B-75414 May 7, 1948

B-75414 May 7, 1948

Administrator, Federal Security Agency

My Dear Mr. Ewing:

Reference is made to letter dated April 14, 198, from the Acting Administrator, Federal Security Agency, requesting a decision on two questions relating to the determination of the cost of construction of approved projects in which the United States is authorized to participate under title VI of the Public Health Service, 58 Stat. 682, as amended, by the Hospital Survey and Construction Act approved August 13, 1946 60 Stat. 1041, 42 U.S. Code 291-291 m.

The said letter points out that, under the above title of the set, the Federal Government participates to the extent of one-third in the cost of approved projects for the construction of hospitals and public health centers; that applications for Federal aid for projects pursuant to approved State plans are made by public and other non-profit agencies; and that, under section 625(a), if an application meets the requirements of the act, the Surgeon General is required to approve it "if sufficient funds to pay 33-1/3 per centum of the cost of construction of such project are available from the allotment to the State." It is pointed out further that, upon approval of the applications, the Surgeon General certifies to the Secretary of the Treasury one-third of the estimated cost of construction as the Federal share and that payment of such amount is made in installments as the work progresses. Also, there are quoted in the letter the definition of the terms "construction" and "cost of construction" as contained in section 631 (h) and (i) 60 Stat. 1047 as follows:

"(h) the term 'construction' includes construction of new buildings, expansion, remodeling, and alteration of existing buildings, and initial equipment of any such buildings; including architects' fees, but excluding the cost of off-site improvements and, except with respect to public health centers, the cost of the acquisition of land; and

"(1) the term 'cost of construction' means the amount found by the Surgeon General to be necessary for the construction of a project."

It is stated in the letter that, in the usual case, the project applications had been for construction of an entire facility and that the position has been taken generally that the cost of construction in which Federal participation is authorized includes only costs incurred after the date of application, but that architect fees and, in the case of public health centers, the cost of acquisition of the site, have been included in determining the cost of construction in which the Federal Government will participate even though such items of cost ordinarily will have been incurred prior to the submission of an application. As reasons for the latter action there are cited the fact that the referred to items are specifically included in the definition of a "construction" in section 631(h) of the act and the fact that they will almost necessarily have been incurred prior to the submission of an application because section 625(a) requires that the application include plans and specifications, a site description, and assurances as to title in the applicant. However, it is stated further that some communities acquired sites for public health centers prior to August 13, 1946, the date the Hospital Survey and Construction Act became law, and a decision is requested as to whether, in determining the cost of construction to which the Federal Government is authorized to contribute, the Surgeon General may include architect fees and, in the case of public health centers, the cost of the site, incurred prior to passage of the act or whether amounts included on account of architect fees and cost of the site of public health centers must be limited to costs incurred subsequent to August 13, 1946. In connection therewith, the letter indicates that your Agency has excluded the purchase price of sites acquired prior to said date in estimating the cost of construction in which the Federal Government will participate.

The general rule is that statues take effect at the date of their passage and are to be applied prospectively and not retrospectively unless a retroactive construction is required and not Unless a retroactive construction is required by express language or necessary implication, 7 Comp. Gen. 266; 16 id. 1051; 20 id. 769; 22 id. 704; United States v. St. Louis Railway Company, 270 U.S. 1. There is nothing in the Hospital Survey and Construction Act specifically requiring that, in determining the costs of construction to be participated in by the Federal Government, there are to be included architect fees or costs of procuring sites for health centers incurred prior to passage of the act; nor is such a construction required by necessary implication. The purpose of the act- set forth in section 601 60 Stat. 1041 thereof-is to assist the States in the surveying of the need for construction of public and non-profit hospitals, developing progress for their construction and constructing such hospitals pursuant to the programs. Section 625 (a) of the act provides as follows:

"Sec. 625. (a) For each project for construction pursuant to a State plan approved under this part, there shall be submitted to the Surgeon General through the State agency an application by the State or a political subdivision thereof or by a public or other nonprofit agency. Such application shall set forth (1) a description of the site for such project, (2) plans and specifications therefor in accordance with the regulations prescribed by the Surgeon General under section 622(e), (3) reasonable assurance that title to such site is or will be bested solely in the applicant, (4) reasonable assurance that adequate financial support will be available for the construction of the project and for its maintenance and operation when completed, and (5) reasonable assurance that the rates of pay for laborers and mechanics engaged in construction of the project will be not less than the prevailing local wage rates for similar work as determined in accordance with Public Law 403 of the Seventy-fourth Congress, approved August 30, 1935, as amended. The Surgeon General shall approve such application if sufficient funds to pay 33-1/3 per centum of the cost of construction of such project are available from the allotment to the State, and if the Surgeon General finds (A) that the application contains such reasonable assurance as to title, financial support, and payment of prevailing rates of wages, (B) that the plans and specifications are in accord with the regulations prescribed pursuant to section 622 (f) regarding the provision of facilities without discrimination on account of race, creed, or color, and for furnishing needed hospital facilities for persons unable to pay therefor, and an assurance that the applicant will conform to State standards for operation and maintenance, and (D) that it has been approved and recommended by the State agency and is entitled to priority over other projects within the State in accordance with the regulations prescribed pursuant to section 622 (d). * * *"

Section 622(e) of the act provides for the promulgation within six months of passage of the act of general regulations prescribing-"General standards of construction and equipment for hospitals of different classes and in different types of locations" and section 633 60 Stat. 1048 authorizes administrative regulations generally to carry out the provisions of the Hospital Survey and Construction Act.

Therefore, since the act provides that each project is to be constructed pursuant to a State plan which was not formulated at the time of its passage, that each application was to set forth plans and specifications in accordance with regulations not then promulgated, and contain certain specified assurances, it is clear that the act was intended to operate prospectively and was not to have any retroactive effect. Accordingly, the reported administrative construction of the act as described above appears to be correct and you are advised that, in determining the cost of construction to which the Federal Government will contribute, the Surgeon General is limited to such items of costs as are incurred subsequent to approval of the act on August 13, 1946.

With reference to the second question presented the letter states that applications have been received for Federal funds to complete facilities on which construction has already begun and that, where otherwise proper, in view of the referred-to definition of "construction" in section 631(h) of the act as including "expansion, remodeling, and alteration of existing buildings," the applications have been approved, it being administratively considered that the completion of the facility is the project for which Federal aid is granted and that retroactive participation in the cost of construction prior to the date of application is not authorized. However, it is stated further that an inquiry has been received from a community in Colorado seeking Federal aid under the act for construction of a hospital, and that it appears such application, when filed, will likely be approvable in all respects except that the State's allotment for the current fiscal year will have been exhausted by projects of higher priority. As the applicant is anxious to commence construction prior to the beginning of the next fiscal year so that the shell and roof of the building may be completed before cold weather stops outside construction, and since approval of the project application can probably be given on July 1, 1948, it is proposed that its application be filed at this time, that construction be commenced at an early date, and that approval be given on July 1, 1948 -if all conditions of the act have been met -- as to all costs including those incurred between date of application and the date of approval. Decision is requested as to whether, whom construction is begun after submittal of an application which meets all the requirements of the act but which, because of exhaustion of the current State allotment, cannot be approved until allotments are made for the succeeding fiscal year, the Surgeon General, upon approval of the project, may include in the estimated cost of construction the entire cost of the facility.

With respect to said question, title 32 U.S. Code, section 665, provides, in part, as follows:

"No executive department or other Government establishment of the United States shall expand, in any one fiscal year, any sum in excess of appropriations made by Congress for that fiscal year, or involve the Government in any excess of such appropriations unless such contract or obligation is authorized by law. * * *"

Also, section 625(a) of the act of August 13, 1946, quoted above, precludes the Surgeon General from approving any application if sufficient funds to pay 33-1/3 percent of the cost of construction of the project is not available from the State's allotment for construction. It is clear that, under these sections of law, no approval may be given during the current fiscal year to any further application for Federal aid in the costs of construction of projects where the State's allotment of funds or its quota of the authorized contract authority for that year is exhausted, not may any official involve the Government in any obligation to pay any sum therefor in the future in the absence of express authority. However, should the Surgeon General, in the succeeding fiscal year, approve such an application previously received-and considering the administrative statement that participation in the entire cost of construction under such circumstances is entirely consistent with the purpose of the act in furnishing assistance in the construction of hospitals in accordance with approved State plans-there appears to be no reason why he may not include in the estimated cost of construction the entire cost of the facility incurred subsequent to receipt of the application.

Respectfully,

Comptroller General Of the United States.