B-151613, JUNE 24, 1963, 42 COMP. GEN. 733

B-151613: Jun 24, 1963

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APPROPRIATIONS - OBLIGATION - CONTRACTS - SUBSEQUENT TO EXPIRATION DATE THE EXTENSION OF PROCUREMENT AUTHORIZATIONS ISSUED BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT TO PARTICIPATING COUNTRIES IN THOSE CASES WHERE THE ORIGINAL CONTRACTING PERIOD HAS EXPIRED BECAUSE THE AGENCY WAS UNABLE TO COMPLETE THE REQUIRED EXTENSION ACTION PRIOR TO THE EXPIRATION DATE OF THE CONTRACTING PERIOD WOULD NOT CREATE ANY LEGAL DUTY OR LIABILITY ON THE PART OF THE UNITED STATES WITH RESPECT TO THE AUTHORIZATION OR TO THE USE OF THE PREVIOUSLY OBLIGATED FUNDS. ANY ACTION TAKEN AFTER THE EXPIRATION OF THE CONTRACTING PERIOD MUST BE CONSTRUED AS A NEW OBLIGATION AND CHARGED AGAINST FUNDS AVAILABLE AT THE TIME SUCH ACTION IS TAKEN.

B-151613, JUNE 24, 1963, 42 COMP. GEN. 733

APPROPRIATIONS - OBLIGATION - CONTRACTS - SUBSEQUENT TO EXPIRATION DATE THE EXTENSION OF PROCUREMENT AUTHORIZATIONS ISSUED BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT TO PARTICIPATING COUNTRIES IN THOSE CASES WHERE THE ORIGINAL CONTRACTING PERIOD HAS EXPIRED BECAUSE THE AGENCY WAS UNABLE TO COMPLETE THE REQUIRED EXTENSION ACTION PRIOR TO THE EXPIRATION DATE OF THE CONTRACTING PERIOD WOULD NOT CREATE ANY LEGAL DUTY OR LIABILITY ON THE PART OF THE UNITED STATES WITH RESPECT TO THE AUTHORIZATION OR TO THE USE OF THE PREVIOUSLY OBLIGATED FUNDS, NOR COULD THE RECIPIENT COUNTRY ACT IN ANY MANNER TO CREATE A LIABILITY AFTER THE TERMINAL CONTRACTING DATE; THEREFORE, ANY ACTION TAKEN AFTER THE EXPIRATION OF THE CONTRACTING PERIOD MUST BE CONSTRUED AS A NEW OBLIGATION AND CHARGED AGAINST FUNDS AVAILABLE AT THE TIME SUCH ACTION IS TAKEN.

TO THE ADMINISTRATOR, AGENCY FOR INTERNATIONAL DEVELOPMENT, JUNE 24, 1963:

BY LETTER OF MAY 15, 1963, YOU REQUESTED OUR OPINION AS TO WHETHER YOU MAY CONSIDER CERTAIN FUNDS TO BE PROPERLY OBLIGATED UNDER THE FOLLOWING FACTS AND CIRCUMSTANCES.

IN CONNECTION WITH AID OPERATIONS, ALLOTMENTS OF NONPROJECT TYPE FUNDS ARE MADE TO PARTICIPATING COUNTRIES. SUBSEQUENTLY, THESE COUNTRIES REQUEST THE ISSUANCE OF PROCUREMENT AUTHORIZATIONS TO PERMIT THEIR PURCHASE OF STIPULATED COMMODITIES OR TYPES OF COMMODITIES. UPON RECEIPT OF SUCH AUTHORIZATION, THE COUNTRIES ISSUE SUBAUTHORIZATIONS TO IMPORTERS WHO THEREUPON ACT TO CONSUMMATE THE PURCHASES.

THE ISSUANCE OF A PROCUREMENT AUTHORIZATION BY AID CONSTITUTES AN OBLIGATION OF APPROPRIATED FUNDS. HOWEVER, INCLUDED IN THE TERMS OF THE GOVERNMENT'S OBLIGATION IS A PROVISION DESIGNATING A SPECIFIC CONTRACTING PERIOD FOR EFFECTING PROCUREMENT OF THE COMMODITIES COVERED. PROCUREMENTS MADE AFTER THE TERMINAL CONTRACTING DATES ARE NOT ELIGIBLE FOR FINANCING. SECTION 201.5 (A) (1) (II) OF ICA(AID) REGULATION 1, AS AMENDED. YOU POINT OUT, HOWEVER, THAT OTHER REGULATIONS PERMIT AMENDMENT OF PROCUREMENT AUTHORIZATIONS AND THAT REQUESTS BY PARTICIPATING COUNTRIES TO EXTEND TERMINAL CONTRACTING DATES HAVE BEEN ROUTINELY GRANTED IN THOSE CASES WHERE THE COUNTRY SATISFACTORILY DEMONSTRATES INABILITY TO SUCCESSFULLY CONSUMMATE CONTRACT NEGOTIATIONS WITHIN THE REQUIRED TIME FOR REASONS BEYOND ITS CONTROL. YOU ADD THAT WHILE SUCH REQUESTS ARE CUSTOMARILY SUBMITTED TO AN AID COUNTRY MISSION FOR CLEARANCE, THE CONTROLLING REGULATION REQUIRES TRANSMISSION TO AID'S WASHINGTON OFFICE FOR FINAL APPROVAL.

YOU STATE THAT ORDINARILY A REQUEST FOR TERMINAL CONTRACTING DATE EXTENSION IS SUBMITTED AND APPROVED BY WASHINGTON PRIOR TO EXPIRATION OF THE ORIGINAL DATE SO THAT THE FUNDS REMAIN OBLIGATED FOR THE EXTENDED PERIOD. BUT WHERE THE COUNTRY DOES NOT SUBMIT THE REQUEST UNTIL AFTER EXPIRATION OF THE TERMINAL CONTRACTING DATE THE FUNDS INVOLVED ARE CONSIDERED AS AUTOMATICALLY DEOBLIGATED, AND SUBSEQUENT EXTENSION APPROVALS IN APPROPRIATE CASES ARE TREATED AS NEW OBLIGATIONS.

THE REQUEST FOR OUR OPINION IS GENERATED BY SEVERAL REQUESTS WHICH HAVE RECENTLY BEEN SUBMITTED FOR TERMINAL CONTRACT DATA EXTENSIONS, THE DATES OF SUBMISSION BEING FROM TWO TO TWENTY DAYS PRIOR TO EXPIRATION OF THE ORIGINAL CONTRACTING PERIODS. YOU EXPLAIN THAT ALTHOUGH AID/WASHINGTON HAS NOT ACTED ON ANY OF THESE REQUESTS PRIOR TO EXPIRATION OF THE ORIGINAL CONTRACTING PERIOD, IT IS CLEAR THAT ACTION COULD AND WOULD HAVE BEEN TAKEN BY OFFICIALS IN WASHINGTON IF THE REQUESTS HAD BEEN MORE EXPEDITIOUSLY HANDLED. BECAUSE YOUR CURRENT APPROPRIATIONS DO NOT PROVIDE AUTHORITY FOR REOBLIGATION OF DEOBLIGATED FUNDS, YOU REQUEST OUR CONCURRENCE IN THE VIEW THAT EXTENSION OF THE TERMINAL CONTRACTING DATE IN SUCH CASES AFTER EXPIRATION OF THE INITIAL CONTRACTING PERIOD MAY PROPERLY BE CONSIDERED AS A CONTINUATION OF THE OBLIGATION AGAINST THE FUNDS INITIALLY CHARGED AS IN THE CASE OF THOSE EXTENSIONS APPROVED BEFORE THE ORIGINAL TERMINAL CONTRACTING DATE. YOU CONTEND THAT IT DOES NOT APPEAR TO BE THE INTENT OF CONGRESS IN WITHHOLDING THE AUTHORITY TO REOBLIGATE DEOBLIGATED FUNDS TO PRECLUDE THE UNITED STATES FROM HONORING LEGITIMATE OBLIGATIONS THROUGH IMPERFECT OPERATION OF ITS OWN ADMINISTRATIVE MACHINERY; THAT THE INTENT OF CONGRESS APPEARS, RATHER, TO RESTRICT AID AUTHORITY ONLY WITH RESPECT TO FINANCING NEW UNDERTAKINGS WITH FUNDS ORIGINALLY OBLIGATED FOR ANOTHER PURPOSE.

THE GIST OF YOUR CONTENTION IS THAT IT IS THE INTENTIONS OF YOUR AGENCY RATHER THAN ITS COMPLETED ACTIONS WHICH CONTROL WHETHER OR NOT THE UNITED STATES IS OBLIGATED UNDER A PARTICULAR CIRCUMSTANCE. WE CANNOT AGREE. THE QUESTION WHETHER GOVERNMENT FUNDS ARE OBLIGATED AT ANY SPECIFIED TIME IN ANSWERABLE ONLY IN TERMS OF AN ANALYSIS OF WRITTEN ARRANGEMENTS AND CONDITIONS AGREED TO BY THE UNITED STATES AND THE PARTY WITH WHOM IT IS DEALING. IF SUCH ANALYSIS DISCLOSES A LEGAL DUTY ON THE PART OF THE UNITED STATES WHICH CONSTITUTES A LEGAL LIABILITY OR WHICH COULD MATURE INTO A LEGAL LIABILITY TO VIRTUE OF ACTIONS ON THE PART OF THE OTHER PARTY BEYOND THE CONTROL OF THE UNITED STATES, AN OBLIGATION OF FUNDS MAY GENERALLY BE STATED TO EXIST. BUT IN THE CASE YOU PRESENT FOR OUR CONSIDERATION, THERE IS NO LEGAL DUTY OR LIABILITY WHATEVER ON THE PART OF THE UNITED STATES WITH RESPECT TO SUCH PORTION OF A PROCUREMENT AUTHORIZATION WHICH HAS NOT BEEN SUBAUTHORIZED BY THE RECIPIENT COUNTRY PRIOR TO EXPIRATION OF THE CONTRACTING PERIOD. NOR COULD THE RECIPIENT COUNTRY ACT IN ANY MANNER TO CREATE A LIABILITY ON THE PART OF THE UNITED STATES AFTER THE TERMINAL CONTRACTING DATE. ANY ACTION TO BE TAKEN BY YOUR AGENCY AFTER THE EXPIRATION DATE MUST, THEREFORE, BE CONSTRUED AS GIVING RISE TO A NEW OBLIGATION EVEN THOUGH THE INITIAL DUTY EXPIRED BY REASON OF THE ADMINISTRATIVE INABILITY TO COMPLETE REQUIRED ACTIONS PRIOR TO SUCH EXPIRATION. AND IT FOLLOWS THAT THIS NEW OBLIGATION CAN ONLY BE CHARGED AGAINST FUNDS AVAILABLE FOR OBLIGATION AT THE TIME IT IS INCURRED.