B-65852, MAY 7, 1947, 26 COMP. GEN. 857

B-65852: May 7, 1947

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THAT "ALL PROCEEDS" FROM THE SALE OF SURPLUS PROPERTY BE COVERED INTO THE TREASURY IS CONTROLLING AS AGAINST THE INCONSISTENT PROVISION OF THE ACT OF JUNE 8. 1947: I HAVE A LETTER DATED APRIL 26. AS FOLLOWS: YOUR DECISION IS REQUESTED AS TO WHETHER. YOUR OFFICE WILL GRANT TO THE WAR ASSETS ADMINISTRATION THE APPROVAL REQUIRED BY SECTION 489. IF YOUR APPROVAL IS GRANTED ONLY THE PROCEEDS OF SUCH SALES REMAINING AFTER DEDUCTION OF SUCH COMMISSIONS WOULD BE DEPOSITED INTO THE TREASURY. I HAVE FOUND IT NECESSARY TO ENTER INTO VARIOUS DISTRIBUTOR-TYPE AGREEMENTS WHEREBY THE CONTRACTOR. COMPENSATION TO THE INDUSTRY-AGENCY FOR THE WORK PERFORMED IS PAID ON A PERCENTAGE OF SALES COMMISSION BASIS.

B-65852, MAY 7, 1947, 26 COMP. GEN. 857

SALES - SURPLUS PROPERTY - PAYMENT OF SALES COMMISSIONS FROM PROCEEDS PRIOR TO DEPOSIT INTO TREASURY IN VIEW OF THE PROVISION IN SECTION 34 OF THE SURPLUS PROPERTY ACT OF 1944 THAT SAID ACT SHALL NOT BE SUBJECT TO ANY CONFLICTING LAW, THE REQUIREMENT OF SECTION 30 (A) OF SAID ACT, AS AMENDED, THAT "ALL PROCEEDS" FROM THE SALE OF SURPLUS PROPERTY BE COVERED INTO THE TREASURY IS CONTROLLING AS AGAINST THE INCONSISTENT PROVISION OF THE ACT OF JUNE 8, 1896, AUTHORIZING THE PAYMENT OF THE EXPENSES OF SALES FROM THE PROCEEDS THEREOF BEFORE DEPOSIT INTO THE TREASURY, SO THAT COMMISSIONS PAYABLE TO WAR ASSETS INDUSTRY-AGENTS MAY NOT BE DEDUCTED FROM THE PROCEEDS OF SALES OF SURPLUS PROPERTY PRIOR TO DEPOSIT INTO THE TREASURY.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, WAR ASSETS ADMINISTRATION, MAY 7, 1947:

I HAVE A LETTER DATED APRIL 26, 1947, FROM THE ASSOCIATE ADMINISTRATOR FOR STAFF OPERATIONS, AS FOLLOWS:

YOUR DECISION IS REQUESTED AS TO WHETHER, UNDER THE CIRCUMSTANCES OUTLINED HEREIN, YOUR OFFICE WILL GRANT TO THE WAR ASSETS ADMINISTRATION THE APPROVAL REQUIRED BY SECTION 489, TITLE 31, U.S.C. ( SECTION 1, ACT OF JUNE 8, 1896, 29 STAT. 268; SECTION 304, ACT OF JUNE 10, 1921, 42 STAT. 24), SO THAT THIS ADMINISTRATION MAY DEDUCT FROM THE PROCEEDS OF SALES OF SURPLUS PROPERTY MADE UNDER ITS INDUSTRY AGENCY PROGRAM, AS EXPENSES OF SUCH SALES, COMMISSIONS PAID WAR ASSETS INDUSTRY-AGENTS. IF YOUR APPROVAL IS GRANTED ONLY THE PROCEEDS OF SUCH SALES REMAINING AFTER DEDUCTION OF SUCH COMMISSIONS WOULD BE DEPOSITED INTO THE TREASURY.

AS YOU UNDOUBTEDLY KNOW, THE WAR ASSETS ADMINISTRATION IN MAKING DISPOSALS OF SURPLUS PROPERTY IN ACCORDANCE WITH THE OBJECTIVES OF THE SURPLUS PROPERTY ACT OF 1944, AS AMENDED, HAS ENCOUNTERED MANY DIFFICULT PROBLEMS NOT USUALLY FOUND IN THE NORMAL TRANSACTION OF GOVERNMENT AFFAIRS. IN ORDER TO ACCOMPLISH THE OBJECTIVES OF THE ACT, PARTICULARLY SECTIONS 2 (B), (D), (H), (J), (K), (L), AND (M), AND IN ACCORDANCE WITH THE AUTHORITY CONFERRED BY SECTION 4 OF THE ACT, I HAVE FOUND IT NECESSARY TO ENTER INTO VARIOUS DISTRIBUTOR-TYPE AGREEMENTS WHEREBY THE CONTRACTOR, ACTING AS AN INDUSTRY-AGENT FOR THIS ADMINISTRATION UNDERTAKES TO SELL CERTAIN TYPES OF SURPLUS PROPERTY. COMPENSATION TO THE INDUSTRY-AGENCY FOR THE WORK PERFORMED IS PAID ON A PERCENTAGE OF SALES COMMISSION BASIS. SUCH COMMISSIONS ARE ACTUALLY EXPENSES INCURRED IN THE SALE OF SURPLUS PROPERTY IN ACCORDANCE WITH THE OBJECTIVES OF THE ACT, AND IT IS BELIEVED PROPERLY CHARGEABLE TO SALES AS SUCH.

THE SUCCESS OF THE ENTIRE PROGRAM OF SURPLUS PROPERTY DISPOSAL THROUGH DISTRIBUTORS OR INDUSTRY-AGENTS HAS BEEN AMPLY DEMONSTRATED DURING THE PAST YEAR. IN MOST CASES, WAR ASSETS ADMINISTRATION COULD NOT OTHERWISE OBTAIN THE SERVICES OF HIGHLY TECHNICALLY TRAINED PERSONNEL AND DISTRIBUTIVE ORGANIZATIONS NECESSARY TO DISPOSE OF THE PROPERTY BEING DISPOSED OF BY INDUSTRY-AGENTS, EXTREMELY HIGH VOLUME. ITS IMPORTANCE TO THE ENTIRE SURPLUS PROPERTY DISPOSAL PROGRAM IS VERY GREAT.

HOWEVER, THE FACT THAT THESE DISTRIBUTORS ARE REQUIRED TO REMIT TO WAR ASSETS ADMINISTRATION MANY THOUSAND DOLLARS WHICH CONSTITUTE THEIR COMMISSIONS IS SERIOUSLY IMPAIRING THE EFFECTIVENESS OF THE PROGRAM, AND IF THIS PROCEDURE IS CONTINUED, IT MAY BE NECESSARY TO ABANDON SALES BY THIS METHOD BECAUSE OF THE UNWILLINGNESS OF INDUSTRY-AGENTS TO CONTINUE ON THIS BASIS. DELAYS ARE NECESSARILY INHERENT IN RETURNING COMMISSIONS AND THE LOSS OF SUCH FUNDS FOR THE PERIOD OF TIME REQUIRED TO RETURN THEM IS SERIOUSLY INTERFERING WITH AND IN MANY CASES PREVENTING OPERATIONS UNDER THE PROGRAM. THESE COMMISSIONS REPRESENT THE WORKING CAPITAL OF MANY DISTRIBUTORS AND ARE REQUIRED IN CURRENT OPERATIONS. IF SUCH AGENTS ARE PERMITTED TO RETAIN THESE COMMISSIONS AND REMIT THE REMAINING PROCEEDS, THE UNSATISFACTORY CONDITION OUTLINED ABOVE WILL NOT ONLY BE CORRECTED SO THAT THE PROGRAM WILL CONTINUE TO OPERATE EFFECTIVELY, BUT ALSO WILL RESULT IN A CONSIDERABLE SAVING TO WAR ASSETS ADMINISTRATION IN REDUCED BOOKKEEPING AND SIMILAR COSTS. IN ADDITION, IF DISTRIBUTORS ARE PERMITTED TO REMIT PROCEEDS, REMAINING AFTER THE DEDUCTION OF THEIR COMMISSIONS, CONSIDERABLE GOOD WILL AMONG AGENTS WILL BE ENGENDERED, FOR SUCH IS NORMAL COMMERCIAL PRACTICE AND MANY DO NOT UNDERSTAND THE NECESSITY FOR REMITTING AMOUNTS REPRESENTING THEIR COMMISSIONS AND THE SUBSEQUENT DELAY AND ADDED EXPENSE IN SECURING RETURN OF FUNDS THEY CONSIDER THEIR OWN.

SECTION 34 (A) OF THE SURPLUS PROPERTY ACT OF 1944 PROVIDES:

"SURPLUS PROPERTY SHALL BE DISPOSED OF TO SUCH EXTENT, AT SUCH TIMES, IN SUCH AREAS, BY SUCH AGENCIES, AT SUCH PRICES, UPON SUCH TERMS AND CONDITIONS, AND IN SUCH MANNER, AS MAY BE PRESCRIBED IN OR PURSUANT TO THIS ACT.'

IT IS SUBMITTED THAT THESE SECTIONS OF THE SURPLUS PROPERTY ACT, TOGETHER WITH SECTION 489 OF TITLE 31, U.S.C. CITED IN THE FIRST PARAGRAPH HEREIN, PERMIT THIS ADMINISTRATION, PROVIDED THE APPROVAL OF YOUR OFFICE IS GRANTED, TO ALLOW INDUSTRY-AGENTS TO RETAIN COMMISSIONS ON THEIR SALES AS EXPENSES THEREOF, SO AS TO REMIT ONLY THE NET PROCEEDS OF SUCH SALES FOR DEPOSIT INTO THE TREASURY. IT IS NOT BELIEVED THAT SECTION 30 (A) OF THE SURPLUS PROPERTY ACT IS IN ANY WAY INCONSISTENT WITH THIS VIEW. THAT SECTION IS SUBSTANTIALLY THE SAME AS SECTION 487, TITLE 31, U.S.C. ( R.S. 3618; SECTION 1, ACT OF FEBRUARY 27, 1877, 19 STAT. 249), AND SHOULD BE CONSTRUED IN CONJUNCTION WITH SECTION 489 OF TITLE 31, U.S.C.

BECAUSE OF THE IMPORTANCE OF THE INDUSTRY-AGENT PROGRAM TO THE CONTINUED EFFECTIVE OPERATIONS OF THIS ADMINISTRATION, AN EARLY DECISION BY YOUR OFFICE IS REQUESTED AS TO WHETHER YOU WILL GRANT APPROVAL TO THE PROCEDURE OUTLINED HEREIN.

THE ACT OF JUNE 8, 1896, 31 U.S.C. 489, REFERRED TO IN THE FIRST PARAGRAPH OF THE FOREGOING LETTER, PROVIDES AS FOLLOWS:

FROM THE PROCEEDS OF SALES OF OLD MATERIAL, CONDEMNED STORES, SUPPLIES, OR OTHER PUBLIC PROPERTY OF ANY KIND, BEFORE BEING DEPOSITED INTO THE TREASURY, EITHER AS MISCELLANEOUS RECEIPTS ON ACCOUNT OF "PROCEEDS OF GOVERNMENT PROPERTY" OR TO THE CREDIT OF APPROPRIATIONS TO WHICH SUCH PROCEEDS ARE BY LAW AUTHORIZED TO BE MADE, THERE MAY BE PAID THE EXPENSES OF SUCH SALES, AS APPROVED BY THE GENERAL ACCOUNTING OFFICE, SO AS TO REQUIRE ONLY THE NET PROCEEDS OF SUCH SALES TO BE DEPOSITED INTO THE TREASURY, EITHER AS MISCELLANEOUS RECEIPTS OR TO THE CREDIT OF SUCH APPROPRIATIONS, AS THE CASE MAY BE.

ON THE OTHER HAND, SECTION 30 (A) OF THE SURPLUS PROPERTY ACT OF 1944, 58 STAT. 781, PROVIDES, WITH CERTAIN EXCEPTIONS NOT MATERIAL HERE, THAT:

ALL PROCEEDS FROM ANY TRANSFER OR DISPOSITION OF PROPERTY UNDER THIS ACT SHALL BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS * * *.

THIS SECTION, IN EFFECT, WAS AMENDED BY THE FIRST DEFICIENCY APPROPRIATION ACT, 1946, PUBLIC LAW 269, APPROVED DECEMBER 28, 1945, 49 STAT. 641, BY THE DIRECTION TO DEPOSIT PROCEEDS FROM SALES OF SURPLUS PROPERTY IN A SPECIAL FUND IN THE TREASURY.

THUS, THERE IS NO OBVIOUS CONFLICT BETWEEN THE TWO STATUTES JUST QUOTED IN RESPECT TO THE AMOUNT OF THE PROCEEDS FROM SALES TO BE DEPOSITED INTO THE TREASURY. IT IS A SETTLED RULE OF STATUTORY CONSTRUCTION THAT WHERE THERE IS AN IRRECONCILABLE CONFLICT BETWEEN A NEW PROVISION OF LAW AND A PRIOR STATUTE RELATING TO THE SAME SUBJECT MATTER, THE FORMER WILL CONTROL AS IT IS THE LATEST EXPRESSION OF THE LEGISLATURE. SUTHERLAND, STATUTORY CONSTRUCTION (3D EDITION), SECTION 5201. APPLICATION OF THIS RULE TO THE PRESENT MATTER WOULD APPEAR TO COMPEL THE VIEW THAT THE TERMS OF SECTION 30 (A), AS AMENDED, SUPRA, ARE CONTROLLING HERE. BUT, ASIDE THEREFROM, SINCE I DO NOT THINK IT IS OPEN TO QUESTION THAT THE SURPLUS PROPERTY ACT OF 1944 REPRESENTS THE BASIC LEGAL AUTHORITY GOVERNING THE PERFORMANCE THE WAR ASSETS ADMINISTRATION OF ITS FUNCTIONS AND PROCEDURES IN THE DISPOSITION OF SURPLUS PROPERTY, THERE IS PERCEIVED NO REASONABLE GROUND FOR IGNORING THE CONGRESSIONAL MANDATE CONTAINED THEREIN, THAT "ALL PROCEEDS" FROM THE SALE OF SUCH PROPERTY BE COVERED INTO THE TREASURY, BY INVOKING THE AUTHORITY FOR A DIFFERENT PROCEDURE IN THAT REGARD UNDER GENERAL STATUTE SUCH AS THE ACT OF 1896.

MOREOVER, I FIND NOTHING IN THE CITED SECTION 34 (A) OF THE SURPLUS PROPERTY ACT, 58 STAT. 783, WHICH REQUIRES A DIFFERENT VIEW. THE FIRST FULL SENTENCE THEREOF, INCLUDING THE PORTION OMITTED FROM THE QUOTATION OF SAID SECTION IN THE ABOVE LETTER, READS AS FOLLOWS:

THE AUTHORITY CONFERRED BY THIS ACT IS IN ADDITION TO ANY AUTHORITY CONFERRED BY ANY OTHER LAW AND SHALL NOT BE SUBJECT TO PROVISIONS OF ANY LAW INCONSISTENT HEREWITH. * * *

I THINK THE ONLY REASONABLE CONSTRUCTION OF THE FOREGOING PROVISION IS THAT IT DIRECTS THE CONTINUANCE IN EFFECT, AND UNDISTURBED BY THE ENACTMENT OF THE 1944 STATUTE, OF THOSE LAWS THEN IN EXISTENCE RELATING TO THE DISPOSITION OF GOVERNMENT PROPERTY. OBVIOUSLY, THE ACT OF JUNE 8, 1896, DOES NOT PROVIDE FOR THE DISPOSITION OF PUBLIC PROPERTY BUT MERELY RELATES TO THE DEPOSIT OF FUNDS FROM SALES OF SUCH PROPERTY. BUT, IN ANY EVENT, IT IS TO BE NOTED THAT BY ITS PLAIN TERMS THE SAID SECTION 34 (A) DIRECTS THAT THE 1944 STATUTE SHALL NOT BE SUBJECT TO ANY LAW IN CONFLICT WITH ITS TERMS. THEREFORE, THE INCONSISTENCY BETWEEN THE STATUTORY PROVISIONS HEREINABOVE REFERRED TO MUST BE RESOLVED BY CONCLUDING THAT SECTION 30 (A), AS AMENDED, OF THE SURPLUS PROPERTY ACT OF 1944 IS CONTROLLING AND THAT THE PROPOSED DEDUCTION FROM THE PROCEEDS OF SALES OF AMOUNTS TO COVER COMMISSIONS PAYABLE TO WAR ASSETS INDUSTRY-AGENTS, BEFORE DEPOSIT OF SAID PROCEEDS INTO THE SPECIAL FUND ACCOUNT ABOVE REFERRED TO, IS NOT AUTHORIZED.

FURTHER, IT IS IMPORTANT TO OBSERVE THAT THE CURRENT APPROPRIATION FOR THE WAR ASSETS ADMINISTRATION CONTAINED IN THE THIRD DEFICIENCY APPROPRIATION ACT OF 1946, APPROVED JULY 23, 1946, PUBLIC LAW 521, 60 STAT. 606, PROVIDES:

SALARIES AND EXPENSES: THERE IS HEREBY APPROPRIATED FROM THE SPECIAL FUND ACCOUNT IN THE TREASURY AS PROVIDED FOR IN THE FIRST DEFICIENCY APPROPRIATION ACT, 1946, NOT TO EXCEED $435,000,000 FOR THE FISCAL YEAR 1947 FOR ALL NECESSARY EXPENSES OF THE WAR ASSETS ADMINISTRATION ESTABLISHED BY EXECUTIVE ORDER 9689 * * *.

THERE CAN BE NO DOUBT THAT THE FOREGOING APPROPRIATION IS AVAILABLE FOR THE PAYMENT OF COMMISSIONS TO SALES AGENTS; IN THAT CONNECTION, SEE THE HEARINGS BEFORE THE SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, ON THE MEASURE, PAGES 555 AND 556.

I CANNOT BUT OBSERVE THAT EVEN IF THERE WERE A LEGAL BASIS FOR THE EXERCISE BY THE GENERAL ACCOUNTING OFFICE OF THE DISCRETION CONTEMPLATED BY THE TERMS OF THE 1896 STATUTE, ABOVE QUOTED, IT OBVIOUSLY WOULD BE INAPPROPRIATE FOR THIS OFFICE TO APPROVE THE DEDUCTION FROM PROCEEDS OF SALES OF AMOUNTS TO COVER SUCH EXPENSES WHEN THE CONGRESS SPECIFICALLY HAS PROVIDED FUNDS FOR THAT PURPOSE. TO DO SO WOULD RESULT IN AN UNLAWFUL AUGMENTATION OF THE AMOUNTS APPROPRIATED TO YOUR ADMINISTRATION.