B-138488, FEBRUARY 18, 1959, 38 COMP. GEN. 558

B-138488: Feb 18, 1959

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SUBJECT TO THE AVAILABILITY OF COAST GUARD APPROPRIATIONS WILL NOT BE OBJECTED TO. IF THE LOAN IS FOR AN INDEFINITE PERIOD WHICH COULD RESULT IN THE PERMANENT TRANSFER OF THE VESSEL WITHOUT REIMBURSEMENT IT WOULD BE IN VIOLATION OF THE REIMBURSEMENT REQUIREMENT IN SECTION 601 OF THE ECONOMY ACT OF 1932. IN THE EVENT WE BELIEVE SUCH LOAN IS NOT AUTHORIZED UNDER SECTION 617. CONCLUDED THAT THE PROPOSED LOAN OF THE VESSEL WAS NOT AUTHORIZED UNDER SECTION 617. THE LATTER REQUEST IS HERE CONSIDERED. THE COSTS OF ANY REPAIRS NECESSARY TO MAINTAIN THE USE OF SUCH AIRCRAFT BY THE BOARD ARE CHARGEABLE TO THAT AGENCY'S APPROPRIATION FOR SALARIES AND EXPENSES. WHICH IS SPECIFICALLY AVAILABLE FOR THE HIRE AND OPERATION OF AIRCRAFT.

B-138488, FEBRUARY 18, 1959, 38 COMP. GEN. 558

LOAN OF GOVERNMENT PROPERTY BETWEEN AGENCIES - WITHOUT REIMBURSEMENT - PERMANENT TRANSFER THE LOAN OF A TUG BY THE MARITIME ADMINISTRATION TO THE COAST GUARD FOR A TEMPORARY PERIOD ON A NONREIMBURSABLE BASIS WITH THE COAST GUARD ASSUMING RESPONSIBILITY AND COSTS FOR THE VESSEL AND FOR ITS RETURN IN AS GOOD A CONDITION AS WHEN LOANED, LESS REASONABLE WEAR AND TEAR, AND SUBJECT TO THE AVAILABILITY OF COAST GUARD APPROPRIATIONS WILL NOT BE OBJECTED TO; HOWEVER, IF THE LOAN IS FOR AN INDEFINITE PERIOD WHICH COULD RESULT IN THE PERMANENT TRANSFER OF THE VESSEL WITHOUT REIMBURSEMENT IT WOULD BE IN VIOLATION OF THE REIMBURSEMENT REQUIREMENT IN SECTION 601 OF THE ECONOMY ACT OF 1932, 31 U.S.C. 686, AND STATUTORY AUTHORITY FOR SUCH TRANSFER SHOULD BE OBTAINED FROM THE CONGRESS.

TO THE ADMINISTRATOR, MARITIME ADMINISTRATION, FEBRUARY 18, 1959:

YOUR LETTER OF JANUARY 28, 1959, WITH ENCLOSURE, REFERS TO THE PRIOR LETTER OF YOUR ADMINISTRATION DATED JANUARY 19, 1959, REQUESTING ADVICE WHETHER OUR OFFICE WOULD BE REQUIRED TO OBJECT TO THE PROPOSED LOAN OF THE TUG BAGADUCE TO THE COAST GUARD UNDER AUTHORITY OF SECTION 617, PUBLIC LAW 85-724, 40 U.S.C. 483A, AND REQUESTS THAT, IN THE EVENT WE BELIEVE SUCH LOAN IS NOT AUTHORIZED UNDER SECTION 617, CONSIDERATION BE GIVEN TO THE PROPRIETY OF THE TRANSACTION IN THE LIGHT OF OUR DECISION PUBLISHED IN 24 COMP. GEN. 184. SINCE OUR DECISION OF FEBRUARY 4, 1959, B-138488, CONCLUDED THAT THE PROPOSED LOAN OF THE VESSEL WAS NOT AUTHORIZED UNDER SECTION 617, THE LATTER REQUEST IS HERE CONSIDERED.

OUR DECISION OF SEPTEMBER 5, 1944, B-44040, PUBLISHED AT 24 COMP. GEN. 184, HELD AS FOLLOWS:

SURPLUS AIRCRAFT MAY BE LEASED BY THE CIVIL AERONAUTICS BOARD FROM ANOTHER GOVERNMENT DEPARTMENT UNDER AN AGREEMENT PURSUANT TO SECTION 601 OF THE ECONOMY ACT OF JUNE 30, 1932, AS AMENDED, TO REIMBURSE THE DEPARTMENT FOR THE COST, IF ANY, NECESSARILY INCURRED BY IT IN CONNECTION WITH SUCH TRANSACTION, AND THE COSTS OF ANY REPAIRS NECESSARY TO MAINTAIN THE USE OF SUCH AIRCRAFT BY THE BOARD ARE CHARGEABLE TO THAT AGENCY'S APPROPRIATION FOR SALARIES AND EXPENSES, WHICH IS SPECIFICALLY AVAILABLE FOR THE HIRE AND OPERATION OF AIRCRAFT.

THE ENCLOSURE TO YOUR LETTER OF JANUARY 28, 1959, STATES THAT THE LOAN IS PROPOSED TO BE MADE UNDER THE FOLLOWING TERMS:

A. THE COAST GUARD WILL ACCEPT TRANSFER OF THE BAGADUCE ON AN "AS IS, WHERE IS" NON-REIMBURSABLE BASIS.

B) UPON ACCEPTANCE OF THE VESSEL, THE COAST GUARD WILL ASSUME ALL RESPONSIBILITY AND COSTS INCURRED IN THE MOVEMENT, ACTIVATION, CONVERSION, AND OPERATION OF THE VESSEL.

C. THE DEPARTMENT OF THE TREASURY WILL NOT OPERATE NOR PERMIT OTHERS TO OPERATE THE VESSEL COMMERCIALLY, AND WILL ASSUME RESPONSIBILITY FOR PLACING THE VESSEL IN SATISFACTORY CONDITION FOR SEAWORTHY OPERATION.

D. IN THE EVENT THE VESSEL BECOMES EXCESS TO THE NEEDS OF THE COAST GUARD, IT WILL BE PREPARED FOR LAY UP IN ACCORDANCE WITH MARITIME ADMINISTRATION INSTRUCTIONS AND REGULATIONS IN EFFECT AT THAT TIME AND DELIVERED TO A RESERVE FLEET DESIGNATED BY, AND WITHOUT COST TO, THE MARITIME ADMINISTRATION.

WHILE THE AGREEMENT INVOLVED IN 24 COMP. GEN. 184 WAS REFERRED TO AS A LEASE, THERE APPEARS TO BE LITTLE, IF ANY, ESSENTIAL DIFFERENCE BETWEEN THAT LEASE AND THE LOAN HERE PROPOSED. MOREOVER, IN THE DECISION OF JANUARY 11, 1951, B-99774, PUBLISHED AT 30 COMP. GEN. 295, WE HELD, QUOTING FROM THE SYLLABUS, THAT---

IN VIEW OF THE AUTHORITY GRANTED GOVERNMENT DEPARTMENT AND AGENCIES BY SECTION 601 OF THE ECONOMY ACT OF 1932, AS AMENDED, TO NEGOTIATE AMONG THEMSELVES TO FURNISH MATERIAL, SUPPLIES, EQUIPMENT, AND SERVICES SIMILAR TO THOSE FURNISHED BY COMMERCIAL CONCERNS AND TO PAY FOR PROPERTY WHICH IS TRANSFERRED, AN AGENCY LOANING PROPERTY TO ANOTHER AGENCY MAY PROVIDE BY AGREEMENT THAT THE PROPERTY BE RETURNED IN AS GOOD CONDITION AS WHEN LOANED AND THAT THE EXPENSE OF PLACING THE PROPERTY IN SUCH CONDITION BE BORNE BY THE BORROWING AGENCY, PROVIDED THAT AGENCY'S APPROPRIATION IS AVAILABLE THEREFOR. 10 COMP. GEN. 288, MODIFIED.

WE STATED IN THAT DECISION THAT---

* * * LIKEWISE, THE PROVISIONS OF SECTION 601, PERMITTING, FOR A CONSIDERATION, THE TOTAL TRANSFER BETWEEN DEPARTMENTS OF MATERIAL, SUPPLIES, AND EQUIPMENT ON A PERMANENT BASIS, WOULD APPEAR TO SANCTION, AS WELL, LESSER TRANSACTIONS BETWEEN DEPARTMENTS ON A TEMPORARY LOAN BASIS UNDER CIRCUMSTANCES SUCH AS ARE PRESENT IN THE INSTANT CASE. THAT IS TO SAY, NO GOOD REASON APPEARS WHY THE LOANING DEPARTMENT MAY NOT PROVIDE BY AGREEMENT WITH THE BORROWING DEPARTMENT THAT THE PROPERTY BE RETURNED IN AS GOOD CONDITION AS WHEN LOANED AND THAT THE EXPENSE OF PLACING THE PROPERTY IN SUCH CONDITION BE BORNE BY THE LATTER DEPARTMENT PROVIDED, OF COURSE, THAT ITS APPROPRIATION IS AVAILABLE THEREFOR.

IN THE LIGHT OF THE HOLDINGS IN THE DECISIONS QUOTED ABOVE, WE WILL NOT OBJECT TO THE LOAN OF THE TUG BAGADUCE TO THE COAST GUARD FOR A TEMPORARY PERIOD WITH THE COAST GUARD ASSUMING THE RESPONSIBILITY AND COSTS INCURRED IN THE MOVEMENT, ACTIVATION, CONVERSION, AND OPERATION OF THE VESSEL AS WELL AS IN RETURNING THE VESSEL TO THE MARITIME ADMINISTRATION IN AS GOOD CONDITION AS WHEN LOANED LESS REASONABLE WEAR AND TEAR, SUBJECT TO THE AVAILABILITY OF THE APPROPRIATIONS OF THE COAST GUARD AT THE TIME SUCH EXPENSES ARE INCURRED.

THE PROPOSED LOAN OF THE VESSEL, HOWEVER, PROVIDES IN PARAGRAPH "D" OF THE TERMS AND CONDITIONS QUOTED ABOVE FOR RETURN OF THE VESSEL TO THE MARITIME ADMINISTRATION (ONLY),"IN THE EVENT THE VESSEL BECOMES EXCESS TO THE NEEDS OF THE COAST GUARD.' THIS LANGUAGE IMPLIES THAT THE LOAN IS TO BE FOR AN INDEFINITE PERIOD OF TIME WHOLLY WITHIN THE DISCRETION OF THE COAST GUARD AND COULD RESULT IN A PERMANENT TRANSFER. IF THIS BE TRUE, THE PROPOSED LOAN WOULD NOT COMPLY WITH THE GENERAL RULE THAT PROPERTY MAY NOT BE PERMANENTLY TRANSFERRED BETWEEN AGENCIES WITHOUT THE REIMBURSEMENT PROVIDED FOR BY SECTION 601 OF THE ACT OF JUNE 30, 1932, 31 U.S.C. 686. IF PERMANENT TRANSFER IS DESIRED, WE WOULD SUGGEST THAT STATUTORY AUTHORITY FOR TRANSFERRING THE VESSEL WITHOUT REIMBURSEMENT BE OBTAINED.