B-241856.2 September 23, 1992

B-241856.2: Sep 23, 1992

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An agency's accounts must be settled within 3 years of the date when they are substantially complete and ready for audit. The account is considered settled. There is no need for our Office to consider whether to grant relief. We find that neither individual is liable for the payment. Since neither is an accountable officer. Was awarded a $238. That work on it was 50 to 60 percent complete. Kimmel was issued a check for $106. Which she determined was improper in view of the assignment to the Bank (as well as the fact that the contract did not provide for progress payments). The investigation also concluded that the certifying officer and other officials in the Accounting and Finance Office at Holloman were not liable.

B-241856.2 September 23, 1992

Accountable Officers Determination criteria Air Force contracting officer and contract specialist generally cannot be held liable as accountable officers for improper payments. Accountable Officers Determination criteria Under 31 U.S.C. Sec. 3526, an agency's accounts must be settled within 3 years of the date when they are substantially complete and ready for audit. For purposes of an improper payment to an assignor (instead of to the assignee), the period generally starts to run on the date of payment. Once the 3-year period has expired, the account is considered settled, and there is no need for our Office to consider whether to grant relief.

Richard H. Koebert, Comptroller Defense Finance and Accounting Service Denver, Colorado 80279-5000

Dear Mr. Koebert:

This responds to your February 14, 1992, letter asking whether contracting officer Katherine C. Hogue and MSgt. Robert L. Davidson (Retired), a contracting specialist, properly may be held liable for an improper payment of $106,140.13 to an Air Force contractor. We find that neither individual is liable for the payment, since neither is an accountable officer. We also find that because of the passage of time the account in issue has been settled as a matter of law, so that no government official can now be held accountable for the payment.

Background

In December 1987, Specialty Vehicles, Inc., of Indianapolis, Indiana, was awarded a $238,950 contract to build an avionics mobile van for the Air Force. The Air Force raised concerns about the financial condition of the contractor prior to the award. To resolve these concerns, the Dubois County Bank provided a written commitment to lend the contractor up to $191,000 to build the van if it won the contract. Following the award, the Bank extended a loan to the contractor as promised. In February 1988, Specialty Vehicles formally assigned all "payments due or to become due" under to the contract to the Bank. The Bank notified the Air Force of the assignment as required.

In January 1989, the President and owner of Specialty Vehicles, William Kimmel, traveled to Holloman Air Force Base in Alamogordo, New Mexico, sponsor of the van project, to request a "progress payment" for work done on the vehicle. He offered a discount for "prompt payment" within 3 days. MSgt. Davidson, temporarily assigned as administrator of the contract, obtained written verification from Air Force inspectors who had seen the van on January 4, 1989, that work on it was 50 to 60 percent complete. Contracting Officer Hogue signed the invoice and forwarded it to officials in Holloman's Accounting and Finance Office for further processing and payment. The Accounting and Finance Office's certifying officer certified the payment, and Mr. Kimmel was issued a check for $106,140.13 ($107,212.25 less the prompt payment discount and other consideration) on January 12, 1989, in time to meet the prompt payment deadline.

In May 1989, a newly assigned contracting officer discovered the payment, which she determined was improper in view of the assignment to the Bank (as well as the fact that the contract did not provide for progress payments). The Air Force, however, has not been successful in its attempt to recover the money from Mr. Kimmel.

The Air Force investigation into the improper payment, launched in September 1989 and completed in November 1990, concluded that both Ms. Hogue and MSgt. Davidson should be held pecuniarily liable for the improper payment. The investigation also concluded that the certifying officer and other officials in the Accounting and Finance Office at Holloman were not liable. You then sent the matter to our Office without recommendation.

Accountable Officer

The Air Force investigation concluded in this case that officers who are generally considered not to be accountable should be held pecuniarily liable, and that those normally held as accountable officers, the Accounting and Finance Officer (the AFO) and the certifying officer, should be relieved from liability. Yet, Air Force AFOs and certifying officers are held to a standard of strict liability (liability with or without negligence) for any improper payments processed by them and made out of funds they control. See AFR 110-4, ch. 6.

Moreover, there is no authority to assess pecuniary liability against a government employee for losses resulting from an error in judgment or neglect of duty unless the agency has issued administrative regulations specifically providing for such liability. If the agency has regulations of this type, they are considered part of the individual's contract of employment. See 52 Comp.Gen. 964 (1973); 21 Comp.Gen. 987 (1942).

Our review discloses no Air Force regulations that would apply here to warrant holding either Ms. Hogue[1] or Msgt. Davidson liable. In this respect, we note a reference in the record to AFR 177-101, sec. A2-3(e), which provides that persons other than accountable officers may be held pecuniarily liable for losses or deficiencies resulting from their actions. We have stated that the intent of that provision is to recognize the liability of non-accountable persons whose criminal conduct (not involved here) has led to a loss. See B-235048, Apr. 4, 1991. In any case, the regulation is not inconsistent with the general rule, as set out above, about the liability of otherwise non-accountable officers based on specific administrative regulations.

Statute of Limitations

Under 31 U.S.C. Sec. 3526, accounts must be settled within 3 years of the date when the agency's accounts are substantially complete and ready for audit. See B-221720, May 8, 1986. Once that period has expired, the account is considered settled, and there is no need for our Office to consider whether to grant relief. Id.

In cases involving improper payments to assignors, we have held that, where notice of the assignment was evident, the 3-year period begins on the date the payment is made. Our rationale is that where the agency has a copy of the assignment all the documents needed to raise a charge in the account are in its possession when the check is issued. B-213720, Sept. 26, 1986 (the copy of the notice of assignment was sent to the contracting officer, so although the notice was not in the contracting file, the document could be traced); B-226176, May 26, 1987 (the assignment was noted in the file and previous payments had been correctly paid to the assignee).

Accounting and Finance Office personnel were aware of the assignment when the check in question was issued. In fact, the record shows that the certifying officer nevertheless certified the payment in part because he did not understand the significance of the assignment document in the file. Accordingly, the 3-year period began in this case on January 12, 1989, the date the check was issued to Specialty Vehicles, Inc. Because the period thus expired on

January 12, 1992, but we did not receive the case for review until February, the account must be considered settled without further recovery from any government officials.

1. Although contracting officers like Ms. Hogue are, in fact, eligible for appointment as authorized certifying officers, there was no such appointment in this case.