B-23077, JANUARY 23, 1942, 21 COMP. GEN. 705

B-23077: Jan 23, 1942

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1942: I HAVE A LETTER OF JANUARY 8. AS FOLLOWS: THERE IS PRESENTED FOR YOUR CONSIDERATION THE FOLLOWING QUESTION: WHETHER IN THE OPERATION OF ITS LOW-COST HOUSING AND RESETTLEMENT PROJECTS THIS ADMINISTRATION MAY ENTER INTO CONTRACTS WITH ITS OWN EMPLOYEES FOR THE OCCUPANCY OF DWELLING UNITS IN SUCH PROJECTS ON THE SAME TERMS AND CONDITIONS AS THOSE EMBODIED IN CONTRACTS WITH NONEMPLOYEES. THIS QUESTION IS PARTICULARLY IMPORTANT AT THE PRESENT TIME FOR THE REASON THAT THIS ADMINISTRATION HAS STARTED THE CONSTRUCTION OF 51 LOW COST DWELLINGS. WILL SOON UNDERTAKE THE CONSTRUCTION OF ABOUT 100 MORE SUCH DWELLINGS IN WHAT IS KNOWN AS THE ELEANOR ROOSEVELT DEVELOPMENT NEAR SAN JUAN. (THERE ARE ABOUT 475 HOUSES IN THE DEVELOPMENT CONSTRUCTED UNDER PREVIOUS YEARS' PROGRAMS).

B-23077, JANUARY 23, 1942, 21 COMP. GEN. 705

OFFICERS AND EMPLOYEES - CONTRACTS WITH THE GOVERNMENT - LOW-COST HOUSING OCCUPANCY IF CONTRACTS BETWEEN THE PUERTO RICO RECONSTRUCTION ADMINISTRATION AND ITS EMPLOYEES FOR THE OCCUPANCY OF DWELLING UNITS IN LOW-COST HOUSING PROJECTS BE ENTERED INTO UNDER THE SAME TERMS AND CONDITIONS AS WITH NONEMPLOYEES, AND IF THERE BE EXCLUDED FROM THE LIST OF ELIGIBLE OCCUPANTS EMPLOYEES WHO ACT IN BEHALF OF THE UNITED STATES IN THE TRANSACTIONS SO AS NOT TO VIOLATE THE PROVISIONS OF 18 U.S.C. 93, SUCH CONTRACTS WOULD NOT BE OBJECTIONABLE AS BEING IN CONTRAVENTION OF THE RULE OF PUBLIC POLICY AGAINST THE GOVERNMENT CONTRACTING WITH ITS EMPLOYEES OR OF THE PROHIBITION IN SECTION 1765, REVISED STATUTES, AGAINST EXTRA ALLOWANCES OR COMPENSATION FOR EMPLOYEES.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE INTERIOR, JANUARY 23, 1942:

I HAVE A LETTER OF JANUARY 8, 1942, FROM THE ADMINISTRATOR, PUERTO RICO RECONSTRUCTION ADMINISTRATION, AS FOLLOWS:

THERE IS PRESENTED FOR YOUR CONSIDERATION THE FOLLOWING QUESTION:

WHETHER IN THE OPERATION OF ITS LOW-COST HOUSING AND RESETTLEMENT PROJECTS THIS ADMINISTRATION MAY ENTER INTO CONTRACTS WITH ITS OWN EMPLOYEES FOR THE OCCUPANCY OF DWELLING UNITS IN SUCH PROJECTS ON THE SAME TERMS AND CONDITIONS AS THOSE EMBODIED IN CONTRACTS WITH NONEMPLOYEES.

THIS QUESTION IS PARTICULARLY IMPORTANT AT THE PRESENT TIME FOR THE REASON THAT THIS ADMINISTRATION HAS STARTED THE CONSTRUCTION OF 51 LOW COST DWELLINGS, AND WILL SOON UNDERTAKE THE CONSTRUCTION OF ABOUT 100 MORE SUCH DWELLINGS IN WHAT IS KNOWN AS THE ELEANOR ROOSEVELT DEVELOPMENT NEAR SAN JUAN, PUERTO RICO. (THERE ARE ABOUT 475 HOUSES IN THE DEVELOPMENT CONSTRUCTED UNDER PREVIOUS YEARS' PROGRAMS). A NUMBER OF PRRA EMPLOYEES WHO MEET THE ELIGIBILITY REQUIREMENTS PRESCRIBED BY PRRA ADMINISTRATIVE ORDERS WITH REGARD TO THE SUBSTANDARD CONDITION OF THEIR PRESENT DWELLING QUARTERS, SIZE OF FAMILY, AMOUNT OF FAMILY INCOME IN RELATION TO PROSPECTIVE RENTAL CHARGED FOR THE NEW HOUSES, ETC., DESIRE AN OPPORTUNITY TO BECOME TENANTS OF THE ELEANOR ROOSEVELT DEVELOPMENT. TENANTS THERE EXECUTE MONTHLY LEASE AGREEMENTS WITH THE UNITED STATES; IF AFTER NOT LESS THAN SIX MONTHS' TENANCY, THEY HAVE PROVEN SATISFACTORY IN EVERY RESPECT, TENANTS MAY, IF THEY DESIRE TO DO SO, ENTER INTO AN AGREEMENT BY THE TERMS OF WHICH THEY MAY EVENTUALLY ACQUIRE TITLE TO THEIR RESPECTIVE DWELLINGS.

SELECTION OF TENANTS FOR PRRA'S LOW-COST HOUSING PROJECTS IS MADE IN THE FOLLOWING MANNER:

THE PROSPECTIVE TENANT FILLS OUT A BLANK GIVING FULL DETAILS AS TO OCCUPATION, INCOME, FAMILY, AND DWELLING CONDITIONS, REFERENCES, ETC. THIS IS CAREFULLY INVESTIGATED, AND THE REPORT OF THE INVESTIGATOR IS CHECKED BY THE CHIEF OF THE PRRA'S OFFICE OF HOUSING MANAGEMENT TO DETERMINE WHETHER THE APPLICANT MEETS THE ELIGIBILITY REQUIREMENTS PRESCRIBED BY PRRA ADMINISTRATIVE ORDERS AND REGULATIONS. IF APPROVED, THE APPLICANT'S NAME IS THEN PLACED IN ITS CHRONOLOGICAL ORDER ON THE LIST OF APPROVED APPLICANTS. AS VACANCIES OCCUR IN THE PROJECTS SAME ARE FILLED FROM THIS LIST, THE EARLIEST APPLICANT BEING GIVEN THE FIRST OPPORTUNITY.

IN THE CASE OF THE NEW HOUSES TO BE CONSTRUCTED AT THE ELEANOR ROOSEVELT DEVELOPMENT, WHERE ALL APPLICATIONS WILL BE RECEIVED AND INVESTIGATED AT ABOUT THE SAME TIME, AND WHERE IT IS BELIEVED THERE WILL BE MANY MORE QUALIFIED APPLICANTS THAN AVAILABLE HOUSES, ALL APPLICANTS WILL BE REQUIRED TO APPEAR AT A CERTAIN TIME AND PLACE FOR THE PURPOSE OF DRAWING LOTS. THE NUMBER OF EACH HOUSE WILL BE PLACED ON A SLIP OF PAPER, AND THESE TOGETHER WITH A NUMBER OF BLANK SLIPS CORRESPONDING TO THE NUMBER OF APPLICANTS PRESENT IN EXCESS OF THE NUMBER OF HOUSES AVAILABLE WILL BE PLACED IN A RECEPTACLE FROM WHICH APPLICANTS WILL DRAW. THOSE DRAWING BLANK SLIPS WILL NOT BE TENDERED OCCUPANCY AGREEMENTS.

IF PRRA EMPLOYEES MAY PROPERLY BE INCLUDED IN THE APPLICANTS FOR HOUSES UNDER THE FOREGOING PROCEDURE, THERE WILL BE EXCLUDED THEREFROM ANY AND ALL EMPLOYEES WHO HAVE ANYTHING TO DO WITH PASSING UPON THOSE WHO ARE ELIGIBLE FOR OCCUPANCY OR WITH DETERMINING TO WHOM HOUSES ARE TO BE ALLOTTED, OR ON WHAT TERMS. THE EMPLOYEE-APPLICANT MUST MEET THE SAME CONDITIONS OF ELIGIBILITY AS ALL OTHER APPLICANTS; IF HE IS A SUCCESSFUL DRAWER HE WILL GET EXACTLY THE SAME SORT OF CONTRACT THAT A HOST OF OTHERS NOT EMPLOYEES GET; AND HIS CONTRACT ALONG WITH THE OTHERS, WILL BE A MERE INCIDENT IN THE ADMINISTRATION'S PROGRAM TO FURNISH LOW-COST HOUSING TO PEOPLE WHO OTHERWISE MIGHT HAVE TO LIVE UNDER LITTLE BETTER THAN SLUM CONDITIONS.

IT IS BELIEVED THAT THE NUMBER OF EMPLOYEE-APPLICANTS WILL BE ONLY A SMALL PERCENTAGE OF THE TOTAL APPLICATIONS TO BE RECEIVED FOR ELEANOR ROOSEVELT DEVELOPMENT HOUSES. THE FACT THAT FINANCING OF THE PRRA BEYOND THE PRESENT FISCAL YEAR AND EMPLOYMENT OF ITS PRESENT SMALL PERSONNEL BEYOND THAT TIME IS UNCERTAIN, WOULD SEEM TO ARGUE FOR RATHER THAN AGAINST LOYAL EMPLOYEES OTHERWISE ELIGIBLE BEING GIVEN THE SAME OPPORTUNITY AS OUTSIDERS TO OBTAIN WHOLESOME DWELLING ACCOMMODATIONS.

THE ONLY EXCEPTION CONTEMPLATED TO PROCEDURE ABOVE OUTLINED IS THAT SUPERVISORS AND ASSISTANTS NOW DWELLING AT THE PROJECT MAY CONTINUE TO OCCUPY THEIR PRESENT HOUSES, OR FOR THE SAKE OF ADMINISTRATIVE EFFICIENCY BE MOVED TO ONE OR MORE OF THE NEW HOUSES. SUCCESSFUL OPERATION OF THE PROJECT AND PROTECTION OF THE INTERESTS OF THE UNITED STATES REQUIRES THAT THESE REPRESENTATIVES OF THE ADMINISTRATION BE EVER PRESENT.

IT WOULD SEEM THAT THIS PRACTICE, TOGETHER WITH THE CONTEMPLATED INCLUSION OF PRRA EMPLOYEES IN THE LIST OF PROSPECTIVE TENANTS OF PRRA DWELLING UNITS, WOULD NOT CONTRAVENE BUT BE WITHIN THE PERMISSIBLE LIMITS OF THE FOLLOWING EXCERPT FROM 14 OP. ATTY. GEN. 482:

"* * * SECTIONS 112 AND 113 OF THE PENAL CODE) MAKE IT ILLEGAL FOR AN OFFICER OF THE U.S. TO HAVE THAT SORT OF CONNECTION WITH A GOVERNMENT CONTRACT WHICH AN AGENT, ATTORNEY, OR SOLICITOR ASSUMES WHEN HE PROCURES OR AIDS TO PROCURE SUCH A CONTRACT FOR ANOTHER AND WHEN HE PROSECUTES FOR ANOTHER AGAINST THE GOVERNMENT ANY CLAIM FOUNDED UPON A GOVERNMENT CONTRACT * * *. BUT THERE IS NOT IN THE STATUTES ANY GENERAL PROHIBITION WHICH PREVENTS EXECUTIVE OFFICERS FROM CONTRACTING DIRECTLY WITH THE GOVERNMENT, AS PRINCIPALS, IN MATTERS ENTIRELY SEPARATE FROM THEIR OFFICES AND IN NO WAY CONNECTED WITH THE PERFORMANCE OF THEIR DUTIES AS OFFICERS OF THE GOVERNMENT; NOR ARE THEY FORBIDDEN TO BE CONNECTED WITH SUCH CONTRACTS, AFTER THEY ARE PROCURED, BY ACQUIRING AN INTEREST IN THEM.'

YOUR EARLY ADVICE WILL BE GREATLY APPRECIATED.

CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE NOT PROHIBITED GENERALLY BY STATUTE BUT ONLY WHERE AN EMPLOYEE OF THE GOVERNMENT ACTS AS AGENT BOTH FOR THE GOVERNMENT AND THE CONTRACTOR IN THE TRANSACTION OF BUSINESS (SEE 18 U.S.C. 93; 14 OP. ATTY. GEN. 482; 24 ID. 557; 5 COMP. GEN. 93; ID. 281; 17 ID. 123); OR WHERE THE SERVICE TO BE RENDERED UNDER A CONTRACT WITH AN EMPLOYEE IS SUCH AS COULD HAVE BEEN REQUIRED OF HIM IN HIS OFFICIAL CAPACITY, IN WHICH CASE THE PAYMENT OF ADDITIONAL COMPENSATION IS INHIBITED BY SECTIONS 1764 AND 1765, REVISED STATUTES, 5 U.S. CODE 69, 70. CF. WOODWELL V. UNITED STATES, 214 U.S. 82.

HOWEVER, ASIDE FROM ANY STATUTORY PROHIBITION, CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE OPEN TO CRITICISM FOR POSSIBLE FAVORITISM AND PREFERENTIAL TREATMENT; AND THIS OFFICE OFTEN HAS EXPRESSED THE VIEW THAT SUCH CONTRACTS SHOULD NOT BE MADE EXCEPT FOR THE MOST COGENT REASONS. 5 COMP. GEN. 93; 14 ID. 403; CF. 13 COMP. GEN. 281.

IF, AS INDICATED IN THE SUBMISSION, THERE BE EXCLUDED FROM THE LIST OF PROSPECTIVE TENANTS ALL EMPLOYEES WHO MIGHT ACT ON THE APPLICATIONS IN BEHALF OF THE UNITED STATES, THE EXECUTION OF A CONTRACT WITH AN EMPLOYEE OF THE ADMINISTRATION EVIDENTLY DOES NOT CONTRAVENE THE PROVISIONS OF LAW SET FORTH IN 18 U.S.C. 93, SINCE THE APPLICANT WOULD NOT REPRESENT THE UNITED STATES IN THE TRANSACTION. NOR DOES IT APPEAR THAT THE RENTAL OF A DWELLING UNIT TO AN EMPLOYEE, UNDER THE SAME TERMS AND CONDITIONS AS OFFERED TO NONEMPLOYEES, CONSTITUTES ADDITIONAL PAY, EXTRA ALLOWANCE OR COMPENSATION TO SAID EMPLOYEE, WITHIN THE MEANING OF SECTION 1765, REVISED STATUTES, BUT RATHER REPRESENTS AN INDEPENDENT TRANSACTION WITH THE EMPLOYEE ON THE SAME BASIS AS OFFERED TO NONEMPLOYEES SIMILARLY SITUATED, AND IN WHICH THE EMPLOYEE PAYS THE RATE ESTABLISHED BY THE GOVERNMENT FOR ALL OCCUPANTS OF SIMILAR DWELLINGS.

THE EVIDENT PURPOSE OF THE ADMINISTRATION IN UNDERTAKING THE CONSTRUCTION OF THE HOUSING DEVELOPMENT IN QUESTION WAS TO MAKE LOW COST HOUSING AVAILABLE TO THOSE WHOSE LIVING CONDITIONS WERE OF A SUBSTANDARD NATURE, AS DEFINED BY THE ADMINISTRATION; AND I AM NOT AWARE OF ANY PROVISION OF LAW OR ISSUE OF PUBLIC POLICY WHICH WOULD REQUIRE EXCLUDING FROM THE LIST OF APPLICANTS EMPLOYEES OF THE ADMINISTRATION WHO ARE OTHERWISE ELIGIBLE TO BECOME TENANTS, PROVIDED EFFECTIVE MEASURES ARE TAKEN TO PREVENT ANY POSSIBILITY OF PREFERENTIAL TREATMENT TO SUCH EMPLOYEES IN THE SELECTION OF TENANTS.

YOU ARE ADVISED, THEREFORE, THAT THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE EXECUTION OF CONTRACTS BETWEEN THE ADMINISTRATION AND ITS EMPLOYEES FOR THE OCCUPANCY OF DWELLING UNITS IN LOW-COST HOUSING PROJECTS, UNDER THE CIRCUMSTANCES DESCRIBED IN THE SUBMISSION.