Interpretation of Two Provisions in the Defense Production Act of 1950

B-96983: Published: Aug 1, 1979. Publicly Released: May 6, 1985.

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GAO commented on the provisions in subsections 717(a), 301(d), and 305(c) of S. 932, a bill to amend the Defense Production Act of 1950. Subsection 717(a) will require Congress to appropriate funds before an authority to expend the funds can be used. With regard to the loan guarantee authority, the provision requires that a statement be made in the agency's appropriation act specifically setting forth the extent to which the agency may guarantee loans in that fiscal year. Direct appropriation is not necessary for each specific project. A lump-sum appropriation satisfies authorities other than the loan guarantee authority. To satisfy the loan guarantee authority, the provision requires that the appropriation act set an aggregate dollar limit on the loans that may be guaranteed in the current fiscal year. Subsection 301(d) acts as a permanent authority for any guaranteeing agency to transfer or reprogram funds available to it for the purposes of national defense. Thus, a guaranteeing agency may repay defaulted loans without a specific appropriation for that purpose if it has available funds appropriated for the purpose of the national defense act. GAO stated that, an evaluation of the implications of the waiver contained in subsection 305(c) of S. 932 would require careful analysis of the bill, the entire act, and every statute containing any limitation on federal procurement.

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