National Aeronautics and Space Administration--Retention of Demutualization Compensation
B-305402: Jan 3, 2006
The National Aeronautics and Space Administration may not retain proceeds from the sale of demutualization compensation received from its contractor, California Institute of Technology (Caltech). Caltech had received demutualization compensation in the form of stock from Prudential Life Insurance Company on policies held for the benefit of employees who operated a NASA laboratory pursuant to a long-standing contract between NASA and Caltech. The proceeds do not qualify as a repayment to NASA, and NASA has no authority to retain and credit to its appropriation proceeds from the sale of the compensation. Accordingly, NASA must deposit them into the Treasury as miscellaneous receipts under 31 U.S.C. sect. 3302(b). After NASA determined that proceeds from the sale of demutualization compensation were public moneys, NASA should have ensured that such proceeds were deposited in the United States Treasury the day following receipt of those proceeds. Directing Caltech officials to deposit proceeds in an interest-bearing money market account violated 31 U.S.C. sect. 3302(c)(1) and Treasury Regulation, 31 C.F.R. sect. 206.5(a)(1).