MATTER OF: ENVIRONMENTAL PROTECTION AGENCY--REQUEST FOR CLARIFICATIONS OF B-195732, JUNE 11, 1980, 59 COMP. GEN. 518, SEPTEMBER 23, 1982:

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP09K00541R001000090024-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: August 16, 2011
• Sequence Number: 24
• Publication Date: September 23, 1982
• Content Type: MISC

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Comp (;,n DECISIONS OF TIE ('OMPTROLLER GENERAL
a residence. The
it be considered
'rohibited under
.as FPMR 11)1 7
rtain type- n,f in
employee's pur-
example, where
Bence at his old
,e as a means of
louse at his new
he second mort-
In holding that
he second mort-
.eenses connected
;age transaction
the purchase of
April 30, 1976.
a second mort-
employee may
.sure transaction
(-d.
here interim fi-
not secured by a
~s were incurred
6). In that deci-
.724a against re-
e is sufficiently
elating to an in-
it the new duty
?sidence. To the
to financing se-
rcew residence, it
prL..
)ove in that the
g to supplement
ing pending the
served a very
interest in the
irchase pending
ed by tha buyer.
1. 650, we do not
,eds of trust ex-
state market so
Travel Regula-
ar deeds of trust
subsequently ex-
nancial package
essential to the purchase of the residence at his new duty station.
In this regard. his case is to be distinguished from that of an em-
ployee who refinances a residence.
In cases involving second mortgages executed either as perma-
nent or interim financing, we have allowed reimbursement to Matter the
same extent as costs associated with the first mortgage. of
Bews, supra. The fact that the purchaser pays similar costs in con-
nection with multiple sources of financing does not preclude reim-
bursement if those costs are otherwi.,(- allowable. B-166698, May
27, 1969. Since the escrow fee charged by the bank in connection
with Mr. Pemberton's purchase of the property and his execution
of the four deeds of trust is in the nature of a charge that may be
reimbursed incident to a first mortgage, Mr. Pemberton was prop-
erly reimbursed the $120 amount of that fee.
In regard to the reconveyance fee assessed at the time the Cal-
Vet loan was closed, it should be noted that we have specifically
allowed reimbursement for the cost associated with a mortgage ex-
ecuted subsequent to the conveyance of title to the employee.
Matter of Rideoutte, B-188716, July 6, 1977. The bank has ex-
plained that the $120 fee for "4 reconveyances at $30.00 each" was
in fact a fee for an escrow opened at the time the Cal-Vet loan was
approved and the interim loans were paid off. While the escrowed
amount was not paid directly to the seller of the residence as in
the usual transaction, but was used to satisfy Mr. Pemberton's obli-
gations under the four deeds of trust, the fee is one that may ordi-
narily be reimbursed in connection with a first mortgage. There-
fore, it may be reimbursed even though it is similar to the escrow
fee reimbursed in connection with the January transaction.
[B-].95732]
Appropriations-Availability-Contracts-Coat Overruns-
Under v. Over Contract Ceiling-Discretionary Costs
Discretionary cost increases in cost reimbursement contracts which exceed contrac-
tually stipulated ceilings set forth in Limitation of Cost clauses and which are not
enforceable by contractor are properly chargeable to funds available when the dis-
cretionary increase is granted by the contracting officer. 59 Comp. Gen. 518 and
other prior inconsistent decisions are modified accordingly.
Matter of: Environmental Protection Agency-Request for
Clarification of B-195732, June 11, 1980, 59 Comp. Gen.
518, September 23, 1982:
The Environmental Protection Agency (EPA) requests clarifica-
tion of our decision in the matter of Recording Obligations Under
EPA cost-plus-fixed-fee Contract, 59 Comp. Gen. 518 (1980). That de-
cision concerned the proper appropriation to charge for a cost over-
run of a cost-plus-fixed-fee contract with the Institute of Gas Tech-
nology for technical consulting services.
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610
Briefly, that decision involved a cost overrun (i.e., an increase in
the total cost of the contract beyond the, contract's ceiling' result-
ing from a revision in the negotiated overhead rates used to com-
pute indirect costs. The basic contract was executed on January 17,
1975. The modification which resulted in the cost overrun was ex-
ecuted on March 2:3, 1979. This modification was negotiated pursu-
ant to the procedures set for; .n in the "Negotir ted O%erhead Rates"
clause of Lie basic contract which entitled the contractor to price
adjustments under certain conditions. Assuming all other condi-
tions were met, this clause, operating in conjunction with the con-
tract's "Limitation of Cos." provision, required price adjustments
for allowable indirect costs but only if the final rate would not
cause the contract to exceed "any monetary ceiling, contract obli-
gation, or specific cost allowance or disallowance provided for in
the contract." Clause 29, section (d). The contract, like most cost re-
imbursement contracts, contained a "Limitation of Cost" clause
which established an estimated cost ceiling and provided that once
that ceiling is reached, the contractor is under no obligation to con-
tinue performance unless additional funds are allocated to the con-
tract. Similarly, the agency is under no obligation to raise the ceil-
ing to fund additional costs.
In our 1980 decision, we concluded that the cost of the 1979 modi-
fication to reflect an increase in allowable overhead rates was to be
paid from the original appropriation obligated for the contract,
even though the modification resulted in an increase in the con-
tract's cost ceiling. The basis for our conclusion was that the in-
creased overhead rates were based on an antecedent contractual li-
ability within the scope of the original contract.
EPA states it agrees with this conclusion insofar as it applies to
increases in overhead rates. EPA's agreement is based on its reading
of General Electric Company v. United States, 194 Ct. Cl. 678, 440 F.2d
420 (1971), and similar cases, which hold generally that increased
overhead rates must be paid in excess of a contractually required
ceiling where failure to give timely notice to the contracting officer
pursuant to a "Limitation of`-Co`sst" clause was not within the con-
tractor's control. However, EPA is concerned that our decision may
be'read as requiring that "almost all modifications which are not a
breach of contract must be funded out of appropriations current
when a contract is signed." This concern arises from statements in
the decision to the effect that any contract modification within the
scope of the original contract should be charged to funds current
when the contract was entered. As discussed below, we agree with
EPA that it is not necessary to charge all cost increases within the
scope of a cost reimbursement contract to funds available when the
contract was entered.
EPA points out that cost overruns on cost reimbursement con-
tracts come about in three ways: (1) through cost increases not re-
lated to a change in the contract's Statement of Work, (2) through
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1~. ..?.-l::r;?.r.''y~'"i*r'?!-.`:
in increase in
oiling) result-
used to com-
January 17,
?rrun was ex-
)tiated pursu-
?rhead Rates"
ictor to price
other condi-
with the con-
adjustments
e would not
:ontract obli-
wvided for in
most cost re-
Cost" clause
i ed that once
ration to con-
d to the con-
aise the ceil-
e 1979 modi-
es was to be
he contract,
in the con-
that the in-
}ntractual Ii-
it applies to
i its reading
378, 440 F.2d
at increased
lly required
sting officer
rin the con-
ecision may
;h are not a
ons current
atements in
within the
nds current
agree with
within the
,a when the
ement con-
ases not re-
(2) through
('map 1:rn UF.CI51(1NS OF TIlE COMPTROLLER GENERAL
cost increases pursuant to change orders which require additional
work. and Ili through cost increases by bilateral modification, "a
new agreement upon different terms than those in the original con-
tract." In all three situations, EPA would use currently available
funds to pay increases beyond the original cost ceiling set out in
the contract on the theory that there is no antecedent liability, en-
forceable by the contractor, to grant such increases, and hence no
"obligation" of originally available funds.
However, as EPA points out, cost increases allowed for overruns
not related to Statement of Work changes, or for changes in the
Statement of Work within the scope of the original contract which
result in overruns, arise through operation of a contractual clause,
the "Limitation of Cost" clause (or the "Limitation of Funds"
clause in incrementally funded contracts). Thus, they are clearly
within the scope of the original contract. The key, in EPA's view, is
whether the contracting officer has discretion to grant or deny a
change in the terms of a contract which will increase costs beyond
a contractually set ceiling. EPA argues that a contracting officer's
(iscretionary action in these circumstances results in a new obliga-
tion chargeable against current funds. EPA also appears to argue
that ' scretionary changes which do not exceed the contracts. ceil-
similarly m bbee charged to futt, c>, whan the char&e is
ordered.
The general rule relating to the permissible use of annual appro-
priations after expiration of their period of availability is that they
may be applied only "to payment of expenses properly incurred
during that year, or to the fulfillment of contracts properly made
within that year," 31 U.S.C. ? 712a (1976). In applying this provi-
sion, we have established the principle that a fiscal year's appropri-
ations may only be charged for contracts executed to meet the bona
fide needs of that year. 37 Comp. Gen. 155 (1957); 33 id. 57 (1953);
32 id. 565 (1953).
Thus, even where the fulfillment of a contract made in an earlier
fiscal year has required increases in cost in later years, we have
allowed the increased costs to be charged to the original appropri-
ation on the theory that the Government's obligation under the
subsequent price adjustment is to fulfill a bona fide need of the
original fiscal year and therefore may be considered as within the
obligation which was created by the original contract award. See 44
Comp. Gen. 399 (1965).
On the question of changes which increase the cost of the con-
tract but d notexceed the contractually set ceilings. we continue to
adhere to the view that such increases should be chaffed to the a
ropriation available when the contract was entered. This ppoition
Ids 'bas~on-tfie fact that an agency must' 'reserve funds in the
amount of the contract's ceiling at its inception in order to comply
with the Antideficiency Act (31 U.S.C. ? 665 (1976)) prohibition
against incurring obligations in excess of available appropriations
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612 DECISIONS oF' 'tilt: 1'c)!vt1-rRo u.t:R (;ENERAI. JSi
since the agency is contractually bound at the outset to fund any
cost increases not relateif to increased work to the contract's ceil-
ing. Since the ceiling amount must be committed at the contract's
inception, any under-ceiling cost increases in later years which are
within the contract's scope-whether because of changed work or
not-therefore should be considered as covered by the original con-
tractual obligation.
However, application of a rule designed to permit the use in ap-
propriate circumstances of prior year funds, after their period of
availability has expired, to preclude use of currently available
funds for otherwise appropriate ends would serve no useful pur-
pose. While an agency is required to reserve funds sufficient to
cover any contingent liability which would be enforceable by the
contractor in order to comply with the Antideficiency Act (includ-
ing amounts for final overhead in excess of the ceiling where an
enforceable right to such amount exists), it would not be reasonable
to require that amounts for cost increases beyond the contract's
ceiling similarly be reserved. 'There is no way to estimate the an-
ticipated amount of such increases or the need for them in any
future years and it would therefore be difficult to consider them as
bona fide needs of an earlier year.
Upon reconsideration, we therefore conclude that cost increases
in cost reimbursement contracts which exceed contractually stipu-
lated ceilings and which are not based on an antecedent liability,
enforceable by the contractor;. mayproperly be charged to funds
available when the discretionary increase is granted by the con-
tracting officer. Accordingly, our 1980 decision, 59 Comp. Gen. 518,
is modified to conform to this decision, as are other prior decisions
inconsistent with this one.
[B-203336]
President-Former-Transition Period Funds-Availability-
Inauguration Day-Travel Expenses of Invited Guests
reneral Accounting Office does not obect to the General Services Administration
(GSA) proposal to recognize ceremonial nature of Inauguration Day departure
flights of outgoing President and his guests as traditional and necessary part of
Presidential transition. Accordingly, GSA may use funds available under the Presi-
dential Transition Act of 1963?. as amended 3 U.S.C. 102 note, to pay expenses of
former President's guests without determining for each one the type of role each
played in the transition. Of course, GSA must assure Inauguration Day travel with
the former President is not subject to abuse.
Matter of Former President Transition Travel Expenses on
Inauguration Day, September 23, 1982:
The General Counsel for the General Services Administration
(GSA) has requested our approval of a proposal upon which GSA
may pay certain presidential transition expenses. Specifically, she
proposes that the proportionate fares of any invited guests who ac-
company a former President during the traditional departure flight
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