This report concerns an expenditure of funds by the Department of the Army that was in violation of a restriction in the Department of Defense Appropriation Act, 1976 (Public Law 94-212, section 724), and subsection (a) of the AntiDeficiency Act (31 U.S.C. 665).

The matter arose from our recent review of executive branch policies and programs for obtaining commercial or industrial products and services for Government use. This review was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act of 1950 (31 U.S.C. 67).

A preliminary Army investigation has concluded that the expenditure did not violate subsection (a) of the AntiDeficiency Act. The investigation considered but stated no specific conclusion regarding possible violation of Public Law 94-212. We believe that the violations occurred.

Because this matter could have broader significance, we are of the opinion that it is of sufficient importance to both the Congress and Defense to warrant a special report to the Congress under section 312(c) of the Budget and Accounting Act, 1921 (31 U.S.C. 53(c)), which provides for reports by the Comptroller General to the Congress concerning expenditures or contracts made by any department or establishment in violation of law.

BACKGROUND

Section 724 of the Department of Defense Appropriation Act, 1976, states that:

"None of the funds appropriated in this Act shall
be used for the construction, replacement, or
reactivation of any bakery, laundry, or drycleaning
facility in the United States, its territories or

possessions, as to which the Secretary of Defense
does not certify in writing, giving his reasons
therefor, that the services to be furnished by

such facilities are not obtainable from commercial
sources at reasonable rates."

The language of section 724 was first used in section 604 of the Second Supplemental Appropriation Act, 1952. 1/ Later, it was incorporated into the Department of Defense Appropriation Act, 1955, 2/ and has been included in all Defense appropriation acts since that time.

The provision was proposed by Senator Allen J. Ellender in response to opposition by certain launderers and drycleaners to Air Force requests for appropriations to construct new laundry and drycleaning plants at various military installations. Senator Ellender stated that the restriction of funds for laundry and drycleaning plant construction would:

"* * * implement the general policy of Congress and
the often stated objective of [the Senate Appropria-
tions Committee] to make maximum use of civilian
services whenever practicable. Large defense ap-
propriations should not provide a vehicle for dis-
ruption or ruin of our small businesses." 3/.

Although section 724 requires approval by the Secretary of Defense, this responsibility has been delegated to an Assistant Secretary of Defense. Obviously, the Congress wanted serious, high-level consideration before the Government invested in laundry and drycleaning plants in the United States. While the Congress did not bar such investment, it demanded that competition with private enterprise not be undertaken lightly.

ILLEGAL EXPENDITURE FOR LAUNDRY

AND DRYCLEANING EQUIPMENT

Because the equipment purchase in question did not receive appropriate consideration and approval, we believe that it violated section 724 of Public Law 94-212.

1/65 Stat. 765-66.

2/68 Stat. 337.

3/Hearings on H. R. 5650 before the Senate Committee on Appropriations, 82d Cong., 1st sess. 10 (1951).

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