B-101860, DEC. 5, 1963

B-101860: Dec 5, 1963

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TO THE SECRETARY OF DEFENSE: THIS IS IN REPLY TO LETTER OF SEPTEMBER 24. THERE WAS NO CONTINUING RESPONSIBILITY IN THE UNITED STATES SINCE ITS OBLIGATION WAS DISCHARGED IN MAKING THE MONTHLY PAYMENT. THERE WAS PROPOSED AT THAT TIME TO COME INTO AGREEMENT WITH THE JAPANESE GOVERNMENT THAT THE UNITED STATES WOULD ASSUME RESPONSIBILITY FOR PAYMENT OF THE RETIREMENT ALLOWANCE WHEN DUE. IT WAS PROPOSED THAT A SPECIAL ACCOUNT BE ESTABLISHED INTO WHICH RETIREMENT ALLOWANCE FUNDS WOULD BE DEPOSITED PROMPTLY AS THE LIABILITY ACCRUED AND FROM WHICH PAYMENTS WOULD BE MADE AS THEY BECAME DUE. THIS CONCLUSION WAS BASED ON SECTION 1210 OF THE GENERAL APPROPRIATION ACT. AS FOLLOWS: "UNLESS A LONGER PERIOD OF AVAILABILITY FOR EXPENDITURE IS SPECIFICALLY PROVIDED IN AN APPROPRIATION OR OTHER LAW.

B-101860, DEC. 5, 1963

TO THE SECRETARY OF DEFENSE:

THIS IS IN REPLY TO LETTER OF SEPTEMBER 24, 1963, FROM CHARLES J. HITCH, ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), ASKING THAT WE RECONSIDER OUR OPINION OF OCTOBER 17, 1955, B-101860, IN WHICH WE HELD THAT THERE EXISTED NO AUTHORITY FOR THE TRANSFER OF APPROPRIATED FUNDS TO A ,SPECIAL ACCOUNT" FROM WHICH CERTAIN OBLIGATIONS INCURRED UNDER A CONTRACT (JAPANESE MASTER LABOR CONTRACT) WITH THE JAPANESE PROCUREMENT AGENCY, AN AGENCY OF THE JAPANESE GOVERNMENT, COULD BE PAID.

THE JAPANESE PROCUREMENT AGENCY FURNISHES SUCH PERSONAL SERVICES TO THE UNITED STATES ARMED FORCES IN JAPAN AS MIGHT BE SPECIFIED IN WORK ORDERS OR REQUISITIONS MADE BY DESIGNATED UNITED STATES OFFICIALS. UNDER THE TERMS OF THE CONTRACT CONSIDERED IN OUR EARLIER DECISION, THE UNITED STATES MADE A MONTHLY PAYMENT TO THE JAPANESE PROCUREMENT AGENCY CONSISTING OF THE BASIC WAGES OF THE EMPLOYEES, AND IN ADDITION, A FLAT SUM FOR EACH EMPLOYEE TO COVER THE LIABILITY ASSUMED BY THE JAPANESE PROCUREMENT AGENCY FOR SPECIFIC BENEFITS, SUCH AS UNEMPLOYMENT, SICKNESS, MATERNITY, DEATH, ACCIDENT, AND RETIREMENT (SEPARATION), REQUIRED BY JAPANESE LAW. THERE WAS NO CONTINUING RESPONSIBILITY IN THE UNITED STATES SINCE ITS OBLIGATION WAS DISCHARGED IN MAKING THE MONTHLY PAYMENT. ORDER TO AVOID THE REQUIREMENT FOR THE UNITED STATES TO PAY IN ADVANCE THE AMOUNT NEEDED FOR EVENTUAL RETIREMENT LIABILITY, THERE WAS PROPOSED AT THAT TIME TO COME INTO AGREEMENT WITH THE JAPANESE GOVERNMENT THAT THE UNITED STATES WOULD ASSUME RESPONSIBILITY FOR PAYMENT OF THE RETIREMENT ALLOWANCE WHEN DUE, EITHER AT THE TIME OF SEPARATION OF THE EMPLOYEE OR TERMINATION OF THE CONTRACT, WHICHEVER OCCURRED EARLIER. IN ORDER TO OVERCOME THESE FUNDS FROM LAPSING INTO THE TREASURY WITH THE LAPSING OF THE APPROPRIATION, IT WAS PROPOSED THAT A SPECIAL ACCOUNT BE ESTABLISHED INTO WHICH RETIREMENT ALLOWANCE FUNDS WOULD BE DEPOSITED PROMPTLY AS THE LIABILITY ACCRUED AND FROM WHICH PAYMENTS WOULD BE MADE AS THEY BECAME DUE.

AS INDICATED ABOVE, WE CONCLUDED THAT NO AUTHORITY EXISTED FOR THE ESTABLISHMENT OF THE REQUESTED SPECIAL ACCOUNT TO WHICH FUNDS COULD BE TRANSFERRED AND RETAINED THEREIN UPON THE LAPSING FOR EXPENDITURE PURPOSES OF THE RELATED APPROPRIATION. THIS CONCLUSION WAS BASED ON SECTION 1210 OF THE GENERAL APPROPRIATION ACT, 1951, APPROVED SEPTEMBER 6, 1950, 64 STAT. 765, WHICH PROVIDES THAT---

"NO FUNDS MADE AVAILABLE BY THIS OR ANY OTHER ACT SHALL BE WITHDRAWN FROM ONE APPROPRIATION ACCOUNT FOR CREDIT TO ANOTHER, OR TO A WORKING FUND, EXCEPT AS AUTHORIZED BY LAW * * *.'

AND SECTION 2 OF THE SURPLUS FUND--- CERTIFIED CLAIMS ACT OF 1949, APPROVED JULY 6, 1949, 63 STAT. 407, WHICH PROVIDES, IN PART, AS FOLLOWS:

"UNLESS A LONGER PERIOD OF AVAILABILITY FOR EXPENDITURE IS SPECIFICALLY PROVIDED IN AN APPROPRIATION OR OTHER LAW, ON JULY 1 IN EACH YEAR THE UNEXPENDED BALANCES OF ALL APPROPRIATIONS WHICH SHALL HAVE REMAINED UPON THE BOOKS OF THE GOVERNMENT FOR TWO FISCAL YEARS FOLLOWING THE FISCAL YEAR OR YEARS FOR WHICH APPROPRIATED SHALL LAPSE AND THE SECRETARY OF THE TREASURY SHALL CAUSE SUCH BALANCES TO BE TRANSFERRED TO A CONSOLIDATED APPROPRIATION ACCOUNT, TO BE KNOWN AS ,PAYMENT OF CERTIFIED CLAIMS," AND SUCH FUNDS SHALL REMAIN AVAILABLE UNTIL EXPENDED FOR THE PAYMENT OF CLAIMS, WITHIN THE LIMITS OF AND CHARGEABLE TO THE RESPECTIVE BALANCES OF ANY LAPSED APPROPRIATIONS, WHICH MAY BE CERTIFIED BY THE COMPTROLLER GENERAL OF THE UNITED STATES TO BE LAWFULLY DUE: * * *.'

HOWEVER, AS STATED IN OUR EARLIER DECISION, WE WERE WORKING AT THAT TIME WITH THE BUREAU OF THE BUDGET AND THE TREASURY DEPARTMENT IN DRAFTING LEGISLATION WHICH WOULD PERMIT EACH DEPARTMENT AND AGENCY TO RETAIN CONTROL OF ANY BALANCE REMAINING IN A LAPSED APPROPRIATION WHICH IS NEEDED FOR THE LIQUIDATION OF VALID OBLIGATIONS. THIS JOINT EFFORT SUBSEQUENTLY RESULTED IN THE ENACTMENT OF PUBLIC LAW 798, APPROVED JULY 25, 1956, 70 STAT. 647. THE LEGISLATION REPEALED SECTION 2 OF THE SURPLUS FUND--- CERTIFIED CLAIMS ACT OF 1949 AND PROVIDED FOR THE CONSOLIDATION OF THE OBLIGATED BUT UNLIQUIDATED BALANCES OF LAPSED FISCAL YEAR APPROPRIATIONS INTO SO-CALLED "M" ACCOUNTS. THE FUNDS THUS CONSOLIDATED IN THE "M" ACCOUNTS ARE UNDER THE CONTROL OF THE DEPARTMENTS INVOLVED AND ARE AVAILABLE TO THEM FOR THE PAYMENT OF OBLIGATIONS VALIDLY INCURRED.

THE ASSISTANT SECRETARY STATES THAT THE LEGISLATIVE HISTORY OF SECTION 1210 OF THE GENERAL APPROPRIATION ACT, 1951, INDICATES THAT THAT SECTION WAS INTENDED PRIMARILY TO CURTAIL THE AVAILABILITY OF ADVANCES TO SPECIAL WORKING FUNDS. CONSEQUENTLY, AND SINCE OBLIGATIONS ONCE INCURRED NOW MAY BE LIQUIDATED BY THE AGENCY INVOLVED EVEN THOUGH THE APPROPRIATION INITIALLY CHARGEABLE HAS LAPSED, HE BELIEVES THAT WE WOULD NOT BE REQUIRED TO OBJECT TO THE ESTABLISHMENT OF A TRUST FUND ACCOUNT FOR RECEIPT AND RETENTION OF RETIREMENT ACCRUALS UNDER THE MASTER JAPANESE LABOR CONTRACT FOR PAYMENT AT TIME OF RETIREMENT AS MAY BE PROVIDED PURSUANT TO THE TERMS OF THE AGREEMENT.

WE DO NOT DISAGREE WITH YOUR VIEW THAT THE TRANSFER OF FUNDS COVERING UNLIQUIDATED CONTRACT RETIREMENT OBLIGATIONS FROM THE APPLICABLE APPROPRIATION ACCOUNTS TO A TRUST FUND ACCOUNT WOULD RESULT IN LESSENING THE ADMINISTRATIVE WORKLOAD IN ACCOUNTING, REPORTING, AND AUDITING OF SUCH OBLIGATIONS. HOWEVER, TRUST FUNDS ORDINARILY CONSIST OF RECEIPTS OR COLLECTIONS AS CONTRASTED WITH FUNDS APPROPRIATED FROM THE GENERAL FUND OF THE TREASURY, AND THE GOVERNMENT'S RELATIONSHIP TO THE BENEFICIARY OF THE TRUST GENERALLY IS COMPARABLE TO THAT OF A TRUSTEE, WHEREAS IN THE INSTANT CASE THE RELATIONSHIP BETWEEN THE GOVERNMENT AND THE ULTIMATE PAYEE IS MERELY A DEBTOR CREDITOR RELATIONSHIP. FURTHERMORE, AND EVEN ASSUMING THAT THE PRIMARY PURPOSE OF SECTION 1210 MAY BE AS STATED BY THE ASSISTANT SECRETARY, THE STATUTE SPECIFICALLY PROVIDES THAT "FUNDS SHALL NOT BE WITHDRAWN FROM ONE APPROPRIATION ACCOUNT FOR CREDIT TO ANOTHER, OR TO A WORKING FUND," AND THUS IS ALL INCLUSIVE AND CLEARLY NOT LIMITED ONLY TO CREDITS TO WORKING FUNDS.

CONSEQUENTLY, AND SINCE THE CONGRESS IN REPEALING SECTION 2 OF THE SURPLUS FUND--- CERTIFIED CLAIMS ACT OF 1949 AND PROVIDING FOR THE ESTABLISHMENT OF "M" ACCOUNTS HAS, IN OUR VIEW, PROVIDED AN EXCLUSIVE METHOD FOR THE PAYMENT OF UNLIQUIDATED OBLIGATIONS CHARGEABLE TO LAPSED FISCAL YEAR APPROPRIATIONS, IT IS OUR OPINION THAT THE USE OF A TRUST FUND ACCOUNT FOR THE PURPOSE DISCUSSED HEREIN IS NOT AUTHORIZED BY LAW.

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