B-10599, JULY 18, 1940, 20 COMP. GEN. 30

B-10599: Jul 18, 1940

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LEASES - TERM AND REPAIR LIMITATIONS NO LEASE ENTERED INTO WITH THE GOVERNMENT OR ON BEHALF OF THE GOVERNMENT UNDER AN ANNUAL APPROPRIATION IS BINDING ON THE GOVERNMENT BEYOND THE FISCAL YEAR CURRENT AT THE TIME OF MAKING SUCH LEASE IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY OTHERWISE. IS THE FIRST ENTIRE YEAR OF ACTUAL TENURE UNDER THE ORIGINAL LEASE. WHERE THE ORIGINAL LEASE IS FOR A PERIOD LESS THAN A YEAR. NOT MORE THAN 25 PERCENT OF RENT FOR ORIGINAL LEASE PERIOD OF LESS THAN 1 YEAR MAY BE EXPENDED BEFORE THE LEASE IS ACTUALLY RENEWED. IS LESS THAN A YEAR. 1940: REFERENCE IS MADE TO YOUR LETTER OF MAY 29. BIDS THEREFOR WERE SOLICITED FOR A PERIOD BEGINNING ON THE DATE OF OCCUPANCY AND ENDING ONE YEAR THEREAFTER.

B-10599, JULY 18, 1940, 20 COMP. GEN. 30

LEASES - TERM AND REPAIR LIMITATIONS NO LEASE ENTERED INTO WITH THE GOVERNMENT OR ON BEHALF OF THE GOVERNMENT UNDER AN ANNUAL APPROPRIATION IS BINDING ON THE GOVERNMENT BEYOND THE FISCAL YEAR CURRENT AT THE TIME OF MAKING SUCH LEASE IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY OTHERWISE. THE "FIRST YEAR OF THE RENTAL TERM" CONTEMPLATED BY THE LIMITATION IN SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, ON THE PERCENTAGE OF THE RENT THAT THE GOVERNMENT MAY PAY FOR REPAIRS, ETC., OF LEASED PROPERTY, IS THE FIRST ENTIRE YEAR OF ACTUAL TENURE UNDER THE ORIGINAL LEASE, AND ANY PROPER RENEWALS, WHERE THE ORIGINAL LEASE IS FOR A PERIOD LESS THAN A YEAR, AND NOT MERELY THE PERIOD OF THE ORIGINAL LEASE. UNDER THE LIMITATION IN SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, ON AMOUNT THE GOVERNMENT MAY PAY FOR REPAIRS, ETC., OF LEASED PROPERTY, NOT MORE THAN 25 PERCENT OF RENT FOR ORIGINAL LEASE PERIOD OF LESS THAN 1 YEAR MAY BE EXPENDED BEFORE THE LEASE IS ACTUALLY RENEWED, AND IF WHOLE PERIOD, INCLUDING RENEWALS, IS LESS THAN A YEAR, NOT MORE THAN 25 PERCENT OF RENT FOR SUCH WHOLE PERIOD MAY BE EXPENDED FOR REPAIRS, ETC.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, JULY 18, 1940:

REFERENCE IS MADE TO YOUR LETTER OF MAY 29, 1940, AS FOLLOWS:

THE PROCUREMENT DIVISION OF THIS DEPARTMENT HAS BEFORE IT A PROPOSED LEASE OF CERTAIN PREMISES IN DENVER, COLORADO, FOR THE WAREHOUSING OF SUPPLIES AND EQUIPMENT FOR THE WORK PROJECTS ADMINISTRATION. BIDS THEREFOR WERE SOLICITED FOR A PERIOD BEGINNING ON THE DATE OF OCCUPANCY AND ENDING ONE YEAR THEREAFTER, WITH AN OPTION TO THE GOVERNMENT TO RENEW THE LEASE UP TO JUNE 30, 1942. ONLY ONE BID WAS RECEIVED, FROM THE VULCAN IRON WORKS COMPANY, OFFERING BUILDINGS CONTAINING 6,500 SQUARE FEET OF SPACE, LOCATED AT 1430 WEST COLFAX AVENUE, DENVER, COLORADO, AT A RENTAL OF $200 PER MONTH.

IT HAS NOT BEEN SUFFICIENTLY ESTABLISHED, UP TO THE PRESENT, THAT THE FAIR MARKET VALUE OF THE PREMISES OFFERED IS HIGH ENOUGH TO PERMIT THE PAYMENT OF THE PROPOSED RENTAL, IN VIEW OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, AS AMENDED ( U.S.C., SUP. V, TITLE 40, SEC. 278A), IF THE LEASE IS MADE UNDER THE TERMS PROPOSED. ON THE OTHER HAND, THE BIDDER HAS AGREED TO MAKE CERTAIN ALTERATIONS, IMPROVEMENTS, AND REPAIRS WITHOUT FURTHER COST TO THE GOVERNMENT, AND AT A COST OF $467.50 TO ITSELF, SO THAT THIS COST PRESUMABLY HAS BEEN INCLUDED IN THE PROPOSED GROSS RENTAL. THESE ALTERATIONS, IMPROVEMENTS, AND REPAIRS ARE ACTUALLY NECESSARY TO FIT THE PREMISES FOR OCCUPANCY BY THE GOVERNMENT, AND THERE IS NO BASIS FOR ASSUMING THAT THEY WOULD BE MADE BY THE LESSOR EXCEPT FOR THE LEASING TO THE GOVERNMENT. HENCE IS APPEARS PERMISSIBLE TO TREAT THEM AS ALTERATIONS, IMPROVEMENTS, AND REPAIRS WITHIN THE MEANING OF SECTION 322 OF THE ECONOMY ACT, SUPRA, TO SEGREGATE THE COST THEREOF FROM THE GROSS RENT, AND THEREBY TO AGREE UPON A NET RENTAL OF $1,932.50 PER ANNUM, OR BELOW THE AMOUNT TO WHICH THE RENTAL LIMITATIONS OF THE ECONOMY ACT ARE APPLICABLE. IF A LEASE ON THIS BASIS CAN BE MADE, IT WOULD BE VALID UNDER THE ACTING COMPTROLLER GENERAL'S DECISION OF JANUARY 7, 1937, A-81998, APART FROM ANY QUESTION OF FISCAL YEAR LIMITATIONS, AND APART ALSO FROM THE QUESTION WHETHER RENEWALS AT THE PROPOSED RENTAL OF $2,400 PER ANNUM WOULD BE PERMISSIBLE.

IN VIEW OF THE ACTING COMPTROLLER GENERAL'S DECISION OF JANUARY 11, 1937, 16 COMP. GEN. 644, THE DEPARTMENT UNDERSTOOD UNTIL RECENTLY THAT A LEASE OF THIS NATURE COULD BE CONSIDERED A LEASE FOR A ONE YEAR "RENTAL TERM," WITHIN THE MEANING OF SECTION 322 OF THE ECONOMY ACT, SUPRA, EVEN THOUGH IT WERE EXPRESSLY STIPULATED THAT THE CONTINUANCE OF THE LEASE WOULD BE SUBJECT TO THE AVAILABILITY OF AN APPROPRIATION AFTER THE END OF THE CURRENT FISCAL YEAR. THE ACTING COMPTROLLER GENERAL'S LETTER OF MARCH 28, 1940, B-7785, HOWEVER, HAS BROUGHT ABOUT A REEXAMINATION OF THE LAW CONCERNING THE FISCAL YEAR LIMITATIONS IMPOSED UPON LEASES BY SECTIONS 3679 AND 3732 OF THE REVISED STATUTES, AS AMENDED ( U.S.C. TITLE 31, SEC. 665; U.S.C. TITLE 41, SEC. 11). ALTHOUGH THE LEASES DISCUSSED IN THAT LETTER WERE NOT EXPRESSLY SUBJECT TO THE AVAILABILITY OF AN APPROPRIATION FOR RENT FOR THE SUCCEEDING FISCAL YEAR, IT NEVERTHELESS APPEARS TO THE DEPARTMENT, UNDER LEITER V. UNITED STATES, (1926) 271 U.S. 204, 207; AND GOODYEAR CO. V. UNITED STATES, (1928) 276 U.S. 287, 291, THAT THEY WOULD HAVE VIOLATED THOSE SECTIONS OF THE REVISED STATUTES EVEN THOUGH THEY HAD BEEN EXPRESSLY SO LIMITED. IN BOTH THE LEITER CASE AND THE GOODYEAR CASE THE LEASES PROVIDED FOR AUTOMATIC TERMINATION AS OF JUNE 30TH OF THE YEAR FOR WHICH AN APPROPRIATION WAS LAST AVAILABLE, AND IN BOTH CASES THE COURT STATED THAT THE LEASES WERE IN VIOLATION OF THOSE STATUTES INSOFAR AS THEIR TERMS EXTENDED BEYOND THE FIRST FISCAL YEAR-- I.E., PRESUMABLY, TO THE EXTENT THAT THEY CREATED A LIABILITY CONTINGENT UPON THE ENACTMENT OF APPROPRIATIONS FOR SUBSEQUENT FISCAL YEARS. AFFIRMATIVE ACTION BY OFFICERS OF THE GOVERNMENT WAS STATED TO BE NECESSARY TO CONTINUE THEM IN EFFECT AFTER THE FIRST YEAR, EVEN THOUGH APPROPRIATIONS AVAILABLE FOR THE PAYMENT OF RENT WERE MADE DURING SUCH YEAR. IN VIEW OF THESE DECISIONS THE DEPARTMENT BELIEVES THAT LEASES OF THE TYPE APPROVED IN 16 COMP. GEN. 644, EVEN THOUGH THEY MAY SATISFY THE ECONOMY ACT, CANNOT BE RECONCILED WITH THE PROVISIONS OF SECTIONS 3679 AND 3732 OF THE REVISED STATUTES.

IF THIS CONCLUSION IS CORRECT, IT WILL HEREAFTER BE NECESSARY TO DRAW LEASES ENTERED INTO UNDER ANNUAL APPROPRIATIONS ONLY FOR THE REMAINDER OF THE PARTICULAR FISCAL YEAR INVOLVED, SUBJECT TO AN OPTION TO RENEW FOR FURTHER PERIODS THEREAFTER. THE RESULT OF THIS PRACTICE WILL BE TO CURTAIL IN VARYING DEGREES THE AVAILABILITY OF APPROPRIATIONS FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS OF THE RENTED PREMISES, IF THE ORIGINAL TERM OF SUCH A LEASE MUST BE REGARDED AS THE "RENTAL TERM" WITHIN THE MEANING OF SECTION 322 OF THE ECONOMY ACT, SUPRA, WHICH RESTRICTS EXPENDITURES THEREFOR TO "25 PERCENTUM OF THE AMOUNT OF THE RENT FOR THE FIRST YEAR OF THE RENTAL TERM, OR FOR THE RENTAL TERM IF LESS THAN ONE YEAR * * *.' THE ACTING COMPTROLLER GENERAL'S DECISION OF JANUARY 11, 1937, SUPRA, IN EFFECT SO HOLDS, STATING WITH REGARD TO A PROPOSED LEASE FROM DATE OF OCCUPANCY TO JUNE 30, 1937, SUBJECT TO ANNUAL RENEWALS THEREAFTER (16 COMP. GEN., AT PAGE 646):

"IF THE LEASE SHOULD BE DRAWN IN ACCORDANCE WITH THE FOREGOING STATEMENT, THE RENTAL TERM BEING LESS THAN 1 YEAR, INSTEAD OF BEING DRAWN FOR 1 YEAR FROM DATE OF OCCUPANCY, THEN, UNDER THE PROVISIONS OF SECTION 322 OF THE ECONOMY ACT ANY PROVISION FOR PAYMENTS FOR ALTERATIONS OR IMPROVEMENTS MUST BE RESTRICTED TO AN AGGREGATE OF NOT TO EXCEED 25 PERCENT OF THE TOTAL AMOUNT OF THE RENT FOR THE PERIOD FROM DATE OF OCCUPANCY TO JUNE 30, 1937, AND NO AMOUNT FOR ALTERATIONS OR IMPROVEMENTS COULD BE INCLUDED IN ANY RENEWAL OF THE LEASE.'

SUCH A RULE SEEMS TO THE DEPARTMENT TO MAKE FOR NEEDLESS COMPLICATIONS IN LEASING AND FOR RESTRICTIONS UPON EXPENDITURES FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS WHICH WERE NEVER CONTEMPLATED BY SECTION 322 OF THE ECONOMY ACT. INDEED, SINCE THE RULE IS FOUNDED UPON THE INTERPRETATION THERE PLACED UPON THE STATUTORY PHRASE "RENTAL TERM," IT IS INCONSISTENT WITH THE RULE APPLIED IN THE ACTING COMPTROLLER GENERAL'S DECISION OF FEBRUARY 24, 1939, 18 COMP. GEN. 675, WITH REGARD TO THE AMOUNTS WHICH MAY BE EXPENDED FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS DURING RENEWAL PERIODS FOLLOWING ORIGINAL TERMS OF A FULL YEAR. IT WAS THERE STATED (AT PAGE 677):

"AS TO YOUR SECOND QUESTION RELATING TO FURTHER IMPROVEMENTS AFTER THE FIRST YEAR, IT IS NOTED THAT WHILE THE TERM OF THE LEASE IS FOR 1 YEAR IT MAY BE EXTENDED BY RENEWALS TO JUNE 30, 1941. THE RENTAL TERM, THEREFORE, WITHIN THE MEANING OF SECTION 322, SUPRA, DOES NOT IN FACT EXPIRE UNTIL JUNE 30, 1941.'

THE DEPARTMENT PERCEIVES NO SOUND REASON WHY DIFFERENT RULES SHOULD APPLY WHEN THE ORIGINAL TERM OF A LEASE IS FOR LESS THAN ONE YEAR AND WHEN IT IS FOR A FULL YEAR, IN BOTH CASES SUBJECT TO RENEWAL. MOREOVER,NO REASON APPEARS WHY THE WORDS "RENTAL TERM" IN THE STATUTE NECESSARILY REFER TO THE ORIGINAL TERMS OF LEASES. IN FACT, SINCE THE ORIGINAL TERMS OF GOVERNMENT LEASES RARELY EXCEED ONE YEAR, THE STATUTORY REFERENCE TO "THE FIRST YEAR OF THE RENTAL TERM" APPEARS STRONGLY TO SUPPORT THE OPPOSITE INTERPRETATION, NAMELY, THAT THE RENTAL TERM WITH WHICH THE STATUTE DEALS IS THE FULL PERIOD OF OCCUPANCY BY THE GOVERNMENT UNDER ANY PARTICULAR LEASE, AND INCLUDES RENEWAL PERIODS. UNLESS IT WAS THE PURPOSE OF THE STATUTE TO RESTRICT EXPENDITURES FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS TO 25 PERCENT OF THE RENT FOR THE FIRST YEAR OF SUCH OCCUPANCY, THEN THE OPERATION OF THE STATUTE MUST NECESSARILY BE NONUNIFORM AND GIVE RISE TO SOME SITUATIONS WHERE THE LIMIT OF EXPENDITURE IS NEGLIGIBLE, MERELY BECAUSE OF THE FORTUITOUS CIRCUMSTANCE THAT OCCUPANCY BEGINNING IMMEDIATELY PRIOR TO THE EXPIRATION OF A FISCAL YEAR CANNOT BE AVOIDED.

IT IS OF COURSE TRUE THAT THERE COULD BE NO JUSTIFICATION FOR SPENDING 25 PERCENT OF A FULL YEAR'S RENT AT THE BEGINNING OF A RENEWABLE TERM OF LESS THAN A YEAR UPON THE MERE EXPECTATION THAT FUTURE RENEWALS WOULD EXTEND THE PERIOD OF OCCUPANCY FOR THE FULL YEAR; AND AN AGREEMENT IN ADVANCE TO EXERCISE THE RIGHT OF RENEWAL WOULD BE INEFFECTIVE TO BIND THE GOVERNMENT. WHILE THERE MIGHT STILL BE MANY ADMINISTRATIVE DIFFICULTIES IN SECURING PREMISES SUITABLE FOR GOVERNMENT OCCUPANCY UNDER THE SUGGESTED VIEW OF THE STATUTE, YET THIS VIEW WOULD AT LEAST PERMIT NEEDED ALTERATIONS, IMPROVEMENTS, AND REPAIRS TO BE MADE IN PART WHEN A LEASE IS ENTERED INTO AND IN PART AT THE TIME OF ITS RENEWAL. IT WOULD ALSO PERMIT ALL NEEDED ALTERATIONS, IMPROVEMENTS, AND REPAIRS TO BE MADE BY THE LESSOR AT THE BEGINNING OF THE TERM, UNDER AN AGREEMENT THAT THE LESSOR WOULD BE REIMBURSED THEREFOR BY PARTIAL PAYMENTS APPORTIONING THE COST OVER THE FIRST YEAR OF OCCUPANCY, PAYABLE WITH THE RENT UNTIL THE END OF THE FISCAL YEAR, AND THEREAFTER FOR THE BALANCE OF THE FIRST YEAR OF OCCUPANCY IN THE EVENT OF THE RENEWAL OF THE LEASE--- IN CASES WHERE LESSORS WOULD BE WILLING TO ENTER INTO SUCH AN AGREEMENT. IF EXPENDITURES FOR THIS PURPOSE WERE APPORTIONED EVENLY ON A YEARLY BASIS, THERE COULD BE NO VIOLATION OF THE ECONOMY ACT LIMITATION EVEN THOUGH THE RIGHT OF RENEWAL WERE NOT EXERCISED.

ADOPTION OF THE VIEWS HEREIN SET FORTH WOULD APPEAR TO RECONCILE ALL OF THE ABOVE CITED DECISIONS ON THEIR PARTICULAR FACTS AND WOULD, IT IS BELIEVED, ELIMINATE THE INCONSISTENCIES OF OPINION WHICH HAVE BEEN POINTED OUT. IT WOULD NOT CREATE AN ENTIRELY DESIRABLE SITUATION FROM AN ADMINISTRATIVE STANDPOINT, BUT THE RESULT WOULD APPEAR TO BE AS DESIRABLE AS THE APPLICABLE STATUTES PERMIT. IT IS REQUESTED ACCORDINGLY, THAT YOU RECONSIDER THE MATTER AND ADVISE THE DEPARTMENT WHETHER, IF A LEASE IS CONCLUDED WITH THE ABOVE-NAMED BIDDER FOR THE REMAINDER OF THE CURRENT FISCAL YEAR, SUBJECT TO RENEWALS UP TO JUNE 30, 1942, YOUR OFFICE WILL OBJECT TO EXPENDITURES FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS AMOUNTING TO NOT MORE THAN 25 PERCENT OF THE ANNUAL RENTAL RATE, MADE EITHER IN INSTALLMENTS OR UNDER THE COST APPORTIONMENT METHOD, AS OUTLINED ABOVE--- ASSUMING, OF COURSE, THAT THE RENTAL RATE ITSELF IS WITHIN THE STATUTORY LIMIT OR IS BELOW THE AMOUNT TO WHICH THE STATUTE IS APPLICABLE.

SINCE THE WAREHOUSING FACILITIES HERE IN QUESTION ARE URGENTLY NEEDED, A DECISION AT YOUR EARLIEST CONVENIENCE WILL BE APPRECIATED.

SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, 47 STAT. 412, PROVIDES AS FOLLOWS:

HEREAFTER NO APPROPRIATION SHALL BE OBLIGATED OR EXPENDED FOR THE RENT OF ANY BUILDING OR PART OF A BUILDING TO BE OCCUPIED FOR GOVERNMENT PURPOSES AT A RENTAL IN EXCESS OF THE PER ANNUM RATE OF 15 PERCENTUM OF THE FAIR MARKET VALUE OF THE RENTED PREMISES AT DATE OF THE LEASE UNDER WHICH THE PREMISES ARE TO BE OCCUPIED BY THE GOVERNMENT NOR FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS OF THE RENTED PREMISES IN EXCESS OF 25 PERCENTUM OF THE AMOUNT OF THE RENT FOR THE FIRST YEAR OF THE RENTAL TERM, OR FOR THE RENTAL TERM IF LESS THAN ONE YEAR: PROVIDED, THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO LEASES HERETOFORE MADE, EXCEPT WHEN RENEWALS THEREOF ARE MADE HEREAFTER, NOR TO LEASES OF PREMISES IN FOREIGN COUNTRIES FOR THE FOREIGN SERVICES OF THE UNITED STATES. ( ITALICS SUPPLIED.)

SAID SECTION WAS AMENDED BY THE ACT OF MARCH 3, 1933, 47 STAT. 1517, RESTRICTING APPLICATION OF ITS PROVISIONS "AS APPLICABLE TO RENTALS" TO LEASES "WHERE THE RENTAL TO BE PAID SHALL EXCEED $2,000 PER ANNUM.'

AS A MATTER OF LAW, NO LEASE ENTERED INTO WITH THE GOVERNMENT OR ON BEHALF OF THE GOVERNMENT UNDER AN ANNUAL APPROPRIATION IS BINDING ON THE GOVERNMENT BEYOND THE FISCAL YEAR CURRENT AT THE TIME OF MAKING SUCH LEASE IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY OTHERWISE. AS STATED IN THE DECISION OF MARCH 28, 1940, B-7785, TO YOU, REFERRED TO IN YOUR LETTER:

IT IS SETTLED THAT A LEASE TO THE GOVERNMENT MADE UNDER AUTHORITY OF AN ANNUAL APPROPRIATION IS NOT EFFECTIVE BEYOND THE END OF THE FISCAL YEAR FOR WHICH THE APPROPRIATION IS MADE, AND THAT IF THE LEASE IS MADE FOR A LONGER TERM IT MAY BE VIEWED AS BINDING THE GOVERNMENT TO THE END OF SUCH FISCAL YEAR, ONLY, WITH AN OPTION IN THE GOVERNMENT TO RENEW THE LEASE FOR THE FURTHER PERIOD, CONTINGENT UPON THE AVAILABILITY OF FUTURE APPROPRIATIONS FOR THAT PURPOSE. SECTION 3679, REVISED STATUTES, AS AMENDED, 31 U.S.C. 665; SECTION 3732, REVISED STATUTES, 41 U.S.C. 11; LEITER V. UNITED STATES, 271 U.S. 204; GOODYEAR V. UNITED STATES, 276 U.S. 287; BROWNSTEIN-LOUIS COMPANY V. UNITED STATES, NO. 44108, DECIDED BY THE COURT OF CLAIMS OCTOBER 2, 1939; 1 COMP. GEN. 10; 5 ID. 355; ID. 522; A- 91697, MARCH 3, 1938. IN LEITER V. UNITED STATES, 271 U.S. 204, 207, THE SUPREME COURT SAID: "* * * A LEASE TO THE GOVERNMENT FOR A TERM OF YEARS, WHEN ENTERED INTO UNDER AN APPROPRIATION AVAILABLE FOR BUT ONE FISCAL YEAR, IS BINDING ON THE GOVERNMENT ONLY FOR THAT YEAR. MCCOLLUM V. UNITED STATES, 17 CT.CLS. 92, 104; SMOOT V. UNITED STATES, 38 CT.CLS. 418, 427. AND IT IS PLAIN THAT, TO MAKE IT BINDING FOR ANY SUBSEQUENT YEAR, IT IS NECESSARY, NOT ONLY THAT AN APPROPRIATION BE MADE AVAILABLE FOR THE PAYMENT OF THE RENT, BUT THAT THE GOVERNMENT, BY ITS DULY AUTHORIZED OFFICERS, AFFIRMATIVELY CONTINUE THE LEASE FOR SUCH SUBSEQUENT YEAR; THEREBY, IN EFFECT, BY THE ADOPTION OF THE ORIGINAL LEASE, MAKING A NEW LEASE UNDER THE AUTHORITY OF SUCH APPROPRIATION FOR THE SUBSEQUENT YEAR. * * *" IT THUS APPEARS THAT LEASES SUCH AS CONSIDERED IN 16 COMP. GEN. 644, IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR, WOULD BE BINDING ON THE GOVERNMENT ONLY TO THE END OF THE FISCAL YEAR FOR WHICH THE APPROPRIATION INVOLVED WAS AVAILABLE AT THE TIME OF THE MAKING OF THE LEASE, WITH AN OPTION IN THE GOVERNMENT OF RENEWAL FROM YEAR TO YEAR UNTIL THE END OF THE RENEWAL PERIOD. IN THIS CONNECTION IT IS NOTED THAT THE STANDARD FORM OF GOVERNMENT LEASE SPECIFICALLY REQUIRES AFFIRMATIVE ACTION BY DULY AUTHORIZED AGENTS OR OFFICERS OF THE GOVERNMENT IF THE LEASE IS TO BE CONTINUED, PARAGRAPH 5 OF THE SAID STANDARD FORM OF GOVERNMENT LEASE CONDITIONING RENEWAL UPON WRITTEN NOTICE TO THE LESSOR PRIOR TO THE EXPIRATION OF THE ORIGINAL LEASE TERM. THE SAME PRINCIPLES APPLY WITH RESPECT TO LEASES SUCH AS CONSIDERED IN 18 COMP. GEN. 675, AND THE FACT THAT THE ORIGINAL TERM OF THE LEASE IS FOR 1 FULL FISCAL YEAR OR FOR A LESSER PERIOD APPEARS TO BE IMMATERIAL INSOFAR AS THIS FEATURE OF THE MATTER IS CONCERNED. IN THE LATTER DECISION IT WAS HELD, ALSO, AS QUOTED IN YOUR LETTER, THAT WHEN THE AMOUNT AUTHORIZED FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS, NOT TO EXCEED 25 PERCENTUM OF THE NET RENT FOR THE FIRST YEAR, IS NOT EXPENDED DURING THE ORIGINAL PERIOD OF THE LEASE, AND THE LEASE IS RENEWED IN ACCORDANCE WITH THE REQUIREMENTS OF LAW, THE BALANCE THEREOF MAY BE USED AT ANY TIME DURING ANY RENEWAL PERIOD PROVIDING THAT THE AGGREGATE EXPENDITURES DURING THE FIRST YEAR AND THE SUBSEQUENT YEARS DO NOT EXCEED 25 PERCENT OF THE FIRST YEAR'S RENT. THAT IS TO SAY, WHILE A LEASE MADE UNDER AUTHORITY OF A FISCAL YEAR APPROPRIATION MAY NOT OBLIGATE THE GOVERNMENT BEYOND THE END OF SUCH FISCAL YEAR, IF THE LEASE RESERVES TO, AND VESTS IN, THE UNITED STATES THE RIGHT TO RENEW THE LEASE, AND SUCH LEASE IS ACTUALLY RENEWED UNDER AUTHORITY OF A SUBSEQUENT YEAR APPROPRIATION AND THE RESERVED RIGHT IN THE LEASE, THE "RENTAL TERM," WITHIN THE INTENT OF SECTION 322 OF THE ECONOMY ACT, SUPRA, MAY BE VIEWED AS CONTINUING OVER, AND AS INCLUDING, THE EXTENDED PERIOD, SO THAT THE LIMITATION IN THE ECONOMY ACT IS SATISFIED IF NOT MORE THAN 25 PERCENTUM OF THE RENT FOR THE FIRST ACTUAL YEAR OF THE RENTAL TERM, AS SO PROLONGED, IS EXPENDED FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS, DURING THE ENTIRE PERIOD THE PREMISES ARE OCCUPIED UNDER SUCH LEASE AND ALL RENEWALS THEREOF. THIS IS SUBJECT, OF COURSE, TO THE FURTHER LIMITATION THAT IF THE WHOLE PERIOD, INCLUDING RENEWALS, IS LESS THAN A FULL YEAR, NOT MORE THAN 25 PERCENTUM OF THE RENT FOR SUCH WHOLE PERIOD LESS THAN A YEAR MAY BE SO EXPENDED. AS SUGGESTED BY YOUR LETTER, A DIFFERENT INTERPRETATION WOULD RESULT IN THE ANOMALOUS SITUATION THAT TWELVE TIMES AS MUCH COULD BE SPENT FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS UNDER A LEASE EFFECTIVE ON JULY FIRST, AT THE BEGINNING OF A FISCAL YEAR, AS COULD BE EXPENDED UNDER A LEASE FOR THE SAME PREMISES MADE JUNE FIRST AND RENEWED JULY FIRST FOR THE FOLLOWING FISCAL YEAR. THERE IS NO EVIDENCE THAT THE LANGUAGE "FIRST YEAR OF THE RENTAL TERM" IN THE ECONOMY ACT WAS USED IN ANY SUCH RESTRICTED SENSE OR AS INTENDING SUCH AN UNREASONABLE RESULT. GIVING EFFECT TO THE PURPOSE OF THE LEGISLATION, THE MORE REASONABLE CONNOTATION OF THE LANGUAGE "FIRST YEAR OF THE RENTAL TERM" IS THE FIRST ENTIRE YEAR OF ACTUAL TENURE UNDER THE LEASE AND ANY RENEWALS MADE PURSUANT TO A RIGHT RESERVED IN THE LEASE, AND ANY PRIOR DECISION WHICH MAY BE UNDERSTOOD AS INDICATING A DIFFERENT VIEW WILL NOT BE REGARDED AS CONTROLLING IN THAT RESPECT. IT IS TO BE BORNE IN MIND, HOWEVER, THAT UNLESS AND UNTIL A LEASE IS RENEWED, THE RIGHT OF RENEWAL IS INCHOATE AND MAY NEVER BE EXERCISED TO EXTEND THE RENTAL TERM BEYOND THE ORIGINAL PERIOD, AND, THEREFORE, NO EXPENDITURES FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS IN EXCESS OF 25 PERCENTUM OF THE RENTAL FOR SUCH ORIGINAL PERIOD IS AUTHORIZED UNLESS AND UNTIL A RESERVED RIGHT OF RENEWAL IS EXERCISED UNDER A LEASE MADE FOR AN ORIGINAL PERIOD OF LESS THAN 1 YEAR.