B-43844, AUGUST 29, 1944, 24 COMP. GEN. 163

B-43844: Aug 29, 1944

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

EVEN THOUGH THE PAYMENTS ARE TO BE MADE IN INSTALLMENTS SOME OF WHICH WILL BE MADE IN A SUCCEEDING FISCAL YEAR. 1944: I HAVE YOUR LETTER OF AUGUST 11. THE ORIGINAL CONTRACT PROVIDED THAT THE CONTRACTOR WAS TO FURNISH 15. THERE WAS INSERTED A CLAUSE WHICH PROVIDED THAT THE CONTRACT WOULD CONTINUE UNTIL JUNE 30. IT WAS THE INTENTION OF BOTH PARTIES THAT THE SUBSCRIPTION WOULD CONTINUE FROM APRIL 22. IT WAS NOT CONTEMPLATED THAT THE CONTRACT WOULD TERMINATE JUNE 30. THESE PROVISIONS WERE ERRONEOUSLY INSERTED BY THE CLERK PREPARING THE CONTRACT UNDER THE MISTAKEN BELIEF THAT SINCE SOME OF THE ISSUES WOULD BE DELIVERED SUBSEQUENT TO THE TERMINATION OF THE 1944 FISCAL YEAR. PAYMENT FOR THESE ISSUES WOULD NECESSARILY BE AN OBLIGATION BEYOND THE END OF THE FISCAL YEAR CURRENT IN WHICH THE CONTRACT WAS EXECUTED AND WOULD THUS CONTRAVENE SECTION 3679 OF THE REVISED STATUTES.

B-43844, AUGUST 29, 1944, 24 COMP. GEN. 163

APPROPRIATIONS - FISCAL YEAR CHARGEABLE - PERIODICAL SUBSCRIPTIONS PAYABLE IN INSTALLMENTS THE AUTHORITY IN THE ACT OF JUNE 12, 1930, AS AMENDED, TO MAKE ADVANCE PAYMENTS OF SUBSCRIPTION CHARGES FOR PUBLICATIONS INCLUDES, ALSO, THE AUTHORITY TO CHARGE THE WHOLE COST THEREOF TO THE APPROPRIATION FOR THE FISCAL YEAR CURRENT WHEN THE SUBSCRIPTION CONTRACT BECOMES EFFECTIVE, IRRESPECTIVE OF THE FACT THAT THE SUBSCRIPTION MAY EXTEND BEYOND THE END OF THAT FISCAL YEAR, EVEN THOUGH THE PAYMENTS ARE TO BE MADE IN INSTALLMENTS SOME OF WHICH WILL BE MADE IN A SUCCEEDING FISCAL YEAR.

ACTING COMPTROLLER GENERAL YATES TO THE DIRECTOR, DIVISION OF CENTRAL ADMINISTRATIVE SERVICES, OFFICE FOR EMERGENCY MANAGEMENT, AUGUST 29, 1944:

I HAVE YOUR LETTER OF AUGUST 11, 1944 (FI-13), AS FOLLOWS:

ON MAY 3, 1944 THE DIVISION OF CENTRAL ADMINISTRATIVE SERVICES ON BEHALF OF THE OFFICE OF CIVILIAN DEFENSE CONTRACTED UNDER CONTRACT OEMA-3013 WITH THE CIVILIAN FRONT PUBLISHING COMPANY FOR THE FURNISHING OF SUBSCRIPTIONS TO A PERIODICAL ENTITLED " THE CIVILIAN FRONT.' THE ORIGINAL CONTRACT PROVIDED THAT THE CONTRACTOR WAS TO FURNISH 15,000 YEARLY SUBSCRIPTIONS BEGINNING ON APRIL 22, 1944 AND CONSISTING OF 52 WEEKLY ISSUES EACH. ERROR, THERE WAS INSERTED A CLAUSE WHICH PROVIDED THAT THE CONTRACT WOULD CONTINUE UNTIL JUNE 30, 1944 WITH THE RIGHT RESERVED IN THE GOVERNMENT TO RENEW THE AGREEMENT NOT TO EXTEND BEYOND APRIL 22, 1945.

THE ORIGINAL CONTRACT FAILED IN SEVERAL RESPECTS TO EXPRESS THE TRUE INTENT AND UNDERSTANDING OF BOTH PARTIES. IT WAS THE INTENTION OF BOTH PARTIES THAT THE SUBSCRIPTION WOULD CONTINUE FROM APRIL 22, 1944 THROUGH APRIL 22, 1945. IT WAS NOT CONTEMPLATED THAT THE CONTRACT WOULD TERMINATE JUNE 30, 1944 NOR THAT THE GOVERNMENT SHOULD BE REQUIRED TO AFFIRMATIVELY EXERCISE ANY OPTION TO RENEW TO CONTINUE THE SUBSCRIPTION BEYOND JUNE 30, 1944.

THESE PROVISIONS WERE ERRONEOUSLY INSERTED BY THE CLERK PREPARING THE CONTRACT UNDER THE MISTAKEN BELIEF THAT SINCE SOME OF THE ISSUES WOULD BE DELIVERED SUBSEQUENT TO THE TERMINATION OF THE 1944 FISCAL YEAR, PAYMENT FOR THESE ISSUES WOULD NECESSARILY BE AN OBLIGATION BEYOND THE END OF THE FISCAL YEAR CURRENT IN WHICH THE CONTRACT WAS EXECUTED AND WOULD THUS CONTRAVENE SECTION 3679 OF THE REVISED STATUTES. IT WAS ALSO CONTEMPLATED THAT THE GOVERNMENT WOULD BE AFFORDED A 30 DAY CANCELLATION PRIVILEGE. AND, FINALLY, IT WAS THE MUTUAL UNDERSTANDING THAT PAYMENTS WOULD BE MADE IN TWELVE EQUAL INSTALLMENTS. A COPY OF THE REQUISITION FOR THE EXECUTION OF THE CONTRACT IS ATTACHED.

THE ATTACHED AMENDMENT TO CONTRACT OEMA-3013 COMPREHENDS A REFORMATION OF THE ORIGINAL CONTRACT TO EXPRESS THE TRUE INTENT OF THE PARTIES. ALL OF THE REVISIONS CONTAINED IN THIS IN THIS AMENDMENT ARE IN THE BEST INTERESTS OF THE GOVERNMENT.

HOWEVER, UNDER THIS REFORMATION THERE IS FOR CONSIDERATION THE QUESTION WHETHER THE PAYMENTS MADE SUBSEQUENT TO JUNE 30, 1944 MAY PROPERLY BE CHARGED TO FUNDS APPROPRIATED FOR THE OFFICE OF CIVILIAN DEFENSE FOR THE FISCAL YEAR 1944.

WHEN THE ORIGINAL CONTRACT WAS EXECUTED THE ENTIRE AMOUNT TO BE EXPENDED THEREUNDER WAS OBLIGATED AGAINST APPROPRIATION 1143100.001 SALARIES AND EXPENSES, OFFICE OF CIVILIAN DEFENSE, 1944. THE OFFICE OF CIVILIAN DEFENSE WAS FACED WITH THE CHOICE OF EITHER PAYING THE ENTIRE SUM IN ADVANCE OR MAKING PAYMENT ON AN INSTALLMENT BASIS. BECAUSE IT WAS ANTICIPATED AT THE TIME THAT THE CONTRACT WAS EXECUTED THAT THE OFFICE OF CIVILIAN DEFENSE WOULD DURING THE NEXT FISCAL YEAR BE IN A STATE OF LIQUIDATION AND THE NECESSITY MIGHT ARISE TO CANCEL THE CONTRACT PRIOR TO ITS EXPIRATION, IT WAS DETERMINED TO ADOPT THE LATTER PLAN. THE ADOPTION OF THIS PLAN WAS ALSO MOTIVATED BY THE FACT THAT IN THE EVENT THE CONTRACT WAS CANCELLED PRIOR TO ITS EXPIRATION THE GOVERNMENT WOULD FIND IT NECESSARY TO EFFECT A REFUND FROM THE CONTRACTOR FOR THE ISSUES NOT FURNISHED AS A RESULT OF THE CANCELLATION. IN ADDITION, THE CONTRACTOR DID NOT FURNISH A PERFORMANCE BOND AND THEREFORE TO PROTECT THE GOVERNMENT'S INTERESTS IT WAS DEEMED UNADVISABLE TO PAY IN ADVANCE $23,400.00.

THE AUTHORITY TO PAY IN ADVANCE FOR SUBSCRIPTION TO NEWSPAPERS, MAGAZINES AND PERIODICALS IS CONTAINED IN THE ACT OF JUNE 12, 1930, 46 STAT. 580 AND IT HAS BEEN CONSISTENTLY HELD BY THE ACCOUNTING OFFICERS OF THE UNITED STATES THAT THE COST OF PUBLICATIONS MAY BE CHARGED TO THE APPROPRIATIONS CURRENT WHEN THE SUBSCRIPTION WAS ORDERED, NOTWITHSTANDING THAT IT MAY COVER DELIVERIES EXTENDING INTO SUBSEQUENT YEARS. 23 COMP. GEN. 326: 2 COMP. DEC. 474; 11 ID. 227; 22 ID. 584; 2 COMP. GEN. 451; B-23155, JANUARY 24, 1942.

WHILE THE DECISIONS CITED INVOLVED CASES WHERE THE ENTIRE PAYMENTS WERE MADE IN ADVANCE, NEVERTHELESS, THEY ESTABLISHED AND REITERATED THE RULE THAT SUCH CONTRACTS ARE PROPER OBLIGATIONS AGAINST THE APPROPRIATIONS CURRENT AT THE TIME THE ORDERS FOR THE SUBSCRIPTIONS ARE PLACED.

IT IS THE OPINION OF THIS OFFICE THAT THIS RULE WOULD OBTAIN WHERE THE GOVERNMENT DID IN FACT OBLIGATE THE ENTIRE AMOUNT OF THE CONTRACT AGAINST THE APPROPRIATION OF THE OFFICE OF CIVILIAN DEFENSE FOR THE FISCAL YEAR 1944, COULD LEGALLY HAVE PAID THIS ENTIRE AMOUNT IN ADVANCE FROM THAT APPROPRIATION, BUT, FOR THE SOLE PURPOSE OF PROTECTING THE GOVERNMENT'S INTEREST OBTAINED APPROVAL FROM THE CONTRACTOR TO EFFECT REIMBURSEMENT ON A PARTIAL PAYMENT PLAN AND AT THE SAME TIME AFFORD THE GOVERNMENT THE BENEFIT OF THE YEARLY RATE.

ACCORDINGLY, I WOULD APPRECIATE YOUR ADVISING ME WHETHER PAYMENTS MADE SUBSEQUENT TO JUNE 30, 1944 UNDER CONTRACT OEMA-3013 AS AMENDED MAY BE CHARGED TO FUNDS APPROPRIATED FOR THE OFFICE OF CIVILIAN DEFENSE FOR THE FISCAL YEAR 1944.

SECTION 3679, REVISED STATUTES, AS AMENDED BY THE ACT OF FEBRUARY 27, 1906, 34 STAT. 49, PROVIDES:

NO EXECUTIVE DEPARTMENT OR OTHER GOVERNMENT ESTABLISHMENT OF THE UNITED STATES SHALL EXPEND, IN ANY ONE FISCAL YEAR, ANY SUM IN EXCESS OF APPROPRIATIONS MADE BY CONGRESS FOR THAT FISCAL YEAR, OR INVOLVE THE GOVERNMENT IN ANY CONTRACT OR OTHER OBLIGATION FOR THE FUTURE PAYMENT OF MONEY IN EXCESS OF SUCH APPROPRIATIONS UNLESS SUCH CONTRACT OR OBLIGATION IS AUTHORIZED BY LAW. * * *

SECTION 3732, REVISED STATUTES, ALSO PROVIDES:

NO CONTRACT OR PURCHASE ON BEHALF OF THE UNITED STATES SHALL BE MADE, UNLESS THE SAME IS AUTHORIZED BY LAW OR IS UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT, EXCEPT IN THE WAR AND NAVY DEPARTMENTS, FOR CLOTHING, SUBSISTENCE, FORAGE, FUEL, QUARTERS, OR TRANSPORTATION, WHICH, HOWEVER, SHALL NOT EXCEED THE NECESSITIES OF THE CURRENT YEAR.

THE ACT OF JUNE 12, 1930, 46 STAT. 580, AS AMENDED (31 U.S.C. 530), PROVIDES IN PERTINENT PART:

* * * SUBSCRIPTION CHARGES FOR NEWSPAPERS, MAGAZINES, AND OTHER PERIODICALS FOR OFFICIAL USE OF ANY OFFICE UNDER THE GOVERNMENT OF THE UNITED STATES * * * TO BE PAID FROM APPROPRIATIONS AVAILABLE THEREFOR, MAY BE PAID IN ADVANCE.

IN 23 COMP. GEN. 326, IT WAS HELD, QUOTING FROM THE SYLLABUS:

THE ACT OF MARCH 4, 1906, AUTHORIZING THE SECRETARY OF AGRICULTURE TO PAY IN ADVANCE FOR SUBSCRIPTIONS TO ANY PUBLICATIONS, AND THE ACT OF JUNE 12, 1930, EXTENDING A SIMILAR AUTHORIZATION TO OTHER DEPARTMENTS AND AGENCIES OF THE GOVERNMENT WITH RESPECT TO SUBSCRIPTIONS TO NEWSPAPER, MAGAZINES, AND OTHER PERIODICALS, DO NOT SPECIFICALLY LIMIT ADVANCE PAYMENT FOR SUBSCRIPTION TO A ONE-YEAR PERIOD, AND, THEREFORE, WHERE IT IS ADVANTAGEOUS FOR THE PURPOSE OF ECONOMY OR OTHERWISE TO SUBSCRIBE TO NEWSPAPERS, MAGAZINES, OR OTHER PERIODICALS FOR LONGER PERIODS, PAYMENT THEREFOR MAY BE MADE FROM CURRENT APPROPRIATIONS OTHERWISE AVAILABLE FOR SUCH PURPOSE.

THE ABOVE DECISION RECOGNIZES THE FACT THAT THE STATUTE, AUTHORIZING ADVANCE PAYMENTS FOR PUBLICATIONS, ALSO NECESSARILY AUTHORIZES THE OBLIGATION OF THE APPROPRIATION FOR THE FISCAL YEAR IN WHICH THE SUBSCRIPTION CONTRACT BECOMES EFFECTIVE FOR THE WHOLE COST OF THE SUBSCRIPTION IRRESPECTIVE OF THE FACT THAT IT MAY EXTEND BEYOND THE END OF THE FISCAL YEAR OR FOR MORE THAN ONE FISCAL YEAR. SEE, ALSO, 2 COMP. DEC. 474; 11 ID. 227; 22 ID. 584; 2 COMP. GEN. 451. THE FACT THAT THE CONTRACT OEMA-3013 AS REFORMED BY SUPPLEMENTAL AGREEMENT OF AUGUST 4, 1944, PROVIDES FOR PAYMENT OF THE CONSIDERATION IN INSTALLMENTS, INSTEAD OF A LUMP SUM IN ADVANCE, DOES NOT REQUIRE ANY CONCLUSION OTHER THAN THAT THE CONTRACT SO MADE OBLIGATED THE APPROPRIATION FOR THE FISCAL YEAR 1944 (IN WHICH YEAR THE DELIVERIES PRESUMABLY BEGAN) FOR THE ENTIRE COST OF THE SUBSCRIPTION.

ACCORDINGLY, THE QUESTION POSED IN THE CONCLUDING PARAGRAPH OF YOUR LETTER IS ANSWERED IN THE AFFIRMATIVE.