B-157824, JAN. 25, 1966, 45 COMP. GEN. 447

B-157824: Jan 25, 1966

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CONTRACTS - DISCOUNTS - LOST - LIABILITY OF CERTIFYING OFFICER ALTHOUGH A CERTIFYING OFFICER IS NOT A PECUNIARILY LIABLE FOR THE AMOUNT OF A TIME DISCOUNT LOST FOR FAILURE TO CERTIFY A VOUCHER WITHIN A TIME DISCOUNT PERIOD. EVEN THOUGH HE IS SUBJECT TO DISCIPLINARY ACTION. THE CERTIFICATION OF A VOUCHER IN THE FULL AMOUNT WHEN THE GOVERNMENT IS ENTITLED TO TAKE THE DISCOUNT CONSTITUTES A "FALSE. OR MISLEADING" CERTIFICATION UNDER 31 U.S.C. 82 (C) AND THE CERTIFYING OFFICER IS LIABLE FOR THE AMOUNT OF THE DISCOUNT LOST. WHERE VOUCHERS ARE NOT PRESENTED FOR CERTIFICATION DUE TO ADMINISTRATIVE DELAYS IN SECURING SIGNATURES ON SUPPORTING DOCUMENTS. HE IS LIABLE WHERE THE FULL AMOUNT WAS PAID INCIDENT TO A DOCUMENT CORRECTED UNDER THE RULE THAT A DISCOUNT PERIOD BEGINS TO RUN ON THE DATE OF RECEIPT OF THE MATERIAL OR SERVICE OR THE DATE OF RECEIPT OF A CORRECT INVOICE.

B-157824, JAN. 25, 1966, 45 COMP. GEN. 447

CONTRACTS - DISCOUNTS - LOST - LIABILITY OF CERTIFYING OFFICER ALTHOUGH A CERTIFYING OFFICER IS NOT A PECUNIARILY LIABLE FOR THE AMOUNT OF A TIME DISCOUNT LOST FOR FAILURE TO CERTIFY A VOUCHER WITHIN A TIME DISCOUNT PERIOD, EVEN THOUGH HE IS SUBJECT TO DISCIPLINARY ACTION, THE CERTIFICATION OF A VOUCHER IN THE FULL AMOUNT WHEN THE GOVERNMENT IS ENTITLED TO TAKE THE DISCOUNT CONSTITUTES A "FALSE, INACCURATE, OR MISLEADING" CERTIFICATION UNDER 31 U.S.C. 82 (C) AND THE CERTIFYING OFFICER IS LIABLE FOR THE AMOUNT OF THE DISCOUNT LOST; THEREFORE, WHERE VOUCHERS ARE NOT PRESENTED FOR CERTIFICATION DUE TO ADMINISTRATIVE DELAYS IN SECURING SIGNATURES ON SUPPORTING DOCUMENTS, THE CERTIFYING OFFICER MAY NOT BE ASSESSED THE DISCOUNT LOST ON THE VOUCHERS COVERING THE SUPPORTING DOCUMENTS CORRECTLY SUBMITTED BY THE CONTRACTOR, HOWEVER, HE IS LIABLE WHERE THE FULL AMOUNT WAS PAID INCIDENT TO A DOCUMENT CORRECTED UNDER THE RULE THAT A DISCOUNT PERIOD BEGINS TO RUN ON THE DATE OF RECEIPT OF THE MATERIAL OR SERVICE OR THE DATE OF RECEIPT OF A CORRECT INVOICE, WHICHEVER IS LATER, AND THE CERTIFICATION OF THE VOUCHER HAVING OCCURRED DURING THE DISCOUNT PERIOD, THE CERTIFYING OFFICER IS RESPONSIBLE FOR THE DISCOUNT LOST ON THE PAYMENT.

TO G. F. LANDWEHR, JR., UNITED STATES DEPARTMENT OF AGRICULTURE, JANUARY 25, 1966:

YOUR LETTER OF OCTOBER 6, 1965, WITH ATTACHMENT, REQUESTED RECONSIDERATION AND REVERSAL OF THE POSITION TAKEN BY THE GENERAL ACCOUNTING OFFICE IN NOTICE OF EXCEPTION NO. R-500008, DATED FEBRUARY 23, 1965 (ORIGINAL EXCEPTION DATED JULY 29, 1964). SAID NOTICE OF EXCEPTION WITHHOLDS CREDIT FOR $9,859.58 REPRESENTING THE AMOUNT OF DISCOUNT LOST, ON A PAYMENT CERTIFIED BY YOU, BY REASON OF FAILURE TO PROCESS AN INVOICE WITHIN THE ALLOWED TIME DISCOUNT PERIOD, UNDER CONTRACT NO. 12-14-120-936- 81, DATED JUNE 28, 1962, WITH AERONAUTICS SERVICE CORP., CHEYENNE, WYOMING. THE RECORD BEFORE OUR OFFICE INDICATES THAT THE DELAY WAS CAUSED BY RETURNING TO THE GOVERNMENT FIELD REPRESENTATIVE ONE OF THE 81 DAILY FLIGHT RECORDS SUPPORTING THE INVOICE IN QUESTION TO OBTAIN THE PILOT'S SIGNATURE, AND THAT THE RESPONSIBILITY FOR THE OMISSION OF SUCH SIGNATURE FELL UPON THE CONTRACTOR. IT FURTHER APPEARS THAT THE VOUCHER WAS CERTIFIED BY YOU WITHIN 20 DAYS AFTER THE ONE DFR WAS RETURNED WITH THE PILOT'S SIGNATURE. THE NOTICE OF EXCEPTION STATES THAT SINCE YOU HAD OVERALL RESPONSIBILITY IN THE MATTER, YOU SHOULD BE HELD RESPONSIBLE FOR THE AMOUNT OF THE LOSS RESULTING FROM THE FAILURE OF YOUR SUBORDINATES TO EXERCISE PRUDENT JUDGMENT IN PROCESSING THE VOUCHER FOR PAYMENT, AND CITES 32 COMP. GEN. 332 AS AUTHORITY FOR SUCH HOLDING.

YOUR LETTER AND ITS ATTACHMENTS ALLEGE THAT THE DISCOUNT IN THIS CASE, AS TO THE 80 CORRECT DFR-S, WAS LOST THROUGH ADMINISTRATIVE DELAYS IN PROCESSING THE INVOICE, FOR WHICH YOU WERE IN NO WAY RESPONSIBLE, PRIOR TO ITS PRESENTATION TO YOU FOR CERTIFICATION, AND SET FORTH IN DETAIL SUCH PROCESSING AND DELAYS TOGETHER WITH THE CHANGES MADE IN PROCEDURES TO PREVENT SIMILAR SITUATIONS FROM ARISING IN THE FUTURE. YOU FURTHER ALLEGE THAT YOU ARE NOT RESPONSIBLE FOR THE AMOUNT OF THE LOSS HERE INVOLVED INSOFAR AS IT PERTAINS TO THE 80 CORRECT DFR-S, SINCE SUCH LOSS DID NOT OCCUR UNDER ANY OF THE TYPES OF ERROR FOR WHICH A CERTIFYING OFFICER IS BY LAW RESPONSIBLE.

THE DECISIONS OF THIS OFFICE HAVE LONG HELD THAT THERE IS NO GENERAL AUTHORITY FOR THE ASSESSMENT OF CHARGES AGAINST AN EMPLOYEE OF THE GOVERNMENT FOR LOSSES SUSTAINED BY THE GOVERNMENT AS A RESULT OF ERROR IN JUDGMENT OR NEGLECT OF DUTY ON THE PART OF SUCH EMPLOYEE, IN THE ABSENCE OF A STATUTE, SPECIFIC REGULATIONS, OR A BOND PROVIDING FOR THE ASSESSMENT OF SUCH CHARGES. SEE 32 COMP. GEN. 332; 26 ID. 866; 25 ID. 299, AND CASES CITED THEREIN. WE STATED IN 32 COMP. GEN. 332 AS FOLLOWS:

THE CITED DECISIONS BY CLEAR INFERENCE PROVIDE THAT WHERE REGULATIONS MAKING THE EMPLOYEE LIABLE EXIST THEY CONSTITUTE A PART OF HIS CONTRACT OF EMPLOYMENT AND THAT HE IS LIABLE FOR LOSSES SUSTAINED BY THE UNITED STATES IN ACCORDANCE WITH THE PROVISIONS OF SUCH REGULATIONS. THE DECISIONS DID NOT INVOLVE BONDED EMPLOYEES AND THIS OFFICE PERCEIVES NO DISTINCTION BETWEEN ESTABLISHMENT OF PECUNIARY RESPONSIBILITY BY REGULATIONS BROUGHT TO THE EMPLOYEE'S ATTENTION AND CONSTITUTING A PART OF HIS CONTRACT OF EMPLOYMENT AND THE ESTABLISHING OF SUCH PECUNIARY RESPONSIBILITY BY REQUIRING OF HIM A BOND UNDER WHICH HE ASSUMES SUCH RESPONSIBILITY, THE BOND GIVING HIM SPECIFIC NOTICE OF HIS POTENTIAL LIABILITY AND CONSTITUTING A PART OF HIS CONTRACT OF EMPLOYMENT.

ACCORDINGLY, A BONDED EMPLOYEE AND HIS SURETY WOULD BE LIABLE FOR PECUNIARY LOSSES BY THE GOVERNMENT IN ACCORDANCE WITH THE TERMS OF HIS BOND. IN THIS CONNECTION, IT SHOULD BE NOTED THAT INASMUCH AS SUCH BONDS ARE INDEMNITY BONDS, IT WOULD BE NECESSARY TO ESTABLISH A PECUNIARY LOSS TO THE GOVERNMENT RESULTING FROM A VIOLATION BY THE EMPLOYEE OF THE OBLIGEE'S REGULATIONS, ORDERS AND INSTRUCTIONS APPLICABLE TO HIS DUTIES AND COVERED BY THE TERMS OF THE BOND BEFORE RECOVERY THEREUNDER CAN BE OBTAINED.

AS A CERTIFYING OFFICER, YOU WERE BY LAW (31 U.S.C. 82C) REQUIRED TO BE BONDED AND THE RECORD SHOWS THAT YOU WERE COVERED BY A POSITION SCHEDULE BOND IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER 2, SECTION 5, OF TITLE 7 OF THE DEPARTMENT OF AGRICULTURE REGULATIONS, 7 AR 136 144.50. UNDER THE TERMS OF YOUR BOND, YOUR SURETY AGREED TO INDEMNIFY THE UNITED STATES AGAINST ANY LOSS OR LOSSES CAUSED BY YOUR FAILURE TO "* * * EFFECT THE FAITHFUL PERFORMANCE OF THE DUTIES IMPOSED UPON HIM BY LAW OR BY REGULATION ISSUED PURSUANT TO LAW * * *.'

THE TERM "FAITHFUL PERFORMANCE OF THE DUTIES" WAS DEFINED IN YOUR NOTICE OF ASSIGNMENT TO A POSITION COVERED BY THE POSITION SCHEDULE BOND, IN CONFORMITY WITH THE DEFINITION CONTAINED IN 6 U.S.C. 14 (A) AND IN 7 AR 139 AS FOLLOWS:

THE TERM "FAITHFUL PERFORMANCE OF THE DUTIES" SHALL INCLUDE THE PROPER ACCOUNTING FOR FUNDS OR PROPERTY RECEIVED BY REASON OF THE POSITION OR EMPLOYMENT OF THE INDIVIDUAL OR INDIVIDUALS BONDED HEREBY AND THE DISCHARGE OF ALL DUTIES AND RESPONSIBILITIES NOW OR HEREAFTER IMPOSED UPON SUCH INDIVIDUAL OR INDIVIDUALS BY LAW OR BY REGULATION ISSUED PURSUANT THERETO. * * *

THE PROVISION OF THE BOND DESCRIBING THE POSITION OF CERTIFYING OFFICER, AS SHOWN BY TITLE 7 OF THE DEPARTMENT OF AGRICULTURE REGULATIONS (EXHIBIT 40, 7 AR 141A), IS AS FOLLOWS:

(1) CERTIFYING OFFICERS--- INDIVIDUALS DESIGNATED IN WRITING BY THE DEPARTMENT TO ACT IN THE CAPACITY OF AUTHORIZED CERTIFYING OFFICERS FOR THE PURPOSE OF CERTIFYING VOUCHERS FOR PAYMENT TO THE TREASURY DISBURSING OFFICERS OR THEIR AGENTS AND TO BE RESPONSIBLE FOR THE EXISTENCE AND CORRECTNESS OF THE FACTS RELATING TO THE PAYMENT, FOR THE LEGALITY OF THE PAYMENT UNDER THE APPROPRIATION OR FUND INVOLVED, AND FOR THE CORRECTNESS OF THE COMPUTATIONS THEREIN.

THE PORTION OF THE DEPARTMENT OF AGRICULTURE REGULATIONS PERTAINING TO CERTIFYING OFFICERS (TITLE 7, CHAPTER 2, SECTION 3, SUBSECTION 1, 7 AR 70- 82) DOES NOT MENTION DISCOUNTS. 7 AR 74, WHICH RECITES THE RESPONSIBILITY AND SCOPE OF LIABILITY OF CERTIFYING OFFICERS, MERELY REPEATS THE WORDING OF THE CERTIFYING OFFICERS ACT (31 U.S.C. 82C AND 82F) AND CITES CERTAIN DECISIONS OF OUR OFFICE AS EXAMPLES. 7 AR 88 PLACES UPON AGENCY HEADS--- NOT THE CERTIFYING OFFICERS--- THE RESPONSIBILITY FOR ESTABLISHING ADEQUATE PROCEDURES FOR THE PROMPT AND PROPER EXAMINATION OF VOUCHERS FOR CERTIFICATION. 7 AR 91, PERTAINING TO DISCOUNTS, MERELY INDICATES THAT TIME DISCOUNTS SHOULD BE TAKEN WHEREVER POSSIBLE AND REQUIRES AN EXPLANATION WHEN A DISCOUNT IS LOST. IN THIS CONNECTION, IT SHOULD BE NOTED THAT THE GENERAL ACCOUNTING OFFICE MANUAL FOR GUIDANCE OF FEDERAL AGENCIES, RELATIVE TO PROMPT PAYMENT TO EARN DISCOUNT (7 GAO 5015.10) PROVIDES AS FOLLOWS:

PROMPT PAYMENT TO EARN DISCOUNT. WHEN CASH DISCOUNT HAS BEEN OFFERED FOR PROMPT PAYMENT, EVERY EFFORT SHOULD BE MADE TO PROCESS THE INVOICE WITHIN THE DISCOUNT PERIOD AND IN ACCORDANCE WITH THE SPECIFIC TERMS UPON WHICH THE DISCOUNT HAS BEEN OFFERED BY THE CONTRACTOR OR SUPPLIER.

DISCOUNTS SHOULD BE TAKEN ONLY ON THOSE INVOICES WHICH CAN BE PAID WITHIN THE SPECIFIED DISCOUNT PERIOD.

SECTION 2 OF THE SO-CALLED CERTIFYING OFFICERS ACT, THE ACT OF DECEMBER 29, 1941, CH. 641, 55 STAT. 875 (31 U.S.C. 82C), PROVIDES IN PERTINENT PART AS FOLLOWS:

THE OFFICER OR EMPLOYEE CERTIFYING A VOUCHER SHALL (1) BE HELD RESPONSIBLE FOR THE EXISTENCE AND CORRECTNESS OF THE FACTS RECITED IN THE CERTIFICATE OR OTHERWISE STATED ON THE VOUCHER OR ITS SUPPORTING PAPERS AND FOR THE LEGALITY OF THE PROPOSED PAYMENT UNDER THE APPROPRIATION OR FUND INVOLVED * * * AND (3) BE HELD ACCOUNTABLE FOR AND REQUIRED TO MAKE GOOD TO THE UNITED STATES THE AMOUNT OF ANY ILLEGAL, IMPROPER, OR INCORRECT PAYMENT RESULTING FROM ANY FALSE, INACCURATE, OR MISLEADING CERTIFICATE MADE BY HIM, AS WELL AS FOR ANY PAYMENT PROHIBITED BY LAW OR WHICH DID NOT REPRESENT A LEGAL OBLIGATION UNDER THE APPROPRIATION OR FUND INVOLVED. * * *

THE RESPONSIBILITY AND LIABILITY ESTABLISHED BY THE STATUTE QUOTED ABOVE WAS EXPANDED TO INCLUDE THE CORRECTNESS OF THE COMPUTATIONS OF CERTIFIED VOUCHERS BY TITLE III OF THE SIXTH SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1942, APPROVED APRIL 28, 1942, CH. 247, 56 STAT. 244 (31 U.S.C. 82F).

NOWHERE IN YOUR BOND, THE PERTINENT REGULATIONS OF THE DEPARTMENT OF AGRICULTURE, OR THE STATUTES ESTABLISHING THE LIABILITY OF CERTIFYING OFFICERS, IS THERE ANY PROVISION SPECIFICALLY RENDERING YOU PECUNIARILY LIABLE TO THE GOVERNMENT FOR THE AMOUNT OF A TIME DISCOUNT LOST THROUGH FAILURE TO CERTIFY A VOUCHER WITHIN THE TIME DISCOUNT PERIOD. HENCE, WHILE YOU MIGHT BE SUBJECT TO DISCIPLINARY ACTION BY YOUR ADMINISTRATIVE OFFICE (SEE 25 COMP. GEN. 299, 301) SHOULD YOU LOSE SUCHA DISCOUNT BY NEGLIGENTLY FAILING TO CERTIFY A VOUCHER WITHIN THE TIME DISCOUNT PERIOD, THERE DOES NOT APPEAR TO BE ANY LEGAL BASIS FOR ASSESSING AGAINST YOU THE AMOUNT OF SUCH LOST DISCOUNT. IT SHOULD BE REMEMBERED, HOWEVER, THAT CERTIFYING A VOUCHER IN THE FULL AMOUNT WHEN THE VOUCHER IS CERTIFIED WITHIN THE TIME DISCOUNT PERIOD AND THE GOVERNMENT IS ENTITLED TO TAKE THE DISCOUNT CONSTITUTES A "FALSE, INACCURATE, OR MISLEADING CERTIFICATE" SINCE IT CERTIFIES FOR PAYMENT AN AMOUNT GREATER THAN THAT LEGALLY DUE, AND A CERTIFYING OFFICER SO DOING WOULD BE PECUNIARILY LIABLE FOR THE AMOUNT OF THE DISCOUNT.

IN VIEW OF THE ABOVE AND OF THE FACTS IN THIS CASE, IT APPEARS THAT THERE IS NO LEGAL BASIS FOR ASSESSING AGAINST YOU THE DISCOUNT LOST ON THE 80 DFR'S SUBMITTED CORRECTLY BY THE CONTRACTOR. HOWEVER, THE RECORD INDICATES THAT THE ONE DFR COVERING THE SPRAYING OF 1,080 ACRES WAS INCORRECT WHEN SUBMITTED AND THAT THE IMPROPRIETY THEREIN WAS THE FAULT OF THE CONTRACTOR. THE GENERAL RULE AS TO THE RUNNING OF A DISCOUNT PERIOD IS THAT THE PERIOD BEGINS TO RUN ON THE DATE OF RECEIPT OF THE MATERIAL OR SERVICE OR THE DATE OF RECEIPT OF A CORRECT INVOICE, WHICHEVER IS LATER. SINCE YOU CERTIFIED THE VOUCHER HERE INVOLVED WITHIN 20 DAYS AFTER RECEIPT OF THE ONE CORRECTED DFR FOR SPRAYING 1,080 ACRES, THE GOVERNMENT WAS ENTITLED TO THE DISCOUNT THEREON AND, TO THAT EXTENT, THE CERTIFICATION ON THE VOUCHER WAS "FALSE, INACCURATE, OR MISLEADING" AND THE AMOUNT PAID THEREON, TO THE EXTENT THAT IT CONSISTED OF THE DISCOUNT ON THAT ONE DFR, CONSTITUTED AN ,ILLEGAL, IMPROPER, OR INCORRECT PAYMENT" RESULTING FROM A "FALSE, INACCURATE, OR MISLEADING" CERTIFICATE MADE BY YOU, FOR WHICH YOU ARE PECUNIARILY RESPONSIBLE.

THE CIVIL ACCOUNTING AND AUDITING DIVISION OF OUR OFFICE IS BEING INSTRUCTED TO ISSUE A CORRECTED NOTICE OF EXCEPTION ELIMINATING ALL OF THE AMOUNT CHARGED AGAINST YOU EXCEPT THAT PERTAINING TO THE ONE DFR COVERING 1,080 ACRES.