A-48741, MAY 17, 1933, 12 COMP. GEN. 646

A-48741: May 17, 1933

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WHEN THE FEDERAL GOVERNMENT PERFORMS WORK FOR A STATE OR PRIVATE AGENCY AND IS AUTHORIZED BY LAW. THERE IS NO AUTHORITY UNDER THE ACT OF MARCH 20. AS FOLLOWS: YOUR DECISION IS REQUESTED OF THE QUESTIONS RAISED BY THE GOVERNOR OF THE PANAMA CANAL IN A RADIOGRAM. IT IS CONCLUDED THAT AFTER APRIL 1ST IT IS ONLY THE 15 PERCENT REDUCTION IN SALARIES ULTIMATELY CHARGEABLE TO APPROPRIATION MADE BY CONGRESS THAT IS TO BE IMPOUNDED AND THAT IN ALL CASES WHERE THE SALARIES ARE CHARGED TO INTERESTS OTHER THAN THOSE SUPPORTED BY DIRECT APPROPRIATIONS BY CONGRESS THE AMOUNT SO CHARGED WILL BE THE NET SALARIES AND WAGES PAID. VARIOUS PRIVATE INTERESTS WILL INCLUDE ONLY THE NET SALARIES OF WAGES PAID AND THE 15 PERCENT DEDUCTION FROM SUCH SALARIES AND WAGES WILL BE EXEMPTED FROM IMPOUNDING.

A-48741, MAY 17, 1933, 12 COMP. GEN. 646

ECONOMY ACT, AMENDED - COOPERATIVE WORK WHERE A STATE OR PRIVATE AGENCY UNDER A COOPERATIVE ARRANGEMENT PAYS THE WHOLE OR ANY PART OF THE SALARY OF EMPLOYEES OF THE FEDERAL GOVERNMENT, THE 15 PERCENT OR OTHER DETERMINED DEDUCTION ON THE PORTION OF THE SALARIES DIRECTLY CHARGED TO THE FUNDS OF SUCH STATE OR PRIVATE AGENCY INURES TO THE BENEFIT OF SAID STATE OR PRIVATE AGENCY, AND THERE WOULD BE NO IMPOUNDING REQUIRED. WHEN THE FEDERAL GOVERNMENT PERFORMS WORK FOR A STATE OR PRIVATE AGENCY AND IS AUTHORIZED BY LAW, OR CONTRACT ENTERED INTO PURSUANT TO LAW, TO BE REIMBURSED ON A COST OR COST-PLUS BASIS, WITH NO DIRECT CONNECTION OR RELATIONSHIP BETWEEN THE STATE OR PRIVATE AGENCY AND THE FEDERAL PERSONNEL, THERE IS NO AUTHORITY UNDER THE ACT OF MARCH 20, 1933, 48 STAT. 13, TO REDUCE THE CHARGES OR FEES PREVIOUSLY IMPOSED ON THE STATE OR PRIVATE AGENCY FOR THE WORK OR SERVICES PERFORMED BY THE FEDERAL GOVERNMENT BY THE AMOUNT OF THE 15 PERCENT DEDUCTED AND IMPOUNDED ON THE SALARIES OF FEDERAL PERSONNEL WHO MAY BE ENGAGED ON THE WORK.

COMPTROLLER GENERAL MCCARL TO THE GOVERNOR OF THE PANAMA CANAL, MAY 17, 1933:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF APRIL 28, 1933, AS FOLLOWS:

YOUR DECISION IS REQUESTED OF THE QUESTIONS RAISED BY THE GOVERNOR OF THE PANAMA CANAL IN A RADIOGRAM, DATED APRIL 27, 1933, RECEIVED BY THIS OFFICE FROM HIM, AS FOLLOWS:

"FROM THE COMPTROLLER GENERAL'S DECISION A-48262 ADDRESSED TO SECRETARY OF TREASURY ON APRIL 7TH, 1933, IT IS CONCLUDED THAT AFTER APRIL 1ST IT IS ONLY THE 15 PERCENT REDUCTION IN SALARIES ULTIMATELY CHARGEABLE TO APPROPRIATION MADE BY CONGRESS THAT IS TO BE IMPOUNDED AND THAT IN ALL CASES WHERE THE SALARIES ARE CHARGED TO INTERESTS OTHER THAN THOSE SUPPORTED BY DIRECT APPROPRIATIONS BY CONGRESS THE AMOUNT SO CHARGED WILL BE THE NET SALARIES AND WAGES PAID. ON THIS BASIS OUR CHARGES, COMPUTED ON COST, AGAINST COMMERCIAL SHIPPING, PANAMA GOVERNMENT, PANAMA RAILROAD COMPANY, AND VARIOUS PRIVATE INTERESTS WILL INCLUDE ONLY THE NET SALARIES OF WAGES PAID AND THE 15 PERCENT DEDUCTION FROM SUCH SALARIES AND WAGES WILL BE EXEMPTED FROM IMPOUNDING.

"ASCERTAIN FROM COMPTROLLER GENERAL WHETHER THIS UNDERSTANDING IS CORRECT AND HOW THE EXEMPTION FROM IMPOUNDING SHOULD BE SHOWN ON REPORTS TO HIM. ALSO CERTAIN ACTIVITIES OF THE CANAL ARE SET UP AS BUSINESS DIVISIONS SUCH AS MECHANICAL DIVISION, FOR WHICH NO APPROPRIATIONS ARE REQUESTED OF OR MADE BY CONGRESS. APPARENTLY NO PART OF THE SALARIES OR WAGES OF EMPLOYEES OF THESE BUSINESS DIVISIONS SHOULD BE IMPOUNDED. IT IS SUGGESTED THAT THESE QUESTIONS BE SUBMITTED TO COMPTROLLER GENERAL WITH SUCH EXPLANATION AS SEEMS NECESSARY FOR AN EARLY DECISION.'

A VERY CONSIDERABLE PART OF THE GROSS EXPENDITURES MADE BY THE PANAMA CANAL ARE REIMBURSED BY CHARGES MADE AGAINST THE PANAMA RAILROAD COMPANY, EMPLOYEES OF THE PANAMA CANAL AND THE PANAMA RAILROAD COMPANY, AND AGAINST OUTSIDE INTERESTS FOR FURNISHING SUPPLIES, FOR THE REPAIR OF VESSELS, AND FOR RENDERING OTHER SERVICES.

IN VIEW OF THE PROVISIONS OF TITLE II OF THE ACT OF MARCH 20, 1933, YOUR DECISION OF APRIL 7, 1933, TO THE SECRETARY OF THE TREASURY (A 48262) CITED BY THE GOVERNOR, AND YOUR DECISION OF APRIL 11, 1933 (A 48294) TO THE SECRETARY OF LABOR, IT APPEARS PROPER THAT THE CHARGES AGAINST ALL SUCH INTERESTS SHOULD BE BASED UPON THE ACTUAL COST TO THE PANAMA CANAL, EXCLUDING FROM SUCH COST THE 15 PERCENT REDUCTION IN COMPENSATION TO EMPLOYEES REQUIRED UNDER THE PROVISIONS OF THE ACT OF MARCH 20, 1933.

IT WOULD NECESSARILY SEEM TO FOLLOW THAT THE AMOUNT BY WHICH THE COMPENSATION OF EMPLOYEES IS REDUCED DURING PERIODS THEY ARE BEING COMPENSATED OUT OF FUNDS DERIVED FROM OTHER SOURCES AND DIRECT APPROPRIATIONS FOR THE PANAMA CANAL SHOULD NOT BE IMPOUNDED AND REQUIRED TO BE DEPOSITED IN THE TREASURY, AS ANY SUCH IMPOUNDING WOULD BE FROM FUNDS APPROPRIATED AND AVAILABLE FOR OTHER PURPOSES.

THERE APPEAR TO BE TWO CLASSES OF EMPLOYEES WHOSE COMPENSATION IS REDUCED 15 PERCENT UNDER THE PROVISIONS OF THE ACT OF MARCH 20, 1933, THE COMPENSATION PAID TO WHOM, IN WHOLE OR IN PART, IS REIMBURSED FROM FUNDS RECEIVED FROM OTHER SOURCES THAN DIRECT PANAMA CANAL APPROPRIATIONS. THESE ARE---

1. EMPLOYEES OF THE VARIOUS BUSINESS DIVISIONS THE ENTIRE EXPENSE OF WHICH IS PAID OUT OF REVENUES RECEIVED.

2. EMPLOYEES OF CERTAIN OTHER DIVISIONS

(A) WHO ARE ENGAGED ALL OF THEIR TIME UPON WORK FOR WHICH THE PANAMA CANAL IS REIMBURSED, OR

(B) WHO ARE ENGAGED IN PART TIME ONLY ON WORK FOR WHICH THE PANAMA CANAL IS REIMBURSED.

IT APPEARS THAT THE AMOUNTS PAID TO EMPLOYEES FOR WORK PERFORMED FOR WHICH THE PANAMA CANAL IS REIMBURSED BY OUTSIDE INTERESTS ARE EXEMPT FROM IMPOUNDMENT, BUT IT IS NOT CLEAR AS TO THE METHODS WHICH SHOULD BE USED IN REPORTING SUCH AMOUNTS WHICH ARE EXEMPT FROM IMPOUNDMENT.

IT IS THEREFORE REQUESTED THAT YOU ADVISE WHETHER IT WILL BE SATISFACTORY, IN MAKING REPORTS OF AMOUNTS TO BE IMPOUNDED, TO ELIMINATE ENTIRELY THE AMOUNT OF THE REDUCTION OF COMPENSATION APPLICABLE TO PAY ROLLS OF EMPLOYEES OF THE BUSINESS DIVISIONS, AND TO DEDUCT FROM THE TOTAL OF THE REDUCTION IN COMPENSATION SHOWN ON PAY ROLLS OF EMPLOYEES OF OTHER DIVISIONS THE PROPORTION APPLICABLE TO WORK DONE FOR WHICH THERE IS REIMBURSEMENT THUS REPORTING FOR IMPOUNDMENT THE EXACT AMOUNT SAVED TO PANAMA CANAL APPROPRIATIONS BY REASON OF THE 15 PERCENT REDUCTION IN THE COMPENSATION OF EMPLOYEES.

YOUR EARLY DECISION WILL BE APPRECIATED.

IN DECISION OF AUGUST 5, 1932, 12 COMP. GEN. 182, IT WAS HELD AS FOLLOWS (QUOTING FROM THE SYLLABUS):

THE CHARGES TO BE MADE TO OTHER GOVERNMENT SERVICES OR OUTSIDE AGENCIES AS THE COST OF REPAY WORK IS THE GROSS AMOUNT TO BE CHARGED AGAINST THE APPROPRIATION OF THE SERVICE PERFORMING THE WORK FOR THE COMPENSATION OF THE EMPLOYEES INCLUDING THE AMOUNT IMPOUNDED UNDER THE ECONOMY ACT.

IN DECISION OF AUGUST 31, 1932, 12 COMP. GEN. 312, IT WAS HELD AS FOLLOWS (QUOTING FROM THE SYLLABUS):

THE COST OF A PROJECT IN A NATIONAL FOREST TOWARD WHICH DONATIONS OR CONTRIBUTIONS FROM PRIVATE INTERESTS ARE MADE INCLUDES THE AMOUNT OF THE SALARY OF FEDERAL EMPLOYEES ENGAGED IN CONNECTION THEREWITH REQUIRED TO BE DEDUCTED AND IMPOUNDED, AND UNDER STATUTES AUTHORIZING REFUND OF DONATIONS OR CONTRIBUTIONS IN EXCESS OF THE COST OF THE PROJECT THERE IS AUTHORIZED TO BE REFUNDED TO THE DONORS OR CONTRIBUTORS NO PART OF THE SALARY OF FEDERAL EMPLOYEES REQUIRED TO BE DEDUCTED AND IMPOUNDED UNDER THE PROVISIONS OF THE ECONOMY ACT.

THE FORMER DECISION STATED THE RULE UNDER THE ECONOMY ACT WITH RESPECT TO SERVICES PERFORMED BY ONE DEPARTMENT OR OFFICE OF THE GOVERNMENT FOR ANOTHER, INVOLVING ULTIMATE EXPENDITURES ONLY FROM APPROPRIATED FUNDS. BOTH DECISIONS STATED THE SAME RULE WITH RESPECT TO SERVICES PERFORMED BY THE FEDERAL GOVERNMENT FOR STATE OR PRIVATE AGENCIES, INVOLVING ULTIMATE EXPENDITURES FROM STATE OR PRIVATE FUNDS. IN EITHER EVENT, UNDER THE ECONOMY ACT, THE COST OF THE SERVICES PERFORMED BY THE FEDERAL GOVERNMENT INCLUDED THE TOTAL SALARY OF THE FEDERAL EMPLOYEES ENGAGED ON THE WORK PERFORMED.

SECTION 8, TITLE II, OF THE ACT OF MARCH 20, 1933, PUBLIC NO. 2, 48 STAT. 15, PROVIDES AS FOLLOWS:

THE APPROPRIATIONS OR PORTIONS OF APPROPRIATIONS UNEXPENDED BY REASON OF THE OPERATION OF THIS ACT SHALL NOT BE USED FOR ANY PURPOSE, BUT SHALL BE IMPOUNDED AND RETURNED TO THE TREASURY.

IN DECISION OF APRIL 7, 1933, A-48262, 12 COMP. GEN. 508, TO THE SECRETARY OF THE TREASURY, IT WAS HELD:

UNDER THE DEFINITION IN SECTION 1 OF THE SAME ACT "ANY PERSON RENDERING SERVICES IN OR UNDER ANY BRANCH OR SERVICE OF THE UNITED STATES GOVERNMENT OR THE GOVERNMENT OF THE DISTRICT OF COLUMBIA," WITH THE FIVE EXCEPTIONS THEREIN MADE, ARE OFFICERS OR EMPLOYEES WHOSE TOTAL COMPENSATION, REGARDLESS OF THE SOURCE FROM WHICH PAID, IS SUBJECT TO THE 15 PERCENT REDUCTION IN ACCORDANCE WITH THE TERMS OF THE EXECUTIVE ORDER OF MARCH 28, 1933, ISSUED PURSUANT TO SECTION 3 OF THE ACT. THAT IS TO SAY, IF THE DUTIES AND RESPONSIBILITIES OF AN OFFICE OR POSITION ARE PERFORMED FOR OR UNDER THE SUPERVISION OF THE FEDERAL GOVERNMENT, AND THE BASIC RATE OF COMPENSATION IS FIXED UNDER "ANY EXISTING (FEDERAL) LAW, SCHEDULE, REGULATION, EXECUTIVE ORDER, OR DEPARTMENTAL ORDER," THE INCUMBENT THEREOF IS A FEDERAL OFFICER OR EMPLOYEE WITHIN THE MEANING OF SECTION 1 (A) OF TITLE II OF THE ACT OF MARCH 20, 1933, AND THE COMPENSATION IS SUBJECT TO THE 15 PERCENT REDUCTION UNDER SECTION 3 OF SAID TITLE.

HOWEVER, AS THE IMPOUNDING PROVISIONS OF THE ACT OF MARCH 20, 1933, RELATE ONLY TO ,APPROPRIATIONS OR PORTIONS OF APPROPRIATIONS UNEXPENDED BY REASON OF THE OPERATION OF THIS ACT" (QUOTING FROM SECTION 8), NO PART OF THE SALARY OF A FEDERAL OFFICER OR EMPLOYEE WHICH IS PAID FROM PRIVATE OR STATE FUNDS WILL BE IMPOUNDED IN THE FEDERAL TREASURY. ACCORDINGLY, ALL THE PRIVATE OR STATE INTERESTS WHICH CONTRIBUTE THE WHOLE OR ANY PART OF THE COMPENSATION OF FEDERAL OFFICERS OR EMPLOYEES SHOULD BE REQUIRED ON AND AFTER APRIL 1, 1933, TO CONTRIBUTE 15 PERCENT LESS OF THE TOTAL COMPENSATION OF EACH OFFICER AND EMPLOYEE AS OF MARCH 31, 1933; THAT IS TO SAY, THE SAVING WITH RESPECT TO THE 15 PERCENT REDUCTION ON THEIR SHARE OF THE COMPENSATION WILL INURE TO THEIR BENEFIT.

SEE, ALSO, DECISION OF APRIL 11, 1933, A-48294, TO THE SECRETARY OF LABOR.

PURSUANT TO THE PRINCIPLES STATED IN THE LAST CITED DECISIONS, WHERE A STATE OR PRIVATE AGENCY UNDER A COOPERATIVE ARRANGEMENT PAYS THE WHOLE OR ANY PART OF THE SALARY OF EMPLOYEES OF THE FEDERAL GOVERNMENT, THE 15 PERCENT OR OTHER DETERMINED DEDUCTION ON THE PORTION OF THE SALARIES DIRECTLY CHARGED TO THE FUNDS OF SUCH STATE OR PRIVATE AGENCY INURES TO THE BENEFIT OF SAID STATE OR PRIVATE AGENCY, AND THERE WOULD BE NO IMPOUNDING REQUIRED.

HOWEVER, WHEN THE FEDERAL GOVERNMENT PERFORMS WORK FOR A STATE OR PRIVATE AGENCY AND IS AUTHORIZED BY LAW, OR CONTRACT ENTERED INTO PURSUANT TO LAW, TO BE REIMBURSED ON A COST OR COST-PLUS BASIS, WITH NO DIRECT CONNECTION OR RELATIONSHIP BETWEEN THE STATE OR PRIVATE AGENCY AND THE FEDERAL PERSONNEL, THERE IS NO AUTHORITY UNDER THE ACT OF MARCH 20, 1933, TO REDUCE THE CHARGES OR FEES PREVIOUSLY IMPOSED ON THE STATE OR PRIVATE AGENCY FOR THE WORK OR SERVICES PERFORMED BY THE FEDERAL GOVERNMENT, BY THE AMOUNT OF THE 15 PERCENT DEDUCTED AND IMPOUNDED ON THE SALARIES OF FEDERAL PERSONNEL WHO MAY BE ENGAGED ON THE WORK. IN OTHER WORDS, A FACTOR ENTERING INTO THE COST OF WORK PERFORMED BY THE GOVERNMENT IS THE TOTAL OR BASIC SALARY RATES OF THE FEDERAL PERSONNEL ENGAGED ON THE WORK, AND NOT THE NET AMOUNT PAID TO THE EMPLOYEES AFTER DEDUCTION AND IMPOUNDMENT OF 15 PERCENT REQUIRED BY THE ACT OF MARCH 20, 1933, AND EXECUTIVE ORDER OF MARCH 28, 1933. THEREFORE, THE SAME RULES STATED UNDER THE ECONOMY ACT IN THE CITED DECISIONS OF AUGUST 5 AND AUGUST 31, 1932, FOR DETERMINING THE COST OF WORK PERFORMED BY ONE BRANCH OF THE GOVERNMENT FOR ANOTHER, AND BY THE FEDERAL GOVERNMENT FOR STATE OR PRIVATE AGENCIES, IS APPLICABLE ON AND AFTER APRIL 1, 1933, UNDER THE ACT OF MARCH 20, 1933.

IT IS UNDERSTOOD FROM YOUR SUBMISSION THAT THERE IS NO DIRECT CONNECTION OR RELATIONSHIP BETWEEN THE PANAMA RAILROAD COMPANY, THE PANAMA GOVERNMENT, OR THE COMMERCIAL SHIPPING OR OTHER PRIVATE INTERESTS REFERRED TO AND THE FEDERAL PERSONNEL OF THE PANAMA CANAL IN CONNECTION WITH THE WORK INVOLVED, BUT THAT SUCH AGENCIES SIMPLY REIMBURSE THE PANAMA CANAL FOR THE COST (OR COST PLUS A SURCHARGE) OF THE WORK PERFORMED OR SERVICES RENDERED. IF SO, YOU ARE ADVISED THAT THE CHARGES MADE FOR THE WORK OR SERVICES PERFORMED SHOULD INCLUDE THE TOTAL OR BASIC SALARY RATES OF THE FEDERAL PERSONNEL ENGAGED ON THE WORK, DETERMINED UNDER "EXISTING LAW" AS REQUIRED BY SECTION 2 OF THE ACT OF MARCH 20, 1933, AND THAT 15 PERCENT OF SUCH TOTAL OR BASIC SALARY RATE SHOULD BE DEDUCTED AND IMPOUNDED AS REQUIRED BY SECTIONS 3 AND 8 OF THE ACT AND THE EXECUTIVE ORDER OF MARCH 28, 1933.