B-125108, OCTOBER 18, 1955, 35 COMP. GEN. 207

B-125108: Oct 18, 1955

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EXCESS PROPERTY - CAPITALIZED UNDER WORKING CAPITAL FUNDS - TRANSFER TO OTHER FEDERAL AGENCIES DEPARTMENT OF DEFENSE EXCESS PROPERTY WHICH IS CAPITALIZED UNDER WORKING CAPITAL FUNDS ESTABLISHED PURSUANT TO SECTION 405 OF THE NATIONAL SECURITY ACT OF 1947 SHOULD BE DISPOSED OF UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 AND WHERE EXCESS PROPERTY IS TRANSFERRED TO OTHER FEDERAL AGENCIES THE HEAD OF THE DEPARTMENT MAY REQUEST REIMBURSEMENT AT THE FAIR VALUE OF THE PROPERTY OR AUTHORIZE THE TRANSFER WITHOUT REIMBURSEMENT. THE ASSISTANT SECRETARY OF DEFENSE STATES THAT IT IS THE VIEW OF THE DEPARTMENT OF DEFENSE THAT WORKING CAPITAL FUNDS AUTHORIZED BY SECTION 405 OF THE NATIONAL SECURITY ACT.

B-125108, OCTOBER 18, 1955, 35 COMP. GEN. 207

EXCESS PROPERTY - CAPITALIZED UNDER WORKING CAPITAL FUNDS - TRANSFER TO OTHER FEDERAL AGENCIES DEPARTMENT OF DEFENSE EXCESS PROPERTY WHICH IS CAPITALIZED UNDER WORKING CAPITAL FUNDS ESTABLISHED PURSUANT TO SECTION 405 OF THE NATIONAL SECURITY ACT OF 1947 SHOULD BE DISPOSED OF UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 AND WHERE EXCESS PROPERTY IS TRANSFERRED TO OTHER FEDERAL AGENCIES THE HEAD OF THE DEPARTMENT MAY REQUEST REIMBURSEMENT AT THE FAIR VALUE OF THE PROPERTY OR AUTHORIZE THE TRANSFER WITHOUT REIMBURSEMENT.

TO THE SECRETARY OF DEFENSE, OCTOBER 18, 1955:

BY LETTER OF AUGUST 8, 1955, THE ASSISTANT SECRETARY OF DEFENSE ( COMPTROLLER) REQUESTS OUR DECISION AS TO WHETHER EXCESS PROPERTY HELD BY CERTAIN WORKING CAPITAL FUNDS IN THE DEPARTMENT OF DEFENSE MAY BE LEGALLY TRANSFERRED TO OTHER FEDERAL AGENCIES WITHOUT REIMBURSEMENT.

THE ASSISTANT SECRETARY OF DEFENSE STATES THAT IT IS THE VIEW OF THE DEPARTMENT OF DEFENSE THAT WORKING CAPITAL FUNDS AUTHORIZED BY SECTION 405 OF THE NATIONAL SECURITY ACT, 1947, AS AMENDED, AND AS ESTABLISHED AND OPERATED PURSUANT TO THE STATUTORY REGULATION ISSUED BY THE SECRETARY OF DEFENSE ARE REQUIRED BY LAW TO BE REIMBURSED FOR TRANSFERS OF PROPERTY THEREFROM, WITH THE EXCEPTION OF PROPERTY TRANSFERRED FOR DONATION PURSUANT TO THE PROVISIONS OF SECTION 203 (J) OF THE FEDERAL PROPERTY ACT. HE STATES FURTHER THE CONGRESS RECOGNIZED THAT WORKING CAPITAL FUNDS ESTABLISHED UNDER THE AUTHORITY OF SECTION 405 AND THE STATUTORY REGULATIONS IN IMPLEMENTATION THEREOF REQUIRED REIMBURSEMENT FOR TRANSFERS OF PROPERTY THEREFROM BY ITS ENACTMENT OF PUBLIC LAW 61 OF THE 84TH CONGRESS, 69 STAT. 83, 40 U.S.C. 484 (J) (1).

SECTION 405 OF THE NATIONAL SECURITY ACT OF 1947, AS ADDED BY SECTION 11 OF THE NATIONAL SECURITY ACT AMENDMENTS OF 1949, PUBLIC LAW 216, APPROVED AUGUST 10, 1949, 63 STAT. 578, 587, 5 U.S.C. 172 (D), WHICH ESTABLISHED THESE WORKING CAPITAL FUNDS, PROVIDES, IN PART, AS FOLLOWS:

(C) SUCH FUNDS SHALL BE---

(1) CHARGED, WHEN APPROPRIATE, WITH THE COST OF STORES, SUPPLIES, MATERIALS, AND EQUIPMENT PROCURED OR OTHERWISE ACQUIRED, MANUFACTURED, REPAIRED, ISSUED, AND CONSUMED AND OF SERVICES RENDERED OR WORK PERFORMED, INCLUDING APPLICABLE ADMINISTRATIVE EXPENSES; AND

(2) REIMBURSED FROM AVAILABLE APPROPRIATIONS OR OTHERWISE CREDITED FOR THE COST OF STORES, SUPPLIES, MATERIALS, OR EQUIPMENT FURNISHED AND OF SERVICES RENDERED OR WORK PERFORMED, INCLUDING APPLICABLE ADMINISTRATIVE EXPENSES.

WHILE THE FOREGOING SUBSECTION (C) (2) PROVIDES THAT FUNDS SHALL BE REIMBURSED FOR THE COST OF STORES, SUPPLIES, MATERIALS, OR EQUIPMENT FURNISHED AND OF SERVICES RENDERED OR WORK PERFORMED, THERE IS NO SPECIFIC REQUIREMENT IN THAT PROVISION OF LAW THAT THE FUNDS SHALL BE REIMBURSED WITH THE PROCEEDS FROM THE TRANSFER OF ANY EXCESS SUPPLIES, MATERIALS, OR EQUIPMENT CAPITALIZED UNDER THE FUNDS. THE LANGUAGE USED SEEMS TO BE DIRECTED MORE TO THE FURNISHING OF SUPPLIES, MATERIALS, AND EQUIPMENT OR THE RENDERING OF SERVICES PRIMARILY TO THE DEPARTMENTS AND AGENCIES OF THE DEPARTMENT OF DEFENSE--- THE VERY PURPOSE FOR WHICH THE FUNDS WERE CREATED --- FOR WHICH SUPPLIES OR SERVICES THE FUND WOULD BE REIMBURSED FOR THE "COST" THEREOF. SELDOM WOULD THE PROCEEDS FROM THE DISPOSITION OF EXCESS PROPERTY BE EQUAL TO THE ORIGINAL "COST" OF SUCH PROPERTY.

THIS VIEW IS SUBSTANTIATED BY THE FACT THAT NO MENTION WHATSOEVER OF THE DISPOSITION OF EXCESS PROPERTY CAPITALIZED UNDER THE FUNDS HAS BEEN FOUND IN THE LEGISLATIVE HISTORY OF TITLE IV OF THE NATIONAL SECURITY ACT OF 1947, AS AMENDED. IT DOES NOT APPEAR REASONABLE TO ASSUME THAT THE CONGRESS INTENDED TO GRANT SUCH A SUBSTANTIAL EXCEPTION FROM THE REQUIREMENT OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, PUBLIC LAW 152, APPROVED JUNE 30, 1949, 63 STAT. 377, 40 U.S.C. 483, RELATING TO THE EXCESS PROPERTY OF ALL EXECUTIVE AGENCIES, INCLUDING THE DEPARTMENT OF DEFENSE WITH CERTAIN SPECIFIED EXCEPTIONS, WITHOUT SOME DISCUSSION THEREOF BEING REFLECTED IN THE LEGISLATIVE HISTORY OF TITLE IV. PARTICULARLY IS THIS TRUE WHEN CONSIDERATION IS GIVEN TO THE FACT ABOUT 90 PERCENT OF ALL EXCESS PROPERTY ORIGINATES IN THE DEPARTMENT OF DEFENSE.

ACCEPTING THE VIEW THAT THE LANGUAGE CONTAINED IN SUBSECTION (C) (2) IS NOT APPLICABLE TO EXCESS PROPERTY, THE LANGUAGE IS NOT INCONSISTENT WITH THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 RELATING TO THE PROCEEDS FROM THE DISPOSITION OF EXCESS PROPERTY. HENCE, SECTION 411 OF THE NATIONAL SECURITY ACT OF 1947, AS AMENDED, REPEALING ALL LAWS, ORDERS, AND REGULATIONS INCONSISTENT WITH TITLE IV OF THAT ACT, DOES NOT AFFECT SUCH PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949. EVEN WHERE THE LANGUAGE OF TWO ACTS SEEMS TO BE REPUGNANT, IT IS A WELL ESTABLISHED RULE OF STATUTORY CONSTRUCTION THAT THE TWO ACTS SHOULD BE HARMONIZED OR RECONCILED SO AS TO PERMIT BOTH TO STAND AND BE OPERATIVE AND EFFECTIVE IF IT IS POSSIBLE TO DO SO BY ANY FAIR AND REASONABLE CONSTRUCTION. SEE 82 C.J.S., STATUTES, SECTION 291C. IT THUS IS OUR VIEW THAT EXCESS PROPERTY CAPITALIZED UNDER THESE WORKING CAPITAL FUNDS OF THE DEPARTMENT OF DEFENSE SHOULD BE DISPOSED OF UNDER THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED.

SECTIONS 202 (A) AND 204 (A) AND (B) OF THAT ACT PROVIDE AS FOLLOWS:

SECTION 202. (A) * * * THE ADMINISTRATOR, WITH THE APPROVAL OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, SHALL PRESCRIBE THE EXTENT OF REIMBURSEMENT FOR SUCH TRANSFERS OF EXCESS PROPERTY: PROVIDED, THAT REIMBURSEMENT SHALL BE REQUIRED OF THE FAIR VALUE, AS DETERMINED BY THE ADMINISTRATOR, OF ANY EXCESS PROPERTY TRANSFERRED WHENEVER NET PROCEEDS ARE REQUESTED PURSUANT TO SECTION 204 (B) * * *.

SECTION 204. (A) ALL PROCEEDS UNDER THIS TITLE FROM ANY TRANSFER OF EXCESS PROPERTY TO A FEDERAL AGENCY FOR ITS USE, OR FROM ANY SALE, LEASE, OR OTHER DISPOSITION OF SURPLUS PROPERTY, SHALL BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS, EXCEPT AS PROVIDED IN SUBSECTIONS (B), (C), (D), AND (E) OF THIS SECTION.

(B) WHERE THE PROPERTY TRANSFERRED OR DISPOSED OF WAS ACQUIRED BY THE USE OF FUNDS EITHER NOT APPROPRIATED FROM THE GENERAL FUND OF THE TREASURY OR APPROPRIATED THEREFROM BUT BY LAW REIMBURSABLE FROM ASSESSMENT, TAX, OR OTHER REVENUE OR RECEIPTS, THEN THE NET PROCEEDS OF THE DISPOSITION OR TRANSFER SHALL BE CREDITED TO THE REIMBURSABLE FUND OR APPROPRIATION OR PAID TO THE FEDERAL AGENCY WHICH DETERMINED SUCH PROPERTY TO BE EXCESS: *

THERE CAN BE NO QUESTION BUT THAT THESE WORKING CAPITAL FUNDS ARE "BY LAW REIMBURSABLE FROM ASSESSMENT, TAX, OR OTHER REVENUE OR RECEIPTS" WITHIN THE MEANING OF THAT PHRASE AS USED IN SECTION 204 (B) ABOVE. SECTION 202, AS ORIGINALLY ENACTED, REQUIRED THAT TRANSFERS OF EXCESS PROPERTY BETWEEN FEDERAL AGENCIES BE AT THE FAIR VALUE THEREOF UNLESS SUCH TRANSFERS WERE OTHERWISE AUTHORIZED BY A LAW APPROVED SUBSEQUENT TO JUNE 21, 1944, TO BE WITHOUT REIMBURSEMENT OR TRANSFER OF FUNDS. THIS REQUIREMENT FOR REIMBURSEMENT AT FAIR VALUE WITH ONLY LIMITED EXCEPTIONS PRECLUDED MAXIMUM UTILIZATION OF EXCESS PROPERTY AND, IN ORDER TO PERMIT BETTER UTILIZATION OF EXCESS PROPERTY, SECTION 202 WAS AMENDED BY PUBLIC LAW 522, APPROVED JULY 12, 1952, 66 STAT. 593, 40 U.S. CODE 487, TO PERMIT THE ADMINISTRATOR OF GENERAL SERVICES, WITH THE APPROVAL OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, TO DETERMINE THE EXTENT OF REIMBURSEMENT TO BE MADE FOR TRANSFERS OF EXCESS PROPERTY. IT WAS IN THIS AMENDMENT TO SECTION 202 THAT THERE WAS ENACTED THE PRESENT PROVISO TO SECTION 202 (A) TO THE EFFECT THAT REIMBURSEMENT SHALL BE REQUIRED OF THE FAIR VALUE OF ANY EXCESS PROPERTY TRANSFERRED WHENEVER NET PROCEEDS ARE REQUESTED PURSUANT TO SECTION 204 (B). THE PHRASE ,WHENEVER NET PROCEEDS ARE REQUESTED PURSUANT TO SECTION 204 (B)" IN SECTION 202 (A) CLEARLY INDICATES THAT REIMBURSEMENT AT FAIR VALUE WAS NOT INTENDED TO BE MANDATORY IN ALL CASES WHERE THE PROPERTY WAS ORIGINALLY ACQUIRED WITH REIMBURSABLE FUNDS, BUT ONLY IN SUCH CASES WHERE THE HEAD OF THE AGENCY REQUESTED REIMBURSEMENT. THIS SEEMS ALL THE MORE TRUE WHEN CONSIDERED IN THE LIGHT OF THE OVERALL PURPOSE OF THIS AMENDMENT TO OBTAIN BETTER UTILIZATION OF THE PROPERTY BY PERMITTING TRANSFERS OF EXCESS PROPERTY TO BE MADE WITHOUT REIMBURSEMENT.

WE DO NOT VIEW THE ENACTMENT OF PUBLIC LAW 61, APPROVED JUNE 3, 1955, 69 STAT. 83, AS BEING A RECOGNITION ON THE PART OF THE CONGRESS THAT THE WORKING CAPITAL FUNDS WERE REQUIRED BY LAW TO BE REIMBURSED FOR TRANSFERS OF EXCESS OR SURPLUS PROPERTY. TO THE CONTRARY, THE LEGISLATIVE HISTORY OF THAT ACT SHOWS CLEARLY THAT THE CONGRESS HAD ALWAYS INTENDED THAT THE AUTHORITY CONTAINED IN THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, RELATING TO THE DONATION OF SURPLUS PROPERTY, BE PARAMOUNT TO THE AUTHORITY OF SECTION 405 OF THE NATIONAL SECURITY ACT OF 1947, AS AMENDED. THE PURPOSE OF PUBLIC LAW 61 WAS SET OUT ON PAGE 3, HOUSE REPORT NO. 206, 84TH CONGRESS, ST SESSION, AS BEING "TO CARRY OUT THE INTENT OF CONGRESS AS EXPRESSED IN PUBLIC LAW 152, ENACTED JUNE 30, 1949, AND PUBLIC LAW 754, ENACTED SEPTEMBER 5, 1950," 5 U.S.C. 630G. IN SENATE REPORT NO. 351, 84TH CONGRESS, ST SESSION, PAGE 1, SUCH PURPOSE IS SET FORTH AS MAKING "CLEAR THAT THE CONGRESS DOES NOT INTEND, AND HAS NEVER INTENDED, TO EXEMPT SURPLUS PERSONAL PROPERTY FROM THE DONATION PROGRAM MERELY BECAUSE IT IS CARRIED IN A WORKING CAPITAL FUND MANAGED BY THE DEPARTMENT OF DEFENSE OR ANY OTHER AGENCY, REGARDLESS OF THE TIME IT WAS PROCURED OR THE ACCOUNTING CLASSIFICATION UNDER WHICH PROCURED OR CARRIED ON THE BOOKS OF THE OWNING AGENCY.' THE LEGISLATIVE HISTORY OF THIS ACT IS REPLETE WITH OTHER EXPRESSIONS TO THE EFFECT THAT REIMBURSEMENT FOR SURPLUS PROPERTY CAPITALIZED UNDER THE WORKING CAPITAL FUNDS AND OTHERWISE WITHIN THE DONATION PROGRAM WAS NOT REQUIRED BY LAW. TO THIS EXTENT, THE PROPOSED LEGISLATION, ENACTED AS PUBLIC LAW 61, APPEARS TO HAVE BEEN INTENDED AS A MERE CLARIFICATION OF PREVIOUSLY EXISTING LAWS. THE CONGRESS THUS APPEARS CLEARLY TO HAVE INTENDED THAT THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, SHOULD BE CONTROLLING NOT ONLY AS TO SURPLUS PROPERTY AVAILABLE FOR DONATION BUT ALSO AS TO EXCESS PROPERTY. THIS APPEARS CLEARLY TO BE BROUGHT OUT BY THE STATEMENT IN HOUSE REPORT NO. 206, 84TH CONGRESS, PAGE 12, AS FOLLOWS:

NOTHING IN THIS AMENDATORY ACT IS INTENDED TO IMPAIR OR DIMINISH THE AUTHORITY OF THE ADMINISTRATOR WITH RESPECT TO THE RELATED PROGRAM AUTHORIZED BY SECTION 202 OF PUBLIC LAW 152 FOR THE MAXIMUM UTILIZATION OF EXCESS PROPERTY (SEE DECISION OF COMPTROLLER GENERAL OF THE UNITED STATES B-121695 DATED FEBRUARY 3, 1955).

OUR DECISION OF FEBRUARY 3, 1955, B-121695, HELD, IN PART, THAT THE EXTENT OF REIMBURSEMENT REQUIRED FOR THE TRANSFER OF EXCESS PROPERTY CAPITALIZED UNDER A REVOLVING FUND OF THE CORPS OF ENGINEERS WAS FOR DETERMINATION UNDER THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 AND REGULATIONS ISSUED THEREUNDER AND THAT, ACCORDINGLY, SUCH PROPERTY COULD BE REASSIGNED WITHIN THE DEPARTMENT OF DEFENSE WITHOUT REIMBURSEMENT, AS AUTHORIZED BY THAT ACT, IF IN ACCORDANCE WITH THE POLICIES OF THE SECRETARY OF DEFENSE.

ACCORDINGLY, EXCESS PROPERTY CAPITALIZED UNDER THE WORKING CAPITAL FUNDS ESTABLISHED BY SECTION 405 OF THE NATIONAL SECURITY ACT OF 1947, AS AMENDED, MAY BE TRANSFERRED WITHOUT REIMBURSEMENT WHERE AUTHORIZED UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, AND APPROPRIATE REGULATIONS ISSUED THEREUNDER. HOWEVER, REIMBURSEMENT AT THE FAIR VALUE OF SUCH PROPERTY IS REQUIRED IF YOU EXERCISE YOUR DISCRETIONARY AUTHORITY TO REQUEST SUCH REIMBURSEMENT.

A COPY OF THIS DECISION IS BEING TRANSMITTED BY LETTER OF TODAY, COPY ATTACHED, TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION.