B-217722, MAR 18, 1985, 64 COMP.GEN. 359

B-217722: Mar 18, 1985

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APPROPRIATIONS - LIMITATIONS - AUTHORIZATION LIMITATION EXECUTIVE BRANCH IS NOT BOUND BY DIRECTIONS IN APPROPRIATIONS COMMITTEE REPORTS INDICATING THE TOTAL NUMBER OF RESEARCH GRANTS TO BE FUNDED BY THE ACT APPROPRIATING FISCAL YEAR 1985 MONIES TO THE NATIONAL INSTITUTES OF HEALTH. OR STATEMENTS IN AGENCY BUDGET JUSTIFICATIONS ARE NOT LEGALLY BINDING ON AN AGENCY UNLESS INCORPORATED. (2) WHETHER THE EXECUTIVE BRANCH WOULD BE USURPING CONGRESSIONAL PREROGATIVES AND VIOLATING CONGRESSIONAL INTENT IF IT FUNDS SOME 646 NIH GRANT PROJECTS FOR A 3-YEAR PERIOD WITH FUNDS THAT WERE APPROPRIATED ONLY FOR THE NEEDS OF FISCAL YEAR 1985. (3) FOR A DESCRIPTION OF THE LEGISLATIVE HISTORY OF A SIMILAR MULTI-YEAR FUNDING PROBLEM THAT WAS BEFORE THE SUBCOMMITTEE IN 1974.

B-217722, MAR 18, 1985, 64 COMP.GEN. 359

APPROPRIATIONS - LIMITATIONS - AUTHORIZATION LIMITATION EXECUTIVE BRANCH IS NOT BOUND BY DIRECTIONS IN APPROPRIATIONS COMMITTEE REPORTS INDICATING THE TOTAL NUMBER OF RESEARCH GRANTS TO BE FUNDED BY THE ACT APPROPRIATING FISCAL YEAR 1985 MONIES TO THE NATIONAL INSTITUTES OF HEALTH, PUB.L. NO. 96-619. 98 STAT. 3305, 3313-14. DIRECTIONS IN COMMITTEE REPORTS, FLOOR DEBATES AND HEARINGS, OR STATEMENTS IN AGENCY BUDGET JUSTIFICATIONS ARE NOT LEGALLY BINDING ON AN AGENCY UNLESS INCORPORATED, EITHER EXPRESSLY OR BY REFERENCE, IN AN APPROPRIATION ACT ITSELF OR IN SOME OTHER STATUTE. APPROPRIATIONS - RESTRICTIONS - "BONA FIDE NEEDS" EXECUTIVE BRANCH PLAN TO FUND SOME 646 NATIONAL INSTITUTES OF HEALTH RESEARCH PROJECT GRANTS FOR 3 FISCAL YEARS WITH MONIES APPROPRIATED TO NIH FOR FISCAL 1985 VIOLATES BONA FIDE NEED RULE, 31 U.S.C. 1502(A). LEGISLATION AUTHORIZING GRANT PROGRAM CONTAINS NO EXPRESS AUTHORITY TO OBLIGATE 1-YEAR APPROPRIATIONS FOR THE FUNDING NEEDS OF SUBSEQUENT YEARS. APPROPRIATIONS - IMPOUNDING - EXECUTIVE BRANCH'S FAILURE TO EXPEND APPROPRIATED FUNDS EXECUTIVE BRANCH PLAN TO FUND SOME 646 NATIONAL INSTITUTES OF HEALTH RESEARCH PROJECT GRANTS FOR 3 FISCAL YEARS WITH FISCAL YEAR 1985 MONIES DOES NOT AT THE TIME OF THIS DECISION VIOLATE THE IMPOUNDMENT CONTROL ACT. THE EXECUTIVE BRANCH'S INTENTION TO DATE, AS EVIDENCED BY THE (ALBEIT IMPROPER) OBLIGATION OF THE FUNDS, HAS NOT BEEN TO WITHHOLD OR DELAY THE AVAILABILITY OF THE FUNDS FOR THE PROGRAM PERIOD.

TO THE HONORABLE LOWELL WEIKER, JR., SUBCOMMITTEE ON LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, COMMITTEE ON APPROPRIATIONS, UNITED STATES SENATE, MARCH 18, 1985:

BY LETTER OF FEBRUARY 4, 1985, YOU RAISED VARIOUS QUESTIONS ABOUT THE AVAILABILITY AND USE OF FUNDS APPROPRIATED TO THE NATIONAL INSTITUTES OF HEALTH (NIH) FOR BIO-MEDICAL RESEARCH GRANTS IN THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION AND RELATED AGENCIES APPROPRIATIONS ACT FOR FISCAL YEAR 1985. PUB.L. NO. 98-619, 98 STAT. 3305, 3313-14.

SPECIFICALLY, YOU ASKED (1) WHETHER THE EXECUTIVE BRANCH VIOLATED THE LANGUAGE AND SPIRIT OF THE APPROPRIATIONS ACT BY SIGNIFICANTLY DEVIATING FROM A CONGRESSIONAL DIRECTIVE SETTING A PARTICULAR LEVEL OF PROGRAM ACTIVITY FOR NIH NEW AND COMPETING RESEARCH GRANTS; (2) WHETHER THE EXECUTIVE BRANCH WOULD BE USURPING CONGRESSIONAL PREROGATIVES AND VIOLATING CONGRESSIONAL INTENT IF IT FUNDS SOME 646 NIH GRANT PROJECTS FOR A 3-YEAR PERIOD WITH FUNDS THAT WERE APPROPRIATED ONLY FOR THE NEEDS OF FISCAL YEAR 1985; (3) FOR A DESCRIPTION OF THE LEGISLATIVE HISTORY OF A SIMILAR MULTI-YEAR FUNDING PROBLEM THAT WAS BEFORE THE SUBCOMMITTEE IN 1974; AND (4) WHETHER THE DESCRIBED ACTIONS OF THE EXECUTIVE BRANCH WERE IN COMPLIANCE WITH THE IMPOUNDMENT CONTROL ACT OF 1974, PUB.L. NO. 93-344, 88 STAT. 297, 332, CODIFIED AT 2 U.S.C. SECS. 681 ET SEQ., AND OTHER PERTINENT STATUTES.

FOR THE REASONS GIVEN BELOW, WE FIND THAT THE EXECUTIVE BRANCH IS NOT LEGALLY BOUND TO COMPLY WITH THE LEVEL OF PROGRAM ACTIVITY SET FORTH IN CONGRESSIONAL COMMITTEE REPORTS FOR NEW AND COMPETING NIH GRANTS. ON THE OTHER HAND, THE EXECUTIVE BRANCH PLAN TO FUND SOME 646 NIH RESEARCH GRANTS ON A 3-YEAR BASIS WITH FISCAL YEAR 1985 FUNDS IS UNLAWFUL, BECAUSE IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY, SUCH ACTIONS VIOLATE 31 U.S.C. SEC. 1502(A). WHILE THE ADMINISTRATION'S ACTION IN OBLIGATING THE FUNDS ON A 3-YEAR BASIS IS IMPROPER, WE CANNOT SAY THAT IT IS AT THIS TIME A VIOLATION OF THE IMPOUNDMENT CONTROL ACT.

I. BACKGROUND

IN YOUR LETTER YOU STATED THAT IN ARRIVING AT THE LEVEL OF ANNUAL APPROPRIATIONS FOR THE NIH, THE CONGRESS HAS TRADITIONALLY BASED ITS DECISIONS UPON A COMPLEX SET OF FACTORS WHICH, TAKEN TOGETHER, REPRESENT THE LEVEL OF EFFORT WHICH IT BELIEVES IS NECESSARY TO FULFILL THE NIH MISSION. AMONG THESE FACTORS ARE THE NUMBER OF NEW, COMPETING RENEWAL, AND NON-COMPETING RESEARCH GRANTS APPLIED FOR AND FUNDED, AS WELL AS THE NUMBER OF CLINICAL TRIALS, RESEARCH CENTERS, AND TRAINING FELLOWSHIPS BEING SUPPORTED BY THE AGENCY. ALSO CONSIDERED IS THE LEVEL OF RESEARCH EFFORT BEING CARRIED OUT THROUGH THE AGENCY'S INTRAMURAL PROGRAM.

CONSISTENT WITH THESE CONSIDERATIONS, FOR FISCAL YEAR 1985 THE HOUSE RECOMMENDED AN APPROPRIATION TO NIH OF CLOSE TO $4.9 BILLION FOR BIO MEDICAL RESEARCH GRANTS, AN INCREASE OF SOME $505.3 MILLION OVER THE ADMINISTRATION'S BUDGET ESTIMATES. THE COMMITTEE STATED THAT ALTHOUGH THE NUMBER OF NEW AND COMPETING GRANTS IN RECENT YEARS HAD STABILIZED AT APPROXIMATELY 5,000, THE AWARD RATES AND PAYLINES FOR THESE GRANTS HAD DECLINED AND MANY HIGH CALIBRE INVESTIGATORS HAD NOT RECEIVED FUNDING. H.R. REP. NO. 911, 98TH CONG., 2D SESS. 29-30 (1984). IN THIS REGARD, THE COMMITTEE WAS CONCERNED THAT THE PRESIDENT'S BUDGET REQUEST FOR FISCAL YEAR 1985 PROPOSED SIGNIFICANTLY DECREASED APPROPRIATIONS WHICH THREATENED THE SCOPE OF THE RESEARCH BEING CONDUCTED. TO CHANGE THIS SITUATION, THE HOUSE COMMITTEE RECOMMENDED INCREASED FUNDING TO SUPPORT AN ESTIMATED 6,200 NEW AND COMPETING RESEARCH PROJECT GRANTS ID. AT 30.

THE SENATE COMMITTEE ON APPROPRIATIONS EXPRESSED THE SAME CONCERNS AND RECOMMENDED INCREASED FUNDING FOR SOME 1,850 NEW AND COMPETING GRANTS OVER THE 5,000 LEVEL REQUESTED. S. REP. NO. 544, 94TH CONG., 2D SESS. 50 (1984); 130 CONG. REC. S. 11688 (DAILY ED. SEPT. 21, 1984) (STATEMENT OF SENATOR PROXMIRE). ALTHOUGH THE CONFERENCE REPORT DID NOT MENTION THE TOTAL NUMBER OF GRANTS INTENDED FOR SUPPORT, IT RECOMMENDED A COMPROMISE APPROPRIATION FOR NIH BIOMEDICAL RESEARCH GRANTS BETWEEN THE AMOUNTS PROPOSED BY THE SENATE AND HOUSE, WHICH WAS LATER ENACTED AS PROPOSED. H.R. REP. NO. 1132, 98TH CONG., 2D SESS. 15 19 (1984).

NOTWITHSTANDING THE NUMBER OF GRANTS WHICH THE COMMITTEES INTENDED TO SUPPORT, THE EXECUTIVE BRANCH HAS DECIDED TO FUND ONLY 5,000 NEW AND COMPETING RESEARCH PROJECT GRANTS IN FISCAL YEAR 1985. MOREOVER, TO INSURE YEAR-TO-YEAR STABILITY IN THE NUMBER OF GRANTS NIH IS ABLE TO SUPPORT, AND TO LOWER FISCAL COMMITMENTS IN FISCAL YEARS 1986 AND 1987, THE EXECUTIVE PLANS TO FUND SOME 646 OF THE 5,000 GRANTS BY COMMITTING ENOUGH FISCAL YEAR 1985 MONIES TO TAKE CARE OF THE GRANTEES' ESTIMATED NEEDS FOR 3 FISCAL YEARS. /1/ IN THIS MANNER, THE ENTIRE FISCAL YEAR 1985 APPROPRIATION WILL BE OBLIGATED. DEPARTMENT OF HEALTH AND HUMAN SERVICES, III JUSTIFICATION OF APPROPRIATION ESTIMATES FOR THE COMMITTEE ON APPROPRIATIONS FOR FISCAL YEAR 1986, 1-3 (1985).

II. LEGAL DISCUSSION

A. CONFLICT WITH COMMITTEE DIRECTIVES ON NUMBER OF GRANTS AWARDED

THE EXECUTIVE BRANCH'S PLAN TO LIMIT NIH TO 5,000 NEW AND COMPETING BIO- MEDICAL RESEARCH GRANTS IN FISCAL YEAR 1985, DOES CONFLICT WITH THE COMMITTEE'S INTENTION TO INCREASE SUBSTANTIALLY THE NUMBER OF GRANTS AWARDED. NEVERTHELESS, IF ALL THE FUNDS ARE PROPERLY OBLIGATED FOR PURPOSES CONSISTENT WITH NIH'S PROGRAM AUTHORIZATION AND APPROPRIATION STATUTES, WE COULD NOT FIND THAT THE LAW ITSELF WAS VIOLATED. EXPLAINED IN SECTION B, WE DO THINK THAT THE MULTIYEAR FUNDING PROPOSED FOR A PORTION OF THE GRANTS WOULD BE A VIOLATION OF A STATUTORY FUNDING RESTRICTION BUT THE FACT THAT THE TOTAL NUMBER OF GRANTS AWARDED DOES NOT CORRESPOND TO THE DIRECTIVES IN THE COMMITTEE REPORTS DOES NOT, BY ITSELF, AMOUNT TO A CIRCUMVENTION OF NIH'S APPROPRIATION ACT.

IT IS A GENERAL PRINCIPLE OF APPROPRIATION LAW THAT DIRECTIONS IN COMMITTEE REPORTS, FLOOR DEBATES AND HEARINGS, OR STATEMENTS IN AGENCY BUDGET JUSTIFICATIONS ARE NOT LEGALLY BINDING ON AN AGENCY UNLESS THEY ARE INCORPORATED, EITHER EXPRESSLY OR BY REFERENCE, IN AN APPROPRIATION ACT ITSELF OR IN SOME OTHER STATUTE. SEE, E.G., 55 COMP.GEN. 307, 319, 325-26 (1975). THE RULE APPLIES WHETHER THE LEGISLATIVE HISTORY SHOWS MERE ACQUIESCENCE IN AN AGENCY'S BUDGET REQUEST OR IS AN AFFIRMATIVE EXPRESSION OF INTENT. AS THE LUMP SUMS APPROPRIATED TO THE VARIOUS NIH INSTITUTES SAY NOTHING ABOUT THE NUMBER OF GRANTS TO BE FUNDED, THERE IS NO LEGAL REQUIREMENT THAT THE COMMITTEE DIRECTIONS BE FOLLOWED.

WE ADD, HOWEVER, THAT THIS DOES NOT MEAN THAT AGENCIES ARE FREE TO IGNORE THE LEGISLATIVE HISTORY APPLICABLE TO THE USE OF APPROPRIATED FUNDS, AS WAS EXPRESSED BY THE CONGRESS IN THE COMMITTEE REPORTS DESCRIBED ABOVE. THEY DO SO AT THE PERIL OF STRAINED RELATIONS WITH THE CONGRESS. THUS, THE EXECUTIVE BRANCH HAS A PRACTICAL, THOUGH NOT A LEGAL, DUTY TO ABIDE BY SUCH EXPRESSIONS OF INTENT. 55 COMP.GEN. AT 319, 325.

B. MULTIYEAR FUNDING

AS DESCRIBED IN THE BACKGROUND SECTION, THE EXECUTIVE BRANCH INTENDS TO USE FISCAL YEAR 1985 APPROPRIATIONS TO NIH TO FUND SOME 646 RESEARCH PROJECT GRANTS FOR 3 FISCAL YEARS. THE LEGISLATION AUTHORIZING RESEARCH GRANTS TO THE VARIOUS NIH UNITS DOES NOT PROVIDE FOR MULTIYEAR GRANT FUNDING. 42 U.S.C. SECS. 241, 243, 281 ET SEQ., 300B1. MOREOVER, NONE OF THE FISCAL YEAR 1985 APPROPRIATIONS TO THE VARIOUS NIH INSTITUTES SUPPORTING THE GRANTS PROVIDE FOR THIS TYPE OF FUNDING. PUB.L. NO. 98-619, 98 STAT. 3305, 3313-14. AS A MATTER OF FACT, WITH VERY FEW EXCEPTIONS (E.G., DEPARTMENT OF DEFENSE MAJOR WEAPONS ACQUISITIONS, OR GENERAL SERVICES ADMINISTRATION LEASING AND PUBLIC UTILITIES AUTHORITIES), MOST AGENCIES DO NOT HAVE SPECIFIC MULTIYEAR AUTHORITY.

WITHOUT EXPRESS STATUTORY AUTHORITY, NO AGENCY MAY OBLIGATE AN APPROPRIATION MADE FOR THE NEEDS OF A LIMITED PERIOD OF TIME (USUALLY, 1 YEAR, AS IN THE PRESENT CASE) FOR THE NEEDS OF SUBSEQUENT YEARS. THIS IS A PARAPHRASE OF A LAW THAT FIRST APPEARED ON THE STATUTE BOOKS IN 1789, AND IS FOUND IN ITS CODIFIED FORM AT 31 U.S.C. SEC. 1502(A). GAO REFERS TO THE STATUTE IN ITS DECISIONS AS THE "BONA FIDE NEED RULE." SEE, E.G., 58 COMP.GEN. 471, 473 (1979); 33 COMP.GEN. 57, 61 (1953).

FROM WHAT CAN BE GLEANED FROM THE SPARSE LEGISLATIVE HISTORY, THE INTENT OF THE CONGRESS WHEN THIS LAW WAS FIRST PASSED WAS TO INSTILL A SENSE OF FISCAL RESPONSIBILITY ON THE PART OF ITS NEWLY FORMED DEPARTMENTS AND AGENCIES. IT WANTED THE BALANCE OF ANY APPROPRIATION NOT REALLY NEEDED FOR THAT YEAR'S OPERATIONS TO BE RETURNED TO THE TREASURY SO THAT IT COULD BE REAPPROPRIATED THE FOLLOWING YEAR IN ACCORDANCE WITH THE CONGRESS' CURRENT PRIORITIES. OF EVEN MORE IMPORTANCE TO THE CONGRESS TODAY, A LIMITED PERIOD OF AVAILABILITY MEANS THAT AN AGENCY HAS TO COME BACK TO ITS OVERSIGHT OR AUTHORIZING COMMITTEES AND THEN TO ITS APPROPRIATIONS COMMITTEES TO JUSTIFY CONTINUING THE PROGRAM OR TO DEBATE ABOUT HOW MUCH IS NEEDED TO CARRY ON THE PROGRAM AT THE SAME OR A DIFFERENT LEVEL.

THESE SAME CONCERNS WERE RAISED BY YOUR SUBCOMMITTEE IN 1974. S. REP. NO. 814, 93RD CONG., 2D SESS., 65-66. AT THAT TIME, YOUR SUBCOMMITTEE COMPLAINED THAT UNAUTHORIZED MULTIYEAR FUNDING INHIBITED THE CONGRESS' ABILITY TO INCREASE (OR DECREASE) THE LEVELS OF FUNDING FOR SPECIFIC PROGRAMS BECAUSE THE AGENCY NEED NOT RETURN EACH YEAR TO JUSTIFY THE NEED- - OR LACK THEREOF-- OF CONTINUED SUPPORT FOR GRANTS MADE IN THE PREVIOUS YEAR.

THE REPORT STATED THAT TRADITIONALLY THE CONGRESS HAD REJECTED THIS CONCEPT AND HAD FUNDED GRANTS FOR ONLY 1 YEAR AT A TIME. IF FOUND THAT MULTIYEAR FUNDING RENDERED THE CONGRESS POWERLESS TO INCREASE THE LEVEL OF FUNDING FOR ANY GIVEN PRIORITY PROGRAM. WHATEVER THE CONGRESS ADDED TO THE BUDGET, A DEPARTMENT COULD USE TO COVER THE FOLLOWING OR FUTURE YEARS' COSTS. THE REPORT REAFFIRMED THE CONGRESS' POSITION THAT ALL GRANT AWARDS BE MADE ON A 12-MONTH BASIS UNLESS SPECIFICALLY PROVIDED TO THE CONTRARY BY THE CONGRESS. ANY ATTEMPT TO PROVIDE MULTIYEAR GRANT FUNDING OR FORWARD FUNDING WOULD BE IN DIRECT OPPOSITION TO THE WILL OF THE CONGRESS, AND COULD VIOLATE THE COURT RULINGS MANDATING THE RELEASE OF PREVIOUSLY IMPOUNDED FUNDS. ID.

SIMILAR CONCERNS WERE EXPRESSED IN FLOOR DEBATE. 120 CONG. REC. 17659-62 (1974) (COMMENTS OF SENATORS MAGNUSON AND BAYH); ID. AT 13276 78 (COMMENTS OF SENATOR MAGNUSON). THE DEBATE ALSO INDICATED THAT THE PROBLEM HAD BEEN RESOLVED. THUS, SENATOR MAGNUSON STATED THAT THE SECRETARY OF HEALTH, EDUCATION AND WELFARE AGREED THAT ALL MULTIYEAR FUNDING WOULD CEASE AS OF MAY 3, 1974-- THE DATE THE SENATE REPORT WAS ISSUED. ID. AT 17659-60. CORRESPONDENCE BETWEEN SENATOR MAGNUSON AND HEW SECRETARY WEINBERGER AND OMB DIRECTOR ASH ALSO REFLECTED THE COMMITTEE'S CONCERNS WITH MULTIYEAR FUNDING AND THE SECRETARY'S DECISION TO LIMIT MULTIYEAR GRANTS. ENCLOSE COPIES OF SOME OF THAT CORRESPONDENCE.

AS DISCUSSED IN YOUR LETTER, MANY OF THE SAME QUESTIONS YOUR SUBCOMMITTEE RAISED IN 1974 ARE STILL APPLICABLE TODAY. IT IS CERTAINLY TRUE THAT TO THE EXTENT THAT THE ADMINISTRATION COMMITS ITS FISCAL YEAR 1985 FUNDS FOR THE SECOND AND THIRD YEARS' NEEDS OF 646 GRANTEES, THESE FUNDS ARE UNAVAILABLE FOR INCREASING THE NUMBER OF NEW AND COMPETING GRANTS AWARDED, OR FOR RAISING THE AWARD RATES AND PAYLINES FOR HIGH CALIBRE INVESTIGATORS. IT APPEARS, THEN, THAT THE PROBLEMS WHICH THE BONA FIDE NEED RULE WAS DESIGNED TO AVOID ARE VERY MUCH IN EVIDENCE IN THE PRESENT SITUATION.

ADMINISTRATION'S ARGUMENTS /2/

THE OFFICIAL REASONS OFFERED FOR THE REDUCTION IN THE TOTAL NUMBER OF GRANTS FOR RESEARCH STUDIES AND RESEARCH CENTERS, AND FOR THE MULTIYEAR FUNDING OF SOME OF THESE PROJECTS, ARE FOUND IN THE PRESIDENT'S BUDGET JUSTIFICATION FOR 1986. DEPARTMENT OF HEALTH AND HUMAN SERVICES, III JUSTIFICATION OF APPROPRIATIONS ESTIMATES FOR THE COMMITTEE ON APPROPRIATIONS FOR FISCAL YEAR 1986, 1-3 (1985). THERE IS NO MENTION IN THAT DOCUMENT OF THE APPROPRIATION RESTRICTION IN 31 U.S.C. SEC. 1502(A). THE PROPOSED ACTIONS WERE SUPPORTED ENTIRELY ON BUDGETARY GROUNDS; THAT IS, TO ENSURE YEAR-TO-YEAR "STABILITY" IN THE NUMBER OF GRANTS NIH IS ABLE TO SUPPORT, AND TO LOWER ITS FINANCIAL COMMITMENTS IN FISCAL YEARS 1986 AND 1987.

INFORMALLY, STAFF MEMBERS OF THE HHS OFFICE OF GENERAL COUNSEL AND OF OMB HAVE INDICATED THAT THEY ARE WELL AWARE OF THE RESTRICTIONS OF THE BONA FIDE NEED RULE (31 U.S.C. SEC. 1502(A)), BUT THOUGHT THAT IT DIDN'T FORECLOSE MULTIYEAR GRANTS IN THIS SITUATION. THEY RELIED, THEY SAID, ON DISCUSSIONS OF THE RULE IN GAO'S PUBLISHED MANUAL, PRINCIPLES OF FEDERAL APPROPRIATIONS LAW, AT PAGES 4-9, 410, 13-16, AND 13-17 (1982). APPLYING THESE PRINCIPLES, BOTH HHS AND OMB VIEW EACH OF THE 646 GRANTS AS SINGLE RESEARCH PROJECTS AND CONTEND THAT THEY ARE NON SEVERABLE ON THE GROUND THAT THERE IS A PRESENT NEED TO HAVE THE RESEARCH PERFORMED. FUNDS MAY THUS BE OBLIGATED IN FISCAL YEAR 1985 TO MEET THAT NEED, EVEN THOUGH PERFORMANCE MAY NOT BE COMPLETED FOR 2 OR MORE YEARS. WE THINK THAT THE PRINCIPLES DISCUSSED IN OUR MANUAL WERE APPLIED INAPPROPRIATELY. DETERMINATION OF WHAT CONSTITUTES A BONA FIDE NEED OF A PARTICULAR FISCAL YEAR DEPENDS LARGELY ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. COMP.GEN. 155, 159 (1957). OVER THE YEARS WE HAVE HELD THAT WHERE CONTINUOUS AND RECURRING SERVICES ARE NEEDED ON A YEAR-TO-YEAR BASIS, CONTRACTS FOR THE SERVICES ARE SEVERABLE AND MUST BE CHARGED TO THE FISCAL YEAR IN WHICH THEY ARE RENDERED. 33 COMP.GEN. 90, 92 (1953); 60 COMP.GEN. 219, 221-22 (1981). THUS, WE HAVE DECIDED THAT CONTRACTS ENTERED INTO WITH FISCAL YEAR APPROPRIATIONS PURPORTING TO BIND OR OBLIGATE THE GOVERNMENT BEYOND THE FISCAL YEAR INVOLVED MUST BE CONSTRUED AS BINDING THE GOVERNMENT ONLY TO THE END OF THE FISCAL YEAR UNLESS OTHERWISE AUTHORIZED BY LAW. 48 COMP.GEN. 497, 499-500 (1969).

THE LEGISLATION PROVIDING THE PRINCIPAL BASIS FOR THE NIH RESEARCH GRANT PROGRAM IS VERY BROAD, ANTICIPATING EXTENSIVE, CONTINUOUS WORK "RELATING TO THE CAUSES, DIAGNOSIS, TREATMENT, CONTROL, AND PREVENTION OF PHYSICAL AND MENTAL DISEASES AND IMPAIRMENTS OF MAN ***." 42 U.S.C. SEC. 241. IS EVIDENT THAT THE LEGISLATION REFLECTS A GOVERNMENT POLICY TO STIMULATE PARTICULAR KINDS OF RESEARCH THAT WILL BE NEEDED YEAR-AFTER-YEAR FOR SUBSTANTIAL PERIODS OF TIME, IF NOT INDEFINITELY. THE HOUSE REPORT ACCOMPANYING THE FISCAL YEAR 1985 APPROPRIATIONS ACT SUGGESTS THAT THE RESEARCH GRANT PROGRAM HAS BEEN ONGOING FOR SOME 35 YEARS. H.R. REP. NO. 911, 98TH CONG., 2D SESS. 29 (1984). THUS, TO THE EXTENT THAT THE NIH GRANT PROGRAM IS CONTINUOUS AND INVOLVES PROJECTS THAT CONTEMPLATE A NUMBER OF YEARS' WORK, THEY RESEMBLE CONTINUOUS SERVICE OR MULTIYEAR CONTRACTS AND THE SAME BONA FIDE NEED PRINCIPLE WOULD APPLY TO THEM.

ALTHOUGH WE HAVE NOT BEEN PROVIDED WITH INFORMATION ALL THE USUAL DURATION OF NIH GRANTS, IT APPEARS THAT SOME MAY TAKE SEVERAL YEARS OR LONGER TO COMPLETE. FOR PURPOSES OF THE BONA FIDE NEED RULE, WE THINK THE SALIENT POINT IS THAT THE NEED FOR THE GRANT WORK CONTINUES FROM YEAR-TO- YEAR. IN THIS REGARD, ALTHOUGH BOTH OMB AND HHS SUGGEST THAT THE 646 GRANTS ARE SINGLE PROJECTS, AND THUS FOR FUNDING PURPOSES ARE NOT SEVERABLE, THEY ALSO ACKNOWLEDGE THAT ANY NUMBER OF THESE GRANTS COULD BE RENEWED IN FISCAL 1988. WE ALSO POINT OUT THAT NEITHER THE HHS BUDGET JUSTIFICATION NOR THE INFORMAL COMMENTS OF HHS AND OMB SUGGEST THAT THE 3- YEAR FUNDING OF THE 646 GRANTS IS DUE TO THE RESEARCH WORK BEING NEEDED IN FISCAL 1985. THE REASONS GIVEN FOR THIS MANNER OF FUNDING ARE PURELY BUDGETARY: TO AVOID SIGNIFICANT FLUCTUATIONS IN THE NUMBER OF GRANTS NIH IS ABLE TO SUPPORT AND HAVING TO FUND THE SAME GRANTS IN FISCAL 1986 AND 1987.

AT THE SAME TIME, WE RECOGNIZE THAT THERE ARE FUNDAMENTAL DIFFERENCES BETWEEN A CONTRACT FOR MATERIALS OR SERVICES AND A RESEARCH GRANT. THE SEVERABILITY CONCEPT IS NOT ALTOGETHER ANALOGOUS TO THE NIH RESEARCH GRANTS, WHICH RESEMBLE SUBSIDIES RATHER THAN CONTRACTS FOR SERVICES. THIS RESPECT, THE GRANTS ARE MORE LIKE LEVEL-OF-EFFORT CONTRACTS. NEVERTHELESS, CONSISTENT WITH THE NIH LEGISLATION AUTHORIZING SUPPORT FOR IMPORTANT INVESTIGATIONS THAT MAY SOME DAY ENRICH OUR STORE OF KNOWLEDGE ABOUT "THE CAUSES, DIAGNOSIS, TREATMENT, CONTROL, AND PREVENTION OF PHYSICAL AND MENTAL DISEASES AND IMPAIRMENTS OF MAN ***." 42 U.S.C. SEC. 241, MORE OFTEN THAN NOT THE GRANTS DO NOT CONTEMPLATE A REQUIRED OUTCOME OR PRODUCT. /3/ THUS, IT CANNOT BE SAID THAT THERE IS A NEED FOR AN END PRODUCT IN ANY PARTICULAR FISCAL YEAR. AS THERE IS NO SUCH NEED, THE BONA FIDE NEED RULE IS VIOLATED WHEN FUNDS ARE OBLIGATED FOR MORE THAN 1 YEAR FOR THESE GRANTS.

WE THINK THE SENATE REPORT DISCUSSED ABOVE AND THE NIH PRACTICE OF FUNDING ITS RESEARCH GRANTS FROM YEAR-TO-YEAR SUPPORTS THE VIEW THAT DECISIONS ABOUT FUNDING THE GRANTS ARE TO BE MADE ON AN ANNUAL BASIS. ACCORDINGLY, UNTIL THE CONGRESS ACTS TO RENEW ITS APPROPRIATIONS FOR A SUBSEQUENT YEAR, NIH HAS NO AUTHORITY TO MAKE A COMMITMENT TO A RESEARCHER OR RESEARCH PROJECT FOR SUCH SUBSEQUENT YEAR.

C. IMPOUNDMENT

AN IMPOUNDMENT IS AN ACTION OR INACTION BY AN OFFICER OR EMPLOYEE OF THE UNITED STATES THAT PRECLUDES THE OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY PROVIDED BY THE CONGRESS. THE IMPOUNDMENT CONTROL ACT OF 1974, PUB.L. NO. 93-344, 88 STAT. 297, 332, CODIFIED AT 2 U.S.C. SECS. 681 AND FOLLOWING, WAS INTENDED TO TIGHTEN CONGRESSIONAL CONTROL OVER IMPOUNDMENTS AND TO ESTABLISH PROCEDURES THAT WOULD PROVIDE A MEANS FOR THE CONGRESS TO PASS UPON EXECUTIVE BRANCH PROPOSALS TO IMPOUND BUDGET AUTHORITY. COMP.GEN. 453, 454 (1974). THE ACT COVERS BOTH RESCISSIONS AND DEFERRALS. A RESCISSION EXISTS WHEN THE PRESIDENT DETERMINES THAT "ALL OR PART OF ANY BUDGET AUTHORITY WILL NOT BE REQUIRED TO CARRY OUT THE FULL OBJECTIVES OR SCOPE OF PROGRAMS FOR WHICH IT IS PROVIDED OR *** SHOULD BE RESCINDED FOR FISCAL POLICY OR OTHER REASONS ***." 2 U.S.C. SEC. 683(A). A DEFERRAL IS A WITHHOLDING OR DELAYING OF THE OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY PROVIDED FOR PROJECTS OR ACTIVITIES OR ANY OTHER TYPE OF EXECUTIVE ACTION OR INACTION THAT EFFECTIVELY PRECLUDES OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY. ID. SEC. 682(1). THE ACT CALLS FOR THE EXECUTIVE BRANCH TO SUBMIT PROPOSED RESCISSIONS AND DEFERRALS FOR CONSIDERATION BY CONGRESS. ID. SECS. 683-84.

CONSISTENT WITH THE IMPOUNDMENT ACT, IN B-200685, DECEMBER 23, 1980, WE POINTED OUT THAT FOR AN IMPOUNDMENT TO OCCUR, BUDGET AUTHORITY MUST BE WITHHELD OR DELAYED FROM OBLIGATION BY EXECUTIVE ACTION OR INACTION. ALSO SAID THAT IF A PROGRAM DECISION DID NOT PRECLUDE THE OBLIGATION OR EXPENDITURE OF FUNDS, AN IMPOUNDMENT WOULD NOT RESULT. THUS, WE CANNOT SAY THAT A VIOLATION OF THE IMPOUNDMENT CONTROL ACT HAS TAKEN PLACE AT THIS TIME BECAUSE THE ADMINISTRATION'S INTENTION TO DATE, AS EVIDENCED BY THE (ALBEIT IMPROPER) OBLIGATION OF THE FUNDS, HAS NOT BEEN TO WITHHOLD OR DELAY THE AVAILABILITY OF THE FUNDS FOR THE PROGRAM PERIOD.

/1/ FOR SIMILAR REASONS, APPROXIMATELY 45 OF 500 RESEARCH CENTERS TO BE FUNDED IN FISCAL 1985 WILL BE AWARDED 2 YEARS OF SUPPORT FROM FISCAL YEAR 1985 FUNDS.

/2/ AS YOU REQUESTED EXPEDITED CONSIDERATION OF THIS MATTER, WE DID NOT HAVE TIME TO SEEK FORMALLY THE VIEWS OF HHS OR THE OFFICE OF MANAGEMENT AND BUDGET (OMB). (WE UNDERSTAND THAT OMB ORALLY DIRECTED THE MANNER OF FUNDING.)

/3/ THERE ARE, OF COURSE, RESEARCH AND DEVELOPMENT GRANTS AND OTHER TARGETED, APPLIED RESEARCH GRANTS IN WHICH A SPECIFIC LINE OF INQUIRY IS REQUESTED TO MEET THE GOVERNMENT'S OWN NEEDS WHICH RESEMBLE GOVERNMENT CONTRACTS MORE CLOSELY. THE GAO HAS RECOMMENDED LEGISLATION TO PERMIT MULTIYEAR FUNDING OF THIS TYPE OF GRANT IN APPROPRIATE CIRCUMSTANCES IN TESTIMONY BEFORE THE HOUSE COMMITTEE ON SCIENCE AND TECHNOLOGY (APRIL 5, 1979 AND JUNE 4, 1980), AND IN A REPORT TO THE CONGRESS, "MULTIYEAR AUTHORIZATIONS FOR RESEARCH AND DEVELOPMENT," B-202294, PAD-81-61, APRIL 21, 1981.