B-28088, AUGUST 24, 1942, 22 COMP. GEN. 156

B-28088: Aug 24, 1942

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THE FISCAL YEAR APPROPRIATION TO BE CHARGED WITH THE COST OF SUCH SUPPLIES IS GOVERNED. NOT BY THE DATE WHEN THE REQUISITION IS ISSUED. BY THE DATE WHEN THE SUPPLIES ARE PURCHASED OR CONTRACTED FOR BY THE PROCUREMENT DIVISION. 1942: I HAVE YOUR LETTER OF AUGUST 10. THE PROCUREMENT DIVISION HAS ADVISED RECENTLY THAT THE MATERIAL COVERED BY THE ORDER WAS NOT PURCHASED PRIOR TO JULY 1. THESE SUPPLIES WERE ACTUALLY NEEDED FOR USE IN THE LAST FISCAL YEAR AND THE VETERANS' ADMINISTRATION WOULD HAVE ORDERED THEM FROM COMMERCIAL SOURCES DURING THAT YEAR INSTEAD OF FROM THE PROCUREMENT DIVISION IF THE DIRECTOR OF PROCUREMENT HAD NOT ISSUED THE ABOVE CITED CIRCULAR INSTRUCTING THAT ELECTRICAL SUPPLIES COSTING IN THE AGGREGATE FIVE HUNDRED DOLLARS.

B-28088, AUGUST 24, 1942, 22 COMP. GEN. 156

APPROPRIATIONS - FISCAL YEAR CHARGEABLE - REQUISITIONING OF SUPPLIES IN FISCAL YEAR PRECEDING YEAR OF ACTUAL PURCHASE A REQUISITION ISSUED BY A GOVERNMENT AGENCY TO THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, FOR THE PROCUREMENT OF SUPPLIES DOES NOT CONSTITUTE THE INCURRING OF AN EXPENSE OR THE MAKING OF A CONTRACT SO AS TO OBLIGATE THEN CURRENT FUNDS, AND, THEREFORE, THE FISCAL YEAR APPROPRIATION TO BE CHARGED WITH THE COST OF SUCH SUPPLIES IS GOVERNED, NOT BY THE DATE WHEN THE REQUISITION IS ISSUED, BUT BY THE DATE WHEN THE SUPPLIES ARE PURCHASED OR CONTRACTED FOR BY THE PROCUREMENT DIVISION.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AUGUST 24, 1942:

I HAVE YOUR LETTER OF AUGUST 10, 1942, AS FOLLOWS:

PURSUANT TO THE PROVISIONS OF CIRCULAR LETTER NO. 566 ISSUED BY THE DIRECTOR OF PROCUREMENT UNDER DATE OF FEBRUARY 27, 1942, THE VETERANS' ADMINISTRATION ON MAY 20, 1942, PLACED AN ORDER WITH THE PROCUREMENT DIVISION FOR ELECTRICAL SUPPLIES AMOUNTING TO $668.34, CHARGEABLE TO THE APPROPRIATION " SALARIES AND EXPENSES, VETERANS' ADMINISTRATION, 1942.' THE PROCUREMENT DIVISION HAS ADVISED RECENTLY THAT THE MATERIAL COVERED BY THE ORDER WAS NOT PURCHASED PRIOR TO JULY 1, 1942, AND HAS REQUESTED THAT AN ALLOTMENT BE MADE FROM THE CURRENT APPROPRIATION TO ENABLE THE PROCUREMENT DIVISION TO PROCEED WITH PROCUREMENT.

THESE SUPPLIES WERE ACTUALLY NEEDED FOR USE IN THE LAST FISCAL YEAR AND THE VETERANS' ADMINISTRATION WOULD HAVE ORDERED THEM FROM COMMERCIAL SOURCES DURING THAT YEAR INSTEAD OF FROM THE PROCUREMENT DIVISION IF THE DIRECTOR OF PROCUREMENT HAD NOT ISSUED THE ABOVE CITED CIRCULAR INSTRUCTING THAT ELECTRICAL SUPPLIES COSTING IN THE AGGREGATE FIVE HUNDRED DOLLARS, OR MORE, BE ORDERED FROM THE PROCUREMENT DIVISION.

IF THE ORDER IN QUESTION HAD BEEN PLACED BY THE VETERANS' ADMINISTRATION WITH A VENDOR PRIOR TO THE EXPIRATION OF THE FISCAL YEAR ENDING JUNE 30, 1942, THE COST OF THE MATERIAL WOULD BE PAYABLE FROM THE APPROPRIATION AVAILABLE AT THE TIME THE ORDER WAS ISSUED ALTHOUGH DELIVERY MAY HAVE BEEN DELAYED UNTIL THE CURRENT FISCAL YEAR.

THE FUNDS FOR THE ELECTRICAL SUPPLIES CALLED FOR IN THE ORDER PLACED WITH THE PROCUREMENT DIVISION WERE INCLUDED IN THE APPROPRIATION OF THE VETERANS' ADMINISTRATION FOR THE FISCAL YEAR 1942. FUNDS FOR THESE PARTICULAR SUPPLIES WERE NOT INCLUDED IN THE APPROPRIATION FOR THE FISCAL YEAR 1943 AND CONSEQUENTLY CANNOT BE MADE AVAILABLE FROM THAT APPROPRIATION WITHOUT CURTAILING EXPENDITURES FOR OTHER SUPPLIES WHICH WERE ANTICIPATED AND INCLUDED IN THE APPROPRIATION FOR THE FISCAL YEAR 1943. IN VIEW OF THE CIRCUMSTANCES, A DECISION IS REQUESTED AS TO WHETHER THE COST OF SUPPLIES AND EQUIPMENT ORDERED FROM THE PROCUREMENT DIVISION MAY BE PAID FROM THE APPROPRIATION AVAILABLE AS OF THE DATE THE VETERANS' ADMINISTRATION PLACES THE ORDERS WITH THE PROCUREMENT DIVISION, NOTWITHSTANDING THE FACT THAT THE PROCUREMENT DIVISION MAY NOT CONTRACT FOR THE COMMODITIES UNTIL THE SUBSEQUENT FISCAL YEAR.

THE SPECIFIC QUESTION HERE PRESENTED IS WHETHER THE PLACING OF THE ORDER BY YOUR ADMINISTRATION OF MAY 20, 1942, WITH THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, FOR THE PURCHASE OF CERTAIN SUPPLIES MAY BE CONSTRUED AS OBLIGATING THE APPROPRIATION " SALARIES AND EXPENSES, VETERANS' ADMINISTRATION, 1942," WITH THE COST THEREOF, NOTWITHSTANDING "THE MATERIAL COVERED BY THE ORDER WAS NOT PURCHASED PRIOR 1942" AND THAT "THE PROCUREMENT DIVISION MAY NOT CONTRACT FOR THE COMMODITIES UNTIL THE SUBSEQUENT FISCAL YEAR," THAT IS, THE FISCAL YEAR 1943.

SECTION 3690, REVISED STATUTES, PROVIDES:

ALL BALANCES OF APPROPRIATIONS CONTAINED IN THE ANNUAL APPROPRIATION BILLS AND MADE SPECIFICALLY FOR THE SERVICE OF ANY FISCAL YEAR, AND REMAINING UNEXPENDED AT THE EXPIRATION OF SUCH FISCAL YEAR, SHALL ONLY BE APPLIED TO THE PAYMENT OF EXPENSES PROPERLY INCURRED DURING THAT YEAR, OR TO THE FULFILLMENT OF CONTRACTS PROPERLY MADE WITHIN THAT YEAR; AND BALANCES NOT NEEDED FOR SUCH PURPOSES SHALL BE CARRIED TO THE SURPLUS FUND. THIS SECTION, HOWEVER, SHALL NOT APPLY TO APPROPRIATIONS KNOWN AS PERMANENT OR INDEFINITE APPROPRIATIONS.

THE QUESTION AS TO WHAT CONSTITUTES THE INCURRING OF AN EXPENSE OR THE MAKING OF A CONTRACT, WITHIN THE PURVIEW OF THAT STATUTE, HAS BEEN THE SUBJECT OF NUMEROUS DECISIONS OF THIS OFFICE. SEE PARTICULARLY 16 COMP. GEN. 37.

IN THE CASE YOU NOW PRESENT IT APPEARS THAT THE CONTRACTING OFFICER OF THE PROCUREMENT DIVISION NEITHER ISSUED A PURCHASE ORDER NOR ENTERED INTO A CONTRACT FOR THE REQUESTED SUPPLIES WITHIN THE FISCAL YEAR 1942. ALL THAT HAD BEEN ACCOMPLISHED PRIOR TO JULY 1, 1942, WAS THE PLACING OF AN ORDER OR AUTHORIZATION BY YOUR ADMINISTRATION WITH THE PROCUREMENT DIVISION. THE PLACING OF SUCH ORDER WAS MERELY A PRELIMINARY STEP TO THE ACTUAL INCURRING OF AN EXPENSE OR THE MAKING OF A CONTRACT FOR THE SUPPLIES. THE RELATIONSHIP BETWEEN YOUR ADMINISTRATION AND THE PROCUREMENT DIVISION WAS NOT THAT OF VENDEE AND VENDOR, BUT THAT OF PRINCIPAL AND AGENT. THAT IS TO SAY, UPON THE ISSUANCE AND PLACING OF THE ADMINISTRATIVE AUTHORIZATION, THE PROCUREMENT DIVISION WAS CONSTITUTED THE PURCHASING AGENT FOR YOUR ADMINISTRATION AND, OBVIOUSLY, NO OBLIGATION OF FUNDS WAS INCURRED. SEE 17 COMP. GEN. 379; B-11372, AUGUST 3, 1940. FURTHER ACTION WAS REQUIRED BY YOUR PURCHASING AGENT (THE PROCUREMENT DIVISION), EITHER BY CONTRACT OR OTHERWISE, PRIOR TO THE TERMINATION OF THE FISCAL YEAR 1942, BEFORE THE APPROPRIATION NOW SOUGHT TO BE CHARGED COULD HAVE BEEN PROPERLY OBLIGATED.

ACCORDINGLY, AS TO THE PARTICULAR TRANSACTION HEREIN CONSIDERED, I HAVE TO ADVISE THAT THE MERE PLACING OF THE REQUISITION, PURCHASE ORDER, OR AUTHORIZATION BY YOUR ADMINISTRATION WITH THE PROCUREMENT DIVISION DID NOT CONSTITUTE THE INCURRING OF AN EXPENSE OR THE MAKING OF A CONTRACT. THEREFORE, IN ANSWER TO THE QUESTION YOU PRESENT, I HAVE TO ADVISE THAT THE APPROPRIATION " SALARIES AND EXPENSES, VETERANS' ADMINISTRATION, 1942" IS NOT PROPERLY CHARGEABLE WITH THE COST OF THE SUPPLIES PURCHASED OR CONTRACTED FOR SUBSEQUENT TO JUNE 30, 1942.