherwise restricted by statute, agencies may 
reprogram funds as they wish to adapt to changing circumstances. 
Because Congress had already made available the reprogrammed portion 
of the $10 billion, USCP should consider that amount as part of its 
current rate under the continuing resolution. In contrast, a transfer 
is the movement of funds between appropriations, which an agency may 
do only when Congress grants it the statutory authority to do so. USCP 
had discretionary authority to transfer funds and used that authority 
in fiscal year 2006 to transfer the funds from its Salaries 
appropriation to its General Expenses appropriation. GAO concluded 
that transfers made at an agency’s discretion pursuant to its general 
transfer authority, and not directed by law, should not be included in 
the calculation. Therefore, the portion of the $10 million comprised 
of the transferred funds could not be included in the calculation of 
the current rate under the continuing resolution. B-308773, Jan. 11, 
2007. 

2. Spending Pattern under Continuing Resolution: 

Page 8-15 – Replace the first paragraph with the following: 

An agency may determine the pattern of its obligations under a 
continuing resolution so long as it operates under a plan which will 
keep it within the rate for operations limit set by the resolution. It 
is important to consider all the relevant provisions of the continuing 
resolution and the operation of the particular program in determining 
how to obligate funds during continuing resolutions. See, e.g., B-
318835, May 14, 2010; B-300167, Nov. 15, 2002. If an agency usually 
obligates most of its annual budget in the first month or first 
quarter of the fiscal year, it may continue that pattern under the 
resolution as long as it complies with other provisions in the 
continuing resolution. If an agency usually obligates funds uniformly 
over the entire year, it will be limited to that pattern under the 
resolution, unless it presents convincing reasons why its pattern must 
be changed in the current fiscal year. 

Page 8-18 – Insert the following after the second full paragraph: 

Another question arose with regard to the U.S. Election Assistance 
Commission’s (EAC) annual payments to the states for requirements 
payments. When EAC was operating under continuing resolutions at the 
beginning of fiscal years 2009 and 2005, it delayed obligations until 
it received its regular appropriation. GAO did not object to EAC’s 
actions since the amounts made available in the continuing resolutions 
were subject to multiple conditions imposed by the continuing 
resolution—here, most notably, an entitlements provision, a high 
initial rate of operations provision, and a limited funding action 
provision. GAO found that delaying obligations on a program that 
generally continues under a system of annual mandatory payments made 
late in the fiscal year is consistent with the relevant continuing 
resolution provisions. B-318835, May 14, 2010. 

C. Projects or Activities: 

Page 8-27 – Replace the cite after the quoted language carried over 
from page 8-26 with the following: 

Id. See also B-316533, July 31, 2008 (a prohibition against using the 
authority provided under section 872 of the Homeland Security Act to 
reorganize the Department of Homeland Security was applicable to 
amounts appropriated by a fiscal year 2008 continuing resolution 
because the prohibition, enacted in 2007, was carried forward under 
the terms of the projects or activities limitation in the 2008 
continuing resolution). 

E. Duration: 

1. Duration of Continuing Resolution: 

Page 8-36 – Replace the first full paragraph, including new footnote 
number 33a with the following: 

Thus, some fiscal years have seen a series of continuing resolutions, 
informally designated “first,” “second,” etc., up to “final.” This 
happens as Congress extends the fixed cutoff date for short time 
periods until either all the regular appropriation acts are enacted or 
Congress determines that some or all of the remaining bills will not 
be enacted individually, in which event relevant portions of the 
resolution will continue in effect for the remainder of the fiscal 
year. During the period covering fiscal years 1998 through 2010, 
Congress enacted 79 continuing resolutions.33a 

Page 8-36 – Insert the following as new footnote number 33a: 

33a Library of Congress, Congressional Research Service, Duration of 
Continuing Resolutions in Recent Years, No. RL32614 (Aug. 25, 2010), 
at 7. 

[End of Chapter 8] 

Chapter 9: Liability and Relief of Accountable Officers: 

B. General Principles: 

2. Who Is an Accountable Officer? 

Page 9-12 – Replace the last paragraph with the following: 

In B-280764, GAO did not question the merits of extending 
accountability and potential pecuniary liability to more Department of 
Defense (DOD) employees, only the means of accomplishing that 
objective. In 2002, Congress added new section 2773a to title 10, 
United States Code, which supplied the department with the requisite 
statutory authority to designate additional accountable officials.12 
See B-305919, Mar. 27, 2006 (DOD may employ foreign local nationals as 
departmental accountable officials under section 2773a). 

3. Funds to Which Accountability Attaches: 

Page 9-27 – Replace the second full paragraph with the following: 

A common example is the Department of Veterans Affairs (VA) “Personal 
Funds of Patients” (PFOP) account. Patients, upon admission to a VA 
hospital, may deposit personal funds in this account for safekeeping 
and use as needed. Upon release, the balance is returned to the 
patient. Patient funds in the PFOP account have been consistently 
treated as accountable funds. B-309267, Jan. 15, 2008; 68 Comp. Gen. 
600 (1989); 68 Comp. Gen. 371 (1989); B-226911, Oct. 19, 1987; B-
221447, Apr. 2, 1986; B-215477, Nov. 5, 1984; B-208888, Sept. 28, 1984. 

C. Physical Loss or Deficiency: 

2. Who Can Grant Relief? Page 9-40 –Replace footnote number 27 with 
the following: 

27 As noted earlier in section B.2 of this chapter, the Department of 
Defense (DOD) has been given the authority to hold other “departmental 
accountable officers,” besides certifying and disbursing officers, 
liable financially for illegal or erroneous payments resulting from 
their negligence. 10 U.S.C. § 2773a. Cf. B-305919, Mar. 27, 2006 
(foreign local nationals may serve as DOD accountable officials under 
10 U.S.C. § 2773a, even though they may not be subject to pecuniary 
liability under United States law, because of U.S. agreements with 
foreign governments). This would include employees whose duty it was 
to provide information, data, or services that are directly relied 
upon by a certifying official in the certification of vouchers for 
payment. 

Page 9-41 – Replace the first full paragraph with the following: 

The $3,000 limitation applies to “single incidents or the total of 
similar incidents which occur about the same time and involve the same 
accountable officer.” 7 GAO-PPM § 8.9.C. Thus, two losses arising from 
the same theft, one under the limit and one over, should be combined 
for purposes of relief. B-189795, Sept. 23, 1977. In B-193380, Sept. 
25, 1979, an imprest fund cashier discovered a $300 shortage while 
reconciling her cash and subvouchers. A few days later, her 
supervisor, upon returning from vacation, found an additional $500 
missing. Since the losses occurred under very similar circumstances, 
GAO agreed with the agency that they should be treated together for 
purposes of seeking relief. Another case, B-187139, Oct. 
25, 1978, involved losses of $1,500, $60, and $50. Since there was no 
indication that the losses were related, the agency was advised to 
separately resolve the $60 and $50 losses administratively. (The 
ceiling was $500 at the time of B-193380 and B-187139.) Likewise, in B-
260862, June 6, 1995, GAO granted relief to an imprest fund cashier 
from liability for the loss of $3,939 missing from a safe, apparently 
due to theft, but did not grant relief for an $820 shortage allegedly 
due to a bookkeeping error discovered the day prior to the theft. The 
$820 shortage was referred back to the agency for resolution since it 
was under the $3,000 limit. See also B-309267, Jan. 15, 2008 (GAO 
denied relief to a cashier for a total loss of $3,280 that occurred in 
2001, and referred a second loss of $123 that occurred in 2003 back to 
the agency for resolution). 

Page 9-43 – Replace the first paragraph with the following: 

As noted above and in sections B.2 and C.1.b of this chapter, the 
statutory scheme for military accountable officers was changed by 
section 913 of Public Law No. 104-106, div. A, title IX, subtitle B, 
110 Stat. 186, 410–12 (Feb. 10, 1996). Section 913 amended a number of 
provisions in titles 10, 31, and 37 of the United States Code to 
authorize the designation and appointment of certifying and disbursing 
officials within the Department of Defense (DOD) (including military 
departments, defense agencies, and field activities) to clearly 
delineate a separation of duties and accountabilities between 
personnel who authorize payments (certifying officers) and personnel 
who make payments (disbursing officers). In doing so, section 
913 also amended 31 U.S.C. § 3527(b) to apply to all accountable 
officials of the armed forces, not just disbursing officers,31 and 
included a new section 3527(b)(1)(B) to provide relief for erroneous 
payments made by military accountable officials. As in the case of a 
physical loss or deficiency, the finding of the Secretary involved 
regarding whether the circumstances warrant relief is conclusive on 
the Comptroller General. In B-307693, Apr. 12, 2007, GAO addressed 
whether the limitation in 31 U.S.C. § 3527 applies to requests from 
certifying officers of DOD components other than the armed services 
for relief of erroneous payments under the revised section 3527(b). 
GAO determined that, because the term “armed forces” as used in 
section 3527(b) applies only to the Army, Navy, Air Force, or Marine 
Corps, GAO may entertain relief requests from certifying officers of 
other DOD components in the same manner as it does requests from 
certifying officers in other agencies. Thus, GAO considered the 
request of a certifying officer of the Defense Logistics Agency, an 
agency of DOD but not one of the armed forces, in B-307693. 

3. Standards for Granting Relief: 

Page 9-46 – Replace the last partial paragraph with the following: 

GAO follows the same rule, stating it in literally dozens of relief 
cases. E.g., B-309267, Jan. 15, 2008; B-288014, May 17, 2002; B-
271896, Mar. 4, 1997; 72 Comp. Gen. 49, 53 (1992); 67 Comp. Gen. 6 
(1987); 65 Comp. Gen. 876 (1986); 54 Comp. Gen. 112 (1974); 48 Comp. 
Gen. 566 (1969).33 

Page 9-55 – Replace the last partial paragraph inserting new footnote 
number 35a as follows: 

The rationale is fairly simple. Money does not just get up and walk 
away. If it is missing, there is an excellent chance that someone took 
it. If the accountable officer exercised the requisite degree of care 
and properly safeguarded the funds, it is unlikely that anyone else 
could have taken the money without leaving some evidence of forced 
entry. Therefore, where there is no evidence to explain a loss, the 
leading probabilities are that the accountable officer either took the 
money or was negligent in some way that facilitated theft by someone 
else.35a Be that as it may, denial of relief in an unexplained loss 
case is not intended to imply dishonesty by the particular accountable 
officer; it means merely that there was insufficient evidence to rebut 
the applicable legal presumption. See B-122688, Sept. 25, 1956. See 
also B-258357, Jan. 3, 1996 (loss of receipts creates “unexplained loss”
 from imprest fund for which cashier is liable). 

Page 9-55 – Insert new footnote number 35a as follows: 

35a For an example of an unexplained loss case where the cashier was 
found to be negligent in the handling of the funds involved, see B-
309267, Jan. 15, 2008. 

Page 9-73 – Replace the first full paragraph with the following: 

The result in these cases should not be taken too far. Poor agency 
security does not guarantee relief; it is merely another factor to 
consider in the proximate cause equation. Another relevant factor is 
the nature and extent of the accountable officer’s efforts to improve 
the situation. See, e.g., B-309267, Jan. 15, 2008 (while GAO has not 
required accountable officers to report concerns about the security of 
funds to agency management officials, GAO has treated such actions as 
evidence of laxity on the part of agency management that could 
mitigate against the presumption of negligence; here, relief was 
denied since there was evidence that the cashier was negligent in 
handling the funds). 

D. Illegal or Improper Payment: 

2. Certifying Officers Page 9-91 – Replace the last paragraph with the 
following: 

Whatever else the certifying officer’s verification burden may or may 
not involve, it certainly involves questioning items on the face of 
vouchers or supporting documents, which simply do not look right. A 
critical tool that certifying officers have to carry out their 
responsibility is the power to question, and refuse certification of, 
payments that may be improper. See, e.g., B-303177, Oct. 20, 2004. For 
example, GAO considered the propriety of imposing liability on a 
certifying officer who certified payment of a purchase card billing 
statement that included improper purchase card transactions. B-307693, 
Apr. 12, 2007. GAO found that, to execute his statutory responsibility 
properly and to avoid possible pecuniary liability, the certifying 
officer should have scrutinized the billing statement and disputed the 
questionable transactions made by the cardholder before certifying the 
billing statement for payment to the bank servicing the purchase card. 
Since he knew or should have known that he was certifying an improper 
payment when he certified the purchase card payment, the certifying 
officer was denied relief. Id. 

Also, a certifying officer who certifies a voucher for payment in the 
full amount claimed, disregarding the fact that the accompanying 
records indicate an outstanding indebtedness to the government against 
which the sum claimed is available for offset, is accountable for any 
resulting overpayment. 28 Comp. Gen. 425 (1949). See also B-303920, 
Mar. 21, 2006 (facts and circumstances should have alerted certifying 
officer to the fact that he was improperly certifying payments to 
purchase bottled water for employees, an unauthorized expenditure). 
Similarly, certifying a voucher in the full amount within a prompt 
payment discount period without taking the discount will result in 
liability for the amount of the lost discount. However, a certifying 
officer is not liable for failing, even if negligently, to certify a 
voucher within the time discount period. 45 Comp. Gen. 447 (1966). 

Page 9-97 – Replace the third paragraph with the following: 

In B-237419, Dec. 5, 1989, relief was granted to a Forest Service 
certifying officer who certified the refund of a timber purchaser’s 
cash bond deposit without knowing that the refund had already been 
made. The certifying officer had followed proper procedures by 
checking to see if the money had been refunded, but did not discover 
the prior payment because it had not been properly recorded. Also, the 
agency was pursuing collection efforts against the payee. Similarly, 
relief was granted to a certifying officer at the American Embassy in 
Managua who certified an erroneous duplicate separation retirement 
payment to a local employee because the officer did not know, and 
after reasonable diligence and inquiry did not discover, the fact that 
the duplicate payment was being issued from another part of the 
agency. The officer certified the payment pursuant to the direction of 
an administrative official and in the belief that funds had been made 
available in the charged account. B-317390, Feb. 20, 2009. 

4. Check Losses: 

Page 9-125 – Insert the following as full text after the “Duplicate 
Payment” bullet: 

In another duplicate payment scenario, a certifying officer at the 
American Embassy in Managua was relieved of liability for an 
overpayment that occurred as the result of a duplicate payment of 
separation retirement benefits made to an Embassy employee. The 
duplicate payment was erroneously paid to the employee as a result of 
confusion at the Embassy concerning the proper procedure for 
processing separation retirement payments. The certifying officer at 
first refused to sign the voucher for the payment because she thought 
that under revised procedures the Embassy no longer processed such 
payments. However, she ultimately certified the payment pursuant to 
the direction of an administrative official and in the belief that 
funds had been made available in the charged Embassy account. The 
certifying officer did not know, and after reasonable diligence and 
inquiry did not discover, the fact that a duplicate payment was being 
issued from another part of the agency. Finding that she persistently 
questioned payment as far as she could with the information she had, 
and that she should not be held responsible for information that was 
withheld from her, GAO relieved the certifying officer of liability 
for the duplicate payment. B-317390, Feb. 20, 2009. 

E. Other Relief Statutes: 

1. Statutes Requiring Affirmative Action: 

Page 9-129 – Replace the last paragraph with the following: 

Since 31 U.S.C. § 3728, the primary certifying officer relief statute, 
does not apply to the legislative or judicial branches, Congress has 
enacted specific statutes for several legislative branch agencies and 
for the judicial branch authorizing or requiring the designation of 
certifying officers, establishing their accountability, and, in some 
cases, authorizing the Comptroller General to grant relief. Patterned 
after 31 U.S.C. § 3728, they are: 2 U.S.C. § 142b (Library of 
Congress), 2 U.S.C. § 142e (Congressional Budget Office), 2 U.S.C. § 
142l (Office of Compliance), 2 U.S.C. § 1904 (Capitol Police), and 44 
U.S.C. § 308 (Government Printing Office). The Secretary of the Senate 
and the Speaker of the House of Representatives have the authority to 
waive the collection of erroneous payments of salary or allowances for 
employees of the Senate and the House, respectively. 2 U.S.C. §§ 130c, 
130d. The relevant provision for the judicial branch is 28 U.S.C. § 
613. See B-303920, Mar. 21, 2006. 

[End of Chapter 9] 

Chapter 10: Federal Assistance: Grants and Cooperative Agreements: 

A. Introduction: 
Page 10-4 – Replace footnote number 5 with the following: 

5 The Domestic Working Group, chaired by the Comptroller General, 
consists of 19 federal, state, and local audit organizations. Its 
purpose is to identify current and emerging challenges of mutual 
interest and to explore opportunities for greater collaboration within 
the intergovernmental audit community. The Guide describes a number of 
ideas and best practices to enhance grant management and 
administration. It covers several topics that are discussed in this 
chapter. An electronic copy of the Guide can be found at [hyperlink, 
http://www.ignet.gov/randp/grantguide.pdf] (last visited Dec. 30, 
2010). 

Page 10-5 – Replace footnote number 6 with the following: 

6 The Catalog of Federal Domestic Assistance is published by the 
General Services Administration and the Office of Management and 
Budget (OMB) pursuant to 31 U.S.C. § 6104 and OMB Circular No. A-89, 
Federal Domestic Assistance Program Information (Aug. 17, 1984). The 
Catalog is a governmentwide list of financial and nonfinancial federal 
assistance programs, projects, services, and activities administered 
by federal agencies that provide assistance or benefits to the 
American public. 31 C.F.R. § 205.2. The most recently updated print 
edition and the frequently updated online version can both be accessed 
through the Catalog’s Web site at [hyperlink, http://www.cfda.gov] 
(last visited Dec. 30, 2010). In addition, OMB, on December 13, 2007, 
rolled out a new publicly accessible Web site that provides 
information on all major federal grants, loans, and contracts. See 
[hyperlink, http://www.USASpending.gov] (last visited Dec. 30, 2010). 
This Web site is in response to 2006 legislation to improve the 
accessibility of federal spending data, Federal Funding Accountability 
and Transparency Act of 2006, Pub. L. No. 109-282, 120 Stat. 1186 
(Sept. 26, 2006), 31 U.S.C. § 6101 note. 

B. Grants versus Procurement Contracts: 

2. The Federal Grant and Cooperative Agreement Act: 

Page 10-16 – Insert the following after the first full paragraph: 

An example of a statutory scheme for oversight of a grant program can 
be found in the Help America Vote Act of 2002 (HAVA), which authorizes 
various federal agencies to make grants or provide payments of federal 
funds to the states and various other entities for purposes related to 
election reform. Pub. L. No. 107-252, 116 Stat. 1666 (Oct. 29, 2002). 
Section 902 of HAVA authorizes each agency making a grant or payment 
to audit any recipient of the funds, and also provides that if the 
Comptroller General makes a determination as a result of an audit that 
a fund recipient did not comply with program requirements or received 
an excess payment, the recipient must return a certain portion of the 
payment. In B-306475, Jan. 30, 2006, GAO concluded that the provision 
regarding GAO audits does not supersede the independent statutory 
authority of agencies to audit and take corrective action on the use 
of federal funds, so GAO need not make its section 902 determination 
before a paying agency may audit and take corrective action on 
questioned costs. If the Comptroller General were to make a 
determination under HAVA as a result of any audit he conducts, he will 
make an appropriate recommendation for the agency to determine 
liability and take corrective action. B-306475, at 5. 

C. Some Basic Concepts: 

2. Availability of Appropriations: 

Page 10-36 – Replace the last paragraph with the following: 

GAO considered this issue in a recent decision, B-303927, June 7, 
2005. Congress appropriated funds to the Department of Labor to assist 
in response and recovery following the September 11, 2001, terrorist 
attacks on the United States. The appropriation earmarked $125 million 
for the purpose of payment to the New York Workers’ Compensation Board 
for “processing of claims related to the terrorist attacks.” The Labor 
Department distributed the funds to the Board through a grant. The 
Board did not use the funds to process claims, but gave them to other 
New York state entities to reimburse those entities for claims they 
had paid on behalf of victims. GAO held that use of the funds for this 
purpose was inconsistent with the language of the appropriation. See 
also B-318831, Apr. 28, 2010 (the Election Assistance Commission 
violated the purpose statute when it obligated its appropriations 
based on language in a conference report instead of the plain, clear 
language of the appropriations act itself). By contrast, GAO held in 
another “purpose” case, B-248111, Sept. 9, 1992, that grant funds were 
available for the activities in question based on the language of the 
authorizing statute and its legislative history. 

Page 10-39 – Replace the second full paragraph with the following: 

Funds must be obligated by the grantor agency within their period of 
availability.31 The period of availability of appropriated funds is 
the period of time provided by law in which the administering agency 
has to obligate the funds. B-319734, July 26, 2010; B-271607, June 3, 
1996. The statutory requirement for recording obligations extends to 
all actions necessary to constitute a valid obligation, and includes, 
of course, grant obligations (31 U.S.C. § 1501(a)(5)).32 Proper 
recording of grant obligations facilitates compliance with the “time 
of obligation” requirement by ensuring that agencies have adequate 
budget authority to cover their obligations. See B-316372, Oct. 21, 
2008; B-300480, Apr. 9, 2003, aff’d, B-300480.2, June 6, 2003. 

Page 10-43 – Replace the first full paragraph with the following: 

Appropriations for grant programs are generally subject to the same 
time availability rules as other appropriations. Adherence to the 
existing framework for grantmaking, as laid out in the statute and 
implementing regulations, provides structure and consistency, which in 
turn promotes the goals of proper administration and accounting, as 
well as fairness to all grant applicants. For example, in one case, 
despite apparent statutory and regulatory limitations on grants to 
certain colleges and graduate institutions, the Education Department 
had granted four-year “extensions” to the original five-year grants 
awarded to those institutions. GAO concluded that Education should 
strictly adhere to the statutory and regulatory duration restrictions 
for grant periods and terminate grants improperly extended. If, at 
that time, Education determined that additional assistance was 
warranted, the department could award a new grant to that institution 
or, in the alternative, seek legislative changes that would allow for 
extensions to five-year grants. B-303845, Jan. 3, 2006. 

Also, when Congress expressly provides that a grant appropriation “
shall remain available until expended” (no-year appropriation), the 
funds remain available until they are obligated and expended by the 
grantor agency, subject to the account closing statute, 31 U.S.C. § 
1555. See, e.g., B-271607, June 3, 1996. It should be emphasized that 
the time availability of grant appropriations governs the grantor agency
’s obligation and expenditure of the funds; it does not limit the time 
in which the grantee must use the funds once it has received them. B-
289801, Dec. 30, 2002. Of course, the grant statute or the grantor 
agency may impose time limits on a grantee’s use of funds. See City of 
New York v. Shalala, 34 F.3d 1161 (2nd Cir. 1994); Mayor and City 
Council of Baltimore v. Browner, 866 F. Supp. 249 (D. Md. 1994). 

3. Agency Regulations: 

Page 10-52 – Replace the first full paragraph with the following: 

Apart from providing for regulatory consolidation and streamlining, 
the Federal Financial Assistance Management Improvement Act contained 
a number of other provisions designed to improve federal assistance 
processes and performance. It also imposed additional responsibilities 
on the agencies and OMB. For example, in response to the act, OMB 
developed Grants.gov on the Internet as the central grant 
identification and application portal for federal grant programs to 
make it easier for applicants to find grant opportunities and grantors 
to process applications faster. See GAO, Grants.gov Has Systemic 
Weaknesses That Require Attention, GAO-09-589 (Washington, D.C.: July 
15, 2009). Section 7 of Public Law 106-107 mandated a GAO evaluation 
of the effectiveness of the act. GAO reported the results of its 
evaluation in Grants Management: Additional Actions Needed to 
Streamline and Simplify Processes, GAO-05-335 (Washington, D.C.: Apr. 
18, 2005). See also GAO, Federal Assistance: Grant System Continues to 
Be Highly Fragmented, GAO-03-718T (Washington, D.C.: Apr. 29, 2003). 

F. Obligation of Appropriations for Grants: 

1. Requirement for Obligation: 

Page 10-107 – Replace the first paragraph after the quoted language 
with the following: 

Briefly stated, the “obligational event” for a grant generally occurs 
at the time of grant award. Therefore, this is when the grantor agency 
must record an obligation under 31 U.S.C. § 1501(a)(5), not when the 
grantee draws down the funds or when the grantee incurs its own 
obligations. See B-316372, Oct. 21, 2008; B-300480, Apr. 9, 2003, aff’
d, B-300480.2, June 6, 2003. 

G. Grant Costs: 

1. Allowable versus Unallowable Costs: 

Page 10-126 – Insert the following after the first full paragraph: 

In another case, GAO considered a Federal Emergency Management Agency 
(FEMA) reimbursement to a subgrantee receiving Stafford Act (42 U.S.C. 
§§ 5121–5206) funds of $3.8 million for the cost of rocks used for 
emergency repairs and improvements to facilities. The rocks had 
originally cost the subgrantee less than $20,000. Given the lack of 
documentation in the record regarding other pricing methods that may 
have been more appropriate to the circumstances and that would ensure 
the subgrantee did not obtain such a sizable windfall, GAO recommended 
that FEMA reassess its reimbursement and determine if recovery action 
is warranted. B-317098, Mar. 13, 2009. 

Page 10-127 – Replace the last paragraph with the following: 

In one case, GAO did concur in a proposal by a grantor agency to adopt 
a method of calculation that disallowed less than the entire amount of 
a grant where the grantee had maintained inadequate records. B-186166, 
Aug. 26, 1976. In this case, a university had received a series of 
federal research grants spanning a number of years. The university had 
no records to document its disposition of grant funds for periods 
prior to fiscal year 1974. Audits of available university records for 
grant expenditures in fiscal years 1974 and 1975 disclosed certain 
unallowable costs. The GAO decision held that the grantor agency had 
discretion to disallow the same proportion of funds for the years for 
which no documentation was available as were disallowed for the 
periods for which records existed. See also B-317098, Mar. 13, 2009 
(Federal Emergency Management Agency should reassess its reimbursement 
to a subgrantee where there was no documentation supporting the 
pricing method used and that method resulted in a significant windfall 
to the subgrantee). 

H. Recovery of Grantee Indebtedness: 

1. Government’s Duty to Recover: 

Page 10-133 – Insert the following after the third full paragraph: 

Also, where a reimbursement by the Federal Emergency Management Agency 
(FEMA) to a subgrantee was calculated using a questionable pricing 
method that afforded the subgrantee a significant windfall, GAO 
recommended that FEMA reassess its reimbursement to determine if the 
reimbursement in question should be reduced or disallowed, and the 
amount recovered. B-317098, Mar. 13, 2009. 

[End of Chapter 10] 

[End of Volume 2] 

Office of the General Counsel 

Volume 3: 
Chapter 12 – Acquisition of Goods and Services; 
Chapter 13 – Real Property; 
Chapter 14 – Claims against and by the Government; 
Chapter 15 – Miscellaneous Topics. 

Chapter 12: Acquisition of Goods and Services: 

A. Acquisition and Disposal of Property for Government Use: 

1. General Services Administration Schedule Programs: 

Page 12-5 – Replace the last paragraph with the following, including 
reference to new footnote number 2a: 

GSA administers the Federal Supply Schedule (FSS) program, also known 
as the GSA Schedules Program or the Multiple Award Schedule Program 
(MAS), which is a simplified process for federal agencies to obtain 
commercial supplies and services at prices associated with volume 
buying.2a See generally Federal Acquisition Regulation (FAR), 48 C.F.R. 
pt. 8.4. Indefinite delivery contracts are awarded to provide supplies 
and services at stated prices for given periods of time. FAR § 
8.402(a). Ordering agencies are authorized to place orders, or to 
establish blanket purchase agreements, against a vendor’s FSS 
contract. Id. § 8.401. Orders and blanket purchasing agreements are 
considered to be issued using full and open competition; therefore, 
when placing orders under FSS contracts or when establishing a blanket 
purchasing agreement, ordering agencies do not need to seek 
competition outside the FSS. Id. § 8.404(a). 

Page 12-5 – Insert the following for new footnote number 2a: 

2a In 2010, GAO reported that, while agencies spent at least $60 
billion in fiscal year 2008 through these contracts and similar single-
agency enterprisewide contracts, there are concerns about duplication, 
oversight, and a lack of information on these contracts, and pricing 
and management of the MAS program, which calls into question whether 
the use of such contracts helps government buyers leverage their 
buying power. GAO, Contracting Strategies: Data and Oversight Problems 
Hamper Opportunities to Leverage Value of Interagency and 
Enterprisewide Contracts, GAO-10-367 (Washington, D.C.: Apr. 29, 
2010). GAO made a number of recommendations to strengthen policy, 
coordinate agencies’ awards, and improve MAS program data, pricing, 
and management. Id., at 47–49. 

Page 12-6 – Replace footnote number 4 with the following: 

4 But see B-318046, July 7, 2009 (in the absence of reliable 
historical usage data, an agency may use $500 as the guaranteed 
minimum for an indefinite-delivery, indefinite-quantity (IDIQ) 
contract, which amount must be obligated at the time of award); B-
308969, May 31, 2007 (the government incurred a legal liability in the 
amount of the guaranteed minimum in an IDIQ contract at the time in 
which the contract was awarded and the agencies involved should have 
obligated that amount at that time); B-302358, Dec. 27, 2004 (upon 
award of an IDIQ contract Customs should have obligated the contract 
guaranteed minimum of $25 million in accordance with the recording 
statute to ensure the integrity of Customs’s obligational accounts 
records). 

B. Interagency Transactions: 

1. The Economy Act Page 12-26 – Replace the first full paragraph with 
the following: 

The introductory portion of 31 U.S.C. § 1535(a) tells you who can use 
the authority and what they can use it for. Both points will be 
explored later in more detail. The numbered subsections establish four 
basic conditions on use of the authority. The Economy Act and Economy 
Act interagency agreements are not the appropriate vehicles to use to 
make a transfer of funds between agencies when there is no exchange of 
funds for goods or services. B-319189, Nov. 12, 2010 (Federal Transit 
Administration was statutorily directed to transfer funds to the 
Denali Commission and should effect the transfer using the Department 
of Treasury’s nonexpenditure transfer procedures, not an Economy Act 
agreement). 

Page 12-32 – Replace the last paragraph with the following: 

There are also a few instances in which entities that clearly are 
agencies or instrumentalities of the United States, or which are 
treated as such for other purposes, are not covered. For example, the 
Postal Service, although clearly an instrumentality of the United 
States, is subject only to those statutes specifically designated in 
the Postal Reorganization Act; however, the Economy Act is not one of 
the statutes designated. B-317878, Mar. 3, 2009; 58 Comp. Gen. 451, 
459 (1979). It also does not apply to nonappropriated fund 
instrumentalities. 64 Comp. Gen. 110 (1984).23 

Page 12-40 – Replace the first full paragraph with the following: 

In addition to direct costs, it has long been recognized that actual 
cost for Economy Act purposes includes as well certain indirect costs 
(overhead) proportionately allocable to the transaction. E.g., B-
301714, Jan. 30, 2004; 22 Comp. Gen. 74 (1942). Indirect costs are 
“items which commonly are recognized as elements of cost 
notwithstanding such items may not have resulted in direct expenditures.
” 56 Comp. Gen. 275 (1977); 22 Comp. Gen. 74. Indirect costs which (1) 
are funded out of currently available appropriations, and (2) bear a 
significant relationship to the service or work performed or the 
materials furnished, are recoverable in an Economy Act transaction the 
same as direct costs. 56 Comp. Gen. 275 (1977), as modified by 57 
Comp. Gen. 674 (1978), as modified in turn by B-211953, Dec. 7, 1984. 
Examples of indirect costs include administrative overhead applicable 
to supervision (56 Comp. Gen. 275); billable time not directly 
chargeable to any particular customer (B-257823, Jan. 22, 1998); and 
rent paid to the General Services Administration attributable to space 
used in the course of performing Economy Act work (B-211953, Dec. 7, 
1984). In calculating indirect costs, entities should “(1) use and 
consistently follow costing methodologies or cost finding techniques 
most appropriate to the operating environment to accumulate and assign 
costs; (2) document managerial cost accounting activities, processes, 
and procedures; and (3) periodically evaluate indirect costing methods.”
 GAO, Centers for Disease Control and Prevention: An Appropriate 
Methodology Is Needed for Determining Administrative Costs 
Attributable to the Agency for Toxic Substances and Disease Registry, 
GAO-10-610R (Washington, D.C.: May 20, 2010), at 2. 

C. Revolving Funds: 

3. Types: 

Page 12-101 – Replace the second full paragraph with the following: 

A working capital fund may also provide goods or services to other 
agencies on a reimbursable basis. See, e.g., 43 U.S.C. § 50a, the 
United States Geological Survey Working Capital Fund (“the fund shall 
be credited with appropriations and other funds of the Survey, and 
other agencies of the Department of the Interior, other Federal 
agencies, and other sources, for providing materials, supplies, 
equipment, work and services”). See also GAO, Intragovernmental 
Revolving Funds: NIST’s Interagency Agreements and Workload Require 
Management Attention, GAO-11-41 (Washington, D.C.: Oct. 20, 2010), 
concerning the National Institute of Standards and Technology’s 
working capital fund. These working capital funds may operate 
similarly to the franchise and other entrepreneurial revolving funds 
described below. 

4. Expenditures/Availability: 

Page 12-118 – Insert the following after the first partial paragraph: 

Amounts advanced by a customer agency to a working capital fund are 
not earned by the working capital fund until the working capital fund 
incurs costs or proper obligations in performing for its customer 
agency. Advances not earned by the working capital fund before the 
appropriation advanced is canceled by operation of law are no longer 
available to the working capital fund. B-319349, June 4, 2010. 
Generally, fiscal year appropriations are canceled by operation of law 
on September 30 of the fifth fiscal year following the fiscal year for 
which they were provided. 31 U.S.C. §§ 1551–1553; 2 U.S.C. § 1907(d). 

D. User Charges: 

3. The Independent Offices Appropriation Act: 

Page 12-152 – Replace the first full paragraph with the following: 

Some courts have held that in order to assess fees under the 
Independent Offices Appropriation Act (IOAA), an agency must first 
issue regulations. See, e.g., Sohio Transportation Co. v. United 
States, 766 F.2d 499, 502 (Fed. Cir. 1985); Alyeska Pipeline Service 
Co. v. United States, 624 F.2d 1005, 1009 (Ct. Cl. 1980); Alaskan 
Arctic Gas Pipeline Co. v. United States, 9 Cl. Ct. 723, 732–33 
(1986), aff’d, 831 F.2d 1043 (Fed. Cir. 1987) (issuance of regulations 
a “condition precedent”). See also B-316796, Sept. 30, 2008, at 14–15 
(since FAA’s implementation of a proposed auction of airport arrival 
and departure slots would amount to a new user fee under IOAA, 
“implementation of the auction would require a new regulation”). A 
simple policy statement to the effect that fees will be charged for 
special services has been held too vague to support fee assessment. 
Diapulse Corp. of America v. FDA, 500 F.2d 75, 79 (2nd Cir. 1974). 
Rather, since rulemaking under the Administrative Procedure Act 
generally must provide the opportunity for public comment, 5 U.S.C.
§ 553, the agency’s notice must include, or make available on request, 
a reasonable explanation of the basis for the proposed fee. This, one 
court has held, must be one that “the concerned public could 
understand." Engine Manufacturers Association v. EPA, 20 F.3d 1177, 
1181 (D.C. Cir. 1994). In that case, the court rejected as inadequate 
an agency cost analysis which, according to the court, “contains page 
after page of impressive looking but utterly useless tables” and some “
complete gibberish.” Id. 

It is probably impossible to predict what would be acceptable to any 
given court at any given time, but cases like this demonstrate the 
need for the agency to observe at least some minimal level of clarity 
and provide its explanation “in intelligible if not plain English.” 
Id. at 1183. The Court of Appeals for the District of Columbia Circuit 
has also stressed the need for the agency to make a clear public 
statement of the basis for its fees so that a reviewing court can 
measure the agency’s action against the Supreme Court’s standards. 
National Cable Television Association v. FCC, 554 F.2d 1094, 1100, 
1104–05 (D.C. Cir. 1976). 

4. Other Authorities: 

Page 12-170 – Insert the following before the last partial paragraph: 

Similarly, since fiscal year 1998 Congress has included an 
appropriations act restriction expressly prohibiting the Federal 
Aviation Administration (FAA) from imposing any “new aviation user fees”
 without specific statutory authority. The 2008 fiscal year 
prohibition stated: “[N]one of the funds in this [Appropriations] Act 
shall be available for the Federal Aviation Administration to finalize 
or implement any regulation that would promulgate new aviation user 
fees not specifically authorized by law after the date of the 
enactment of this Act.” Pub. L. No. 110-161, 121 Stat. 1844, 2379 
(2007). While this provision does not explicitly reference the IOAA, 
GAO has concluded that the provision would preclude FAA’s use of IOAA 
as authority to auction airport arrival and departure slots because 
such auctions would amount to a “new aviation user fee” not 
specifically authorized by law. B-316796, Sept. 30, 2008. 

[End of Chapter 12] 

Chapter 13: Real Property: 

A. Introduction and Terminology: 

Page 13-5 – Replace footnote number 1 with the following: 

1 The federal government owns approximately 636 million acres 
nationwide. This includes 3.5 percent of all land in the northeastern 
and north central United States, 5.1 percent in the south Atlantic and 
south central regions, and 56.6 percent of the western United States. 
GAO, High-Risk Series: Federal Real Property, GAO-03-122 (Washington, 
D.C.: Jan. 2003), at 5–6. The proportion of federal land ownership is 
actually decreasing. A 1996 report put the figure at about 650 million 
acres or about 30 percent, down from slightly over 700 million acres 
in 1964. GAO, Land Ownership: Information on the Acreage, Management, 
and Use of Federal and Other Lands, GAO/RCED-96-40 (Washington, D.C.: 
Mar. 13, 1996), at 2–4. One major caveat with respect to these figures 
is that Uncle Sam does not really know how much property he owns since 
available data are unreliable. See generally GAO, Federal Real 
Property: Better Governmentwide Data Needed for Strategic 
Decisionmaking, GAO-02-342 (Washington, D.C.: Apr. 16, 2002). In 
subsequent reviews, GAO has found that the federal government has made 
progress in revamping its governmentwide real property inventory since 
GAO’s 2003 high risk designation in GAO-03-122, but data reliability 
is still a problem at the agency level and agencies continue to retain 
excess property and face challenges from repair and maintenance 
backlogs. GAO, Federal Real Property: An Update on High Risk Issues, 
GAO-09-801T (Washington, D.C.: July 15, 2009); Federal Real Property: 
An Update on High-Risk Issues, GAO-07-895T (Washington, D.C.: May 24, 
2007), at 14. See also GAO, Federal Real Property: Progress Made 
Toward Addressing Problems, but Underlying Obstacles Continue to 
Hamper Reform, GAO-07-349 (Washington, D.C.: Apr. 13, 2007). The 
material that follows in this Introduction has been distilled from 
many sources. They include: Marla E. Mansfield, A Primer of Public 
Land Law, 68 Wash. L. Rev. 801, 802 n.1 (1993); George C. Coggins and 
Charles F. Wilkinson, Federal Public Land and Resources Law (1981); 
and Paul W. Gates, Public Land Law Review Commission, History of 
Public Land Law Development (1968). 

E. Leasing: 

1. Some General Principles: 

Page 13-127 – Insert the following after the second full paragraph: 

There was a similar result in B-316860, Apr. 29, 2009, under different 
circumstances. There, GAO found that the National Transportation 
Safety Board did possess statutory authority to lease real property 
independent of 40 U.S.C. § 585(a)(2). The Board receives, however, 
fiscal year appropriations only. Based on 41 U.S.C. § 254c, GAO held 
that the Board could enter into multiyear leases for up to five years 
if, at the time the lease is signed, the Board obligates from current 
fiscal year funds an amount sufficient to cover the cost of the first 
fiscal year in which the contract is in effect plus the estimated 
costs of termination, or an amount sufficient to cover the agency’s 
obligations for the full period of the contract. 

2. Statutory Authorities and Limitations: 

Page 13-155 – Add the following bullet to the list under “Some 
examples from the civilian side of the government are:” 

* 49 U.S.C. § 1113(b)(1)(B): National Transportation Safety Board may “
enter into ... such contracts, leases, cooperative agreements or other 
transactions as may be necessary in the conduct of the functions and 
the duties of the Board,” as explained in B-316860, Apr. 29, 2009. 

F. Public Buildings and Improvements: 

1. Construction Page 13-183 – Replace the first two paragraphs with 
the following: 

Not surprisingly,160 the most detailed and comprehensive scheme is 
that applicable to the Defense Department and the military 
departments. Typically, construction funds are appropriated to each 
department in a lump sum to be used “as authorized by law,” which 
means in accordance with authorization acts required by 10 U.S.C. § 
114(a)(6).161 See, e.g., B-318897, Mar. 18, 2010 (funds in the U.S. 
Army Corps of Engineers’ (USACE) Revolving Fund are not available to 
pay for the cost of replacing an existing USACE Engineer Research and 
Development Center headquarters building without specific 
congressional authorization). Most of the funds are authorized by 
installation, in line item format. In addition, each department 
receives a lump-sum authorization for “unspecified minor military 
construction projects.” 

Substantive provisions are found in the Military Construction 
Codification Act,162 codified chiefly in 10 U.S.C. §§ 2801–2853. 
“Military construction” is defined broadly as “any construction, 
development, conversion, or extension of any kind carried out with 
respect to a military installation, whether to satisfy temporary or 
permanent requirements.” 10 U.S.C. § 2801(a). A “military construction 
project” includes all military construction “necessary to produce a 
complete and usable facility or a complete and usable improvement to 
an existing facility” or authorized portion thereof. 10 U.S.C. § 
2801(b). See, e.g., B-318897, Mar. 18, 2010. 

[End of Chapter 13] 

Chapter 14: Claims against and by the Government: 

C. Claims against the Government: 

2. Source of Payment of Claims against the Government: 

Page 14-34 – Replace the first full paragraph with the following: 

The Judgment Fund is not itself a waiver of sovereign immunity. Thus, 
the legal basis for a judgment or award must be found elsewhere in the 
law. OPM v. Richmond, 496 U.S. 414, 432 (1990) (section 1304 “does not 
create an all-purpose fund for judicial disbursement.... Rather, funds 
may be paid out only on the basis of a judgment based on a substantive 
right to compensation based on the express terms of a specific 
statute.”). See also County of Suffolk, New York v. Sebelius, 605 F.3d 
135, 143 (2nd Cir. 2010). 

Page 14-46 – Replace the second full paragraph with the following: 

Where the United States is not obligated to pay a claim until a final 
determination of liability has been made, the appropriation current at 
the time that determination is made is properly chargeable with the 
obligation. E.g., 65 Comp. Gen. 533, 541 (1986); 63 Comp. Gen. 308 
(1984); 38 Comp. Gen. 338, 340 (1958); B-174762, Jan. 24, 1972. This 
rule is “grounded on the theory that the court or administrative award ‘
creates a new right’ in the successful claimant, giving rise to new 
Government liability.” 63 Comp. Gen. at 310. See also B-272984, Sept. 
26, 1996; B-255772, Aug. 22, 1995. As a general proposition, claims 
involving property damage or personal injury will fall into this 
category. E.g., 38 Comp. Gen. 338; 35 Comp. Gen. 511, 512 (1956). 
Thus, administrative awards of $2,500 or less under the Federal Tort 
Claims Act are payable from funds currently available at the time the 
claim is determined to be proper for payment. 38 Comp. Gen. 338; 35 
Comp. Gen. at 512; 27 Comp. Gen. 445 (1948); 27 Comp. Gen. 237 (1947). 
Similarly, payments under the Military Personnel and Civilian Employees’
 Claims Act of 1964 are chargeable to funds current when a final 
determination of liability is made. B-174762, Jan. 24, 1972. Another 
case involved the proper obligation of a settlement executed in fiscal 
year 2007 of cost overruns incurred in fiscal year 2006 as a result of 
an unauthorized contract modification during the performance of a 
contract. The agency charged the settlement amount to its fiscal year 
2006 appropriation. GAO disagreed, however, concluding that the 
settlement created a new obligation in fiscal year 2007 and should 
have been charged against the agency’s fiscal year 2007 appropriation. 
B-317413, Apr. 24, 2009. 

3. Whom and What to Pay: 

Page 14-69 – Replace the last paragraph with the following, including 
reference to new footnote number 94a: 

The second EAJA provision applicable to judicial awards is section 
2412(d). It is a “catch-all” provision that generally applies to any 
civil action brought by or against the United States except tort cases 
or cases subject to another fee-shifting statute. It parallels the 
provisions of 5 U.S.C. § 504(a), discussed above. A prevailing party 
(other than the United States) who meets specified financial 
eligibility criteria may apply to the court for a fee award under this 
subsection.94a Fees will be awarded unless the court finds that “the 
position of the United States was substantially justified or that 
special circumstances make an award unjust.” 28 U.S.C. § 412(d)(1)(A). 
The “substantially justified” determination includes the underlying 
administrative action, as well as the government’s position in the 
lawsuit. 28 U.S.C. § 2412(d)(1)(B). Once the party applies for the fee 
application, the burden shifts to the United States to establish that 
its position was substantially justified.95 E.g., International Air 
Response, Inc. v. United States, 80 Fed. Cl. 460, 463 (2008). Fees are 
limited to $125 per hour, but courts may award higher amount based on 
cost-of-living increases or other special factors. 28 U.S.C. § 
2412(d)(2)(A). An award may be reduced or denied if the prevailing 
party has “unduly and unreasonably protracted” the case. 28 U.S.C. § 
2412(d)(1)(C). 

Page 14-69 – Insert the following as footnote number 94a: 

94a Under section 2412(d), an award of fees and other expenses to a “
prevailing party” is payable to the litigant, not the attorney, and is 
therefore subject to a government offset to satisfy a pre-existing 
debt that the litigant owes the United States. Astrue v. Ratliff, 560 
U.S. ___, 130 S. Ct. 2521 (2010). 

[End of Chapter 14] 

Chapter 15: Miscellaneous Topics: 

A. Boards, Committees, and Commissions: 

2. Title 31 Funding Provisions: 

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page with the following: 

90 Cong. Rec. 3059 (1944), quoted in 24 Comp. Gen. 241, 243 (1944). 

4. The Federal Advisory Committee Act: 

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Similarly, the United States Postal Service (USPS) has considered 
itself exempt from FACA even though USPS was not expressly exempted in 
either FACA or its own authorizing legislation. The Postal 
Reorganization Act, 39 U.S.C. § 410, does grant USPS a broad exemption 
from many similar procedural laws, and Congress has never specifically 
made FACA applicable to USPS despite enacting multiple amendments to 
section 410 over the years to explicitly subject USPS to other 
procedural acts. The District of Columbia District Court agreed with 
USPS and determined that FACA does not apply to the USPS Mailer’s 
Technical Advisory Committee. American Postal Workers Union v. United 
States Postal Service, 541 F. Supp. 2d 95 (D.D.C. 2008). 

B. Government Use of Corporate Entities: 

2. The Problem of Definition: 

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number 51a as follows: 

Given the absence of a definitive legal definition of what constitutes 
a government corporation, we need to resort to other sources. As we 
have seen, one approach is to try to identify common attributes.51a 
One analyst identifies some of these attributes as “a public purpose, 
a federal government charter, some form of government supervision, and 
a public subsidy.”52 While this is useful in establishing a conceptual 
framework, it suffers when you break it down to the working level. If, 
for example, one equates “charter” with “enabling legislation”—and it 
is beyond question that the charter of a government corporation is its 
enabling legislation—the attributes apply equally to any government 
agency. Similarly, we previously noted a statement from a GAO report 
that government corporations “are generally federally chartered 
entities created to serve a public function of a predominantly 
business nature.” GAO, Government Corporations: Profiles of Existing 
Government Corporations, GAO/GGD-96-14 (Washington, D.C.: Dec. 13, 
1995), at 1. This again shows the hazard of generalization, saved by 
the fortunate inclusion of the word “generally,” since some government 
corporations may perform primarily governmental functions (e.g., the 
Commodity Credit Corporation, which stabilizes and protects farm 
income and prices). 

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51a For example, in 2009 GAO identified 23 government corporations, 
defined as “an entity established by the U.S. government in a 
corporate form by a federal charter for a public purpose.” GAO, 
Federally Created Entities: An Overview of Key Attributes, GAO-10-97 
(Washington, D.C.: Oct. 29, 2009), at 13. 

7. Application of Other Laws: 

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As discussed in the previous sections, a government corporation’s180 
autonomy, while conferring considerable spending discretion, does not 
remove it from the coverage of various laws of the United States. We 
set forth here several other laws governing the operations of federal 
agencies. As one would expect, wholly owned corporations are subject 
to more of the laws than mixed-ownership corporations, which are in 
turn subject to more than the so-called noninstrumentality 
corporations. Two summary charts, each including some laws not covered 
here, may be found in GAO, Federally Created Entities: An Overview of 
Key Attributes, GAO-10-97 (Washington, D.C.: Oct. 29, 2009), at 34, 
and Government Corporations: Profiles of Existing Government 
Corporations, GAO/GGD-96-14 (Washington, D.C.: Dec. 13, 1995), App. 
III. See also Library of Congress, Congressional Research Service, 
Federal Government Corporations: An Overview, No. RL30365 (Mar. 15, 
2005), at App. 1; Thomas H. Stanton and Ronald C. Moe, “Government 
Corporations and Government-Sponsored Enterprises,” in Lester M. 
Salaman, The Tools of Government: A Guide to the New Governance, 80, 
92 table 3-1 (2002). 

C. Nonappropriated Fund Instrumentalities: 

1. Introduction Page 15-236 – Replace the last full paragraph with the 
following: 

Further complicating the discussion of NAFIs is the use of the term 
NAFI by some federal courts. The Federal Circuit and the Court of 
Federal Claims have used the term in cases discussing their 
jurisdiction. See, e.g., AINS, Inc. v. United States, 365 F.3d 1333, 
1343 (Fed. Cir. 2004) (holding that the court had no jurisdiction to 
hear case against U.S. Mint because it was a NAFI); Slattery 
v. United States, 583 F.3d 800, 807–12 (Fed. Cir. 2009) (holding that 
the court had jurisdiction because the Federal Deposit Insurance 
Corporation is not a NAFI). See also O’Quin v. United States, 72 Fed. 
Cl. 20, 23–24 (2006); McCafferty v. United States, 61 Fed. Cl. 615, 
616 (2004). The Federal Circuit’s definition of a NAFI for purposes of 
its jurisdiction has resulted in classifying some entities that 
operate with permanent, indefinite appropriations as NAFIs. See AINS, 
365 F.3d 1333; Core Concepts of Florida, Inc. v. United States, 
327 F.3d 1331 (Fed. Cir. 2003). See also Furash & Co. v. United 
States, 252 F.3d 1336 (Fed. Cir. 2001) (holding that the court had no 
jurisdiction to hear claims against the Federal Housing Finance Board 
because it was a NAFI).244 

[End of Chapter 15] 

[End of Volume 3]