BNUMBER:  B-272191 
DATE:  November 4, 1997
TITLE: Funding for Army Repair Projects, B-272191, November 4, 1997
**********************************************************************

Matter of:Funding for Army Repair Projects

File:     B-272191

Date:November 4, 1997

DIGEST

1.  The Army was not required to make an election between two 
appropriation accounts available for major repair and minor 
construction projects during fiscal year 1993, because Congress 
specifically authorized the use of both accounts for such projects in 
section 301 of Public Law 103-35.

2.  Section 301 of Public Law 103-35, 107 Stat. 97, 103 (May 31, 
1993), authorized the Army to use its FY 1993 O&M funds in addition to 
amounts appropriated for real property maintenance, Defense (RPM,D), 
fiscal years 1993-94, to carry out major repair or minor construction 
projects.  In fiscal year 1994, the Army deobligated amounts charged 
to the RPM,D appropriation and obligated those amounts to the expired 
fiscal year 1993 O&M appropriation.  Since those obligations, in fact, 
were incurred in fiscal year 1993, did not exceed the unobligated 
balance of the expired appropriation, represented a bona fide need of 
fiscal year 1993, and could have been charged to O&M at the time they 
were incurred, and since unobligated balances in expired accounts 
remain available for "recording . . . obligations properly chargeable 
to [the FY 93 O&M] account," 31 U.S.C.  sec.  1553(a), we have no objection 
to Army's adjustment of the accounts.

DECISION

The Deputy Chief of Staff, Resource Management, Department of the 
Army, a certifying officer, requested our opinion regarding the 
funding for Army real property maintenance and repair projects in 
Europe during fiscal year 1993.  The request stemmed from a draft 
audit report entitled "Funding for Army Facility Maintenance and 
Repair Projects in Europe" (Report),  issued by the Inspector General 
(IG), Department of Defense, dated February 8, 1996.  The IG reported 
that after the end of fiscal year 1993, the Army, asserting authority 
under 31 U.S.C.  sec.  1553(a), deobligated about $20.4 million that it had 
properly charged for fiscal year 1993 projects to the fiscal year 
1993-94 Real Property Maintenance, Defense (RPM,D) appropriation and 
obligated this amount against the fiscal year 1993 Operation and 
Maintenance, Army (O&M) appropriation.  By using unobligated balances 
of FY 1993 O&M funds to cover amounts originally charged to the 
two-year RPM,D funds, the Army freed up RPM,D funds for new 
obligations.  The Inspector General questioned the Army's actions, 
noting that under 31 U.S.C.  sec.  1553(a), the Army's O&M appropriation, 
after its expiration at the end of fiscal year 1993, was "available 
[only] for recording, adjusting, and liquidating obligations properly 
chargeable to that account."  The IG argues that substituting O&M 
funds for RPM,D funds after the end of the fiscal year was not an 
authorized "adjustment" under the statute.  The certifying officer, 
however, argues that "the substitution directly furthered Congress' 
intent in enacting Public Law No. 103-35, . . . which expressly 
authorized the Army to use FY 93 [O&M] funds in addition to RPM,D 
funds for major repair and minor construction projects."  For the 
reasons discussed below, we do not object to the Army's use of the 
expired fiscal year 1993 O&M funds in this manner.

Background

In the Department of Defense Appropriations Act for fiscal year 1992, 
the Congress, for the first time, appropriated $500,000,000, available 
until September 30, 1993 (a two-year appropriation), for Real Property 
Maintenance, Defense, to finance maintenance and repair projects.  
Pub. L. No 102-172, 105 Stat. 1150, 1159 (Nov. 26, 1991).  In the 
Department of Defense Appropriations Act for fiscal year 1993, the 
Congress appropriated additional funds, $507,962,000, for RPM,D.  Pub. 
L. No.     102-396, 106 Stat. 1876, 1885 (Oct. 6, 1992).  These funds 
were also a two-year appropriation, available until September 30, 
1994.  Congress routinely appropriates annual funds to the Army to 
cover Operations and Maintenance (O&M) expenses.   In the fiscal year 
1993 DOD Appropriations Act, Congress appropriated over $13 billion to 
the Army's O&M account, available for obligation until September 30, 
1993.  The fiscal years 1993-94 RPM,D appropriation and the fiscal 
year 1993 O&M appropriation are at issue here.

Until enactment in 1992 of the first RPM,D appropriation, the military 
departments had used their O&M appropriations to finance maintenance 
and repair projects.  With enactment of the RPM,D appropriation, a 
question arose concerning the continued availability of O&M for this 
purpose.  In November 1992, shortly after enactment of the 1993 
Defense Appropriations Act, the Comptroller, Department of Defense 
(DOD), concluded that the RPM,D appropriation was the only 
appropriation available for real property major repair and minor 
construction projects.  Memorandum from DOD's Associate Deputy General 
Counsel, Feb. 10, 1995 at 1 (Memorandum).  In response, on May 31, 
1993, the Congress enacted section 301 of Public Law 103-35.  Section 
301 of Public Law 103-35 provides:

     "In addition to using the funds specifically appropriated for 
     real property maintenance under the heading "REAL PROPERTY 
     MAINTENANCE, DEFENSE" in title II of the Department of Defense 
     Appropriations Act, 1993 . . . the Secretary of Defense and the 
     Secretary of a military department may also use funds 
     appropriated to the Secretary concerned for operation and 
     maintenance under any of the first 11 headings of such title in 
     order to carry out a major repair project that costs $15,000 or 
     more or a minor construction project that costs not less than 
     $15,000 and not more than $300,000."

107 Stat. 97, 103.[1]

By the closing months of fiscal year 1994, the Army had obligated 
virtually all of its  fiscal years 1993-94 RPM,D funds, although it 
had not yet funded some planned repair projects.  Memorandum at 2.  
However, the Army still had a substantial amount of unobligated but 
expired fiscal year 1993 O&M funds.  To accommodate the remaining 
unfunded projects, the Army deobligated about $20.4 million of fiscal 
year 1993-94 RPM,D funds that had been obligated for projects in 
fiscal year 1993, and obligated the same amount to the expired fiscal 
year 1993 O&M funds.  By substituting fiscal year 1993 O&M funds, the 
Army covered its fiscal year 1993 projects with adequate budget 
authority and freed up a corresponding amount in the RPM,D account to 
support new obligations.  "The freed-up FY 1993 funds were then used 
to fund previously unfunded [Army] maintenance and repair projects."  
Report at 4.

The Army asserts that its actions were authorized under 31 U.S.C.  sec.  
1553(a).  According to the Army, while the unobligated expired fiscal 
year 1993 O&M funds were no longer available for new obligations, they 
remained available to make "legitimate obligation adjustments" to the 
Army's accounting records.  Because section 301 of Public Law 103-35 
made the fiscal year 1993 O&M appropriation  available during fiscal 
year 1993 for these projects, the Army contends that  adjusting its 
accounting records for the cost of the projects by deobligating the 
RPM,D appropriation and obligating the corresponding amount to O&M was 
simply a "legitimate obligation adjustment" under section 1553(a).

The IG agrees that section 301 of Public Law 103-35 made the fiscal 
year 1993 O&M appropriation available for repair projects.  However, 
the IG views the Army's action as improper on two grounds.  First, 
relying on prior decisions of this Office, the IG contends that when 
two appropriations are available for the same purpose, the agency must 
select which to use, and that once it has made an election, the agency 
may not use the other appropriation even if it depletes the budget 
authority available in the appropriation selected.  See 68 Comp. Gen. 
337 (1989); 59 Comp. Gen. 518 (1980).  Since the Army selected the 
RPM,D appropriation for the projects at issue, the IG believes that 
the Army could not later use the O&M appropriation to secure 
additional funds.  "Once the Army chose [RPM,D] funds for a project, 
that election became binding for future actions on that contract."  
Report at 7.

Second, the IG does not view section 1553(a) as authority for the 
Army's adjustments.  The IG argues that "while funds may be 
deobligated for several valid reasons, where the purpose of the action 
is merely to make the funds available for new obligations, such 
deobligation is improper."  Id.  As stated in his Report, the IG 
concludes that the Army's action did not constitute a proper 
adjustment under section 1553(a) because it was not taken to correct 
unrecorded or underrecorded obligations, nor to adjust the account to 
reflect what actually occurred during the fiscal year.  "The fund 
substitution was not done for an accepted reason; rather the actions 
were taken to make available . . . funds that were still within their 
period of obligational availability."  Id.

Discussion

The IG has raised two issues.  First, was the Army required to make an 
election between RPM,D and O&M for funding repair projects.  Second, 
does the deobligation of amounts charged to the fiscal year 1993-94 
RPM,D appropriation and the obligation of those amounts to the expired 
fiscal year 1993 O&M appropriation constitute a legitimate obligation 
adjustment under section 1553(a).

A. 
As the IG pointed out in his report, we have held that where two 
appropriations are available for the same purpose, the agency may 
select which one to charge for the expenditure in question.  Once that 
election has been made, the agency must continue to use the same 
appropriation for that purpose unless the agency, at the beginning of 
the fiscal year, informs the Congress of its intent to change for the 
next fiscal year.  See Unsubstantiated DOE Travel Payments, 
GAO/RCED-96-58R, Dec. 28, 1995.  See also 68 Comp. Gen. 337 (1989).  
Once the agency has made its election, it cannot change to the second 
appropriation during the course of the fiscal year if funds in the 
first appropriation become insufficient.  See 59 Comp. Gen. 528 
(1980).  Section 301 of Public Law 103-35, however, did not force Army 
to make an election, because the law clearly authorized the Army to 
use its O&M appropriation to supplement the RPM,D appropriation.  

The difficulty with the IG's position is that the fiscal law 
principles cited by the IG do not apply to the present situation.  The 
reason is straightforward--section 301 of Public Law 103-35.  The 
language of the law makes clear that Congress intended that the "funds 
appropriated to the Secretary [of the Army] for operation and 
maintenance" in the FY 1993 Defense Appropriations Act are "[i]n 
addition to . . . the funds specifically appropriated for real 
property maintenance under the heading [RPM,D]" in that appropriation 
act.[2]  The very purpose of section 301 runs counter to the purpose 
of the decisions relied on by the IG, namely, by requiring an election 
to limit available budget authority to a specified amount for a 
particular purpose.  Hence to require the Army to elect RPM,D or O&M 
for funding repair projects would defeat the purpose of section 301 to 
supplement the amount of funds available to the military departments 
for real property repair and maintenance projects in fiscal year 1993 
by making O&M funds available "in addition to using the funds 
specifically appropriated for real property maintenance under the 
heading 'Real Property Maintenance, Defense'."  Pub. L. No. 100-35, 
sec. 301.  Accordingly, section 301 of Public Law 103-35 did not 
require the Army to make an election between the fiscal year 1993-1994 
RPM,D and fiscal year 1993 O&M appropriation accounts for funding 
repair projects.

B.
The IG also questions the Army's position that 31 U.S.C.  sec.  1553(a) 
authorized it to deobligate fiscal years 1993-94 RPM,D appropriations 
and charge expired fiscal year 1993 O&M appropriations.  Upon 
expiration of a fixed period appropriation account (e.g., fiscal year 
1993 O&M appropriation), the obligated and unobligated balances retain 
their fiscal year identity in an "expired account" for an additional 
five fiscal years, after which time the obligated and unobligated 
balances in the appropriation account are canceled and the 
appropriation is closed.  31 U.S.C.  sec.  1552(a).  During the five-year 
expired period, the appropriation is no longer available for new 
obligations, but remains "available for recording, adjusting, and 
liquidating obligations properly chargeable to that account."  31 
U.S.C.  sec.  1553(a).

At the time the Army adjusted the appropriations accounts, the Army 
clearly had not incurred a new obligation.  An agency incurs an 
obligation whenever it incurs "a definite commitment which creates a 
legal liability of the government for the payment of appropriated 
funds."  B-116795, June 18, 1950.  The Army had already incurred the 
obligations, or legal liability, for the projects that it shifted to 
the expired fiscal year 1993 O&M appropriation.  Whether that 
appropriation is available, then, turns on whether the obligations are 
"properly chargeable" to that appropriation under 31 U.S.C.  sec.  1553(a).

The IG concluded that the obligations were not properly chargeable to 
the fiscal year 1993 O&M funds because the Army's action "did not 
correct unrecorded or underrecorded obligations, nor did it adjust the 
account to reflect what actually occurred during the fiscal year."  
Report at 7.  Ordinarily, because any particular obligation is 
chargeable to only one appropriation, any account adjustment during 
the five-year expired period of that appropriation is likely 
necessitated by a factual finding that the obligational records of the 
appropriation do not "reflect what actually occurred" during the 
period of the appropriation's availability.  A typical example is 
where an obligation, properly incurred during the period of 
availability, had been underrecorded or not recorded at all.  The 
situation at issue here, however, is somewhat out of the ordinary 
because few agencies can draw on two different appropriations to 
finance the same activity, as the Army was able to do here.  Further 
complicating the matter is the fact that one appropriation was a      
two-year appropriation and the other a fiscal year appropriation.  

We think the IG's objection to the Army's actions fails to properly 
recognize the flexibility that the Congress provided the Army by 
virtue of section 301 of Public Law 103-35.  As discussed above, the 
Army, in fiscal year 1993, could have obligated either fiscal years 
1993-94 RPM,D or fiscal year 1993 O&M appropriation for repair 
projects.  Had the Army been required to choose between fiscal years 
1993-94 RPM,D and fiscal year 1993 O&M, as the IG argues, the Army's 
choice of RPM,D would have foreclosed the availability of the O&M 
appropriation for this purpose.  It is clear, however, that the fiscal 
year 1993 projects that the Army initially charged to RPM,D could have 
been charged, at the time of obligation, to O&M.  Had the Army charged 
these projects to O&M, the expired fiscal year 1993 O&M appropriation, 
of course, would be available under section 1553(a) to liquidate the 
obligations, and the Army could use the unobligated balance of the 
expired appropriation to adjust the obligations for project 
modifications or cost overruns.  It is just as clear that the Army, 
prior to the close of fiscal year 1993, could have shifted the 
obligations from RPM,D to O&M in order to maximize its flexibility and 
take full advantage of the budget authority available to it.[3]

The question as to whether these obligations were "properly 
chargeable" to the expired fiscal year 1993 O&M appropriation hinges 
upon whether these obligations meet the time, purpose, and amount 
requirements imposed on the fiscal year 1993 O&M appropriation.  See 
73 Comp. Gen. 338 (1994); B-265901, Oct. 17, 1997.  The Congress has 
provided that expired appropriations remain available for, among other 
things, "recording . . . obligations properly chargeable" to that 
appropriation.  The House Committee on Government Operations 
explained:

     "Obligations are 'properly chargeable' to an expired account when 
     they reflect 'bona fide needs' of the period of availability of 
     the expired account . . . and meet other requirements set forth 
     in statutes and Comptroller General and court decisions for 
     obligations of appropriated funds."

H.R. Rep. No. 101-898, at 7.

Because the Army, in fact, incurred these obligations during fiscal 
year 1993 and they represent "bona fide needs" of the period of 
availability, they satisfy the time restriction of the fiscal year 
1993 O&M appropriation.  The fiscal year 1993 O&M appropriation was 
also available for this purpose by virtue of section 301 of Public Law 
103-35.  Additionally, no question has been raised as to whether there 
was adequate budget authority available in the fiscal year 1993 O&M 
appropriation to cover these obligations; indeed, it was for that 
reason that the Army shifted these obligations from RPM,D to O&M.  We 
conclude that these obligations are "properly chargeable" to the 
expired account, and that the Army, acting under 31 U.S.C.  sec.  1553(a) 
and taking advantage of the flexibility afforded it by Public Law 
103-35, can charge these obligations for major repair and minor 
construction projects to the expired fiscal year 1993 O&M 
appropriation.

Robert Murphy
Comptroller General
of the United States

1. The Army's Operation and Maintenance appropriation account falls 
under the "first 11 headings" of title II of the Department of Defense 
Appropriations Act, 1993.     106 Stat. 1878.  Hereafter, when we 
refer to maintenance projects undertaken with funds appropriated under 
this law, we are referring to a repair project costing $15,000 or more 
or a minor construction project costing between $15,000 and $300,000.

2. The legislative history of the fiscal year 1992-93 RPM,D 
appropriation indicates that the Congress had intended, by 
establishing an account specifically for this purpose, to impose a 
higher priority on repair projects than they were receiving when 
funded by the O&M appropriation:

            "The conferees take this action because of their 
            continuing frustration with the services' repeated 
            attempts to use real property maintenance funds for other 
            purposes after having justified to the committee the high 
            priority need for such funds."

H.R. Rep. No. 102-328, at 51 (1991).  See also H.R. Rep. No. 102-95, 
at 7.  Consequently, when the Comptroller announced that because of 
the specificity of the RPM,D appropriation, O&M funds were no longer 
available for repair projects, the Congress enacted section 301 of 
Public Law 103-35 to ensure funding for these priority projects.  
According to the Report of the Armed Services Committee accompanying 
this law, section 301 of the law would fix the "unintended restriction 
of funding sources" imposed on the military departments by the 
Comptroller's interpretation of the fiscal year 1993 Department of 
Defense Appropriations Act.  H.R. Rep. No. 103-83, at 7 (1993).  It 
would correct a "defect in the language of the Department of Defense 
Appropriations Act for Fiscal Year 1993 concerning the use of funds 
for real property repair and construction projects."  Id. at 8. 

3. Relying on our Principles of Federal Appropriations Law (2d ed., 
Dec. 1992) (PFAL), the IG criticized the Army's actions on the ground 
that "while funds may be deobligated for several valid reasons, where 
the purpose of the action is merely to make the funds available for 
new obligations, such deobligation is improper."  Report at 7.  The 
concerns expressed in PFAL at page 7-52 about deobligating funds to 
make them available for new obligations arose in a different context.  
The discussion referred to by the IG relates to the situation where a 
government check, issued in payment of a valid obligation, was not 
promptly negotiated, and the agency if it cancels the check, 
deobligates the funds and obligates the funds for some other use while 
remaining legally liable to the payee for the underlying commitment, 
risks violating the Antideficiency Act.  The Antideficiency Act 
violation would occur if the payee, subsequent to the deobligation, 
demands payment but no funds remain to support the payment.  See 15 
Comp. Gen. 489 (1935); A-44024, Sept. 21, 1942.  There is no 
indication that the Army risked overobligating either of its 
appropriations.  There is no objection in law to an agency fully using 
its budget authority so long as it satisfies any restrictions imposed 
on its use of the budget authority, and we normally would expect an 
agency to make its budget authority fully available for obligation.  
See, e.g., Impoundment Control Act of 1974, 2 U.S.C.  sec.  683, 684(a).