B-130815, FEBRUARY 13, 1959, 38 COMP. GEN. 548

B-130815, FEBRUARY 13, 1959, 38 COMP. GEN. 548

ATOMIC ENERGY COMMISSION - CONTRACTS - LONG-TERM AUTHORITY THE AUTHORITY GRANTED TO THE ATOMIC ENERGY COMMISSION UNDER SECTION 7 OF PUBLIC LAW 85-681, APPROVED AUGUST 19, 1958, FOR THE EXECUTION OF LONG- TERM CONTRACTS IS INTENDED ONLY TO OVERCOME THE LIMITATIONS ON THE COMMISSION'S CONTRACTING POWER AND DOES NOT AFFECT EXISTING AUTHORITY UNDER SECTION 66 OF THE ATOMIC ENERGY ACT OF 1954, 42 U.S.C. 2096, FOR THE EXECUTION OF LONG-TERM CONTRACTS INCIDENT TO THE URANIUM CONCENTRATE PROGRAM.

TO THE CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION, FEBRUARY 13, 1959:

WE REFER TO YOUR LETTER OF JANUARY 28, 1959, REQUESTING OUR VIEWS AS TO THE EFFECT OF SECTION 161, SUBSECTION V, OF THE ATOMIC ENERGY ACT OF 1954, AS AMENDED 72 STAT. 633, 42 U.S.C. 2201 (V), ON THE AUTHORITY OF THE COMMISSION UNDER SECTION 66 OF THE ACT OF 1954, 68 STAT. 933, 42 U.S.C. 2096, TO USE TERM PURCHASE CONTRACTS IN CARRYING OUT THE URANIUM CONCENTRATE PROCUREMENT PROGRAM.

UNDER SECTION 66 THE COMMISSION IS AUTHORIZED TO ACQUIRE SUPPLIES OF SOURCE MATERIALS BY CONTRACT AND TO ESTABLISH GUARANTEED PRICES FOR SUCH MATERIALS DELIVERED TO IT WITHIN A SPECIFIED TIME. WE HAVE HELD THAT UNDER SUCH AUTHORITY THE COMMISSION MAY ENTER INTO LONG-TERM CONTRACTS FOR THE PROCUREMENT OF SOURCE MATERIALS, INCLUDING URANIUM CONCENTRATE. 124106, MARCH 7, 1956.

SECTION 7 OF THE ACT OF AUGUST 19, 1958, 72 STAT. 633, AMENDS THE ACT OF 1954 BY THE ADDITION OF SUBSECTION 161V WHICH, IN PERTINENT PART, AUTHORIZES THE COMMISSION TO:

(2) (A) ENTER INTO CONTRACTS FOR SUCH PERIODS OF TIME AS THE COMMISSION MAY DEEM NECESSARY OR DESIRABLE FOR THE PURCHASE OR ACQUISITION OF ANY SUPPLIES, EQUIPMENT, MATERIALS, OR SERVICES REQUIRED BY THE COMMISSION WHENEVER THE COMMISSION DETERMINES THAT: (I) IT IS ADVANTAGEOUS TO THE GOVERNMENT TO MAKE SUCH PURCHASE OR ACQUISITION FROM COMMERCIAL SOURCES; (II) THE FURNISHING OF SUCH SUPPLIES, EQUIPMENT, MATERIALS, OR SERVICES WILL REQUIRE THE CONSTRUCTION OR ACQUISITION OF SPECIAL FACILITIES BY THE VENDORS OR SUPPLIERS THEREOF; (III) THE AMORTIZATION CHARGEABLE TO THE COMMISSION CONSTITUTES AN APPRECIABLE PORTION OF THE COST OF CONTRACT PERFORMANCE, EXCLUDING COST OF MATERIALS; AND (IV) THE CONTRACT FOR SUCH PERIOD IS MORE ADVANTAGEOUS TO THE GOVERNMENT THAN A SIMILAR CONTRACT NOT EXECUTED UNDER THE AUTHORITY OF THIS SUBSECTION. SUCH CONTRACTS SHALL BE ENTERED INTO FOR PERIODS NOT TO EXCEED FIVE YEARS EACH FROM THE DATE OF INITIAL DELIVERY OF SUCH SUPPLIES, EQUIPMENT, MATERIALS, OR SERVICES OR TEN YEARS FROM THE DATE OF EXECUTION OF THE CONTRACTS EXCLUDING PERIODS OF RENEWAL UNDER OPTION.

(B) IN ENTERING INTO SUCH CONTRACTS THE COMMISSION SHALL BE GUIDED BY THE FOLLOWING RINCIPLES: (I)THE PERCENTAGE OF THE TOTAL COST OF SPECIAL FACILITIES DEVOTED TO CONTRACT PERFORMANCE AND CHARGEABLE TO THE COMMISSION SHOULD NOT EXCEED THE RATIO BETWEEN THE PERIOD OF CONTRACT DELIVERIES AND THE ANTICIPATED USEFUL LIFE OF SUCH SPECIAL FACILITIES; (II) THE DESIRABILITY OF OBTAINING OPTIONS TO RENEW THE CONTRACT FOR REASONABLE PERIODS AT PRICES NOT TO INCLUDE CHARGES FOR SPECIAL FACILITIES ALREADY AMORTIZED; AND (III) THE DESIRABILITY OF RESERVING IN THE COMMISSION THE RIGHT TO TAKE TITLE TO THE SPECIAL FACILITIES UNDER APPROPRIATE CIRCUMSTANCES * * * ( ITALICS SUPPLIED.)

SPECIFICALLY, WE UNDERSTAND YOUR QUESTION TO BE WHETHER THE FIVE- OR TEN- YEAR LIMITATION CONTAINED IN THE FOREGOING STATUTE AND THE NECESSITY FOR MAKING THE DESIGNATED FINDINGS, AS WELL AS THE GUIDING PRINCIPLES STATED, APPLY TO CONTRACTS FOR SOURCE MATERIALS ENTERED INTO UNDER THE AUTHORITY OF SECTION 66.

IN OUR DECISION OF APRIL 2, 1957, PUBLISHED AT 36 COMP. GEN. 683, WE HELD THAT UNDER THE LAW AS IT THEN EXISTED THE COMMISSION WAS NOT AUTHORIZED TO ENTER INTO A CONTRACT TO OBTAIN MAGNESIUM COVERING A PERIOD GREATER THAN ONE YEAR. THAT DECISION WAS AFFIRMED AT 37 COMP. GEN. 155 AND CERTAIN DETAILS WERE CLARIFIED BY B-130815, APRIL 15, 1958.

ON JULY 30, 1958, THERE WAS INTRODUCED H.R. 13482, 85TH CONGRESS, LATER ENACTED AS PUBLIC LAW 85-681, APPROVED AUGUST 19, 1958, 42 U.S.C. 2073 (A) (4), WHICH CONTAINED LANGUAGE IDENTICAL TO THE ABOVE-QUOTED PORTIONS OF SUBSECTION 161V. HOUSE REPORT NO. 2272 TO ACCOMPANY THE BILL STATES AT PAGE 8:

THE NEW AUTHORITY OF SUBSECTION V WAS REQUESTED BY THE COMMISSION BECAUSE OF A DECISION OF THE COMPTROLLER GENERAL IN 1957 THAT, IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY, THE COMMISSION'S ANNUAL APPROPRIATIONS FOR OPERATING EXPENSES MIGHT BE USED ONLY FOR PAYMENT OF EXPENSES PROPERLY INCURRED DURING THE FISCAL YEAR OR FOR PAYMENTS UNDER CONTRACTS "PROPERLY" MADE WITHIN THAT YEAR. THE COMPTROLLER GENERAL'S OPINION FURTHER STATED THAT, IN THE ABSENCE OF SPECIAL STATUTORY AUTHORITY, A CONTRACT WAS "PROPERLY" MADE ONLY WHEN IT SATISFIED A BONA FIDE NEED FOR SERVICES FOR THAT PARTICULAR FISCAL YEAR.

ON AUGUST 5, 1958, SENATOR ANDERSON CAUSED TO BE INSERTED IN THE CONGRESSIONAL RECORD, 85TH CONGRESS, AT PAGE 14835, COMMENTS ON H.R. 13482 READING IN PART AS FOLLOWS:

NEW SUBSECTION V AUTHORIZES THE COMMISSION TO ENTER INTO LONG-TERM CONTRACTS IN CERTAIN LIMITED AREAS. THE NECESSITY FOR THIS NEW SUBSECTION GREW OUT OF A DECISION OF THE COMPTROLLER GENERAL TO THE EFFECT THAT, IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY, THE COMMISSION'S ANNUAL APPROPRIATIONS FOR OPERATING EXPENSES MIGHT BE USED ONLY FOR PAYMENT OF EXPENSES, SERVICES, AND EQUIPMENT INCURRED DURING THE CURRENT FISCAL YEAR. THIS NEW SUBSECTION WOULD PROVIDE STATUTORY AUTHORITY FOR THE COMMISSION TO ENTER INTO LONG-TERM CONTRACTS WHEN IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO, BUT SUBJECT TO CERTAIN DETERMINATIONS WHICH THE COMMISSION, MUST MAKE, AND IN ACCORDANCE WITH CERTAIN PRINCIPLES ADDED TO THE BILL BY THE JOINT COMMITTEE.

FROM THE FOREGOING IT IS CLEAR THAT IN ENACTING PUBLIC LAW 85-681, THE CONGRESS INTENDED ONLY TO OVERCOME THE LIMITATIONS ON THE COMMISSION'S CONTRACTING POWER NOTED IN OUR DECISIONS AT 36 COMP. GEN. 683, 37 COMP. GEN. 155, AND B-130815, APRIL 15, 1958; AND DID NOT INTEND TO AFFECT THE COMMISSION'S EXISTING AUTHORITY UNDER SECTION 66. ACCORDINGLY, WE FIND THAT THE AUTHORITY OF THE COMMISSION TO ENTER INTO LONG-TERM CONTRACTS FOR SOURCE MATERIALS UNDER THE SPECIFIC AUTHORITY OF SECTION 66 WHICH WAS RECOGNIZED IN OUR DECISION, B-124106, MARCH 7, 1956, IS NOT AFFECTED BY THE ENACTMENT OF SUBSECTION 161V.