TITLE: B-306424, Presidio Trust--Use of Appropriated Funds for Audio Equipment, March 24, 2006
BNUMBER: B-306424
DATE: March 24, 2006
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B-306424, Presidio Trust--Use of Appropriated Funds for Audio Equipment, March 24, 2006

   Decision

   Matter of: Presidio Trust--Use of Appropriated Funds for Audio Equipment
   Rental Fees and Services

   File: B-306424

   Date:  March 24, 2006

   DIGEST

   Where Congress authorized the Presidio Trust to lease, manage, and
   administer the operations of the Presidio property and the Trust's regular
   operating procedures include providing a venue for public and private
   events, providing audio equipment and related services is a necessary and
   incidental part of the Trust's operations. Accordingly, the Trust's
   appropriations were available to cover expenses incurred during the
   National Academy of Public Administration's use of the Presidio's
   facilities for its 2005 annual Board of Directors meeting.

   DECISION

   This responds to a request for a legal decision on whether the Presidio
   Trust's (Trust) appropriation was available to pay $2,685.00 for the costs
   of audio equipment rental and for related services incurred on behalf of a
   patron's use of the Presidio facilities. Letter to Anthony Gamboa, General
   Counsel, Government Accountability Office, from Carla A. Armstrong,
   Controller, The Presidio Trust, Oct. 4, 2005 (Armstrong Letter), at 2. For
   the reasons stated below, we conclude that the Trust's appropriations were
   available to pay the rental fees and services in question.

   BACKGROUND

   The Presidio, located in San Francisco, was the oldest continuously
   operated military post in the United States before becoming a national
   historic landmark and part of the Golden Gate National Recreation Area.
   The Omnibus Parks and Public Lands Management Act of 1996, Pub. L. No.
   104-333, title I, sect. 101, 110 Stat. 4093, 4097 (Nov. 12, 1996). In
   1996, Congress created the Trust to "manage the leasing, maintenance,
   rehabilitation, repair and improvement of property within the Presidio."
   Id.  sect. 104(a). In pursuing this goal, Congress authorized the Trust to
   "participate in development of programs and activities at the properties
   . . . to negotiate and enter into such agreements, leases, contracts and
   other arrangements with any person, firm, association, organization,
   corporation or government entity . . ." Id. sect. 104(b). Congress also
   envisioned that the Trust would become a self-sustaining organization,
   requiring that the Trust receive no annual appropriations 15 years after
   the first meeting of the Trust's Board of Directors. Id. sect. 105(b).

   In March 1993, the Trust contracted with the National Academy of Public
   Administration[1] (NAPA) to assess the Trust's finance and business
   practices, its long-range strategic plans, and its overall progress in
   becoming a self-sustaining organization as required by its authorizing
   legislation.[2] NAPA completed its study in January 2004. Subsequently,
   the Executive Director of the Trust, Craig Middleton, encouraged NAPA to
   hold one of its Board meetings at the Presidio. Statement of Craig
   Middleton, Sept. 27, 2005 (Middleton Statement). As part of its
   operations, the Trust rents venue space to the public. Armstrong Letter,
   at 1. Mr. Middleton offered that the Trust would pay for some costs
   related to NAPA's use of the Presidio facilities. Middleton Statement.

   NAPA held its Board of Directors meeting at the Presidio in June 2005. The
   meeting lasted about 2 1/2 days. It included an afternoon session led by
   Mr. Middleton discussing NAPA's study of the Presidio and a reception with
   the Board of the Trust. Letter to Thomas H. Armstrong, Assistant General
   Counsel, GAO, from Karen A. Cook, General Counsel, The Presidio Trust,
   Jan. 10, 2006 (Cook Letter), exhibit 2.

   Related to NAPA's use of the Presidio facilities, the Trust incurred
   expenses for the rental of audio equipment and services for the
   installation and the dismantling of such equipment. This equipment
   included rental of table microphones, a 16-channel audio mixer, a podium
   microphone, a dual cassette recorder, an audio equalizer, and a wireless
   microphone. Armstrong Letter, Attached Invoice. The total expense incurred
   was $2,685.00. Id.

   Prior to certifying payment for the audio equipment and related services,
   the Controller of the Trust, Carla A. Armstrong, requested an advance
   decision, pursuant to 31 U.S.C. sect. 3529(a), as to whether the Trust's
   appropriations are available for paying such expenses. A certifying
   officer has the statutory right to obtain an advance decision from the
   Comptroller General on any payment voucher presented for certification. 31
   U.S.C. sect. 3529(a). Ms. Armstrong noted that occasionally the Trust will
   cosponsor an event with another organization where the event will benefit
   the Trust, for example, where the Trust personnel will obtain skills or
   knowledge useful to their jobs. Armstrong Letter, at 1. Ms. Armstrong
   expressed concern that the charges may be improper because the expenses
   did not benefit the Trust directly. Id.

   In an effort to develop the factual record, we contacted the Trust's
   General Counsel, Karen A. Cook. Ms. Cook contended that appropriated funds
   could be used to pay the equipment and related expenses because they were
   reasonable expenses incurred by the Trust under its broad statutory
   authority to manage the properties within the Presidio. Cook Letter, at
   2--3.

   DISCUSSION

   Appropriated funds may be used only for the purposes for which they are
   appropriated and for any expenses that are reasonably necessary for the
   accomplishment of that purpose. 31 U.S.C. sect. 1301(a); see also
   B-304228, Sept. 30, 2005. This statute, however, does not require that
   every item of expenditure be specified in an appropriation act, and it is
   well settled that agencies have reasonable discretion in determining how
   to carry out the objects of their appropriations. See B-303170, Apr. 22,
   2005. We have long recognized that "where an appropriation is made for a
   particular object, by implication it confers authority to incur expenses
   which are necessary or proper or incident to the proper execution of the
   object . . ." 6 Comp. Gen. 619, 621 (1927).

   In determining whether expenses are "necessary or proper or incident" to
   the object of an appropriation, we apply a three-part test: (1) the
   expenditure must have a logical relationship to the appropriation sought
   to be charged; (2) the expenditure must not be prohibited by law; and (3)
   the expenditure must not be provided for by another appropriation. E.g.
   B-303170, Apr. 22, 2005; 63 Comp. Gen. 422, 427--28 (1984). We are aware
   of no law that would prohibit the Trust from using its appropriated funds
   for paying expenses related to rental of audio equipment nor are we aware
   of another appropriation that would specifically cover the expenses at
   issue in this case. Accordingly, we must determine whether the Trust's
   payment of audio equipment expenses for the 2005 NAPA Board of Directors
   meeting bears a logical relationship to the appropriation that the Trust
   receives.

   For fiscal year 2005, Congress appropriated $20,000,000[3] to the Trust
   for "necessary expenses" to fulfill responsibilities under the Trust's
   authorizing legislation.[4] Pub. L. No. 108-447, div. E, title II, 118
   Stat. 2809, 3092 (Dec. 8, 2004). The "necessary expenses" of the Trust are
   defined by reference to the Omnibus Parks and Public Lands Management Act
   under which Congress authorized the Trust to "manage the leasing,
   maintenance, rehabilitation, repair and improvement of property within the
   Presidio under its administrative jurisdiction." Pub. L. No. 104-333,
   sect. 104(a).

   On the basis of Mr. Middleton's explanations, the Trust's General Counsel
   believes that the expenses in question are necessary expenses of the
   Trust's appropriations. Mr. Middleton stated that he made the decision to
   incur the expense in an attempt to encourage NAPA to hold its annual
   meeting at the Trust facilities. Mr. Middleton also stated that NAPA's use
   of the facilities was beneficial to the Trust because it "foster[ed]
   closer working relations with NAPA, showcase[d] The Presidio Trust as a
   new model to accomplish public work through a government corporation, and
   [gave] key Trust staff access to members of the Academy Board." Cook
   Letter, exhibit 3. This statement justifies the expenses in question as
   occurring in the legitimate pursuit of business networking to garner more
   business for the Trust and to gain access to NAPA's expertise in the field
   of efficient public administration. In this decision we do not need to
   decide whether Mr. Middleton's business networking reason, in and of
   itself, is an adequate justification for using the Trust's appropriation
   to rent equipment and services for NAPA's Board meeting. While we
   certainly appreciate the benefits an organization can obtain as a result
   of professional networking, as we explain below, we believe that there is
   a clearer, more direct nexus between the rental costs and the Trust's
   mission.

   As noted above, Congress created the Trust to "manage the leasing,
   maintenance, rehabilitation, repair and improvement of property within the
   Presidio." Under this authority, the Trust maintains regular business
   practices, which include leasing venue space on a short-term basis for
   public use. See Armstrong Letter, at 1. Such short term use of the
   Presidio facilities may include providing space for conference or special
   events, similar to the NAPA Board of Director's meeting. It is reasonable
   that an organization, such as the Trust, seeking to be competitive in the
   business of providing facilities for conferences and special events would
   provide audio equipment and related services in addition to providing
   space. Accordingly, we believe that providing such audio equipment and
   related services has a rational relationship to the Presidio's role in the
   managing "the leasing, maintenance, rehabilitation, repair and
   improvement" of the Presidio property. We conclude that the rental of
   audio equipment and related services were "necessary expenses" in
   fulfilling the Trust's statutory responsibilities, and the Trust's
   appropriations were available to pay for such expenses.

   Although we conclude that the Trust's appropriations are available for
   paying for the rental of audio equipment and related services, we
   understand Ms. Armstrong's apprehension. In addition to providing the
   equipment and related services, the Trust, in this case, waived its usual
   fee. The Trust presently has no written policy regarding waiver of fees
   and/or covering costs such as rental of audio equipment. Cook Letter, at
   2. With no definite guidelines or procedures, it is difficult for the
   certifying officer to make a determination of whether such expenses should
   be certified for payment. We urge the Presidio to develop and adopt more
   definite guidelines and operating procedures.

   CONCLUSION

   Since the Trust's regular operations include providing venue and
   facilities for the public use, we conclude that costs incurred to furnish
   the facilities with audio equipment and related services to be used by
   patrons of the Presidio's facilities are a necessary expense of the
   Trust's operations. Accordingly, we do not object to the Trust using its
   appropriations to pay for the rental of audio equipment and related
   services used during the NAPA 2005 Board of Directors meeting.

   Anthony H. Gamboa

   General Counsel

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

   [1] The National Academy of Public Administration (NAPA) is a federally
   chartered corporation whose mission is, among other things, to evaluate
   "the structure, administration, operation, and program performance of
   Federal and other governments and government agencies, anticipating,
   identifying, and analyzing significant problems, and suggesting timely
   corrective action." 36 U.S.C. sect. 150103.

   [2] In its report accompanying the fiscal year 2003 Interior
   appropriations bill, enacted as Pub. L. No. 108-7, 113 Stat. 11 (Feb. 20,
   2003), the House Appropriations Committee directed the Trust to contract
   with NAPA to study its "finance and business management practices,
   including financial assumptions and projections; a review of major capital
   construction projects; and the management and use of government loan
   authorities." H.R. Rep. No. 107-564, at 159-60 (2002).

   [3] In addition to the amount appropriated in the annual appropriation
   act, the Trust, pursuant to statute, retains and credits any proceeds it
   receives to its appropriation. See Pub. L. No. 104-333, sect. 104(a).

   [4] Pub. L. No. 104-333.