B-125613, DECEMBER 12, 1955, 35 COMP. GEN. 356

B-125613: Dec 12, 1955

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APPROPRIATIONS - ANTI-DEFICIENCY ACT VIOLATIONS - AGENCY REPORTS THE CHARGING OF PART OF A CONTRACT FOR THE INSTALLATION OF AUTOMATIC TELEPHONES AGAINST AN APPROPRIATION ALLOCATION WHICH IS INSUFFICIENT TO COVER THE ENTIRE CONTRACT AND THE BALANCE AGAINST ANTICIPATED PROCEEDS FROM THE SALE OF REPLACED EQUIPMENT RESULTS IN AN OVEROBLIGATION OF APPROPRIATIONS IN VIOLATION OF THE ANTI-DEFICIENCY ACT (31 U.S.C. 665). 1955: REFERENCE IS MADE TO LETTER DATED SEPTEMBER 15. IT IS STATED IN THE LETTER THAT CORRECTIVE ACTION HAS BEEN TAKEN AND THAT IT IS CONSIDERED INAPPROPRIATE TO SUBMIT A FORMAL TYPE OF REPORT PURSUANT TO SUBSECTION (1) (2) OF SECTION 3579. THE REQUEST IS MADE THAT OUR OFFICE ACCEPT THE EXPLANATION OF THE MANNER IN WHICH THE INCIDENT TOOK PLACE AND HAS BEEN CORRECTED.

B-125613, DECEMBER 12, 1955, 35 COMP. GEN. 356

APPROPRIATIONS - ANTI-DEFICIENCY ACT VIOLATIONS - AGENCY REPORTS THE CHARGING OF PART OF A CONTRACT FOR THE INSTALLATION OF AUTOMATIC TELEPHONES AGAINST AN APPROPRIATION ALLOCATION WHICH IS INSUFFICIENT TO COVER THE ENTIRE CONTRACT AND THE BALANCE AGAINST ANTICIPATED PROCEEDS FROM THE SALE OF REPLACED EQUIPMENT RESULTS IN AN OVEROBLIGATION OF APPROPRIATIONS IN VIOLATION OF THE ANTI-DEFICIENCY ACT (31 U.S.C. 665), WHICH VIOLATION MUST BE IMMEDIATELY REPORTED BY THE HEAD OF THE AGENCY TO THE PRESIDENT AND TO THE CONGRESS PURSUANT TO SECTION 2 (I) (2) OF THE ACT NOTWITHSTANDING THAT THE OVEROBLIGATION RESULTED FROM A MISINTERPRETATION OF THE REGULATIONS ON UTILIZATION OF THE PROCEEDS OF REPLACED EQUIPMENT.

TO THE SECRETARY OF STATE, DECEMBER 12, 1955:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 15, 1955, FROM MR. EDWARD B. WILBER, ACTING ASSISTANT SECRETARY-1CONTROLLER, CONCERNING THAT PORTION OF OUR REPORT OF SIGNIFICANT FINDINGS DEVELOPED IN OUR EXAMINATION OF THE REPORT SUBMITTED BY THE SECRETARY OF STATE UNDER SECTION 1311 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1955, 31 U.S.C. 200, WHICH DEALS WITH A VIOLATION OF THE ANTI-1DEFICIENCY ACT, SECTION 3579, REVISED STATUTES, AS AMENDED, 31 U.S.C. 665, AT UNITED STATES MISSION TO THE NORTH ATLANTIC TREATY ORGANIZATION AND EUROPEAN REGIONAL ORGANIZATION DURING FISCAL YEAR 1954. IT IS STATED IN THE LETTER THAT CORRECTIVE ACTION HAS BEEN TAKEN AND THAT IT IS CONSIDERED INAPPROPRIATE TO SUBMIT A FORMAL TYPE OF REPORT PURSUANT TO SUBSECTION (1) (2) OF SECTION 3579, REVISED STATUTES. THE REQUEST IS MADE THAT OUR OFFICE ACCEPT THE EXPLANATION OF THE MANNER IN WHICH THE INCIDENT TOOK PLACE AND HAS BEEN CORRECTED.

THE REPORTED VIOLATION CONCERNED AN OFFER FOR THE INSTALLATION OF AUTOMATIC TELEPHONE EQUIPMENT IN THE AMOUNT OF $40,975, ACCEPTED BY THE CONTRACTING OFFICER ON JUNE 28, 1954. ON THAT DATE THE UNOBLIGATED BALANCE IN THE ALLOTMENT TO BE CHARGED WAS ONLY $20,161, AGAINST WHICH $20,000 OF THE CONTRACTUAL OBLIGATION WAS CHARGED, THE BALANCE BEING EXPECTED TO BE MADE UP FROM THE PROCEEDS OF THE SALE OF THE TELEPHONE EQUIPMENT TO BE REPLACED. SINCE OBLIGATIONS CANNOT BE CHARGED AGAINST ANTICIPATED PROCEEDS FROM THE SALE OF PROPERTY, AN OVEROBLIGATION OF THE ALLOTMENT WAS INCURRED. THE BASIS OF YOUR DEPARTMENT'S VIEW THAT IT IS CONSIDERED INAPPROPRIATE TO SUBMIT A FORMAL TYPE OF REPORT REQUIRED BY THE ANTI-1DEFICIENCY ACT IS THAT THE OVEROBLIGATION RESULTED FROM A MISINTERPRETATION BY THE OFFICIALS CONCERNED OF GENERAL ACCOUNTING OFFICE REGULATIONS AND IMPLEMENTING DEPARTMENT OF STATE PROCEDURES FOR THE UTILIZATION OF PROCEEDS OF SALES OF REPLACED EQUIPMENT; THAT SINCE THE CLOSE OF THE FISCAL YEAR 1954, A COMBINATION OF UPWARD AND DOWNWARD ADJUSTMENTS IN THE OBLIGATIONS RECORDED AGAINST THE ALLOTMENT INVOLVED RESULTED IN A NET REDUCTION OF AN AMOUNT SUFFICIENT TO LIQUIDATE THE OBLIGATION; AND THAT HAD THE REGULATIONS BEEN CORRECTLY INTERPRETED, AN ALLOTMENT INCREASE COULD READILY HAVE BEEN GRANTED AT THE TIME THE CONTRACT WAS ENTERED INTO.

THE ALLOTMENT HERE INVOLVED, USRO ALLOTMENT 4A-4237, APPEARS TO BE AN ADMINISTRATIVE SUBDIVISION OF AN APPORTIONMENT AUTHORIZED BY DEPARTMENT REGULATIONS PROMULGATED PURSUANT TO SUBSECTION (G) OF SECTION 3579, REVISED STATUTES, SUBSECTION (H) OF WHICH PROVIDES:

NO OFFICER OR EMPLOYEE OF THE UNITED STATES SHALL AUTHORIZE OR CREATE ANY OBLIGATION OR MAKE ANY EXPENDITURE (A) IN EXCESS OF AN APPORTIONMENT OR REAPPORTIONMENT, OR (B) IN EXCESS OF THE AMOUNT PERMITTED BY REGULATIONS PRESCRIBED PURSUANT TO SUBSECTION (G) OF THIS SECTION.

WHILE THE EXPLANATION FURNISHED IN THE LETTER OF SEPTEMBER 15, 1955, INDICATES THAT EXTENUATING CIRCUMSTANCES ATTENDED THE OVEROBLIGATION IN QUESTION, THE TERMS OF THE ABOVE-QUOTED SUBSECTION APPEAR NEVERTHELESS TO HAVE BEEN VIOLATED. IN SUCH INSTANCES, CONSIDERATION OF MITIGATING CIRCUMSTANCES GIVING RISE TO AN OVEROBLIGATION OF FUNDS IS NOT A MATTER WITHIN THE JURISDICTION OF OUR OFFICE SINCE SUBSECTION (I) (2) OF SECTION 3579, REVISED STATUTES, REQUIRES, IN THE CASE OF VIOLATIONS OF SUBSECTIONS (A), (B), OR (H), THAT THE HEAD OF THE AGENCY CONCERNED IMMEDIATELY REPORT TO THE PRESIDENT THROUGH THE DIRECTOR OF THE BUREAU OF THE BUDGET, AND TO THE CONGRESS ALL PERTINENT FACTS TOGETHER WITH A STATEMENT OF THE ACTION TAKEN THEREON. THUS, IT WOULD APPEAR THE PROPER ACTION WOULD BE TO MAKE SUCH A REPORT IN WHICH THE EXTENUATING CIRCUMSTANCES AND CORRECTIVE ACTION, OF COURSE, PROPERLY MIGHT BE SET FORTH.