A-83505, FEBRUARY 9, 1937, 16 COMP. GEN. 752

A-83505: Feb 9, 1937

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1920 WHERE FUNDS ARE ADVANCED TO THE WAR OR NAVY DEPARTMENTS FOR THE PROCUREMENT OF MATERIAL TO BE MANUFACTURED. THERE ARE SUBMITTED HEREWITH TWO QUESTIONS PERTAINING TO THE APPLICATION OF EXISTING LAWS TO THE UTILIZATION OF ARSENAL ORDERS FOR THE ACCOMPLISHMENT OF WORK FOR OTHER DEPARTMENTS FOR WHICH FUNDS ARE ADVANCED BY THEM. IT IS DESIRED TO MAKE THE FOLLOWING STATEMENTS WITH A VIEW TO POSSIBLY CLARIFYING THE SITUATION AS TO THE ADMINISTRATIVE PROBLEMS WHICH. IT IS BELIEVED. THERE ARE TWO CLASSES OF LEGISLATIVELY AUTHORIZED PROCEDURE PROVIDING SPECIAL MEANS OF ACCOMPLISHING WORK OF THIS CHARACTER AS FOLLOWS: (1) ADVANCEMENT OF FUNDS BY ONE DEPARTMENT OR AGENCY TO ANOTHER DEPARTMENT OR AGENCY COORDINATE THEREWITH.

A-83505, FEBRUARY 9, 1937, 16 COMP. GEN. 752

ADVANCE PAYMENTS FOR INTERDEPARTMENTAL SERVICES - OBLIGATION LIMITATION ACT, JUNE 22, 1936 - WAR OR NAVY DEPARTMENT WORK UNDER ACT, JUNE 5, 1920 WHERE FUNDS ARE ADVANCED TO THE WAR OR NAVY DEPARTMENTS FOR THE PROCUREMENT OF MATERIAL TO BE MANUFACTURED, THE PLACING OF ORDERS FOR APPROVED PROJECTS WITH GOVERNMENT-OWNED MANUFACTURING ESTABLISHMENTS SUCH AS ARSENALS, NAVY YARDS, ETC., PURSUANT TO THE PROVISIONS OF THE ACT OF JUNE 5, 1920, 41 STAT. 975, MAY BE CONSIDERED OBLIGATIONS FOR PAYMENT OF WHICH THE ADVANCED FUNDS REMAIN AVAILABLE FOR THE SAME PERIOD AS PROVIDED FOR SIMILAR ORDERS PLACED WITH COMMERCIAL MANUFACTURERS NOTWITHSTANDING THE PROVISIONS OF SECTION 8 OF THE ACT OF JUNE 22, 1936, 49 STAT. 1648. 16 COMP. GEN. 575, MODIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, FEBRUARY 9, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 26, 1937, AS FOLLOWS:

IN ACCORDANCE WITH UNDERSTANDING REACHED DURING THE CONFERENCE ON THE 18TH INSTANT WITH REPRESENTATIVES OF THIS DEPARTMENT IN YOUR OFFICE, THERE ARE SUBMITTED HEREWITH TWO QUESTIONS PERTAINING TO THE APPLICATION OF EXISTING LAWS TO THE UTILIZATION OF ARSENAL ORDERS FOR THE ACCOMPLISHMENT OF WORK FOR OTHER DEPARTMENTS FOR WHICH FUNDS ARE ADVANCED BY THEM.

AS A PRELIMINARY TO THE PRESENTATION OF THESE QUESTIONS, IT IS DESIRED TO MAKE THE FOLLOWING STATEMENTS WITH A VIEW TO POSSIBLY CLARIFYING THE SITUATION AS TO THE ADMINISTRATIVE PROBLEMS WHICH, IT IS BELIEVED, PERTAIN IN VERY MUCH GREATER DEGREE, IF NOT EXCLUSIVELY, TO THE ACTIVITIES OF THE WAR AND NAVY DEPARTMENTS THAN TO THOSE OF OTHER DEPARTMENTS:

A. THERE ARE TWO CLASSES OF LEGISLATIVELY AUTHORIZED PROCEDURE PROVIDING SPECIAL MEANS OF ACCOMPLISHING WORK OF THIS CHARACTER AS FOLLOWS:

(1) ADVANCEMENT OF FUNDS BY ONE DEPARTMENT OR AGENCY TO ANOTHER DEPARTMENT OR AGENCY COORDINATE THEREWITH, OR NOT UNDER THE JURISDICTION THEREOF. THIS PROCEDURE WAS INITIALLY SPECIFICALLY AUTHORIZED BY SEC. 7 OF THE FORTIFICATION APPROPRIATION ACT OF MAY 21, 1920 (41 STAT. 613); WHICH PROVISION WAS AMENDED BY SECTION 601 OF THE ACT OF JUNE 30, 1932; AND FURTHER AMENDED BY SEC. 8 OF THE DEFICIENCY ACT OF JUNE 22, 1936.

(2) SPECIFIC TREATMENT OF ORDERS FOR MANUFACTURE PLACED BY SUPERVISORY AGENCIES WITH ESTABLISHMENTS SUBORDINATE THERETO AND THE PLACING OF SAID ORDERS WITHIN THE PERIOD OF AVAILABILITY OF THE APPROPRIATION CHARGEABLE HAVING THE EFFECT OF AUTHORIZING THE INCURRING BY THE SUBORDINATE AGENCY OF OBLIGATIONS TO EFFECTUATE THE PURPOSES OF THE ORDER FOR TWO FISCAL YEARS AFTER THE PERIOD OF AVAILABILITY OF THE ORIGINAL APPROPRIATION. THIS PROCEDURE WAS INITIALLY AUTHORIZED BY SECTION 6 OF THE FORTIFICATION APPROPRIATION ACT OF MAY 21, 1920 (41 STAT. 613), APPLYING EXCLUSIVELY TO ORDERS PLACED WITH ORDNANCE ESTABLISHMENTS, AND SUBSEQUENTLY BY A PROVISION CONTAINED IN THE ARMY APPROPRIATION ACT OF JUNE 5, 1920 (41 STAT. 975) WHICH IS MORE GENERAL IN ITS TERMS; BOTH ENACTMENTS PROVIDING THAT THE ORDERS FOR MANUFACTURING "SHALL BE CONSIDERED AS OBLIGATIONS IN THE SAME MANNER AS PROVIDED FOR SIMILAR ORDERS PLACED WITH COMMERCIAL MANUFACTURERS.'

B. IN THE ADMINISTRATION OF THE MANUFACTURING ACTIVITIES OF THE WAR DEPARTMENT, IT HAS BEEN CONSIDERED THAT THE TWO CLASSES OF LEGISLATION CITED IN SUBPARAGRAPH A ABOVE, WERE SEPARATE AND DISTINCT AND THAT THE LIMITATION IN THE ACT OF JUNE 22, 1936, ON THE AVAILABILITY OF FUNDS ADVANCED FROM ONE AGENCY TO ANOTHER, DID NOT IN ANY WAY MODIFY THE LEGISLATIVE DEFINITION OF AN ,OBLIGATION" REFERRED TO UNDER SUBPARAGRAPH A (2) ABOVE.

C. WITH REFERENCE TO SUBPARAGRAPH A (2). WHILE THE APPLICABILITY OF SECTION 6 OF THE ACT OF MAY 21, 1920, IS RESTRICTED TO "ARMAMENT OF FORTIFICATIONS APPROPRIATIONS," THE CORRESPONDING PROVISION IN THE ACT OF JUNE 5, 1920, CONTAINS NO SUCH RESTRICTION BUT APPLIES IN TERMS TO ANY FUNDS UTILIZED FOR THE MANUFACTURE OF MATERIAL PERTAINING TO APPROVED PROJECTS, AND IT HAS BEEN THE UNDERSTANDING OF THIS DEPARTMENT THAT THIS PROVISION OF LAW STILL APPLIES TO MANUFACTURING ORDERS PLACED BY THE WAR DEPARTMENT WITH ITS SUBORDINATE AGENCIES IRRESPECTIVE OF WHETHER THE COST OF THE WORK IS CHARGEABLE TO FUNDS ORIGINALLY APPROPRIATED FOR THE WAR DEPARTMENT OR TO FUNDS ADVANCED BY OTHER DEPARTMENTS.

D. THE WORK OF THE ORDNANCE DEPARTMENT OF THE ARMY HAS ALWAYS INVOLVED LARGE AMOUNTS OF MANUFACTURING, DONE AT GOVERNMENT ESTABLISHMENTS, AND IS OF SUCH CHARACTER THAT IT CAN NOT ECONOMICALLY AND EFFICIENTLY BE ACCOMPLISHED UNDER APPROPRIATIONS WITH A FISCAL YEAR LIMITATION WITHOUT SOME SUCH SPECIAL AUTHORIZATION AS THOSE CITED IN SUBPARAGRAPH A (2) ABOVE. PRIOR TO 1920 THE BULK OF FUNDS PROVIDED FOR ACTIVITIES OF THE ARMY ORDNANCE DEPARTMENT WERE PROVIDED IN FORTIFICATIONS APPROPRIATION ACTS, WHICH WERE THEN AVAILABLE UNTIL EXPENDED. THE ENACTMENT IN 1919 MAKING FUTURE FORTIFICATIONS APPROPRIATIONS SUBJECT TO A FISCAL-YEAR LIMITATION WAS THE OCCASION FOR THE ENACTMENTS CITED IN SUBPARAGRAPH A (2) ABOVE.

E. THE PROCEDURE AUTHORIZED BY THE LAWS CITED IN SUBPARAGRAPH A (1) APPLY TO ALL DEPARTMENTS OF THE GOVERNMENT, AND IT IS BELIEVED ARE GENERALLY RESORTED TO WHEREVER WORK CAN BE DONE MORE ADVANTAGEOUSLY THAN OTHERWISE BY ONE AGENCY FOR ANOTHER. THE PROCEDURE REFERRED TO IN SUBPARAGRAPH A (2), HOWEVER, WAS PRIMARILY AUTHORIZED FOR MANUFACTURING ACTIVITIES OF THE ARMY AND SO FAR AS KNOWN IS UTILIZED MAINLY, IF NOT ENTIRELY, BY THE ARMY AND NAVY IN THEIR MANUFACTURING ACTIVITIES. GOVERNMENTAL POLICIES APPEAR TO FAVOR THE MANUFACTURE OF WAR MATERIAL AT GOVERNMENT-OWNED RATHER THAN COMMERCIAL PLANTS.

THE FOLLOWING TWO EXAMPLES ARE BELIEVED TO ILLUSTRATE THE PRESENT SITUATION:

A. ON NOVEMBER 4, 1935, THE BUREAU OF ORDNANCE, NAVY, ISSUED REQUISITION NO. 148, COVERING 3 INCH A.A. GUNS AND MOUNTS, TO BE MANUFACTURED BY THE ARMY. UPON RECEIPT OF THIS ORDER BY THE ORDNANCE OFFICE, WAR DEPARTMENT, REQUEST WAS ISSUED ON NOVEMBER 22, 1935, FOR AN ADVANCE OF $155,400 TO THE WORKING FUND. THIS MONEY WAS MADE AVAILABLE ON DECEMBER 2, 1935, AND ON DECEMBER 5, 1935, ORDERS FOR ITS MANUFACTURE WERE PLACED WITH VARIOUS ORDNANCE ESTABLISHMENTS BEST EQUIPPED TO MANUFACTURE THE PARTICULAR ITEMS COVERED BY THE REQUISITION. IN ACCORDANCE WITH ANSWER MADE TO QUESTION (B) IN 26 COMP. DEC. 1023, THIS ORDER IS CONSIDERED AN APPROVED PROJECT. THIS ORDER WAS FINANCED BY THE NAVY DEPARTMENT WITH FUNDS FROM THE APPROPRIATION "ORDNANCE AND ORDNANCE STORES, BUREAU OF ORDNANCE, NAVY, 1936.'

B. AFTER THE PASSAGE OF THE FIRST DEFICIENCY ACT OF 1936, APPROVED JUNE 22, 1936, STEPS WERE TAKEN TO OBLIGATE IMMEDIATELY ALL FUNDS RECEIVED FROM OTHER EXECUTIVE DEPARTMENTS WHICH WERE MADE AVAILABLE FROM A 1936 APPROPRIATION. ALL FUNDS NOW BEING CREDITED TO THE WORKING FUND CARRY THE FISCAL YEAR DESIGNATION OF THE APPROPRIATION FROM WHICH RECEIVED. SEPTEMBER 25, 1936, THE OFFICE OF THE CHIEF OF ORDNANCE RECEIVED BUREAU OF ORDNANCE, NAVY, REQUISITION NO. 132, COVERING THE MANUFACTURE OF 5 INCH (38 A.A. COMMON PROJECTILES. REQUEST FOR ADVANCE PAYMENT WAS MADE ON OCTOBER 2, 1936, AND THE FUNDS MADE AVAILABLE TO THE ORDNANCE DEPARTMENT NOVEMBER 12, 1936. ORDER WAS THEN PLACED WITH FRANKFORD ARSENAL ON NOVEMBER 13, 1936. THIS ORDER WAS LABELED APPROVED PROJECT UNDER THE TERMS OF THE ACT OF JUNE 5, 1920, AND WAS FINANCED BY THE NAVY DEPARTMENT WITH FUNDS FROM THE APPROPRIATION "ORDNANCE AND ORDNANCE STORES, BUREAU OF ORDNANCE, NAVY, 1937," AND WERE CREDITED TO "WORKING FUND, WAR DEPARTMENT (NAVY ORDNANCE) 1937.'

WITH REFERENCE TO THESE EXAMPLES, THE FOLLOWING QUESTIONS ARE PROPOUNDED:

"UNDER EXAMPLE A, CAN THE FUNDS ADVANCED TO THE WAR DEPARTMENT BY THE NAVY DEPARTMENT BE USED FOR THE PAYMENT OF MATERIALS PROCURED OR PERSONNEL EMPLOYED BY AN ARSENAL DURING THE FISCAL YEARS 1937 AND 1938 INSOFAR AS NECESSARY TO COMPLETE THE ORDERS ISSUED BY THE CHIEF OF ORDNANCE, ARMY UNDER THE ACT OF JUNE 5, 1920?

UNDER EXAMPLE B, CAN FUNDS ON THIS ORDER BE UTILIZED FOR PAYMENTS FOR MATERIALS PROCURED OR PERSONNEL EMPLOYED BY THE FRANKFORD ARSENAL DURING THE FISCAL YEARS 1938 AND 1939 IN ORDER TO COMPLETE THE WORK COVERED BY THE ORDER PLACED ON NOVEMBER 13, 1936?

IN VIEW OF THE IMPORTANCE TO THE WAR DEPARTMENT OF THE QUESTIONS PRESENTED HEREIN, A DECISION THEREON AT AS AN EARLY DATE AS MAY BE PRACTICABLE WILL BE APPRECIATED.

A SIMILAR QUESTION RECENTLY WAS PRESENTED BY THE SECRETARY OF THE NAVY AND BY DECISION OF DECEMBER 11, 1936, A-80526 (16 COMP. GEN. 575), IT WAS HELD IN SUBSTANCE THAT THE ISSUING OF PROJECT ORDERS BY THE NAVY DEPARTMENT UNDER THE PROVISIONS OF THE ARMY APPROPRIATION ACT OF JUNE 5, 1920, 41 STAT. 975, AND THE PROVISIONS IN THE NAVAL APPROPRIATION ACT OF JULY 1, 1922, 42 STAT. 812, TO NAVY YARDS OR OTHER GOVERNMENT AGENCIES UNDER THE NAVY DEPARTMENT COULD NOT BE CONSIDERED AS CONSTITUTING AN OBLIGATION OF THE FUNDS INVOLVED TO THE EXTENT THAT A SUBSEQUENT EXPENDITURE OF SUCH FUNDS WOULD NOT BE REGARDED AS AN "OBLIGATION" WITHIN THE MEANING OF THAT TERM AS USED IN SECTION 8 OF THE ACT OF JUNE 22, 1936, 49 STAT. 1648.

THE ACT OF JUNE 5, 1920, PROVIDES:

THAT ALL ORDERS OR CONTRACTS FOR THE MANUFACTURE OF MATERIAL PERTAINING TO APPROVED PROJECTS HERETOFORE OR HEREAFTER PLACED WITH GOVERNMENT-OWNED ESTABLISHMENTS SHALL BE CONSIDERED AS OBLIGATIONS IN THE SAME MANNER AS PROVIDED FOR SIMILAR ORDERS PLACED WITH COMMERCIAL MANUFACTURERS, AND THE APPROPRIATIONS SHALL REMAIN AVAILABLE FOR THE PAYMENT OF THE OBLIGATIONS SO CREATED AS IN THE CASE OF CONTRACTS OR ORDERS WITH COMMERCIAL MANUFACTURERS.

SAID SECTION 8 OF THE ACT OF JUNE 22, 1936, PROVIDES THAT ADVANCE PAYMENTS UNDER THE PROVISIONS OF TITLE VI, PART II, OF THE LEGISLATIVE APPROPRIATION ACT FOR THE FISCAL YEAR 1933,"SHALL HAVE NO LONGER PERIOD OF AVAILABILITY FOR OBLIGATION THAN THE APPROPRIATION FROM WHICH SUCH ADVANCE PAYMENTS ARE MADE.' UNDER THE PROVISIONS OF THIS SECTION, AFFECTING ALL ADVANCES MADE UNDER THE CITED LAW, IF THE APPROPRIATION FROM WHICH THE ADVANCE IS MADE IS NOT AVAILABLE FOR OBLIGATION EITHER BY ITS TERMS OR UNDER OTHER GENERAL OR SPECIAL STATUTE BEYOND THE END OF A CERTAIN FISCAL YEAR, THE FUNDS SO ADVANCED ARE NOT AVAILABLE BEYOND SUCH DATE. THIS, OF COURSE, OPERATED AS A REPEAL OF SECTION 601 (C) OF THE ACT OF JUNE 30, 1932, 47 STAT. 418, WHICH READS:

ORDERS PLACED AS PROVIDED IN SUBSECTION (A) SHALL BE CONSIDERED AS OBLIGATIONS UPON APPROPRIATIONS IN THE SAME MANNER AS ORDERS OR CONTRACTS PLACED WITH PRIVATE CONTRACTORS. ADVANCE PAYMENTS CREDITED TO A SPECIAL WORKING FUND SHALL REMAIN AVAILABLE UNTIL EXPENDED. AND DID NOT OPERATE TO RESTORE THE PROVISION IN THE ACT OF JULY 1, 1922, 42 STAT. 812 (QUOTED IN THE DECISION OF DECEMBER 11, 1936), WHICH WAS SUPERSEDED BY SAID SECTION 601 (C).

THE STATEMENTS IN YOUR LETTER NOW STRESS THE VIEW THAT MANUFACTURING ESTABLISHMENTS OF THE GOVERNMENT SUCH AS ARSENALS, NAVY YARDS, ETC. APPEAR TO HAVE BEEN CONSIDERED BY LEGISLATION ENACTED PRIOR TO THE ACT OF JUNE 30, 1932, ON THE SAME BASIS AS COMMERCIAL MANUFACTURING ESTABLISHMENTS AND THAT ORDERS PLACED WITH SUCH MANUFACTURING ACTIVITIES OF THE GOVERNMENT SHOULD BE TREATED ON THE SAME BASIS, INSOFAR AS OBLIGATION OF THE FUNDS IS CONCERNED, AS CONTRACTS PLACED WITH COMMERCIAL ESTABLISHMENTS. AND IT IS URGED THAT THE PROVISIONS OF SECTION 8 OF THE ACT OF JUNE 22, 1936, SHOULD NOT BE CONSTRUED AS MODIFYING THE PROVISIONS OF THE ACT OF 1920 IN THAT RESPECT. THERE APPEARS TO BE NOTHING IN THE TERMS OF SECTION 8 OF THE ACT OF JUNE 22, OR IN ITS LEGISLATIVE HISTORY, TO INDICATE AN INTENT TO RESTORE OR PRESERVE THE PROCEDURE ORIGINALLY AUTHORIZED UNDER THE ACT OF JUNE 5, 1920. HOWEVER, HAVING REGARD TO PREVIOUS LEGISLATION WITH RESPECT TO THE USE OF APPROPRIATIONS IN CONNECTION WITH THE MANUFACTURE OF MATERIAL IN GOVERNMENT-OWNED MANUFACTURING ESTABLISHMENTS, AND IN VIEW OF THE EXPLANATIONS AND REPRESENTATIONS MADE IN YOUR LETTER, SUPRA, THERE WOULD APPEAR TO BE SUFFICIENT JUSTIFICATION FOR HOLDING THAT, IN THE CASE OF ADVANCES MADE TO THE WAR DEPARTMENT OR THE NAVY DEPARTMENT FOR THE PROCUREMENT OF MATERIAL TO BE MANUFACTURED, THE PLACING OF ORDERS FOR APPROVED PROJECTS WITH GOVERNMENT-OWNED MANUFACTURING ESTABLISHMENTS SUCH AS ARSENALS, NAVY YARDS, ETC., PURSUANT TO THE PROVISIONS OF THE ACT OF JUNE 5, 1920, MAY BE CONSIDERED OBLIGATIONS FOR PAYMENT OF WHICH THE ADVANCED FUNDS MAY BE USED IN ACCORDANCE WITH THE PROVISIONS OF THE SAID ACT OF JUNE 5, 1920, NOTWITHSTANDING THE PROVISIONS OF SECTION 8 OF THE ACT OF JUNE 22, 1936, SUPRA. THEREFORE, THE TWO QUESTIONS SUBMITTED IN YOUR LETTER ARE ANSWERED IN THE AFFIRMATIVE.

THE DECISION OF DECEMBER 11, 1936, A-80526 (16 COMP. GEN. 575), IS MODIFIED ACCORDINGLY.