A-68262, A-77225, NOVEMBER 18, 1936, 16 COMP. GEN. 499

A-68262, A-77225, NOVEMBER 18, 1936, 16 COMP. GEN. 499

AGRICULTURE DEPARTMENT - COOPERATIVE WORK - JOINT EXPENDITURES IN THE MATTER OF FEDERAL PAYMENTS INVOLVING COOPERATIVE UNDERTAKINGS, THE REQUIREMENT SET FORTH IN DECISION OF SEPTEMBER 23, 1936, 16 COMP. GEN. 300, THAT SUCH PAYMENTS SHOULD BE ON THE BASIS OF VOUCHERS STATED AND CERTIFIED IN THE TOTAL AMOUNT OF THE EXPENDITURE, THE AMOUNTS PAID OR PAYABLE BY THE COOPERATING AGENCIES TO BE DEDUCTED THEREON WITH APPROPRIATE NOTATION THEREOF MADE, IS NOT FOR APPLICATION TO ALL CLASSES OF COOPERATIVE UNDERTAKINGS BUT ONLY TO SUCH AS INVOLVE JOINT EXPENDITURES, I.E., WHERE THE EXPENDITURE IS PAYABLE PARTIALLY FROM FEDERAL AND PARTIALLY FROM COOPERATING AGENCY FUNDS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, NOVEMBER 18, 1936:

I HAVE YOUR LETTER OF NOVEMBER 6, 1936, AS FOLLOWS:

ACKNOWLEDGMENT IS MADE OF YOUR LETTER OF SEPTEMBER 23, 1936, A 68262, A- 77225, RELATIVE TO A SUSPENSION FROM THE TRAVEL EXPENSE ACCOUNT OF MR. FLOYD K. REED. IN ACCORDANCE WITH THE REQUEST OF YOUR OFFICE AND INASMUCH AS NO EMBARRASSMENT WILL BE CAUSED IN THE RELATIONSHIP BETWEEN THIS DEPARTMENT AND THE COOPERATING AGENCIES INVOLVED, THIS AND SEVERAL OTHER COOPERATIVE ACCOUNTS ARE BEING RESTATED TO COMPLY WITH THE PROCEDURE OUTLINED IN YOUR LETTER. THESE RESTATED ACCOUNTS WILL BE SUBMITTED TO YOUR OFFICE AS SOON AS THEY ARE AVAILABLE. IT APPEARS TO BE NECESSARY AND DESIRABLE, HOWEVER, TO REVIEW FOR YOUR INFORMATION THE PURPOSE OF COOPERATIVE AGREEMENTS, THE LEGAL BASIS FOR THEM, THE TYPE OF COOPERATING AGENCIES, AND THE METHOD OF COOPERATION.

FOR MANY YEARS THIS DEPARTMENT HAS BEEN CONDUCTING PARTS OF ITS WORK THROUGH COOPERATIVE AGREEMENTS AS AUTHORIZED BY THE ACT OF JULY 24, 1919, 41 STAT., 270. THIS ARRANGEMENT HAS PERMITTED THE ACCOMPLISHMENT OF MAXIMUM RESULTS WITH A MINIMUM EXPENDITURE. IT HAS ENABLED THE DEPARTMENT TO UTILIZE THE FACILITIES OF RESEARCH ORGANIZATIONS, THE INVESTIGATIONS OF OTHER SCIENTISTS, AND THE PERSONNEL, EQUIPMENT, FIELDS, CROPS, AND RAW MATERIAL OF VARIOUS COOPERATORS.

THESE COOPERATORS CONSIST OF STATE GOVERNMENTS, UNIVERSITIES AND COLLEGES, FOREIGN GOVERNMENTS, PRIVATE CORPORATIONS, AND PRIVATE INDIVIDUALS. THE PURPOSES OF THESE COOPERATIVE AGREEMENTS ARE AS VARIED AND AS WIDE AS THE WORK OF THE DEPARTMENT ITSELF. IN HUNDREDS OF INSTANCES THE DEPARTMENT HAS GONE TO STATE OR PRIVATE AGENCIES AND REQUESTED THE PRIVILEGE OF COOPERATING UPON A SPECIFIC PROJECT. WHILE THE BENEFITS DERIVED HAVE UNDOUBTEDLY BEEN MUTUAL THEY HAVE BEEN OF VERY MATERIAL ADVANTAGE TO THIS DEPARTMENT AND OFTEN OUTWEIGHED THOSE ACCRUING TO THE COOPERATING AGENCY.

IT IS THE DESIRE OF THIS DEPARTMENT TO COOPERATE WHOLEHEARTEDLY IN SPIRIT AS WELL AS IN THE LETTER WITH YOUR OFFICE BUT IT IS NOT BELIEVED THAT YOU WOULD DESIRE TO PRESCRIBE REQUIREMENTS WHICH ARE UNNECESSARY, UNREASONABLE, AND SO OFFENSIVE TO PRIVATE AGENCIES COOPERATING WITH THIS DEPARTMENT AS TO RESULT IN CANCELLATION OF AGREEMENTS. YOUR OFFICE HAS PRESCRIBED THAT, EXCEPT IN CASES WHERE REIMBURSEMENT OF THE APPROPRIATION IS PERMITTED BY LAW,

"* * * THE PROPER PROCEDURE WOULD BE TO HAVE THE VOUCHERS STATED AND CERTIFIED IN THE TOTAL AMOUNT OF THE EXPENSES INCURRED; THE AMOUNTS PAID OR PAYABLE BY COOPERATING AGENCIES DEDUCTED ON THE FACE OF THE VOUCHER WITH APPROPRIATE NOTATIONS EXPLAINING THE BASIS FOR THE DEDUCTION, AND THE NET AMOUNT THEREOF, IF OTHERWISE PROPER, PAID FROM APPLICABLE FEDERAL FUNDS.'

THIS DEPARTMENT WILL ISSUE INSTRUCTIONS TO INSURE THAT EVERY BUREAU SHALL FOLLOW THE PROCEDURE YOUR OFFICE HAS OUTLINED IN EVERY INSTANCE OF JOINT EXPENDITURE. IT IS ASSUMED THAT THIS REQUIREMENT IS APPLICABLE ONLY TO THOSE ITEMS WHICH ARE PAYABLE PARTIALLY FROM FEDERAL FUNDS AND PARTIALLY FROM COOPERATING AGENCY FUNDS. AS ANY OTHER INTERPRETATION WOULD BE MOST UNFORTUNATE IT MAY BE DESIRABLE TO REVIEW SEVERAL TYPICAL CASES TO ILLUSTRATE THE ORDINARY FISCAL PRACTICE FOLLOWED IN COOPERATIVE UNDERTAKINGS.

1. AN AGREEMENT DATED OCTOBER 13, 1936, BETWEEN THE BUREAU OF ANIMAL INDUSTRY AND THE JOHNS HOPKINS UNIVERSITY PROVIDED FOR THE STUDY OF BLOOD FORMATION IN SWINE. SECTIONS 13 AND 14 OF THIS AGREEMENT READ AS FOLLOWS:

"THE EXPENDITURES BY THE UNITED STATES GOVERNMENT WILL BE MADE FROM APPROPRIATIONS FOR SALARIES AND EXPENSES, BUREAU OF ANIMAL INDUSTRY (ANIMAL HUSBANDRY) AND/OR ALLOTMENTS FROM THE BANKHEAD-JONES ACT, SPECIAL RESEARCH FUND, AND THE COST OF THIS PROJECT FROM THESE SOURCES WILL NOT EXCEED $200.

"THE COST OF THIS PROJECT TO THE JOHNS HOPKINS UNIVERSITY WILL BE AN AMOUNT NO LESS THAN THAT EXPENDED BY THE UNITED STATES DEPARTMENT OF AGRICULTURE, BUT WILL NOT EXCEED $500.'

SECTION 10 (A) OF THIS AGREEMENT READS AS FOLLOWS:

"THIS PROJECT DOES NOT INVOLVE GOVERNMENT PROPERTY OTHER THAN SWINE AND FUNDS FOR SALARIES AND EXPENSES WHICH ARE TO BE DISBURSED IN ACCORDANCE WITH UNITED STATES DEPARTMENT OF AGRICULTURE REGULATIONS.'

INASMUCH AS THE FUNDS OF THE DEPARTMENT ARE TO BE USED FOR PURPOSES WHICH ARE SEPARATE AND DISTINCT FROM THOSE OF THE UNIVERSITY AND ARE TO BE SPENT IN ACCORDANCE WITH GOVERNMENT PROCEDURE, IT IS BELIEVED THAT THE AGREEMENT IS BOTH LEGAL AND PROPER.

2. UNDER DATE OF MARCH 18, 1936, THE BUREAU OF PLANT INDUSTRY ENTERED INTO AN AGREEMENT WITH THE IOWA AGRICULTURAL EXPERIMENT STATION, A STATE INSTITUTION, FOR THE PURPOSE OF IMPROVING CEREAL CROPS, PARTICULARLY CORN, OATS, WHEAT, AND BARLEY. THIS AGREEMENT PROVIDED THAT THE EXPERIMENT STATION WOULD FURNISH THE LAND, MACHINERY AND EQUIPMENT, OFFICE AND LABORATORY SPACE, ETC., AND THE BUREAU WOULD ASSIGN INVESTIGATORS, PAY THEIR SALARIES AND EXPENSES, AND PROVIDE SEEDS, ETC. THE BUREAU OF PLANT INDUSTRY WAS TO SPEND APPROXIMATELY $14,520 AND THE IOWA AGRICULTURAL EXPERIMENT STATION APPROXIMATELY $14,000 DURING THE FISCAL YEAR ENDED JUNE 30, 1936. ALL GOVERNMENT FUNDS WERE TO BE DISBURSED IN ACCORDANCE WITH THE REGULATIONS OF THE DEPARTMENT WHILE STATE FUNDS WERE TO BE DISBURSED ACCORDING TO THE FISCAL REGULATIONS OF THE EXPERIMENT STATION. INASMUCH AS THE TYPES OF EXPENDITURES WERE SEGREGATED SO THAT THERE WAS NO OVERLAPPING AND AS NO STATE FUNDS COULD BE EXPENDED EXCEPT IN ACCORDANCE WITH STATE LAWS AND REGULATIONS IT IS NOT BELIEVED THAT ANY USEFUL PURPOSE WOULD HAVE BEEN SERVED BY SUGGESTING ANY OTHER PROCEDURE. IT WOULD ALSO APPEAR THAT THIS ARRANGEMENT IS ENTIRELY IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OF JULY 24, 1919 (5 U.S. CODE, SEC. 563), WHICH AUTHORIZES THE DISBURSEMENT OF FUNDS BY STATE, COUNTY, OR OTHER AGENCIES COOPERATING WITH THE SECRETARY OF AGRICULTURE.

3. AN AGREEMENT WAS MADE BETWEEN THE DEPARTMENT OF AGRICULTURE AND THE AGRICULTURAL AND MECHANICAL COLLEGE OF TEXAS, EFFECTIVE SEPTEMBER 1, 1935, FOR THE PURPOSE OF OPERATING A COOPERATIVE SPINNING AND FIBER RESEARCH LABORATORY FOR THE PURPOSE OF DETERMINING THE RELATIONSHIP BETWEEN CERTAIN FIBER CHARACTERISTICS AND SPINNING QUALITY IN COTTON. THE TEXAS AGRICULTURAL AND MECHANICAL COLLEGE AGREED TO ASSIGN INVESTIGATORS, PROVIDE SPACE, LABORATORIES, SUPPLIES, ETC., WHILE THE DEPARTMENT AGREED TO ASSIGN INVESTIGATORS, FURNISH COTTONS, ARRANGE FOR GINNING, ETC., ,ALL FEDERAL AND STATE FUNDS EXPENDED IN CONNECTION WITH THESE INVESTIGATIONS SHALL BE DISBURSED IN ACCORDANCE WITH THE FISCAL REGULATIONS OF THE UNITED STATES DEPARTMENT OF AGRICULTURE AND THE TEXAS AGRICULTURAL AND MECHANICAL COLLEGE RESPECTIVELY.' IT WAS FURTHER AGREED EQUIPMENT PURCHASED FROM FEDERAL FUNDS SHALL REMAIN THE PROPERTY OF THE UNITED STATES DEPARTMENT OF AGRICULTURE AND EQUIPMENT PURCHASED FROM STATE FUNDS SHALL REMAIN THE PROPERTY OF THE TEXAS AGRICULTURAL AND MECHANICAL COLLEGE.

IT IS APPARENT FROM THIS SUMMARY THAT THE INTERESTS OF THE UNITED STATES ARE AMPLY PROTECTED AND THAT ANY REQUIREMENT THAT STATE EXPENDITURES MUST BE AUDITED BY A FEDERAL OFFICIAL WOULD BE UNREASONABLE, UNNECESSARY, AND UNDOUBTEDLY REFUSED.

4. A MEMORANDUM OF UNDERSTANDING WAS ENTERED INTO BETWEEN THE BUREAU OF PLANT INDUSTRY AND MR. C. NORWOOD HASTIE, OF CHARLESTON, SOUTH CAROLINA, EFFECTIVE FEBRUARY 1, 1936, FOR THE PURPOSE OF CONDUCTING STUDIES ON THE NATURE AND CONTROL OF THE AZALEA FLOWER SPOT. THIS AGREEMENT PROVIDED THAT MR. HASTIE WAS TO GIVE FREE AND UNRESTRICTED ACCESS TO HIS ESTATE, KNOWN AS MAGNOLIA GARDENS, TO FURNISH A SUITABLE NUMBER AND VARIETY OF AZALEAS TO PERMIT OBSERVATIONS TO BE MADE AND SPECIMENS COLLECTED, TO FURNISH ORDINARY LABOR, HOUSING, HEAT, LIGHT, AND WATER AS MAY BE REQUIRED. THE BUREAU OF PLANT INDUSTRY AGREED TO ASSIGN TECHNICIANS, PAY THEIR SALARIES AND EXPENSES, FURNISH LABORATORY EQUIPMENT AND SPECIAL LABOR. THE AGREEMENT FURTHER PROVIDED THAT FEDERAL FUNDS WERE TO BE DISBURSED IN ACCORDANCE WITH THE REGULATIONS OF THE DEPARTMENT AND THAT EQUIPMENT PURCHASED WITH FEDERAL FUNDS WAS TO REMAIN THE PROPERTY OF THE GOVERNMENT. WHILE THE VALUE OF THE FACILITIES TO BE FURNISHED BY EACH WAS ESTIMATED THE AGREEMENT WAS NATURALLY SILENT AS TO THE FISCAL AFFAIRS OF MR. HASTIE, THE SUPERVISION OF THIS WORK ON MR. HASTIE'S ESTATE BY SCIENTISTS OF THIS DEPARTMENT BEING CONSIDERED AMPLE ASSURANCE THAT HIS OBLIGATIONS WOULD BE FULFILLED.

IT WILL BE APPARENT FROM A REVIEW OF THESE COOPERATIVE AGREEMENTS INTO WHICH THIS DEPARTMENT HAS ENTERED:

(A) THAT IN FACT, WHERE NO CONTINGENT EXPENDITURES ARE MADE, THE COOPERATION IS PRIMARILY A MATTER OF WORKING TOGETHER TO A COMMON END OF MUTUAL INTEREST, THE DEPARTMENT AND THE COOPERATING AGENCIES EACH EXPENDING ITS FUNDS UNDER ITS OWN FISCAL REGULATIONS FOR OBJECTIVES AUTHORIZED BY LAW. THE MEMORANDUM OF UNDERSTANDING IS MERELY A PLACING IN A SINGLE DOCUMENT, WHAT MIGHT BE ACCOMPLISHED LESS EFFICIENTLY BY AN INTERCHANGE OF CORRESPONDENCE, A STATEMENT OF THE OBJECTIVES OF TWO AGENCIES, AND HOW THE RESPONSIBILITIES MAY BE DIVIDED TO AVOID UNNECESSARY DUPLICATION WITH ITS RESULTANT LOSS OF THE TAXPAYER'S MONEY;

(B) THAT THE COOPERATING AGENCIES ARE ASSISTING THE DEPARTMENT EQUALLY AS MUCH AS THE DEPARTMENT IS AIDING THEM;

(C) THAT THE COST OF THE DEPARTMENT WOULD BE PROHIBITIVE IF ALL OF THE EXPENSES INVOLVED HAD TO BE BORNE BY THE FEDERAL GOVERNMENT;

(D) THAT THE MAJOR PORTION OF THE AGENCIES WHICH ARE NOW COOPERATING WITH THE DEPARTMENT IN A MOST BENEFICIAL AND PRACTICABLE MANNER WOULD REFUSE TO UNDERTAKE JOINT INVESTIGATIONS IF THEY WERE REQUIRED TO SUBMIT TO GOVERNMENT PROCEDURE IN THEIR ACTIVITIES OR TO TURN ALL FUNDS OVER TO THIS DEPARTMENT TO BE DISBURSED BY A CENTRAL DISBURSING OFFICER IN ACCORDANCE WITH FEDERAL LAWS AND DEPARTMENTAL REGULATIONS.

REALIZING, NEVERTHELESS, THE DESIRABILITY OF ESTABLISHING A DEFINITE PROCEDURE FOR HANDLING FUNDS IN CONNECTION WITH COOPERATIVE ENTERPRISES, THE FOLLOWING SECTION OF A PROPOSED REGULATION HAS BEEN DRAFTED AND IS SUBMITTED FOR YOUR CONSIDERATION.

"FUNDS.--- ORDINARILY COOPERATIVE AGREEMENTS OR MEMORANDA OF UNDERSTANDING WILL PROVIDE THAT THE FEDERAL GOVERNMENT WILL HANDLE ITS FUNDS AND THE COOPERATING AGENCY WILL HANDLE ITS FUNDS, EACH IN ACCORDANCE WITH ITS OWN REQUIREMENTS.

"IN THOSE INSTANCES WHERE IT IS NECESSARY TO HAVE EACH AGENCY PAY A PART OF A VOUCHER THE VOUCHER SHOULD BE CERTIFIED IN THE TOTAL AMOUNT OF THE EXPENSES INCURRED; THE AMOUNTS PAID OR PAYABLE BY THE COOPERATING AGENCY DEDUCTED ON THE FACE OF THE VOUCHER WITH APPROPRIATE NOTATIONS EXPLAINING THE BASIS FOR THE DEDUCTION; AND THE NET AMOUNT THEREOF, IF OTHERWISE PROPER, PAID FROM APPLICABLE FEDERAL FUNDS.

"FUNDS OF A COOPERATING AGENCY SHALL NOT BE EXPENDED BY A FEDERAL EMPLOYEE, EVEN THOUGH THE COOPERATING AGENCY HAS NO REPRESENTATIVES STATIONED IN THE LOCALITY. IN SUCH CASES A FEDERAL EMPLOYEE MAY HANDLE THE ACCOUNTS BUT SHALL FORWARD THE VOUCHERS TO THE DISBURSING AGENT OF THE COOPERATING AGENCY FOR PAYMENT. COOPERATING AGENCIES SHOULD NOT SEND CHECKS PAYABLE TO FEDERAL EMPLOYEES OR SEND THEM CHECKS PAYABLE TO "CASH" OR "BEARER" FOR PAYMENT OF LOCAL EXPENSES.'

IT WILL BE NOTED THAT A CLEAR LINE OF DEMARCATION IS DRAWN BETWEEN FUNDS SUPPLIED BY COOPERATING AGENCIES AND FEDERAL FUNDS, INSURING A PROPER FISCAL ARRANGEMENT.

ALTHOUGH YOU ARE UNDOUBTEDLY AWARE THAT THERE ARE NUMEROUS ACTS SUPPLEMENTARY TO THE ACT OF JULY 24, 1919, SUPRA, AUTHORIZING SPECIFIC BUREAUS TO COOPERATE WITH VARIOUS AGENCIES OUTSIDE OF THE FEDERAL GOVERNMENT FOR THE PURPOSE OF CARRYING OUT THE PROVISIONS OF LAW, IT MAY NOT BE INAPPROPRIATE TO MENTION THE FOLLOWING TO ILLUSTRATE THE BREADTH OF AUTHORITY GIVEN TO THIS DEPARTMENT:

* * * * * * * * * * * * * * (TABLE OMITTED) * * * * * * * * * * * * * *

IN CONCLUSION I SHOULD LIKE TO EMPHASIZE THAT THE APPLICATION OF THE FISCAL PROCEDURE SUGGESTED IN YOUR LETTER OF SEPTEMBER 23, 1936, TO ALL COOPERATIVE UNDERTAKINGS WOULD CAUSE THE MAJORITY OF OUR COOPERATORS TO CANCEL THEIR AGREEMENTS THEREBY TERMINATING A TREMENDOUS AMOUNT OF INVALUABLE RESEARCH WORK. IN VIEW OF THE IMPORTANCE OF THIS WORK IT IS HOPED YOU WILL APPROVE THE PROPOSED REGULATION QUOTED ABOVE BUT IF THIS PRESENTATION OF OUR PROBLEM IS NOT ENTIRELY CLEAR THIS DEPARTMENT WILL WELCOME THE ASSIGNMENT OF REPRESENTATIVES OF YOUR OFFICE TO STUDY THIS SITUATION AT FIRST HAND.

THE REQUIREMENT SET FORTH IN DECISION OF SEPTEMBER 23, 1936, WAS NOT INTENDED TO APPLY TO ALL CLASSES OF COOPERATIVE UNDERTAKINGS BUT ONLY TO SUCH ACCOUNTS AS INVOLVED JOINT EXPENDITURES, THAT IS, WHERE A PARTICULAR ACCOUNT IS PAYABLE PARTIALLY FROM FEDERAL FUNDS AND PARTIALLY FROM COOPERATING AGENCY FUNDS--- SUCH AS THAT WHICH FORMED THE BASIS OF THE SAID DECISION.

THE DRAFT OF REGULATIONS PROPOSED IN YOUR LETTER, SUPRA, APPEARS TO EMBODY THE SUBSTANCE OF THE REFERRED-TO REQUIREMENT OF THIS OFFICE AND NO OBJECTION, THEREFORE, WILL BE INTERPOSED TO THE ADOPTION AND PROMULGATION OF SAID PROPOSED REGULATIONS.