TITLE:  National Archives and Records Administration's Records Center Revolving Fund -- Property Damage Recovery, B-302962, June 10, 2005
BNUMBER:  B-302962
DATE:  June 10, 2005
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   Decision

   Matter of: National Archives and Records Administration's Records Center
Revolving Fund -- Property Damage Recovery

   File: B-302962

   Date: June 10, 2005

   DIGEST

   The National Archives and Records Administration (NARA) should collect
amounts sufficient to repair damages to facilities financed by the Records
Center Revolving Fund, whether that damage is caused by NARA's federal
agency customer, the customer's contractor or NARA's own contractors, and
deposit those amounts into the revolving fund.  Agency customers that
receive amounts from their own contractors to cover such repairs should
transfer those amounts to the revolving fund.   

   DECISION

   The General Counsel of the National Archives and Records Administration
(NARA) has requested an advance decision under 31 U.S.C. S 3529 on whether
NARA may collect and retain in its Records Center Revolving Fund payments
for damages caused by a customer agency or the agency's contractor to
facilities financed by the revolving fund.  Letter from Gary M. Stern,
General Counsel, NARA, to Susan Poling, Associate General Counsel, GAO,
Mar. 31, 2004 (Stern Letter).  Specifically, the General Counsel asks: (1)
whether NARA may receive payments from an agency customer for such damages
as an exception to the so-called interdepartmental waiver doctrine;[1] (2)
whether NARA may retain payments received from a customer's contractor for
damages caused by that contractor; and (3) whether an agency customer may
transfer to NARA amounts that the customer received from its contractor
for reimbursement for damages, or whether the agency customer must deposit
those funds in the Treasury as miscellaneous receipts.  Id.  Additionally,
from the facts that NARA poses, we identify a fourth question: (4) whether
NARA may retain payments received from its own NARA contractors for
damages caused by the contractor to facilities financed by the revolving
fund.

   As we explain below, NARA should collect amounts sufficient to cover
repair costs from entities that damage facilities financed by the Records
Center Revolving Fund, whether that damage is caused by the agency
customer, the customer's contractor or NARA's own contractors, and deposit
those amounts into the revolving fund.  Further, agency customers that
receive amounts directly from their own contractors to cover such repairs
should transfer those amounts to the revolving fund.

   BACKGROUND

   NARA stores temporary and pre-archival records that belong to other
federal agencies in its Records Center Program Facilities.  Federal
agencies may enter into agreements with NARA to transfer and store those
records at NARA records centers.  See 44 U.S.C. S 3103; 36 C.F.R. SS
1220.38(a), 1228.150, 1228.156(a).  See generally 44 U.S.C. SS 2901--2909
(Records Management).  When a federal agency customer or that customer's
contractor damages a loading dock door while delivering records for
storage at a national or regional NARA records center, causing several
thousand dollars worth of damage, NARA, for security and other reasons,
must immediately repair the damage.[2]  Stern Letter.

   The Treasury and General Government Appropriations Act, 2000, established
a "Records Center Revolving Fund" (revolving fund) to pay for expenses and
equipment necessary to provide storage and related services for such
temporary and pre-archival records of federal agencies and other
instrumentalities of the federal government.  Pub. L. No. 106-58, Title
IV, Nat'l Archives & Recs. Admin., Recs. Ctr. Revolving Fund, 113 Stat.
430, 460-61 (Sept. 29, 1999).  NARA must store these records at "Federal
National and Regional Records Centers" and must credit the revolving fund
with user charges received from federal agencies as payment for the
provision of personnel, storage, materials, supplies, equipment and
authorized services.  Id.  The rates that NARA charges must "return in
full the expenses of operation, including reserves for accrued annual
leave, worker's compensation, depreciation of capitalized equipment and
shelving, and amortization of information technology software and
systems."  Id.  The Congress also appropriated an "initial capitalization"
to the fund for start-up costs.  Id.  The revolving fund may also retain
up to four percent of its total annual income as "an operating reserve or
for the replacement or acquisition of capital equipment, including
shelving, and for the improvement and implementation of the financial
management, information technology, and other support systems" of NARA. 
Id.  At the close of the fiscal year, funds in excess of the four percent
must be deposited into the Treasury as miscellaneous receipts.  Id.

   According to the Senate Appropriations Committee report accompanying
Public
Law 106-58, the purpose in establishing the revolving fund was to make the
NARA records center operations self-sufficient, providing services on a
standard price basis to federal agency customers, without further
appropriation from Congress.  S. Rep. No. 106-87, at 68 (1999). 

   Apart from the revolving fund, NARA receives annual appropriations "for
repair, alteration, and improvement of archives facilities, and to provide
adequate storage for holdings."  Pub. L. No. 108-199, Div. F, Title IV,
118 Stat. 3, 336-37 (Jan. 23, 2004) (emphasis added). See also Pub. L. No.
106-58, 113 Stat. 430, 460.  NARA officials informally advised us that
they construe the term "holdings" to refer to documents for which NARA has
legal and physical custody, that is, the permanent records of the National
Archives of the United States, while "temporary and pre-archival records
of federal agencies" are records for which NARA has physical, but not
legal custody.  See, e.g., 36 C.F.R. S 1228.272(c) (legal custody of
records passes to NARA when a NARA official signs Standard Form 258,
Agreement to Transfer Records to the National Archives of the United
States, acknowledging receipt of records).  NARA officials further advised
us that the permanent archives and temporary agency records are housed
separately, and that NARA accounts separately for the respective expenses
for their care.  See, e.g., Treasury, Postal Service, and General
Government Appropriations for Fiscal Year 2003:  Hearing before a
Subcommittee of the House Committee on Appropriations, 107th Cong. 612,
614-15, 657 pt. 4 (2002) (NARA 2003 Budget Congressional Justification).

   The matter before us concerns the collection and disposition of funds
received for property damage to federal records centers financed by the
revolving fund, not for NARA's operations related to "holdings" (the
permanent records of the National Archives) that are financed by the
annual appropriations.

   ANALYSIS

   As a general proposition, amounts recovered by the government for loss or
damage to government property cannot be credited to the appropriation
available to repair or replace the property, but must be deposited in the
Treasury as miscellaneous receipts.  64 Comp. Gen. 431 (1985).  It has
long been the rule that where one federal agency damages property of
another federal agency, funds available to the former may not be used to
pay claims for damages by the latter.  65 Comp. Gen. 910, 911 (1986); 46
Comp. Gen. 586, 587 (1966).  The prohibition, known as the
"interdepartmental waiver" doctrine, is based primarily on the concept
that property of the various agencies is not the property of separate
entities but rather of the government as a single entity, and there can be
no reimbursement by the government for damages to or loss of its own
property.  46 Comp. Gen. at 586, 587. 

   The interdepartmental waiver doctrine does not apply, however, where an
agency has statutory authority to retain income derived from the use or
sale of certain property, and the governing legislation shows an intent
for the particular program or activity to be self-sustaining.  24 Comp.
Gen. 847 (1945).  Thus, where an agency operation is financed through
reimbursements or a revolving fund, the prohibition does not apply.  65
Comp. Gen. 910 (1986).  See also 3 Comp. Gen. 74, 75 (1923).  In such
cases, the agency should recover amounts sufficient to cover loss or
damage to property financed by the reimbursements or revolving fund,
regardless of whether that damage is caused by another federal agency or a
private party, and deposit those funds into the revolving fund.  See 65
Comp. Gen. 910.  The rationale for this exception is that the revolving
fund, established to operate like a self-sustaining business, should not
bear the cost for "other than objects for which the fund was created." Id.

   Thus, the Government Printing Office (GPO) was required to reimburse the
General Services Administration (GSA) for expenses connected with the
repair of a motor pool revolving fund vehicle occasioned by an accident in
which a GPO employee was the driver.  59 Comp. Gen. 515 (1980).  The
repair expenses were a part of the cost of operating and maintaining a
motor vehicle pool.  Id.  Since the Congress intended the GSA revolving
fund to operate on a businesslike basis, it would have frustrated this
objective to impose upon the revolving fund the cost of a loss for which
the managing agency was in no way responsible.  Id.   See also 27 Comp.
Gen. 352 (1947); 3 Comp. Gen. 74 (1923).

   The interdepartmental waiver rule does not apply in the situation posited
by NARA, where a federal agency customer damages property maintained by
the records center revolving fund.  In such a situation, the agency
customer should reimburse the revolving fund for the expenses of repairing
that damage.  59 Comp. Gen. 515.  Repair expenses for damages to revolving
fund facilities are expenses of providing storage and related services for
temporary and pre-archival federal records.  Pub. L. No. 106-58, 113 Stat.
460.  NARA is required by statute to credit the revolving fund with user
charges at rates that "return in full the expenses of operations."  Pub.
L. No. 106-58, 113 Stat. 461.  Therefore amounts reimbursed for those
damages should be returned to the revolving fund.  59 Comp. Gen. 515. 
Congress intended the records center revolving fund to operate like a
self-sufficient business and that rates charged return in full the
expenses of operation, Pub. L. No. 106-58, 113 Stat. 461, without further
appropriation from Congress.  To impose upon the revolving fund a loss for
which NARA was in no way responsible would require NARA to spread the
costs of damages caused by one customer to all NARA customers, in effect,
causing other customer agencies to subsidize storage and service provided
to another agency customer. [3]   59 Comp. Gen. 515.

   For these same reasons, NARA should deposit into the revolving fund any
payments that NARA receives as a result of damages caused by an agency
customer's contractor, or by NARA's own contractors, to record center
facilities maintained by the revolving fund.  Id.  In this regard, it
would make no difference whether NARA's customer agency transferred to
NARA amounts that the customer collected from its contractor or whether
the contractor paid NARA directly.

   CONCLUSION

   NARA should collect amounts sufficient to cover repair costs from entities
that damage facilities financed by the Records Center Revolving Fund,
whether that damage is caused by the agency customer, the customer's
contractor or NARA's own contractors, and deposit those amounts into the
revolving fund.  Agency customers that receive amounts directly from their
own contractors to cover such repairs should transfer those amounts to the
revolving fund.

   /signed/

   Anthony H. Gamboa

   General Counsel

   ------------------------

   [1] The interdepartmental waiver doctrine is discussed in detail infra at
page 3.

   [2] NARA would be responsible for repairing damages to those facilities
owned by the General Services Administration.  Stern Letter.  See
generally 41 C.F.R. SS 102-74.10--74.35 (federal property management
regulations).

   [3] This situation differs from the facts of B-301714, Jan. 30, 2004.  In
that case we held that the Library of Congress should use administrative
fees collected from Federal Library and Information Network's (FEDLINK)
revolving fund customers to cover a loss resulting from advance payments
to a contractor who subsequently defaulted and declared bankruptcy, rather
than assign the loss to the specific agencies whose orders were placed
with that contractor.  The federal customer agencies in B-301714, Jan. 30,
2004, on whose behalf the Library placed the orders, bore no
responsibility for the contractor's default.  Here, the agency or the
agency's contractor is clearly at fault and should bear the cost of
repairing any damages they caused to facilities financed by the revolving
fund.