Doing the right thing--fiscal law tips: dealing with conferences, coins, and the use of...

Having practiced fiscal law for almost 20 years for the United States Navy and the United States Air Force in addition to serving as the American Society of Military Comptrollers General Counsel for half that amount of time, I've noticed that certain questions and issues seem to recur. As Yogi Berra

once said, "It's deja vu all over again." I've also observed that almost every fiscal law issue can be resolved by applying one or more of the time-honored principles of time, purpose, and amount. That said, occasionally the Congress, the Comptroller General, or even the steady march of technology throws a curve ball that makes us pause and re-examine practices and assumptions that we have taken almost as articles of faith. In this article, I discuss some old favorites as well as more recent developments in the area of fiscal law. But before plunging in, here is a quick refresher on the basics, including a short history lesson.

Refresher on Fiscal Law

As a starting point, how many times have you been challenged with the assertion, "Show me where it says I can't--"? Feel free to fill in the blank with your favorite example. We occasionally need to remind ourselves--and often need to remind those who look to us for guidance--that fiscal law is "different," and that this is precisely the wrong question. The right question is, "Show me where it says I can," or words to that effect. It does seem counterintuitive, in a democratic society that values freedom of action and especially in a military culture that rewards decisiveness and getting the job done, that we should have to identify positive authority to spend money. But that is precisely as the founding fathers intended it to be.

It is no accident that the powers of the Congress are set out in the first article of the Constitution (Article I), and it is no accident that the Congress reserved to itself--and not to the Executive Branch--the power of the purse. We know this from the written record of what was an unprecedented public relations and lobbying effort to get our Constitution ratified. The Federalist Papers, which were over 80 "anonymous" pro-ratification op-ed pieces written largely by Alexander Hamilton and James Madison for the major newspapers of the day, devote more ink to the issue of who would control the purse than to any other subject.

Why did this subject get more attention than representation in the Congress or the power of the President or the courts? Hamilton, Madison, and others were keenly aware that Great Britain's unsuccessful six-year armed struggle against the colonists had nearly bankrupted that country. By the time that ratification of our Constitution was being debated, it is estimated that nearly three-fourths of the British government's annual revenues were consumed merely by servicing the debt that had been incurred from 1775 to 1781. This was the result of unchecked spending by King George III rather than the actions of Parliament. Consequently, our own Constitution gave power of the purse to the Legislative Branch in Article I, section 9, clause 7, which provides that "no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time."

So the next time you're asked to "show me where it says I can't," you'll be able to point out, that is not the right question. And if your inquisitor doesn't like that response, don't take the blame yourself or even blame the lawyers; blame King George Ill. It worked for Hamilton and Madison, so it should work for you.

But enough about history. What about command coins, serving pastries at conferences, using e-mail to promote non-government events, and other things that really matter to commanders?

Food at Conferences

"There is no free lunch. "--Economist John Kenneth Galbraith

In early 2005, the Comptroller General nearly caused the second shutdown of the federal government with the decision in "Matter of: National Institutes of Health--Food at Government-Sponsored Conferences," B-300826, March 3, 2005. That decision was issued in response to questions posed by the National Institutes of Health (NIH). The various institutes of the NIH, which are on the cutting edge of almost every major medical issue from cancer to AIDS to a possible bird flu pandemic, regularly bring together the foremost authorities in the world to share information. (In this case, the conference concerned Parkinson's disease.) In the interests of fiscal correctness, the NIH asked whether appropriated funds could be used to provide meals and light refreshments to federal government and nonfederal attendees and presenters at the NIHhosted conference; and if food is provided, then could the NIH charge a registration or other fee to defray the costs?

To the question of whether food could be served, the Comptroller General responded yes, provided that meals and refreshments were "incidental" to the conference. Specifically, the Comptroller General stated that food could be served if attendance at the meals and times when refreshments were provided were important to ensure full participation in essential discussions, lectures, or speeches concerning the purpose of the conference and that the conference also included substantial functions occurring separately from when the food was served. In other words, there must really be a conference or a similar function that would occur regardless of whether lunch or snacks were served. If that's the case, and attendees would miss essential parts of the event if they had to forage for themselves, then the agency may, but is not required to, serve food. This part of the NIH decision broke no new ground.

Although not asked, the Comptroller General also addressed whether appropriated funds may be used to pay for food for federal employees from outside the NIH and for nonfederal attendees. This question was also answered in the affirmative: "We think the presence of private citizens or federal employees from other agencies who are essential to achieve the program or conference objectives should not change the character of the expense from allowable to unallowable ... so long as an administrative determination is made that their attendance is necessary to achieve the conference objectives."

Again, this was not earthshaking, but merely a common-sense application of the "purpose" test. Having concluded that the NIH could feed its own employees under certain circumstances, it would have been bad manners to have excluded experts from other federal agencies and the private sector.

Collecting Conference Fees

It was the answer to the conference fee question that nearly caused the federal government to suspend operations--and did result in more than one congressional inquiry. The Comptroller General concluded that the NIH could "not charge a registration or other fee to defray the costs of providing meals or light refreshments without unlawfully augmenting its appropriations. An appropriation establishes a maximum authorized program level, and an agency, without specific statutory authority, may not augment its appropriations from sources outside the government."

This, however, was not a departure from well-settled law. The "Miscellaneous Receipts" statute, 31 United States Code (U.S.C.), section 3302(b), states that "except as provided [by law], an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon a practicable.... "

So the takeaways from the NIH decision are the following:

The rules have not changed.

* Appropriated funds are generally not available to purchase food unless certain conditions are met.

* If those conditions are met, there is no distinction between the agency's and other federal and nonfederal employees.

* The Miscellaneous Receipts statute, 31 U.S.C. 3302(b), prohibits retaining off-book "conference fees."

* However, the hosting federal activities can be reimbursed under the Economy Act, 31 U.S.C.1535, or the Federal Employees Training Act, 5 U.S.C. 4101 et seq. (if applicable), but must follow applicable agency procedures.

Please note that legislation recently enacted as part of the Fiscal Year (FY) National Defense Authorization Act would allow Department of Defense (DoD) activities to collect conference fees and deposit them in the appropriation that bears the expense of the contract. This legislation effectively overrules one aspect of the NIH decision that required such fees to be deposited into Miscellaneous Receipts. However, this new legislation requires implementation by the Under Secretary of Defense (Comptroller) (USD(C)) and should not be implemented until appropriate guidance is received. For further information, check the USD(C) Web site or with your command legal officer.

The Issue of Coins

"You see, Miss Turner, the Pirates Code is not so much a set of rules as what you might call guidelines. "--Captain Barbossa, Commanding Officer of the Black Pearl, "Pirates of the Caribbean"

It has been observed by one wag that the Pentagon renovation was made necessary at least in part because the weight of all the command coins in the building was causing it to sink into the Potomac. While certain aspects underpinning Pentagon renovation decisions may be, and will likely remain, classified for many years to come, it seems that nearly all organizations--and key individuals, for that matter--have their own coins. Despite this proliferation of coins, there are rules, not "guidelines," in this area, and they have not changed in more than 20 years. There are three, and only three, circumstances in which a coin may be purchased and presented.

The first rule addresses coins presented as part of a bona fide agency awards program. In the matter of "Awarding of Desk Medallion by Naval Sea Systems Command," B-184306, August 27, 1980, the Comptroller General determined that it was within the range of agency discretion to use appropriated funds to purchase coins, or medallions (as they were referred to then), where they were "to be awarded to civilian and military employees of the Naval Sea Systems Command in recognition of their accomplishments which further the mission of the Command pursuant to its award program, the purchase [with appropriated funds] and dissemination of these medallions are in accord with the authority contained in the 'Government Employee's Incentive Award Act' and the corresponding Act for military personnel and is thus authorized."

Put another way, if you could present a cash award or medal, you could present a command coin. The coin, however, cannot be passed out like M&M'S[R] candles, or as John D. Rockefeller once passed out dimes to strangers on the street. While there is no coverage of this in the DoD Financial Management Regulation, other agencies, such as the Air Force, have incorporated this rule in their own budget policy regulations. (See, for example, Air Force Instruction 65-601 volume I, section 4.29.2, "Mission Accomplishment Awards.")

The second way in which commemorative coins may be purchased with appropriated funds and presented is under an agency's Official Representation Fund (ORF) program. The standards for ORF are found in DoD Directive 7250.13, as well as in agency implementing regulations. As a general matter, however, ORF is legally available only for expenses necessary to "maintaining the standing and prestige of the United States and the Department of Defense, and may never be used for entertainment or to purchase mementos for DoD personnel." There are some limited exceptions to this rule; for example, if the Secretary of Defense or a four-star officer or civilian equivalent is visiting your installation, your commander could present him or her with an ORF-purchased coin, but the ORF should be viewed mainly as a source of funding when non-DoD dignitaries come calling.

Finally--and this is an important point that goes well beyond the issue of coins--it is never wrong for commanders to reach into their wallets and personally fund certain social courtesies and other "nice-to-do's." For some, this is a radical concept, but the "OWN" appropriation is always legally available when other appropriations are not.

So, practically, how can this work in a climate where coins are given and exchanged as easily as business cards? First, coins purchased with appropriated funds should not be personalized with a commander's name or have logos, mottos, and the like, which may have a short shelf life.

Second, a log or other record should be maintained of each award coin that is presented. While this may sound onerous, keep in mind that the underlying statutory scheme that permits using appropriated funds for the purchase of coins is the same one that permits the award of a commendation medal or a civilian cash award. No one would argue against maintaining records of those awards.

Third, if you have a commander or a boss who feels compelled to accompany every handshake with a coin, then have him or her write a check and place an order for a personal supply of coins that may be distributed as he or she sees fit. I know of several officials at the Pentagon who have done just that, and their military assistants help them keep straight when it is okay to present a taxpayer-funded coin and when they should present an "OWN"-funded coin.

Personal Use of Government Resources

"For every complex question, there is always a simple solution ... and it is always wrong."--H.L. Mencken

Depression-era columnist and social critic H.L. Mencken's observation about complex questions and simple solutions has great resonance in the area of using government resources. "Official Use Only" is the simple-and incorrect--answer to the purposes for which government resources may be used. Yet this is a common refrain, in part because it is viewed as a safe use of government resources. But it can also be tricky because it is an area where the Comptrollers General have moderated their views over the years, where technology has made the cost of certain functions almost negligible, and where principles of fiscal law intersect with government ethics and standards of conduct.

One of the job requirements of early comptrollers of the late nineteenth and early twentieth centuries was to be a curmudgeon. While modern executives seek to emulate Bill Gates, Jack Welch (the legendary chief executive officer of General Electric), or Apple Computer's Steve Jobs, a hundred years ago Ebenezer Scrooge would have been a role model. So you will find early Comptroller General decisions (and, prior to the establishment of the Government Accountability Office (GAO), the Comptroller of the Treasury) holding that expenses like training were "personal" in nature and could not be paid for with appropriated funds; hence, the Congress enacted the Government Employees Training Act.

It is evident, however, from decisions such as those approving the purchase of refrigerators and microwave ovens that Comptrollers General of the late twentieth and early twenty-first centuries have moderated their views. (See, for example, B-302993, June 25, 2004, "Use of Appropriated Funds to Purchase Kitchen Appliances.") In addition to making life more bearable for federal workers, Comptroller General decisions also have begun to recognize, as a matter of fiscal law, that government equipment and resources could be used within a limited range of non-official activities, where there was little, if any, additional expense to the government. See B-277678, January 4, 1999: "In applying [the "Purpose Statute"], we have taken the position that.., it is not necessary that each and every authorized government employee activity or agency activity be specifically designated by statute. Accordingly, we have viewed certain civic, charitable, and similar community support activities involving limited use of agency resources and employee time as falling within an agency's permissible range of discretion. 71 Comp. Gen. 469, 471 (1992); 67 Comp. Gen. 254, 256 (1988)."

It is, however, within the body of law and regulation-governing ethics and standards of conduct that the clearest general guidance in this area can be found. The Department of Defense Joint Ethics Regulation (JER), DoD 5500.7-R (available at http://www.defenselink.mil/dodgc/defense_ethics/), sets out general standards for use of DoD resources. Specifically, section 3-201 of the JER provides that agency designees may permit their DoD employees to make limited personal use of federal government resources other than personnel, such as typewriters, calculators, libraries, and other similar resources and facilities, if [that use] ...

(a) does not adversely affect the performance of official duties...;

(b) is of reasonable duration and frequency ... during the DoD employee's personal time;

(c) serves a legitimate public interest (such as supporting local charities or volunteer services to the community; enhancing the professional skills of the DoD employee; job-searching in response to federal government downsizing);

(d) does not put federal government resources to uses that would reflect adversely on DoD or the DoD component (such as involving commercial activities; unofficial advertising, soliciting or selling ... and other uses that are incompatible with public service);

(e) creates no significant additional cost to DoD or the DoD component.

In addition to these general standards, the JER and the General Services Administration regulations (found at 41 Code of Federal Regulations 201) address the use of government communications equipment such as e-mail, faxes, and other land lines and cell phones. Under these regulations, there are three types of communication: official, authorized, and unauthorized. Government communications systems may be used for both official and authorized communications:

* Official communications are those "that the DoD Component determines are necessary in the interest of the Federal Government." In addition to phone calls and e-mails to conduct the government's business, official communications may also include use of the systems for morale and welfare purposes when approved by theater commanders for military members and civilian employees who are deployed for extended periods of time.

* At the other end of the spectrum are communications that are clearly unauthorized. These are communications "that would reflect adversely on DoD or the DoD Component." They include pornography, chain letters, commercial advertising, soliciting or selling (except on authorized bulletin boards established for such use), or other uses that violate a statute or a regulation such as inappropriately handling classified information or threatening or harassing e-mails.

* In between these two are what the JER and other DoD component regulations refer to as authorized communications. Authorized communications are ones that are not essential to conducting the government's business, but are nevertheless permitted, such as "personal communications from the DoD employee's usual work place that are most reasonably made while at the work place." They include, but are not limited to, "checking in with a spouse or minor children; scheduling doctor and auto or home repair appointments; brief internet searches; e-mailing directions to visiting relatives." (See JER section 3-201 .) Some agency regulations, such as Air Force Instruction 33-119, "Air Force Messaging" (http://www.e-publishing.af.mil/pubfiles/af/33/afi33-119/afi33-119.pdf), have further clarified that the term authorized communications also includes e-mails sent on behalf of private organizations that are authorized to operate DoD installations (provided that such usage has been authorized).

Local commanders and supervisors (and systems administrators) may permit use of the e-mail systems for any of the preceding reasons, provided such use

* Does not adversely affect the performance of official duties by the DoD employee or the DoD employee's organization;

* Is of reasonable duration and frequency, and whenever possible, is made during the DoD employee's personal time such as after-duty hours or lunch periods; and Does not overburden the communications system or create significant additional cost to the DoD or the DoD component.

Doing It Right

"Americans will always do the right thing . . . after they've exhausted all the alternatives. "---Winston Churchill

All of us who have responsibilities for the proper use of the taxpayers' funds are under pressure, from time to time, to "find a way" to do something or just "make it happen." As the preceding examples illustrate, even the Congress and the GAO occasionally indulge in some out-of-the-box thinking. However, it's important to remember--and to remind others--that there still is a box. That box contains the constitutional requirement to identify positive legal authority to obligate and expend funds, as well as our old friends purpose, time, and amount.

When most of us think of Winston Churchill, we picture the great wartime leader, cigar firmly in place, standing up to Nazi tyranny. It is not so widely known that he distinguished himself early in his career as a government financial manager, albeit one without Defense financial management certification. In the 1920s, as Chancellor of the Exchequer (a sort of combination of Office of Management and Budget Director and Secretary of the Treasury), Churchill was notoriously tightfisted and earned the wrath of Britain's military establishment for holding the line on what he saw as unnecessary and wasteful spending.

So the next time you're under pressure to be creative or to push the envelope, apply the tools in the box, summon up some Churchillian courage, and do the right thing.