PREMIUM ON BOND OF CONTRACTOR-LUMP-SUM CONTRACT PAYABLE IN INSTALLMENTS.

In a contract to do certain work for a specified sum to be paid in installments as the work progressed up to 90 per cent of the value of the completed work the premium on the bond of the contractor may not be included in the computation of the value of the completed work, 2 Comp. Gen., 470, distinguished.

Acting Comptroller General Ginn to the Secretary of the Treasury, February 13, 1923:

There has been received your letter of January 8, 1923, requesting decision as to whether the North-Eastern Construction Co. can be reimbursed for the cost of their bond executed to insure faithful performance of their contract dated October 23, 1922, for the construction of two wings of the Veterans' Hospital at Chelsea, N. Y., on the voucher paying the first installment of 90 per cent due them under the terms of the contract.

The contractor agreed to erect certain buildings in accordance with specifications not here material "for the sum of four hundred nineteen thousand two hundred seventy four dollars ($419,274.00), such payment to be made as prescribed in said specifications."

The specifications on which the contractor bid contained a notice that a bond would be required in the amount of one-half of the contract price, and paragraph 33 of these specifications, which are made a part of the contract, provides that—

Payments of approximately 90% of the value of the work executed and satisfactorily in place, as determined by the Supervising Architect, acting through the superintendent, will be made monthly, and payment of the balance retained will be made after the final acceptance by the duly authorized representative of the Treasury Department of all materials and workmanship embraced in the contract, but payments will not be made until every part of the work to the point for which payment is claimed is satisfactorily supplied and executed in every particular and all defects therein remedied to the satisfaction of the Supervising Architect.

You state

Under date of Jan. 4, 1922, the superintendent of construction for the work transmitted a voucher in payment, with letter in explanation of the same, from which the following is an excerpt:

"Enclosed please find voucher for $13,320.00 in favor the North-Eastern Construction Company, 101 Park Ave., New York City, for work done during November and December, 1922, in executing their contract for the construction of the infirmary group of buildings at the Chelsea (N. Y.) T. B. Hospital. Please note that the value of the work stated, namely, $14,800.00, includes $9,800.00 for the cost to the contractor of his bond."

It does not appear on what basis the claim is made for payment by the United States of the premium on the bond. Under the terms of the contract the contractor is to receive a fixed sum for the completed work, and there is no provision for the reimbursement to the contractor for the cost of his bond as such. The requirement of the specifications that the contractor give bond for performance of the contract does not place an obligation on the United States to pay

therefor. The case is distinguishable from that where the premium on the bond may be a cost under a cost-plus contract, as considered by the Supreme Court of the United States in decision of December 4, 1922, in the matter of Mason & Hanger Co. and North-Eastern Construction Company. 2 Comp. Gen., 470. The monthly payments are limited to approximately 90% of the value of the work completed during the previous month, and the value of such completed work is to be ascertained by the Supervising Architect, presumably by comparison of the work accomplished with the total to be performed under the contract, and does not necessarily include all of the expense incurred during that period by the contractor in carrying out his obligation.

The execution of a bond was required to insure faithful performance of the contract, and is not an element in the value of the work. The cost of the same is therefore not properly for consideration in determining the amounts upon which the partial payments of 90% are to be computed.

GASOLINE AND OIL FOR AUTOMOBILES OWNED AND USED BY OFFICERS OF THE ARMY IN THEIR DISTRICTS ON OFFICIAL BUSINESS.

In view of the specific provisions for official travel by officers of the Army and of the provision in the act of June 30, 1922, 42 Stat., 729, barring the use of appropriations in that act for the hire, operation, maintenance, or repair of any motor-propelled vehicle which is employed wholly or in part for personal, social, or similar use, reimbursement to such officers for the cost of gasoline or oil consumed in their own automobiles when used by them in their districts on official business is unauthorized, as is also the cost of the furnishing of gasoline or oil in kind for such consumpton.

Acting Comptroller General Ginn to the Secretary of War, February 14, 1923:

I have your letter of December 28, 1922, requesting decision whether the appropriation "Transportation of the Army and its Supplies, 1923," 42 Stat., 729, is available—

for reimbursement to officers of the Army for the cost of gasoline, lubricants, etc., used in the operation of privately owned automobiles when used on official business, and whether gasoline, lubricants, etc., may be issued under proper regulations for use in privately owned vehicles on official public business.

What is intended to be included in the term "et cetera " is not clearly apparent. There have been decisions that, where civilian officers or employees are in a travel status and entitled to reimbursement of expenses of actual and necessary cost of travel and who use their privately owned automobiles for the travel, they are entitled to reimbursement of the cost of gasoline and oil. 27 Comp. Dec., 306; 1 Comp. Gen., 681; 2 id., 233 and 339. Reimbursement has also been authorized for such expenses where an appropriation is made broadly for transportation of employees on public business at their

stations, and the employee uses his privately owned automobile for such official travel. 2 Comp. Gen., 329. But in all these cases reimbursement has been limited to the cost of gasoline and oil only and in an amount not exceeding what it would have cost the Government to provide transportation by public conveyance. Reimbursement of other items of expense in the operation of privately owned automobiles has generally been denied.

It is understood that the submission has reference to travel of officers in the district where their duties are-that is, at their official station—and that the officers are not in a travel status and entitled to mileage or actual expenses for such travel. The question seems to have been presented because of the decisions adverted to.

The appropriation for "Transportation of the Army and its supplies" contains no provision specifically authorizing the issue of gasoline and oil or reimbursement therefor to officers using their privately owned automobiles on official business in the district where their duties are, and it is no different in this respect from the language used in this appropriation for many years past. The appropriation for the current year, 42 Stat., 729, 730, is in part as follows:

For transportation of the Army and its supplies, including transportation of the troops when moving either by land or water, and of their baggage, for the purchase, hire, operation, maintenance, and repair of such harness, wagons, carts, drays, other vehicles, and horse-drawn passenger-carrying vehicles as are required for the transportation of troops and supplies and for official, military, and garrison purposes; Provided further, That no money appropriated by this act shall be expended for the hire, operation, maintenance, or repair of any motor-propelled vehicle which shall be employed wholly or in part for personal, social, or similar use, except such use as is prescribed by order for the transportation of Army personnel in connection with the recreational activities of the Army;

Specific provision is made for the official travel of officers of the Army by (1) mileage or actual expenses when traveling under competent orders without troops; (2) for transportation in kind when traveling with troops; and (3) "other vehicles and horse-drawn passenger-carrying vehicles as are required * for official, military, and garrison purposes"; that is, official travel in the district where an officer's duty is.

*

The current appropriation makes no new or further provision for official travel of officers of the Army. These provisions apparently have been in the past considered by the administrative authorities as excluding the furnishing of gasoline and oil for privately owned automobiles or reimbursement therefor when used by officers of the Army for official business in the district where their duty is, and there is nothing in the current appropriation warranting a different construction in the absence of any change in the language of the appropriation. The specific provision of law for the official travel of officers of the Army alluded to must be considered as exclusive.

In addition to and aside from the reasons already given, it is remarked that the prohibition in the appropriation upon expending the money "for the hire, operation, maintenance, or repair of any motor-propelled vehicle which shall be employed wholly or in part for personal, social, or similar use" includes in its language, its purpose, and its intent privately owned automobiles. If it is necessary to prohibit the use of appropriations for the hire, operation, maintenance, or repair of publicly owned motor-propelled vehicles it would seem logical that it would be equally objectionable to use the appropriation for the hire, operation, maintenance, or repair of privately owned vehicles used in whole or in part for personal, social, or similar use. It is not enough to say that the primary purpose of a privately owned automobile is for personal and social purposes and that it is only when used for official purposes that the Government is being asked to bear the cost of operation, as the vehicle owned by the Government and only partly used for such purposes is excluded entirely, and not only when so used.

Accordingly, you are informed that the appropriation is not available for the purchase of gasoline and oil to be supplied to privately owned automobiles used for official purposes, nor for the reimbursement of such expenses.

JUDGMENTS FOR REFUND OF INTERNAL REVENUE TAXESAPPROPRIATIONS APPLICABLE.

The annual appropriations for refund of internal-revenue taxes made pursuant to estimates submitted to Congress as directed by the act of February 24, 1919, 40 Stat., 1145, are applicable to the payment of refunds, whether resulting from action by the Commissioner of Internal Revenue or from judgment rendered by a court, and such refunds pursuant to judgments rendered by competent courts are payable from the appropriation for refunds of such taxes for the year in which the taxes are collected.

Acting Comptroller General Ginn to the Secretary of the Treasury, February 14, 1923:

I have your letter of January 25, 1923, requesting decision as to the basis for determining the proper appropriation from which a judgment for the recovery of internal-revenue taxes should be paidwhether the year should be controlled by the date of final payment of the tax or by the date of entry of final judgment.

You state that in the past the income-tax unit has scheduled such claims for settlement from the appropriation determined by the date of payment of the tax and suggest as inconsistent a practice that would list judgment claims and nonjudgment claims for payment from appropriation for different years when the illegal taxes in both claims were collected and paid the same year.

For the fiscal year 1920 and prior years claims for refund of taxes under the provisions of section 3220, Revised Statutes, were payable from the annual appropriations indefinite in amount provided by section 3689, Revised Statutes. The proper annual appropriation to be charged with the amount of a claim for refund, adjudicated and certified for payment by the Commissioner of Internal Revenue, was the year in which the cause of action arose; that is, the date when the tax was collected. 21 Comp. Dec., 705; 22 id., 294; 27 id., 20. However, the annual appropriations provided by section 3689, Revised Statutes, and the rule with respect to proper year to be charged, did not apply to claims for refund adjudicated and authorized for payment by judgment of court; such claims were required to be certified to Congress for a specific appropriation. 7 Comp. Dec., 471; 15 id., 387.

By the act of February 24, 1919, 40 Stat., 1145, the annual appropriation indefinite in amount provided by section 3689, Revised Statutes, was repealed, and beginning with the fiscal year 1921 the Secretary of the Treasury was required to submit

an estimate of appropriations to refund and pay back duties or taxes erroneously or illegally assessed or collected under the internal revenue laws, and to pay judgments, including interest and costs, rendered for taxes or penalties erroneously or illegally assessed or collected under the internal revenue laws.

In accordance with this statute the Secretary of the Treasury has submitted annually his estimate of the amount needed for refund of taxes on which the annual appropriations have been based, viz, 41 Stat., 654; 41 Stat., 1274; and 42 Stat., 376. These annual appropriations are definite in amount and are in lieu of the prior method of annual indefinite appropriation.

This change from an indefinite to a definite appropriation has not changed the rule for determining the proper annual appropriation chargeable with a claim for refund certified for payment by the Commissioner of Internal Revenue which still maintains as the year in which the tax is collected. 1 Comp. Gen., 411. Neither the estimates on which these annual appropriations are based nor the appropriations themselves mention or specifically authorize the payment of judgment claims, but in each a reference is made to the act of February 24, 1919, supra, the basic authority for including judgment claims in the estimates and appropriations, and it is clear, I believe, that this reference is sufficient to obligate the appropriations for payment of judgment claims. The Comptroller of the Treasury so held with respect to the first appropriation made subsequent to the change in the law, fiscal year 1921, but limited such holding to that fiscal year and suggested the estimates should expressly include judgment claims. 27 Comp. Dec., 442. While a separate estimate for judgment claims might be desirable for proper itemization of the Budget the absence thereof does not affect the availability of the appropriations for that purpose.