deficiency Act prohibits the Corps from incurring an obligation in excess of the Fund's available budget authority.

Applicable regulations require the Corps to record obligations promptly. E.g., DOD Directive 7200.1, Administrative Control of Appropriations, May 7, 1984 at Encl. 5, K.3. We have long held that agency actions involving revolving funds that meet the documentation requirements of 31 U.S.C. § 1501, such as awarding contracts for goods and services, must be recorded as incurred obligations. 65 Comp. Gen. 4, 7 (1985); 39 Comp. Gen. 422, 425 (1959); B-226801, Mar. 2, 1988. For example, in 65 Comp. Gen. 4, we discussed how obligations for loan guarantees made under the Student Loan Insurance Program should be recorded under section 1501. Payments under these guarantees are made out of an insurance fund, which is a revolving fund. See 20 U.S.C. § 1081. Thus, the requirement to recognize obligations once the conditions specified in section 1501 are met clearly applies to revolving funds.

We also have previously held that revolving funds are subject to the Antideficiency Act's prohibition against incurring obligations in excess of available budget authority. For example, in several cases we have considered an agency's authority to fund long-term contracts out of revolving funds. We stated that, under the Act, the agencies must ensure that the funds have available budget authority, as prescribed by OMB guidance, to support their obligations. 51 Comp. Gen. 598 (1972); 48 Comp. Gen. 497 (1969).

In other contexts, we have discussed what budget authority is available to a revolving fund to cover its obligations. For example, we stated in 60 Comp. Gen. 520 (1981) that the inventory of the GSA General Supply Fund is not budget authority available to support the Fund's obligations. In addition, our audit report, The Air Force Has Incurred Numerous Overobligations in its Industrial Fund (AFMD-81-53, August 14, 1981), discussed why revolving funds may not count anticipated receipts from future customer orders as budget authority to support their obligations. Thus, we think it is well established that revolving funds are generally subject to the requirement to recognize and record obligations when contracts are awarded, and the Antideficiency Act's prohibition against overobligating available budget authority.

No law explicitly exempts the Corps's Civil Works Revolving Fund from either section 1501 or the Antideficiency Act. In addition, we do not find the legislative history of the Fund's authorizing statute to reflect a view of the Fund's operations that is inconsistent with requirements of section 1501 and the Antideficiency Act. For example, during testimony by both Corps and GAO officials who had developed the proposal to establish the Fund, a GAO official explained the significance of a proposed limitation on the Fund's corpus. The GAO witness stated:

I believe the limitation was put in so that the corpus could not be increased above $140 million without specific authorization. For instance, when a new piece of capital equipment is to be acquired, like a new dredge, and sufficient cash were not available in the fund, the Corps would go to Congress to get sufficient funds to build the new dredge.

Civil Functions, Department of the Army Appropriations for 1954: Hearings Before the Subcomm. on Civil Functions and Military Construction of the House Comm. on Appropriations, 83rd Cong., 1st Sess. 593 (1953). This discussion clearly contemplates that the Fund would have sufficient cash available to finance the full amount of new equipment purchases. This method of operating the Fund is not inconsistent with the generally applicable requirements of section 1501 and the Antideficiency Act.2

We are not persuaded that the Corps's Civil Works Revolving Fund has a unique status regarding the treatment of PRIP contract awards for purposes of section 1501 or the Antideficiency Act. Thus, we conclude that the Corps must ensure that contracts financed by the Fund are recorded as obligations and are supported by adequate budget authority.

Corps Proposed New Equipment Acquisition Policy

The Corps continues to believe that its policy was within its authority. However, in response to our advice concerning the applicability of section 1501 and the Antideficiency Act, the Corps has proposed a new method of managing and controlling the Fund's equipment purchases. The Corps proposes to collect the Fund's depreciation and other revenues that are intended to finance equipment acquisition into a reserve account. Quarterly, the Corps will authorize its district offices to award equipment contracts up to the level of budget authority (cash) accumulated in the reserve account. When contracts are awarded, they will be recorded as obligations against the reserve account. This cycle would be repeated quarterly, so that obligations for all outstanding equipment contracts would be supported by the cash balance held in the Fund's reserve account. This proposal, if properly implemented by the Corps, will bring the Civil Works Revolving Fund into compliance with section 1501 and the Antideficiency Act.

2 Prior to 1966, the Antideficiency Act had been interpreted to require certain Department of Defense revolving funds to maintain cash balances sufficient to support all outstanding obligations. See 51 Comp. Gen. 598, 603 (1972). The testimony in regard to the Civil Works Revolving Fund is consistent with this interpretation of the Act's requirements. However, it is now well accepted that revolving funds may use forms of budget authority other than cash balances to support their obligations. See, e.g., OMB Cir. A-34 at VIII-8.

B-250953, December 14, 1992
Appropriations/Financial Management

Budget Process

Prior year accounts ■■Adjustments

Refunds

Appropriations/Financial Management

Budget Process

Prior year accounts

Refunds

Accounting

This Office has no objection to agencies accepting a credit and applying it against a current year invoice in order to effect a refund of prior year payments in lieu of requiring a vendor to issue a refund check, unless the method of making the refund is specifically governed by a law, regulation, or contract. If the credit is for a "de minimis" amount of $100 or less, this Office also has no objection to agencies accepting the "de minimis" credit without adjusting the prior year accounts to reflect the credit as a refund to the accounts.

Matter of: Secretary of the Senate Processing and Accounting for “de minimis" credits

This decision responds to a request from Stuart Balderson, Financial Clerk of the Senate, Office of the Secretary of the Senate, asking whether a "de minimis" ($100 or less) credit, which represents a refund of prior year payments, may be accepted and applied against a current year invoice in lieu of requiring a refund check from the vendor. We understand Mr. Balderson to also be asking whether such a credit may be accepted without adjusting the prior year accounts to reflect the credit as a refund to the accounts. For the reasons given below, we have no objection to agencies treating such "de minimis" credits in the manner suggested.

Mr. Balderson states that current procedures prohibit the credit from being applied to an invoice for a current fiscal year and require the vendor to issue a check in lieu of the credit. The check is then processed via Standard Form (SF) 215, "Deposit Ticket" and credited to the fiscal year and account initially charged with the government payment via the SF 1220, "Statement of Transactions, According to Appropriations, Funds, and Receipt Accounts." Mr. Balderson argues that the cost involved to the vendor and the government to convert a "de minimis" credit into a refund check and process the check deposit exceeds the amount of the credit. Mr. Balderson further argues that accepting "de minimis" credits for prior fiscal years and applying them to the current year would result in cost savings to the government.

Normally, when the government pays an amount that is charged to a particular fixed period appropriation account, and the government subsequently receives a refund of a portion of the amount originally paid, the refund is deposited to the

credit of the appropriation initially charged with the payment. If the appropriation account has expired for purposes of incurring new obligations, but has not yet closed, the refund is deposited to the credit of the expired account. See generally, GAO, Policy and Procedures Manual for Guidance of Federal Agencies, title 7, § 5.4 (TS 7-42, February 12, 1990). 65 Comp. Gen. 600 (1986). A purpose of these "account integrity" procedures is to prevent unauthorized augmentation of current year accounts and to permit determinations of compliance with the requirements of the Antideficiency Act.1

Mr. Balderson's request involves consideration of two separate issues: (1) the method of making a refund to the government and (2) the proper accounting for the refund. Regarding the first issue, we are unaware of any current law or regulation that is so inflexible so as to require agencies to receive refunds from vendors only in the form of a check and not by a credit against a current invoice. We see no reason why the necessary adjusting entries could not be made after applying the credit against a current invoice when proper accounting for the refund requires that it ultimately be credited to a prior year account rather than the current year account. Accordingly, except to the extent the method of making a refund is specifically governed by a law, regulation, or contract, we have no general objection to agencies receiving a refund in the form of a credit against a current invoice instead of having a vendor issue a refund check. Regarding the second issue, we do not believe that an agency's application of a "de minimis" credit against a current year invoice without adjusting prior year accounts will have more than an insignificant impact on the agency's account integrity. In view of the cost savings, we also do not believe that such an insignificant impact should be treated as an unauthorized augmentation of current year accounts and a violation of the Antideficiency Act. Consequently, we would not object to an agency accepting a "de minimis" credit to current year invoices in order to effect a refund of prior year payments without also adjusting the prior year accounts to reflect the credit as a refund to the accounts.

B-250059, December 23, 1992

Procurement

Sealed Bidding

Bids

Error correction

Pricing errors

Line items

Where a bidder's unit and extended prices for a multi-unit line item are identical, the bid may be corrected to reflect a unit price that is consistent with the extended price if the unit price clearly is out of line with both the government estimate and the prices offered by the other bidders, and only

1 The Antideficiency Act, 31 U.S.C. § 1341, provides that an officer or employee of the United States government may not make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation.

the extended price reasonably can be regarded as having been the intended bid. The fact that the unit price at issue was inserted by the bidder in lieu of one which was crossed out does not preclude correction of the unit price as mistaken where that is the only reasonable conclusion.

Matter of: JV Contractors

Mario A. Corral for the protester.

Edwin L. Robinson for B-R Constructors, Inc., an interested party.

Allen W. Smith, Department of Agriculture, Forest Service, for the agency.

Mindi Weisenbloom, Esq., and John F. Mitchell, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

JV Contractors protests the award of a contract to B-R Constructors, Inc., under invitation for bids (IFB) No. R3-05-92-005, issued by the Department of Agriculture, Forest Service, for the Twilight Campground Project in the Safford Arizona Ranger District. JV Contractors argues that it was the low bidder and that the Forest Service erred by rejecting its bid.

We sustain the protest.

The Twilight Campground Project consists of shaping and surfacing 0.9 mile of existing road and constructing a 31-unit campground with paved roads and spurs. The work includes reconditioning a roadbed.

The Bid Schedule for the project consisted of a base bid comprised of 39 line items, plus two additive items. Bidders were to enter a unit price for each item, and an "Estimated Amount" for the extended price derived from multiplying the unit price by the number of units. At the foot of the base bid schedule, a blank was provided for the entry of the "Total Bid." Award was to be based on the lowest total amount bid for the base bid.

Six bids were received. JV Contractors' apparent low base bid of $465,361.99 was only $1,796.01 below the government estimate of $467,158. B-R Constructors' second low aggregate base bid of $479,969 was $14,607.01 higher than the protesters. The highest bid received was $619,058.94.

In many instances in the protester's bid, the unit price multiplied by the number of units did not correspond to the extended price. With one exception, however, the discrepancies in the base bid involved only insignificant amounts and would not affect the relative standing of the bidders. It was one item, for the reconditioning of a roadbed, which accounted for $212,615.50, or more than 99 percent, of the difference between the base bid based on unit prices and the base bid based on extended prices. For this item, JV Contractors entered the same price in both the space for the unit price and the space for the extended price, even though the bidders were to enter an extended price for 51 stations. The original unit price-which is indecipherable-had been crossed out and ini