B-166278, MAR. 24, 1969

B-166278, MAR. 24, 1969

TO MR. EDWARD G. BOEHM:

YOUR LETTER OF FEBRUARY 24, 1969, REQUESTS A DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER IN FAVOR OF THE INSTITUTE OF INTERNATIONAL EDUCATION, INC. (IIE), IN THE AMOUNT OF $102,003.74.

THE PERTINENT FACTS AND CIRCUMSTANCES CONCERNING THE MATTER, AS DISCLOSED BY YOUR LETTER, ARE SET FORTH BELOW.

IIE IS A NONPROFIT CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK, WITH OFFICES LOCATED IN NEW YORK CITY, CHICAGO, DENVER, HOUSTON, AND WASHINGTON; OVERSEAS OFFICES ARE LOCATED IN BANGKOK, LIMA, NAIROBI, AND PARIS. THE CORPORATION'S ACTIVITIES INCLUDE THE ESTABLISHMENT OF INTERNATIONAL FELLOWSHIPS, THE FACILITATION OF THE INTERCHANGE OF STUDENTS AND PROFESSORS BETWEEN INSTITUTIONS OF LEARNING IN VARIOUS COUNTRIES, THE MANAGEMENT AND PROMOTION OF CONFERENCES AND CONVENTIONS ON PROBLEMS OF INTERNATIONAL EDUCATION, AND THE EXTENSION OF FINANCIAL AID AND OTHER ASSISTANCE TO ACADEMIC INSTITUTIONS, ORGANIZATIONS AND INDIVIDUALS AS MAY BE ENGAGED IN FURTHERING THE INSTITUTE'S PURPOSES.

THE DEPARTMENT OF STATE AND IIE ENTERED INTO GRANT AGREEMENT NO. 40159 ON JULY 1, 1963, AS AUTHORIZED BY SECTION 104/E) (1) OF THE MUTUAL EDUCATIONAL AND CULTURAL EXCHANGE ACT OF 1961, AS AMENDED, 22 U.S.C. 2454, FOR CARRYING OUT ACTIVITIES UNDER SECTION 102 OF SAID ACT, 22 U.S.C. 2452. THIS AGREEMENT EXPIRED ACCORDING TO ITS TERMS ON JUNE 30, 1966, AND, AS AMENDED, MADE A GRANT TO IIE IN THE TOTAL AMOUNT OF $5,421,769. SUBSEQUENT REVIEW OF IIE'S PERFORMANCE HAS REVEALED THAT THE GRANTEE OVEREXPENDED THE AMOUNT PROVIDED IN THE GRANT BY $102,003.74, THE AMOUNT OF THE PRESENT CLAIM.

ARTICLE IV OF THE GRANT AGREEMENT PROVIDED FOR REPORTS BY THE GRANTEE OF ESTIMATED UNOBLIGATED BALANCES OF PROBRAM FUNDS. YOU STATE THAT THE OVEREXPENDITURE APPARENTLY WAS ATTRIBUTABLE TO AN ERRONEOUS ESTIMATE BY IIE OF ANTICIPATED PROGRAM SAVINGS WHICH DID NOT MATERIALIZE DUE TO INCREASES IN TUITION COSTS OVER WHICH THE GRANTEE HAD NO CONTROL. THE ERRONEOUS ESTIMATE LED IIE TO NOTIFY THE DEPARTMENT ON MAY 25, 1965, THAT OF AMOUNTS ADVANCED UNDER THE GRANT, A BALANCE OF $303,100 REMAINED AVAILABLE FOR EXPENDITURE. THE DEPARTMENT THEREUPON AUTHORIZED USE OF THE BALANCE FOR CERTAIN SPECIFIED PURPOSES WITHIN THE SCOPE OF THE GRANT AGREEMENT.

A THOROUGH EXAMINATION OF THE GRANTEE'S RECORDS HAS LED THE DEPARTMENT OF STATE TO CONCLUDE THAT THE COSTS CHARGED BY IIE TO THE GRANT HAVE BEEN PROPERLY SO ALLOCATED AND THAT THE DISCREPANCY BETWEEN THE GRANTEE'S ESTIMATE OF THE UNOBLIGATED BALANCE AND ACTUAL EXPENDITURES WAS NOT ATTRIBUTABLE TO FAULT ON THE PART OF IIE. YOU STATE THAT THERE IS NO QUESTION THAT IIE PERFORMED THE SERVICES REQUESTED BY THE DEPARTMENT IN ITS LETTER OF JUNE 10, 1965, AND THAT THE FUNDS WERE DISTRIBUTED IN ACCORDANCE WITH THE TERMS OF THE GRANT; AND THAT ACCORDINGLY, YOU BELIEVE THAT THE ENCLOSED VOUCHER SHOULD BE PAID, IF PAYMENT IS LEGALLY POSSIBLE.

THE PRINCIPAL FUNCTIONS SERVED BY IIE WERE TO CHANNEL FUNDS TO PERSONS INTENDED TO BE BENEFITED BY THE MUTUAL EDUCATIONAL AND CULTURAL EXCHANGE ACT AND TO ADMINISTER INDIVIDUAL SUBGRANTS TO SUCH ULTIMATE BENEFICIARIES. THE GRANT AMOUNT WAS DETERMINED AFTER SUBMISSION BY IIE OF A BUDGET WHICH ESTIMATED THE COST OF CARRYING OUT THE PROGRAM NEEDS OF THE DEPARTMENT. ADDITIONAL FUNDS WERE PROVIDED FROM TIME TO TIME DURING THE PERIOD OF THE GRANT TO MEET NEW PROGRAM NEEDS AND ALLOCATIONS BASED ON ESTIMATED COSTS WERE ADJUSTED IN ACCORDANCE WITH ACTUAL EXPERIENCE.

YOU STATE THAT THE CONTRACTING OFFICE ADVISES THAT IF THE GRANTEE HAD NOT INDICATED THAT PROGRAM SAVINGS WERE AVAILABLE TO FUND THE ACTIVITIES DESCRIBED IN THE DEPARTMENT'S LETTER OF JUNE 10, 1965, THE NECESSARY ADDITIONAL FUNDS WOULD HAVE BEEN PROVIDED BY GRANT AMENDMENT.

YOU FEEL THAT IN LIGHT OF THE PURPOSE OF THE GRANT AND THE MANNER IN WHICH IT WAS ADMINISTERED, IT WOULD SEEM UNREASONABLE TO ASCRIBE TO THE PARTIES AN INTENT TO COMPEL THE GRANTEE TO BEAR THE LOSS WITH RESPECT TO SPECIFIC ACTIVITIES UNDERTAKEN AT THE REQUEST OF THE GRANTOR. IT IS YOUR VIEW THAT SUCH A BURDEN WOULD NOT ONLY BE UNFAIR IN CASES SUCH AS THE PRESENT, BUT ALSO, WOULD IMPEDE FUTURE PERFORMANCE BY GRANTEES, THUS DIMINISHING THE EFFECTIVENESS TO THE DEPARTMENT'S IMPLEMENTATION OF THE MUTUAL EDUCATIONAL AND CULTURAL EXCHANGE ACT OF 1961, AS AMENDED.

ACCORDINGLY, YOU REQUEST THAT WE APPROVE PAYMENT OF THE ENCLOSED VOUCHER.

INASMUCH AS THE GRANT WAS IN A FIXED LUMP-SUM AMOUNT, THE MATTER IS NOT FREE FROM DOUBT. HOWEVER, IT APPEARS THAT IIE, EVEN THOUGH MISTAKEN, ACTED IN GOOD FAITH, AND THAT IT PERFORMED THE SERVICES REQUESTED BY THE DEPARTMENT. FURTHER, THE COSTS CHARGED BY IIE TO THE GRANT WERE PROPERLY ALLOCATED AND DISTRIBUTED IN ACCORDANCE WITH THE TERMS OF THE GRANT. MOREOVER, IT ALSO APPEARS THAT IF THE GRANTEE HAD NOT INDICATED PROGRAM SAVINGS WERE AVAILABLE TO FUND OTHER PROGRAM ACTIVITIES, THE NECESSARY ADDITIONAL FUNDS WOULD HAVE BEEN PROVIDED BY GRANT AMENDMENT. CONSIDERING THE FOREGOING, PAYMENT OF THE AMOUNT IN QUESTION TO IIE WOULD BE SOMEWHAT ANALAGOUS TO PAYMENT ON A QUANTUM MERUIT BASIS.

ACCORDINGLY, IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES AND PARTICULARLY SINCE THE GRANTEE PERFORMED THE SERVICES THE GOVERNMENT REQUESTED, WE WOULD NOT QUESTION, IN THE INSTANT CASE, YOUR CERTIFYING THE VOUCHER FOR PAYMENT (WHICH WE UNDERSTAND WILL BE MADE FROM THE DEPARTMENT'S "M" ACCOUNT).