B-112978, JAN 8, 1953

B-112978: Jan 8, 1953

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FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 24. SINCE IT IS UNDERSTOOD THAT A COPY OF THE REPORT WAS FURNISHED TO YOU. IT IS NOT BELIEVED NECESSARY TO REPEAT HERE ANY PORTION THEREOF. WHICH WERE ATTACHED TO YOUR LETTER. CERTAIN INDIRECT COSTS IN THE COFFEE ROASTING OPERATIONS ARE NOT INCLUDED IN THE SALES PRICES TO THE COMMISSARIES AND POST EXCHANGES. THE PROVIDING OF BENEFITS AND ADVANTAGES TO CERTAIN CLASSES OF PERSONNEL AT PUBLIC EXPENSE WITHOUT REIMBURSEMENT THEREFOR IS NOT AUTHORIZED. THAT ONLY THE CONGRESS SHALL HAVE THE POWER TO DISPOSE OF AND TO MAKE ALL NEEDFUL RULES AND REGULATIONS RESPECTING THE PROPERTY BELONGING TO THE UNITED STATES AND THE SUPREME COURT OF THE UNITED STATES IN ROYAL INDEMNITY COMPANY V.

B-112978, JAN 8, 1953

PRECIS-UNAVAILABLE

HONORABLE HERBERT C. BONNER, CHAIRMAN:

INTER-GOVERNMENTAL RELATIONS SUBCOMMITTEE COMMITTEE ON GOVERNMENT OPERATIONS HOUSE OF REPRESENTATIVES.

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 24, 1952, ACKNOWLEDGED DECEMBER 4, REQUESTING A DECISION AS TO THE LEGALITY OF THE SALE OF GOVERNMENT-MANUFACTURED COFFEE THROUGH MILITARY EXCHANGES, COMMISSARIES, ETC., TO PERSONNEL WITHOUT THE INCLUSION OF ALL DIRECT AND INDIRECT COSTS.

ON OCTOBER 1, 1952, THE MUNITIONS BOARD ISSUED A STAFF REPORT ON COFFEE ROASTING OPERATIONS OF THE DEPARTMENT OF DEFENSE WHICH, AMONG OTHER THINGS, SHOWS THE COSTS INCLUDED IN THE SALE PRICES OF COFFEE BY EACH OF THE SERVICES UNDER THE DEPARTMENT OF DEFENSE. SINCE IT IS UNDERSTOOD THAT A COPY OF THE REPORT WAS FURNISHED TO YOU, IT IS NOT BELIEVED NECESSARY TO REPEAT HERE ANY PORTION THEREOF. OF COURSE, AS DISCLOSED IN THE EXCERPTS OF TESTIMONY BEFORE YOUR COMMITTEE, WHICH WERE ATTACHED TO YOUR LETTER, CERTAIN INDIRECT COSTS IN THE COFFEE ROASTING OPERATIONS ARE NOT INCLUDED IN THE SALES PRICES TO THE COMMISSARIES AND POST EXCHANGES. AS INDICATED IN YOUR LETTER, THIS CONCEIVABLY MIGHT BE CONSIDERED AS VIOLATING AT LEAST THE SPIRIT OF SECTION 3 OF THE ACT OF JUNE 20, 1874, 5 U.S.C. 71 AND SECTION 1765, REVISED STATUTES, 5 U.S.C. 70, PROHIBITING GENERALLY THE RECEIPT BY FEDERAL PERSONNEL OF ADDITIONAL COMPENSATION IN ANY FORM WHATEVER.

IT CONSISTENTLY HAS BEEN THE VIEW OF THE GENERAL ACCOUNTING OFFICE THAT, IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY, THE PROVIDING OF BENEFITS AND ADVANTAGES TO CERTAIN CLASSES OF PERSONNEL AT PUBLIC EXPENSE WITHOUT REIMBURSEMENT THEREFOR IS NOT AUTHORIZED. SEE THE SPECIAL REPORT DATED AUGUST 10, 1949, B-45101, OF THIS OFFICE TO THE CONGRESS ON THE IMPROPER HANDLING OF CERTAIN FUNDS RECEIVED PRIMARILY FROM REVENUE PRODUCING ACTIVITIES. AS STATED IN THAT REPORT, SECTION 3 OF ARTICLE IV OF THE CONSTITUTION OF THE UNITED STATES PROVIDES, IN EFFECT, THAT ONLY THE CONGRESS SHALL HAVE THE POWER TO DISPOSE OF AND TO MAKE ALL NEEDFUL RULES AND REGULATIONS RESPECTING THE PROPERTY BELONGING TO THE UNITED STATES AND THE SUPREME COURT OF THE UNITED STATES IN ROYAL INDEMNITY COMPANY V. UNITED STATES, 313 U.S. 289, 294, CITING THAT CONSTITUTIONAL PROVISION SAID:

"POWER TO RELEASE OR OTHERWISE DISPOSE OF THE RIGHTS AND PROPERTY OF THE UNITED STATES IS LODGED IN THE CONGRESS BY THE CONSTITUTION *** SUBORDINATE OFFICERS OF THE UNITED STATES ARE WITHOUT THAT POWER, SAVE ONLY AS IT HAS BEEN CONFERRED UPON THEM BY ACT OF CONGRESS OR IS TO BE IMPLIED FROM OTHER POWERS SO GRANTED."

NO STATUTORY AUTHORITY HAS BEEN FOUND FOR THE SALE OF COFFEE ROASTED IN GOVERNMENT-OWNED PLANTS TO THE COMMISSARIES AND POST EXCHANGES AT PRICES INSUFFICIENT TO RECOVER ALL DIRECT AND FEASIBLY ASCERTAINED INDIRECT COSTS. IN FACT, THE AFOREMENTIONED STAFF REPORT STATES THAT THE ONLY STATUTORY AUTHORITY RELIED UPON BY THE DEPARTMENT OF DEFENSE FOR EVEN OPERATING THE ROASTING PLANTS IS THE REFERENCE THERETO IN ANNUAL APPROPRIATION ACTS, THE ONLY ONE IN THE CASE OF THE ARMY BEING THE ONE FOR THE FISCAL YEAR 1913, 37 STAT. 569, 578, AND AS TO THE NAVY THE APPROPRIATION ACTS FOR THE NAVAL SERVICE BEGINNING WITH THE FISCAL YEAR 1858, 11 STAT. 243, 244.

IN ANSWER TO YOUR SPECIFIC QUESTION, IT IS THE VIEW OF THIS OFFICE THAT THERE IS NO LEGAL BASIS FOR THE SALE OF GOVERNMENT-MANUFACTURED COFFEE THROUGH EXCHANGES TO PERSONNEL WITHOUT THE INCLUSION OF ALL DIRECT AND INDIRECT COSTS.