B-42663 July 26, 1944

B-42663: Jul 26, 1944

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Chairman: Further reference is made to your letter of June 9. The same is hereby. Collection proceedings against any and all persons and concerns to whom any ad all illegal payments or disbursements shall be dound to have been made. It is noted that ehe citation in line 4. With respect to all items for which such officers are legally liable. Inasmuch as certifying officers do not have accounts in which disallowances may be made or credits withheld in the usual sense. It is then within the province of that Department to institute suit against the debtor. Collection proceedings against any and all persons and ocncersn to whom any and all illegal payments or disbursements shall be found to have been made.".

B-42663 July 26, 1944

Honorable Carter Manasco, Chairman, Committee on Expenditures in the Executive Departments, House of Representatives.

My dear Mr. Chairman:

Further reference is made to your letter of June 9, 1944, acknowledged June 13, requesting a report on bill H.R. 3274, 78th Congress, entitled, "A BILL to amend section 312 of the Budget and Accounting Act, 1921, and for other purposes", which bill provides as follows:

"be it enacted by the Senate and House of Representatives of the United States of America in Congress Assembled, that section 312 of the Budget and Accounting Act, 1921 (42 Stat. 24), be, and the same is hereby, amended by adding at the end of said section the following, to wit:"

"(f) It shall be the mandatory duty of the Comptroller General of the United States in addition to reporting to the Congress every contract and expenditure made in violation of law, as aforesaid, to make disallowances and to withhold credits in the accounts of appropriate accountable officers of the Government for and in respect of each and every expenditure made in violation of law; and he shall report to the Congress, annually or specially, and in detail, every such disallowance and withholding of credit pursuant thereto."

"(g) It shall furhter be the mandatory duty of the Comptroller General fo the United States to raise porper charges, and to institute or cause the instutution of, collection proceedings against any and all persons and concerns to whom any ad all illegal payments or disbursements shall be dound to have been made; and he shall report to the Cogress, annually or specially, in detai, all charges so raised and allcollection proceedings commeneed or requested to be commeneed pursuant therto."

"(h) It shall furhter be the mandatory duty of the Comptroller General of the United States to, and he shall upon request, furnish the details of all such disallowances, withholding of credits, and collection proceedigns instituted or requested to be commenced, to any committee of either House of Congress, or to any Member of Congress, together with copies or originals of investigative reports pertaining thereto submitted to him in the course of business of his office."

"(i) It shall furhter be the mandatory duty of the Ocmptroller General of the United States to, and he shall, make a suudy of the functions of the agencies of the Government and make a report to Congress annually as to their overlapping of duties and functions, and report such finds to any member of Congress upon request."

It is noted that ehe citation in line 4, page 1 of the bill, should be 42 Stat. 25, instead of 42 Stat. 24.

Under existing practice and as provided by existing law, this office makes disallowances and withholds credit in the accounts of disbursing officers, and raises charges against certifying officers, with respect to all items for which such officers are legally liable. See the act of December 29, 1941, 55 Stat. 875, as amended by the act of April 28, 1942, 56 Stat. 244, as to the respective liability of disbursing officers and certifying officers. The language of subsection "(f)" as contained in the subject bill, requiring the Comptroller General of the United States "to make disallowances and to withhold credits in the accounts of appropriate accountable officers," might be interpreted to apply to disbursing officers only, inasmuch as certifying officers do not have accounts in which disallowances may be made or credits withheld in the usual sense. Under such an interpretation as above suggested, the proposed legislation apparently would require that disallowances and withholding of credit be made in the involved disbursing officer's accounts with respect ot every illegal expenditure, irrespective of th eexisting statutory provisions above cited fixing the respective liability of disbursing officers and certifying officers. On the other hand, if the said language be interpreted as requiring that either a dirsursing officer or a certifying officer be held liable with respect to every illegal payment, the proposed subsection "(f)" would add nothing to existing law and practice except the requirement that such disallowances, etc., shall be reported in detail to the Congress.

The proposed subsection "(g)" clearly appears to be open to serious objection . The right of the Government to recover money from one to whom it had been paid erronously, even as a result of misconstruction of the law by administrative officers, long has been recognized, notwithstanding the fact that the Government has recourse, also, against the disbursing officers or certifying officers responsible fo rthe erroneous payments, and their sureties. Wisconsin Central Railroad Company v. United States, 164 U.S. 190, 210-212. See, also Whiteside v. United States, 93 U.S. 247. However, this office never has been vested with the responsibility of the acutal institution o fsuits on claims of the United States against debtors other than accountable officers, although section 304 of the Budget and Accounting Act of 1921, 42 Stat. 24 (31 U.S.C. 93), provides that the General Accounting Office shall "superintend the recovery of all debts finally certified by it to be due to the United States." In this connection, it may be stated that the said section 304 formerly provided, also, that this office should institute suit against accountable officers who neglected or refused to pay balances due the Government; but section 5 of Executive Order No. 6166, June 10, 1933, transferred to the Department of Justice the function of prosecuting in the courts claims and demands by the Government.

Accordingly, under existing procedure, after exhausting all reasonable methods of attempting collection -- by set-off or otherwise -- of claims by the Government against disbursing officers, certifying officers, an dpersons reciving illegal payments, this office reports the claims, with supporting data, to the Department of Justice fo rthe institution of collection proceedings. It is then within the province of that Department to institute suit against the debtor, to prosecute such suit to judgement, to compromise the claim, or to agandon all collection proceedings. The porposed subsection "(g)" as contained the bill H.R. 3274 would empower and require the General Accounting Office "to institute, or cause th einstitution of, collection proceedings against any and all persons and ocncersn to whom any and all illegal payments or disbursements shall be found to have been made."

In addition to the question as to the desirability of empowering this office, rather than the Department of Justice, to institute suits on the involved classes of claims by the Government, there is the more serious question whether mandatory institution of collection proceedings by any Government agency on all such claims is desirable. It is my conviction that such provision is most undesirable, for reason chiefly as follows:

1. Many illegal payments are so small that he cost of recovery by suit would exceed the amount recovered.

2. Many debtors are financially irresponsible and collection could not be made by suit.

3. The provision in question would result in a multiplicity of suits. Under existing practice, amounts improperly paid to numerous payees are disallowed in a disbursing officer's accounts and usually are consolidated in one action against the disbursing officer and his surety, thereby avioding the necessity of instituting separate suits aginst the payees unless the disbursing officer's bond is insufficient. The proposed legislation would increase tremendously the effort and expense required in the collection of amounts due the United States.

4. In suites against disbursing officers, the United States has the advantage of the prima facie case which generally can be established on the basis of the transcript furnished by this office. 28 U.S.C. 665; id. 781 to 788; Moses v. United States, 186 U.S. 571; Soule v. United States, 100 U.S. 8; United States v. Du Perow, 208 F. 895.

5. The existing practice of instituting collection proceedings first against disbursing and certifying officers and their surties, rather than against payees, undoubtedly operates to encourage a greater degree of caution and efficiency on the part of such officers than would be prevalent should the Government assume the burden of attempting to recover from the payees. There is perceived no valid reason for placing on the United States the burden of collecting -- or attempting to collect -- from a large number of payees amounts which have been paid to them erroneously and for which disbursing officers or certifying officers, and thieir sureties, are responsible.

For the foregoing reasons, it is the view of this office that the matter of determining the methods of attempting collection of claims by the Governmetn should remain discretionary, and that the mandatory institution of collection proceedings against all payees who have received "illegal payments or disbursements" would be determinental to the interest of the United States.

With respect to the proposed subsection "(i)" contained in the subject bill, which subsection would require the Comptroller General to make a sutdy of the functions of the agencies of the Government and report to Congress annually as to their overlapping of duties and functions, attention is invited to the following provisions of existing law enacted as section 312 (which section the subject bill would amend) and 313 of the Budget and Accounting Act of June 10, 1921, 42 Stat. 25-26, and set forth in sections 53 and 54, Title 31, U.S.C.:

"#53. Investigations and reports by Comptroller General."

"(a) the Conmptroller General shall investigate, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds, and shall make to the President when requested by him, and to Congress at the beginning of each regular session, a report in writing of the work of the General Accounting Office, containing recommendations concerning the legislation he may deem necessary to facilitate the prompt and accurate rendition and settlement of accounts and concerning such other matters relating to the receipt, disbursement, and applciation of public funds as he may think advisable. In such regular rpoert, or in special reports at any time when Congress is in session, he shall make recommendations looking to greater economy or efficiency in public expenditures."

"(b) He shall make such investigations and reports as shall be ordered by either House of Congress or by any committee of either House having jurisdiction over revenue, appropriations, or expenditures. The Comptroller General shall also, at the request of any such committee, direct assistants from his office to furnish the committee such aid an dinformation as it may request."

"(c) The Comptroller General shall specially report to Congress every expenditure or contract made by any department or establishment in any year in violation of law."

"(d) He shall submit to Congress reports upon the adequacy and effectiveness of the administrative examination of accounts and claims in the respective departments and establishments and upon the adequacy and effectiveness of departmental inspection of the offices and accounts of fiscal officers."

"(e) He shall furnish such information relating to expenditures and accounting to the Bureau of the Budget as it may request from time to time."

"#54. Information furnished to Comptroller General by department and establishments."

"All departments and establishments shall furnish to the Comptroller General such information regarding the powers, duties, activities, organization, financial transactions, and methods of business of their respective offices as he may from time to time require of them; and the Comptroller General, or any of his assistants or employees, when duly authorized by him, shall for the purpose of securing such information, have access to and the right to examine any books, documents, papers, or records of any such department or establishment. The authority contained in this section shall not be applicable to expenditures made under the provisions of section 107 of this title."

Attendance is invited, also, to section 209 of the Budget and Accounting Act 42 Stat. 22, (31 U.S.C. 18), providing, in substance, that the Bureau of the Budget, when so directed by the President, shall make a study of the departments and establishments and report to the President, with a view to securing greater economy and efficiency in the conduct of the public service.

The question as to whetere, in view of the statutory provisions above mentioned, there is need for futher legislation such as that proposed in subseciton "(I)" of the subject bill is a matter peculiarly within the province of the Congress and I have no recommendation to make at this time with respect thereto. However, it may be observed that during the existing war emergency it would be extremely difficult, if not impossible, to employ competent personnel in adequate numbers to accomplish the purposes apparently contemplated by the said subsection.

In view of the foregoing, I am unable to recommend favorable consideration of the bill H.R. 3274.

Sincerely yours,

Comptroller General of the United States