A-90753, JULY 12, 1939, 19 COMP. GEN. 44

A-90753, JULY 12, 1939, 19 COMP. GEN. 44

TREASURY DEPARTMENT - GOVERNMENT BOND SALE EXPENSE AUTHORITY THE AUTHORITY CONFERRED UPON THE SECRETARY OF THE TREASURY BY SECTION 10 OF THE SECOND LIBERTY BOND ACT OF SEPTEMBER 24, 1917, AS EXTENDED AND AMENDED, TO USE THE APPROPRIATION FOR "ALL NECESSARY EXPENSES" AND TO SPEND THE FUNDS AS HE "MAY DIRECT," ALTHOUGH BROAD, IS NONE THE LESS GENERAL, AND MAY NOT BE SO CONSTRUED AS TO MAKE INEFFECTIVE SPECIFIC AND MANDATORY RESTRICTIONS OF LAW RELATING TO THE PROCUREMENT OF PRINTING AND BINDING, ENVELOPES, ETC., AND THE DEPARTMENT MAY NOT HAVE DONE FOR IT INDIRECTLY, THROUGH FEDERAL RESERVE BANKS DESIGNATED BY IT FOR THE PURPOSE, THAT WHICH IT MAY NOT DO DIRECTLY. WHERE A FEDERAL RESERVE BANK'S ACTIVITY IN CONNECTION WITH THE ADVERTISING FOR SALE OF UNITED STATES SAVINGS BONDS, INSOFAR AS PROCUREMENT FO THE ADVERTISING LITERATURE--- SUCH AS PRINTED BOOKLETS, POSTERS, ENVELOPES, ETC.--- IS CONCERNED, IS LIMITED TO ORDERING THE SUPPLIES FROM COMMERCIAL CONCERNS, ON BEHALF OF THE TREASURY DEPARTMENT, FOR DIRECT DELIVERY TO WASHINGTON D.C., PAYING FOR THE SUPPLIES DELIVERED, AND THEN OBTAINING REIMBURSEMENT FROM THE DEPARTMENT FOR THE AMOUNT SO EXPENDED, AND THE ADVERTISING CAMPAIGN IS DIRECTED BY THE TREASURY DEPARTMENT FROM WHICH PLACE THE CIRCULARS AND ADVERTISING MATTER ARE DISTRIBUTED, THE SUPPLIES MAY NOT BE CONSIDERED AS PROCURED OR USED BY THE BANK AS A NECESSARY INCIDENT TO THE PERFORMANCE BY IT OF ANY AUTHORIZED DUTY AS A FISCAL AGENT OF THE UNITED STATES, BUT AS PROCURED FOR THE TREASURY DEPARTMENT ITSELF, AND AS SUCH THE PURCHASES ARE SUBJECT TO THE PRINTING AND BINDING AT THE GOVERNMENT PRINTING OFFICE REQUIREMENTS OF SECTION 11 OF THE ACT OF MARCH 1, 1919, 40 STAT. 1270; THE PURCHASE OF ENVELOPES UNDER CONTRACTS OF THE POST OFFICE DEPARTMENT PROVISIONS OF THE ACT OF JUNE 26, 1906, 34 STAT. 476; AND THE REQUIREMENTS FOR ADVERTISING OF SECTION 3709, REVISED STATUTES, AS TO OTHER MISCELLANEOUS ITEMS, WHERE THE AMOUNTS INVOLVED ARE IN EXCESS OF THE OPEN MARKET PURCHASE LIMITATIONS. FUTURE PROCUREMENT PROCEDURE SHOULD BE ACCORDINGLY.

COMPTROLLER GENERAL BROWN TO THE SECRETARY OF THE TREASURY, JULY 12, 1939:

REFERENCE IS MADE TO LETTER DATED APRIL 5, 1939, FROM THE COMMISSIONER OF THE PUBLIC DEPT, AS FOLLOWS:

THIS OFFICE HAS RECEIVED THE FOLLOWING NOTICES OF EXCEPTION TAKEN TO PAYMENT MADE BY CHIEF DISBURSING OFFICER G. F. ALLEN, TREASURY DEPARTMENT, IN REIMBURSEMENT OF EXPENSES INCURRED BY THE FEDERAL RESERVE BANK OF NEW YORK AS FISCAL AGENT OF THE UNITED STATES:

CHART D.O. VOUCHER NO.: PERIOD D.O. VOUCHER NO.: PERIOD

177184 ----------- AUGUST 1936. 58549 ----1OCTOBER 1937.

758791 ----------- NOVEMBER 1936. 8181218 ---1NOVEMBER 1937.

871803 ----------- NOVEMBER 1936. 925948 ----1DECEMBER 1937.

1108853 ----------- JANUARY 1937. 1063808 ----1JANUARY 1938.

1692847 ----------- APRIL 1937. 1315042 ----1MARCH 1938.

186236 ----------- AUGUST 1937. 1473545 ---1APRIL 1938.

242627 ----------- AUGUST 1937. 1526387 ---1APRIL 1938.

403008 ----------- AUGUST 1937. 1735459 ---1MAY 1938.

UNDER AUTHORITY CONTAINED IN SECTION 15 OF THE FEDERAL RESERVE ACT, THE SECRETARY OF THE TREASURY DESIGNATED FEDERAL RESERVE BANKS AS FISCAL AGENTS OF THE UNITED STATES, AND FROM TIME TO TIME HAS CHARGED THEM WITH THE CONDUCT OF OPERATIONS FACILITATING THE SALE OF PUBLIC/DEBT SECURITIES. WITH RESPECT TO PUBLIC/DEBT ISSUES AUTHORIZED BY THE SECOND LIBERTY BOND ACT, APPROVED SEPTEMBER 24, 1917, AS AMENDED, THE EXPENSES INCURRED BY THE FEDERAL RESERVE BANKS HAVE BEEN REIMBURSED AS CHARGES AGAINST THE PERMANENT INDEFINITE APPROPRIATION PROVIDED FOR THE EXPENSES OF THE ISSUES. SECTION 22 OF THE ACT, ADDED BONDS, PROVIDES IN SECTION (D): "THE APPROPRIATION FOR EXPENSES PROVIDED BY SECTION 10 OF THE ACT AND EXTENDED BY THE ACT OF JUNE 16, 1921, SHALL BE AVAILABLE FOR ALL NECESSARY EXPENSES UNDER THIS SECTION * * *.' THE PAYMENT MADE ON THE ABOVE-NOTED VOUCHERS, TO WHICH EXCEPTION IS TAKEN BY YOUR OFFICE, WERE IN CONNECTION WITH THE PROCUREMENT OF SALES PROMOTION MATERIALS (BOOKLETS, POSTERS, ENVELOPES, ETC.) NEEDED TO ADEQUATELY ADVERTISE UNITED STATES SAVINGS BONDS.

ADVERTISING IS A NECESSARY INCIDENT TO THE CONDUCT OF THE PUBLIC DEBT ISSUE OPERATIONS, AND THE METHOD OF ADVERTISING TO BE ADOPTED DEPENDS UPON THE PARTICULAR SITUATION CONFRONTING THE SECRETARY OF THE TREASURY. UNITED STATES SAVINGS BONDS ARE ADVERTISED LARGELY BY CIRCULARIZING A CONSTANTLY GROWING MAILING LIST OF PRESENT AND PROSPECTIVE PURCHASERS. THE MATERIALS COVERED BY THE VOUCHERS IN QUESTION WERE USED IN THIS CONNECTION, AND WERE SHIPPED TO WASHINGTON MERELY AS A MATTER OF CONVENIENCE IN ASSEMBLY AND DISTRIBUTION. IT WAS CONSIDERED ADVISABLE TO KEEP THE EXTENSIVE MAILING LISTS USED IN CONNECTION WITH THESE DISTRIBUTIONS IN THE DEPARTMENT. IN ADDITION, LARGE QUANTITIES OF THESE ASSEMBLIES WERE DISPATCHED IN BULK TO POST OFFICES FOR DOOR-TO-DOOR DISTRIBUTION.

IN FLOATING THE LIBERTY LOANS, PUBLICITY IN ALL OF ITS PHASES WAS RESORTED TO AND IN LARGE MEASURE WAS CONDUCTED THROUGH OR WITH THE AID OF THE FEDERAL RESERVE BANKS. POSTERS, LITERATURE, ETC., WERE DISTRIBUTED, AND THE METHOD OF PROCUREMENT AND DISTRIBUTION HAS ALWAYS BEEN CONSIDERED TO BE LEGITIMATELY DISCRETIONARY WITH THE SECRETARY OF THE TREASURY UNDER THE PROVISIONS OF THE ACT OF SEPTEMBER 24, 1917, AS AMENDED. THE APPROPRIATION PROVIDED BY THE ACT IS IN BROAD TERMS, VESTING CONSIDERABLE DISCRETION IN THE SECRETARY OF THE TREASURY IN DETERMINING WHAT IS TO BE THE FIT AND APPROPRIATE METHOD OF CONDUCTING FINANCING OPERATIONS.

IN VIEW OF THE ABOVE, IT IS REQUESTED THAT THE ITEMS COVERED IN THE EXCEPTIONS LISTED BE PASSED FOR CREDIT IN DISBURSING OFFICER ALLEN'S ACCOUNT.

THE VOUCHERS IN QUESTION COVER REIMBURSEMENT TO THE FEDERAL RESERVE BANK AT NEW YORK FOR ,EXPENSES INCURRED IN ACTING AS FISCAL AGENT OF THE UNITED STATES" IN CONNECTION WITH THE ADVERTISEMENT AND SALE OF THE SO-CALLED "BABY" BONDS AUTHORIZED BY THE ACT OF FEBRUARY 4, 1935, 49 STAT. 20. PAYMENT WAS MADE FROM THE INDEFINITE APPROPRIATION," EXPENSE OF LOANS, ACT OF SEPTEMBER 24, 1917, AS AMENDED AND EXTENDED.' TYPICAL OF THE VOUCHERS IS THAT NUMBERED 758,791, IN THE AMOUNT OF $55,902, PAID NOVEMBER 4, 1936, BY G. F. ALLEN, SYMBOL NO. 1-100. THE PRINCIPAL ITEMS FOR WHICH REIMBURSEMENT WAS MADE CONSIST OF PRINTED BOOKLETS, POSTERS, ENVELOPES, ETC., AND OTHER MISCELLANEOUS SUPPLIES. EXCEPTIONS WERE TAKEN TO THE VOUCHERS BECAUSE OF THE FAILURE TO OBTAIN THE SERVICES AND SUPPLIES FROM THE GOVERNMENT PRINTING OFFICE, THROUGH THE POSTMASTER GENERAL, OR AFTER ADVERTISING FOR BIDS, AS REQUIRED IN THE CASE OF SUCH PURCHASES BY THE TREASURY DEPARTMENT, BY THE ACT OF MARCH 1, 1919, 40 STAT. 1270, THE ACT OF JUNE 26, 1906, 34 STAT. 476, AND SECTION 3709, REVISED STATUTES.

THE SERVICES AND SUPPLIES IN QUESTION APPEAR TO HAVE BEEN ORDERED BY THE FEDERAL RESERVE BANK FOR DIRECT DELIVERY TO THE TREASURY DEPARTMENT, WASHINGTON, D.C., WHERE THE LITERATURE, ETC., WAS ASSEMBLED AND DISTRIBUTED. IT IS UNDERSTOOD THE TREASURY DEPARTMENT EMPLOYS A CONSIDERABLE FORCE IN WASHINGTON FOR THE PURPOSE OF MAINTAINING A MAILING LIST OF SEVERAL MILLION NAMES OF OWNERS AND PROSPECTIVE PURCHASERS OF BONDS TO WHICH CIRCULARS AND ADVERTISING MATTER ARE DISTRIBUTED, AND FOR THE PURPOSE OF KEEPING OTHER RECORDS AND STATISTICS WITH RESPECT TO THE SALE OF THE BONDS. IT APPEARS THAT THE ADVERTISING CAMPAIGN IS DIRECTED BY THE TREASURY DEPARTMENT AND THAT, INSOFAR AS PROCUREMENT OF ADVERTISING LITERATURE, ETC., IS CONCERNED, THE FEDERAL RESERVE BANK'S ACTIVITY IS LIMITED TO ORDERING THE SUPPLIES FROM COMMERCIAL CONCERNS, ON BEHALF OF THE TREASURY DEPARTMENT, FOR DIRECT DELIVERY TO WASHINGTON, D.C., PAYING FOR THE SUPPLIES DELIVERED, AND THEN OBTAINING REIMBURSEMENT FOR THE AMOUNT SO EXPENDED. INSOFAR AS RESULTS ARE CONCERNED THE SITUATION IS THE SAME AS IF THE TREASURY DEPARTMENT HAD ORDERED AND PAID FOR THE SUPPLIES IN THE FIRST INSTANCE, WITHOUT THE INTERVENTION OF THE FEDERAL RESERVE BANK.

WITH RESPECT TO THE PRINTING AND BINDING OF THE BOOKLETS, ETC., ATTENTION IS DIRECTED TO THE LAST PROVISO OF SECTION 11 OF THE ACT OF MARCH 1, 1919, 40 STAT. 1270, AS FOLLOWS:

* * * THAT ON AND AFTER JULY 1, 1919, ALL PRINTING, BINDING, AND BLANK- BOOK WORK FOR CONGRESS, THE EXECUTIVE OFFICE, THE JUDICIARY, AND EVERY EXECUTIVE DEPARTMENT, INDEPENDENT OFFICE, AND ESTABLISHMENT OF THE GOVERNMENT, SHALL BE DONE AT THE GOVERNMENT PRINTING OFFICE, EXCEPT SUCH CLASSES OF WORK AS SHALL BE DEEMED BY THE JOINT COMMITTEE ON PRINTING TO BE URGENT OR NECESSARY TO HAVE DONE ELSEWHERE THAN IN THE DISTRICT OF COLUMBIA FOR THE EXCLUSIVE USE OF ANY FIELD SERVICE OUTSIDE OF SAID DISTRICT.

THE PROVISIONS OF THIS STATUTE BEING MANDATORY AND APPLICABLE TO THE TREASURY DEPARTMENT, THE PRINTING AND BINDING HERE IN QUESTION--- WHICH APPEARS TO HAVE BEEN REQUIRED, USED, AND PAID FOR BY THE TREASURY DEPARTMENT--- SHOULD HAVE BEEN PROCURED FROM THE GOVERNMENT PRINTING OFFICE, THE EXCEPTION AS TO FIELD PRINTING NOT BEING PERTINENT FOR THE REASON IT DOES NOT APPEAR THE JOINT COMMITTEE ON PRINTING AUTHORIZED THE PROCUREMENT OF SUCH PRINTING ELSEWHERE THAN FROM THE GOVERNMENT PRINTING OFFICE, OR THAT SUCH PRINTING WAS "FOR THE EXCLUSIVE USE OF ANY FIELD SERVICE.'

AS TO THE PROCUREMENT OF THE ENVELOPES, ATTENTION IS INVITED TO THE MANDATORY TERMS OF THE ACT OF JUNE 26, 1906, 34 STAT. 476, WHICH PROVIDES:

* * * THE POSTMASTER GENERAL SHALL CONTRACT, FOR A PERIOD NOT EXCEEDING FOUR YEARS, FOR ALL ENVELOPES, STAMPED OR OTHERWISE, DESIGNED FOR SALE TO THE PUBLIC, OR FOR USE BY THE POST OFFICE DEPARTMENT, THE POSTAL SERVICE, AND OTHER EXECUTIVE DEPARTMENTS, AND ALL GOVERNMENT BUREAUS AND ESTABLISHMENTS, AND THE BRANCHES OF THE SERVICE COMING UNDER THEIR JURISDICTION, AND MAY CONTRACT TO THEM TO BE PLAIN OR WITH SUCH PRINTED MATTER AS MAY BE PRESCRIBED BY THE DEPARTMENT MAKING REQUISITION THEREFOR:

SEE IN THIS CONNECTION 14 COMP. GEN. 854; 15 ID. 266. ALSO, SEE THE ACT OF JUNE 7, 1924, 43 STAT. 592, AND 7 COMP. GEN. 712.

THE MISCELLANEOUS SUPPLIES FOR WHICH THE FEDERAL RESERVE BANK WAS REIMBURSED, ALTHOUGH FOR USE BY THE TREASURY DEPARTMENT, WERE PROCURED WITHOUT COMPLIANCE WITH THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES, WHICH PROVIDES:

ALL PURCHASES AND CONTRACTS FOR SUPPLIES OR SERVICES, IN ANY OF THE DEPARTMENTS OF THE GOVERNMENT, EXCEPT FOR PERSONAL SERVICES, SHALL BE MADE BY ADVERTISING A SUFFICIENT TIME PREVIOUSLY FOR PROPOSALS RESPECTING THE SAME, WHEN THE PUBLIC EXIGENCIES DO NOT REQUIRE THE IMMEDIATE DELIVERY OR PERFORMANCE IS REQUIRED BY THE PUBLIC EXIGENCY, THE ARTICLES OR SERVICE REQUIRED MAY BE PROCURED BY OPEN PURCHASE OR CONTRACT, AT THE PLACES AND IN THE MANNER IN WHICH SUCH ARTICLES ARE USUALLY BOUGHT AND SOLD, OR SUCH SERVICES ENGAGED, BETWEEN INDIVIDUALS.

WHILE THE PROVISIONS OF THIS SECTION ARE MADE INAPPLICABLE TO THE TREASURY DEPARTMENT BY ANNUAL APPROPRIATION ACTS WHEN THE AMOUNT OF THE PURCHASE DOES NOT EXCEED $50 (SEE, FOR EXAMPLE, 52 STAT. 123) THE MAJORITY OF THE PURCHASES HERE IN QUESTION FOR WHICH THE FEDERAL RESERVE BANK WAS REIMBURSED ARE IN EXCESS OF THE $50 LIMITATION AND ARE NOT SHOWN TO HAVE BEEN REQUIRED IMMEDIATELY BY ANY PUBLIC EXIGENCY.

IN SUPPORT OF THE PROCEDURE FOLLOWED WITH RESPECT TO THIS MATTER THERE HAS BEEN CITED THE ACT OF SEPTEMBER 24, 1917, 40 STAT. 288, AS EXTENDED AND AMENDED, AND THE AUTHORITY OF FEDERAL RESERVE BANKS TO ACT AS FISCAL AGENTS OF THE UNITED STATES (36 STAT. 265).

SECTION 10 OF THE SECOND LIBERTY BOND ACT OF SEPTEMBER 24, 1917, 40 STAT. 292, PROVIDES IN PERTINENT PART, AS FOLLOWS:

THAT IN ORDER TO PAY ALL NECESSARY EXPENSES, INCLUDING RENT, CONNECTED WITH ANY OPERATIONS UNDER THIS ACT, * * * A SUM NOT EXCEEDING ONE-FIFTH OF ONE PERCENTUM OF THE AMOUNT OF BONDS AND WAR SAVING CERTIFICATES AND ONE- TENTH OF ONE PERCENTUM OF THE AMOUNT OF CERTIFICATES OF INDEBTEDNESS HEREIN AUTHORIZED IS HEREBY APPROPRIATED, OR AS MUCH THEREOF AS MAY BE NECESSARY, OUT OF ANY MONEY IN THE TREASURY NOT OTHERWISE APPROPRIATED, TO BE EXPENDED AS THE SECRETARY OF THE TREASURY MAY DIRECT * * *.

THIS APPROPRIATION WAS EXTENDED BY THE ACT OF JUNE 16, 1921, 42 STAT. 36, AND MADE APPLICABLE TO "ANY OPERATIONS ARISING IN CONNECTION WITH ANY PUBLIC/DEBT ISSUES MADE SUBSEQUENTLY TO JUNE 30, 1921, PURSUANT TO THE AUTHORITY CONTAINED IN * * * THE SECOND LIBERTY BOND ACT, AS AMENDED AND SUPPLEMENTED. THE SECOND LIBERTY BOND ACT WAS FURTHER AMENDED BY THE ACT OF FEBRUARY 4, 1935, 49 STAT. 20, WHICH AUTHORIZED THE ISSUANCE OF "BABY" BONDS, THE SAID AMENDMENT PROVIDING UNDER SECTION 22 (D) THAT:

THE APPROPRIATION FOR EXPENSES PROVIDED BY SECTION 10 OF THIS ACT AND EXTENDED BY THE ACT OF JUNE 16, 1921 ( U.S.C., TITLE 31, SECS. 760 AND 761), SHALL BE AVAILABLE FOR ALL NECESSARY EXPENSES UNDER THIS SECTION; *

THAT THE " EXPENSES OF LOANS" APPROPRIATION IS AVAILABLE FOR ALL "NECESSARY EXPENSES" IN CONNECTION WITH THE ISSUE OF THE BONDS, INCLUDING NECESSARY ADVERTISING LITERATURE, SUPPLIES, ETC., AND THAT THE FEDERAL RESERVE BANKS MAY ACT AS FISCAL AGENTS OF THE UNITED STATES IS NOT QUESTIONED, THE OBJECTION BEING AS TO THE MANNER IN WHICH THE FUNDS ARE BEING EXPENDED, RATHER THAN TO THE PURPOSES FOR WHICH EXPENDED. THE AVAILABILITY OF A FUND FOR CERTAIN PURPOSES DOES NOT REMOVE STATUTORY REQUIREMENTS AS TO THE MANNER IN WHICH THE PURPOSES ARE TO BE ACCOMPLISHED. THE AUTHORITY CONFERRED UPON THE SECRETARY OF THE TREASURY BY THE ACT OF SEPTEMBER 24, 1917, AS EXTENDED AND AMENDED, TO USE THE APPROPRIATION FOR "ALL NECESSARY EXPENSES" AND TO SPEND THE FUNDS AS HE "MAY DIRECT" IS ADMITTEDLY BROAD BUT IT IS NONETHELESS GENERAL AND MAY NOT BE SO CONSTRUED AS TO MAKE INEFFECTIVE SPECIFIC AND MANDATORY RESTRICTIONS OF LAW RELATING TO THE PROCUREMENT OF PRINTING AND BINDING, ENVELOPES, ETC. IN THIS CONNECTION IT SHOULD BE NOTED, ALSO, THAT THE WORDS "AS THE SECRETARY OF THE TREASURY MAY DIRECT" ARE NOT CONTAINED IN THE AMENDMENT OF FEBRUARY 4, 1935, SUPRA, THE WORDING OF THE PROVISION BEING MERELY THAT THE APPROPRIATION IN QUESTION WAS TO BE AVAILABLE "FOR ALL NECESSARY EXPENSES.'

THIS OFFICE DOES NOT QUESTION THE AUTHORITY OF FEDERAL RESERVE BANKS TO ACT AS FISCAL AGENTS OF THE UNITED STATES, NOR DOES IT QUESTION YOUR AUTHORITY TO REIMBURSE THE BANKS THE NECESSARY EXPENSES THEY MAY INCUR IN ACTING AS SUCH AGENTS. HOWEVER, THE OBJECTIONABLE FEATURE IN CONNECTION WITH THE PRESENT MATTER IS THAT THE PRINTING AND BINDING, ENVELOPES, AND OTHER SUPPLIES HEREIN REFERRED TO WERE NOT PROCURED OR USED BY THE BANK AS A NECESSARY INCIDENT TO THE PERFORMANCE BY IT OF ANY AUTHORIZED DUTY AS SUCH FISCAL AGENT. THE TREASURY DEPARTMENT COULD NOT LEGALLY PROCURE THE SERVICES AND SUPPLIES HERE IN QUESTION RESULTS IN THE DOING INDIRECTLY THAT WHICH CANNOT BE DONE DIRECTLY. THE POWER TO DESIGNATE FEDERAL RESERVE BANKS AS FISCAL AGENTS WOULD SEEM TO CARRY NO SUCH AUTHORITY. VIEW OF ALL THE FACTS AND CIRCUMSTANCES APPEARING, OTHERWISE PROPER PAYMENTS FOR SUCH SUPPLIES AND SERVICES HERETOFORE PROCURED WILL NOT BE FURTHER QUESTIONED, BUT CREDIT WILL NOT BE ALLOWED FOR PAYMENTS FOR SUCH SUPPLIES OR SERVICES HEREAFTER PROCURED UNLESS SUCH PROCUREMENTS ARE MADE IN ACCORDANCE WITH THE STATUTORY REQUIREMENTS HEREIN REFERRED TO. ..END :