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B-203074 1 (1981-08-06)

handle is hein.gao/gaobabkdi0001 and id is 1 raw text is: t /n t UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 OFI E OF GENERAL COUNSEL B-203074 August 6, 1981 I The Honorable James J. Florio, Chairman, Subcommittee on Commerce, Transportation and Tourism Committee on Energy and Commerce House of Representatives Dear Mr. Chairman: By letter of May 12, 1981, you asked whether money appropriated to carry out Northeast Corridor improvements authorized by title VII of the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act), 45 U.S.C. §851 et seq., could be used to terminate contracts designed to meet certain goals of title VII, i.e., used to satisfy the Gov- ernment's obligations to the contractors as a result of con- tract terminations. My response follows discussions between my staff and yours on June 5, 1981. We are informed that certain electrification and signal- ling contracts were terminated, in whole or in part, for the convenience of the Government under contract clauses which provide for such action. These clauses also provide for the settlement and payment of termination claims submitted by the contractors in accordance with the specified procedures and criteria. As a general rule, the appropriation under which a Gov- ernment contract is obligated constitutes the proper source for funding all costs incurred by the Government under that contract. This includes costs resulting from a termination for convenience. See 55 Comp. Gen. 768 (1976). The right to terminate (with a resulting obligation to pay termination costs) exists under the contracts in question. Consequently, it appears the funds are for use in liquidating valid obliga- tions of the Northeast Corridor improvement program, and therefore are payable, if otherwise correct, from that program's appropriations. The application of this rule, however, must be consistent with the proposition that money authorized and appropriated for specified purposes ma not be used for other purposes. See E X ola- 40 7t eeJr e7 i/

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