[Letter], B-276550, December 15, 1997

B-276550 Dec 15, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights While you have asked for our views on this issue. We note that our statutory role in this area was limited in 1996. GSA declared that the Custom House was surplus property. The officers and agents of the government have no authority to waive contractual rights which have accrued to the United States or to modify existing contracts to the detriment of the United States without adequate legal consideration or a compensating benefit. 67 Comp.Gen. 271. It is commonly understood to mean the discharge of a debt for less than the outstanding balance without any compensating benefit. The Court pointed out that "[t]he words 'settled and adjusted' [as used in the predecessor statute to 31 U.S.C. sec. 3702 (1994)] were taken to mean the determination in the Treasury Department for administrative purposes of the state of the account and the amount due.". View Decision B-276550 December 15, 1997 DIGEST Mr. William R. Barton Inspector General General Services Administration Dear Mr. Barton: This responds to your request for our opinion on whether the Administrator, General Services (GSA), has the authority to compromise debt arising from the disposal of surplus property under section 204(g) of the Federal Property and Administrative Services Act of 1949 (Property Act), 40 U.S.C. sec. 485(g) (1994). Section 204(g) provides that where the Administrator has extended credit in connection with the disposal of surplus property, he "may enforce, adjust, and settle any right of the Government with respect to [that credit] in such manner and upon such terms as he deems in the best interest of the Government." As explained below, section 204(g) does not provide the Administrator with compromise authority. While you have asked for our views on this issue, we note that our statutory role in this area was limited in 1996, when the Congress transferred the Comptroller General's authority under 31 U.S.C. sec. 3702(a) to settle and adjust claims of or against the United States to the Office of Management and Budget (OMB). OMB in turn delegated parts of this authority to other executive departments and agencies. Pub. L. No. 104-316, Tit. II, sec. 202(n)(1), 110 Stat. 3843-44 (1996); see also Pub. L. No. 104-53, sec. 211, 109 Stat. 535 (1995). Background Your question arose in connection with the GSA sale of the United States Custom House in Boston to the City of Boston. In March 1986, GSA declared that the Custom House was surplus property, and, in October 1987, sold it to Boston, receiving from the city a 10-year promissory note. In April 1991, Boston defaulted on the note. At the time, Boston's total outstanding debt (principal and accumulated interest) exceeded $13 million. In January 1996, after a restructuring of the debt and almost 5 years of negotiations, the city discharged its debt for approximately $6.1 million. Your office has concluded that the Administrator's restructuring of Boston's loan agreement and eventual agreement to Boston's discharge of the debt resulted in compromises of Boston's debt in violation of the FCCA. In January 1996, when GSA discharged Boston's debt, the FCCA limited agencies' compromise authority to claims that did not exceed $20,000. Pub. L. No. 89-508, sec. 3, 80 Stat. 308, 309 (1966). [1] GSA disagrees that its actions constituted a compromise, but argues, nevertheless, that section 204(g) of the Property Act, in authorizing the Administrator to restructure credit offerings, permits GSA to compromise debt, and that section 204(g), enacted prior to the FCCA, supersedes any restrictions imposed by the FCCA. [2] In your view, the Property Act did not grant the Administrator the authority to compromise debts. As requested by your office, our opinion does not address GSA's sale of the Custom House and GSA's contention that its actions do not constitute a compromise of debt. Rather, we address only the question whether section 204(g) permits the Administrator to compromise debt. Discussion I. The Constitution lodges the power to release or otherwise dispose of the rights and property of the United States in the Congress. U.S. Const., Art. IV, sec. 3, Cl. 2; Royal Indemnity Co. v. United States, 313 U.S. 289, 294 (1941). For this reason, absent statutory authority, the officers and agents of the government have no authority to waive contractual rights which have accrued to the United States or to modify existing contracts to the detriment of the United States without adequate legal consideration or a compensating benefit. 67 Comp.Gen. 271, 273 (1988). In this regard, the FCCA provides the officers and agents of the government with the authority to compromise debts of less than $100,000 without Justice Department approval and in excess of $100,000 with Justice Department approval. 31 U.S.C. sec. 3711(a)(2) (West Supp. 1997).