B-153785, FEB. 9, 1965, 44 COMP. GEN. 472

B-153785: Feb 9, 1965

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THAT ARE ON HAND AS EXCESS AT THE CLOSE OF THE 1962 1963 SCHOOL YEAR IN AN AMOUNT LESS THAN THE RETENTION LIMITATION PRESCRIBED BY REGULATION ARE NOT FOR RECOUPMENT AS FUNDS BELONGING TO THE UNITED STATES. 1965: REFERENCE IS MADE TO LETTER OF NOVEMBER 10. FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) REQUESTING A DECISION WHETHER THE ACTION OF THE AIR FORCE IN RECOUPING SURPLUS ROTC UNIFORM COMMUTATION FUNDS FROM THE UNIVERSITY OF MARYLAND WAS PROPER UNDER THE PROVISIONS OF 10 U.S.C. 9386 AS IMPLEMENTED BY THE DEPARTMENT OF DEFENSE DIRECTIVE 1215.10. THE SECRETARY OF THE AIR FORCE MAY ISSUE TO INSTITUTIONS AT WHICH UNITS OF THE AIR FORCE RESERVE OFFICERS' TRAINING CORPS ARE MAINTAINED.

B-153785, FEB. 9, 1965, 44 COMP. GEN. 472

UNIFORMS - MILITARY PERSONNEL - RESERVE OFFICERS' TRAINING CORPS - COMMUTATION FUNDS IN LIEU OF UNIFORMS - RECOUPMENT OF SURPLUS FUNDS THE COMMUTATION FUNDS PAID TO THE UNIVERSITY OF MARYLAND IN LIEU OF UNIFORMS FOR ENROLLED MEMBERS OF THE AIR FORCE RESERVE OFFICERS' TRAINING CORPS AT RATES PRESCRIBED BY 10 U.S.C. 9386, FOR A PERIOD NOT TO EXCEED 2 YEARS, THAT ARE ON HAND AS EXCESS AT THE CLOSE OF THE 1962 1963 SCHOOL YEAR IN AN AMOUNT LESS THAN THE RETENTION LIMITATION PRESCRIBED BY REGULATION ARE NOT FOR RECOUPMENT AS FUNDS BELONGING TO THE UNITED STATES, THE RETENTION FORMULA OF THE REGULATIONS HAVING BEEN PRESCRIBED BY THE SECRETARY OF THE AIR FORCE UNDER THE AUTHORITY OF SECTION 9386, THE AMENDMENT OF THE STATUTORY REGULATION ON APRIL 15, 1964, CHANGING THE FORMULA, MAY NOT BE RETROACTIVELY APPLIED TO DECREASE THE RIGHTS OF THE UNIVERSITY; HOWEVER, HAVING CONSENTED TO PARTICIPATE IN THE AIR FORCE RESERVE OFFICERS' TRAINING CORPS PROGRAM FOR ANOTHER YEAR, THE UNIVERSITY ASSENTED TO THE 1964 REGULATION, AND THE NEW FORMULA, PRESCRIBING A LESSER AMOUNT OF SURPLUS UNIFORM COMMUTATION FUNDS TO BE RETAINED AS APPLICABLE TO THE 1964-65 FISCAL AND SCHOOL YEAR, AND TO THE UNOBLIGATED CASH BALANCE OF THE FUNDS ON HAND JULY 1, 1964.

TO THE SECRETARY OF DEFENSE, FEBRUARY 9, 1965:

REFERENCE IS MADE TO LETTER OF NOVEMBER 10, 1964, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) REQUESTING A DECISION WHETHER THE ACTION OF THE AIR FORCE IN RECOUPING SURPLUS ROTC UNIFORM COMMUTATION FUNDS FROM THE UNIVERSITY OF MARYLAND WAS PROPER UNDER THE PROVISIONS OF 10 U.S.C. 9386 AS IMPLEMENTED BY THE DEPARTMENT OF DEFENSE DIRECTIVE 1215.10.

SECTION 9386 OF TITLE 10, U.S. CODE, PROVIDED IN PERTINENT PART THAT---

(A) UNDER SUCH CONDITIONS AS HE MAY PRESCRIBE, THE SECRETARY OF THE AIR FORCE MAY ISSUE TO INSTITUTIONS AT WHICH UNITS OF THE AIR FORCE RESERVE OFFICERS' TRAINING CORPS ARE MAINTAINED---

(3) UNIFORMS, EXCEPT THAT HE MAY PAY COMMUTATION AT A RATE FIXED BY HIM ANNUALLY INSTEAD OF UNIFORMS.

SECTION V OF DEPARTMENT OF DEFENSE DIRECTIVE NO. 1215.10 DATED FEBRUARY 12, 1959--- PROMULGATED UNDER STATUTORY AUTHORITY FROM WHICH 10 U.S.C. 133 WAS DERIVED--- ESTABLISHED RATES FOR COMMUNICATION IN LIEU OF UNIFORMS FOR ENROLLED MEMBERS OF THE RESERVE OFFICERS' TRAINING CORPS UNDER 10 U.S.C. 4386, 6901 AND 9386 AT $25 PER YEAR FOR A PERIOD NOT TO EXCEED 2 YEARS FOR EACH ENROLLED MEMBER OF THE BASIC COURSE AND $100 COVERING A 2-YEAR PERIOD FOR EACH ENROLLED MEMBER OF THE ADVANCED COURSE, SENIOR DIVISION, ARMY AND AIR FORCE ROTC AT CIVILIAN COLLEGES AND UNIVERSITIES. THAT DIRECTIVE CONTAINS NO PROVISION FOR THE RECOUPMENT OF SURPLUS UNIFORM COMMUTATION FUNDS. SECTION VII OF THAT DIRECTIVE, HOWEVER, REFERS TO IMPLEMENTING DIRECTIVES TO BE ISSUED BY THE VARIOUS SERVICES. IDENTICAL RATES ARE PRESCRIBED IN AFR 45-25, DATED NOVEMBER 10, 1960, WHICH STATES THAT IT "IMPLEMENTS DOD DIRECTIVE 1215.10, 12 FEBRUARY 1959.' IT ALSO IS SILENT CONCERNING RECOUPMENT OF SURPLUS UNIFORM COMMUTATION FUNDS.

IN SEPTEMBER 1952 MARYLAND UNIVERSITY AND THE AIR FORCE ENTERED INTO AN AGREEMENT FOR ESTABLISHMENT OF SENIOR UNIT, AIR FORCE RESERVE OFFICERS' TRAINING CORPS IN PARAGRAPH 1E OF WHICH THE SECRETARY OF THE AIR FORCE AGREED, AMONG OTHER THINGS,

TO PAY, AT THE EXPENSE OF THE UNITED STATES AND SUBJECT TO APPROPRIATE REGULATIONS, COMMUTATION IN LIEU OF THE ISSUE OF GOVERNMENT UNIFORM CLOTHING, AT THE CURRENTLY PRESCRIBED RATE OR RATES, IN BEHALF OF FORMALLY ENROLLED MEMBERS OF THE BASIC COURSE OR THE ADVANCED COURSE, OR BOTH, TO WHOM SUITABLE UNIFORM CLOTHING IS FURNISHED AT THE EXPENSE OF THE INSTITUTION.

IN PARAGRAPH 3F OF THAT AGREEMENT MARYLAND UNIVERSITY INITIALLY ELECTED TO RECEIVE FOR STUDENTS OF THE BASIC COURSE UNIFORMS-IN-KIND AND TO RECEIVE FOR STUDENTS OF THE ADVANCED COURSE COMMUTATION OF UNIFORM. DECEMBER 1955 THE AIR FORCE RECOMMENDED THAT MARYLAND UNIVERSITY CHANGE FROM THE UNIFORMS-IN-KIND SYSTEM TO COMMUTATION IN LIEU OF UNIFORMS AND IN FEBRUARY 1956 MARYLAND UNIVERSITY AND THE AIR FORCE AGREED UPON THAT CHANGE. THE ABOVE-STATED COMMUTATIONS RATES WERE EFFECTIVE WHEN MARYLAND UNIVERSITY CONVERTED TO THE COMMUTATION SYSTEM EFFECTIVE JULY 1, 1956. SEE AFR 45-25, DATED MARCH 5, 1956, AND OCTOBER 25, 1956.

IN A "SUPPLEMENTAL APPLICATION AND AGREEMENT PERTAINING TO MODIFICATION OF AIR FORCE ROTC SUPPLY PROCEDURES" SIGNED BY THE PRESIDENT OF MARYLAND UNIVERSITY ON APRIL 15, 1957, AND BY THE SECRETARY OF THE AIR FORCE ON MAY 24, 1957, MARYLAND UNIVERSITY, IN PARAGRAPH 2, AGREED---

D. TO CONTINUE TO ACT AS AGENT FOR ITS AIR FORCE ROTC STUDENTS IN WHOSE BEHALF COMMUTATION OF UNIFORM ALLOWANCES ARE RECEIVED, IN ALL MATTERS PERTAINING TO CONTRACTING FOR THE PURCHASE OF UNIFORMS, FINANCING OF SUCH CONTRACTS AND ACCOUNTING FOR GOVERNMENT FUNDS IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE SECRETARY OF THE AIR FORCE.

E. THAT FUNDS DERIVED FROM THE SALE OF COMMUTATION PROCURED UNIFORMS WILL BE USED IN IMPROVING THE AIR FORCE ROTC INSTITUTIONAL PROGRAM TO INCLUDE BUT NOT NECESSARILY LIMITED TO MAINTENANCE OF UNIFORMS, PURCHASE OF TRAINING AIDS OR SPECIAL EQUIPMENT AND A SUITABLE MILITARY UNIFORM FOR SPONSORS.

IT IS UNDERSTOOD THAT PRIOR TO 1957 THERE WAS NO LIMITATION PLACED BY AIR FORCE REGULATION ON FUND RETENTION BY THE ORIGINAL INSTITUTIONS USING COMMUTATION FOR BASIC CODETS. ALSO IT IS UNDERSTOOD THAT THE RETENTION FORMULA ADOPTED IN 1957 WAS SUBSTANTIALLY THE SAME FORMULA AS THAT PRESCRIBED IN PARAGRAPH 509B OF AFROTCM 45-1, DATED JUNE 15, 1963, WHICH PROVIDED AS FOLLOWS:

AFTER THE CLOSE OF EACH FISCAL YEAR, BUT NOT LATER THAN 1 OCTOBER, THE INSTITUTION MUST RETURN TO THE GOVERNMENT ALL UNEXPENDED COMMUTATION FUNDS ON HAND IN EXCESS OF 75 PERCENT OF THE TOTAL AMOUNT RECEIVED FOR THE PRIOR TWO FISCAL YEARS. "UNEXPENDED FUNDS" ARE DEFINED TO INCLUDE CASH ON HAND LESS PURCHASE ORDERS IN PROCESS AND LESS COMMITMENTS ON HAND WHICH REQUIRE A RESERVATION OF FUNDS. UNEXPENDED FUNDS WILL BE REPORTED IN ACCORDANCE WITH AFROTCR 177-2.

THIS FORMULA WAS LATER CHANGED BY PARAGRAPH 510A OF AFROTCM 45-1F DATED APRIL 15, 1964, TO READ AS FOLLOWS:

THE AMOUNT OF UNEXPENDED UNIFORM COMMUTATION FUNDS WHICH MAY BE RETAINED FROM ONE FISCAL YEAR TO THE NEXT WILL BE COMPUTED AS OF 1 JULY EACH YEAR AS FOLLOWS:

(1) INSTITUTIONS WHICH HAVE ACCUMULATED $10,000 MAY RETAIN THEIR ENTIRE ACCUMULATION.

(2) INSTITUTIONS WHICH HAVE ACCUMULATED MORE THAN $10,000 MAY RETAIN AN AMOUNT EQUAL TO 30 PERCENT OF PRIOR YEAR RECEIPTS OR $10,000 WHICHEVER IS THE LARGER SUM. ACCUMULATED FUNDS WHICH EXCEED THESE LIMITATIONS WILL BE REFUNDED TO THE GOVERNMENT.

BY LETTER DATED NOVEMBER 18, 1963 (BEFORE THE LAST QUOTED REGULATION WAS ISSUED), THE AIR FORCE ADVISED MARYLAND UNIVERSITY THAT THE TOTAL ACCUMULATED UNEXPENDED BALANCE OF $79,339 AS OF JULY 1, 1963, WOULD BE RECLAIMED BY THE GOVERNMENT BY DEDUCTING THAT AMOUNT FROM ITS UNIFORM COMMUTATION ENTITLEMENT OF THE CURRENT FISCAL YEAR (1963- 1964). LETTER OF FEBRUARY 11, 1964, MARYLAND UNIVERSITY ADVISED THE AIR FORCE OF ITS POSITION THAT "THE FUNDS PAID TO THE UNIVERSITY BY THE AIR FORCE * * * ARE UNIVERSITY FUNDS" AND FORMALLY REQUESTED PAYMENT TO THE UNIVERSITY OF $74,975 TO COVER THE COMMUTATION ALLOWANCE DUE THE UNIVERSITY FOR THE 1963 FALL SEMESTER ENROLLMENT. IN LETTER DATED FEBRUARY 24, 1964, THE AIR FORCE REPLIED THAT ITS POSITION IS THAT "TITLE TO THESE UNEXPENDED FUNDS RESTS WITH THE UNITED STATES GOVERNMENT.'

ON DECEMBER 6, 1963, AND MAY 25, 1964, MARYLAND UNIVERSITY SUBMITTED TO THE AIR FORCE TWO VOUCHERS TOTALING $81,950 FOR COMMUTATION OF UNIFORM ALLOWANCES BELIEVED DUE THE UNIVERSITY BASED UPON THE NUMBER OF STUDENTS ENROLLED IN THE ROTC PROGRAM DURING THE 1963-64 SCHOOL YEAR. THE AIR FORCE HAS REFUSED TO PAY THAT SUM TO MARYLAND UNIVERSITY AND INSTEAD ISSUED A CHECK PAYABLE TO UNIVERSITY IN THE AMOUNT OF $2,611, REPRESENTING THE DIFFERENCE BETWEEN THE AMOUNT REQUESTED BY MARYLAND UNIVERSITY AND THE ENTIRE CASH COMMUTATION FUND BALANCE OF $79,339 AS OF JULY 1, 1963.

THE STATED LEGAL BASIS FOR THE AIR FORCE VIEW THAT THE TITLE TO THE UNEXPENDED UNIFORM COMMUTATION FUNDS PAID TO MARYLAND UNIVERSITY RESTS WITH THE UNITED STATES IS 10 U.S.C. 9836, WHICH AUTHORIZES SECRETARY OF THE AIR FORCE TO PAY UNIFORM COMMUTATION TO INSTITUTIONS PARTICIPATING IN THE AIR FORCE ROTC PROGRAM "UNDER SUCH CONDITIONS AS HE MAY PRESCRIBE," AND CHAPTER 5 OF THE AIR FORCE ROTC MANUAL 45-1, WHICH PRESCRIBES THE PURPOSES FOR WHICH THE UNIFORM COMMUTATION FUNDS MAY BE EXPENDED BY THE INSTITUTION AND PROVIDES A FORMULA FOR THE RETENTION OF UNEXPENDED FUNDS. IN THAT CONNECTION IT IS NOTED THAT SUBPARAGRAPHS 507B AND 507C OF CHAPTER 5 OF THE JUNE 15, 1963 EDITION OF AFROTCM 45-1 PROVIDED, AMONG OTHER THINGS, THAT UNIFORM COMMUTATION FUNDS MAY BE USED FOR PROCUREMENT AND MAINTENANCE OF ROTC UNIFORMS; RECEIPT, STORAGE, AND ISSUE OF UNIFORMS; TRANSPORTATION OF RIFLE AND DRILL TEAMS AND MAINTENANCE OF DRILL AND RIFLE EQUIPMENT, AND THAT

* * * ANY AND ALL EXPENDITURES NOT COVERED BY THE PROVISIONS OF SUB PARAGRAPH B ABOVE ARE PROHIBITED. ALL EXPENDITURES MUST HAVE THE WRITTEN APPROVAL OF THE RESPONSIBLE INSTITUTIONAL OFFICIALS.

BY LETTER OF APRIL 30, 1964, THE ATTORNEY GENERAL OF THE STATE OF MARYLAND RENDERED AN OPINION TO MARYLAND UNIVERSITY IN WHICH HE CONCLUDED THAT THE UNIFORM COMMUTATION FUNDS "BELONG TO THE UNIVERSITY OF MARYLAND AND ARE NOT THE PROPERTY OF THE AIR FORCE.' HE BASED THAT CONCLUSION UPON PARAGRAPH 1E OF THE 1952 AGREEMENT IN WHICH THE SECRETARY OF THE AIR FORCE AGREED "TO PAY COMMUTATION" TO MARYLAND UNIVERSITY IN BEHALF OF CADETS,"TO WHOM SUITABLE UNIFORM CLOTHING IS FURNISHED AT THE EXPENSE OF THE INSTITUTION," AND STATED THAT SUCH CONCLUSION IS FURTHER BUTTRESSED BY THE FACT THAT PARAGRAPH 510A OF AFROTCM 45-1 (SEE THE JUNE 15, 1963, EDITION) STATES THAT UNIFORMS PURCHASED FROM UNIFORM COMMUTATION FUNDS ARE NOT THE PROPERTY OF THE GOVERNMENT, WHEREAS UNIFORMS-IN-KIND ISSUED BY THE AIR FORCE ARE THE PROPERTY OF THE GOVERNMENT. THE ATTORNEY GENERAL FURTHER STATES THAT THE PROVISIONS OF 10 U.S.C. 9386 PERMIT THE SECRETARY OF THE AIR FORCE PRIOR TO PAYMENT TO (1) PRESCRIBE CONDITIONS UNDER WHICH PAYMENT OF COMMUTATION MAY BE MADE AND (2) FIX THE RATE OF COMMUTATION PAYMENT ANNUALLY, BUT NOT TO PRESCRIBE CONDITIONS HAVING A RETROACTIVE EFFECT ON FUNDS IN THE HANDS OF THE UNIVERSITY AS A RESULT OF PAYMENTS ALREADY MADE TO THE UNIVERSITY AT THE FIXED ANNUAL RATE.

IT IS A WELL-ESTABLISHED PRINCIPLE OF LAW THAT, ONCE STATUTORY REGULATIONS ARE ISSUED AND PAYMENTS ARE MADE PURSUANT TO SUCH REGULATIONS, THE RIGHTS THEREUNDER BECOME FIXED, AND ALTHOUGH SUCH REGULATIONS MAY BE AMENDED PROSPECTIVELY TO INCREASE OR DECREASE THE RIGHTS GIVEN THEREBY, THEY MAY NOT BE SO AMENDED RETROACTIVELY. 32 COMP. GEN. 315; 33 ID. 318; 40 ID. 242, 247. MARYLAND UNIVERSITY HAS INFORMALLY ADVISED US THAT THE COMMUTATION OF UNIFORMS RECEIVED FOR STUDENTS IN THE BASIC ROTC PROGRAM AND THE ACTUAL EXPENDITURES FOR THE FOUR SCHOOL YEARS 1959-60, 1960-61, 1961-62, AND 1962-63, WERE AS FOLLOWS:

CHART

ACTUAL

YEAR COMMUTATION EXPENDITURES

1959-60$79,132.50 $138,036.31

1960-61 104,825.00 101,028.22

1961-62 126,025.00 105,672.29

1962-63 79,925.00 51,101.18

ON THE BASIS OF THESE FIGURES IT WILL BE SEEN THAT AT THE CLOSE OF THE 1962-63 SCHOOL YEAR (AS OF JULY 1, 1963) THE $79,339 CASH COMMUTATION FUND BALANCE OF MARYLAND UNIVERSITY WAS LESS THAN 75 PERCENT OF THE TOTAL AMOUNT OF UNIFORM COMMUTATION FUNDS RECEIVED FOR STUDENTS IN THE BASIC ROTC COURSES FOR THE PRIOR TWO FISCAL (SCHOOL) YEARS. IT FOLLOWS THAT UNDER THE PROVISIONS OF THE AIR FORCE REGULATIONS AND OF THE AIR FORCE CONTRACT WITH MARYLAND UNIVERSITY, A RECOUPMENT OF THE UNIVERSITY'S CASH UNOBLIGATED BALANCE OF ROTC BASIC UNIFORM COMMUTATION FUNDS AS OF JULY 1, 1963, IS NOT LEGALLY SUPPORTABLE.

IT SHOULD BE NOTED, HOWEVER, THAT THE STATUTE AUTHORIZES THE PAYMENT OF COMMUTATION IN LIEU OF UNIFORMS "UNDER SUCH CONDITIONS AS" THE SECRETARY OF THE AIR FORCE "MAY PRESCRIBE" AND THAT IN ITS AGREEMENT WITH MARYLAND UNIVERSITY THE AIR FORCE AGREED TO PAY SUCH COMMUTATION "SUBJECT TO APPROPRIATE REGULATIONS.' IN VIEW OF THE LIMITED PURPOSES FOR WHICH AIR FORCE REGULATIONS PERMIT PARTICIPATING ROTC INSTITUTIONS TO EXPEND UNIFORM COMMUTATION FUNDS, IT APPEARS REASONABLY CLEAR THAT IF AN EDUCATIONAL INSTITUTION DISCONTINUES ITS PARTICIPATION IN THE AIR FORCE ROTC PROGRAM, SUCH UNEXPENDED FUNDS MUST BE RETURNED TO THE GOVERNMENT AS CONTEMPLATED BY THE REGULATIONS. SEE PARAGRAPH 509C AFROTCM 45-1, JUNE 15, 1963, AND PARAGRAPH 510C OF THE APRIL 1964 EDITION OF SUCH REGULATIONS. BY ENTERING UPON ANOTHER'S YEAR'S AIR FORCE ROTC PROGRAM MARYLAND UNIVERSITY MUST BE DEEMED BY ITS CONDUCT AND CONTRACT WITH THE AIR FORCE TO HAVE ASSENTED TO THE RECOUPMENT PROVISIONS OF THE APRIL 1964 REGULATIONS QUOTED ABOVE. ACCORDINGLY, IT IS OUR VIEW THAT THE ($10,000 OR 30 PERCENT) RECOUPMENT FORMULA ADOPTED BY THE AIR FORCE IN THE APRIL 1964 REGULATIONS IS APPLICABLE TO THE 1964-65 FISCAL AND SCHOOL YEAR SO AS TO APPLY TO THE UNOBLIGATED CASH BALANCE OF MARYLAND UNIVERSITY'S UNIFORM COMMUTATION FUNDS AS OF JULY 1, 1964. WE DO NOT CONSIDER THE PROVISIONS OF DOD DIRECTIVE NO. 1215.10, WHICH SPECIFIES THE RATES OF COMMUTATION IN LIEU OF UNIFORMS UNDER THE ROTC PROGRAM AND DIRECTS THE SEVERAL SERVICES TO FURNISH THE ASSISTANT SECRETARY OF DEFENSE (MANPOWER, PERSONNEL AND RESERVE) COPIES OF SERVICE DIRECTIVES IMPLEMENTING ITS PROVISIONS WITHIN 60 DAYS, AS REQUIRING A DIFFERENT CONCLUSION. YOUR QUESTIONS ARE ANSWERED ACCORDINGLY.