TITLE: B-307382, Department of Homeland Security--Use of Management Directorate Appropriations to Pay Costs of Component Agencies, September 5, 2006
BNUMBER: B-307382
DATE: September 5, 2006
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B-307382, Department of Homeland Security--Use of Management Directorate Appropriations to Pay Costs of Component Agencies, September 5, 2006

   B-307382

   September 5, 2006

   The Honorable Harold Rogers, Chairman
   Subcommittee on Homeland Security
   Committee on Appropriations
   House of Representatives

   The Honorable Martin Sabo, Ranking Member
   Subcommittee on Homeland Security
   Committee on Appropriations
   House of Representatives

   Subject: Department of Homeland Security--Use of Management Directorate
   Appropriations to Pay Costs of Component Agencies

   This responds to your letter of February 1, 2006, in which you requested
   our legal opinion regarding the Department of Homeland Security's (DHS)
   use of its Management Directorate appropriations to pay for certain costs
   of several DHS component agencies. In considering a reprogramming request
   submitted by DHS, the Committee on Appropriations learned that in fiscal
   year 2005 the department had charged the costs of mail operations,
   employee transit benefit subsidies, parking, and executive sedan services
   for various DHS component agencies[1] to the department's Management
   Directorate appropriations, rather than charging those costs to specific
   appropriations which those components receive directly for "management and
   administration" expenses.

   As we explain below, either DHS's Management Directorate appropriations or
   the various "management and administration" appropriations for the
   subcomponents may be reasonably construed as available to pay the costs of
   administrative activities such as mail operations, parking, and executive
   sedan services incurred by component agencies. Having elected to use the
   Management Directorate appropriations to pay the costs of mail operations,
   parking, and executive sedan services for SLGCP, IAIP, and S&T ab initio,
   DHS should continue to use that same appropriation to the exclusion of any
   other for the same purpose unless DHS, at the beginning of the fiscal
   year, informs Congress of its intent to change for the next fiscal year.

   In fiscal year 2005, DHS charged the costs of employee transit benefit
   subsidies to both the Management Directorate appropriations and the
   "management and administration" appropriations for the three component
   agencies, SLGCP, IAIP and S&T. As stated above, while both appropriations
   may be reasonably construed to be available for the cost of employee
   transit benefits, an agency must elect one and use it to the exclusion of
   the other. Continued use of the same appropriation to the exclusion of any
   other for the same purpose is required to provide for consistency,
   regularity, and predictability in the execution of the appropriations
   provided by Congress. DHS should elect to charge the costs of transit
   benefit subsidies incurred by those three component agencies to either the
   Management Directorate appropriations or the "management and
   administration" appropriations for the respective DHS subcomponent and
   adjust its fiscal year 2005 accounts accordingly.

   Consistent with our customary practice when rendering opinions, upon
   receipt of your request, we wrote a letter to DHS's General Counsel to
   establish a record on the matter you put before us. Letter from Susan A.
   Poling, Managing Associate General Counsel, GAO, to Philip J. Perry,
   General Counsel, DHS, March 3, 2006. We requested factual information and
   posed a series of questions to the General Counsel designed to permit us
   to assess DHS's legal justification for charging such costs to the
   appropriations accounts in question. We received a response from DHS on
   April 24, 2006. Letter from Eugene Schied, Acting Chief Financial Officer,
   DHS, to Susan A. Poling, GAO, March 30, 2006 (Schied Letter).

   BACKGROUND

   Under the Homeland Security Act of 2002, the Under Secretary for
   Management is responsible for the management and administration of DHS,
   including, inter alia, the budget, appropriations, expenditure of funds,
   accounting, and finance; procurement; human resources and personnel;
   facilities, property, equipment, and other material resources; and any
   other management duties that the Secretary may designate. See 6 U.S.C.
   sect. 341(a). DHS necessary expenses of the Office of the Under Secretary
   for Management," as authorized by section 341. Department of Homeland
   Security Appropriations Act, 2005, Pub. L. No. 108-334, title I, 118 Stat.
   1298 (Oct. 18, 2004). See also Department of Homeland Security
   Appropriations Act, 2006, Pub. L. No. 109-90, title I, 119 Stat. 2064
   (Oct. 18, 2005).[2] Various DHS component agencies also received specific,
   direct appropriations for "management and administration" for fiscal year
   2005. The Office of State and Local Government Coordination and
   Preparation (SLGCP), for example, received a specific "Management and
   Administration" appropriation available "for necessary expenses" of that
   office. Pub. L. No. 108-334, title III, 118 Stat. at 1309. Further, the
   Office of the Under Secretary for Information Analysis and Infrastructure
   Protection (IAIP) received a specific "Management and Administration"
   appropriation available for "salaries and expenses" of the office "and for
   management and administration of programs and activities." Id., title IV,
   118 Stat. at 1314. Similarly, the Office of the Under Secretary for
   Science and Technology (S&T) received a specific "Management and
   Administration" appropriations available for "salaries and expenses" of
   the office "and for management and administration of programs and
   activities." Id., at 1315.

   For fiscal year 2005, DHS charged the costs of mail operations, parking,
   and executive sedan service[3] for SLGCP, IAIP, and S&T to the Office of
   the Under Secretary for Management. Schied Letter. DHS charged some of the
   costs of transit benefit subsidies of SLGCP, IAIP, and S&T for fiscal year
   2005 to the Management Directorate appropriations and some costs of
   transit benefit subsidies to the respective component appropriations. Id.
   According to DHS, the Management Directorate paid for these costs because
   that directorate was responsible for providing these services to the new
   start-up organizations when DHS was created. Id.

   The question arises whether fiscal year 2005 appropriations for the DHS
   Office of the Under Secretary for Management were available to pay the
   costs of mail operations, employee transit benefit subsidies, parking, and
   executive sedan services incurred by these three DHS component agencies
   that received separate, direct appropriations available for "management
   and administration."

   DISCUSSION

   An agency may use appropriated funds only for the purposes for which
   appropriated. 31 U.S.C. sect. 1301(a). Even if a particular expenditure is
   not specifically provided for in the appropriation, the expenditure may be
   permissible under the "necessary expense doctrine" if it will contribute
   materially to the effective accomplishment of the function. B-301721, Jan.
   16, 2004. We apply a three-part test to determine if the Management
   Directorate appropriation is available for these purposes. First, the
   expenditure must be reasonably related to the purposes that Congress
   intended the appropriation to fulfill; second, the expenditure must not be
   prohibited by law; and third, the expenditure must not fall within the
   scope of another appropriation or funding source. See 63 Comp. Gen. 422,
   427-28 (1984); B-251887, July 22, 1993.

   When we consider the costs of mail operations, employee transit benefit
   subsidies, parking, and executive sedan services, we find that these costs
   meet the first two prongs of the necessary expense doctrine. Id. These
   costs are reasonably related to the purpose that Congress intended the
   Management Directorate appropriations to fulfill. See 6 U.S.C. sect.
   341(a). See also Pub. L. No. 108-334, 118 Stat. at 1298, 1309, 1314, 1315.
   Our cases, for example, have long found that mail operations are
   reasonably related, and contribute materially, to the effective management
   and administration of the programs administered by DHS and its component
   agencies. See, e.g., 4 Comp. Gen. 256 (1924) (purchase of air mail stamps
   for the transmittal of official matter may be properly regarded as a
   necessary miscellaneous item of expense); B-212745, Apr. 15, 1985;
   B-194851, Apr. 8, 1980. Cf. 39 U.S.C. sect. 3206.[4]

   Federal agencies, including DHS, have specific authority to provide
   employee transit subsidies, 5 U.S.C. sect. 7905, and executive sedan
   services, see 40 U.S.C. sections 601-611. We have also found that
   appropriated funds are available for the cost of parking.[5] See 72 Comp.
   Gen. 139 (1993). See also 55 Comp. Gen. 897 (1976). The costs of mail
   operations, employee transit benefit subsidies, parking, and executive
   sedan services are not prohibited by law, and such expenditures are
   reasonably related to the purposes that Congress intended DHS's various
   management and administration appropriations to fulfill.

   Under the third prong--what is at issue here--an expenditure must not fall
   within the scope of another appropriation or funding source. 63 Comp. Gen.
   at 427-28. Even an expenditure that may be reasonably related to a general
   appropriation may not be paid out of that appropriation where the
   expenditure falls specifically within the scope of another appropriation.
   See, e.g., B-291241, Oct. 8, 2002; B-290005, July 1, 2002; B-289209, May
   31, 2002. The question arises as to which appropriation account is
   available to DHS for the costs at issue--DHS's "Management Directorate"
   appropriations or appropriations specifically available to the component
   agencies for "management and administration."

   Where one can reasonably construe two appropriations as available for an
   expenditure not specifically mentioned in either appropriation, we will
   accept an administrative determination as to which appropriation to
   charge. 68 Comp. Gen. 337 (1989). See also 5 Comp. Gen. 479 (1926). In 68
   Comp. Gen. 337, we considered whether the Railroad Retirement Board should
   use its general appropriation or a separate appropriation for the Board's
   Office of Inspector General (OIG) to pay for performance awards to members
   of the OIG's Senior Executive Service (SES). Because the head of the Board
   makes determinations regarding performance awards under the Civil Service
   Reform Act, we found that one could reasonably construe the Board's
   general appropriation as available for payment of OIG SES performance
   awards in the same manner and to the same extent as non-OIG SES
   performance awards. 68 Comp. Gen. 337.

   Alternatively, we found that one may reasonably construe the OIG
   appropriation as available for payment of OIG performance awards; we
   opined that the payment of performance awards from the appropriation
   available for the activity which presumably benefited from the performance
   being rewarded is not an unreasonable proposition. Id. Also, the Board
   could view SES performance awards for OIG employees as akin to salaries
   and thus chargeable to the OIG appropriation. Id. We concluded that the
   Railroad Retirement Board could elect to use either appropriations to pay
   the OIG SES performance awards because both appropriations could be
   reasonably construed as available for that purpose. Id. However, once an
   election is made, continued use of the same appropriation to the exclusion
   of any other for the same purpose is required. 59 Comp. Gen. 518 (1980).

   Similarly, we find that that either DHS's "Management Directorate"
   appropriation or the "management and administration" appropriations for
   DHS components are available to pay the costs of mail operations, employee
   transit benefit subsidies, parking, and executive sedan services. DHS
   could reasonably construe either appropriation as available for these
   costs. Under provisions of the Homeland Security Act of 2002, the Under
   Secretary for Management is responsible for the "management and
   administration" of DHS, including, for example, the centralized provision
   of services associated with such costs. See 6 U.S.C. sect. 341(a).
   Alternatively, DHS could reasonably construe the various "management and
   administration" appropriations for the SLGCP, IAIP, and S&T components as
   available for such "necessary expenses." See, e.g., Pub. L. No. 108-334,
   title III, 118 Stat. at 1309.

   In this case, DHS elected to use the Management Directorate appropriations
   to pay the costs of mail operations, parking, and executive sedan services
   for the various start-up components ab initio. Schied Letter. We find this
   construction reasonable. See 68 Comp. Gen. 337. Having elected to use the
   Management Directorate appropriations, DHS should continue to use that
   same appropriation to the exclusion of any other for the same purpose,
   unless DHS, at the beginning of the fiscal year, informs Congress of its
   intent to change for the next fiscal year. See B-272191, Nov. 4, 1997.

   With regard to transit subsidy benefits for employees of IAIP, S&T and
   SLGCP, DHS charged those costs to both the Management Directorate
   appropriations and the management and administration appropriations for
   those subcomponents. Schied Letter. As we mention above, continued use of
   the same appropriation to the exclusion of any other for the same purpose
   is required. 59 Comp. Gen. 518. This rule provides for consistency,
   regularity, and predictability in the execution of appropriations provided
   by Congress. U.S. General Accounting Office, Unsubstantiated DOE Travel
   Payments, GAO/RCED-96-58R at 3 (Washington, D.C.: Dec. 28, 1995). In the
   absence of such a rule, Congress might have to resort to the cumbersome
   and detailed appropriations acts common many decades ago. Id.

   Consistency is also required because, in addition to providing necessary
   funding for federal programs and activities, an appropriation establishes
   a maximum authorized program level. See B-300248, Jan. 15, 2004; 72 Comp.
   Gen. 164 (1993). That is, the agency's ability to elect between two
   appropriations available to pay for an expenditure does not mean that an
   agency can elect to use (or exhaust) first one and then the other of the
   two appropriations for the same class of expenditures. 10 Comp. Gen. 440,
   447 (1931). See also 23 Comp. Gen. 827 (1944) ("The use of the
   appropriations must be consistent.").

   DHS should elect to charge the costs of transit benefit subsidies to
   either the Management Directorate appropriations or the "management and
   administration" appropriations for the respective subcomponent agency.
   Under the authority of 31 U.S.C. sect. 1553(a), DHS should then adjust its
   fiscal year 2005 accounts accordingly. Section 1553(a) permits agencies,
   after the end of the period of availability for obligation of a fixed
   appropriation account and before the closing of that account under section
   1552(a) of title 31 of the U.S. Code, to record, adjust, and liquidate
   obligations properly chargeable to that account.[6]

   CONCLUSION

   DHS's Management Directorate appropriations or the various "management and
   administration" appropriations for the subcomponents may be reasonably
   construed as available to pay for the costs of mail operations, parking
   for official agency vehicles, and executive sedan services incurred by
   component agencies. Having elected to use the Management Directorate
   appropriations to pay these costs ab initio, DHS should continue to use
   that same appropriation to the exclusion of "the management and
   administration" appropriations of the various components unless DHS, at
   the beginning of the fiscal year, informs Congress of its intent to change
   for that next fiscal year.

   In fiscal year 2005, DHS improperly charged the costs of employee transit
   benefit subsidies to both the Management Directorate appropriations and
   the "management and administration" appropriations for the three
   subcomponent agencies, SLGCP, IAIP and S&T. DHS should elect to charge the
   costs of transit benefit subsidies to either the Management Directorate
   appropriations or the "management and administration" appropriations for
   the respective DHS subcomponent and adjust its fiscal year 2005 accounts
   accordingly.

   Gary L. Kepplinger
   General Counsel

   B-307382

   DIGESTS

    1. Where one can reasonably construe two appropriations as available for
       an expenditure not specifically mentioned under either appropriation,
       we will not question an administrative determination as to which
       appropriation to charge. Either Department of Homeland Security's
       Management Directorate appropriations or the various "management and
       administration" appropriations for DHS subcomponents, may be
       reasonably construed as available to pay the costs of mail operations,
       parking for official agency vehicles, and executive sedan services
       incurred by component agencies. Having elected to use the Management
       Directorate appropriations to pay such costs, DHS must now continue to
       use that same appropriation to the exclusion of the management and
       administration appropriations of the various components.

    2. DHS charged fiscal year 2005 costs of employee transit benefit
       subsidies to both the Management Directorate appropriations and the
       "management and administration" appropriations for three subcomponent
       agencies, SLGCP, IAIP and S&T. Continued use of the same appropriation
       to the exclusion of any other for the same purpose is required to
       provide for consistency, regularity, and predictability in the
       execution of the appropriations provided by Congress. DHS should elect
       to charge these costs to either the Management Directorate
       appropriations or the "management and administration" appropriations
       for the respective DHS subcomponent. DHS should then adjust its fiscal
       year 2005 accounts accordingly under the authority of 31 U.S.C. sect.
       1553(a).

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

   [1] Those component agencies were the Office of State and Local Government
   Coordination and Preparation (SLGCP); the Office of the Under Secretary
   for Information Analysis and Infrastructure Protection (IAIP); and Office
   of the Under Secretary for Science and Technology (S&T). Under recent
   reorganizations, SLGCP and IAIP were abolished. IAIP's functions were
   divided into two new components--Analysis and Operations and the
   Preparedness Directorate. See H.R. Conf. Rep. No. 109-241, at 30 (2005)
   (discussing recent DHS reorganization under the agency's ``Second Stage
   Review'').

   [2] The Office of the Under Secretary for Management and its subordinate
   offices (i.e., the offices of the Chief Financial Officer, Chief
   Information Officer, Chief Human Capital Officer, Chief Administrative
   Services Officer, Chief Procurement Officer, and Chief Security Officer)
   are referred to collectively within DHS as the "Management Directorate,"
   consistent with the other "directorates" established by the Homeland
   Security Act of 2002. See 6 U.S.C. sections 341-345. See also "DHS
   Organization, Department Structure, Directorate for Management" available
   at http://www.dhs.gov/dhspublic/interapp/editorial/editorial_0096.xml
   (last visited Aug. 2, 2006). Throughout this opinion, references to the
   "Management Directorate" appropriations and appropriations for the "Office
   of the Under Secretary for Management" are synonymous and used
   interchangeably.

   [3]Although DHS did not define "executive sedan service," for purposes of
   this decision we presume that the service refers to the provision of local
   transportation for official, authorized uses.

   [4] Section 3206(a) permits agencies to reimburse the Postal Service for
   penalty mail "out of any appropriations or funds available to them." This
   statute permits federal agencies to use appropriations for one component
   to pay penalty mail costs of another component funded under a separate
   appropriation and does not constitute an unauthorized transfer of
   appropriations or augmentation of funds. 33 Comp. Gen. 216 (1953). Penalty
   mail means official mail, other than franked mail, which is authorized by
   law to be transmitted in the mail without prepayment of postage. 39 U.S.C.
   sect. 3201(1). To the extent that costs of mail operations may include
   such reimbursement to the Postal Service, we would not object to DHS
   charging any appropriation available to the agency for the costs of
   penalty mail. 39 U.S.C. sect. 3206(a); 33 Comp. Gen. 216.

   [5] While appropriated funds are available to provide parking facilities
   generally, employee parking expenses incident to ordinary commuting are
   personal expenses and thus not payable from appropriated funds. 63 Comp.
   Gen. 270 (1984). An agency may provide employee parking facilities if it
   determines that the lack of parking facilities will significantly impair
   the operating efficiency of the agency and will be detrimental to the
   hiring and retention of personnel. 72 Comp. Gen. 139 (1993).

   [6] DHS could temporarily charge the costs of transit benefit subsidies to
   the Management Directorate appropriations during fiscal year 2005 under
   the authority of 31 U.S.C. sect. 1534, which permits agencies to make
   adjustments at any time during the fiscal year between appropriations.