In an 8 June 2007 opinion, (1) the GAO considered whether the President's appointment of Mr. Sam Fox as the ambassador to Belgium during a congressional recess (called a "recess appointment") violated the Antideficiency Act's (ADA) (2) prohibition against voluntary services. The GAO concluded that because 5 U.S.C.S. [section] 5503 prohibits the payment of individuals receiving recess appointments, Mr. Fox's appointment would not violate the ADA. (3)
On 9 January 2007, the President nominated Mr. Sam Fox to be the United States' ambassador to Belgium. (4) On 27 February 2007, the Senate Foreign Relations Committee discussed the nomination and scheduled the entire Senate to vote on the nomination on 28 March 2007. Before the Senate voted, however, the President withdrew his nomination of Mr. Fox. On 4 April 2007, while the Congress was in recess, the President made a "recess appointment" of Mr. Fox as ambassador to Belgium. (5)
Under the United States Constitution, the President has the responsibility to nominate ambassadors and the Senate has the responsibility to confirm them. (6) The Constitution also authorizes the President to nominate ambassadors while the Senate is in recess. (7) In such cases, the Senate would convene a confirmation hearing once it was in session again. Per 5 U.S.C.S. [section] 5503, an individual receiving a recess appointment may not be paid while awaiting the Senate to vote on his or her appointment. This section states in pertinent part:
Payment for services may not be made from the Treasury of the United States to an individual appointed during a recess of the Senate to fill a vacancy in an existing office, if the vacancy existed while the Senate was in session and was by law required to be filled by and with the advice and consent of the Senate, until the appointee has been confirmed by the Senate. (8)
In this case, Mr. Fox's appointment fits with the conditions of 5 U.S.C.S. [section] 5503 and as such, he could not receive payment for his services unless the Senate confirmed his nomination as ambassador to Belgium. (9) Specifically, the President appointed Mr. Fox during the Senate's recess, the position of ambassador to Belgium was an "existing office" when the President appointed him, the vacancy existed while the Senate was in session, and the vacancy was one that the Senate was required to confirm. (10)
The GAO focused its opinion on whether Mr. Fox's service as ambassador to Belgium during the Senate's recess would violate the ADA's prohibition against accepting voluntary services. (11) In analyzing the facts of this case, the GAO described the history and significance of the voluntary services prohibition. Federal law has prohibited the acceptance of voluntary services since 1884. Congress passed the first law prohibiting voluntary services because it was "faced with claims 'presented for extra services performed here and elsewhere by [employees] of the Government who had been engaged after hours.'" (12) Congress was concerned that government supervisors were routinely forcing subordinates to "volunteer" their services in situations where they would not otherwise entitled to payment. (13) Subsequently, the subordinates would file claims to compensate them for these "voluntary services," thereby coercing Congress to appropriate additional funds. In other words, Congress feared that agencies would demand employees to engage in additional work for which agencies had insufficient appropriated funds. Then, the employees (or the agencies) would request Congress to appropriate additional funds to compensate the employees and that Congress would feel a moral obligation to do so. Congress sought to prevent such requests by prohibiting the acceptance of voluntary services. (14) The GAO refers to this evil as a "coercive deficiency." (15)
The GAO explained that while the acceptance of voluntary services is clearly prohibited by the ADA, the acceptance of "gratuitous services" is not. (16) On that point, the GAO has issued a number of opinions distinguishing prohibited "voluntary services" from permissible "gratuitous services." (17) When an individual performs gratuitous services, the individual agrees (often in writing in advance) that he will not request payment for his services. Thus, acceptance of these services will not result in a moral obligation to pay for a coercive deficiency. (18)
The GAO related Mr. Fox's recess appointment to gratuitous services. (19) When the President appointed Mr. Fox during Congress' recess, a separate federal statute barred compensating Mr. Fox for his services. Thus, by accepting the recess appointment, Mr. Fox was, in essence, agreeing that he would not be paid unless the Senate confirmed his appointment. So, since 5 U.S.C.S. [section] 5503 prohibits compensating Mr. Fox, Congress would not entertain a claim for payment for these services. (20)
Therefore, the GAO concluded that Mr. Fox's recess appointment as ambassador to Belgium did not violate the ADA's voluntary services prohibition. (21) The GAO stated, "we will not interpret the voluntary services prohibition to bar Mr. Fox from serving as Ambassador to Belgium, even though he may not receive a salary ... until he is confirmed by the Senate." (22)
While Mr. Fox performed the services of ambassador without compensation, he did so only because a statute precluded payment and thus, these services were not "voluntary" under 31 U.S.C.S. [section] 1342. Hence, Mr. Fox's service as ambassador following his recess appointment does not violate the ADA. (23)
While government attorneys working in the fiscal law field will likely have infrequent encounters with recess appointments, the GAO's consideration of the topic of voluntary services is yet noteworthy. While the voluntary services prohibition has existed since 1884, there are few opinions interpreting that statute. Still there are many instances in the modern government workplace where the voluntary services issue arises. Practitioners should be wary of the often subtle circumstances where individuals attempt to volunteer their services to the government and the overriding prohibition against accepting them.
Awarding a Lease Contract Without Authority Does Not Violate ADA
The Department of Defense Inspector General (DOD IG) and the Department of Interior Inspector General (DOI IG) audited a series of transactions conducted between the Counterintelligence Field Activity (CIFA) of the DOD and GovWorks (a Department of Interior franchise fund) for the purpose of leasing office space. (24) Following these audits, the DOI IG requested that the GAO issue an opinion addressing two issues-the authority to lease and the ADA.
In a 17 August 2007 opinion, the GAO considered whether the CIFA or GovWorks had the authority to acquire office space through a lease and additionally whether doing so violated the ADA. (25) The GAO concluded that neither CIFA nor GovWorks had the requisite authority to acquire office space by entering into a lease. Nonetheless, the GAO found that awarding a lease contract did not result in an ADA violation by either organization. (26)
In February of 2003, the Office of the Assistant Secretary of Defense, Command, Control, Communications, and Intelligence and GovWorks signed an interagency agreement addressing CIFA's need for additional office space. (27) The agreement stated that GovWorks would enter into an indefinite delivery indefinite quantity (ID/IQ) contract, for the benefit of CIFC, to provide this office space. The agreement also stated that GovWorks would oversee and administer the contract for office space. The agreement required CIFA to reimburse GovWorks for the cost of the contract. On 30 April 2003, CIFA executed a Military Interdepartmental Purchase Request (MIPR) for the purpose of transferring funds from CIFA to GovWorks for the first payment on the lease. (28) This MIPR transferred $4,070,311 in fiscal year 2003 Defense-wide Operations and Maintenance (DOD-wide O&M) funds to GovWorks. (29)
On 12 June 2003, GovWorks awarded an IDIQ contract (Contract 70941) to TKC Communication, Inc. (TKC). (30) This contract required TKC to "provide services, including office space and facilitate management services not to exceed $100 million." (31) That same day GovWorks issued a Task Order 73001 requiring TKC to lease office space for a period of ten years and seven months and for GovWorks to pay TKC the annual rent listed on the schedule attached to the task order. As described above, CIFC would reimburse GovWorks for all costs associated with this contract. The total rent cost for the period of the contract was about $90 million. (32)
From 2003 to 2007, CIFA issued a series of MIPRs to GovWorks for both the cost of rent under the lease with TKC and also for GovWorks' administrative fee to oversee the IDIQ contract. (33) All of the MIPRs CIFA issued to GovWorks transferred DOD-wide O&M funds. (34)
In analyzing the issue of authority to lease, the GAO reviewed the relevant contractual documents. (35) While CIFA and GovWorks referred to the IDIQ contract as a "service contract" and not a "lease," the GAO reasoned that Contract 70941 was actually a lease since nearly 90% of the contract costs arose from the lease portion of the contract. (36) The GAO explained that generally, it characterized a contract based on its overall purpose and not upon any particular name the awarding entity used to refer to the contract. The GAO's characterization of Contract 70941 as a "lease" is central to its analysis and conclusions. Thus, the GAO viewed the instant contract as a long-term lease for office space. (37)
After determining that the instant contract was a lease, the GAO next focused on whether the contracting parties had the requisite authority to award a lease contract. (38) The GAO referred to the statute which vests in the Administrator of the General Services Administration (GSA) the authority for "[a]ll functions with respect to acquiring space in buildings by lease, and all functions with respect to assigning and reassigning space in buildings for use by agencies (including both space acquired by lease and space in Government-owned buildings).... (39) While the Administrator of the GSA may delegate this authority to lease to certain officials in the GSA and also to the head of another federal agency, (40) in the instant case, no such delegation occurred. (41) The GAO further stated that it was aware of no other authority which would authorize either GovWorks or CIFA to award this particular lease. While the GAO stated that statutory authority exists authorizing DoD to enter into building leases under certain circumstances, this authority is inapplicable in the instant case. (42) Regarding the issue of whether GovWorks or CIFA had the authority to enter into a lease, the GAO concluded that both entities did not. (43) The GAO further concluded that since neither entity had the authority to award a lease contract, the subject lease was either void or voidable. (44) Further, the GAO found that the funds CIFA transferred to GovWorks (via MIPR) and which GovWorks, in turn, distributed to TKC were improper payments. (45) Accordingly, the GAO recommended that the agencies attempt to recover these improper payments from the contractor. Moreover, GAO recommended that all future contract payments cease. (46)
Regarding the issue of whether GovWorks and CIFA violated ADA in obligating and expending appropriated funds pursuant to Contract 70941, the GAO concluded in the negative. (47) In analyzing this issue, the GAO found that the obligation of DOD-wide O&M funds to pay for the lease contract did not exceed an amount available in an appropriation nor was it made in advance of an appropriation. (48)
Moreover, the GAO stated that the DOD-wide O&M appropriation was the correct appropriation to fund the lease contract. The GAO made this determination after referring to the relevant section of the DOD Appropriations Act and the DoD Financial Management Regulation (FMR). Specifically, regarding proper uses of DOD-wide O&M, the Fiscal Year 2003 DoD Appropriations Act states that such funds may be used for "for expenses ... for the operation and maintenance of activities and agencies of the Department of Defense" (49) Further, the FMR states in that DOD-wide O&M appropriations are the proper funding source for real property leases. (50) The GAO reasoned that because there were sufficient DoD-wide O&M funds to cover the obligations and expenditures for the subject lease contract, neither CIFA nor GovWorks violated the ADA. (51)
Based upon the GAO's reasoning, it would seem logical to conclude that no obligation of funds occurred at all. Consequently, where if no appropriated funds were obligated, then no ADA violation could have occurred. Recall that the GAO concluded that because neither CIFC nor GovWorks had the requisite authority to award a lease contract, that the instant contract was void or voidable. (52) Therefore, it would seem to follow that if the contracting officer had no contractual authority to award the contract, then the funds would never have been obligated (which occurs at the time of contract award). (53) Remarkably, the GAO did not mention this analysis. Instead, the GAO's ADA analysis, again, concentrated on the availability of the proper source of appropriated funds, DoD-wide O&M.
In government legal practice, ADA issues arise in a variety of different forms. Regardless of the type of violation, if a government employee suspects a potential violation of the ADA, he or she must follow the reporting requirements located in the DoD FMR. (54) An initial ADA report often leads to an ADA investigation. (55)
These investigations are normally time-consuming and lengthy. If an investigation leads to a final determination of an ADA violation, then the agency head must report the violation to the President and to Congress. (56) Government attorneys should keep a constant watchful eye over government monetary transactions and attempt to avoid violations whenever possible.
Major Marci A. Lawson
(1) Recess Appointment of Sam Fox, B-309301, 2007 U.S. Comp. Gen. LEXIS 97 (June 8, 2007).
(2) The Antideficiency Act (ADA) is actually a series of statutes codified at 31 U.S.C.S. [section] [section] 1341- 1354 (LexisNexis 2008). The voluntary services prohibition, located at 31 U.S.C.S. [section] 1342, states, "An officer or employee of the United States Government or of the District of Columbia government may not accept voluntary services ... exceeding that authorized by law except for emergencies involving the safety of human life or the protection of property."
(3) Sam Fox, 2007 U.S. Comp. Gen. LEXIS 97, at *1-*2.
(6) U.S. CONST. art. II, [section] 2.
(8) 5 U.S.C.S. [section] 5503 (LexisNexis 2008).
(9) Sam Fox, 2007 U.S. Comp. Gen. LEXIS 97, at *2.
(11) Id. at *3.
(12) Id. at *7 (quoting 15 CONG. REC. 3411 (1884) (statement of Rep. Randall)).
(13) Id. at *4.
(19) Id. at *5-*6.
(21) Id. at *7.
(22) Id. at *18.
(24) Interagency Agreements--Use of an Interagency Agreement between the Counterintelligence Field Activities, Dep't of Defense, and GovWorks to Obtain Office Space, B-309181, Aug. 17, 2007, 2007 CPD 163.
(25) Id. at *1-*2.
(27) Id. at *6-*7.
(28) Id. at *8.
(30) Id. at *9.
(32) Id. at *11.
(35) Id. at *12-*13.
(37) Id. at *13-*14.
(38) Id. at *14.
(39) Id.; 40 U.S.C.S. [section] 301 (LexisNexis 2008).
(40) 40 U.S.C.S. [section] 585.
(41) Interagency Agreements, 2007 CPD [paragraph] 163, at *15.
(42) Id. at *16-*17.
(43) Id. at *19.
(45) Id. at *20.
(46) Id. at *20-*21.
(47) Id. at *23.
(48) Id. at *22-*23. The ADA states that:
An officer or employee of the United States Government or of the District of Columbia government may not (A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation; [or] (B) involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law;
31 U.S.C.S. [section] 1341 (LexisNexis 2008).
(49) Department of Defense Appropriations Act, 2003, Pub. L. No. 107-248, 116 Stat. 1519, tit. I (2004).
(50) Id. The GAO referred to the DOD Financial Management Regulation which states that Operations and Maintenance appropriations are the appropriate funds to pay for lease payments. U.S. DEP'T OF DEFENSE 7000.14-R, DOD FINANCIAL MANAGEMENT REG., vol. 2A, ch. 1, para. 0106 (June 2006) [hereinafter DOD FMR].
(51) Interagency Agreements, 2007 CPD 163, at *23.
(52) Id. at *19.
(53) The GAO has stated that the government's legal obligation to compensate a contractor arises at the moment of contract award. United States Fish and Wildlife Service-Installment Payments for Real Property, B-114841, 56 Comp. Gen. 351 (1997).
(54) DOD FMR, supra note 50, vol. 14, ch. 3, para. 0301.
(56) Id. at ch. 7.
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|Title Annotation:||Contract and Fiscal Developments of 2007 - the Year in Review|
|Author:||Lawson, Marci A.|
|Date:||Jan 1, 2008|