B-148902, AUGUST 8, 1962, 42 COMP. GEN. 81

B-148902, AUGUST 8, 1962, 42 COMP. GEN. 81

APPROPRIATIONS - OBLIGATION - CONTRACTS - FUTURE NEEDS ALTHOUGH A 2-YEAR CONTRACT FOR REPORTING SERVICES ENTERED INTO BY AN AGENCY TO FILL ITS NEEDS BEYOND THE FISCAL YEAR APPROPRIATION AVAILABLE AT THE TIME OF THE EXECUTION OF THE CONTRACT IS NOT IN CONTRAVENTION OF SECTIONS 3679 AND 3732, REVISED STATUTES, 31 U.S.C. 665, AND 41 ID. 11, PROHIBITING CONTRACTS IN EXCESS OF APPROPRIATIONS UNLESS AUTHORIZED BY LAW, SINCE THIS TYPE OF CONTRACT DOES NOT OBLIGATE THE GOVERNMENT FOR THE FUTURE PAYMENT OF MONEY UNLESS MORE THAN A CERTAIN NUMBER OF COPIES ARE FURNISHED THE AGENCY--- A SITUATION WHICH HAS NEVER OCCURRED HERETOFORE--- IT DOES REPRESENT AN ENFORCEABLE OBLIGATION AGAINST THE UNITED STATES, AND AS SUCH IS CONTRARY TO THE INTENT OF THE PUBLIC ADVERTISING STATUTES AND SECTION 3732, REVISED STATUTES, WHICH PROHIBITS THE MAKING OF CONTRACTS "UNLESS THE SAME IS AUTHORIZED BY LAW OR IS UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT" AND, THEREFORE, THE INTEREST OF THE GOVERNMENT REQUIRE THAT SUCH CONTRACTS BE LIMITED TO 1 YEAR.'

TO THE CHAIRMAN, CIVIL AERONAUTICS BOARD, AUGUST 8, 1962:

THERE IS ENCLOSED FOR YOUR INFORMATION COPY OF OUR DECISION OF TODAY TO WARD AND PAUL, INC., DENYING ITS REQUEST THAT THE CIVIL AERONAUTICS BOARD BE REQUIRED TO ISSUE A NEW INVITATION FOR THE FISCAL YEAR 1963, LIMITED TO 1 YEAR, FOR VERBATIM REPORTING OF HEARINGS AND DEPOSITIONS HELD OR TAKEN IN THE UNITED STATES BEFORE THE CIVIL AERONAUTICS BOARD, THE FURNISHING OF TRANSCRIPTS THEREOF, AND THE PERFORMANCE OF RELATED SERVICES.

AS INDICATED IN THE DECISION THE CURRENT CONTRACT (NO. CAB 186 C) FOR THE INVOLVED SERVICES WAS AWARDED TO THE CSA REPORTING CORPORATION FOR THE PERIOD JULY 1, 1961, THROUGH JUNE 30, 1963. IN SUPPORT OF THEIR REQUEST WARD AND PAUL, INC., STATED, IN EFFECT, THAT SINCE THE TERM OF THE CONTRACT SPANS 2 FISCAL YEARS, IT CONFLICTS WITH OUR DECISIONS HOLDING THAT SUCH CONTRACTS MADE UNDER ANNUAL APPROPRIATION ACTS ARE PROHIBITED AS IN CONTRAVENTION OF SECTIONS 3679 AND 3732, REVISED STATUTES (31 U.S.C. 665 AND 41 U.S.C. 11). AS POINTED OUT, HOWEVER, THE PROHIBITION IN SECTION 3679, REVISED STATUTES, HAS ONLY CONTINGENT APPLICATION TO THIS TYPE OF CONTRACT SINCE THE CONTRACT DOES NOT INVOLVE THE GOVERNMENT IN OBLIGATIONS FOR THE FUTURE PAYMENT OF MONEY, UNLESS MORE THAN 10 COPIES ARE FURNISHED THE BOARD--- A SITUATION WHICH THE BOARD HAS REPORTED INFORMALLY HAS NEVER OCCURRED. AS FURTHER POINTED OUT, THE PROHIBITION IN SECTION 3732, REVISED STATUTES, ALSO HAS ONLY CONTINGENT APPLICABILITY TO THIS TYPE OF CONTRACT, SINCE IT DOES NOT BECOME A CONTRACT INSOFAR AS ANY OBLIGATION TO PAY MONEY IS CONCERNED UNLESS THE CONTRACTOR SHOULD FURNISH THE BOARD MORE THAN 10 COPIES--- A SITUATION WHICH AS HERETOFORE INDICATED HAS NEVER OCCURRED.

WHILE SECTIONS 3679 AND 3732, REVISED STATUTES, AND SECTION 3735, REVISED STATUTES, 41 U.S.C. 13, DO NOT HAVE ANY IMMEDIATE AND CERTAIN APPLICABILITY TO THIS CONTRACT, IT IS PLAIN THAT SUCH PROCEDURE IS NOT IN ACCORDANCE WITH THE INTENT OF SECTION 3732, REVISED STATUTES, AND THE PUBLIC ADVERTISING STATUTES. SECTION 3732, REVISED STATUTES, PROHIBITS THE MAKING OF CONTRACTS "UNLESS THE SAME IS AUTHORIZED BY LAW OR IS UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT.' IT HAS BEEN HELD CONSISTENTLY THAT A CONTRACT DEPENDING UPON AN ANNUAL APPROPRIATION FOR ITS AUTHORITY MAY NOT EXTEND BEYOND THE FISCAL YEAR FOR WHICH THE APPROPRIATION WAS MADE, NOR OBLIGATE APPROPRIATIONS WHICH HAD NOT BEEN MADE AT THE TIME WHEN THE CONTRACT WAS ENTERED INTO. 6 COMP. GEN. 295; 9 ID. 6; 32 ID. 565; 36 ID. 683; 37 ID. 60. UNDER THIS STATUTE CONTRACTS CANNOT BE ENTERED INTO WHICH WILL CONTINUE AS BINDING OBLIGATIONS BEYOND THE LIFETIME OF THE APPROPRIATION UNDER WHICH THEY ARE MADE. PREVIOUSLY INDICATED THIS STATUTORY PROHIBITION HAS ONLY CONTINGENT APPLICABILITY TO THIS TYPE OF CONTRACT FOR THE REASONS HERETOFORE STATED. THERE CAN BE NO QUESTION, HOWEVER, THAT THE CONTRACT, REPRESENTING AS IT DOES AN ENFORCEABLE OBLIGATION AGAINST THE UNITED STATES, IS CONTRARY TO THE INTENT OF SECTION 3732, REVISED STATUTES, IN THAT THE SUBJECT MATTER OF THE CONTRACT CONCERNS THE BOARD'S NEEDS AND REQUIREMENTS SPANNING 2 FISCAL YEARS WHEREAS THE USUAL APPROPRIATIONS FOR THE BOARD'S NECESSARY EXPENSES ARE ON A FISCAL YEAR BASIS.

IT IS UNDERSTOOD THAT THE PURPOSE OF THE 2-YEAR CONTRACT WAS TO ELIMINATE THE COST OF READVERTISING. WE ARE FULLY APPRECIATIVE OF THE DESIRE TO ELIMINATE UNNECESSARY AND USELESS EXPENDITURES WHEREVER POSSIBLE BUT SUCH CONSIDERATION SHOULD NOT BE INVOKED WHERE IT OPERATES TO DEFEAT THE INTENT OF SECTION 3732, REVISED STATUTES, AND THE PUBLIC ADVERTISING STATUTES. EVEN THOUGH SECTIONS 3679 AND 3732, REVISED STATUTES, HAVE ONLY CONTINGENT APPLICABILITY TO CONTRACTS FOR SERVICES SUCH AS HERE INVOLVED, IT WOULD APPEAR THAT THE INTERESTS OF THE GOVERNMENT AS WELL AS THE INDUSTRY WOULD BEST BE SERVED BY LIMITING SUCH CONTRACTS TO 1 FISCAL YEAR. OTHERWISE, IF A CONTRACT PROPERLY COULD BE EXECUTED FOR A 2-YEAR PERIOD UNDER THE JUSTIFICATION INDICATED, FOR THE SAME REASON, CONTRACTS COULD BE EXECUTED FOR UNLIMITED TERMS, A SITUATION WHICH EXPERIENCE HAS SHOWN WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT OR THE INDUSTRY.

SINCE THE AWARD IN THIS INSTANCE WAS MADE UNDER THE IMPRESSION THAT IT WAS NOT LEGALLY OR OTHERWISE OBJECTIONABLE OUR OFFICE WILL INTERPOSE NO OBJECTION TO COMPLETION OF THE CONTRACT TERM. IT IS REQUESTED, HOWEVER, THAT THE MATTER BE CALLED TO THE ATTENTION OF THE CONTRACTING OFFICER IN ORDER TO AVOID RECURRENCE OF THIS PROCEDURE.