B-39759, MAY 9, 1944, 23 COMP. GEN. 862
Highlights
CONTRACTS - APPROPRIATION CHARGEABLE WITH PAYMENTS UNDER TERMINATION AGREEMENTS WHEN AN APPROPRIATION IS BY ITS TERMS MADE AVAILABLE UNTIL A SPECIFIED DATE. UNLESS THE PAYMENT IS OTHERWISE EXPRESSLY PROHIBITED BY STATUTE. THE APPROPRIATION CHARGEABLE WITH PAYMENTS UNDER THE ORIGINAL CONTRACT IN ANY PARTICULAR CASE IS CHARGEABLE. THIS IS SO WHETHER THE TERMINATION AGREEMENTS BE EXECUTED BEFORE OR AFTER JULY 1. 1944: I HAVE YOUR LETTER OF APRIL 21. UNDER THE AUTHORITY OF WHICH THE ABOVE CONTRACTS WERE EXECUTED. YOUR DECISION IS REQUESTED AS TO WHETHER PAYMENTS MAY BE MADE UNDER SUCH TERMINATION AGREEMENTS IF THEY ARE EXECUTED BY EITHER THE GOVERNMENT OR THE CONTRACTOR AFTER JULY 1. YOUR DECISION IS ALSO REQUESTED AS TO WHETHER THE CIVILIAN PILOT TRAINING APPROPRIATION FOR THE FISCAL YEAR ENDING JUNE 30.
B-39759, MAY 9, 1944, 23 COMP. GEN. 862
CONTRACTS - APPROPRIATION CHARGEABLE WITH PAYMENTS UNDER TERMINATION AGREEMENTS WHEN AN APPROPRIATION IS BY ITS TERMS MADE AVAILABLE UNTIL A SPECIFIED DATE, THE AVAILABILITY RELATES TO THE AUTHORITY TO OBLIGATE THE APPROPRIATION AND DOES NOT NECESSARILY PROHIBIT PAYMENT AFTER THE AVAILABLE DATE FOR OBLIGATIONS PREVIOUSLY INCURRED, UNLESS THE PAYMENT IS OTHERWISE EXPRESSLY PROHIBITED BY STATUTE. THE APPROPRIATION CHARGEABLE WITH PAYMENTS UNDER THE ORIGINAL CONTRACT IN ANY PARTICULAR CASE IS CHARGEABLE, ALSO, WITH PAYMENTS UNDER A TERMINATION AGREEMENT PROVIDING FOR TERMINATION OF THE CONTRACT AND FOR PAYMENT TO THE CONTRACTOR OF THE AMOUNT AGREED UPON IN SETTLEMENT OF THE CONTRACTOR'S RIGHTS ARISING OUT OF THE ORIGINAL CONTRACT. WHILE THE CIVILIAN PILOT TRAINING ACT OF 1939 PROVIDES THAT ALL OBLIGATIONS ENTERED INTO THEREUNDER SHALL EXPIRE ON OR PRIOR TO JULY 1, 1944, THE APPROPRIATION MADE TO CARRY OUT THE PURPOSES OF THE ACT DURING THE FISCAL YEAR ENDING JUNE 30, 1944, MAY BE CHARGED AFTER THAT DATE WITH PAYMENTS MADE UNDER CONTRACT TERMINATION AGREEMENTS ENTERED INTO IN SETTLEMENT OF CONTRACTORS' RIGHTS ARISING OUT OF ORIGINAL CONTRACTS MADE AND TERMINATED BY THE GOVERNMENT DURING THE FISCAL YEAR 1944, AND THIS IS SO WHETHER THE TERMINATION AGREEMENTS BE EXECUTED BEFORE OR AFTER JULY 1, 1944.
COMPTROLLER GENERAL WARREN TO THE SECRETARY OF COMMERCE, MAY 9, 1944:
I HAVE YOUR LETTER OF APRIL 21, 1944, AS FOLLOWS:
IN YOUR OPINION NO. B-39759, DATED FEBRUARY 15, 1944, YOU ADVISED THAT THERE WOULD BE NO LEGAL OBJECTION TO THE EXECUTION OF CERTAIN AGREEMENTS WITH GROUND SCHOOL AND FLIGHT CONTRACTORS UNDER THE CIVIL AERONAUTICS ADMINISTRATION WAR TRAINING PROGRAM, TERMINATING THEIR CONTRACTS AND PROVIDING FOR A SETTLEMENT OF ALL CLAIMS ARISING OUT OF SUCH CONTRACTS.
SECTION 7 OF THE CIVILIAN PILOT TRAINING ACT OF 1930, UNDER THE AUTHORITY OF WHICH THE ABOVE CONTRACTS WERE EXECUTED, PROVIDES THAT " THIS ACT SHALL EXPIRE ON JULY 1, 1944, AND ALL CONTRACTS, LEASES, OR OTHER OBLIGATIONS ENTERED INTO UNDER THIS ACT SHALL EXPIRE ON OR PRIOR TO SUCH DATE.' MARCH 30, 1944, THE SENATE PASSED A BILL, S. 1432, TO EXTEND THE LIFE OF THE CIVILIAN PILOT TRAINING ACT OF 1939 FROM JULY 1, 1944, TO JULY 1, 1949. THE HOUSE HAS NOT YET ACTED ON SUCH BILL.
IT MAY BE QUITE DIFFICULT TO COMPLETE THE NEGOTIATION OF TERMINATION AGREEMENTS WITH ALL OF THE CONTRACTORS INVOLVED, PRIOR TO THE EXPIRATION DATE PRESCRIBED IN THE ACT, BECAUSE OF THE NECESSITY OF ANALYZING THEIR ACCOUNTS BEFORE SETTLING WITH THEM. ACCORDINGLY, YOUR DECISION IS REQUESTED AS TO WHETHER PAYMENTS MAY BE MADE UNDER SUCH TERMINATION AGREEMENTS IF THEY ARE EXECUTED BY EITHER THE GOVERNMENT OR THE CONTRACTOR AFTER JULY 1, 1944.
IF YOU DECIDE THAT THE TERMINATION AGREEMENTS REFERRED TO ABOVE MAY BE EXECUTED AFTER JULY 1, 1944, YOUR DECISION IS ALSO REQUESTED AS TO WHETHER THE CIVILIAN PILOT TRAINING APPROPRIATION FOR THE FISCAL YEAR ENDING JUNE 30, 1944, WOULD BE AVAILABLE FOR THE PAYMENTS SPECIFIED IN SUCH CONTRACTS.
ASSUMING THAT A TERMINATION AGREEMENT HAS BEEN EXECUTED BY BOTH THE GOVERNMENT AND A CONTRACTOR BEFORE JULY 1, 1944, PROVIDING FOR THE PAYMENT OF A CERTAIN SUM TO THE LATTER IN SETTLEMENT OF HIS CLAIMS, CAN PAYMENT OF THIS SUM BE MADE SUBSEQUENT TO JULY 1, 1944, OUT OF THE APPROPRIATION FOR THE FISCAL YEAR ENDING JUNE 30, 1944? YOUR OFFICE HAS ON SEVERAL OCCASIONS RULED THAT OBLIGATIONS ARISING IN ONE FISCAL YEAR MAY BE PAID IN A SUBSEQUENT FISCAL YEAR. HOWEVER, IT WOULD SEEM THAT A DIFFERENT QUESTION MAY BE RAISED IN THIS CASE BECAUSE OF THE LANGUAGE OF THE CIVILIAN PILOT TRAINING ACT WHICH PROVIDES THAT "ALL * * * OBLIGATIONS ENTERED INTO UNDER THIS ACT SHALL EXPIRE ON OR PRIOR" TO JULY 1, 1944.
WHEN AN APPROPRIATION IS BY ITS TERMS MADE AVAILABLE UNTIL A SPECIFIED DATE, THE GENERAL RULE IS THAT THE AVAILABILITY RELATES TO THE AUTHORITY TO OBLIGATE THE APPROPRIATION AND DOES NOT NECESSARILY PROHIBIT PAYMENT AFTER THE AVAILABLE DATE FOR OBLIGATIONS PREVIOUSLY INCURRED, UNLESS THE PAYMENT IS OTHERWISE EXPRESSLY PROHIBITED BY STATUTE. WITH RESPECT TO THE MATTER HERE INVOLVED, IT APPEARS THAT, FROM TIME TO TIME, APPROPRIATIONS HAVE BEEN MADE PROVIDING FOR ALL NECESSARY EXPENSES OF THE OFFICE OF THE ADMINISTRATOR OF CIVIL AERONAUTICS IN CARRYING OUT THE DUTIES, POWERS AND FUNCTIONS DEVOLVING UPON THAT OFFICE PURSUANT TO THE AUTHORITY CONTAINED IN THE CIVILIAN PILOT TRAINING ACT OF 1939, 53 STAT. 855, AS AMENDED, THE APPROPRIATION FOR THIS PURPOSE FOR THE FISCAL YEAR ENDING JUNE 30, 1944, HAVING BEEN INCLUDED IN THE ACT OF JULY 1, 1943, 57 STAT. 294. WHILE, AS POINTED OUT BY YOU, THE CIVILIAN PILOT TRAINING ACT OF 1939 EXPRESSLY PROVIDED THAT THE ACT AND ALL CONTRACTS, LEASES AND OTHER OBLIGATIONS ENTERED INTO THEREUNDER WOULD EXPIRE ON OR PRIOR TO JULY 1, 1944, NEITHER THE SAID ACT NOR THE APPROPRIATION PROHIBITS PAYMENT AFTER JUNE 30, 1944, OF OBLIGATIONS LAWFULLY INCURRED PRIOR TO JULY 1, 1944.
THEREFORE, AS TO PAYMENTS UNDER TERMINATION AGREEMENTS ENTERED INTO BEFORE JULY 1, 1944, IT IS APPARENT THAT THE APPROPRIATION FOR THE FISCAL YEAR ENDING JUNE 30, 1944, MAY BE CHARGED AFTER THAT DATE WITH SUCH PAYMENTS AS PROPERLY MAY BE DUE FOR WORK PERFORMED OR SERVICES RENDERED UNDER CONTRACTS WHCH OBLIGATED THE APPROPRIATION FOR THAT FISCAL YEAR.
WITH RESPECT TO THE MATTER OF ENTERING INTO TERMINATION AGREEMENTS AFTER JUNE 30, 1944, IT IS UNDERSTOOD THAT ANY SUCH AGREEMENTS WHICH NECESSARILY WOULD BE ENTERED INTO AFTER THAT DATE WOULD CONSTITUTE NOTHING MORE THAN A DETERMINATION OF THE BALANCE DUE FOR WORK PERFORMED OR SERVICES RENDERED PRIOR TO JULY 1, 1944, UNDER CONTRACTS ENTERED INTO DURING THE FISCAL YEAR ENDING JUNE 30, 1944, WHICH, IT IS UNDERSTOOD, WERE TERMINATED AS OF JANUARY 15, 1944, THE DELAY IN ENTERING INTO SUCH AGREEMENTS WITH THE CONTRACTORS BEING DUE TO "THE NECESSITY OF ANALYZING THEIR ACCOUNTS BEFORE SETTLING WITH THEM.' THE APPROPRIATION CHARGEABLE WITH PAYMENTS UNDER THE ORIGINAL CONTRACT IN ANY PARTICULAR CASE IS CHARGEABLE, ALSO, WITH PAYMENTS UNDER A TERMINATION AGREEMENT PROVIDING FOR TERMINATION OF THE CONTRACT AND FOR PAYMENT TO THE CONTRACTOR OF THE AMOUNT AGREED UPON IN SETTLEMENT OF THE CONTRACTOR'S RIGHTS ARISING OUT OF THE ORIGINAL CONTRACT.
THEREFORE, IN VIEW OF THE ABOVE STATED RULE THAT THE AVAILABILITY OF AN APPROPRIATION RELATES TO THE AUTHORITY TO OBLIGATE THE APPROPRIATION, AND SINCE IT IS REASONABLE TO ASSUME THAT IT WAS NOT THE INTENT OF THE CONGRESS BY LIMITING THE CIVILIAN PILOT TRAINING ACT OF 1939 TO JULY 1, 1944, TO PROHIBIT PAYMENT THEREAFTER OF LAWFUL OBLIGATIONS INCURRED PRIOR TO THAT DATE, YOU ARE ADVISED THAT THERE APPEARS NO LEGAL OBJECTION TO THE EXECUTION OF SUCH TERMINATION AGREEMENTS AS MAY BE NECESSARY AFTER JUNE 30, 1944, TO DETERMINE THE AMOUNT TO BE PAID UNDER OBLIGATIONS INCURRED PRIOR TO JULY 1, 1944, OR TO THE PAYMENT OF THE AMOUNTS PROPERLY DUE UNDER SUCH AGREEMENTS FROM THE APPLICABLE APPROPRIATION FOR THE FISCAL YEAR ENDING JUNE 30, 1944.