A-83053, MARCH 31, 1937, 16 COMP. GEN. 901

A-83053: Mar 31, 1937

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NOR ARE SUCH ARTICLES SO DIRECTLY CONNECTED WITH THE CONSTRUCTION OF A SCHOOL HOUSE AS TO BE REGARDED AS A PART OF CONSTRUCTION FOR GRANT PURPOSES. THE DISALLOWANCE WAS BASED ON THE GROUND THAT SUCH ITEMS OF FURNITURE AND EQUIPMENT MAY NOT BE CONSIDERED AS MATERIAL AND LABOR AND WERE. NOT PROPERLY INCLUDED IN THE TOTAL UPON WHICH THE GRANT WAS BASED. YOUR LETTER IS IN PART AS FOLLOWS: AS HAS BEEN POINTED OUT IN PREVIOUS CORRESPONDENCE WITH YOUR OFFICE. CONSIDERABLE THOUGH WAS GIVEN BY THE ADMINISTRATION TO THE MEANING OF THE WORDS "30 PERCENTUM OF THE COST OF THE LABOR AND MATERIALS EMPLOYED UPON SUCH PROJECT" AS USED IN SECTION 203 (A) (2) OF TITLE II OF THE NATIONAL INDUSTRIAL RECOVERY ACT.

A-83053, MARCH 31, 1937, 16 COMP. GEN. 901

PROJECTS - PUBLIC WORKS - GRANTS TO PUBLIC BODIES INVOLVING MOVABLE ARTICLES OF FURNITURE AND EQUIPMENT SECTION 203 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT, 48 STAT. 202, AUTHORIZING GRANTS TO PUBLIC BODIES FOR THE CONSTRUCTION, REPAIR, OR IMPROVEMENT OF PUBLIC WORKS PROJECTS NOT "IN EXCESS OF 30 PERCENTUM OF THE COST OF THE LABOR AND MATERIALS EMPLOYED UPON SUCH PROJECT" DOES NOT SPECIFICALLY AUTHORIZE GRANTS BASED UPON THE COST OF MOVABLE ARTICLES OF FURNITURE AND EQUIPMENT FOR A SCHOOL HOUSE, NOR ARE SUCH ARTICLES SO DIRECTLY CONNECTED WITH THE CONSTRUCTION OF A SCHOOL HOUSE AS TO BE REGARDED AS A PART OF CONSTRUCTION FOR GRANT PURPOSES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS, MARCH 31, 1937:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JANUARY 14, 1937, REQUESTING REVIEW OF A DISALLOWANCE IN THE AMOUNT OF $226.89 ON VOUCHER NO. 91, MARCH 1934 ACCOUNTS OF J. S. KEMP, COVERING PAYMENT OF A 30 PERCENT GRANT MADE TO THE OLYMPIA SCHOOL DISTRICT NO. 4, RICHLAND COUNTY, S.C., PURSUANT TO THE PROVISIONS OF SECTION 203 (A) (2) OF THE NATIONAL INDUSTRIAL RECOVERY ACT, 48 STAT. 202, AND GRANT AGREEMENT PW 382.3, DATED JANUARY 20, 1934, IN CONNECTION WITH A PROJECT FOR THE CONSTRUCTION AND FURNISHING OF A NEW FOUR-ROOM FRAME SCHOOL BUILDING WITH AUDITORIUM. THE AMOUNT DISALLOWED REPRESENTS THAT PART OF THE GRANT BASED UPON THE COST OF PUPILS' DOUBLE DESKS, TEACHERS' TABLES AND CHAIRS, AUDITORIUM BENCHES, AND HANK HEATING STOVES PURCHASED UNDER THE PROJECT, AND THE DISALLOWANCE WAS BASED ON THE GROUND THAT SUCH ITEMS OF FURNITURE AND EQUIPMENT MAY NOT BE CONSIDERED AS MATERIAL AND LABOR AND WERE, THEREFORE, NOT PROPERLY INCLUDED IN THE TOTAL UPON WHICH THE GRANT WAS BASED.

YOUR LETTER IS IN PART AS FOLLOWS:

AS HAS BEEN POINTED OUT IN PREVIOUS CORRESPONDENCE WITH YOUR OFFICE, CONSIDERABLE THOUGH WAS GIVEN BY THE ADMINISTRATION TO THE MEANING OF THE WORDS "30 PERCENTUM OF THE COST OF THE LABOR AND MATERIALS EMPLOYED UPON SUCH PROJECT" AS USED IN SECTION 203 (A) (2) OF TITLE II OF THE NATIONAL INDUSTRIAL RECOVERY ACT. IN VIEW OF THE NECESSITY FOR ENLISTING THE COOPERATION OF MUNICIPALITIES AND OTHER LOCAL POLITICAL SUBDIVISIONS IN SUCCESSFULLY CARRYING OUT A PROGRAM OF PUBLIC WORKS, IT WAS THOUGHT REASONABLE TO CONSTRUE THE WORDS "MATERIALS EMPLOYED UPON SUCH PROJECT" TO INCLUDE SUCH FURNISHINGS AND EQUIPMENT AS WERE NECESSARY TO MAKE PROJECTS USEFUL TO THE PUBLIC. THE PUBLIC WORKS PROGRAM WAS LAUNCHED AT A TIME WHEN MUNICIPAL FINANCES WERE AT LOW EBB. THE 30 PERCENT GRANT WAS PROVIDED FOR IN THE RECOVERY ACT TO SUPPLEMENT MUNICIPAL FUNDS AND TO ENCOURAGE MUNICIPALITIES TO UNDERTAKE PUBLIC WORKS PROJECTS AND THUS AID IN CREATING EMPLOYMENT. IT GOES WITHOUT SAYING THAT MUNICIPALITIES WERE NOT INTERESTED IN THE CONSTRUCTION OF UNFURNISHED AND UNEQUIPPED PROJECTS AND THAT MUNICIPAL FINANCES WERE JUST AS UNAVAILABLE FOR FURNISHING AND EQUIPPING PROJECTS AS FOR THEIR ACTUAL CONSTRUCTION IN THE NARROW SENSE. IN ORDER TO FORMULATE A SUCCESSFUL PROGRAM, IT WAS ABSOLUTELY NECESSARY THAT FEDERAL AID BE GIVEN IN FINANCING THE CONSTRUCTION OF USEFUL AND COMPLETED PROJECTS. IF SUCH AID HAD NOT BEEN OFFERED, THE CURTAILED FINANCES OF MUNICIPALITIES WOULD HAVE DETERRED THEM FROM SUBMITTING APPLICATIONS AND THE EFFECTIVENESS OF THE PROGRAM WOULD HAVE BEEN DESTROYED. IN THE CIRCUMSTANCES, IT WAS FELT THAT THE ONLY PRACTICAL INTERPRETATION OF THE LANGUAGE OF THE ACT WOULD BE TO INCLUDE MATERIALS USED FOR FURNISHING AND EQUIPPING PROJECTS WITHIN THE MEANING OF THE TERM "MATERIALS EMPLOYED UPON SUCH PROJECT.' THIS INTERPRETATION IS NOT A STRAINED ONE AND WAS CALCULATED TO FURNISH MUNICIPALITIES WITH AS MUCH INDUCEMENT AS POSSIBLE TO ENGAGE IN PUBLIC WORKS WITHOUT DOING VIOLENCE TO THE LANGUAGE OF THE ACT.

THIS INTERPRETATION HAS BEEN IN FORCE SINCE THE OUTSET AND HUNDREDS OF GRANT PAYMENTS HAVE BEEN MADE, WITHOUT EXCEPTION, BASED UPON COSTS, INCLUDING THE COST OF SUCH EQUIPMENT AND FURNISHINGS AS WERE NECESSARY TO COMPLETE PROJECTS AND TO MAKE THEM USEFUL. TO PLACE A DIFFERENT INTERPRETATION UPON THE ACT AT THIS LATE DATE WOULD IN THE GREAT MAJORITY OF CASES PRODUCE ONLY CLAIMS AGAINST MUNICIPALITIES AND OTHER PUBLIC BODIES WHICH WOULD BE IMPOSSIBLE OF COLLECTION.

IT IS, THEREFORE, REQUESTED THAT THE EXCEPTION TO CREDIT MENTIONED ABOVE BE RECONSIDERED AND THAT APPROVAL BE GIVEN TO THE ADMINISTRATIVE COURSE WHICH HAS BEEN FOLLOWED OF INCLUDING THE COST OF MATERIALS USED FOR THE NECESSARY FURNISHING AND EQUIPPING OF PROJECTS IN THE BASE ON WHICH THE GRANT IS COMPUTED.

SECTION 203 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT, 48 STAT. 202, PROVIDES IN PART AS FOLLOWS:

WITH A VIEW TO INCREASING EMPLOYMENT QUICKLY (WHILE REASONABLE SECURING ANY LOANS MADE BY THE UNITED STATES) THE PRESIDENT IS AUTHORIZED AND EMPOWERED, THROUGH THE ADMINISTRATOR OR THROUGH SUCH OTHER AGENCIES AS HE MAY DESIGNATE OR CREATE (1) TO CONSTRUCT, FINANCE, OR AID IN THE CONSTRUCTION OR FINANCING OF ANY PUBLIC WORKS PROJECT INCLUDED IN THE PROGRAM PREPARED PURSUANT TO SECTION 202; (2) UPON SUCH TERMS AS THE PRESIDENT SHALL PRESCRIBE, TO MAKE GRANTS TO STATES, MUNICIPALITIES, OR OTHER PUBLIC BODIES FOR THE CONSTRUCTION, REPAIR, OR IMPROVEMENT OF ANY SUCH PROJECT, BUT NO SUCH GRANT SHALL BE IN EXCESS OF 30 PERCENTUM OF THE COST OF THE LABOR AND MATERIALS EMPLOYED UPON SUCH PROJECT; * * *

AS SET FORTH IN MY DECISION OF OCTOBER 19, 1936, A-80613, TO YOU, THE SETTLED RULE OF CONSTRUCTION APPLICABLE TO GRANTS BY THE PUBLIC IS THAT THEY ARE TO BE STRICTLY CONSTRUED IN FAVOR OF THE PUBLIC. THE QUOTED STATUTE PROVIDES FOR GRANTS TO PUBLIC BODIES FOR THE CONSTRUCTION, REPAIR, OR IMPROVEMENT OF PUBLIC WORKS PROJECTS, BUT DOES NOT SPECIFICALLY AUTHORIZE GRANTS BASED UPON THE COST OF MOVABLE ARTICLES OF FURNITURE AND EQUIPMENT, AND THE PROCUREMENT OF SUCH ARTICLES DOES NOT APPEAR TO BE SO DIRECTLY CONNECTED WITH THE CONSTRUCTION OF A SCHOOL HOUSE AS TO BE REGARDED AS A PART OF SUCH CONSTRUCTION. SEE MY DECISION OF FEBRUARY 25, 1936, A-70759, TO YOU AND DECISIONS CITED THEREIN.

FURTHERMORE, EVEN IF MATERIALS USED FOR MOVABLE FURNITURE AND EQUIPMENT COULD BE CONSIDERED AS ,MATERIALS EMPLOYED UPON SUCH PROJECT," THE ENTIRE COST OF OBTAINING COMPLETED FURNITURE OF THE CHARACTER HERE DISCLOSED MAY NOT BE REGARDED AS INCLUDED IN "THE COST OF THE LABOR AND MATERIALS EMPLOYED UPON SUCH PROJECT" WITHIN THE PURVIEW OF SECTION 203 (A) (2) OF THE NATIONAL INDUSTRIAL RECOVERY ACT, AND IT HAS NOT BEEN SHOWN THAT THE COST OF THE VARIOUS ARTICLES OF FURNITURE, CLAIMED AS A PART OF THE GRANT BASE IN THIS CASE, DID NOT EXCEED THE COST OF THE LABOR AND MATERIALS EMPLOYED IN THE PRODUCTION OF THOSE ARTICLES.

HOWEVER, IN VIEW OF THE CONDITIONS AND CIRCUMSTANCES RESULTING FROM THE ADMINISTRATIVE INTERPRETATION IN THIS MATTER, AND OF THE FACT THAT THE GRANT WAS MADE PRIOR TO THE DECISION OF OCTOBER 19, 1936, A-80613, CREDIT WILL NOW BE ALLOWED THEREFORE IN THE ACCOUNTS OF THE DISBURSING OFFICER. A-80613, NOVEMBER 24, 1936.