A-21596, MARCH 3, 1928, 7 COMP. GEN. 541

A-21596: Mar 3, 1928

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UNLESS THEIR CREATION SHALL HAVE BEEN AUTHORIZED BY LAW. THE PAYMENT OF EXPENSES OF BOARDS OF ARBITRATORS APPOINTED UNDER A CONTRACT PROVISION AUTHORIZING SAME IS NOT AUTHORIZED TO BE MADE. THERE IS NO AUTHORITY FOR INSERTING IN SUCH CONTRACTS A PROVISION PURPORTING TO VEST IN AN ARBITRATION BOARD THE AUTHORITY TO ADJUST SUCH CLAIMS. 1928: THERE HAVE BEEN CALLED TO MY ATTENTION LEASE AGREEMENTS W-ORD-15 AND W-QM -381. AS TO WHETHER THE PLANTS AND FACILITIES ARE DELIVERED BACK TO THE UNITED STATES IN LIKE GOOD ORDER AND CONDITION AS WHEN RECEIVED. THE PARAGRAPHS IN THE LEASES TO WHICH REFERENCE IS MADE PROVIDE THAT QUESTIONS OF THE CHARACTER MENTIONED AND DISPUTES UPON OTHER QUESTIONS OF FACT CONCERNING OR ARISING OUT OF THE LEASES.

A-21596, MARCH 3, 1928, 7 COMP. GEN. 541

CONTRACTS - DISPUTES - BOARDS OF ARBITRATORS UNDER SECTION 3681, REVISED STATUTES, AND SECTION 9 OF THE ACT OF MARCH 4, 1909, 35 STAT. 1027, PROHIBITING THE PAYMENT OF EXPENSES OF ANY COMMISSION, COUNCIL, BOARD, OR OTHER SIMILAR BODY TO DETERMINE MATTERS ARISING UNDER CONTRACTS, ETC., UNLESS THEIR CREATION SHALL HAVE BEEN AUTHORIZED BY LAW, THE PAYMENT OF EXPENSES OF BOARDS OF ARBITRATORS APPOINTED UNDER A CONTRACT PROVISION AUTHORIZING SAME IS NOT AUTHORIZED TO BE MADE, IN THE ABSENCE OF STATUTORY AUTHORITY THEREFOR. OTHER PROVISION HAVING BEEN MADE BY LAW FOR THE ADJUSTMENT OF CLAIMS ARISING UNDER GOVERNMENT CONTRACTS, THERE IS NO AUTHORITY FOR INSERTING IN SUCH CONTRACTS A PROVISION PURPORTING TO VEST IN AN ARBITRATION BOARD THE AUTHORITY TO ADJUST SUCH CLAIMS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, MARCH 3, 1928:

THERE HAVE BEEN CALLED TO MY ATTENTION LEASE AGREEMENTS W-ORD-15 AND W-QM -381, DATED JULY 21, 1927, AND NOVEMBER 23, 1927, RESPECTIVELY, COVERING THE LEASING BY YOU TO THE ALABAMA POWER CO. OF A SUBSTATION LOCATED AT WACO QUARRY, NEAR RUSSELLVILLE, ALA., AND A STEAM POWER GENERATING PLANT LOCATED AT MUSCLE SHOALS, ALA., TOGETHER WITH OTHER FACILITIES AND EQUIPMENT CONNECTED THEREWITH, THE MATTER IN QUESTION BEING, PRIMARILY, THE PROVISIONS IN SAID AGREEMENTS FOR THE APPOINTMENT OF BOARDS OF ARBITRATORS TO DETERMINE MATTERS PERTAINING TO ANY QUESTIONS THAT MAY ARISE UPON TERMINATION OF THE LEASES, AS TO WHETHER THE PLANTS AND FACILITIES ARE DELIVERED BACK TO THE UNITED STATES IN LIKE GOOD ORDER AND CONDITION AS WHEN RECEIVED, ORDINARY WEAR AND TEAR AND THE ACTS OF GOD ONLY EXCEPTED, ETC.

THE PARAGRAPHS IN THE LEASES TO WHICH REFERENCE IS MADE PROVIDE THAT QUESTIONS OF THE CHARACTER MENTIONED AND DISPUTES UPON OTHER QUESTIONS OF FACT CONCERNING OR ARISING OUT OF THE LEASES, OR AS TO PERFORMANCE OR NONPERFORMANCE, AND WHICH ARE NOT DISPOSED OF BY MUTUAL AGREEMENT, SHALL BE SUBMITTED TO A BOARD OF THREE ARBITRATORS, ONE OF WHOM TO BE CHOSEN BY THE SECRETARY OF WAR, ONE BY THE POWER COMPANY, AND THE THIRD BY THE TWO SO DESIGNATED, OR, IF THE TWO DESIGNATED ARBITRATORS ARE UNABLE TO AGREE, BY THE ASSOCIATE JUSTICE OF THE SUPREME COURT OF THE FIFTH CIRCUIT ON APPLICATION BY EITHER PARTY, PROVISION ALSO BEING MADE FOR EQUAL PAYMENTS BY THE GOVERNMENT AND THE LESSEE COMPANY OF EXPENSES OF THE BOARDS IF AND WHEN APPOINTED.

WITH REFERENCE TO PAYMENT OF THE EXPENSES OF SUCH BOARDS AS ARE CONTEMPLATED UNDER THESE LEASES, ATTENTION IS INVITED TO SECTION 3681, REVISED STATUTES, PROVIDING THAT NO ACCOUNTING OR DISBURSING OFFICER OF THE GOVERNMENT SHALL ALLOW OR PAY ANY ACCOUNT OR CHARGE WHATEVER GROWING OUT OF OR IN ANY WAY CONNECTED WITH ANY COMMISSION OR INQUIRY, EXCEPT COURTS-MARTIAL OR COURTS OF INQUIRY IN THE MILITARY OR NAVAL SERVICES, UNTIL SPECIAL APPROPRIATIONS SHALL HAVE BEEN MADE BY LAW TO PAY SUCH ACCOUNTS AND CHARGES, AND TO SECTION 9 OF THE ACT OF MARCH 4,1909, 35 STAT. 1027, PROHIBITING THE PAYMENT OF COMPENSATION OR EXPENSES OF ANY COMMISSION, COUNCIL, BOARD, OR OTHER SIMILAR BODY, OR ANY MEMBERS THEREOF, OR FOR EXPENSES IN CONNECTION WITH ANY WORK OR THE RESULTS OF ANY WORK OR ACTION OF ANY COMMISSION, COUNCIL, BOARD, OR OTHER SIMILAR BODY UNLESS THEIR CREATION SHALL HAVE BEEN AUTHORIZED BY LAW. THE LAST-MENTIONED PROVISION OF LAW ALSO PROHIBITS THE DETAILING OF EMPLOYEES IN THE GOVERNMENT SERVICE IN CONNECTION WITH ANY SUCH COMMISSION, COUNCIL, BOARD, OR SIMILAR BODY.

FURTHERMORE, PROVISION HAVING BEEN MADE BY LAW FOR THE ADJUSTMENT OF CLAIMS THAT MAY ARISE UNDER GOVERNMENT CONTRACTS, THERE IS NO POWER OR AUTHORITY IN ANY ADMINISTRATIVE OR CONTRACTING OFFICER OF THE GOVERNMENT, BY MEANS OF A PROVISION IN A CONTRACT, TO ESTABLISH OR PROVIDE FOR A DIFFERENT PROCEDURE FOR THE ADJUSTMENT OF SUCH CLAIMS.

THE PAYMENT OF EXPENSES OF BOARDS SIMILAR TO THE ONES PROVIDED FOR IN THESE LEASES HAS BEEN HELD BY FORMER COMPTROLLERS OF THE TREASURY AND BY THIS OFFICE TO BE UNAUTHORIZED AND IN CONTRAVENTION OF THE PROVISIONS OF THE ABOVE-MENTIONED STATUTES. SEE IN THIS CONNECTION 16 COMP. DEC. 282, 423; 20 ID. 643; 5 COMP. GEN. 231, 417, 553; 6 ID. 140.

TO THE EXTENT, THEREFORE, THAT THE LEASES HERE IN QUESTION PURPORT TO AUTHORIZE THE APPOINTMENT OF BOARDS OF ARBITRATORS TO SETTLE MATTERS OF DISPUTES ARISING UNDER THE LEASES AND FOR THE PART PAYMENT OF EXPENSES OF SUCH BOARDS, IT MUST BE HELD THAT THEY ARE IN CONTRAVENTION OF LAW.