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TRANSFER OF SURPLUS PROPERTY - FAIR VALUE - INTERAGENCY TRANSFER OF LIABILITY WHERE THE GOVERNMENT'S LIABILITY TO RESTORE LEASED PREMISES OR MAKE A LUMP-SUM PAYMENT IN LIEU OF RESTORATION AROSE WHILE THE PREMISES WERE OCCUPIED BY NAVAL ACTIVITIES UNDER LEASES OBLIGATING NAVAL APPROPRIATIONS. SUCH PREEXISTING OBLIGATIONS ARE NOT FOR INCLUSION IN THE "FAIR VALUE" OF THE LEASEHOLD TRANSFERRED TO THE VETERANS' ADMINISTRATION AS THE SUCCEEDING AGENCY UNDER REGULATIONS PURPORTEDLY ISSUED PURSUANT TO SECTION 12 OF THE SURPLUS PROPERTY ACT OF 1944. I HAVE YOUR LETTER OF AUGUST 18. THE SPACE INVOLVED WAS ORIGINALLY OCCUPIED BY THE 13TH NAVAL DISTRICT HEADQUARTERS. WAS TAKEN OVER BY THE VETERANS' ADMINISTRATION UNDER AN INTERAGENCY AGREEMENT PROVIDING.

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B-71989, OCTOBER 20, 1948, 28 COMP. GEN. 251

TRANSFER OF SURPLUS PROPERTY - FAIR VALUE - INTERAGENCY TRANSFER OF LIABILITY WHERE THE GOVERNMENT'S LIABILITY TO RESTORE LEASED PREMISES OR MAKE A LUMP-SUM PAYMENT IN LIEU OF RESTORATION AROSE WHILE THE PREMISES WERE OCCUPIED BY NAVAL ACTIVITIES UNDER LEASES OBLIGATING NAVAL APPROPRIATIONS, SUCH PREEXISTING OBLIGATIONS ARE NOT FOR INCLUSION IN THE "FAIR VALUE" OF THE LEASEHOLD TRANSFERRED TO THE VETERANS' ADMINISTRATION AS THE SUCCEEDING AGENCY UNDER REGULATIONS PURPORTEDLY ISSUED PURSUANT TO SECTION 12 OF THE SURPLUS PROPERTY ACT OF 1944, AUTHORIZING THE TRANSFER OF SURPLUS PROPERTY FROM ONE GOVERNMENT AGENCY TO ANOTHER AT THE "FAIR VALUE OF THE PROPERTY.'

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE NAVY, OCTOBER 20, 1948.

I HAVE YOUR LETTER OF AUGUST 18, 1948, REQUESTING RECONSIDERATION OF DECISION OF JANUARY 23, 1948, B-71989 (27 COMP. GEN. 391), TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, INVOLVING A PROPOSED PAYMENT OF $93,000 BY THE VETERANS' ADMINISTRATION TO THE UNITED EXCHANGE BUILDING CORPORATION AS DAMAGES IN LIEU OF RESTORATION OF 165,000 SQUARE FEET OF SPACE IN THE EXCHANGE BUILDING, SEATTLE, WASHINGTON. THE SPACE INVOLVED WAS ORIGINALLY OCCUPIED BY THE 13TH NAVAL DISTRICT HEADQUARTERS, AND WAS TAKEN OVER BY THE VETERANS' ADMINISTRATION UNDER AN INTERAGENCY AGREEMENT PROVIDING, AMONG OTHER THINGS, THAT THE VETERANS' ADMINISTRATION WOULD ASSUME THE NAVY'S RESTORATION LIABILITY.

THE FACTS AS REPORTED BY THE VETERANS' ADMINISTRATION ARE FULLY SET FORTH IN THE DECISION OF JANUARY 23, 1948, AND WILL NOT BE REPEATED HERE. WAS HELD IN SAID DECISION THAT SINCE IT APPEARED THAT THE GOVERNMENT'S OBLIGATION TO RESTORE THE PROPERTY INVOLVED AS OF JUNE 30, 1946, AROSE, AT LEAST IN MAJOR PART, WHILE THE PROPERTY WAS OCCUPIED BY NAVAL ACTIVITIES UNDER NAVY DEPARTMENT LEASES DATING BACK TO DECEMBER 1, 1939, UNDER NAVAL APPROPRIATIONS, THERE WAS NO AUTHORITY OF LAW TO TRANSFER, BY INTERAGENCY AGREEMENT OR BY CONTRACT WITH THE LESSOR, OR OTHERWISE, SUCH OBLIGATION TO VETERANS' ADMINISTRATION APPROPRIATIONS AS PROPOSED BY SUPPLEMENTAL AGREEMENT NO. 4, REFERRED TO IN SAID DECISION.

IT IS STATED IN YOUR LETTER THAT THE VETERANS' ADMINISTRATION NOW HAS REQUESTED THE DEPARTMENT OF THE NAVY TO MAKE FUNDS AVAILABLE TO DISCHARGE ALL RESTORATION CLAIMS ARISING FROM THE DATE OF THE INITIAL OCCUPANCY UNDER LEASE NOY/R/-37909 TO JUNE 30, 1946, AND THAT IT IS FELT THAT THE INTERAGENCY AGREEMENT CONCERNING THE TRANSFER OF THE LEASE AND OF THE NAVY CONSTRUCTED IMPROVEMENTS TOGETHER WITH THE ASSUMPTION OF ALL OF THE OBLIGATIONS UNDER SAID LEASE (INCLUDING THE OBLIGATION TO RESTORE) WAS AUTHORIZED BY THE SURPLUS PROPERTY ACT OF 1944, 50 U.S.C. APP. 1611, ET SEQ., AND WAR ASSETS ADMINISTRATION REGULATIONS ISSUED PURSUANT THERETO. SPECIFICALLY, YOU REFER TO WAR ASSETS ADMINISTRATION REGULATION NO. 5, AND PARTICULARLY TO SECTION 8305.7.

SAID REGULATION, EFFECTIVE OCTOBER 5, 1945 (THE REGULATION IN EFFECT AT THE TIME THE INTERAGENCY AGREEMENT IS REPORTED TO HAVE BEEN EFFECTED), PROVIDES, IN PERTINENT PART, AS FOLLOWS:

DISPOSAL OF LEASEHOLD INTERESTS AND IMPROVEMENTS BY OWING AGENCY--- (A) LEASEHOLDS. A GOVERNMENT AGENCY OWNING A LEASEHOLD INTEREST OR SIMILAR RIGHT OF OCCUPANCY WHICH IS NO LONGER NEEDED BY SUCH AGENCY BUT WHICH IS NEEDED BY ANOTHER GOVERNMENT AGENCY SHALL, UNLESS PROHIBITED BY THE TERMS OF THE LEASE OR OTHER INSTRUMENT UNDER WHICH THE INTEREST WAS ACQUIRED, TRANSFER SUCH INTEREST DIRECTLY TO SUCH OTHER AGENCY WITHOUT DECLARING IT SURPLUS. ANY SUCH TRANSFER SHALL BE AT THE MARKET VALUE, UNLESS TRANSFERS, WITHOUT REIMBURSEMENT ARE AUTHORIZED BY LAW, AND MAY BE CONDITIONED UPON THE TRANSFEREE AGENCY ASSUMING ALL OR ANY OBLIGATIONS INCURRED BY THE TRANSFEROR AGENCY IN CONNECTION WITH THE INTEREST TRANSFERRED. THE OWNING AGENCY SHALL TAKE REASONABLE STEPS TO ASCERTAIN THE FACILITIES OF THE PUBLIC BUILDINGS ADMINISTRATION OF THE FEDERAL WORKS AGENCY. IF SUCH LEASEHOLD OR OTHER INTEREST IS NOT CLAIMED BY ANY GOVERNMENT AGENCY WITHIN A REASONABLE TIME AND THE OWNING AGENCY HAS THE LEGAL RIGHT TO CANCEL, SUCH LEASE OR INTEREST SHALL BE CANCELLED WITHOUT DECLARING IT SURPLUS.

SUCH REGULATION APPARENTLY PURPORTS TO BE BASED UPON SECTION 12 OF THE SAID SURPLUS PROPERTY ACT OF 1944 (50 U.S.C. 1621), AS FOLLOWS:

UTILIZATION OF SURPLUS PROPERTY BY FEDERAL AGENCIES.

(A) IT SHALL BE THE DUTY OF THE ADMINISTRATOR TO FACILITATE THE TRANSFER OF SURPLUS PROPERTY FROM ONE GOVERNMENT AGENCY TO OTHER GOVERNMENT AGENCIES FOR THEIR OWN USE AND NOT FOR TRANSFER OR DISPOSITION; AND THE TRANSFER OF SURPLUS PROPERTY UNDER THIS SECTION SHALL BE GIVEN PRIORITY OVER ALL OTHER DISPOSALS PROVIDED FOR IN THIS ACT (SECTIONS 1611-1614, 1615-1630, 1632-1646 OF THIS APPENDIX), EXCEPT DISPOSALS TO VETERANS OF PROPERTY RESERVED EXCLUSIVELY FOR VETERANS UNDER SUBSECTION (B) OF SECTION 16 OF THIS ACT (SECTION 1625 (B) OF THIS APPENDIX). THE ADMINISTRATOR SHALL PRESCRIBE A REASONABLE TIME WITHIN WHICH GOVERNMENT AGENCIES SHALL EXERCISE THE PRIORITY PROVIDED BY THIS SUBSECTION, BUT THE TIME SO FIXED SHALL NOT EXCEED TWENTY DAYS FROM THE TIME PUBLIC NOTICE IS GIVEN OF THE AVAILABILITY OF THE SURPLUS PROPERTY FOR DISPOSAL TO GOVERNMENT AGENCIES.

(B) IT SHALL BE THE RESPONSIBILITY OF ALL GOVERNMENT AGENCIES, IN ORDER TO AVOID MAKING PURCHASES THROUGH COMMERCIAL CHANNELS, CONTINUOUSLY TO CONSULT THE RECORDS OF SURPLUS PROPERTY ESTABLISHED BY THE SURPLUS PROPERTY ADMINISTRATOR AND TO DETERMINE WHETHER THEIR REQUIREMENTS CAN BE SATISFIED OUT OF SUCH SURPLUS PROPERTY. IT SHALL ALSO BE THE RESPONSIBILITY OF THE HEAD OF EACH GOVERNMENT AGENCY TO SUBMIT TO THE SURPLUS PROPERTY ADMINISTRATOR SUCH ESTIMATES OF THE NEEDS OF THE AGENCY AND SUCH REPORTS IN RELATION THERETO AS HE MAY DEEM NECESSARY TO PROMOTE THE FULLEST UTILIZATION OF SURPLUS PROPERTY. IT SHALL BE THE RESPONSIBILITY OF THE SURPLUS PROPERTY ADMINISTRATOR TO DETERMINE WHETHER GOVERNMENT AGENCIES ARE ACQUIRING SURPLUS PROPERTY TO THE FULLEST POSSIBLE EXTENT, AND TO NOTIFY AGENCIES WHENEVER, IN HIS JUDGMENT, THEY ARE NOT SO DOING.

(C) THE DISPOSAL AGENCY RESPONSIBLE FOR ANY SUCH PROPERTY SHALL TRANSFER IT TO THE GOVERNMENT AGENCY ACQUIRING IT AT THE FAIR VALUE OF THE PROPERTY AS FIXED BY THE DISPOSAL AGENCY, UNDER REGULATIONS PRESCRIBED BY THE ADMINISTRATOR, UNLESS TRANSFER WITHOUT REIMBURSEMENT OR TRANSFER OF FUNDS IS AUTHORIZED UNDER SUBSECTION (D) OF THIS SECTION.

(D) NOTWITHSTANDING THE PROVISIONS OF SECTION 34 (A) OF THIS ACT (SECTION 1643 (A) OF THIS APPENDIX), NO GOVERNMENT AGENCY MAY TRANSFER ANY PROPERTY TO ANY OTHER GOVERNMENT AGENCY WITHOUT REIMBURSEMENT OR TRANSFER OF FUNDS UNDER AUTHORITY OF ANY LAW APPROVED PRIOR TO JUNE 22, 1944. ANY DISPOSAL AGENCY MAY TRANSFER SURPLUS PROPERTY TO A GOVERNMENT AGENCY WITHOUT REIMBURSEMENT OR TRANSFER OF FUNDS WHENEVER A TRANSFER ON SUCH TERMS BY THE OWNING AGENCY (BY WHICH SUCH PROPERTY WAS DECLARED SURPLUS) WOULD BE AUTHORIZED BY ANY LAW APPROVED SUBSEQUENT TO JUNE 21, 1944, TO BE MADE TO THE GOVERNMENT AGENCY DESIRING SUCH PROPERTY.

WHILE THE STATUTE DIRECTS THAT THE DISPOSAL AGENCY SHALL TRANSFER SURPLUS PROPERTY TO THE GOVERNMENT AGENCY ACQUIRING IT AT THE "FAIR VALUE OF THE PROPERTY" AS FIXED BY THE DISPOSAL AGENCY UNDER REGULATIONS PRESCRIBED BY THE BOARD,"UNLESS TRANSFER WITHOUT REIMBURSEMENT OR TRANSFER OF FUNDS IS OTHERWISE AUTHORIZED BY LAW," THE STATUTE DOES NOT AUTHORIZE, OR PURPORT TO AUTHORIZE, UNDER REGULATIONS PRESCRIBED BY THE BOARD, OR OTHERWISE, THE INCLUSION IN THE "FAIR VALUE" OF THE PROPERTY INTEREST TRANSFERRED OF ANY SUM TO COVER PREEXISTING OBLIGATIONS THERETOFORE INCURRED BY THE DISPOSAL AGENCY. TO THE EXTENT THAT THE QUOTED REGULATION MAY BE VIEWED AS CONTEMPLATING OR PERMITTING SUCH A TRANSFER OF PREEXISTING OBLIGATIONS AGAINST THE APPROPRIATIONS OF THE DISPOSING AGENCY TO THE APPROPRIATIONS OF THE ACQUIRING AGENCY, SUCH REGULATION DOES NOT APPEAR TO BE AUTHORIZED EITHER BY THE QUOTED PROVISIONS OF THE SURPLUS PROPERTY ACT OR BY GENERAL LAW. SEE, IN THAT CONNECTION, THE STATUTES AND DECISIONS CITED, QUOTED, AND DISCUSSED IN THE DECISION OF JANUARY 23, 1948, TO THE ADMINISTRATOR OF VETERANS' AFFAIRS ON THE PRESENT MATTER, IN SUPPORT OF THE STATEMENT OF THE FUNDAMENTAL RULE THAT REPRESENTATIVES OF GOVERNMENT AGENCIES MAY NOT, BY AGREEMENT AMONG THEMSELVES AND WITHOUT LEGISLATIVE SANCTION, EXPAND THE AVAILABILITY OF THEIR OWN APPROPRIATIONS OR TRANSFER LIABILITIES INCURRED UNDER THEIR OWN APPROPRIATIONS TO THOSE OF ANOTHER AGENCY. THERE APPEARS TO BE NOTHING IN THE PROVISION OF THE SURPLUS PROPERTY ACT OF 1944, SUPRA, WHICH REASONABLY MAY BE VIEWED AS INTENDING TO GRANT ANY SUCH SANCTION OR TO VARY SUCH FUNDAMENTAL RULE. MOREOVER, SUCH STATUTE APPARENTLY AUTHORIZES THE INTERAGENCY TRANSFER OF SURPLUS GOVERNMENT PROPERTY AT THE "FAIR VALUE OF THE PROPERTY" ONLY WHERE TRANSFER WITHOUT REIMBURSEMENT IS NOT OTHERWISE AUTHORIZED BY LAW. IN THAT CONNECTION, SEE THE PROVISIONS OF SECTION 1 OF THE ACT OF AUGUST 27, 1935, 49 STAT. 885, AS AMENDED (40 U.S.C. 304 (A) (, IN EFFECT PROVIDING, INTER ALIA, FOR THE TRANSFER OR REASSIGNMENT OF SURPLUS PROPERTY HELD UNDER LEASE TO OTHER FEDERAL AGENCIES.

FOR SUCH REASONS, THERE APPEARS TO BE NOTHING IN EITHER THE QUOTED PROVISIONS OF THE SURPLUS PROPERTY ACT, SUPRA, OR REGULATIONS ISSUED IN THE DECISION OF JANUARY 23, 1948, HOLDING THAT VETERANS' ADMINISTRATION APPROPRIATIONS MAY NOT BE CHARGED FOR RESTORATION EXPENSES INCURRED BY THE NAVY DEPARTMENT.

SUPPLEMENTAL AGREEMENT NO. 4, TRANSMITTED HERE INFORMALLY BY OFFICE MEMORANDUM OF SEPTEMBER 10, 1948, IS RETURNED HEREWITH.

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