B-43236, SEPTEMBER 12, 1944, 24 COMP. GEN. 216

B-43236, SEPTEMBER 12, 1944, 24 COMP. GEN. 216

PERSONAL SERVICES - ATTORNEYS - SMALLER WAR PLANTS CORPORATION THE PROVISIONS OF SECTION 365, REVISED STATUTES, REQUIRING THE APPROVAL OF THE ATTORNEY GENERAL AS A CONDITION TO PAYMENT FOR THE SERVICES OF "ANY ATTORNEY OR COUNSELOR TO THE UNITED STATES, OR ANY BRANCH OR DEPARTMENT OF THE GOVERNMENT THEREOF," BY OTHER THAN DEPARTMENT OF JUSTICE OFFICERS, HAVE NO APPLICATION TO LEGAL SERVICES PROCURED UNDER CONTRACT BY THE SMALLER WAR PLANTS CORPORATION WHICH, AS PROVIDED IN SECTION 4 OF THE ACT OF JUNE 11, 1942, CREATING THE CORPORATION, IS AUTHORIZED TO SUE AND TO BE SUED, TO COMPLAIN AND TO DEFEND IN ANY COURT OF COMPETENT JURISDICTION, TO SELECT, EMPLOY, AND FIX THE COMPENSATION OF ATTORNEYS, AND TO ENTER INTO CONTRACTS WITH THE UNITED STATES GOVERNMENT. WHILE SECTION 365, REVISED STATUTES, REQUIRING THE APPROVAL OF THE ATTORNEY GENERAL AS A CONDITION TO PAYMENT FOR LEGAL SERVICES OBTAINED OTHER THAN THROUGH THE DEPARTMENT OF JUSTICE, HAS NO APPLICATION TO LEGAL SERVICES OBTAINED UNDER CONTRACT BY THE SMALLER WAR PLANTS CORPORATION, THE CORPORATION'S FUNDS MADE AVAILABLE BY THE NATIONAL WAR AGENCY APPROPRIATION ACT, 1945, FOR EXPENDITURES "NECESSARY TO ENABLE" THE CORPORATION TO CARRY OUT ITS FUNCTIONS ARE NOT AVAILABLE FOR EXPENDITURES FOR SUCH LEGAL SERVICES UNLESS IT IS SHOWN AFFIRMATIVELY THAT THE SERVICES COULD NOT HAVE BEEN PROCURED FROM THE DEPARTMENT OF JUSTICE WITHOUT COST, OR WITH LESS COST, TO THE CORPORATION.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, BOARD OF DIRECTORS, AND GENERAL MANAGER, SMALLER WAR PLANTS CORPORATION, SEPTEMBER 12, 1944:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JULY 28, 1944, AS FOLLOWS:

ON JULY 8, 1944, MR. R. E. SHAUGHNESSY AN AUTHORIZED CERTIFYING OFFICER IN THE SMALLER WAR PLANTS CORPORATION WROTE YOU AS FOLLOWS:

"THE SMALLER WAR PLANTS CORPORATION HAS CONSUMMATED AN ATTORNEYS AGREEMENT WITH BARBA, STERN AND EISEMAN, ATTORNEYS OF PHILADELPHIA, PENNSYLVANIA. THE ORIGINAL EXECUTED COPY OF THIS AGREEMENT IDENTIFIED BY THE CODIFICATION OEM-SWP-2, IS ON FILE IN YOUR OFFICE.

" I HAVE BEEN INFORMED THAT CLAIMS FOR SERVICES RENDERED PURSUANT TO THIS CONTRACT ARE TO BE PRESENTED IN THE IMMEDIATE FUTURE WITH REQUESTS FOR EXPEDITIOUS HANDLING. IN ORDER THAT THIS OFFICE MAY BE IN A POSITION TO PROMPTLY PROCESS THESE CLAIMS IT IS REQUESTED THAT YOU INFORM US AS TO WHETHER OR NOT THE TERMS OF SECTION 365 OF THE REVISED STATUTES (5 U.S.C.A. 314) ARE FOR APPLICATION IN THIS INSTANCE.'

IN RESPONSE TO THAT LETTER YOUR OFFICE CITED THE FACT THAT VOUCHERS WERE NOT RENDERED WITH THE REQUEST FOR A DECISION AND REFUSED, ON THAT BASIS, TO RESPOND TO MR. SHAUGHNESSY'S REQUEST.

WHILE IT IS TRUE THAT THE FISCAL OFFICER DID NOT HAVE IN HIS POSSESSION VOUCHERS ARISING FROM THE CONTRACT SPECIFICALLY MENTIONED IN HIS LETTER, RECEIPT OF SUCH VOUCHERS IS IMMINENT. THE MATTER, MOREOVER, IS OF BROADER CONCERN TO THIS CORPORATION.

UNDER AUTHORITY OF PUBLIC LAW 372, THE NATIONAL WAR AGENCIES APPROPRIATION ACT, 1945, THE CORPORATION IS ACCORDED AUTHORITY TO EXPEND FUNDS FOR PROCUREMENT OF SERVICES BY CONTRACT OF VARIOUS PROFESSIONAL PERSONNEL. IN PRACTICE, SOME OF THE CONTRACTS CONSUMMATED UNDER THIS APPROPRIATION AUTHORITY WILL BE WITH ATTORNEYS. SINCE WE ARE DESIROUS OF DOING EVERYTHING WITHIN OUR POWER TO AVOID UNNECESSARY DELAYS IN PAYMENTS UNDER CONTRACTS WITH PROFESSIONAL PERSONNEL, IT IS QUITE ESSENTIAL THAT WE OBTAIN SOME EXPRESSION FROM YOU AS TO THE APPLICABILITY OF SECTION 365 OF THE REVISED STATUTES, PROVIDING IN SUBSTANCE FOR A CERTIFICATION BY THE ATTORNEY GENERAL TO THE EFFECT THAT THE LEGAL SERVICES SOUGHT TO BE PROCURED CANNOT BE FURNISHED BY THE DEPARTMENT OF JUSTICE.

IT IS THE OPINION OF CERTAIN RESPONSIBLE OFFICERS WITHIN THE CORPORATION THAT THE EXTRAORDINARY POWERS CONFERRED UPON THE SMALLER WAR PLANTS CORPORATION BY PUBLIC LAW 603 (77TH CONGRESS, ENACTED JUNE 11, 1942) WOULD MAKE IT UNNECESSARY FOR THE CORPORATION TO COMPLY WITH THE STATUTORY REQUIREMENTS CITED. AT THE SAME TIME, OUR FISCAL OFFICE DOES NOT FEEL FREE TO CERTIFY VOUCHERS NOT SUPPORTED BY THE ATTORNEY GENERAL'S CERTIFICATE, IN THE LIGHT OF THE FACT THAT THESE VOUCHERS ARE CHARGEABLE TO THE ADMINISTRATIVE APPROPRIATION OF THE CORPORATION SPECIFICALLY MADE SUBJECT TO THE BUDGET AND ACCOUNTING ACT BY TERMS OF PUBLIC LAW 372.

SINCE IT IS THE DESIRE OF THIS OFFICE TO AVAIL ITSELF OF THE FULL EFFECT OF POWERS CONFERRED UNDER PUBLIC LAW 603, AND AT THE SAME TIME TO COMPLY EXPLICITLY WITH ALL LAWS AND REGULATIONS BY WHICH WE MAY BE BOUND, IT IS RESPECTFULLY REQUESTED THAT YOU RENDER A DECISION ON THE SPECIFIC POINT OF THE APPLICABILITY OF SECTION 365 OF THE REVISED STATUTES TO ADMINISTRATIVE CONTRACTS FOR PROFESSIONAL LEGAL SERVICES UNDER AUTHORITY OF PUBLIC LAW 603, 77TH CONGRESS, AND PUBLIC LAW 372, 78TH CONGRESS.

SECTION 365, REVISED STATUTES (5 U.S.C. 314), PROVIDES:

NO COMPENSATION SHALL HEREAFTER BE ALLOWED TO ANY PERSON, BESIDES THE RESPECTIVE DISTRICT ATTORNEYS AND ASSISTANT DISTRICT ATTORNEYS FOR SERVICES AS AN ATTORNEY OR COUNSELOR TO THE UNITED STATES, OR TO ANY BRANCH OR DEPARTMENT OF THE GOVERNMENT THEREOF, EXCEPT IN CASES SPECIALLY AUTHORIZED BY LAW, AND THEN ONLY ON THE CERTIFICATE OF THE ATTORNEY- GENERAL THAT SUCH SERVICES WERE ACTUALLY RENDERED, AND THAT SAME COULD NOT BE PERFORMED BY THE ATTORNEY-GENERAL, OR SOLICITOR 1GENERAL, OR THE OFFICERS OF THE DEPARTMENT OF JUSTICE, OR BY THE DISTRICT ATTORNEYS.

BY SECTION 4 OF THE ACT OF JUNE 11, 1942, 56 STAT. 353, THE SMALLER WAR PLANTS CORPORATION WAS CREATED A BODY CORPORATE WITH CAPITAL STOCK OF $150,000,000 SUBSCRIBED FOR BY THE UNITED STATES THROUGH THE SECRETARY OF THE TREASURY TO CARRY OUT THE PURPOSES OF THE SAID ACT. BRIEFLY STATED THE CORPORATION, IN ORDER TO CARRY OUT THE PURPOSES OF THE STATUTE, IS EMPOWERED TO MAKE LOANS OR ADVANCES TO SMALL BUSINESS CONCERNS, TO LEASE, SELL OR OTHERWISE DISPOSE OF TO ANY SMALL BUSINESS CONCERN LAND, PLANTS, EQUIPMENT, ETC., WHICH THE CORPORATION IS AUTHORIZED TO PURCHASE, LEASE OR BUILD FOR THAT PURPOSE, TO ENTER INTO CONTRACTS WITH THE UNITED STATES AND TO SUBLET SUCH CONTRACTS TO SMALL BUSINESS CONCERNS. THE CORPORATION IS FINANCED FROM THE PROCEEDS OF THE SALE OF ITS CAPITAL STOCK TO THE GOVERNMENT AND FROM REVENUES DERIVED FROM ITS OPERATIONS. PARTICULAR ATTENTION IS DIRECTED TO SUBSECTIONS (D), (F) (4), AND (G) (3) OF SECTION 4 OF THE STATUTE, 56 STAT. 353, 354, AND 355, WHICH PROVIDE, SO FAR AS HERE MATERIAL, AS FOLLOWS:

(D) THE CORPORATION SHALL NOT HAVE SUCCESSION, BEYOND JULY 1, 1945, EXCEPT FOR PURPOSES OF LIQUIDATION, UNLESS ITS LIFE IS EXTENDED BEYOND SUCH DATE PURSUANT TO AN ACT OF CONGRESS. IT SHALL HAVE POWER TO ADOPT, ALTER, AND USE A CORPORATE SEAL, WHICH SHALL BE JUDICIALLY NOTICED; TO MAKE CONTRACTS; TO LEASE SUCH REAL ESTATE AS MAY BE NECESSARY FOR THE TRANSACTION OF ITS BUSINESS; TO SUE AND BE SUED, TO COMPLAIN AND TO DEFEND, IN ANY COURT OF COMPETENT JURISDICTION, STATE OR FEDERAL; TO SELECT, EMPLOY, AND FIX THE COMPENSATION OF SUCH OFFICERS, EMPLOYEES, ATTORNEYS, AND AGENTS AS SHALL BE NECESSARY FOR THE TRANSACTION OF THE BUSINESS OF THE CORPORATION; TO DEFINE THEIR AUTHORITY AND DUTIES, REQUIRE BONDS OF THEM, AND FIX THE PENALTIES THEREOF; AND TO PRESCRIBE, AMEND, AND REPEAL, BY ITS BOARD OF DIRECTORS, BYLAWS, RULES, AND REGULATIONS GOVERNING THE MANNER IN WHICH ITS GENERAL BUSINESS MAY BE CONDUCTED AND THE POWERS GRANTED TO IT BY LAW MAY BE EXERCISED AND ENJOYED. THE BOARD OF DIRECTORS OF THE CORPORATION SHALL DETERMINE AND PRESCRIBE THE MANNER IN WHICH ITS OBLIGATIONS SHALL BE INCURRED AND ITS EXPENSES ALLOWED AND PAID. * * * * * * * * * * *

(F) THE CORPORATION IS EMPOWERED * * * (4) TO ENTER INTO CONTRACTS WITH THE UNITED STATES GOVERNMENT AND ANY DEPARTMENT, AGENCY, OR OFFICER THEREOF HAVING PROCUREMENT POWERS OBLIGATING THE CORPORATION TO FURNISH ARTICLES, EQUIPMENT, SUPPLIES, OR MATERIALS TO THE GOVERNMENT * * *. *

(3) THE PROVISIONS OF SECTIONS 112, 113, 114, 115, 116, AND 117 OF THE CRIMINAL CODE OF THE UNITED STATES ( U.S.C., TITLE 18, CH. 5, SECS. 202 TO 207, INCLUSIVE), INSOFAR AS APPLICABLE, ARE EXTENDED TO APPLY TO CONTRACTS OR AGREEMENTS WITH THE CORPORATION UNDER THIS ACT.

THE EMPLOYMENT OF LEGAL SERVICES BY A CORPORATION SO CREATED AND VESTED WITH SUCH POWERS--- PARTICULARLY THE POWER TO ENTER INTO CONTRACTS WITH THE UNITED STATES GOVERNMENT--- COULD NOT REASONABLY BE REGARDED AS THE EMPLOYMENT OF "SERVICES AS AN ATTORNEY OR COUNSELOR TO THE UNITED STATES, OR TO ANY BRANCH OR DEPARTMENT OF THE GOVERNMENT THEREOF" WITHIN THE MEANING OF SECTION 365, REVISED STATUTES, SUPRA.

THE " NATIONAL WAR AGENCY APPROPRIATION ACT, 1945," APPROVED JUNE 28, 1944, 58 STAT. 541, PUBLIC LAW 372, CONTAINS THE FOLLOWING:

SMALLER WAR PLANTS CORPORATION, ADMINISTRATIVE EXPENSES: NOT TO EXCEED $10,000,000 OF THE FUNDS OF THE SMALLER WAR PLANTS CORPORATION, ACQUIRED IN ACCORDANCE WITH THE ACT OF JUNE 11, 1942 ( PUBLIC LAW 603), SHALL BE AVAILABLE FOR THE ADMINISTRATIVE EXPENSES OF SUCH CORPORATION NECESSARY TO ENABLE IT TO CARRY OUT THE FUNCTIONS VESTED IN IT BY SUCH ACT, TO CARRY OUT THE PROVISIONS OF SECTION 2 OF SUCH ACT, AND SUCH OTHER FUNCTIONS AS MAY BE LAWFULLY DELEGATED TO THE CORPORATION, INCLUDING * * * NOT TO EXCEED $500,000 FOR THE TEMPORARY EMPLOYMENT OF PERSONS OR ORGANIZATIONS BY CONTRACT OR OTHERWISE WITHOUT REGARD TO THE CIVIL-SERVICE AND CLASSIFICATION LAWS FOR SPECIAL SERVICES, INCLUDING AUDITS NOTWITHSTANDING SECTION 5 OF THE ACT OF APRIL 6, 1914 (5 U.S.C. 55) * * *.

IN VIEW OF THE NATURE OF THE CORPORATION AND ITS FUNCTIONS AS ABOVE STATED, AND IN THE LIGHT OF THE DECISIONS HEREINAFTER REFERRED TO, THE LIMITATION CONTAINED IN THE ABOVE-QUOTED APPROPRIATION ACT ON THE TOTAL AMOUNT OF THE CORPORATION'S FUNDS WHICH MAY BE EXPENDED FOR ADMINISTRATIVE EXPENSES AND THE FURTHER LIMITATION AS TO THE AMOUNT THEREOF ($500,000) WHICH MAY BE EXPENDED FOR THE TEMPORARY EMPLOYMENT OF PERSONS OR ORGANIZATIONS BY CONTRACT OR OTHERWISE WITHOUT REGARD TO THE CIVIL-SERVICE AND CLASSIFICATION LAWS, CANNOT OPERATE TO MAKE SECTION 365, REVISED STATUTES, APPLICABLE TO THE CORPORATION'S FUNDS.

IN A DECISION OF APRIL 24, 1925, A-7650, AFTER QUOTING STATUTES APPLICABLE TO THE FEDERAL TRADE COMMISSION, IT WAS STATED:

IN OTHER WORDS, THE FEDERAL TRADE COMMISSION IS AUTHORIZED TO FILE A TRANSCRIPT OF ITS PROCEEDINGS WITH THE PROPER CIRCUIT COURT OF APPEALS AND APPLY FOR AN ORDER COMPELLING COMPLIANCE WITH ITS ORDER TO CEASE AND DESIST OR THE PERSON, PARTNERSHIP, OR CORPORATION AGAINST WHOM SUCH A CEASE AND DESIST ORDER MAY HAVE BEEN ISSUED IS AUTHORIZED TO OBTAIN A REVIEW BY THE APPLICABLE CIRCUIT COURT OF APPEALS OF SUCH ORDER. NECESSARILY THE CONDUCT OF SUCH PROCEEDINGS ON BEHALF OF THE COMMISSION REQUIRES THE SERVICES OF ATTORNEYS AND FREQUENTLY OF ATTORNEYS FAMILIAR WITH THE LAW AND ECONOMICS OF UNFAIR METHODS OF COMPETITION. IN VIEW OF THE PLAIN PROVISIONS OF THE ACT OF SEPTEMBER 26, 1914, SUPRA, IT APPEARS TO BE CLEAR THAT SECTIONS 189 AND 365, REVISED STATUTES, DO NOT REQUIRE THE COMMISSION TO SECURE EITHER THE APPROVAL OF THE ATTORNEY GENERAL TO THE EMPLOYMENT OF ATTORNEYS FOR GENERAL SERVICE WITH THE COMMISSION, OR A CERTIFICATE FROM THE ATTORNEY GENERAL THAT SUCH SERVICES COULD NOT BE PERFORMED BY THE OFFICIALS OF THE DEPARTMENT OF JUSTICE OR THE UNITED STATES ATTORNEYS, AND IT IS NOT BELIEVED THAT SAID SECTIONS REQUIRE THE COMMISSION TO SECURE SUCH APPROVAL OR CERTIFICATE AS A CONDITION PRECEDENT TO ITS EMPLOYMENT OF AN ATTORNEY UNDER THE CIRCUMSTANCES APPEARING IN THIS CASE.

ALSO, IN DECISION OF JUNE 29, 1929, A-27566, TO THE CHAIRMAN, FEDERAL RADIO COMMISSION, IT WAS STATED:

SECTION 4 OF THE RADIO ACT OF FEBRUARY 23, 1927, 44 STAT. 1163-1164, PROVIDES FOR THE HOLDING OF HEARINGS BY THE RADIO COMMISSION OF A QUASI JUDICIAL NATURE, INCLUDING THE POWER TO SUMMON WITNESSES, ADMINISTER OATHS, ETC., AND SECTION 16 OF THAT ACT PROVIDES FOR APPEALS FROM THE ACTION OF THE COMMISSION TO THE COURT OF APPEALS OF THE DISTRICT OF COLUMBIA OR TO THE DISTRICT COURTS OF THE DISTRICT IN WHICH THE RADIO APPARATUS IS LOCATED. THE CONDUCT OF SUCH PROCEEDINGS ON BEHALF OF THE COMMISSION NECESSARILY REQUIRES THE SERVICES OF ATTORNEYS FAMILIAR WITH THE LAW AND HAVING AT LEAST A WORKING KNOWLEDGE OF RADIO WAVES AND POSSIBILITIES OF INTERFERENCE. STATUTORY AUTHORITY HAS BEEN GIVEN FOR THE EMPLOYMENT OF SPECIAL COUNSEL, SO THAT FOLLOWING THE REQUIREMENTS OF SECTIONS 189 AND 365, REVISED STATUTES, AND MAKING SUCH EMPLOYMENT THROUGH THE ATTORNEY GENERAL IS NOT REQUIRED. * * *

IT WILL BE NOTED THAT SECTION 4 (D), SUPRA, OF THE BASIC ACT CREATING THE SMALLER WAR PLANTS CORPORATION SPECIFICALLY AUTHORIZES THE CORPORATION "TO SUE AND BE SUED, TO COMPLAIN AND TO DEFEND, IN ANY COURT OF COMPETENT JURISDICTION, STATE OR FEDERAL" AND, ALSO, * SPECIFICALLY AUTHORIZES THE CORPORATION "TO SELECT, EMPLOY, AND FIX THE COMPENSATION OF * * * ATTORNEYS * * * AS SHALL BE NECESSARY FOR THE TRANSACTION OF THE BUSINESS OF THE CORPORATION.' HENCE, AND FOR REASONS HEREINBEFORE STATED, THE RULE STATED IN THE QUOTED DECISIONS RELATIVE TO THE INAPPLICABILITY OF SECTION 365, REVISED STATUTES, WOULD SEEM TO APPLY A FORTIORI TO THE SMALLER WAR PLANTS CORPORATION.

HOWEVER, YOUR ATTENTION IS INVITED TO THE FACT THAT THE APPROPRIATION ITEM FOR THE SMALLER WAR PLANTS CORPORATION ABOVE QUOTED SPECIFICALLY LIMITS EXPENDITURES FOR ADMINISTRATIVE EXPENSES TO THOSE "NECESSARY TO ENABLE" THE CORPORATION TO CARRY OUT THE FUNCTIONS VESTED IN IT BY THE ACT OF JUNE 11, 1942, INCLUDING THE PROVISIONS OF SECTION 2 THEREOF, 56 STAT. 352, AND SUCH OTHER FUNCTIONS AS MAY BE LAWFULLY DELEGATED TO THE CORPORATION. THEREFORE, WHILE SECTION 365, REVISED STATUTES, DOES NOT PRECLUDE PAYMENTS UNDER CONTRACTS FOR LEGAL SERVICES, SUCH AS THE ONE REFERRED TO IN YOUR LETTER, AND OTHERWISE HAS NO APPLICATION TO THE CORPORATION, THE APPROPRIATED FUNDS HERE INVOLVED ARE NOT AVAILABLE FOR EXPENDITURES FOR SUCH LEGAL SERVICES IF THE LEGAL SERVICES REQUIRED BY THE CORPORATION CAN BE PERFORMED BY THE DEPARTMENT OF JUSTICE WITHOUT EXPENSE TO THE CORPORATION FOR THE REASON THAT IF AND TO THE EXTENT THAT LEGAL SERVICES REQUIRED BY THE CORPORATION CAN BE SO OBTAINED FROM THE DEPARTMENT OF JUSTICE, AND EXPENDITURE BY THE CORPORATION THEREFOR REASONABLY MAY NOT BE REGARDED AS AN EXPENDITURE "NECESSARY TO ENABLE" THE CORPORATION TO CARRY OUT THE FUNCTIONS VESTED IN IT BY OR PURSUANT TO SAID ACT OF JUNE 11, 1942. HENCE, IN SUPPORT OF ANY PAYMENT FOR LEGAL SERVICES ORDERED UNDER A CONTRACT SUCH AS THE ONE HERE INVOLVED THERE WILL BE REQUIRED A SHOWING TO THE EFFECT THAT THE PARTICULAR SERVICES REQUIRED COULD NOT BE PROCURED FROM THE DEPARTMENT OF JUSTICE WITHOUT COST, OR WITH LESS COST, TO THE CORPORATION.