B-43894 September 11, 1944

B-43894 September 11, 1944

The Honorable, The Secretary of the Interior.

My dear Mr. Secretary:

I have your letter of August 14, 1944, as follows:

"A number of questions have arisen regarding the operation of canteens on the Pribilof Islands for the benefit and welfare of the natives of these islands on which your opinion is desired."

"Under the provisions of the Act of February 26, 1944, 58 Stat. 100 (16 U.S.C. 631a-631r), section 7 of which provides authority identical to that contained in the Act of April 21, 1910, as amended (16 U.S.C. 653), the Secretary of the Interior is authorized to furnish food, shelter, fuel, clothing, and other necessities of life to the native inhabitants on the Pribilof Islands of Alaska and to provide for their comfort, maintenance, education, and protection. Funds to carry out the provisions of this act and for other purposes are appropriated to the Department annually. Funds for the fiscal year 1945 were appropriated in the Interior Department Appropriations Act, 1945, under the caption 'Alaska Fisheries' of the Fish and Wildlife Service."

"Another provision of the Act of February 26, 1944, section 6, directs the employment at fair compensation for their labor of natives of the Pribilof Islands in the killing of seals and the taking of sealskins; and authorizes the Secretary of the Interior to fix fair compensation and prescribe by regulation the manner in which such compensation shall be paid to said natives or expended or otherwise used in their behalf and for their benefit. The Secretary of the Interior annually authorizes payment direct to the natives employed in the taking of fur seals. The rates of payment authorized for the 1944 season were 90 cents $1.20 for each fur sealskin taken on St. Paul Island and St. George Island, respectively. In addition, the Secretary of the Interior has authorized payment to the natives of $5.00 for each fox skin which is taken under the provisions of the Act of August 18, 1894, as amended (48 U.S.C. 212). The estimated payments to the natives for this work are $36,000 for St. Paul Island and $12,000 for St. George Island. Such payments will be made by Federal check from the trust fund appropriation '14x8541, Fox and Fur Seal Industries, Pribilof Islands, Alaska'.

"Under that portion of the act first-mentioned the Government provides the natives with living quarters, fuel, food staples, clothing, and other essentials, as well as educational facilities and medical attention. The fox and fur seal industries are a source of substantial cash income to the natives and with these funds the natives purchase dress clothing, food stuffs, household furnishings, and other luxuries and semi-luxuries to augment their Government issues."

"Because of the absence of commercial facilities on the islands and their position as virtual wards of the Government, the natives have looked to the Government Agent for each of the islands for guidance in financial matters and as custodian for their surplus funds. Through the Government Agents, working with the Native Councils composed of influential representatives of the communities, there have been established canteens at which are stocked groceries, candies, tobaccos, drugs, clothing, hardware, ammunition, and other articles commonly desired by the natives. The Agent also handles a large number of mail-order purchases and community recreational and spiritual projects involving the purchase of musical instruments, motion picture equipment, and athletic equipment, and the payment of operating expenses of the native churches."

"Canteens on both of the islands were first established in 1918. The canteens are financed entirely from funds of the natives and sales are made at cost, plus percentages mark-ups as determined by the Native Council and the Agent of amount sufficient to make them self-supporting, provide working capital sufficient to maintain representative stocks, and to accumulate surpluses for the support of recreational and church activities. At this time the working capital consisting of merchandise inventories, amounts due from natives, and cash on hand is estimated as $20,000 for St. Paul Island and $15,000 for St. George Island."

"The case income of the natives is concentrated during two periods of the year; that is, when Federal payments are made upon completion of furjsealing operations during September, and at the close of foxing operations in March. In order to provide a continuous purchasing power, the practice has been followed of permitting the Natives to make credit purchases within certain limits depending on their earning power. When the Federal checks are issued, they are endorsed to the Agent to be credited against indebtedness to the canteen and for disposition of the balance in accordance with the wishes of each native. Usually each native has a mail order to place at the time against which the major portion of the balance is applied, or the native may request the Agent to hold the balance as a credit against future canteen purchases or for application as he may direct, or the native may elect to receive the balance in cash. The natives are not encouraged to take their earnings in cash as many of them are ready gamblers and as they have no convenient means of disposing of the funds other than through the canteens."

"Receipts"

"(1) Case sales of canteen supplies."

"(2) Payments by the natives to cover credit sales of canteen supplies."

"(3) Advances by natives of funds for mail-order house purchases, safekeeping, or disposition as they direct, such as the purchase of War Savings Bonds."

"Disbursements"

"(1) Merchandise ordered for canteen stock and resale."

"(2) Mail-order house purchases for account of the natives."

"(3) Salaries of native employees engaged to operate the canteens and other miscellaneous operating expenses."

"(4) Expenses of the church, including salary and subsistence of the priest."

"(5) Expenses of community activities, including movie picture projector, films, athletic equipment, subscriptions to magazines, etc."

"(6) Repayments to natives of funds deposited for safekeeping or their expenditure for other purposes as they may direct."

"Through the medium of the foregoing transactions, considerable amounts of funds in the form of currency and negotiable instruments are collected by the Government Agents. Since there are no banking or other commercial facilities on the islands, the major portion of these funds are disposed of by transfers to the Superintendent's office at Seattle, designated as the 'Pribilof Islands Canteen Account'. Disbursements from this account for the purchase of canteen supplies and for other purposes are made by the Superintendent for the account of each of the islands and such disbursements are recorded and accounted for in the canteen's accounts."

"The Department is of the opinion that ample authority is contained in the Act of February 26, 1944, for the conduct of the canteens for the natives in the manner mentioned. They provide the natives with a ready supply of the small luxuries of life so highly prized in isolated localities and at the same time furnish a convenient and equitable means of financing the religious and social activities of the natives. The peculiar conditions which surround the economic and social life of the natives make these canteens essential to the welfare of the natives and therefore a government responsibility."

"Since the canteen funds of the natives came in possession and are handled for the benefit of the natives by the Agents and the Superintendent in their official capacities as Government employees, the question has been raised as to the application of 31 U.S.C. 484, requiring deposit without deduction into the Treasury of moneys received from whatever source for use of the United States, and 16 U.S.C. 495, requiring every person who shall have moneys in his hands or possession to pay same to the Treasurer without delay, and in all cases within thirty days of their receipt. If these sections of the code are determined to be applicable, it would appear to be necessary that a trust account or a special deposits account be established through which the funds could be deposited and disbursed. A special deposits account would be preferable, if such is permissible for these types of transactions, since the delays in securing the warranting of funds would be avoided. The infrequency of transportation between the islands and the mainland makes transfers of funds between the islands slow and as a general rule these funds are needed immediately for replacement purchases and to pay for mail-order purchases so that the goods will be ready for the return trip of the vessel."

"As there are no facilities for deposit of funds at the Pribilof Islands and as transportation between the islands and the mainland is by vessel at infrequent intervals, certain complications would arise under either a trust fund account or special deposits account procedure. The requirement for the deposit of all funds would not permit the retention of cash by Agents for current disbursements, unless it would be permissible to arrange for agent-cashier's authorizations for this purpose. In all probability, funds could not be deposited within thirty days after receipt in all cases."

"It is our understanding that your office has ruled that competitive bids are not required for the purchase of articles for resale at canteens as herein described, but a specific decision on this subject was not located. Since the articles which are purchased are those for which the natives have expressed a preference, the bid solicitation procedures is not desirable."

"Apparently, the prime purpose of the act of February 26, 1944, referred to in your letter, is to give effect to the Provisional Fur Seal Agreement of 1942 between the United States and Canada, following the abrogation by Japan of the Fur Seal Convention of 1911, concluded by the United States, Great Britain, Russia and Japan. By section 6, 58 Stat. 021, of the recent act, the Pribilof Islands are declared to be 'a special reservation for Government purposes' and it is provided that persons other than natives and officers and employees of the Fish and Wildlife Service who land or remain thereon except in an emergency or by authority of the Secretary of the Interior shall be deemed guilty of a misdemeanor. By section 7, 58 Stat. 102, it is provided that natives shall be employed in the killing of seals and the curing of sealskins on the islands and shall receive fair compensation at rates fixed by the Secretary of the Interior who is authorized to 'prescribed the manner in which such compensation shall be paid to the natives or expended or otherwise used on their behalf and for their benefit.' And by section 8, 59 Stat. 102, the Secretary of the Interior is authorized to 'establish and maintain depots for provisions and supplies' on the islands and to 'furnish food, shelter, fuel, clothing, and other necessities of life to the native inhabitants of the Pribilof Islands and to provide for their comfort, maintenance, education, and protection.' The above-mentioned sections of the act are merely reenactments -- substantially without change -- of provisions contained in the act of April 21, 1910, also referred to in your letter, so that the recent statute does not add to or detract from the previously existing authority of law insofar as the present matter is concerned."

The operation of canteens for the benefit of the natives of these islands is not covered by an express statutory provision. The authority to establish and maintain "depots for provisions and supplies" would seem to have reference only to facilities for the storage of such necessaries of life as the Secretary is authorized to furnish to the natives at Government expense. However, having in mind that the islands are "a special reservation for Government purposes" and that the Government has undertaken to provide for the "comfort, maintenance, education, and protection" of the natives, in addition to furnishing them food, shelter, and other necessities, this office is inclined to agree that authority to manage and operate canteens for the benefit of the natives, as well as to accept and handle their funds for mail order house purchases, safekeeping, the purchase of War Savings Bonds, and other similar purposes, is necessarily to be implied, under the circumstances, from the express authority conferred.

Reference is made in your letter to 31 U.S.C. 484 (section 3617, Revised Statutes) and to 31 U.S.C. 495 (section 3621, Revised Statutes) -- the latter section being erroneously cited in your letter as 16 U.S.C. 495 -- as of possible application to the funds here in question. Section 3617, Revised Statutes, requires that the gross amount of all moneys received "for the use of the United States" -- with certain exceptions not pertinent here -- shall be deposited and covered into the Treasury as miscellaneous receipts. Section 3621, Revised Statutes, provides that every person who shall have "moneys of the United States" in his hands or possession, shall pay the same to the treasurer, or some public depositary of the United States, without delay, and in all cases within thirty days of their receipt.

It cannot properly be considered that amounts received in connection with the canteen accounts constitute "moneys received for the use of the United States" within the meaning of section 3617, Revised Statutes. The fact that such funds come into the possession of the agent in his official capacity as an employee of the United States is but one factor to be considered in that regard. The goods sold at the canteens were purchased originally from the proceeds of previous sales and not with Government funds; and the purchases were made by the Government only in its capacity as quasi-guardian of the natives and expressly for the purpose of resale at the canteens. Consequently, amounts paid by natives either in purchasing goods for cash or to cover previous credit purchases are received not "for the use of the United States" but for the various purposes specified in you letter. And, for like reasons, the provisions of section 3618, Revised Statutes, 31 U.S.C. 487, which have referenced to the disposition of the proceeds of sales of "public property" would appear to have no application to the proceeds of sales of goods at these canteens.

With respect to moneys paid over to the agents for disposition according to the express wishes of individual natives, it is even more apparent that the provisions of section 3617, Revised Statutes, do not apply. Such funds are impressed with a trust upon payment; they are received by the agents for only certain specified purposes; and they are for disbursement according to the terms and conditions to the trust agreement. Certainly, moneys received under such circumstances may not be considered has having been received "for use of the United States."

Section 3621, Revised Statutes, presents quite a different situation. As indicated above, it relates to "moneys of the United States" in the hands or possession of any person and requires that such money be paid to the Treasurer or some public depositary without delay. The said section is designed to insure that such funds will be placed in a safe depositary, without regard to the manner in which such funds thereafter shall be accounted for. This office previously has construed the provisions of section 3620, Revised Statutes, 31 U.S.C. 492 -- which requires that the disbursement deposit the same with the Treasurer or an Assistant Treasurer of the United States or in such manner as may be prescribed by the Secretary of the Treasury -- as extending to moneys coming into the possession of disbursing officers in their official capacity as such either for the use of the United States or to be held in trust for certain purposes. A-22880, December 7, 1928. Hence, the funds here involved should be deposited as soon after receipt thereof as possible, but in view of the transportation difficulties and other attendant circumstances described in your letter, this office will not insist upon compliance with the requirement as to deposit within thirty days.

In connection with the nature of the account required for the involved funds, there is for consideration section 20 of the Permanent Appropriation Repeal Act, 31 U.S.C. 725a, which section provides in part as follows:

"* * * Hereafter moneys received by the Government as trustee analogous to the funds named in subsections (b) and (c) of this section, not otherwise herein provided for * * * shall likewise be deposited into the Treasury as trust funds with appropriate title, and all amounts credited to such trust-fund accounts are hereby appropriated and shall be disbursed in compliance with the terms of the Trust * * *."

There are listed in said section numerous trust-fund accounts, including several which seem more or less analogous both to moneys received for canteen purchases and to moneys received in trust from the natives. E.g. "Commissary funds, Federal prisons" and "Patients' deposits, United States Marine Hospital, Carville, Louisiana." Thus, under ordinary circumstances, the funds here involved would be required to be deposited into the Treasury into a trust-fund account under the appropriate title and accounted for as other funds covered by said section. See General Regulations No. 80, 14 Comp Gen. 940.

However, as indicated in your letter, considerable delay necessarily would be involved in the warranting of funds under the trust-fund account procedure; and unless the working capital available to each agent were sufficient at all times to meet current needs, there might be instances where necessary purchases or withdrawals could not be made promptly. While these moneys are impressed with a trust, in view of the unusual conditions prevailing in connection with the transactions carried on by the agents in the Probilof Islands, and the fact that the act of February 26, 1944, authorizes you to prescribe the manner in which compensation paid the natives shall be "expended or otherwise used on their behalf and for their benefit," no objections will be interposed by this office to accounting for the funds through the use of a special deposit account.

The statutes governing the receipt of moneys do not authorize the withholding from deposit, for any purpose whatsoever, of the whole or any part of such collections. However, in the absence of banking or other commercial facilities in the Pribilof Islands, if it be necessary that the agents have a cash account for current disbursements, so far as this office is concerned there would appear no objection to cash advances being made by the accounting officer to agent-cashiers in the usual manner.

The final question raised in your letter concerns the applicability of the advertising-for-bids requirements of section 3709, Revised Status, to the subject transactions. This office held in 1 Comp. Gen. 134, that in purchasing articles to keep in stock for sale to private parties, the Panama Canal could limit competition to particular makes or brands of articles for which there was known to be a demand or could purchase such articles without advertising in cases where it was found impracticable to advertise. And, in decision dated December 9, 1931, A-39662, involving funds appropriated under an act which authorized expenditures "in the discretion of the Secretary of the Interior" for the purpose of enabling Indians to become self-supporting, it was stated:

"It is realized of course that in any instance where the purchase of implements and/or live stock is to be made for a particular Indian or Indians that the individual wants must, as far as reasonably possible, be complied with, but it does not necessarily follow that, after such wants have been determined upon and made known and approved by the Secretary of the Interior, there should not be competition as contemplated by the provisions of section 3709, Revised Statutes. This, in order that the lowest possible prices may be secured and the rights of the individual Indian may be protected. This requirement is not affected by the fact that the Government funds are to be reimbursed b the Indians from their personal funds."

"If, in the discretion of the Secretary of the Interior, it should be found that the purchase of a particular make of implement or a particular tool, animal, etc., selected by the Indian for whom the purchase is to be made will best promote the purpose of the act, which is to enable Indians to become self-supporting, the advertising may be limited to the particular make, etc. While the law does not require advertising when it can be satisfactorily shown that advertising should serve no useful purpose, such as where a particular horse or other animal is desired and can be purchased only from the owner thereof, there should be some kind of advertising in all cases in which there is any possibility of obtaining competition on the article or thing to be purchased, whether for resale or Government use."

"The law does not require that there be formal advertising in each instance but contemplates such publicity as will offer all probable bidders notice thereof and resulting opportunity to bid. Hence, any advertising that gives all available competition under the circumstances of the particular case generally will be accepted by this office as a compliance with the requirements of the statute. See 3 Comp. Gen. 862; 4 id. 568."

The principles of the above decisions are for application to the transactions here involved. While the purchases made by the Government agents are not paid for with appropriated funds, the Government owes it to the natives -- who will repurchase the articles from the canteens at prices determined principally by the cost there-of-to secure such articles at as low a cost as possible. At the same time, where particular makes or brands of articles are known to be preferred by the natives and such articles are obtainable from only one source, or from several sources at a uniform price, advertising would serve no useful purpose. Consequently, competitive bids should be solicited in purchasing articles for resale at the canteens where practicable but advertising need not be resorted to where it reasonably could not be exported to effect a saving in the cost of the articles to be purchased or where for other reasons advertising would be impracticable.

Your submission is answered accordingly.

Respectfully,

Comptroller General of the United States.