A-91513, AUGUST 12, 1939, 19 COMP. GEN. 191

A-91513, AUGUST 12, 1939, 19 COMP. GEN. 191

COMPENSATION - DOUBLE - RETIRED PAY AND CIVILIAN EMPLOYEE COMPENSATION - UNITED STATES NAVAL ACADEMY LAUNDRY PERSONNEL AS THE ACT OF AUGUST 5, 1939, PUBLIC, NO. 284, 53 STAT. 1210, DEFINITELY DEFINES THE UNITED STATES NAVAL ACADEMY LAUNDRY COLLECTIONS AS "PUBLIC MONEYS," AND ALL EMPLOYEES OF THE LAUNDRY AS " GOVERNMENT EMPLOYEES"--- A QUESTION CONCERNING WHICH THERE HAD BEEN DISAGREEMENT BETWEEN THE GENERAL ACCOUNTING OFFICE AND THE NAVY DEPARTMENT--- REFUND OF ANY PART OF THE RETIRED PAY OR SALARY PAID TO THE MANAGER OF THE LAUNDRY--- A RETIRED NAVAL OFFICER--- NEED NOT BE REQUIRED FOR THE PERIOD PRIOR TO MARCH 31, 1938, THE DATE OF RECEIPT OF DECISION OF THIS OFFICE OF MARCH 29, 1938, 17 COMP. GEN. 786, HOLDING SUCH EMPLOYEES TO BE " GOVERNMENT EMPLOYEES" AND SUCH FUNDS TO BE ,PUBLIC MONEYS," BUT THE DUAL PAYMENT OF RETIRED PAY AND CIVILIAN COMPENSATION FOR THE PERIOD BEGINNING APRIL 1, 1938, SHOULD BE ADJUSTED WITHIN THE DUAL COMPENSATION RECEIPT LIMITATION OF $3,000 PER ANNUM PRESCRIBED BY SECTION 212 OF THE ECONOMY ACT.

COMPTROLLER GENERAL BROWN TO THE SECRETARY OF THE NAVY, AUGUST 12, 1939:

THERE HAS BEEN CONSIDERED YOUR LETTER OF MAY 5, 1939, AS FOLLOWS:

REFERENCE IS MADE TO THE ACTING COMPTROLLER GENERAL'S LETTER OF MARCH 29, 1938, A-91513, WITH WHICH WAS ENCLOSED A COPY OF THE ACTING COMPTROLLER GENERAL'S DECISION OF THE SAME DATE AND NUMBER TO THE PRESIDENT, U.S. CIVIL SERVICE COMMISSION, CONCLUDING THAT THE MIDSHIPMEN'S LAUNDRY FUND, UNITED STATES NAVAL ACADEMY, IS EQUIVALENT TO AN APPROPRIATED FUND AND THAT THE EMPLOYEES OF THE LAUNDRY PAID THEREFROM ARE EMPLOYEES OF THE GOVERNMENT.

THE ACTING COMPTROLLER GENERAL'S LETTER OF MARCH 29, 1938, CALLS ATTENTION TO THE DUAL PAYMENT BEING MADE TO LIEUTENANT (J.G.) WILLIAM G. SULLIVAN, U.S. NAVY, RETIRED, OF RETIRED PAY AND COMPENSATION AS MANAGER OF THE NAVAL ACADEMY LAUNDRY AND, IN CONNECTION THEREWITH, POINTS OUT THAT THE COMBINED RATE OF SUCH PAYMENT GREATLY EXCEEDS $3,000 PER ANNUM, THE LIMITATION PRESCRIBED BY SECTION 212 OF THE ECONOMY ACT APPROVED JUNE 30, 1932 (47 STAT. 406; 5 U.S. CODE, SEC. 59A).

THE OFFICIAL RECORDS IN THE CASE OF LIEUTENANT (J.G.) SULLIVAN DISCLOSE THAT HE WAS RETIRED FROM ACTIVE SERVICE ON DECEMBER 27, 1921, UNDER THE PROVISIONS OF SECTION 1453 REVISED STATUTES (34 U.S. CODE, SEC. 417), AND NOT BECAUSE OF DISABILITY "INCURRED IN COMBAT WITH AN ENEMY OF THE UNITED STATES," WITHIN THE MEANING OF THE QUOTED WORDS AS CONTAINED IN THE PROVISO TO SECTION 212 (B) OF THE CITED ACT OF JUNE 30, 1932, MAKING AN EXCEPTION TO THE REQUIREMENTS OF SAID SECTION 212 AS TO OFFICERS SO RETIRED.

SINCE THE ACTING COMPTROLLER GENERAL'S DECISION OF MARCH 29, 1938, NO PAYMENTS ON ACCOUNT OF RETIRED PAY HAVE BEEN MADE TO LIEUTENANT (J.G.) SULLIVAN. HOWEVER, HIS GOVERNMENT INSURANCE ALLOTMENT OF $8.56 A MONTH HAS BEEN CONTINUED IN EFFECT. UP TO AND INCLUDING MARCH 31, 1938, LIEUTENANT (J.G.) SULLIVAN HAS BEEN PAID RETIRED PAY AT THE RATE OF $2,160 PER ANNUM, LESS MONTHLY CHECK AGE OF $8.56 FOR GOVERNMENT INSURANCE ALLOTMENT AND 20 CENTS PER MONTH FOR HOSPITAL FUND. THIS PAYMENT WAS IN ADDITION TO THE SALARY HE RECEIVED AS MANAGER OF THE NAVAL ACADEMY LAUNDRY. ON THE BASIS OF SALARY PAID BY THE NAVAL ACADEMY LAUNDRY TO LIEUTENANT (J.G.) SULLIVAN, AS REPORTED BY THAT OFFICER FOR THE PERIOD JULY 1, 1932, TO MARCH 31, 1938, HE WOULD HAVE FORFEITED UNDER THE PROVISIONS OF SECTION 212 OF THE CITED ACT OF JUNE 30, 1932, THE TOTAL AMOUNT OF $8,868.31.

NO ADJUSTMENT OF CHECK AGE HAS BEEN MADE IN THE RETIRED PAY ACCOUNTS OF LIEUTENANT (J.G.) SULLIVAN ON ACCOUNT OF THE STATED PAYMENT OF $8,868.31 NOR HAS ANY NOTICE OF EXCEPTION OR DISALLOWANCE ON ACCOUNT OF SUCH PAYMENT BEEN RECEIVED BY THE DISBURSING OFFICER CARRYING HIS RETIRED PAY ACCOUNTS. PRIOR TO THE ACTING COMPTROLLER GENERAL'S DECISION OF MARCH 29, 1938, THE NAVY DEPARTMENT CONSIDERED THE CIRCUMSTANCES UNDER WHICH LIEUTENANT (J.G.) SULLIVAN WAS EMPLOYED AS MANAGER OF THE NAVAL ACADEMY LAUNDRY AS NOT CONSTITUTING THIS RETIRED OFFICER AS A GOVERNMENT EMPLOYEE WHILE EMPLOYED IN SUCH CAPACITY, FOR THE REASON THAT HIS SALARY WAS PAID ENTIRELY FROM THE MIDSHIPMEN'S LAUNDRY FUND AND NOT FROM APPROPRIATED MONEY, AS MORE FULLY APPEARS FROM CORRESPONDENCE HAD BETWEEN THE NAVY DEPARTMENT AND THE CIVIL SERVICE COMMISSION, COPIES OF WHICH WERE FURNISHED YOUR OFFICE BY THE CIVIL SERVICE COMMISSION AND TO WHICH YOUR ATTENTION IS INVITED.

AN EXTREME HARDSHIP OBVIOUSLY WOULD BE IMPOSED ON LIEUTENANT (J.G.) SULLIVAN IF HE IS NOW REQUIRED TO REFUND THE AMOUNT OF THE STATED OVERPAYMENT OF $8,868.31. FURTHERMORE, SINCE HIS EMPLOYMENT AS MANAGER OF THE NAVAL ACADEMY LAUNDRY DURING THE PERIOD INVOLVED WAS WITH THE FULL SANCTION AND APPROVAL OF THE NAVY DEPARTMENT AND WITH THE UNDERSTANDING THAT WHILE SO EMPLOYED HE WOULD BE ENTITLED TO RECEIVE BOTH HIS RETIRED PAY AND COMPENSATION AS MANAGER OF THE NAVAL ACADEMY LAUNDRY WITHOUT VIOLATING THE PROVISIONS OF SECTION 212 OF THE CITED ECONOMY ACT OF JUNE 30, 1932, OR ANY OTHER PROVISION OF LAW, IT WOULD APPEAR MANIFESTLY UNFAIR TO NOW CALL UPON THIS RETIRED OFFICER TO REFUND SAID AMOUNT OF $8,868.31.

COMMENCING IN 1932 THE CHIEF LAUNDRYMAN'S SALARY AT THE NAVAL ACADEMY WAS PAID FROM THE MIDSHIPMEN'S LAUNDRY FUND INSTEAD OF FROM APPROPRIATED MONEY AS THERETOFORE. WITH REFERENCE TO THIS CHANGE IN THE SOURCE FROM WHICH THE SALARY OF THE MANAGER OF THE NAVAL ACADEMY LAUNDRY WAS PAID, IT IS STATED IN THE ACTING COMPTROLLER GENERAL'S LETTER OF MARCH 29, 1938: "IN FACT, SINCE THE ADJUSTMENT IN THE SOURCE FROM WHICH HIS SALARY IS PAID FROM APPROPRIATED FUNDS TO DEDUCTIONS FROM THE MIDSHIPMEN'S PAY AND/OR ALLOWANCES WAS COINCIDENT WITH THE PASSAGE OF THE ECONOMY ACT, IT MIGHT APPEAR THAT SUCH ADJUSTMENT WAS MADE PURPOSELY TO EVADE THE LIMITATIONS OF THE ECONOMY ACT.'

IN CONNECTION WITH THE QUOTED STATEMENT, YOU ARE ADVISED THAT THE INITIAL CLASSIFICATION OF THE POSITION OF CHIEF LAUNDRYMAN AT THE NAVAL ACADEMY LAUNDRY WAS BROUGHT INTO THE CLASSIFIED SERVICE IN 1921 BY A CHANGE FROM THE MIDSHIPMEN'S MESS FUND TO APPROPRIATED FUNDS OF THE NAVY DEPARTMENT. THE NAVAL APPROPRIATION ACT FOR THE FISCAL YEAR 1921 AND SUBSEQUENT YEARS APPROPRIATED CERTAIN FUNDS FOR DEFRAYING THE ESTIMATED COST OF LABOR TO BE EMPLOYED AT THE NAVAL ACADEMY LAUNDRY. THESE FUNDS WERE INSUFFICIENT TO MEET COMPLETELY THE COST OF OPERATING THE LAUNDRY BECAUSE LABOR WAS ONLY ONE ITEM OF EXPENSE, AND ONLY THE COST OF LABOR WAS PROVIDED FOR IN THE APPROPRIATIONS.

FROM 1921 UNTIL JULY 1932 THE COST OF LABOR WAS PAID FROM FUNDS MADE AVAILABLE BY THE ANNUAL NAVAL APPROPRIATION ACTS AND FROM FUNDS RECEIVED FROM OFFICERS IN PAYMENT OF THEIR LAUNDRY BILLS. HOWEVER, THE NAVAL ACADEMY WAS FORCED TO DEPART FROM THIS PRACTICE BY THE DRASTIC REDUCTION IN FUNDS, FROM $58,500 TO $28,719, MADE AVAILABLE FOR THIS PURPOSE AND APPROPRIATED FOR THE FISCAL YEAR 1933, THEREBY MAKING IT IMPERATIVE THAT THE NUMBER OF PERSONS PAID ON THE GOVERNMENT ROLLS BE CORRESPONDINGLY REDUCED. ONE OF THE POSITIONS THUS AFFECTED WAS THAT OF CHIEF LAUNDRYMAN, WHICH POSITION HAS BEEN LEFT VACANT SINCE JUNE 30, 1932.

THE ACTION THUS TAKEN WITH RESPECT TO THE POSITION OF CHIEF LAUNDRYMAN AT THE NAVAL ACADEMY SHOWS CLEARLY IT WAS DUE TO THE REDUCTION IN APPROPRIATED MONEYS. ON JUNE 29, 1932, THE NAVY DEPARTMENT, ON RECOMMENDATION OF THE SUPERINTENDENT, U.S. NAVAL ACADEMY, NOTIFIED MR. SULLIVAN THAT HE WAS "FURLOUGHED WITHOUT PAY ON ACCOUNT OF LACK OF FUNDS AS CHIEF LAUNDRYMAN--- $2,000 PER ANNUM COMMISSARY DEPARTMENT, NAVAL ACADEMY, TO TAKE EFFECT JULY 1, 1932," AND ON APRIL 21, 1933, FOR THE SAME REASON MR. SULLIVAN WAS DISCHARGED FROM HIS POSITION IN THE CLASSIFIED CIVIL SERVICE, CHARGEABLE TO THE APPROPRIATION " PAY, NAVAL ACADEMY.' THE ADJUSTMENT IN MR. SULLIVAN'S POSITION AT THE LAUNDRY, UNDER WHICH HE WAS SUBSEQUENTLY PAID FROM THE NAVAL ACADEMY LAUNDRY FUND OBVIOUSLY WAS NOT FOR THE PURPOSE OF EVADING THE LIMITATIONS OF THE ECONOMY ACT OF JUNE 30, 1932, INCIDENT TO HIS STATUS AS A RETIRED COMMISSIONED OFFICER, BUT WAS DUE SOLELY TO REDUCTIONS IN THE APPROPRIATION " PAY, NAVAL ACADEMY.'

IN THE CONCLUDING PARAGRAPH OF HIS LETTER TO THE SECRETARY OF THE NAVY, THE ACTING COMPTROLLER GENERAL REFERS TO THE CASE OF ENSIGN RAYMOND D. LEWIS, U.S. NAVY, RETIRED, COVERED BY HIS DECISIONS A-88569 OF FEBRUARY 21 AND MARCH 22, 1938, RESPECTIVELY, COPIES OF WHICH FORMED ENCLOSURES TO THE ABOVE-MENTIONED LETTER.

IT WILL BE NOTED THAT THE NAVY DEPARTMENT PURSUANT TO SECTION 212 (A) OF THE ECONOMY ACT OF JUNE 30, 1932 (47 STAT. 406), WITHHELD THE RETIRED PAY OF SAID LEWIS FROM MARCH 16, 1934, TO JUNE 30, 1937, BECAUSE DURING SAID PERIOD HE WAS EMPLOYED AS A DISBURSING OFFICER OF THE FEDERAL RELIEF CORPORATION AND ITS SUCCESSOR, THE FEDERAL SURPLUS COMMODITIES CORPORATION AT A SALARY OF $3,600 PER ANNUM, WHICH WAS IN EXCESS OF $3,000 LIMITATION IMPOSED BY THE SECTION OF THE ECONOMY ACT MENTIONED.

IN DISALLOWING THE CLAIM FOR THE RETIRED PAY SO WITHHELD THE COMPTROLLER GENERAL IN HIS DECISIONS HELD THAT THE CORPORATIONS NAMED WERE FROM THEIR INCEPTION,"AN AGENCY OF THE UNITED STATES" AND THAT CLAIMANT'S POSITION AS DISBURSING OFFICER OF THE CORPORATION WAS A CIVILIAN OFFICE OR POSITION UNDER THE U.S. GOVERNMENT WITHIN THE PURVIEW OF THE CITED SECTION OF THE ECONOMY ACT.

IN A BULLETIN ISSUED BY THE UNITED STATES INFORMATION SERVICE ENTITLED " DIGEST OF THE PURPOSES OF CURRENT FEDERAL AGENCIES," THE FEDERAL SURPLUS COMMODITIES CORPORATION IS SHOWN TO HAVE BEEN CREATED FOR THE PURPOSE OF ASSISTING THE AGRICULTURAL ADJUSTMENT ADMINISTRATION IN ITS PROGRAM FOR THE DISPOSITION OF SURPLUS FARM COMMODITIES. IT ALSO SHOWS THE AUTHORITY FOR ITS CREATION TO HAVE BEEN DERIVED FROM THE AGRICULTURAL ADJUSTMENT APPROPRIATION ACT OF MAY 12, 1933 (48 STAT. 55), AND AMENDMENTS THERETO. THE ORIGINAL ACT PROVIDED A DIRECT APPROPRIATION OF $100,000,000 IN ADDITION TO PROCEEDS DERIVED FROM CERTAIN TAXES WHICH WERE EXPRESSLY APPROPRIATED FOR VARIOUS PURPOSES INCLUDING ADMINISTRATIVE EXPENSES. THE ADMINISTRATIVE EXPENSES WERE STATED IN THE ACT TO INCLUDE PERSONAL SERVICES.

AS INDICATIVE OF THE CONTROL EXERCISED BY THE GOVERNMENT OVER THE USE OF FUNDS OF SUCH CORPORATION, IT MIGHT BE NOTED BY EXECUTIVE ORDER NO. 7150, ISSUED AUGUST 19, 1935, THE PRESIDENT DIRECTED THAT THE FEDERAL SURPLUS RELIEF ADMINISTRATION SUBMIT TO THE BUREAU OF THE BUDGET PURSUANT TO THE BUDGET AND ACCOUNTING ACT OF 1921 ESTIMATES OF APPROPRIATIONS FOR ADMINISTRATIVE EXPENSES.

BY SECTION 7 (B) OF THE FIRST DEFICIENCY APPROPRIATION ACT, FISCAL YEAR 1936, APPROVED JUNE 22, 1936 (49 STAT. 1647), THE FEDERAL SURPLUS COMMODITIES CORPORATION WAS EXPRESSLY PROHIBITED FROM INCURRING AFTER JUNE 30, 1937, ANY OBLIGATIONS FOR ADMINISTRATIVE EXPENSES "EXCEPT PURSUANT TO AN ANNUAL APPROPRIATION SPECIFICALLY THEREFOR.' IN CONFORMITY WITH SUCH REQUIREMENT, THE BUDGET FOR 1938, PAGE 94 CONTAINS ESTIMATES OF APPROPRIATIONS FOR THIS AGENCY IN THE SAME MANNER AS FOR OTHER ACTIVITIES. A NOTE ON THIS PAGE OF THE BUDGET IS TO THE EFFECT THAT THE CORPORATION IS " FINANCED BY FUNDS CONTRIBUTED BY STATE RELIEF ADMINISTRATIONS.' IN REFERRING TO CERTAIN OF THE FUNDS THUS OBTAINED, THE COMPTROLLER GENERAL IN DECISION OF JUNE 14, 1937 (16 COMP. GEN. 1072, 1075), SAID:

"WHILE THE FUNDS IN THE SPECIAL DEPOSIT ACCOUNT, FEDERAL SURPLUS COMMODITIES CORPORATION, WERE NOT APPROPRIATED DIRECTLY TO YOUR CORPORATION, THEY NEVERTHELESS WERE INITIALLY FEDERALLY APPROPRIATED FUNDS AND WERE GRANTED TO THE VARIOUS STATES FOR SPECIFIC PURPOSES OF RELIEF. IN TURNING SUCH FUNDS OVER TO YOUR CORPORATION THE STATES DID NOT AND COULD NOT ENLARGE THE PURPOSES FOR WHICH THEY WERE ORIGINALLY GRANTED.'

IT IS CONSIDERED THAT THE FACTS ON WHICH THE ACTION IN THE LEWIS CASE WAS BASED ARE NOT ANALOGOUS TO THOSE EXISTING IN THE SULLIVAN CASE. THE FUNDS FROM WHICH MR. SULLIVAN IS PAID, AS ABOVE NOTED, ARE NOT APPROPRIATED BY THE CONGRESS FOR SUCH PURPOSE, BUT ARE DERIVED FROM MONEYS RECEIVED FROM OFFICERS AND CIVILIAN INSTRUCTORS AND FROM CHECK AGES AGAINST THE INDIVIDUAL ACCOUNTS OF MIDSHIPMEN FROM THEIR PAY, WHICH CHECK AGES ARE MERELY A MEANS OF ACCOUNTING CONVENIENCE AND ARE NOT MADE IN PURSUANCE OF ANY STATUTE OR DIRECTION OF THE CONGRESS. FURTHERMORE, ESTIMATES COVERING THE PAY OF MR. SULLIVAN AS MANAGER OF THE NAVAL ACADEMY LAUNDRY ARE NOT REQUIRED TO BE SUBMITTED THROUGH THE BUREAU OF THE BUDGET AS ARE THOSE FOR PERSONAL SERVICES OF THE CORPORATION INVOLVED IN THE LEWIS CASE. THE NAVY DEPARTMENT ACCORDINGLY CONSIDERED THAT THE DECISION IN THE LEWIS CASE WAS NOT PROPERLY APPLICABLE TO THE SULLIVAN CASE.

AFTER CAREFUL CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES DISCLOSED IN THE CASE OF LIEUTENANT (J.G.) SULLIVAN, AS ABOVE SET FORTH, THE NAVY DEPARTMENT STRONGLY RECOMMENDS THAT HE BE NOT REQUIRED TO REFUND ANY AMOUNT RECEIVED BY HIM PRIOR TO APRIL 1, 1938, AS RETIRED PAY OR AS SALARY FOR SERVICES ACTUALLY PERFORMED AS MANAGER OF THE NAVAL ACADEMY LAUNDRY.

IN CONNECTION WITH THE FOREGOING, YOU ARE ADVISED THAT UNDER DATE OF MAY 2, 1939, THE NAVY DEPARTMENT TRANSMITTED A DRAFT OF A PROPOSED BILL TO CONGRESS ENTITLED " TO ESTABLISH THE STATUS OF FUNDS AND EMPLOYEES OF THE UNITED STATES NAVAL ACADEMY LAUNDRY.' YOU WILL OBSERVE THAT UNDER THE TERMS OF THIS BILL, COPY ENCLOSED, THE EMPLOYEES OF THE LAUNDRY AT THE NAVAL ACADEMY MAY RECEIVE FULL CIVIL-SERVICE STATUS AND AT THE SAME TIME BE PAID FOR THEIR SERVICES FROM FUNDS RECEIVED FROM THE OPERATION OF THE NAVAL ACADEMY LAUNDRY, WHICH FUNDS SHALL BE ACCOUNTED FOR AS PUBLIC MONEYS. IN OTHER WORDS, THIS PROPOSED LEGISLATION WILL CLEARLY DEFINE THE CHARACTER OF THE FUNDS IN QUESTION AS WELL AS THE STATUS OF THE EMPLOYEES CONCERNED.

IN DECISION OF MARCH 29, 1938, TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, 17 COMP. GEN. 786, IT WAS HELD AS FOLLOWS (QUOTING FROM THE SYLLABUS): POSITIONS AND EMPLOYEES IN THE LAUNDRY OF THE UNITED STATES NAVAL ACADEMY, PAID FROM THE ,LAUNDRY FUND" CREATED BY CHARGES OR DEDUCTIONS FROM THE PAY AND/OR ALLOWANCES OF MIDSHIPMEN USING THE LAUNDRY SERVICE, ARE GOVERNMENT POSITIONS AND EMPLOYEES, AND THE FACT THAT THE LAUNDRY DEDUCTIONS ARE DEPOSITED IN A PRIVATE BANK INSTEAD OF IN THE TREASURY IN SUPPLEMENT OF THE DIRECT APPROPRIATION FOR THE LAUNDRY, DOES NOT REMOVE THEM FROM THE CONTROL OF THE GOVERNMENT OR RENDER THEM NONACCOUNTABLE FUNDS.

ON THE SAME DAY THERE WAS ADDRESSED TO YOU A LETTER CONCLUDING AS FOLLOWS:

THERE IS ANOTHER MATTER WHICH I BELIEVE SHOULD BE BROUGHT TO YOUR ATTENTION--- THE DUAL PAYMENT BEING MADE TO LIEUTENANT WILLIAM G. SULLIVAN, RETIRED, U.S. NAVY, OF RETIRED PAY AND COMPENSATION AS MANAGER OF THE NAVAL ACADEMY LAUNDRY, THE COMBINED RATE GREATLY EXCEEDING $3,000 PER ANNUM, THE LIMITATION PRESCRIBED BY SECTION 212 OF THE ECONOMY ACT. IT APPEARS THAT LIEUTENANT SULLIVAN WAS RETIRED FOR DISABILITY, INCIDENT TO THE SERVICE, DECEMBER 27, 1921, UNDER THE PROVISIONS OF SECTION 1453, REVISED STATUTES, BUT IT IS NOT DISCLOSED FROM ANY INFORMATION IN THIS OFFICE WHETHER THE DISABILITY WAS "INCURRED IN COMBAT WITH AN ENEMY OF THE UNITED STATES" (QUOTING FROM THE PROVISO MAKING AN EXCEPTION TO SECTION 212 OF THE ECONOMY ACT). THE POSITION OF MANAGER OF THE NAVAL ACADEMY LAUNDRY--- UNQUESTIONABLY A GOVERNMENTAL FACILITY--- APPEARS TO BE A CIVILIAN POSITION "UNDER THE UNITED STATES GOVERNMENT" WITHIN THE MEANING OF SECTION 212 OF THE ECONOMY ACT, AND UNLESS LIEUTENANT SULLIVAN COMES WITHIN THE EXCEPTION, PROPER ADMINISTRATIVE ACTION SHOULD BE TAKEN TO LIMIT HIS COMBINED RATE OF RETIRED PAY AND CIVILIAN COMPENSATION TO $3,000 PER ANNUM. IN FACT, SINCE THE ADJUSTMENT IN THE SOURCE FROM WHICH HIS SALARY IS PAID FROM APPROPRIATED FUNDS TO DEDUCTIONS FROM THE MIDSHIPMEN'S PAY AND/OR ALLOWANCES WAS COINCIDENT WITH THE PASSAGE OF THE ECONOMY ACT, IT MIGHT APPEAR THAT SUCH ADJUSTMENT WAS MADE PURPOSELY TO EVADE THE LIMITATIONS OF THE ECONOMY ACT. YOUR EARLY ADMINISTRATIVE CONSIDERATION AND REPORT IN THE MATTER ARE REQUESTED, AND IT IS SUGGESTED THAT THERE BE CONSIDERED IN CONNECTION WITH THIS CASE THE ACTION OF THE NAVY DEPARTMENT IN WITHHOLDING RETIRED PAY FROM RAYMOND D. LEWIS, U.S. NAVY, RETIRED, FOR THE PERIOD MARCH 16, 1934, TO JUNE 30, 1937, WHILE HE HELD THE POSITION OF DISBURSING OFFICER OF THE FEDERAL SURPLUS RELIEF CORPORATION AND ITS SUCCESSOR, THE FEDERAL SURPLUS COMMODITIES CORPORATION. COPIES OF THE TWO DECISIONS OF THIS OFFICE IN THAT CASE DATED FEBRUARY 21 AND MARCH 22, 1938, A-88569, ARE INCLOSED.

AS A RESULT OF THAT LETTER, IT IS UNDERSTOOD THAT ALL PAYMENTS OF RETIRED PAY TO LIEUTENANT SULLIVAN WERE DISCONTINUED EFFECTIVE MARCH 31, 1938, EXCEPT THAT HE HAS SINCE BEEN CREDITED WITH $8.56 PER MONTH OF RETIRED PAY TOWARD INSURANCE PREMIUMS, AND THAT HE HAS SINCE BEEN PAID ONLY HIS SALARY AS MANAGER OF THE NAVAL ACADEMY LAUNDRY. IT APPEARS THAT HIS RETIRED PAY WAS AT THE RATE OF $2,160 AND THAT HIS SALARY AS MANAGER OF THE LAUNDRY WAS AT THE RATE OF $2,450, OR MORE, PER ANNUM.

THE LIMITATION ON CURRENT PAYMENTS OF RETIRED PAY AND COMPENSATION APPEARING IN SECTION 212 OF THE ECONOMY ACT OF JUNE 30, 1932, 47 STAT. 406, IS SPECIFICALLY MADE APPLICABLE TO A RETIRED OFFICER HOLDING "A CIVILIAN OFFICE OR POSITION, APPOINTIVE OR ELECTIVE, UNDER THE UNITED STATES GOVERNMENT.'

THE ACT OF AUGUST 5, 1939, PUBLIC, NO. 284, 53 STAT. 1210, PROVIDES:

THAT ALL FUNDS COLLECTED FROM THE OPERATION OF THE LAUNDRY AT THE UNITED STATES NAVAL ACADEMY FOR THE BENEFIT OF NAVAL ACADEMY ACTIVITIES AND PERSONNEL, INCLUDING MIDSHIPMEN, ARE APPROPRIATED FOR THE PURPOSE OF PROVIDING AND MAINTAINING THE NECESSARY LAUNDRY SERVICE AND SHALL HEREAFTER BE ACCOUNTED FOR AS PUBLIC MONEYS.

SEC. 2. ALL EMPLOYEES OF SUCH LAUNDRY, WHETHER HERETOFORE PAID FROM APPROPRIATED MONEYS OR FROM RECEIPTS OF THE LAUNDRY, SHALL HEREAFTER BE DEEMED TO BE GOVERNMENT EMPLOYEES ENTITLED TO ALL BENEFITS AND SUBJECT TO ALL RESTRICTIONS ARISING UNDER THE LAWS OF THE UNITED STATES APPLICABLE TO EMPLOYEES OF THEIR GRADE AND CLASS.

PRIOR TO THE DECISION OF MARCH 29, 1938, THE RECORD CLEARLY SHOWS THAT THE STATUS OF THE LAUNDRY FUNDS FROM WHICH THE SALARY OF THE MANAGER WAS PAID WAS REGARDED ADMINISTRATIVELY TO BE OTHER THAN FEDERAL FUNDS AND THAT NOT ONLY THE POSITION OF MANAGER, BUT ALL SUBORDINATE POSITIONS AT THE LAUNDRY THE SALARIES OF WHICH WERE PAID FROM SAID FUNDS, WERE REGARDED AS OTHER THAN CIVILIAN POSITIONS UNDER THE UNITED STATES GOVERNMENT AND AS NOT SUBJECT TO THE CIVIL SERVICE AND RETIREMENT LAWS. THIS ADMINISTRATIVE VIEW WAS SUPPORTED BY AN OPINION OF THE JUDGE ADVOCATE GENERAL OF THE NAVY. IN VIEW THEREOF, AND SINCE THE ACT OF AUGUST 5, 1939, SUPRA, DEFINITELY DEFINES THE LAUNDRY FUND AS "PUBLIC MONEYS" AND ALL EMPLOYEES OF THE LAUNDRY AS " GOVERNMENT EMPLOYEES," THEREBY SETTING AT REST FOR THE FUTURE THE QUESTION AS TO THE STATUS OF THESE EMPLOYEES CONCERNING WHICH THERE HAD BEEN DISAGREEMENT BETWEEN THIS OFFICE AND THE NAVY DEPARTMENT, I AM NOT DISPOSED TO QUESTION FURTHER THE ADMINISTRATIVE ACTION IN THIS CASE PRIOR TO THE DATE OF RECEIPT OF THE DECISION OF THE ACTING COMPTROLLER GENERAL, TO WIT, MARCH 31, 1938. ACCORDINGLY, LIEUTENANT SULLIVAN WILL NOT BE REQUIRED TO REFUND ANY PART OF THE RETIRED PAY OR SALARY PAID TO HIM FOR THE PERIOD JULY 1, 1932, TO MARCH 31, 1938, BUT THE DUAL PAYMENT OF RETIRED PAY AND CIVILIAN COMPENSATION TO HIM FOR THE PERIOD BEGINNING APRIL 1, 1938, SHOULD BE ADJUSTED WITHIN THE LIMITATION OF $3,000 PER ANNUM PRESCRIBED BY SECTION 212 OF THE ECONOMY ACT. IN MAKING SUCH ADJUSTMENT THERE SHOULD BE CHARGED TO HIM, OF COURSE, THE AMOUNT OF ANY RETIRED PAY FOR THE PERIOD SINCE MARCH 31, 1938, THAT MAY HAVE BEEN CREDITED AGAINST INSURANCE PREMIUMS DUE FROM HIM.