B-85703, MAY 17, 1949, 28 COMP. GEN. 648

B-85703: May 17, 1949

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ARE APPLICABLE WITH RESPECT TO TECHNICAL INFORMATION AND ASSISTANCE FURNISHED PURSUANT TO SECTION 111 (A) (3) THEREOF PRIOR TO THE PASSAGE OF THE ACT OF APRIL 19. 1949: REFERENCE IS MADE TO YOUR LETTER OF APRIL 15. YOU REQUEST A DECISION WHETHER THE LOCAL CURRENCY MATCHING PROVISIONS OF SECTION 115 (B) (6) OF THE ECONOMIC COOPERATION ACT OF 1948 ARE APPLICABLE TO EXPENDITURES NOT ONLY UNDER THE $6. WHEN ANY COMMODITY OR SERVICE IS MADE AVAILABLE THROUGH ANY MEANS AUTHORIZED UNDER THIS TITLE. IS FURNISHED TO THE PARTICIPATING COUNTRY ON A GRANT BASIS * * *. THE DECISIVE QUESTION WITH RESPECT TO THE NECESSITY UNDER THE ORIGINAL ACT FOR MATCHING TECHNICAL INFORMATION AND ASSISTANCE WITH LOCAL CURRENCY DEPOSITS OF COMMENSURATE VALUE IS WHETHER SUCH TECHNICAL INFORMATION AND ASSISTANCE PROPERLY MAY BE CONSIDERED A "SERVICE * * * MADE AVAILABLE THROUGH ANY MEANS AUTHORIZED UNDER" THE ECONOMIC COOPERATION ACT OF 1948.

B-85703, MAY 17, 1949, 28 COMP. GEN. 648

ECONOMIC COOPERATION ADMINISTRATION - LOCAL CURRENCY DEPOSIT REQUIREMENT THE PROVISIONS OF SECTION 115 (B) (6) OF THE ECONOMIC COOPERATION ACT OF 1948, REQUIRING PARTICIPATING COUNTRIES TO MAKE LOCAL CURRENCY DEPOSITS IN AMOUNTS COMMENSURATE WITH THE VALUE OF COMMODITIES OR SERVICES FURNISHED UNDER THE ACT, ARE APPLICABLE WITH RESPECT TO TECHNICAL INFORMATION AND ASSISTANCE FURNISHED PURSUANT TO SECTION 111 (A) (3) THEREOF PRIOR TO THE PASSAGE OF THE ACT OF APRIL 19, 1949, AMENDING THE 1948 ACT SO AS TO PERMIT THE ADMINISTRATOR, IN HIS DISCRETION, TO WAIVE THE DEPOSIT REQUIREMENT WITH RESPECT TO THE FURNISHING OF SUCH TECHNICAL INFORMATION AND ASSISTANCE. HOWEVER, SUCH DEPOSITS NEED NOT BE REQUIRED IN CONNECTION WITH ADMINISTRATIVE EXPENSES OF THE PROGRAM.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, ECONOMIC COOPERATION ADMINISTRATION, MAY 17, 1949:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 15, 1949, REQUESTING A DECISION AS TO WHETHER SECTION 115 (B) (6) OF THE ECONOMIC COOPERATION ACT OF 1948, 62 STAT. 137, 151, REQUIRES PARTICIPATING COUNTRIES TO MAKE LOCAL CURRENCY DEPOSITS COMMENSURATE WITH THE VALUE OF TECHNICAL INFORMATION AND ASSISTANCE FURNISHED THEM UNDER THE AUTHORITY OF SECTION 111 (A) (3) OF THE ACT, 62 STAT. 144. YOUR DOUBT IN THE MATTER APPEARS TO ARISE FROM THE FACT THAT THE APPROPRIATION ACT INVOLVED--- FOREIGN AID APPROPRIATION ACT, 1949, 62 STAT. 1054, 1055--- PROVIDES, INTER ALIA:

* * * THAT NOT TO EXCEED $58,000,000 MAY BE EXPENDED FOR ADMINISTRATIVE AND OTHER EXPENSES INCLUDING NOT TO EXCEED &12,000,000 FOR DIRECT ADMINISTRATION AND NOT TO EXCEED $6,000,000 FOR TECHNICAL ASSISTANCE AUTHORIZED UNDER SECTION 111 (A) (3) OF THE ECONOMIC COOPERATION ACT OF 1948 * * *.

IN VIEW OF THE FACT THAT THE APPROPRIATION ACT PLACES THE $6,000,000 ALLOWED FOR TECHNICAL ASSISTANCE UNDER ADMINISTRATIVE AND OTHER EXPENSES, YOU REQUEST A DECISION WHETHER THE LOCAL CURRENCY MATCHING PROVISIONS OF SECTION 115 (B) (6) OF THE ECONOMIC COOPERATION ACT OF 1948 ARE APPLICABLE TO EXPENDITURES NOT ONLY UNDER THE $6,000,000 LIMITATION ON TECHNICAL ASSISTANCE BUT UNDER ANY OTHER SUBDIVISION OF THE $58,000,000 LIMITATION FOR ADMINISTRATIVE AND OTHER EXPENSES.

SECTION 115 (B) OF THE BASIC ACT, PRIOR TO ITS RECENT AMENDMENT, PROVIDED THAT COUNTRIES PARTICIPATING IN THE ECA PROGRAM SHOULD CONCLUDE AGREEMENTS WITH THE UNITED STATES MAKING PROVISIONS, AMONG OTHERS, FOR:

(6) PLACING IN A SPECIAL ACCOUNT A DEPOSIT IN THE CURRENCY OF SUCH COUNTRY, IN COMMENSURATE AMOUNTS AND UNDER SUCH TERMS AND CONDITIONS AS MAY BE AGREED TO BETWEEN SUCH COUNTRY AND THE GOVERNMENT OF THE UNITED STATES, WHEN ANY COMMODITY OR SERVICE IS MADE AVAILABLE THROUGH ANY MEANS AUTHORIZED UNDER THIS TITLE, AND IS FURNISHED TO THE PARTICIPATING COUNTRY ON A GRANT BASIS * * *.

THE DECISIVE QUESTION WITH RESPECT TO THE NECESSITY UNDER THE ORIGINAL ACT FOR MATCHING TECHNICAL INFORMATION AND ASSISTANCE WITH LOCAL CURRENCY DEPOSITS OF COMMENSURATE VALUE IS WHETHER SUCH TECHNICAL INFORMATION AND ASSISTANCE PROPERLY MAY BE CONSIDERED A "SERVICE * * * MADE AVAILABLE THROUGH ANY MEANS AUTHORIZED UNDER" THE ECONOMIC COOPERATION ACT OF 1948. SECTION 111 OF THAT ACT IS TITLED " NATURE AND METHOD OF ASSISTANCE," AND AUTHORIZES THE ECONOMIC COOPERATION ADMINISTRATOR TO FURNISH ASSISTANCE TO ANY PARTICIPATING COUNTRY BY PROVIDING FOR THE (1) PROCUREMENT OF ANY COMMODITY; (2) PROCESSING, STORING, TRANSPORTING, AND REPAIRING ANY COMMODITIES, OR PERFORMING ANY OTHER SERVICES WITH RESPECT TO A PARTICIPATING COUNTRY; (3) PROCUREMENT OF AND FURNISHING TECHNICAL INFORMATION AND ASSISTANCE; (4) TRANSFER OF ANY COMMODITY OR SERVICE OR BY RENDERING A SERVICE TO A PARTICIPATING COUNTRY; AND (5) ALLOCATION OF COMMODITIES OR SERVICES TO SPECIFIC PROJECT SUBMITTED BY PARTICIPATING COUNTRIES. THE INCLUSION IN SAID SECTION 111 OF TECHNICAL INFORMATION AND ASSISTANCE AMONG THE THINGS WHICH MAY BE FURNISHED TO A PARTICIPATING COUNTRY IN FURTHERANCE OF THE PURPOSES OF THE ECONOMIC COOPERATION ACT OF 1948 WOULD APPEAR TO INDICATE THAT SUCH TECHNICAL INFORMATION WAS INTENDED TO BE CONSIDERED AS MUCH A PART OF THE DIRECT ASSISTANCE TO BE FURNISHED PARTICIPATING COUNTRIES AS COMMODITIES AND OTHER SERVICES ITEMIZED IN THE SECTION, AND THERE WOULD APPEAR TO BE LITTLE DOUBT, IF CONSIDERATION BE GIVEN ONLY TO THE ECONOMIC COOPERATION ACT OF 1948, THAT THE TECHNICAL INFORMATION AND ASSISTANCE AUTHORIZED TO BE FURNISHED BY SECTION 111 (A) (3) THEREOF SHOULD BE CONSIDERED A "SERVICE" MADE AVAILABLE THROUGH MEANS AUTHORIZED UNDER THE ACT WITHIN THE PURVIEW OF SECTION 115 (B) (6) AND IN RESPECT OF WHICH A COMMENSURATE LOCAL CURRENCY DEPOSIT SHOULD BE MADE.

THE QUESTION THEN ARISES WHETHER THE LANGUAGE USED IN THE PROVISO OF THE FOREIGN AID APPROPRIATION ACT, 1949, HEREINABOVE QUOTED, PLACING LIMITATIONS OF $12,000,000 AND $6,000,000, RESPECTIVELY, ON EXPENDITURES FOR DIRECT ADMINISTRATION AND TECHNICAL ASSISTANCE, MAY BE VIEWED AS INDICATING A CONGRESSIONAL INTENT TO WAIVE THE REQUIREMENT THAT LOCAL CURRENCY COUNTERPART FUNDS BE DEPOSITED COMMENSURATE IN AMOUNT WITH THE VALUE OF TECHNICAL INFORMATION AND ASSISTANCE FURNISHED. IN THIS CONNECTION IT MAY BE NOTED THAT PARAGRAPH (6) OF SECTION 115 (B) OF THE ECONOMIC COOPERATION ACT OF 1948 WAS AMENDED BY THE ACT OF APRIL 19, 1949, PUBLIC LAW 47, 81ST CONGRESS, 63 STAT. 53, BY THE INSERTION OF THE FOLLOWING LANGUAGE:

PROVIDED, THAT THE OBLIGATION TO MAKE SUCH DEPOSITS MAY BE WAIVED, IN THE DISCRETION OF THE ADMINISTRATOR, WITH RESPECT TO TECHNICAL INFORMATION OR ASSISTANCE FURNISHED UNDER SECTION 111 (A) (3) OF THIS TITLE * * *.

THE FOLLOWING COMMENT WITH RESPECT TO SUCH AMENDMENT IS TO BE FOUND AT PAGE 14 OF REPORT NO. 100 OF THE SENATE COMMITTEE ON FOREIGN RELATIONS, DATED MARCH 8, 1949:

ACCORDINGLY, THE COMMITTEE APPROVED AN AMENDMENT WHICH WOULD PERMIT THE ADMINISTRATOR IN HIS DISCRETION TO WAIVE THE DEPOSIT OF COUNTERPART FUNDS FOR THE DOLLAR COSTS OF SUCH TECHNICAL ASSISTANCE. IT SHOULD BE EMPHASIZED, HOWEVER, THAT THIS AMENDMENT DOES NOT CONSTITUTE A BLANKET WAIVER OF ALL COUNTERPART DEPOSITS FOR TECHNICAL ASSISTANCE. THE COMMITTEE HAS BEEN ASSURED BY ECA THAT THE ADMINISTRATOR WILL USE HIS DISCRETION TO WAIVE THE DEPOSIT OF COUNTERPART ONLY IN THOSE CASES WHERE HE DEEMS IT HIGHLY DESIRABLE IN THE INTERESTS OF THE PROGRAM. * * *

IT SEEMS OBVIOUS, IN THE LIGHT OF THE FOREGOING, THAT THE CONJUNCTION OF THE LIMITATIONS ON ECA ADMINISTRATIVE EXPENSES AND ON EXPENDITURES FOR TECHNICAL ASSISTANCE CONTAINED IN THE PROVISO OF THE FOREIGN AID APPROPRIATION ACT, 1949, FIRST HEREINABOVE QUOTED, WAS NOT INTENDED TO WAIVE THE REQUIREMENT THAT LOCAL CURRENCY COUNTERPART FUNDS BE DEPOSITED FOR TECHNICAL ASSISTANCE FURNISHED PRIOR TO THE PASSAGE OF THE ACT OF APRIL 19, 1949, AMENDING THE ECONOMIC COOPERATION ACT OF 1948.

IN YOUR LETTER OF APRIL 15, 1949, YOU RAISE THE FURTHER QUESTION WHETHER LOCAL CURRENCY DEPOSITS MUST BE MADE COMMENSURATE WITH EXPENDITURES UNDER ANY OTHER SUBDIVISION OF THE $58,000,000 LIMITATION ON ADMINISTRATIVE AND OTHER EXPENSES. IT IS STATED IN SECTION 115 (B) (6) OF THE ECONOMIC COOPERATION ACT OF 1948 THAT LOCAL CURRENCY COUNTERPART DEPOSITS ARE TO BE MADE ONLY WITH RESPECT TO COMMODITIES OR SERVICES "FURNISHED TO THE PARTICIPATING COUNTRY," AND IT SEEMS EVIDENT THAT THE REQUIREMENT WAS INTENDED TO APPLY ONLY TO DIRECT ASSISTANCE FURNISHED. THUS, COUNTERPART DEPOSITS OBVIOUSLY WOULD NOT BE REQUIRED WITH RESPECT TO ADMINISTRATIVE EXPENSES OF YOUR ADMINISTRATION, AND WITH RESPECT TO THE BALANCE OF THE $58,000,000 MENTIONED IN THE PROVISO, IT IS MY VIEW THAT IF EXPENDITURES THEREFROM ARE NOT MADE FOR COMMODITIES OR SERVICES FURNISHED TO PARTICIPATING COUNTRIES, NO LOCAL CURRENCY COUNTERPART NEED BE DEPOSITED.