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B-133102, NOV 13, 1979

B-133102 Nov 13, 1979
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NOT IMPROPER SINCE LINE ITEM APPROPRIATION MAY BE APPLIED IN ANY AMOUNT TO ANY OF PROGRAMS FOR WHICH IT IS AVAILABLE ABSENT FURTHER RESTRICTIONS PROVIDED BY APPROPRIATION ACT OR ANOTHER STATUTE. SINCE SUCH LEASES ARE EXPRESSLY AUTHORIZED BY LAW UNDER 10 U.S.C. HIS CONCERN ARISES FROM INFORMATION PRESENTED DURING RECENT HEARINGS ON 1980 APPROPRIATION REQUESTS FOR THE FAMILY HOUSING ACCOUNT INDICATING THAT CERTAIN FUNDS MAY HAVE BEEN REPROGRAMMED DURING THE LAST TWO YEARS WITHOUT CONGRESSIONAL APPROVAL. THE AUDIT STAFF ALSO ASKED THAT WE RESPOND TO THE LEGAL ASPECT OF THE FOLLOWING QUESTION ASKED BY THE CHAIRMAN: "WHETHER THE DEFENSE DEPARTMENT IS ENTERING INTO LEASE CONSTRUCTION AGREEMENTS PRIOR TO THE PASSAGE OF APPROPRIATION LAWS AND IF THEY ARE.

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B-133102, NOV 13, 1979

DIGEST: I. DOD REPROGRAMMING OF FUNDS BETWEEN SUBORDINATE ACCOUNTS OF MAJOR FUNCTIONAL ACCOUNT, APPROPRIATED AS LINE ITEM ENTITLED "OPERATION, MAINTENANCE, $1,399,400,000," PUB. L. NO. 95-374, 92 STAT. 707 (SEPTEMBER 18, 1978), NOT IMPROPER SINCE LINE ITEM APPROPRIATION MAY BE APPLIED IN ANY AMOUNT TO ANY OF PROGRAMS FOR WHICH IT IS AVAILABLE ABSENT FURTHER RESTRICTIONS PROVIDED BY APPROPRIATION ACT OR ANOTHER STATUTE. SEE COMPTROLLER GENERAL DECISIONS CITED. II. ASSUMING DOD ENTERS INTO LEASE-CONSTRUCTION AGREEMENTS PRIOR TO RECEIPT OF APPROPRIATION TO FUND ADDITIONAL UNITS, SUCH ACTIONS DO NOT APPEAR IMPROPER UNDER SO-CALLED ANTI-DEFICIENCY ACT, 31 U.S.C. SEC. 665 (1976), SINCE SUCH LEASES ARE EXPRESSLY AUTHORIZED BY LAW UNDER 10 U.S.C. SEC. 2675 AND, HENCE WOULD FALL WITHIN EXCEPTION OF 31 U.S.C. SEC. 665(A) FOR CONTRACTS OR OBLIGATIONS OTHERWISE AUTHORIZED BY LAW.

DOD'S FAMILY HOUSING MANAGEMENT ACCOUNT:

BY LETTER DATED JULY 31, 1979, THE CHAIRMAN OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, ASKED THE GENERAL ACCOUNTING OFFICE (GAO) TO EXAMINE DOD'S FAMILY HOUSING ACCOUNT ESTABLISHED PURSUANT TO SECTION 501(A) OF PUBLIC LAW NO. 87-554, 42 U.S.C. SEC. 1594A-1, FOR FISCAL YEARS 1977, 1978, AND 1979. HIS CONCERN ARISES FROM INFORMATION PRESENTED DURING RECENT HEARINGS ON 1980 APPROPRIATION REQUESTS FOR THE FAMILY HOUSING ACCOUNT INDICATING THAT CERTAIN FUNDS MAY HAVE BEEN REPROGRAMMED DURING THE LAST TWO YEARS WITHOUT CONGRESSIONAL APPROVAL. THE AUDIT STAFF ASKED US TO ADDRESS THE QUESTION WHETHER DOD, CONSISTENT WITH ITS 1978 AND 1979 APPROPRIATION ACTS, MAY REPROGRAM FUNDS JUSTIFIED IN BUDGET PRESENTATIONS AS FUNDS FOR THE LEASING OF FAMILY HOUSING QUARTERS TO THE MAINTENANCE ACCOUNT OF THE FAMILY HOUSING ACCOUNT. THE AUDIT STAFF ALSO ASKED THAT WE RESPOND TO THE LEGAL ASPECT OF THE FOLLOWING QUESTION ASKED BY THE CHAIRMAN:

"WHETHER THE DEFENSE DEPARTMENT IS ENTERING INTO LEASE CONSTRUCTION AGREEMENTS PRIOR TO THE PASSAGE OF APPROPRIATION LAWS AND IF THEY ARE, WHETHER THIS IS WITHIN THE LAW."

WITH REGARD TO THE FIRST ISSUE, WE UNDERSTAND THAT APPROXIMATELY $40 MILLION IN FUNDS PROGRAMMED FOR LEASING FAMILY HOUSING QUARTERS WERE TRANSFERRED TO THE MAINTENANCE ACCOUNT IN THE FAMILY HOUSING ACCOUNT TO COVER A SHORTFALL RESULTING FROM THE DOLLAR DEVALUATION IN EUROPE. SEE MILITARY CONSTRUCTION APPROPRIATIONS FOR 1980: HEARINGS BEFORE SUBCOMMITTEE ON MILITARY CONSTRUCTION APPROPRIATIONS OF THE HOUSE COMMITTEE ON APPROPRIATIONS, 96TH CONG., 1ST SESS. 477 (1979) (HEREINAFTER CITED AS HEARINGS). ACCORDING TO RECENT TESTIMONY, SURPLUS LEASING FUNDS WERE AVAILABLE FOR REPROGRAMMING DUE TO A DOD CHANGE IN THE WAY FUNDS ARE OBLIGATED FOR MULTIYEAR LEASES. ID. AT 477 478. PRIOR TO 1978, FUNDS FOR THE FULL RENTAL AMOUNT OF A MULTIYEAR LEASE WERE OBLIGATED UPON THE EXECUTION OF THE LEASE AGREEMENT IN THE FIRST YEAR OF THE LEASE AND THE DOD FISCAL YEAR 1978 AND 1979 LEASING BUDGETS WERE DEVELOPED ON THIS BASIS. HOWEVER, UPON THE ADVICE OF THE OFFICE OF MANAGEMENT AND BUDGET THAT SECTION 807(J) OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1978, PUB. L. NO. 95-111, 91 STAT. 899 900 (1977) PERMITTED OBLIGATION OF FUNDS FOR 12 MONTHS AT A TIME, DOD IN JULY 1978 BEGAN TO RECORD OBLIGATIONS FOR FAMILY HOUSING LEASES ONLY FOR A PERIOD OF TWELVE MONTHS AT A TIME. ID., AT 478-479. THIS SERIES OF EVENTS FREED UP THE APPROXIMATELY $40 MILLION FOR REPROGRAMMING.

ALTHOUGH DOD'S BUDGET JUSTIFICATION FOR LEASING AND MAINTENANCE ARE PRESENTED SEPARATELY AS DISTINCT PROGRAMS, BOTH THE LEASING AND THE MAINTENANCE ACCOUNTS FALL UNDER THE APPROPRIATION HEADING "OPERATIONS, MAINTENANCE." SEE, E.G., MILITARY CONSTRUCTION APPROPRIATION ACT, 1978, PUB. L. NO. 95-101, 91 STAT. 837 (AUGUST 15, 1977). DOD INSTRUCTION 7150.6, JULY 25, 1978, PROVIDES IN PERTINENT PARTS THAT:

"C. MAJOR FUNCTIONAL CATEGORY: OPERATION AND MAINTENANCE

1. IMMEDIATE SUBORDINATE ACCOUNT: OPERATION. ATTACHMENT 1 TO THIS ENCLOSURE PROVIDES THE BASIS FOR DETERMINATION OF 'IN-HOUSE' CHARGES TO THE OPERATION ACCOUNT. THIS ACCOUNT INCLUDES THE FOLLOWING:

F. LEASING OF FAMILY HOUSING FACILITIES BY THE GOVERNMENT AS OUTLINED IN THE ENCLOSURE TO DOD DIRECTIVE 7150.4 (REFERENCE B);"

THE SECOND ISSUE RELATES TO DOD'S LEASE-CONSTRUCTION PROGRAM. DOD IS PRESENTLY AUTHORIZED TO ENTER INTO LEASES IN FOREIGN COUNTRIES FOR A PERIOD OF UP TO 10 YEARS FOR MILITARY FAMILY HOUSING FACILITIES. U.S.C. SEC. 2675 (SUPP. I 1977). SEE ALSO 42 U.S.C. SEC. 1594K (1976) (RENTAL GUARANTEE PROGRAM). THE PRESENT AUTHORIZATION STANDS AT 18,000 UNITS. 10 U.S.C. SEC. 2675(D)(2) (SUPP. I 1977); 42 U.S.C. SEC. 1594(1976). UNDER THIS PROGRAM, PRIVATE INVESTORS AGREE TO CONSTRUCT HOUSING AND DOD AGREES TO LEASE THE HOUSING FOR OCCUPANCY BY MILITARY PERSONNEL UPON COMPLETION OF CONSTRUCTION. NO FUNDS ARE RECORDED AS OBLIGATED UNTIL THE BUILDING IS OCCUPIED AND, AS NOTED ABOVE, FUNDS ARE OBLIGATED FOR ONE YEAR AT A TIME AND NOT FOR THE FULL TERM OF THE LEASE IN THE FIRST YEAR OF THE LEASE, AS WAS THE PRACTICE PRIOR TO 1978. SEE HEARINGS, SUPRA AT 477-481.

QUESTION: MAY DOD, CONSISTENT WITH ITS 1978 AND 1979 APPROPRIATION ACTS, REPROGRAM WITHIN ITS FAMILY HOUSING ACCOUNT FUNDS FROM ITS LEASING PROGRAM TO THE MAINTENANCE PROGRAM?

ANSWER: YES.

DISCUSSION: SECTION 501 OF PUBLIC LAW NO. 87-554, 42 U.S.C. SEC. 1594A-1, ESTABLISHED THE FAMILY HOUSING MANAGEMENT ACCOUNT:

"(A) ESTABLISHMENT. FOR THE PURPOSE OF PROVIDING IMPROVED MANAGEMENT AND ADMINISTRATION OF FUNDS APPROPRIATED OR OTHERWISE MADE AVAILABLE TO THE DEPARTMENT OF DEFENSE FOR FAMILY HOUSING PROGRAMS THERE IS HEREBY ESTABLISHED ON THE BOOKS OF THE TREASURY DEPARTMENT THE DEPARTMENT OF DEFENSE FAMILY HOUSING MANAGEMENT ACCOUNT (HEREINAFTER REFERRED TO AS THE MANAGEMENT ACCOUNT).

"(B) ADMINISTRATION OF ACCOUNT. THE MANAGEMENT ACCOUNT SHALL BE ADMINISTERED BY THE SECRETARY OF DEFENSE AS A SINGLE ACCOUNT. INTO SUCH ACCOUNT THERE SHALL BE TRANSFERRED (1) THE UNEXPENDED BALANCE OF THE FUNDS ESTABLISHED PURSUANT TO SUBSECTIONS (G) AND (H) OF SECTION 404 OF THE HOUSING AMENDMENTS OF 1955, AND (2) APPROPRIATIONS HEREAFTER MADE TO THE DEPARTMENT OF DEFENSE, FOR THE PURPOSE OF, OR WHICH ARE AVAILABLE FOR, THE PAYMENT OF COSTS ARISING IN CONNECTION WITH THE CONSTRUCTION, ACQUISITION, REPLACEMENT, ADDITION, EXPANSION, EXTENSION, ALTERATION, LEASING, OPERATION, OR MAINTENANCE OF FAMILY HOUSING, INCLUDING THE COST OF PRINCIPAL AND INTEREST CHARGES, AND INSURANCE PREMIUMS, ARISING IN CONNECTION WITH THE ACQUISITION OF SUCH HOUSING, AND MORTGAGE INSURANCE PREMIUMS PAYABLE UNDER SECTION 222(C) OF THE NATIONAL HOUSING ACT (12 U.S.C. SEC. 1715MC)) AND (3) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, FOR THE PURPOSE OF DEBT SERVICE, PROCEEDS OF THE HANDLING AND THE DISPOSAL OF FAMILY HOUSING OF THE DEPARTMENT OF DEFENSE, INCLUDING RELATED LAND AND IMPROVEMENTS, WHETHER HANDLED OR DISPOSED OF BY THE DEPARTMENT OF DEFENSE OR ANY OTHER FEDERAL AGENCY, BUT LESS THOSE EXPENSES PAYABLE PURSUANT TO SECTION 204(B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED (40 U.S.C. SEC. 485(B)), TO REMAIN AVAILABLE UNTIL EXPENDED.

"(C) OBLIGATION AGAINST ACCOUNT. OBLIGATIONS AGAINST THE MANAGEMENT ACCOUNT MAY BE MADE BY THE SECRETARY OF DEFENSE, IN SUCH AMOUNTS AS MAY BE SPECIFIED FROM TIME TO TIME IN APPROPRIATION ACT, FOR THE PURPOSE OF DEFRAYING, IN THE MANNER AND THE EXTENT AUTHORIZED BY LAW, THE COSTS REFERRED TO IN SUBSECTION (B)."

THE MILITARY CONSTRUCTION APPROPRIATION ACTS FOR 1978 AND 1979, PUB. L. NO. 95-101, 91 STAT. 837 (AUGUST 15, 1977) AND PUB. L. NO. 95-374, 92 STAT. 707 (SEPTEMBER 18, 1978), RESPECTIVELY, ARE SUBSTANTIALLY SIMILAR IN LANGUAGE. FOR PURPOSES OF DISCUSSION AND UNLESS OTHERWISE NOTED, WE WILL REFER ONLY TO THE 1979 APPROPRIATION ACT, WHICH READS AS FOLLOWS:

"FAMILY HOUSING, DEFENSE"

"FOR EXPENSES OF FAMILY HOUSING FOR THE ARMY, NAVY, MARINE CORPS, AIR FORCE, AND DEFENSE AGENCIES, FOR CONSTRUCTION, INCLUDING ACQUISITION, REPLACEMENT, ADDITION, EXPANSION, EXTENSION AND ALTERATION AND FOR OPERATION, MAINTENANCE, AND DEBT PAYMENT, INCLUDING LEASING, MINOR CONSTRUCTION, PRINCIPAL AND INTEREST CHARGES, AND INSURANCE PREMIUMS, AS AUTHORIZED BY LAW, $1,679,865,000, TO BE OBLIGATED AND EXPENDED IN THE FAMILY HOUSING MANAGEMENT ACCOUNT ESTABLISHED PURSUANT TO SECTION 501(A) OF PUBLIC LAW 87-554, IN NOT TO EXCEED THE FOLLOWING AMOUNTS:

FOR THE ARMY:

CONSTRUCTION, $60,560,000;

FOR THE NAVY AND MARINE CORPS:

CONSTRUCTION, $33,446,000;

FOR THE AIR FORCE:

CONSTRUCTION, $35,335,000;

FOR DEFENSE AGENCIES:

CONSTRUCTION, $3,024,000;

FOR DEPARTMENT OF DEFENSE:

DEBT PAYMENT, $148,100,000; OPERATION, MAINTENANCE, $1,399,400,000;

PROVIDED, THAT THE AMOUNTS PROVIDED UNDER THIS HEAD FOR CONSTRUCTION, AND FOR DEBT PAYMENT, SHALL REMAIN AVAILABLE UNTIL SEPTEMBER 30, 1983: PROVIDED FURTHER, THAT OF THE AMOUNTS APPROPRIATED FOR OPERATION AND MAINTENANCE, NOT LESS THAN $635,000,000 SHALL BE AVAILABLE ONLY FOR THE MAINTENANCE OF REAL PROPERTY FACILITIES."

AS YOU INFORMALLY ADVISED US, BOTH THE LEASING PROGRAM AND THE MAINTENANCE PROGRAM ARE SUBSUMED UNDER THE HEADING "OPERATION, MAINTENANCE, $1,399,400,000." ALTHOUGH THE BUDGET JUSTIFICATIONS ARE SET OUT BY INDIVIDUAL PROGRAM, THE AMOUNT APPROPRIATED UNDER THE LINE ITEM HEADING "OPERATION, MAINTENANCE, $1,399,400,000" IS NOT SUBDIVIDED IN THE ACT NOR IS THERE ANY RESTRICTION PLACED ON THE AMOUNTS AVAILABLE FOR ANY PARTICULAR PROGRAM WITHIN THIS LINE-ITEM APPROPRIATION, EXCEPT THAT NOT LESS THAN $635,000,000 OF THE AMOUNT APPROPRIATED FOR "OPERATION, MAINTENANCE" SHALL BE USED FOR MAINTENANCE OF REAL PROPERTY.

IN SITUATIONS SUCH AS THIS, WE HAVE CONSISTENTLY EXPRESSED THE VIEW THAT SUBDIVISIONS OF AN APPROPRIATION CONTAINED IN BUDGET JUSTIFICATIONS ARE NOT LEGALLY BINDING UPON THE DEPARTMENT OR AGENCY CONCERNED UNLESS THEY ARE CARRIED OVER TO THE APPROPRIATION ACT ITSELF. LTV AEROSPACE CORPORATION, 55 COMP.GEN. 307 (1975); NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, 55 COMP.GEN. 812 (1975). THUS,

"IN A STRICT LEGAL SENSE, THE TOTAL AMOUNT OF A LINE ITEM APPROPRIATION MAY BE APPLIED TO ANY OF THE PROGRAMS OR ACTIVITIES FOR WHICH IT IS AVAILABLE IN ANY AMOUNT ABSENT FURTHER RESTRICTIONS PROVIDED BY THE APPROPRIATION ACT OR ANOTHER STATUTE." B-164031(3), APRIL 16, 1975. SEE ALSO NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, 55 COMP.GEN. 812, 821-822 (1975).

IN LTV AEROSPACE CORPORATION, SUPRA, WE DISCUSSED THE RATIONALE FOR THIS VIEW:

"IN THIS REGARD, CONGRESS HAS RECOGNIZED THAT IN MOST INSTANCES IT IS DESIRABLE TO MAINTAIN EXECUTIVE FLEXIBILITY TO SHIFT AROUND FUNDS WITHIN A PARTICULAR LUMP-SUM APPROPRIATION ACCOUNT SO THAT AGENCIES CAN MAKE NECESSARY ADJUSTMENTS FOR UNFORESEEN DEVELOPMENTS, CHANGING REQUIREMENTS, INCORRECT PRICE ESTIMATES, WAGE-RATE ADJUSTMENTS, CHANGES IN THE INTERNATIONAL SITUATION, AND LEGISLATION ENACTED SUBSEQUENT TO APPROPRIATIONS. FISHER, 'REPROGRAMMING OF FUNDS BY THE DEFENSE DEPARTMENT,' 36 THE JOURNAL OF POLITICS, 77, 78 (1974). THIS IS NOT TO SAY THAT CONGRESS DOES NOT EXPECT THAT FUNDS WILL BE SPENT IN ACCORDANCE WITH BUDGET ESTIMATES OR IN ACCORDANCE WITH RESTRICTIONS DETAILED IN COMMITTEE REPORTS. HOWEVER, IN ORDER TO PRESERVE SPENDING FLEXIBILITY, IT MAY CHOOSE NOT TO IMPOSE THESE PARTICULAR RESTRICTIONS AS A MATTER OF LAW, BUT RATHER TO LEAVE IT TO THE AGENCIES TO 'KEEP FAITH' WITH THE CONGRESS. SEE FISHER, SUPRA, AT 82. AS THE NAVY POINTS OUT, THERE ARE PRACTICAL REASONS WHY AGENCIES CAN BE EXPECTED TO COMPLY WITH THESE CONGRESSIONAL EXPECTATIONS. IF AN AGENCY FINDS IT DESIRABLE OR NECESSARY TO TAKE ADVANTAGE OF THAT FLEXIBILITY BY DEVIATING FROM WHAT CONGRESS HAD IN MIND IN APPROPRIATING PARTICULAR FUNDS, THE AGENCY CAN BE EXPECTED TO SO INFORM CONGRESS THROUGH RECOGNIZED AND ACCEPTED PRACTICES.

"ACCORDINGLY, IT IS OUR VIEW THAT WHEN CONGRESS MERELY APPROPRIATES LUMP- SUM AMOUNTS WITHOUT STATUTORILY RESTRICTING WHAT CAN BE DONE WITH 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 FEDERAL AGENCIES.

"AN ACCOMMODATION HAS DEVELOPED BETWEEN THE CONGRESS AND THE EXECUTIVE BRANCH RESULTING IN THE APPROPRIATION PROCESS FLEXIBILITY DISCUSSED ABOVE. FUNDS ARE MOST OFTEN APPROPRIATED IN LUMP SUMS ON THE BASIS OF MUTUAL LEGISLATIVE AND EXECUTIVE UNDERSTANDINGS AS TO THEIR USE AND DERIVE FROM AGENCY BUDGET ESTIMATES AND TESTIMONY AND EXPRESSIONS OF INTENT IN COMMITTEE REPORTS. THE UNDERSTANDINGS REACHED GENERALLY ARE NOT ENGRAFTED UPON THE APPROPRIATION PROVISIONS ENACTED. TO ESTABLISH AS A MATTER OF LAW SPECIFIC RESTRICTIONS COVERING THE DETAILED AND COMPLETE BASIS UPON WHICH APPROPRIATED FUNDS ARE UNDERSTOOD TO BE PROVIDED WOULD, AS A PRACTICAL MATTER, SEVERELY LIMIT THE CAPABILITY OF AGENCIES TO ACCOMMODATE CHANGING CONDITIONS.

"AS OBSERVED ABOVE, THIS DOES NOT MEAN AGENCIES ARE FREE TO IGNORE CLEARLY EXPRESSED LEGISLATIVE HISTORY APPLICABLE TO THE USE OF APPROPRIATED FUNDS. THEY IGNORE SUCH EXPRESSIONS OF INTENT AT THE PERIL OF STRAINED RELATIONS WITH THE CONGRESS. THE EXECUTIVE BRANCH - AS THE NAVY HAS RECOGNIZED - HAS A PRACTICAL DUTY TO ABIDE BY SUCH EXPRESSIONS. THIS DUTY, HOWEVER, MUST BE UNDERSTOOD TO FALL SHORT OF A STATUTORY REQUIREMENT GIVING RISE TO A LEGAL INFRACTION WHERE THERE IS A FAILURE TO CARRY OUT THAT DUTY." 55 COMP.GEN. 318-25 (1975).

THERE ARE TWO ADDITIONAL POINTS THAT DESERVE MENTION. FIRST, THERE IS EXPLICIT CONGRESSIONAL RECOGNITION OF THE LEGAL EFFECT OF ENACTING UNRESTRICTED APPROPRIATION ACTS. IN COMMENTING ON REPROGRAMMING IN ITS REPORT ON THE DEPARTMENT OF DEFENSE APPROPRIATION BILL FOR FISCAL YEAR 1974, THE HOUSE COMMITTEE ON APPROPRIATIONS NOTED: "IN A STRICTLY LEGAL SENSE, THE DEPARTMENT OF DEFENSE COULD UTILIZE THE FUNDS APPROPRIATED FOR WHATEVER PROGRAMS WERE INCLUDED UNDER THE INDIVIDUAL APPROPRIATION ACCOUNTS, BUT THE RELATIONSHIP WITH THE CONGRESS DEMANDS THAT THE DETAILED JUSTIFICATIONS WHICH ARE PRESENTED IN SUPPORT OF BUDGET REQUESTS BE FOLLOWED. TO DO OTHERWISE WOULD CAUSE CONGRESS TO LOSE CONFIDENCE IN THE REQUESTS MADE AND PROBABLY RESULT IN REDUCED APPROPRIATIONS OR LINE ITEM APPROPRIATION BILLS." H.R. REPORT NO. 93 662, 93RD CONG., 1ST SESS. 16 (1973). SECOND, WHILE THE PRACTICE OF ENACTING UNRESTRICTED APPROPRIATIONS PROVIDES FLEXIBILITY, DOD APPARENTLY HAS BEEN SENSITIVE TO CONGRESS' DESIRE TO MAINTAIN CLOSE SCRUTINY AND CONTROL OVER APPROPRIATED FUNDS. HENCE, DOD HAS DEVELOPED A SET OF INSTRUCTIONS ON REPROGRAMMING THAT IN CERTAIN INSTANCES CONTEMPLATE OBTAINING THE APPROVAL OF THE APPROPRIATIONS COMMITTEES AND THE ARMED SERVICES COMMITTEES. DOD DIRECTIVE 7250.5, JANUARY 14, 1975 AND DOD INSTRUCTION 7250.10, JANUARY 14, 1975. YOU MAY WISH TO CONSIDER WHETHER THE DOD DIRECTIVES WERE ADHERED TO IN THIS SITUATION.

QUESTION: ASSUMING DOD IS ENTERING INTO LEASE-CONSTRUCTION AGREEMENTS PRIOR TO THE PASSAGE OF APPROPRIATIONS LAWS, IS THIS PRACTICE WITHIN THE LAW?

ANSWER: YES (FN1).

DISCUSSION: THE RECENT HEARINGS BEFORE THE HOUSE APPROPRIATIONS COMMITTEE'S SUBCOMMITTEE ON MILITARY CONSTRUCTION APPROPRIATIONS CONTAINED THE FOLLOWING EXCHANGE BETWEEN THE SUBCOMMITTEE'S CHAIRMAN, MR. MCKAY, AND THE DEPUTY ASSISTANT SECRETARY OF DEFENSE (INSTALLATIONS AND HOUSING), PERRY J. FLIAKAS:

"MR. MCKAY: DO YOU ENTER INTO LEASE AGREEMENTS THAT REQUIRE APPROPRIATIONS PRIOR TO THE PASSAGE OF A PUBLIC LAW?"

"MR. FLIAKAS. NO."

HEARINGS, SUPRA, AT 487.

ON THE OTHER HAND, YOU ADVISED US INFORMALLY THAT DOD ENTERS INTO LEASE- CONSTRUCTION AGREEMENTS PRIOR TO RECEIVING AN APPROPRIATION TO FUND THE ADDITIONAL UNITS COVERED BY THE AGREEMENT.

THERE IS FOR CONSIDERATION THE QUESTION WHETHER THIS PRACTICE IS WITHIN THE LAW. APPARENTLY, THE QUESTION CONTEMPLATES A POTENTIAL VIOLATION OF 31 U.S.C. SEC. 665(A) (1976) (POPULARLY KNOWN AS THE ANTI DEFICIENCY ACT) THAT PROHIBITS EXECUTIVE OFFICERS OF THE GOVERNMENT FROM SUBJECTING THE GOVERNMENT TO LIABILITIES AND EXPENDITURES IN EXCESS OF THOSE CONTEMPLATED BY THE LAW:

"(A) NO OFFICER OR EMPLOYEE OF THE UNITED STATES SHALL MAKE OR AUTHORIZE AN EXPENDITURE FROM OR CREATE OR AUTHORIZE AN OBLIGATION UNDER ANY APPROPRIATION OR FUND IN EXCESS OF THE AMOUNT AVAILABLE THEREIN; NOR SHALL ANY SUCH OFFICER OR EMPLOYEE INVOLVE THE GOVERNMENT IN ANY CONTRACT OR OTHER OBLIGATION, FOR THE PAYMENT OF MONEY, OR FOR ANY PURPOSE, IN ADVANCE OF APPROPRIATIONS MADE FOR SUCH PURPOSE, UNLESS SUCH CONTRACT OR OBLIGATION IS AUTHORIZED BY LAW."

DOD'S PRACTICE WOULD NOT IMPINGE ON 31 U.S.C. SEC. 665(A). DOD IS PRESENTLY AUTHORIZED TO ENTER INTO LONG TERM LEASES FOR MILITARY FAMILY HOUSING FACILITIES:

"(A) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE SECRETARY OF A MILITARY DEPARTMENT MAY ACQUIRE BY LEASE, IN ANY FOREIGN COUNTRY, STRUCTURES AND REAL PROPERTY RELATING THERETO THAT ARE NEEDED FOR MILITARY PURPOSES. A LEASE UNDER THIS SECTION MAY NOT BE FOR A PERIOD OF MORE THAN FIVE YEARS, EXCEPT THAT A LEASE UNDER THIS SECTION FOR MILITARY FAMILY HOUSING FACILITIES AND REAL PROPERTY RELATING THERETO MAY BE FOR A PERIOD OF MORE THAN FIVE YEARS BUT MAY NOT BE FOR A PERIOD OF MORE THAN TEN YEARS.

"(B) A LEASE MAY NOT BE ENTERED INTO UNDER THIS SECTION OR ANY OTHER PROVISION OF LAW FOR STRUCTURES, FAMILY HOUSING FACILITIES, OR RELATED REAL PROPERTY IN ANY FOREIGN COUNTRY IF THE AVERAGE ESTIMATED ANNUAL RENTAL DURING THE TERM OF THE LEASE IS MORE THAN $250,000 UNTIL AFTER THE EXPIRATION OF THIRTY DAYS FROM THE DATE UPON WHICH A REPORT OF THE FACTS CONCERNING THE PROPOSED LEASE IS SUBMITTED TO THE COMMITTEES ON ARMED SERVICES OF THE SENATE AND HOUSE OF REPRESENTATIVES.

"(C) A STATEMENT IN A LEASE THAT THE REQUIREMENTS OF THIS SECTION HAVE BEEN MET, OR THAT THE LEASE IS NOT SUBJECT TO THIS SECTION, IS CONCLUSIVE.

"(C)(1) THE AVERAGE UNIT RENTAL FOR DEPARTMENT OF DEFENSE FAMILY HOUSING ACQUIRED BY LEASE IN FOREIGN COUNTRIES MAY NOT EXCEED $485 PER MONTH FOR THE DEPARTMENT, AND IN NO EVENT SHALL THE RENTAL FOR ANY ONE UNIT EXCEED $850 PER MONTH, INCLUDING THE COSTS OF OPERATION, MAINTENANCE, AND UTILITIES. THE SECRETARY OF DEFENSE MAY WAIVE THE COST LIMITATIONS SPECIFIED IN THE FIRST SENTENCE OF THIS PARAGRAPH WITH RESPECT TO NOT MORE THAN 150 SUCH UNITS IF SUCH UNITS ARE LEASED FOR INCUMBENTS OF SPECIAL POSITIONS OR FOR PERSONNEL ASSIGNED TO DEFENSE ATTACHE OFFICES OR ARE LEASED IN COUNTRIES WHERE EXCESSIVE COSTS OF HOUSING WOULD CAUSE UNDUE HARDSHIP ON DEPARTMENT OF DEFENSE PERSONNEL.

"(2) NOT MORE THAN 18,000 FAMILY HOUSING UNITS MAY BE LEASED IN FOREIGN COUNTRIES AT ANY ONE TIME."

SINCE THESE LEASES ARE EXPRESSLY AUTHORIZED UNDER 10 U.S.C. SEC. 2675 (SUPP. I 1977), THEY WOULD FALL WITHIN THE EXCEPTION OF 31 U.S.C. SEC. 665(A) (1976) FOR CONTRACTS OR OBLIGATIONS "AUTHORIZED BY LAW." SEE JOSEPH DEITER V. UNITED STATES, 59 CT.CL. 907 (1924), AFF'D 271 U.S. 204 (1926); UNITED STATES V. DOULLUT, 213 F. 729 (5TH CIR. 1914) (HOLDING THAT LEASE FOR TERM OF YEARS, MADE WITHOUT SPECIFIC LEGAL AUTHORITY AND WITHOUT AN APPROPRIATION FOR PAYMENT OF RENT OTHER THAN THE FIRST YEAR, VIOLATED R.S. SECS. 3732 AND 3679, PREDECESSOR OF 31 U.S.C. SEC. 665(A).

FN1 FOR PURPOSES OF OUR DISCUSSION AND ANSWER, WE ASSUME THAT THE ACTUAL LEASE CONSTRUCTION AGREEMENTS ARE ALL CONSISTENT WITH THE STATUTORY RENTAL LIMITS OF 10 U.S.C. SEC. 2675 (1976). SHOULD THEY NOT CONFORM TO THE STATUTORY LIMITATIONS, A DIFFERENT QUESTION WOULD BE PRESENTED THAN THE ONE WE NOW ADDRESS.

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