Skip to Highlights
Highlights

DELIVERIES UNDER SUCH CONTRACTS MAY BE ACCEPTED PRIOR TO THE BEGINNING OF THAT FISCAL YEAR ONLY IF MADE AFTER THE FUNDS HAVE BEEN APPROPRIATED. INASMUCH AS PAYMENT MAY NOT BE MADE FOR SUCH DELIVERIES UNTIL AFTER THE BEGINNING OF THE FISCAL YEAR FOR WHICH THE APPROPRIATION IS MADE. WHERE CONTRACTS FOR COAL HAVE BEEN MADE BY THE POST OFFICE DEPARTMENT IN ONE FISCAL YEAR FOR SUPPLYING ITS NEEDS FOR THE ENSUING FISCAL YEAR. THE COST OF FREIGHT AND DRAYAGE UNDER CONTRACTS SEPARATE FROM THE PURCHASE CONTRACTS IS PROPERLY CHARGEABLE TO THE APPLICABLE APPROPRIATION FOR THE ENSUING FISCAL YEAR. 1942: I HAVE YOUR LETTER OF FEBRUARY 21. AS FOLLOWS: REFERENCE IS MADE TO DECISION OF OCTOBER 18. THE FOLLOWING IS AN EXCERPT OF THE LETTER OF SEPTEMBER 20: "YOUR DECISION IS REQUESTED WHETHER THERE WOULD BE ANY OBJECTION FROM AN ACCOUNTING STANDPOINT TO THE CONSUMMATION OF CONTRACTS CONTEMPLATING DELIVERIES OF COAL DURING THE MONTHS OF MAY AND JUNE.

View Decision

B-20670, MARCH 14, 1942, 21 COMP. GEN. 864

CONTRACTS - DELIVERIES - OBLIGATION OF APPROPRIATIONS PRIOR TO FISCAL YEAR FOR WHICH MADE WHILE THE POST OFFICE DEPARTMENT MAY CONTRACT FOR THE PURCHASE OF COAL FOR AN ENSUING FISCAL YEAR CONTINGENT UPON THE ENACTMENT OF THE FISCAL YEAR APPROPRIATION PROVIDING FUNDS THEREFOR, DELIVERIES UNDER SUCH CONTRACTS MAY BE ACCEPTED PRIOR TO THE BEGINNING OF THAT FISCAL YEAR ONLY IF MADE AFTER THE FUNDS HAVE BEEN APPROPRIATED, AND, INASMUCH AS PAYMENT MAY NOT BE MADE FOR SUCH DELIVERIES UNTIL AFTER THE BEGINNING OF THE FISCAL YEAR FOR WHICH THE APPROPRIATION IS MADE, BOTH THE PURCHASE AND TRANSPORTATION CONTRACTS, IF THERE BE SEPARATE TRANSPORTATION CONTRACTS, SHOULD CONTAIN SUITABLE PROTECTIVE PROVISIONS REGARDING THESE MATTERS OF TIME OF DELIVERY AND PAYMENT. WHERE CONTRACTS FOR COAL HAVE BEEN MADE BY THE POST OFFICE DEPARTMENT IN ONE FISCAL YEAR FOR SUPPLYING ITS NEEDS FOR THE ENSUING FISCAL YEAR, THE COST OF FREIGHT AND DRAYAGE UNDER CONTRACTS SEPARATE FROM THE PURCHASE CONTRACTS IS PROPERLY CHARGEABLE TO THE APPLICABLE APPROPRIATION FOR THE ENSUING FISCAL YEAR, EVEN THOUGH THE SERVICES BE RENDERED DURING THE PRIOR FISCAL YEAR. 16 COMP. GEN. 843, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, MARCH 14, 1942:

I HAVE YOUR LETTER OF FEBRUARY 21, 1942, AS FOLLOWS:

REFERENCE IS MADE TO DECISION OF OCTOBER 18, 1941 (B-20670), IN RESPONSE TO A COMMUNICATION ADDRESSED TO YOU BY THIS DEPARTMENT ON SEPTEMBER 20, 1941, CONCERNING THE NEGOTIATION OF CONTRACTS FOR COAL USED IN THE HEATING OF GOVERNMENT POST OFFICE BUILDINGS. THE FOLLOWING IS AN EXCERPT OF THE LETTER OF SEPTEMBER 20:

"YOUR DECISION IS REQUESTED WHETHER THERE WOULD BE ANY OBJECTION FROM AN ACCOUNTING STANDPOINT TO THE CONSUMMATION OF CONTRACTS CONTEMPLATING DELIVERIES OF COAL DURING THE MONTHS OF MAY AND JUNE--- ALL COSTS, INCLUDING THE PRICE OF THE COAL, FREIGHT, AND DRAYAGE, TO BE PAID FROM THE APPROPRIATION FOR THE FISCAL YEAR IN WHICH THE COAL IS TO BE USED. THIS CONNECTION YOUR ATTENTION IS INVITED TO THE OPINION OF COMPTROLLER WARWICK, ADDRESSED TO THE SECRETARY OF THE TREASURY UNDER DATE OF JUNE 28, 1921, ALSO 27 COMP. DEC. 879.'

IN THE DECISION OF OCTOBER 18, IT WAS STATED IN PART:

"THERE WOULD APPEAR NO OBJECTION TO THE AWARD OF CONTRACTS FOR COAL FOR AN ENSUING FISCAL YEAR AT ANY TIME AFTER THE ACT MAKING AN APPROPRIATION FOR THAT YEAR AND FOR THAT PURPOSE HAD BEEN ENACTED, PROVIDED, HOWEVER, THAT IN THE ABSENCE OF A SPECIFIC PROVISION IN THE APPROPRIATION ACT SO PROVIDING NO PAYMENT MAY BE MADE UNDER SUCH CONTRACTS UNTIL THE NEW FISCAL YEAR BEGINS EVEN THOUGH DELIVERY MAY BE MADE PRIOR THERETO. IN THIS CONNECTION SEE MY DECISION TO YOU OF JUNE 10, 1941, 20 COMP. GEN. 868. INDICATED IN THAT DECISION, IT WOULD APPEAR TO BE ADVISABLE TO INCORPORATE IN ANY SUCH CONTRACTS WHICH CALL FOR DELIVERY PRIOR TO THE BEGINNING OF THE FISCAL YEAR A PROVISION APPRISING THE CONTRACTOR OF THE FACT THAT PAYMENTS UNDER THE CONTRACT MAY NOT BE MADE UNTIL AFTER THE BEGINNING OF THE NEW FISCAL YEAR.' ( ITALICS SUPPLIED.)

THE DEPARTMENT CONTEMPLATES IN ADVERTISING FOR BIDS FOR COAL FOR THE HEATING SEASON 1942-43 TO ASK FOR DELIVERIES INSOFAR AS POSSIBLE DURING THE MONTHS OF MAY AND JUNE OF THE CURRENT YEAR (1942), WITH THE PROVISION THAT PAYMENT WILL NOT BE MADE UNTIL SUBSEQUENT TO JULY 1, 1942, AND CONTINGENT UPON THE AUTHORIZATION BY THE CONGRESS OF THE NECESSARY APPROPRIATION.

IT IS CONTEMPLATED FURTHER WITHHOLDING PAYMENTS FOR THE FREIGHT AND DRAYAGE OF THIS COAL, WHICH ARE EXPENSES INCIDENT TO DELIVERY, UNTIL AFTER JULY 1, BELIEVING THAT THIS WOULD BE WITHIN THE CONSTRUCTION OF THE WORD "DELIVERY" AS USED IN THE PARAGRAPH OF THE DECISION HERETOFORE REFERRED TO.

IT WILL BE APPRECIATED IF THE DEPARTMENT MAY BE ADVISED AS TO WHETHER ITS INTERPRETATION OF THE DECISION OF OCTOBER 18, LAST, IS CORRECT, ALSO IF PROMPT RESPONSE COULD BE MADE INASMUCH AS IT IS DESIRED TO ADVERTISE FOR BIDS AS EARLY AS PRACTICABLE.

AS YOU WERE ADVISED IN MY DECISION OF OCTOBER 18, 1941,"THE UNITED STATES MAY NOT BE COMMITTED BY CONTRACT OR OTHERWISE TO RECEIVE AND PAY FOR COAL FOR THE USE OF YOUR DEPARTMENT UNLESS AND UNTIL THE CONGRESS HAS ENACTED AN APPROPRIATION PROVIDING FUNDS WITH WHICH TO MAKE THE PAYMENT.' HOWEVER, AS FURTHER STATED IN THAT DECISION,"THERE WOULD BE NO OBJECTION, FROM AN ACCOUNTING STANDPOINT, TO THE AWARD OF A CONDITIONAL CONTRACT FOR THAT PURPOSE--- THAT IS, A CONTRACT WHICH SPECIFICALLY PROVIDES BY ITS TERMS THAT THE GOVERNMENT'S LIABILITY THEREUNDER IS CONTINGENT UPON THE FUTURE AVAILABILITY OF APPROPRIATED MONEYS WITH WHICH TO MAKE PAYMENT FOR THE COAL.'

IT IS NOT TO BE UNDERSTOOD FROM THIS LAST QUOTED STATEMENT THAT ACTUAL DELIVERIES OF COAL MAY BE MADE AND ACCEPTED UNDER SUCH A CONTRACT PRIOR TO THE DATE OF ENACTMENT OF AN APPROPRIATION ACT PROVIDING FUNDS FOR THAT PURPOSE. IF DELIVERIES WERE MADE PRIOR TO THAT TIME, THE CONTENTION MIGHT BE SUCCESSFULLY ADVANCED THAT IN ACCEPTING THE COAL THE GOVERNMENT BECAME OBLIGATED TO PAY THE REASONABLE VALUE THEREOF, AND THAT SUCH OBLIGATION EXISTS INDEPENDENTLY OF THE CONTRACT AND IS UNAFFECTED BY ANY RESTRICTIVE TERMS OR CONDITIONS CONTAINED THEREIN. AS STATED IN MY DECISION OF OCTOBER 18, 1941,"THE UNITED STATES MAY NOT BE COMMITTED BY CONTRACT OR OTHERWISE TO RECEIVE AND PAY FOR COAL FOR THE USE OF YOUR DEPARTMENT UNLESS AND UNTIL THE CONGRESS HAS ENACTED AN APPROPRIATION PROVIDING FUNDS WITH WHICH TO MAKE THE PAYMENT.' ( ITALICS SUPPLIED.) IN OTHER WORDS, ALTHOUGH THE ADMINISTRATIVE TASK OF SOLICITING BIDS AND AWARDING CONDITIONAL CONTRACTS FOR COAL FOR THE ENSUING FISCAL YEAR MAY BE COMPLETED PRIOR TO ENACTMENT OF THE NECESSARY APPROPRIATION ACT, SUCH CONTRACTS BY THEIR TERMS MAY NOT BECOME OPERATIVE--- AND ACCORDINGLY, DELIVERIES MAY NOT BE ACCEPTED THEREUNDER--- UNTIL THE INVOLVED APPROPRIATION HAS IN FACT BEEN MADE.

IT IS UNDERSTOOD FROM YOUR PRESENT LETTER THAT YOU INTEND TO INCORPORATE IN ANY CONTRACTS FOR COAL WHICH MAY BE AWARDED PRIOR TO THE TIME WHEN FUNDS WITH WHICH TO PROCURE COAL FOR YOUR DEPARTMENT FOR ANY GIVEN FISCAL YEAR HAVE BEEN MADE AVAILABLE, SPECIFIC PROVISIONS TO THE EFFECT THAT (1) THE GOVERNMENT'S LIABILITY THEREUNDER IS CONTINGENT UPON THE AUTHORIZATION BY THE CONGRESS OF A SUFFICIENT APPROPRIATION WITH WHICH TO MAKE PAYMENT IN ACCORDANCE WITH THE TERMS OF THE CONTRACT AND (2) THAT SUCH PAYMENT WOULD NOT BE MADE UNTIL AFTER JUNE 30, 1942. IT IS SUGGESTED THAT IT BE MADE CLEAR, ALSO, BY THE TERMS OF SAID CONTRACTS THAT NO DELIVERIES THEREUNDER ARE TO BE MADE UNLESS AND UNTIL THE APPROPRIATION ACT PROVIDING THE NECESSARY FUNDS HAS BEEN ENACTED INTO LAW. THESE PROVISIONS WOULD APPEAR SUFFICIENT TO PROTECT THE INTERESTS OF THE UNITED STATES AND MEET THE REQUIREMENTS AS OUTLINED IN MY DECISION OF OCTOBER 18, 1941. COURSE, SINCE THE TREASURY AND POST OFFICE DEPARTMENT APPROPRIATION ACT, 1943, HAS ALREADY BEEN ENACTED INTO LAW ( PUBLIC LAW 495, 77TH CONG., APPROVED MARCH 10, 1942, 56 STAT. 150), AND FUNDS ARE THEREIN PROVIDED WITH WHICH TO PURCHASE COAL FOR THE POST OFFICE DEPARTMENT FOR THE FISCAL YEAR 1943, IT WILL BE UNNECESSARY, SO FAR AS CONTRACTS FOR THAT YEAR ARE CONCERNED, TO PROVIDE THEREIN THAT THE GOVERNMENT'S LIABILITY IS CONTINGENT UPON THE APPROPRIATION OF FUNDS OR THAT NO DELIVERIES SHALL BE MADE UNTIL SUCH FUNDS SHALL HAVE BEEN PROVIDED.

IT APPEARS FROM THE NEXT TO THE LAST PARAGRAPH OF YOUR LETTER THAT CONTRACTS FOR FREIGHT AND DRAYAGE OF COAL ARE ENTERED INTO SEPARATELY FROM THE COAL PURCHASE CONTRACTS--- IN OTHER WORDS, THAT PURCHASES ARE MADE F.O.B. MINE RATHER THAN F.O.B. DESTINATION. OF COURSE, COAL PROCUREMENT BIDS SHOULD BE INVITED ON A BASIS WHICH WILL ASSURE TO THE UNITED STATES THE MOST ADVANTAGEOUS DELIVERED PRICE; AND IF THAT RESULT CAN BE ACHIEVED BY PURCHASING COAL ON A DELIVERED BASIS, THERE WOULD BE NO NEED FOR THE AWARD OF SEPARATE CONTRACTS FOR FREIGHT AND DRAYAGE. HOWEVER, IN CASES WHERE BIDS ARE SOLICITED ON BOTH AN F.O.B. MINE AND AN F.O.B. DESTINATION BASIS AND IT PROVES ADVANTAGEOUS TO MAKE THE PURCHASES F.O.B. MINE, OR WHERE IT IS ADMINISTRATIVELY DETERMINED, AS A RESULT OF EXPERIENCE, THAT IT IS IN THE INTEREST OF THE UNITED STATES (DUE TO LOCAL CONDITIONS, ETC.) TO SOLICIT BIDS FOR COAL FOR OFFICES IN A GIVEN LOCALITY ON AN F.O.B. MINE BASIS ONLY, THEN THE COST OF FREIGHT AND DRAYAGE, LIKE THE COST OF THE COAL, WOULD APPEAR PROPERLY FOR REGARDING AS EXPENSES CHARGEABLE TO THE APPROPRIATION FOR THE ENSUING FISCAL YEAR BECAUSE THE SERVICE IS CONCERNED WITH AND IS PERFORMED WITH SPECIFIC REFERENCE TO THE NEXT FISCAL YEAR NEEDS. ACCORDINGLY, THE DELIVERY CONTRACTS, ALSO, SHOULD CONTAIN PROTECTIVE PROVISIONS SIMILAR TO THOSE WHICH ARE TO APPEAR IN THE CONTRACTS FOR THE COAL--- AS OUTLINED ABOVE AND IN MY DECISION OF OCTOBER 18, 1941.

THE CONCLUSION THAT THE TRANSPORTATION COSTS IN CONNECTION WITH F.O.B. MINE PURCHASES ARE PROPERLY CHARGEABLE TO THE APPROPRIATION FOR THE FOLLOWING FISCAL YEAR IS NOT TO BE REGARDED AS A MODIFICATION OF THE ESTABLISHED RULE, AS SET FORTH IN 16 COMP. GEN. 843, 844, THAT "WHERE SUPPLIES ARE PURCHASED F.O.B. PLACE OF MANUFACTURE, AND TRANSPORTATION IS NOT ORDERED OR ACCOMPLISHED UNTIL THE FOLLOWING FISCAL YEAR, THE TRANSPORTATION COSTS ARE NOT CHARGEABLE TO THE APPROPRIATION FOR THE FISCAL YEAR IN WHICH THE SUPPLIES WERE PURCHASED, BUT TO THE APPROPRIATION FOR THE FISCAL YEAR IN WHICH THE TRANSPORTATION WAS PERFORMED--- THE CONTRACT OF TRANSPORTATION BEING SEPARATE FROM THE CONTRACT OF PURCHASE.' THAT RULE RELATES TO AND IS APPLICABLE IN SITUATIONS WHERE TRANSPORTATION CONTRACTS ARE ENTERED INTO AND PERFORMED IN A FISCAL YEAR SUBSEQUENT TO THE FISCAL YEAR IN WHICH THE SUPPLIES WERE PURCHASED, BUT TO THE APPROPRIATION FOR THE FISCAL YEAR IN WHICH THE TRANSPORTATION WAS PERFORMED--- THE CONTRACT OF TRANSPORTATION BEING SEPARATE FROM THE CONTRACT OF PURCHASE.' THAT RULE RELATES TO AND IS APPLICABLE IN SITUATIONS WHERE TRANSPORTATION CONTRACTS ARE ENTERED INTO AND PERFORMED IN A FISCAL YEAR SUBSEQUENT TO THE FISCAL YEAR IN WHICH THE SUPPLIES ARE PURCHASED, AND IS SOUGHT TO CHARGE THE APPROPRIATION FOR A PRIOR FISCAL YEAR ALREADY ENDED ON THE THEORY THAT THE TRANSACTION IS MERELY AN INCIDENT OF THE EARLIER PURCHASE CONTRACT; HOWEVER, IT IS NOT APPLICABLE TO A SITUATION WHERE BOTH THE PURCHASE CONTRACT AND THE TRANSPORTATION CONTRACT ARE MADE NEAR THE CLOSE OF ONE FISCAL YEAR, BUT WITH PARTICULAR REFERENCE TO AN ENSUING FISCAL YEAR. ALTHOUGH THE PROPOSED PURCHASE CONTRACTS AND TRANSPORTATION CONTRACTS HERE INVOLVED WOULD CONSTITUTE DISTINCT UNDERTAKINGS, AND, THEREFORE, THE APPROPRIATION TO BE CHARGED WOULD BE FOR DETERMINING BY CONSIDERING EACH CONTRACT SEPARATELY AND ON ITS OWN MERITS; NEVERTHELESS, WHEN SO CONSIDERED, THE CONCLUSION APPEARS TO BE REQUIRED THAT BOTH THE PURCHASE PRICE AND THE TRANSPORTATION EXPENSES WOULD BE DIRECTLY CONCERNED WITH ENSUING FISCAL YEAR ACTIVITIES AND NEEDS AND, THEREFORE, PROPERLY ARE CHARGEABLE TO APPROPRIATIONS FOR THAT YEAR.

GAO Contacts