B-240700.3, Feb 01, 1991

B-240700.3: Feb 1, 1991

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DIGEST: There is no inconsistency between the responsibility of the Comptroller General under 31 U.S.C. Sec. 1304 to certify court judgments and awards by agency boards of contract appeals for payment from the judgment fund and our determination that the Department of Defense improperly used expired "M" account funds to cover the costs of an award that should have been paid from current appropriations. The Honorable Andy Ireland House of Representatives: This is in response to your letter of September 27. The case study was prepared in connection with our ongoing review of Department of Defense (DOD) "M" account transactions in which we questioned the use by DOD agencies of expired "M" account funds to pay contractor claims in some cases.

B-240700.3, Feb 01, 1991

DIGEST: There is no inconsistency between the responsibility of the Comptroller General under 31 U.S.C. Sec. 1304 to certify court judgments and awards by agency boards of contract appeals for payment from the judgment fund and our determination that the Department of Defense improperly used expired "M" account funds to cover the costs of an award that should have been paid from current appropriations.

The Honorable Andy Ireland

House of Representatives:

This is in response to your letter of September 27, 1990, requesting clarification of the preliminary conclusions we reached in a case study provided for your informal review. The case study was prepared in connection with our ongoing review of Department of Defense (DOD) "M" account transactions in which we questioned the use by DOD agencies of expired "M" account funds to pay contractor claims in some cases. You asked how we could "question the use of M' account monies to pay claims or interest on a claim" in light of the Comptroller General's statutory responsibility under 31 U.S.C. Sec. 1304 to certify such payments at the time they are made. As explained below, there is no inconsistency between the responsibility of the Comptroller General to certify judgments and awards for payment under 31 U.S.C. Sec. 1304 and our determination that DOD improperly used "M" account funds to pay an award that should have been paid with current funds.

The specific case history you questioned /1/ involved the Air Force's use of expired funds to pay its share of an award by the Armed Services Board of Contract Appeals in favor of a contractor who submitted a claim under the Contract Disputes Act of 1978, 41 U.S.C. Secs. 601-613. We concluded that the Air Force should have used current funds to pay its portion of the award based on our holding in 63 Comp.Gen. 308, 312 (1984) (copy enclosed). That decision held that under section 13 of the Contract Disputes Act, 41 U.S.C. Sec. 612, which provides that awards by agency boards of contract appeals ultimately must be paid from "available funds," agencies are required to use current, as opposed to expired, funds. This would be true whether the agency paid the award directly, as we understand the Air Force did in this case, or by reimbursing the judgment fund if payment to the contractor was made through the fund. In this case, the Comptroller General did not certify the award for payment under 31 U.S.C. Sec. 1304 because the Air Force did not request payment from the judgment fund. However, even when an award by an agency board of contract appeals is paid through the judgment fund, the Comptroller General's certification of the award for payment would have nothing to do with the separate question of the funding source the agency would be required to use in reimbursing the judgment fund.

It should be noted that when we question DOD's use of expired appropriations to pay claims by contractors there is ordinarily no doubt as to the contractor's entitlement to payment. The issue in these cases is not the legality of payment but the source of funds-- current or expired-- agencies should use to make the payment. Thus, there would be no basis in these cases for attempting to recover an "illegal" payment from the payee.

We trust that the foregoing explanation adequately responds to your request for clarification.

/1/ You also asked us about another case history involving the use of "M" account monies to pay interest on a claim. That situation involved the payment of interest by the Army on a negotiated settlement with the contractor. The Comptroller General is not responsible for certifying the payment of negotiated settlements of contractor claims or interest on such settlements.