B-138574, MARCH 25, 1959, 38 COMP. GEN. 628

B-138574: Mar 25, 1959

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APPROPRIATIONS - OBLIGATION - FISCAL YEAR - CONTRACTS WITH OTHER GOVERNMENT AGENCIES - FEDERAL PRISON INDUSTRIES A PROCUREMENT OF ITEMS SIMILAR TO THOSE FOR WHICH A PURCHASE ORDER IS PLACED IN FISCAL YEAR 1958 WITH THE FEDERAL PRISON INDUSTRIES FROM ANOTHER SOURCE IN A SUBSEQUENT FISCAL YEAR TO SATISFY A NEED BY THE ORDERING AGENCY FOR ACCELERATED DELIVERIES WOULD CONSTITUTE A SEPARATE TRANSACTION FOR APPROPRIATION OBLIGATION PURPOSES AND WOULD HAVE TO BE FINANCED FROM APPROPRIATIONS AVAILABLE FOR OBLIGATION AT THE TIME OF SUCH PROCUREMENT AND. THERE IS NOTHING IN THE FEDERAL PRISON INDUSTRIES LEGISLATION WHICH WOULD AUTHORIZE THAT AGENCY TO ACCEPT ORDERS FOR ITEMS THAT IT PRODUCES AND THEN.

B-138574, MARCH 25, 1959, 38 COMP. GEN. 628

APPROPRIATIONS - OBLIGATION - FISCAL YEAR - CONTRACTS WITH OTHER GOVERNMENT AGENCIES - FEDERAL PRISON INDUSTRIES A PROCUREMENT OF ITEMS SIMILAR TO THOSE FOR WHICH A PURCHASE ORDER IS PLACED IN FISCAL YEAR 1958 WITH THE FEDERAL PRISON INDUSTRIES FROM ANOTHER SOURCE IN A SUBSEQUENT FISCAL YEAR TO SATISFY A NEED BY THE ORDERING AGENCY FOR ACCELERATED DELIVERIES WOULD CONSTITUTE A SEPARATE TRANSACTION FOR APPROPRIATION OBLIGATION PURPOSES AND WOULD HAVE TO BE FINANCED FROM APPROPRIATIONS AVAILABLE FOR OBLIGATION AT THE TIME OF SUCH PROCUREMENT AND, THEREFORE, THE FEDERAL PRISON INDUSTRIES CANNOT RETAIN JURISDICTION OVER THE ORDER AND THE OBLIGATED 1958 FISCAL YEAR FUNDS AND CALL UPON ANOTHER AGENCY TO PROCURE THE REQUIRED ITEMS AGAINST SUCH FUNDS. ALTHOUGH THE FEDERAL PRISON INDUSTRIES MAY USE THE AUTHORITY IN SECTION 601 OF THE ECONOMY ACT, 31 U.S.C. 686, TO OBTAIN FROM OTHER GOVERNMENT AGENCIES SUPPLIES OR SERVICES IT MAY NEED FOR ITS OWN USE, THERE IS NOTHING IN THE FEDERAL PRISON INDUSTRIES LEGISLATION WHICH WOULD AUTHORIZE THAT AGENCY TO ACCEPT ORDERS FOR ITEMS THAT IT PRODUCES AND THEN, DUE TO ITS INABILITY TO MANUFACTURE THE ORDERED ITEMS ON TIME,"FARM OUT" SUCH ORDERS TO OTHER AGENCIES OR SUPPLIERS UNDER SECTION 601, OR ANY OTHER STATUTE, TO SATISFY A NEED OF THE ORDERING AGENCY FOR ACCELERATED DELIVERIES. A DEPARTMENT OF THE AIR FORCE PROCUREMENT WHICH INVOLVES THE PLACEMENT OF A PURCHASE ORDER ON APRIL 25, 1958, JUST PRIOR TO THE LAST TWO MONTHS OF THE FISCAL YEAR, DURING WHICH THE LIMITATION ON THE INCURRENCE OF OBLIGATIONS CONTAINED IN SECTION 621 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1958, WAS OPERATIVE, WITH ANOTHER AGENCY FOR ITEMS WHICH COULD NOT BE DELIVERED UNTIL THE LATTER PART OF FISCAL YEAR 1960, WHEN SIMILAR ITEMS COULD HAVE BEEN OBTAINED FROM OTHER SOURCES WITH PRACTICALLY NO LEAD TIME INVOLVED, RAISES A DOUBT WHETHER THERE EXISTS A BONA FIDE NEED FOR THE ITEM ORDERED IN FISCAL YEAR 1958.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, MARCH 25, 1959:

YOUR LETTER OF JANUARY 28, 1959, REQUESTS OUR DECISION CONCERNING THE PROCUREMENT OF BEDS BY YOUR ADMINISTRATION FOR THE AIR FORCE AND THE USE OF FUNDS THEREFOR WHICH PREVIOUSLY HAVE BEEN OBLIGATED FOR SUCH PURPOSE BY A PURCHASE ORDER PLACED WITH THE FEDERAL PRISON INDUSTRIES (HEREINAFTER REFERRED TO AS FPI).

THE LETTER STATES THAT ON APRIL 25, 1958, THE DEPARTMENT OF THE AIR FORCE PLACED WITH THE FPI A PURCHASE ORDER FOR 31,009 METAL BEDSTEADS AND CONVERSION KITS. OTHER ORDERS FOR SUCH BEDSTEADS AND KITS HAD BEEN PLACED WITH THE FPI BY THE AIR FORCE SO THAT APPROXIMATELY 82,000 UNITS WERE ORDERED DURING FISCAL YEARS 1957 AND 1958. WHILE THE FPI HAS APPROXIMATELY DOUBLED ITS PRODUCTION OF THESE UNITS SINCE THE PLACING OF THE ORDER ON APRIL 25, 1958, APPARENTLY NO DELIVERIES HAVE BEEN MADE UNDER THAT ORDER, WHICH PROVIDED FOR DELIVERY IN APPROXIMATELY NINE MONTHS. THE AIR FORCE'S NEED HAS BECOME MUCH MORE ACUTE IN THE PAST FEW MONTHS AND DELIVERY OF THE 31,009 UNITS IS NEEDED NO LATER THAN JULY 1959. BOTH THE AIR FORCE AND THE FPI DESIRE TO TRANSFER THE ORDER TO THE GENERAL SERVICES ADMINISTRATION, WHICH WOULD RESULT IN PROBABLE DELIVERIES WITHIN THE REQUIRED TIME AND PERMIT TIMELY DELIVERY BY THE FPI OF THE REMAINING UNFULFILLED ORDERS. ALSO, YOUR ADMINISTRATION IS WILLING TO COMPLY WITH THE REQUEST AND FEELS THAT CONTRACTS ASSURING TIMELY DELIVERY CAN BE MADE. ACCORDINGLY, THE QUESTION IS PRESENTED AS TO WHETHER SUCH TRANSFER CAN BE ACCOMPLISHED AND PROCUREMENT MADE BY GSA WITHOUT CAUSING THE AIR FORCE TO LOSE THE 1958 FISCAL YEAR FUNDS PREVIOUSLY OBLIGATED AND REQUIRING PAYMENT FROM CURRENT APPROPRIATIONS.

YOUR LETTER STATES THAT FPI PRESUMABLY IS ABLE TO USE SECTION 601 OF THE ECONOMY ACT, 31 U.S.C. 686, JUST AS ANY OTHER GOVERNMENT AGENCY MAY. IS SUGGESTED THAT THE FPI MAY RETAIN NOMINAL JURISDICTION OF THE ORDER AND THE OBLIGATED FUNDS AND CALL ON GSA UNDER SECTION 601 TO PROCURE THE UNITS. WE CONCUR THAT THE FPI MAY UTILIZE THE AUTHORITY GRANTED BY SECTION 601 IN APPROPRIATE INSTANCE TO DETAIN SUPPLIES OR SERVICES IT MAY NEED FOR ITS OWN USE. HOWEVER, THE FPI WAS CREATED FOR THE PRIMARY PURPOSE OF FURNISHING EMPLOYMENT FOR PHYSICALLY FIT INMATES OF FEDERAL PENAL AND CORRECTIONAL INSTITUTIONS AND PROVIDING SUCH INMATES VOCATIONAL TRAINING AND AN OPPORTUNITY TO ACQUIRE KNOWLEDGE AND SKILL IN TRADES AND OCCUPATIONS WHICH WOULD GIVE THEM A MEANS OF EARNING A LIVELIHOOD UPON RELEASE. THE STATUTORY REQUIREMENT THAT GOVERNMENT AGENCIES PROCURE CERTAIN CLASSES OF ITEMS FROM THE FPI WAS INTENDED TO PROVIDE AN OUTLET FOR THE ITEMS PRODUCED INCIDENT TO THE ACCOMPLISHMENT OF THAT PURPOSE. THERE IS NOTHING CONTAINED IN THE LEGISLATION ESTABLISHING THE FPI WHICH WOULD APPEAR TO AUTHORIZE THAT AGENCY TO ACCEPT ORDERS FOR SUCH ITEMS AND THEN "FARM OUT" SUCH ORDERS TO OTHER AGENCIES OR SUPPLIERS UNDER SECTION 601 OR ANY OTHER STATUTE TO SATISFY A NEED OF ANOTHER AGENCY FOR ACCELERATED DELIVERIES. THE GOVERNMENT AGENCIES ARE REQUIRED TO PROCURE ONLY SUCH PRISON-MADE PRODUCTS AS MAY BE AVAILABLE (18 U.S.C. 4124) WHICH CONTEMPLATES THAT THE AGENCIES WILL PROCURE FROM OTHER SOURCES WHEN SUCH PRISON-MADE PRODUCTS ARE NOT AVAILABLE.

YOUR LETTER STATES FURTHER THAT THERE WAS A GENUINE NEED IN FISCAL YEAR 1958 WHICH CONTINUES TO EXIST AND THAT, WHILE YOU FEEL NO REAL QUESTION EXISTS OF A VIOLATION OF THE TERMS OF 41 U.S.C. 11, YOU WOULD APPRECIATE OUR ADVICE ON THIS POINT. WE ARE NOT CONVINCED FROM THE INFORMATION CONTAINED IN YOUR LETTER AND ENCLOSURES THAT THERE WAS A BONA FIDE NEED FOR THESE UNITS IN THE FISCAL YEAR 1958, BUT THIS IS A MATTER WHICH WOULD HAVE TO BE JUSTIFIED BY THE DEPARTMENT OF THE AIR FORCE IF SUCH FUNDS ARE USED. OUR DOUBTS IN THE MATTER RESULT FROM TWO FACTORS. FIRST, EVEN ASSUMING THAT FPI HAD NO ORDERS FOR THESE UNITS OTHER THAN THOSE FROM THE AIR FORCE AND THAT FPI DOUBLED ITS PRODUCTION TO 4,000 BEDS IMMEDIATELY AFTER APRIL 25, 1958, THE DATE OF THE ORDER FOR 31,009 UNITS, ALL OF THESE UNITS APPARENTLY COULD NOT BE DELIVERED UNTIL THE LATTER PART OF FISCAL YEAR 1960. SUCH DELIVERY PERIOD SEEMS TO BE AN UNUSUALLY LONG PERIOD OF TIME TO SATISFY A BONA FIDE NEED WHERE SIMILAR ITEMS COULD BE OBTAINED FROM OTHER SOURCES WITH PRACTICALLY NO LEAD TIME INVOLVED. SECONDLY, AND WHILE IT MAY NOT BE RELEVANT, THESE FUNDS WERE OBLIGATED DURING THE LAST WEEK OF APRIL JUST PRIOR TO THE LAST TWO MONTHS OF THE FISCAL YEAR DURING WHICH THE LIMITATION ON THE INCURRING OF OBLIGATIONS CONTAINED IN SECTION 621 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1958, 71 STAT. 327, WAS OPERATIVE.

IN ANY EVENT, HOWEVER, IF THE ORDER DATED APRIL 25, 1958, IS CANCELED, THE 1958 FUNDS OBLIGATED UNDER THE ORDER WOULD THEREBY BECOME DEOBLIGATED AND WOULD LAPSE. SINCE WE UNDERSTAND THAT FPI IS CARRYING OUT THE AIR FORCE ORDERS IN THE MANNER CONTEMPLATED WHEN THE ORDERS WERE ISSUED, THE PROCUREMENT OF SIMILAR UNITS FROM OTHER SOURCES WOULD BE AN ENTIRELY SEPARATE TRANSACTION FOR OBLIGATION PURPOSES AND WOULD HAVE TO BE FINANCED FROM APPROPRIATIONS AVAILABLE FOR OBLIGATION AT THE TIME OF SUCH PROCUREMENT ACTION.

HENCE, WE ARE REQUIRED TO HOLD THAT FPI CANNOT RETAIN JURISDICTION OVER THE ORDER AND THE OBLIGATED 1958 FISCAL YEAR FUNDS AND CALL UPON GSA TO PROCURE THE REQUIRED UNITS AGAINST SUCH FUNDS.

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