B-134339, DECEMBER 18, 1957, 37 COMP. GEN. 417

B-134339, DECEMBER 18, 1957, 37 COMP. GEN. 417

CONTRACTS - CIVIL DEFENSE PURPOSES - LOAN GUARANTY ELIGIBILITY - NATIONAL DEFENSE IN THE ABSENCE OF ANY EVIDENCE OF A CONGRESSIONAL INTENT TO EXCLUDE CIVIL DEFENSE ACTIVITIES FROM THE DEFINITION OF NATIONAL DEFENSE IN SECTION 702 (D) OF THE DEFENSE PRODUCTION ACT AMENDMENTS OF 1953, 50 U.S.C. APP. 2152, CONTRACTS FOR THE PURCHASE OF EQUIPMENT FOR STOCKPILING FOR CIVIL DEFENSE MAY BE REGARDED AS CONTRACTS FOR THE NATIONAL DEFENSE AND ELIGIBLE FOR GUARANTY LOANS UNDER 50 U.S.C. APP. 2153.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, DECEMBER 18, 1957:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 5, 1957, REQUESTING OUR VIEWS AS TO THE ELIGIBILITY OF CERTAIN LOANS FOR GUARANTY BY THE GENERAL SERVICES ADMINISTRATION UNDER SECTION 301 OF THE DEFENSE PRODUCTION ACT OF 1950, AS AMENDED, 50 U.S.C. APP. 2091.

SECTION 301 OF THE DEFENSE PRODUCTION ACT, AS IMPLEMENTED BY SECTIONS 301 AND 302 OF EXECUTIVE ORDER NO. 10480 OF AUGUST 18, 1953, 50 U.S.C. APP. 2153 NOTE, AUTHORIZES THE GENERAL SERVICES ADMINISTRATION TO GUARANTEE FINANCING INSTITUTIONS AGAINST LOSS ON LOANS MADE FOR THE PURPOSE OF FINANCING.

* * * ANY CONTRACTOR, SUBCONTRACTOR, OR OTHER PERSON IN CONNECTION WITH THE PERFORMANCE OF ANY CONTRACT OR OTHER OPERATION DEEMED BY THE GUARANTEEING AGENCY TO BE NECESSARY TO EXPEDITE PRODUCTION AND DELIVERIES OR SERVICES UNDER GOVERNMENT CONTRACTS FOR THE PROCUREMENT OF MATERIALS OR THE PERFORMANCE OF SERVICES FOR THE NATIONAL DEFENSE. ( ITALICS SUPPLIED.)

THE CONTRACTS INVOLVED ARE FOR THE PROCUREMENT BY G.S.A. OF SUBSTANTIAL QUANTITIES OF DOSIMETERS AND RELATED EQUIPMENT USED IN DETERMINING THE EXTENT OF RADIATION EXPOSURE. SUCH SUPPLIES ARE BEING PURCHASED FOR THE FEDERAL CIVIL DEFENSE ADMINISTRATION FOR STOCKPILING IN WAREHOUSES AROUND THE COUNTRY FOR DISTRIBUTION TO CIVIL DEFENSE AGENCIES IN THE EVENT OF AN ATTACK.

THE DOUBT AS TO THE ELIGIBILITY FOR GUARANTY OF LOANS TO THE CONTRACTOR ARISES FROM THE CHANGE IN DEFINITION OF THE TERM "NATIONAL DEFENSE" WHICH WAS MADE BY THE 1953 AMENDMENTS TO THE DEFENSE PRODUCTION ACT. THERETOFORE, NATIONAL DEFENSE WAS DEFINED BY SECTION 702 (D) OF THE ACT, 50 U.S.C. APP. 2152, AS FOLLOWS:

(D) THE TERM "NATIONAL DEFENSE" MEANS THE OPERATIONS AND ACTIVITIES OF THE ARMED FORCES, THE ATOMIC ENERGY COMMISSION, OR ANY OTHER GOVERNMENT DEPARTMENT OR AGENCY DIRECTLY OR INDIRECTLY AND SUBSTANTIALLY CONCERNED WITH THE NATIONAL DEFENSE, OR OPERATIONS OR ACTIVITIES IN CONNECTION WITH THE MUTUAL DEFENSE ASSISTANCE ACT OF 1949, AS AMENDED.

BY THE DEFENSE PRODUCTION ACT AMENDMENTS OF 1953, 67 STAT. 130, SECTION 702 (D), 50 U.S.C. APP. 2152, WAS AMENDED TO READ AS FOLLOWS:

(D) THE TERM "NATIONAL DEFENSE" MEANS PROGRAMS FOR MILITARY AND ATOMIC ENERGY PRODUCTION OR CONSTRUCTION, MILITARY ASSISTANCE TO ANY FOREIGN NATION, STOCKPILING, AND DIRECTLY RELATED ACTIVITY.

THE LEGISLATIVE HISTORY SHOWS CLEARLY THE INTENT OF CONGRESS TO MAKE THE AMENDED DEFINITION OF ,NATIONAL DEFENSE" MORE RESTRICTIVE. SEE SENATE REPORT NO. 138, 83RD CONGRESS, ST SESSION, P. 6; HOUSE REPORT NO. 516, 83RD CONGRESS, ST SESSION, P. 3; HOUSE REPORT NO. 571, 83RD CONGRESS, ST SESSION, PP. 12-13; HOUSE REPORT NO. 694, 83RD CONGRESS, ST SESSION, PP. 5 -6; CONGRESSIONAL RECORD, MAY 13, 1954, VOL. 99, PART 4, PP. 4863-64; ID. MAY 19, 1953, PP. 5091-92; ID. JUNE 9, 1953, PART 5, PP. 6258-59.

CONGRESSIONAL DEBATE ON THE MATTER INDICATES THAT THE PRINCIPAL REASON FOR THE RESTRICTION WAS TO LIMIT PREFERENTIAL PRIORITIES AND ALLOCATIONS ON SCARCE MATERIALS TO FIRMS MORE DIRECTLY CONCERNED WITH NATIONAL DEFENSE. THE POSSIBILITY THAT A MORE RESTRICTIVE DEFINITION OF THE TERM ,NATIONAL DEFENSE" MIGHT HAVE UNINTENDED RESULTS WAS POINTED OUT BY SENATOR CAPEHART AS FOLLOWS ( CONG. RECORD, MAY 13, 1955, PP. 4863-64):

THE PROPOSAL TO ALTER THE DEFINITION OF THE TERM "NATIONAL DEFENSE" IN SECTION 702 OF THE DEFENSE PRODUCTION ACT IS DANGEROUS.

THE ENTIRE ACT IS EXPRESSLY INTENDED TO PROVIDE FOR THE NATIONAL DEFENSE, AND THE VARIOUS POWERS IT GIVES THE PRESIDENT MUST BE USED BY HIM IN THE INTERESTS OF THE NATIONAL DEFENSE. THUS, ANY CHANGE IN THE DEFINITION OF THE BASIC TERM "NATIONAL DEFENSE" MAY LIMIT OR DESTROY THE USEFULNESS OF VIRTUALLY THE ENTIRE STATUTE.

* * * IF THE CONGRESS DOES NOT WANT THE PRESIDENT TO USE THE PRIORITIES AND ALLOCATION AUTHORITY TO AVOID DEFENSE-CREATED HARDSHIP IN THE CIVILIAN ECONOMY, FOR EXAMPLE, THAT LIMITATION SHOULD APPEAR IN A SUBSTANTIVE PROVISION OF THE ACT. IT IS NOT POSSIBLE TO BE CERTAIN ABOUT THE EFFECTS WHICH A CHANGE IN A BASIC DEFINITION MAY HAVE, AND SOME OF THOSE EFFECTS MAY BE FAR FROM THE INTENT OF THE CONGRESS.

THE QUESTION NOW PRESENTED DEMONSTRATES THE ACCURACY OF SENATOR CAPEHART'S COMMENTS. NO INDICATION HAS BEEN FOUND IN THE LEGISLATIVE HISTORY THAT THE CONGRESS HAD ANY INTENTION TO EXCLUDE CIVILIAN DEFENSE ACTIVITIES FROM THE CONCEPT OF NATIONAL DEFENSE. ON THE OTHER HAND, NO SPECIFIC SUPPORT CAN BE FOUND FOR A CONTRARY INTENT.

AS STATED IN YOUR LETTER, THERE SEEMS TO BE A QUESTION THAT "NATIONAL DEFENSE" UNDER THE DEFENSE PRODUCTION ACT PRIOR TO THE AMENDMENT OF SECTION 702 (D) THEREOF INCLUDED "CIVIL DEFENSE" UNDER THE FEDERAL CIVIL DEFENSE ACT, 50 U.S.C. 2251 NOTE. AND IT WELL MAY BE ARGUED, AS YOU STATE, THAT THE CONGRESS COULD NOT HAVE INTENDED TO EXCLUDE CIVIL DEFENSE OF OUR OWN PEOPLE FROM A DEFINITION WHICH SPECIFICALLY INCLUDES MILITARY ASSISTANCE TO ANY FOREIGN NATION.

A FURTHER ARGUMENT ADVANCED IN YOUR LETTER IS THAT MANY FCDA CONTRACTS ARE FOR THE PROCUREMENT OF SURVIVAL SUPPLIES, PROTECTION EQUIPMENT, AND OTHER MATERIALS TO BE STORED IN WAREHOUSES SCATTERED ABOUT THE COUNTRY FOR DISTRIBUTION TO CIVIL DEFENSE AGENCIES IN THE EVENT OF ATTACK. SECTION 3 (B) OF THE FEDERAL CIVIL DEFENSE ACT, 50 U.S.C. APP. 2252 (B), WHICH DEFINES "CIVIL DEFENSE," INCLUDES WITHIN THAT TERM "THE PROCUREMENT AND STOCKPILING OF NECESSARY MATERIALS AND SUPPLIES.' ( ITALICS SUPPLIED.) SINCE THE AMENDED DEFINITION OF "NATIONAL DEFENSE" UNDER THE DEFENSE PRODUCTION ACT SPECIFICALLY INCLUDES STOCKPILING, IT IS SUGGESTED THAT THIS TERM MAY HAVE BEEN INTENDED TO INCLUDE STOCKPILING UNDER THE FEDERAL CIVIL DEFENSE ACT, AS WELL AS UNDER THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING ACT, 50 U.S.C. 98.

WHILE THE MATTER IS NOT ENTIRELY FREE FROM DOUBT, WE DO NOT BELIEVE IT WAS INTENDED BY THE CONGRESS IN ENACTING THE DEFINITION OF "NATIONAL DEFENSE" NOW CONTAINED IN SECTION 702 (D) OF THE DEFENSE PRODUCTION ACT TO PRECLUDE THE APPLICABILITY OF SECTION 301 OF THAT ACT TO CONTRACTS OF THE TYPE PRESENTLY UNDER CONSIDERATION. IN THE ABSENCE OF ANY INDICATION OF SUCH AN INTENT, IT IS OUR OPINION, FOR THE REASONS SET FORTH IN YOUR LETTER, THAT THE CONTRACTS IN QUESTION ARE ELIGIBLE FOR GUARANTEED LOANS.