B-124786, JAN. 18, 1956

B-124786, JAN. 18, 1956

TO BRIGADIER GENERAL JOHN S. SEYBOLD, GOVERNOR OF THE CANAL ZONE:

REFERENCE IS MADE TO YOUR LETTER OF JULY 18, 1955 REQUESTING A DECISION AS TO WHETHER SECTION 107 OF THE CIVIL FUNCTIONS APPROPRIATION ACT, 1955, 68 STAT. 335, REQUIRES THE DEPARTMENT OF DEFENSE TO REIMBURSE THE CANAL ZONE GOVERNMENT FOR EXPENSES INCURRED IN FURNISHING KINDERGARTEN AND JUNIOR COLLEGE EDUCATIONAL SERVICES TO DEPENDENTS OF DEFENSE DEPARTMENT PERSONNEL IN EXCESS OF THE CHARGES ASSESSED SUCH PERSONNEL. A DECISION ALSO IS REQUESTED AS TO WHETHER NON-APPROPRIATED FUND ACTIVITIES OF THE DEPARTMENT ARE REQUIRED TO REIMBURSE THE CANAL ZONE GOVERNMENT FOR MEDICAL, HOSPITAL AND EDUCATIONAL SERVICES FURNISHED EMPLOYEES OF SUCH ACTIVITIES AND DEPENDENTS OF SUCH EMPLOYEES.

BY LETTER OF DECEMBER 19, 1955, COPY ATTACHED, THE ASSISTANT SECRETARY OF DEFENSE ADVISED THAT THE MILITARY DEPARTMENTS ARE IMPLEMENTING A MEMORANDUM DATED JULY 8, 1955, COPY ALSO ATTACHED, IN WHICH THE ASSISTANT GENERAL COUNSEL (FISCAL MATTERS) OF THE DEPARTMENT OF DEFENSE EXPRESSED THE VIEW THAT "AMOUNTS EXPENDED BY THE CANAL ZONE GOVERNMENT IN ACCOMMODATING THE KINDERGARTEN AND COLLEGE EDUCATION OF DEPENDENTS OF EMPLOYEES OF THE DEPARTMENT OF DEFENSE IN THE CANAL ZONE, TO THE EXTENT THAT SUCH AMOUNTS ARE NOT RECOVERED FROM THE EMPLOYEE BY WAY OF A REASONABLE CHARGE, SHALL BE REIMBURSABLE FROM APPROPRIATIONS OR FUNDS OF THE DEPARTMENT OF DEFENSE AVAILABLE FOR BEARING THE COST OF THE COMPENSATION OF THE EMPLOYEES CONCERNED.' THEREFORE, IT IS ASSUMED THAT THE CANAL ZONE GOVERNMENT WILL ENCOUNTER NO FURTHER DIFFICULTY IN OBTAINING REIMBURSEMENT FROM MILITARY DEPARTMENTS FOR UNRECOVERED COSTS OF FURNISHING KINDERGARTEN AND JUNIOR COLLEGE EDUCATIONAL SERVICES TO DEPENDENTS OF EMPLOYEES OF SUCH DEPARTMENTS.

AS TO NON-APPROPRIATED FUND ACTIVITIES, IT IS NOTED THAT SECTION 107 OF THE CIVIL FUNCTIONS APPROPRIATION ACT, 1955, 68 STAT. 330, 335 PROVIDES, INSOFAR AS PERTINENT, THAT:

"* * * AMOUNTS EXPENDED BY THE CANAL ZONE GOVERNMENT FOR FURNISHING EDUCATION, AND HOSPITAL AND MEDICAL CARE TO EMPLOYEES OF AGENCIES OF THE UNITED STATES AND THEIR DEPENDENTS, OTHER THAN THE PANAMA CANAL COMPANY AND CANAL ZONE GOVERNMENT, LESS AMOUNTS PAYABLE BY SUCH EMPLOYEES AND THEIR DEPENDENTS HEREAFTER SHALL, NOTWITHSTANDING ANY OTHER PROVISION OF LAW, BE FULLY REIMBURSABLE TO THE CANAL ZONE GOVERNMENT BY SUCH AGENCIES. THE APPROPRIATION OR FUND OF ANY SUCH OTHER AGENCY BEARING THE COST OF THE COMPENSATION OF THE EMPLOYEE CONCERNED IS HEREBY MADE AVAILABLE FOR SUCH REIMBURSEMENTS.'

IT CONSISTENTLY HAS BEEN HELD THAT FOR THE PURPOSE OF APPLYING VARIOUS STATUTES NON-APPROPRIATED FUND ACTIVITIES SUCH AS POST EXCHANGES ARE AGENCIES OR INSTRUMENTALITIES OF THE FEDERAL GOVERNMENT. SEE 24 COMP. GEN. 771, 33 ID. 302 AND THE AUTHORITIES THERE CITED. MOREOVER, THE PLAIN LANGUAGE OF THE STATUTE APPEARS TO REQUIRE REIMBURSEMENT FROM THE APPROPRIATION OR FUND OF ANY GOVERNMENT AGENCY, WHETHER FINANCED BY APPROPRIATIONS OR THROUGH COMMERCIAL-TYPE OPERATION, FOR SERVICES FURNISHED TO THE EMPLOYEES OF SUCH AGENCY OR THEIR DEPENDENTS. THAT COMPREHENSIVE APPLICATION OF THE SECTION WAS INTENDED SEEMS CLEAR FROM THE LANGUAGE OF HOUSE REPORT 450, 83RD CONGRESS, WHICH COMMENTED ON THE PROVISIONS OF SECTION 105 OF THE CIVIL FUNCTIONS APPROPRIATIONS ACT, 1954, AS FOLLOWS:

"THE COMMITTEE IS ALARMED AT THE EXTENT OF SUBSIDIZATION FURNISHED BY THE COMPANY TO OTHER GOVERNMENT AGENCIES IN THE CANAL ZONE. THIS IS ESPECIALLY TRUE AS IT APPLIES TO THE DEPARTMENT OF DEFENSE. THE EXTENT OF THIS SUBSIDY AS IT APPLIES TO CANAL ZONE HOSPITALS IS SHOWN BY THE FOLLOWING TABLE:

TABLE

CANAL ZONE GOVERNMENT HOSPITALS

1952 1953 1954

SUBSIDY $391,600 $416,000 $333,300

"OTHER ESTIMATED ANNUAL AMOUNTS INVOLVED INCLUDE MAINTENANCE OF DEFENSE FACILITIES, $200,000 AND UNREIMBURSED SCHOOL COST $250,000.

"THESE ITEMS ARE NOT PROPERLY CHARGEABLE AGAINST THE REVENUES OF THE COMPANY, RATHER THEY SHOULD BE BORNE IN THEIR ENTIRETY BY THE USING AGENCIES. THE COMMITTEE HAS INCLUDED LANGUAGE IN THE ACCOMPANYING BILL WHICH ELIMINATES THIS "HAND OUT" AND PROVIDES THAT SUCH ACTIVITIES SHALL BE FULLY REIMBURSABLE.'

IN THE LIGHT OF SUCH LANGUAGE, WE FIND IT DIFFICULT TO BELIEVE THAT THE CONGRESS COULD HAVE INTENDED TO END THE SUBSIDIZATION IN THE CASE OF ACTIVITIES SUPPORTED BY APPROPRIATIONS, BUT TO CONTINUE IT IN THE CASE OF COMMERCIAL TYPE INSTRUMENTALITIES OR NON-APPROPRIATED FUND ACTIVITIES. RATHER, IT APPEARS TO HAVE BEEN THE INTENT OF CONGRESS THAT THE CANAL ZONE GOVERNMENT SHOULD NOT ABSORB ANY PART OF THE COST OF PROVIDING EDUCATION AND MEDICAL AND HOSPITAL SERVICES TO INDIVIDUALS WHOSE PRESENCE IN THE CANAL ZONE RESULTS FROM SERVICE IN OR EMPLOYMENT BY OTHER GOVERNMENT AGENCIES OR INSTRUMENTALITIES. OBVIOUSLY, THE PRESENCE IN THE CANAL ZONE OF EMPLOYEES OF NON APPROPRIATED FUND ACTIVITIES IS DIRECTLY ATTRIBUTABLE TO OTHER ACTIVITIES OF THE DEPARTMENT OF DEFENSE. WE ARE REQUIRED TO CONCLUDE THAT SECTION 107 REQUIRES ALL GOVERNMENT INSTRUMENTALITIES INCLUDING NON-APPROPRIATED FUND ACTIVITIES, TO REIMBURSE THE CANAL ZONE GOVERNMENT FOR THAT PORTION OF THE COST OF FURNISHING THE INDICATED SERVICES TO EMPLOYEES OF SUCH INSTRUMENTALITIES AND THE DEPENDENTS OF SUCH EMPLOYEES WHICH IS NOT RECOVERED THROUGH ASSESSMENT OF CHARGES TO THE EMPLOYEES THEMSELVES.

BY LETTER OF SEPTEMBER 14, 1955, YOU SUBMITTED A FURTHER INQUIRY AS TO THE PROCEDURE TO BE FOLLOWED IN SECURING REIMBURSEMENT FOR EDUCATIONAL AND HOSPITAL BENEFITS FURNISHED RETIRED PERSONNEL LIVING ON MILITARY RESERVATIONS IN THE CANAL ZONE AND THE DEPENDENTS OF SUCH PERSONNEL. REQUESTED THE DEFENSE DEPARTMENT TO FURNISH CERTAIN INFORMATION IN THE MATTER, BUT NO COMMENT HAS YET BEEN RECEIVED. WE WILL ADVISE YOU FURTHER IN SUCH MATTER UPON RECEIPT OF THE REQUESTED REPORT.