B-140808, OCTOBER 19, 1959, 39 COMP. GEN. 296

B-140808: Oct 19, 1959

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APPROPRIATIONS - FEDERAL GRANTS TO STATES - SMALL BUSINESS RESEARCH GRANTS - FISCAL YEAR CHARGEABLE - AMENDMENTS TO GRANTS A FEDERAL GRANT WHICH IS MADE IN ONE FISCAL YEAR BASED UPON SPECIFIC OBJECTIVES AND ESTIMATES OF PROJECT COSTS GIVES RISE TO A DEFINITE AND MAXIMUM OBLIGATION OF THE UNITED STATES AND THE ENLARGEMENT OF THE GRANT BEYOND ITS ORIGINAL SCOPE CREATES AN ADDITIONAL OBLIGATION AND MUST BE REGARDED AS A NEW GRANT. MAY NOT BE AMENDED DURING THE YEAR IN WHICH THE GRANT IS MADE TO CHANGE THE SCOPE OR INCREASE THE AMOUNT OF THE ORIGINAL GRANT. NOR MAY A NEW GRANT TO A STATE BE MADE IN A SUBSEQUENT YEAR IN WHICH AN AMENDMENT TO AN ORIGINAL GRANT IS MADE AND CHARGED TO THAT YEAR'S APPROPRIATION.

B-140808, OCTOBER 19, 1959, 39 COMP. GEN. 296

APPROPRIATIONS - FEDERAL GRANTS TO STATES - SMALL BUSINESS RESEARCH GRANTS - FISCAL YEAR CHARGEABLE - AMENDMENTS TO GRANTS A FEDERAL GRANT WHICH IS MADE IN ONE FISCAL YEAR BASED UPON SPECIFIC OBJECTIVES AND ESTIMATES OF PROJECT COSTS GIVES RISE TO A DEFINITE AND MAXIMUM OBLIGATION OF THE UNITED STATES AND THE ENLARGEMENT OF THE GRANT BEYOND ITS ORIGINAL SCOPE CREATES AN ADDITIONAL OBLIGATION AND MUST BE REGARDED AS A NEW GRANT. A FEDERAL RESEARCH AND COUNSELING GRANT TO A STATE OR INSTITUTION UNDER SECTION 7 (D), OF THE SMALL BUSINESS ACT, 15 U.S.C. 636 (D), WHICH PROVIDES THAT ONLY ONE GRANT SHALL BE MADE TO A STATE IN ANY ONE YEAR, MAY NOT BE AMENDED DURING THE YEAR IN WHICH THE GRANT IS MADE TO CHANGE THE SCOPE OR INCREASE THE AMOUNT OF THE ORIGINAL GRANT, NOR MAY A NEW GRANT TO A STATE BE MADE IN A SUBSEQUENT YEAR IN WHICH AN AMENDMENT TO AN ORIGINAL GRANT IS MADE AND CHARGED TO THAT YEAR'S APPROPRIATION. AMENDMENTS IN 1960 TO CHANGE THE SCOPE OF FEDERAL RESEARCH AND COUNSELING GRANTS TO STATES OR INSTITUTIONS ORIGINALLY MADE IN 1959 PURSUANT TO SECTION 7 (D), OF THE SMALL BUSINESS ACT, 15 U.S.C. 636 (D), MAY NOT BE CHARGED TO 1959 FUNDS BUT MUST BE CHARGED TO 1960 FUNDS SUBJECT TO ANY NEW STATUTORY LIMITATIONS WHICH MAY NOT HAVE BEEN APPLICABLE TO THE ORIGINAL GRANT.

TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, OCTOBER 19, 1959:

YOUR LETTER OF SEPTEMBER 17, 1959, REQUESTS OUR DECISION AS TO WHICH FISCAL YEAR APPROPRIATIONS SHOULD BE CHARGED FOR AMENDMENTS TO GRANTS MADE UNDER SECTION 7 (D) OF THE SMALL BUSINESS ACT AS ADDED BY SECTION 602 (C) OF THE SMALL BUSINESS INVESTMENT ACT OF 1958, 72 STAT. 698, 15 U.S.C. 636 (D).

THE SMALL BUSINESS ACT, AS AMENDED, EMPOWERS THE SMALL BUSINESS ADMINISTRATION TO MAKE GRANTS TO STATES AND VARIOUS TYPES OF INSTITUTIONS FOR STUDIES, RESEARCH, AND COUNSELING CONCERNING THE MANAGING, FINANCING, AND OPERATION OF SMALL BUSINESS ENTERPRISES, AND TECHNICAL AND STATISTICAL INFORMATION NECESSARY THERETO, IN CONNECTION WITH PROVIDING ASSISTANCE TO SMALL BUSINESS CONCERNS. SECTION 7 (D) OF THE ACT, AS AMENDED, PROVIDES IN PERTINENT PART THAT:

* * * ONLY ONE SUCH GRANT SHALL BE MADE WITHIN ANY ONE STATE IN ANY ONE YEAR, AND NO SUCH GRANT SHALL EXCEED AN AGGREGATE AMOUNT OF $40,000. SUCH GRANTS SHALL BE MADE FROM THE FUND ESTABLISHED IN THE TREASURY BY SECTION 602 (B) OF THE SMALL BUSINESS INVESTMENT ACT OF 1958.

WITH RESPECT TO THE SPECIAL FUND " GRANTS FOR RESEARCH AND MANAGEMENT COUNSELING" ESTABLISHED BY SECTION 602 (B) OF THE INVESTMENT ACT, 12 U.S.C. 352A NOTE, THE UNOBLIGATED BALANCE THEREIN AS OF JUNE 30, 1959, WAS RESCINDED IN TITLE III OF THE DEPARTMENT OF COMMERCE AND RELATED AGENCIES APPROPRIATION ACT, 1960, 73 STAT. 208, WITH THE PROVISO "THAT FOR THE FISCAL YEAR ENDING JUNE 30, 1960, $2,080,000 SHALL REMAIN AVAILABLE FOR GRANTS UNDER SECTION 7 (D) OF THE SMALL BUSINESS ACT, AS AMENDED.'

YOU STATE THAT, BASED UPON PROPOSALS SUBMITTED BY INSTITUTIONS SEEKING FUNDS, GRANTS IN VARIOUS AMOUNTS, NOT EXCEEDING $40,000 IN ANY ONE INSTANCE, HAVE BEEN MADE DURING FISCAL YEAR 1959 AND THAT EACH PROPOSAL CONTAINED SPECIFIC OBJECTIVES TO BE ACCOMPLISHED, A DESCRIPTION OF THE RESEARCH METHOD TO BE UTILIZED, AND A BUDGET OF ESTIMATED PROJECT COSTS. YOU STATE FURTHER THAT WORK IN THE EARLY STAGES OF A PROJECT SOMETIMES DEVELOPS INFORMATION WHICH SUGGESTS CHANGES IN METHODS OR PROCEDURES DURING LATER STAGES; THAT IT MAY BE DESIRABLE TO ENLARGE THE SCOPE OF THE ORIGINAL PROJECT TO IMPROVE THE RESEARCH RESULTS; AND THAT AUTHORITY TO AMEND ORIGINAL GRANTS--- WITHIN THE STATUTORY $40,000 LIMITATION--- TO PROVIDE FUNDS FOR EXPANDING OR CHANGING THE SCOPE OF A PROJECT ALREADY UNDERTAKEN IS ESSENTIAL TO EFFECTIVE ADMINISTRATION OF THE RESEARCH PROGRAM. YOU STATE IT TO BE YOUR VIEW THAT THE STATUTORY LIMITATION DOES NOT PROHIBIT THE SMALL BUSINESS ADMINISTRATION FROM INCREASING A GRANT SO LONG AS THE AGGREGATE AMOUNT OF THE GRANT DOES NOT EXCEED $40,000; THAT, THUS, WHERE A GRANT HAS BEEN MADE IN 1959, AN AMENDMENT EXECUTED IN 1960 INCREASING THE AMOUNT OF THAT GRANT WOULD NOT CONTRAVENE THE LIMITATIONS CITED ABOVE AND WOULD NOT PRECLUDE ISSUANCE OF A NEW GRANT DURING 1960 TO ANOTHER INSTITUTION LOCATED IN THE SAME STATE.

ON THE BASIS OF THE FOREGOING INTERPRETATION, YOU PLAN TO INCREASE THE AMOUNTS OF A NUMBER OF GRANTS AND REQUEST OUR OPINION CONCERNING THE FOLLOWING QUESTIONS AS TO WHICH FISCAL YEAR APPROPRIATIONS ARE CHARGEABLE WITH THE COST OF GRANT AMENDMENTS UNDER VARYING CIRCUMSTANCES:

1. WHEN A 1959 GRANT IS AMENDED IN 1960 TO INCREASE THE AMOUNT OF THIS GRANT, MAY SUCH INCREASE BE CHARGED TO THE ORIGINAL FUND MADE AVAILABLE UNDER SECTION 602 (A) AND (B) OF THE SMALL BUSINESS INVESTMENT ACT OF 1958, OR MUST IT BE CHARGED TO THE RESIDUE OF THAT FUND--- $2,080,000--- AVAILABLE FOR 1960 GRANTS UNDER THE PROVISIONS OF THE DEPARTMENT OF COMMERCE AND RELATED AGENCIES APPROPRIATION ACT, 1960? THE LATTER OBVIOUSLY IS UNDESIRABLE SINCE SUCH A RULING WILL REDUCE THE FUNDS AVAILABLE FOR 1960 GRANTS. IT WOULD APPEAR THAT INCREASES IN GRANTS MADE IN 1960 OR IN FUTURE YEARS SHOULD BE CHARGED TO THE FUNDS AVAILABLE IN THE YEAR IN WHICH THE GRANT WAS MADE.

2. WITH RESPECT TO GRANTS MADE IN 1960, MAY INCREASES IN SUCH GRANTS MADE AFTER 1960 BE CHARGED TO THE $2,080,000 AVAILABLE FOR 1960 GRANTS UNDER THE DEPARTMENT OF COMMERCE AND RELATED AGENCIES APPROPRIATION ACT?

3. IT IS ANTICIPATED THAT AFTER 1960, GRANTS WILL BE ISSUED UNDER ANNUAL APPROPRIATIONS BY CONGRESS FOR THAT PURPOSE RATHER THAN FROM A SPECIAL FUND. IN THESE CIRCUMSTANCES, MAY INCREASES IN GRANTS MADE SUBSEQUENT TO THE YEAR OF THE GRANT BE CHARGED TO THE APPROPRIATION FOR THE YEAR IN WHICH THE GRANT ORIGINALLY WAS MADE?

4. IF IT IS DECIDED THAT INCREASES IN GRANTS MUST BE CHARGED TO THE YEAR IN WHICH THE SUPPLEMENTAL AMENDMENT IS MADE RATHER THAN THE YEAR OF THE ORIGINAL GRANT, WOULD A NEW GRANT IN THE SAME YEAR AS THE AMENDMENT AND IN THE SAME STATE IN THE FULL AMOUNT OF $40,000 BE PROHIBITED UNDER THE LIMITATIONS SET OUT IN SECTION 7 (D) OF THE SMALL BUSINESS ACT CITED ABOVE?

WE CANNOT AGREE THAT AUTHORITY TO MAKE ONE GRANT IN A FISCAL YEAR NECESSARILY CARRIES WITH IT AUTHORITY TO AMEND THAT GRANT WHERE THE AMENDMENT WOULD ALTER THE SCOPE OF THE ORIGINAL GRANT AND REQUIRE ADDITIONAL FUNDS. THE EXECUTION OF A GRANT BASED UPON A PROPOSAL CONTAINING SPECIFIC OBJECTIVES, RESEARCH METHODS TO BE FOLLOWED, AND ESTIMATES OF PROJECT COSTS WOULD ORDINARILY GIVE RISE TO A DEFINITE AND MAXIMUM OBLIGATION OF THE UNITED STATES. TO ENLARGE SUCH A GRANT BEYOND THE SCOPE OF THE ORIGINAL IS TO CREATE AN ADDITIONAL OBLIGATION AND MUST BE CONSIDERED AS GIVING RISE TO A NEW GRANT. AND SUCH NEW GRANT WOULD BE SUBJECT TO ANY STATUTORY LIMITATIONS AS THOUGH IT WERE NOT IN ANY WAY CONNECTED WITH THE GRANT SOUGHT TO BE AMENDED. THEREFORE, IN VIEW OF THE STATUTORY PROHIBITION AGAINST MORE THAN ONE GRANT WITHIN ANY ONE STATE IN ANY ONE YEAR, YOU ARE ADVISED THAT GRANTS MAY NOT BE AMENDED DURING THE YEAR IN WHICH THEY ARE MADE IN SUCH A WAY AS TO CHANGE THE SCOPE OF ORIGINAL GRANTS AND REQUIRE ADDITIONAL FUNDS.

ACCORDINGLY, WITH RESPECT TO THE FIRST QUESTION PRESENTED, AMENDMENTS IN 1960 WHICH WOULD CHANGE THE SCOPE OF 1959 GRANTS MUST BE CHARGED TO THE FUNDS--- $2,080,000--- AVAILABLE FOR 1960 GRANTS, AND THE ANSWERS TO THE SECOND AND THIRD QUESTIONS ARE IN THE NEGATIVE. AS TO THE LAST QUESTION RAISED, IT MUST BE HELD THAT A NEW GRANT OF ANY AMOUNT IS PROHIBITED IN THE SAME YEAR AND IN THE SAME STATE AS SUCH AN AMENDMENT CHARGED TO THAT YEAR'S APPROPRIATION, SINCE MORE THAN ONE GRANT A YEAR IN A STATE IS PROHIBITED AND, AS SHOWN ABOVE, WE BELIEVE THE AMENDMENT WOULD ITSELF BE A NEW GRANT.